NCERT Textbook: Poverty as a Challenge Notes | Study Economy and Indian Economy (Prelims) by Shahid Ali - Teaching

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 Page 1


  Poverty as a Challenge  29
Overview
This chapter deals with one of the most
difficult challenges faced by independent
India—poverty. After discussing this
multi-dimensional problem through
examples, the chapter discusses the way
poverty is seen in social sciences. Poverty
trends in India and the world are
illustrated through the concept of the
poverty line. Causes of poverty as well as
anti-poverty measures taken by the
government are also discussed. The
chapter ends with broadening the official
concept of poverty into human poverty.
Introduction
In our daily life, we come across many
people who we think are poor. They could
be landless labourers in villages or people
living in overcrowded jhuggis in cities. They
could be daily wage workers at
construction sites or child workers in
Poverty as a Challenge Chapter
dhabas. They could also be beggars with
children in tatters. We see poverty all
around us. In fact, every fourth person in
India is poor. This means, roughly 270
million (or 27 crore) people in India live
in poverty 2011-12. This also means that
India has the largest single concentration
of the poor in the world. This illustrates
the seriousness of the challenge.
Two Typical Cases of Poverty
Urban Case
Thirty-three year old Ram Saran works
as a daily-wage labourer in a wheat
flour mill near Ranchi in Jharkhand.
He manages to earn around Rs 1,500
a month when he finds employment,
which is not often. The money is not
enough to sustain his family of six—
that includes his wife and four children
aged between 12 years to six months.
Poverty as a Challenge
3 3
Picture 3.1  Story  of Ram Saran
2020-21
Page 2


  Poverty as a Challenge  29
Overview
This chapter deals with one of the most
difficult challenges faced by independent
India—poverty. After discussing this
multi-dimensional problem through
examples, the chapter discusses the way
poverty is seen in social sciences. Poverty
trends in India and the world are
illustrated through the concept of the
poverty line. Causes of poverty as well as
anti-poverty measures taken by the
government are also discussed. The
chapter ends with broadening the official
concept of poverty into human poverty.
Introduction
In our daily life, we come across many
people who we think are poor. They could
be landless labourers in villages or people
living in overcrowded jhuggis in cities. They
could be daily wage workers at
construction sites or child workers in
Poverty as a Challenge Chapter
dhabas. They could also be beggars with
children in tatters. We see poverty all
around us. In fact, every fourth person in
India is poor. This means, roughly 270
million (or 27 crore) people in India live
in poverty 2011-12. This also means that
India has the largest single concentration
of the poor in the world. This illustrates
the seriousness of the challenge.
Two Typical Cases of Poverty
Urban Case
Thirty-three year old Ram Saran works
as a daily-wage labourer in a wheat
flour mill near Ranchi in Jharkhand.
He manages to earn around Rs 1,500
a month when he finds employment,
which is not often. The money is not
enough to sustain his family of six—
that includes his wife and four children
aged between 12 years to six months.
Poverty as a Challenge
3 3
Picture 3.1  Story  of Ram Saran
2020-21
30   Economics
He has to send money home to his old
parents who live in a village near
Ramgarh. His father a landless
labourer, depends on Ram Saran and
his brother who lives in Hazaribagh,
for sustenance. Ram Saran lives in a
one-room rented house in a crowded
basti in the outskirts of the city. It’s a
temporary shack built of bricks and
clay tiles. His wife Santa Devi, works
as a part time maid in a few houses
and manages to earn another Rs 800.
They manage a meagre meal of dal and
rice twice a day, but there’s never
enough for all of them. His elder son
works as a helper in a tea shop to
supplement the family income and
earns another Rs 300, while his 10-
year-old daughter takes care of the
younger siblings. None of the children
go to school. They have only two pairs
of hand-me-down clothes each. New
ones are bought only when the old
clothes become unwearable. Shoes are
a luxury. The younger kids are
undernourished. They have no access
to healthcare when they fall ill.
Rural case
Lakha Singh belongs to a small village
near Meerut in Uttar Pradesh. His
family doesn’t own any land, so they
do odd jobs for the big farmers. Work
is erratic and so is income. At times
they get paid Rs 50 for a hard day’s
work. But often it’s in kind like a few
kilograms of wheat or dal or even
vegetables for toiling in the farm
through the day. The family of eight
cannot always manage two square
meals a day. Lakha lives in a kuchha
hut on the outskirts of the village.
The women of the family spend the
day chopping fodder and collecting
firewood in the fields. His father a
TB patient, passed away two years
ago due to lack of medication. His
mother now suffers from the same
disease and life is slowly ebbing away.
Although, the village has a primary
school, Lakha never went there. He
had to start earning when he was 10
years old. New clothes happen once
in a few years. Even soap and oil are
a luxury for the family.
Study the above cases of poverty
and discuss the following issues
related to poverty:
• Landlessness
• Unemployment
• Size of families
• Illiteracy
• Poor health/malnutrition
• Child labour
• Helplessness
Picture 3.2  Story  of Lakha Singh
2020-21
Page 3


  Poverty as a Challenge  29
Overview
This chapter deals with one of the most
difficult challenges faced by independent
India—poverty. After discussing this
multi-dimensional problem through
examples, the chapter discusses the way
poverty is seen in social sciences. Poverty
trends in India and the world are
illustrated through the concept of the
poverty line. Causes of poverty as well as
anti-poverty measures taken by the
government are also discussed. The
chapter ends with broadening the official
concept of poverty into human poverty.
Introduction
In our daily life, we come across many
people who we think are poor. They could
be landless labourers in villages or people
living in overcrowded jhuggis in cities. They
could be daily wage workers at
construction sites or child workers in
Poverty as a Challenge Chapter
dhabas. They could also be beggars with
children in tatters. We see poverty all
around us. In fact, every fourth person in
India is poor. This means, roughly 270
million (or 27 crore) people in India live
in poverty 2011-12. This also means that
India has the largest single concentration
of the poor in the world. This illustrates
the seriousness of the challenge.
Two Typical Cases of Poverty
Urban Case
Thirty-three year old Ram Saran works
as a daily-wage labourer in a wheat
flour mill near Ranchi in Jharkhand.
He manages to earn around Rs 1,500
a month when he finds employment,
which is not often. The money is not
enough to sustain his family of six—
that includes his wife and four children
aged between 12 years to six months.
Poverty as a Challenge
3 3
Picture 3.1  Story  of Ram Saran
2020-21
30   Economics
He has to send money home to his old
parents who live in a village near
Ramgarh. His father a landless
labourer, depends on Ram Saran and
his brother who lives in Hazaribagh,
for sustenance. Ram Saran lives in a
one-room rented house in a crowded
basti in the outskirts of the city. It’s a
temporary shack built of bricks and
clay tiles. His wife Santa Devi, works
as a part time maid in a few houses
and manages to earn another Rs 800.
They manage a meagre meal of dal and
rice twice a day, but there’s never
enough for all of them. His elder son
works as a helper in a tea shop to
supplement the family income and
earns another Rs 300, while his 10-
year-old daughter takes care of the
younger siblings. None of the children
go to school. They have only two pairs
of hand-me-down clothes each. New
ones are bought only when the old
clothes become unwearable. Shoes are
a luxury. The younger kids are
undernourished. They have no access
to healthcare when they fall ill.
Rural case
Lakha Singh belongs to a small village
near Meerut in Uttar Pradesh. His
family doesn’t own any land, so they
do odd jobs for the big farmers. Work
is erratic and so is income. At times
they get paid Rs 50 for a hard day’s
work. But often it’s in kind like a few
kilograms of wheat or dal or even
vegetables for toiling in the farm
through the day. The family of eight
cannot always manage two square
meals a day. Lakha lives in a kuchha
hut on the outskirts of the village.
The women of the family spend the
day chopping fodder and collecting
firewood in the fields. His father a
TB patient, passed away two years
ago due to lack of medication. His
mother now suffers from the same
disease and life is slowly ebbing away.
Although, the village has a primary
school, Lakha never went there. He
had to start earning when he was 10
years old. New clothes happen once
in a few years. Even soap and oil are
a luxury for the family.
Study the above cases of poverty
and discuss the following issues
related to poverty:
• Landlessness
• Unemployment
• Size of families
• Illiteracy
• Poor health/malnutrition
• Child labour
• Helplessness
Picture 3.2  Story  of Lakha Singh
2020-21
Poverty as a challenge    31
These two typical cases illustrate many
dimensions of poverty. They show that
poverty means hunger and lack of shelter.
It also is a situation in which parents are
not able to send their children to school
or a situation where sick people cannot
afford treatment. Poverty also means lack
of clean water and sanitation facilities. It
also means lack of a regular job at a
minimum decent level. Above all it means
living with a sense of helplessness. Poor
people are in a situation in which they
are ill-treated at almost every place, in
farms, factories, government offices,
hospitals, railway stations etc. Obviously,
nobody would like to live in poverty.
One of the biggest challenges of
independent India has been to bring
millions of its people out of abject poverty.
Mahatama Gandhi always insisted that
India would be truly independent only
when the poorest of its people become free
of human suffering.
Poverty as seen by social scientists
Since poverty has many facets, social
scientists look at it through a variety of
indicators. Usually the indicators used
relate to the levels of income and
consumption. But now poverty is looked
through other social indicators like
illiteracy level, lack of general resistance
due to malnutrition, lack of access to
healthcare, lack of job opportunities, lack
of access to safe drinking water,
sanitation etc. Analysis of poverty based
on social exclusion and vulnerability is
now becoming very common (see box).
both a cause as well as a
consequence of poverty in the usual
sense. Broadly, it is a process through
which individuals or groups are
excluded from facilities, benefits and
opportunities that others (their
“betters”) enjoy. A typical example is
the working of the caste system in
India in which people belonging to
certain castes are excluded from
equal opportunities. Social exclusion
thus may lead to, but can cause more
damage than, having a very low
income.
Vulnerability
Vulnerability to poverty is a measure,
which describes the greater
probability of certain communities
(say, members of a backward caste)
or individuals (such as a widow or a
physically handicapped person) of
becoming, or remaining, poor in the
coming years. Vulnerability is
determined by the options available
to different communities for finding
an alternative living in terms of
assets, education, health and job
opportunities. Further, it is analysed
on the basis of the greater risks these
groups face at the time of natural
disasters (earthquakes, tsunami),
terrorism etc. Additional analysis is
made of their social and economic
ability to handle these risks. In fact,
vulnerability describes the greater
probability of being more adversely
affected than other people when bad
time comes for everybody, whether a
flood or an earthquake or simply a
fall in the availability of jobs!
Social exclusion
According to this concept, poverty
must be seen in terms of the poor
having to live only in a poor
surrounding with other poor people,
excluded from enjoying social equality
of better-off people in better
surroundings. Social exclusion can be
Poverty Line
At the centre of the discussion on poverty
is usually the concept of the “poverty line”.
A common method used to measure
poverty is based on the income or
2020-21
Page 4


  Poverty as a Challenge  29
Overview
This chapter deals with one of the most
difficult challenges faced by independent
India—poverty. After discussing this
multi-dimensional problem through
examples, the chapter discusses the way
poverty is seen in social sciences. Poverty
trends in India and the world are
illustrated through the concept of the
poverty line. Causes of poverty as well as
anti-poverty measures taken by the
government are also discussed. The
chapter ends with broadening the official
concept of poverty into human poverty.
Introduction
In our daily life, we come across many
people who we think are poor. They could
be landless labourers in villages or people
living in overcrowded jhuggis in cities. They
could be daily wage workers at
construction sites or child workers in
Poverty as a Challenge Chapter
dhabas. They could also be beggars with
children in tatters. We see poverty all
around us. In fact, every fourth person in
India is poor. This means, roughly 270
million (or 27 crore) people in India live
in poverty 2011-12. This also means that
India has the largest single concentration
of the poor in the world. This illustrates
the seriousness of the challenge.
Two Typical Cases of Poverty
Urban Case
Thirty-three year old Ram Saran works
as a daily-wage labourer in a wheat
flour mill near Ranchi in Jharkhand.
He manages to earn around Rs 1,500
a month when he finds employment,
which is not often. The money is not
enough to sustain his family of six—
that includes his wife and four children
aged between 12 years to six months.
Poverty as a Challenge
3 3
Picture 3.1  Story  of Ram Saran
2020-21
30   Economics
He has to send money home to his old
parents who live in a village near
Ramgarh. His father a landless
labourer, depends on Ram Saran and
his brother who lives in Hazaribagh,
for sustenance. Ram Saran lives in a
one-room rented house in a crowded
basti in the outskirts of the city. It’s a
temporary shack built of bricks and
clay tiles. His wife Santa Devi, works
as a part time maid in a few houses
and manages to earn another Rs 800.
They manage a meagre meal of dal and
rice twice a day, but there’s never
enough for all of them. His elder son
works as a helper in a tea shop to
supplement the family income and
earns another Rs 300, while his 10-
year-old daughter takes care of the
younger siblings. None of the children
go to school. They have only two pairs
of hand-me-down clothes each. New
ones are bought only when the old
clothes become unwearable. Shoes are
a luxury. The younger kids are
undernourished. They have no access
to healthcare when they fall ill.
Rural case
Lakha Singh belongs to a small village
near Meerut in Uttar Pradesh. His
family doesn’t own any land, so they
do odd jobs for the big farmers. Work
is erratic and so is income. At times
they get paid Rs 50 for a hard day’s
work. But often it’s in kind like a few
kilograms of wheat or dal or even
vegetables for toiling in the farm
through the day. The family of eight
cannot always manage two square
meals a day. Lakha lives in a kuchha
hut on the outskirts of the village.
The women of the family spend the
day chopping fodder and collecting
firewood in the fields. His father a
TB patient, passed away two years
ago due to lack of medication. His
mother now suffers from the same
disease and life is slowly ebbing away.
Although, the village has a primary
school, Lakha never went there. He
had to start earning when he was 10
years old. New clothes happen once
in a few years. Even soap and oil are
a luxury for the family.
Study the above cases of poverty
and discuss the following issues
related to poverty:
• Landlessness
• Unemployment
• Size of families
• Illiteracy
• Poor health/malnutrition
• Child labour
• Helplessness
Picture 3.2  Story  of Lakha Singh
2020-21
Poverty as a challenge    31
These two typical cases illustrate many
dimensions of poverty. They show that
poverty means hunger and lack of shelter.
It also is a situation in which parents are
not able to send their children to school
or a situation where sick people cannot
afford treatment. Poverty also means lack
of clean water and sanitation facilities. It
also means lack of a regular job at a
minimum decent level. Above all it means
living with a sense of helplessness. Poor
people are in a situation in which they
are ill-treated at almost every place, in
farms, factories, government offices,
hospitals, railway stations etc. Obviously,
nobody would like to live in poverty.
One of the biggest challenges of
independent India has been to bring
millions of its people out of abject poverty.
Mahatama Gandhi always insisted that
India would be truly independent only
when the poorest of its people become free
of human suffering.
Poverty as seen by social scientists
Since poverty has many facets, social
scientists look at it through a variety of
indicators. Usually the indicators used
relate to the levels of income and
consumption. But now poverty is looked
through other social indicators like
illiteracy level, lack of general resistance
due to malnutrition, lack of access to
healthcare, lack of job opportunities, lack
of access to safe drinking water,
sanitation etc. Analysis of poverty based
on social exclusion and vulnerability is
now becoming very common (see box).
both a cause as well as a
consequence of poverty in the usual
sense. Broadly, it is a process through
which individuals or groups are
excluded from facilities, benefits and
opportunities that others (their
“betters”) enjoy. A typical example is
the working of the caste system in
India in which people belonging to
certain castes are excluded from
equal opportunities. Social exclusion
thus may lead to, but can cause more
damage than, having a very low
income.
Vulnerability
Vulnerability to poverty is a measure,
which describes the greater
probability of certain communities
(say, members of a backward caste)
or individuals (such as a widow or a
physically handicapped person) of
becoming, or remaining, poor in the
coming years. Vulnerability is
determined by the options available
to different communities for finding
an alternative living in terms of
assets, education, health and job
opportunities. Further, it is analysed
on the basis of the greater risks these
groups face at the time of natural
disasters (earthquakes, tsunami),
terrorism etc. Additional analysis is
made of their social and economic
ability to handle these risks. In fact,
vulnerability describes the greater
probability of being more adversely
affected than other people when bad
time comes for everybody, whether a
flood or an earthquake or simply a
fall in the availability of jobs!
Social exclusion
According to this concept, poverty
must be seen in terms of the poor
having to live only in a poor
surrounding with other poor people,
excluded from enjoying social equality
of better-off people in better
surroundings. Social exclusion can be
Poverty Line
At the centre of the discussion on poverty
is usually the concept of the “poverty line”.
A common method used to measure
poverty is based on the income or
2020-21
32    Economics
consumption levels. A person is
considered poor if his or her income or
consumption level falls below a given
“minimum level” necessary to fulfill the
basic needs. What is necessary to satisfy
the basic needs is different at different
times and in different countries.
Therefore, poverty line may vary with time
and place. Each country uses an
imaginary line that is considered
appropriate for its existing level of
development and its accepted minimum
social norms. For example, a person not
having a car in the United States may be
considered poor. In India, owning of a car
is still considered a luxury.
While determining the poverty line in
India, a minimum level of food requirement,
clothing, footwear, fuel and light,
educational and medical requirement, etc.,
are determined for subsistence. These
physical quantities are multiplied by their
prices in rupees. The present formula for
food requirement while estimating the
poverty line is based on the desired
calorie requirement. Food items, such as
cereals, pulses, vegetable, milk, oil, sugar,
etc., together provide these needed
calories. The calorie needs vary depending
on age, sex and the type of work that a
person does. The accepted average calorie
requirement in India is 2400 calories per
person per day in rural areas and 2100
calories per person per day in urban
areas. Since people living in rural areas
engage themselves in more physical work,
calorie requirements in rural areas are
considered to be higher than in urban
areas. The monetary expenditure per
capita needed for buying these calorie
requirements in terms of food grains, etc.,
is revised periodically taking into
consideration the rise in prices.
On the basis of these calculations, for
the year 2011–12, the poverty line for a
person was fixed at Rs 816 per month for
rural areas and Rs 1000 for urban areas.
Despite less calorie requirement,the
higher amount for urban areas has been
fixed because of high prices of many
essential products in urban centres. In
this way in the year 2011-12, a family of
five members living in rural areas and
earning less than about Rs 4,080 per
month will be below the poverty line. A
similar family in the urban areas would
need a minimum of Rs 5,000 per month
to meet their basic requirements. The
poverty line is estimated periodically
(normally every five years) by conducting
sample surveys. These surveys are
carried out by the National Sample Survey
Organisation (NSSO). However, for
making comparisons between developing
countries, many international
organisations like the World Bank use a
uniform standard for the poverty line:
minimum availability of the equivalent of
$1.90 per person per day (2011, ppp).
  Let’s Discuss
Discuss the following:
• Why do different countries use different
poverty lines?
• What do you think would be the
“minimum necessary level” in your
locality?
Poverty Estimates
It is clear from Table 3.1 that there is a
substantial decline in poverty ratios in
India from about 45 per cent in 1993-94
to 37.2 per cent in 2004–05. The
proportion of people below poverty line
further came down to about 22 per cent
in 2011–12. If the trend continues, people
below poverty line may come down to less
than 20 per cent in the next few years.
Although the percentage of people living
under poverty declined in the earlier two
decades (1973–1993), the number of poor
declined from 407 million in 2004–05 to
270 million in 2011–12 with an average
annual decline of 2.2 percentage points
during 2004–05 to 2011–12.
2020-21
Page 5


  Poverty as a Challenge  29
Overview
This chapter deals with one of the most
difficult challenges faced by independent
India—poverty. After discussing this
multi-dimensional problem through
examples, the chapter discusses the way
poverty is seen in social sciences. Poverty
trends in India and the world are
illustrated through the concept of the
poverty line. Causes of poverty as well as
anti-poverty measures taken by the
government are also discussed. The
chapter ends with broadening the official
concept of poverty into human poverty.
Introduction
In our daily life, we come across many
people who we think are poor. They could
be landless labourers in villages or people
living in overcrowded jhuggis in cities. They
could be daily wage workers at
construction sites or child workers in
Poverty as a Challenge Chapter
dhabas. They could also be beggars with
children in tatters. We see poverty all
around us. In fact, every fourth person in
India is poor. This means, roughly 270
million (or 27 crore) people in India live
in poverty 2011-12. This also means that
India has the largest single concentration
of the poor in the world. This illustrates
the seriousness of the challenge.
Two Typical Cases of Poverty
Urban Case
Thirty-three year old Ram Saran works
as a daily-wage labourer in a wheat
flour mill near Ranchi in Jharkhand.
He manages to earn around Rs 1,500
a month when he finds employment,
which is not often. The money is not
enough to sustain his family of six—
that includes his wife and four children
aged between 12 years to six months.
Poverty as a Challenge
3 3
Picture 3.1  Story  of Ram Saran
2020-21
30   Economics
He has to send money home to his old
parents who live in a village near
Ramgarh. His father a landless
labourer, depends on Ram Saran and
his brother who lives in Hazaribagh,
for sustenance. Ram Saran lives in a
one-room rented house in a crowded
basti in the outskirts of the city. It’s a
temporary shack built of bricks and
clay tiles. His wife Santa Devi, works
as a part time maid in a few houses
and manages to earn another Rs 800.
They manage a meagre meal of dal and
rice twice a day, but there’s never
enough for all of them. His elder son
works as a helper in a tea shop to
supplement the family income and
earns another Rs 300, while his 10-
year-old daughter takes care of the
younger siblings. None of the children
go to school. They have only two pairs
of hand-me-down clothes each. New
ones are bought only when the old
clothes become unwearable. Shoes are
a luxury. The younger kids are
undernourished. They have no access
to healthcare when they fall ill.
Rural case
Lakha Singh belongs to a small village
near Meerut in Uttar Pradesh. His
family doesn’t own any land, so they
do odd jobs for the big farmers. Work
is erratic and so is income. At times
they get paid Rs 50 for a hard day’s
work. But often it’s in kind like a few
kilograms of wheat or dal or even
vegetables for toiling in the farm
through the day. The family of eight
cannot always manage two square
meals a day. Lakha lives in a kuchha
hut on the outskirts of the village.
The women of the family spend the
day chopping fodder and collecting
firewood in the fields. His father a
TB patient, passed away two years
ago due to lack of medication. His
mother now suffers from the same
disease and life is slowly ebbing away.
Although, the village has a primary
school, Lakha never went there. He
had to start earning when he was 10
years old. New clothes happen once
in a few years. Even soap and oil are
a luxury for the family.
Study the above cases of poverty
and discuss the following issues
related to poverty:
• Landlessness
• Unemployment
• Size of families
• Illiteracy
• Poor health/malnutrition
• Child labour
• Helplessness
Picture 3.2  Story  of Lakha Singh
2020-21
Poverty as a challenge    31
These two typical cases illustrate many
dimensions of poverty. They show that
poverty means hunger and lack of shelter.
It also is a situation in which parents are
not able to send their children to school
or a situation where sick people cannot
afford treatment. Poverty also means lack
of clean water and sanitation facilities. It
also means lack of a regular job at a
minimum decent level. Above all it means
living with a sense of helplessness. Poor
people are in a situation in which they
are ill-treated at almost every place, in
farms, factories, government offices,
hospitals, railway stations etc. Obviously,
nobody would like to live in poverty.
One of the biggest challenges of
independent India has been to bring
millions of its people out of abject poverty.
Mahatama Gandhi always insisted that
India would be truly independent only
when the poorest of its people become free
of human suffering.
Poverty as seen by social scientists
Since poverty has many facets, social
scientists look at it through a variety of
indicators. Usually the indicators used
relate to the levels of income and
consumption. But now poverty is looked
through other social indicators like
illiteracy level, lack of general resistance
due to malnutrition, lack of access to
healthcare, lack of job opportunities, lack
of access to safe drinking water,
sanitation etc. Analysis of poverty based
on social exclusion and vulnerability is
now becoming very common (see box).
both a cause as well as a
consequence of poverty in the usual
sense. Broadly, it is a process through
which individuals or groups are
excluded from facilities, benefits and
opportunities that others (their
“betters”) enjoy. A typical example is
the working of the caste system in
India in which people belonging to
certain castes are excluded from
equal opportunities. Social exclusion
thus may lead to, but can cause more
damage than, having a very low
income.
Vulnerability
Vulnerability to poverty is a measure,
which describes the greater
probability of certain communities
(say, members of a backward caste)
or individuals (such as a widow or a
physically handicapped person) of
becoming, or remaining, poor in the
coming years. Vulnerability is
determined by the options available
to different communities for finding
an alternative living in terms of
assets, education, health and job
opportunities. Further, it is analysed
on the basis of the greater risks these
groups face at the time of natural
disasters (earthquakes, tsunami),
terrorism etc. Additional analysis is
made of their social and economic
ability to handle these risks. In fact,
vulnerability describes the greater
probability of being more adversely
affected than other people when bad
time comes for everybody, whether a
flood or an earthquake or simply a
fall in the availability of jobs!
Social exclusion
According to this concept, poverty
must be seen in terms of the poor
having to live only in a poor
surrounding with other poor people,
excluded from enjoying social equality
of better-off people in better
surroundings. Social exclusion can be
Poverty Line
At the centre of the discussion on poverty
is usually the concept of the “poverty line”.
A common method used to measure
poverty is based on the income or
2020-21
32    Economics
consumption levels. A person is
considered poor if his or her income or
consumption level falls below a given
“minimum level” necessary to fulfill the
basic needs. What is necessary to satisfy
the basic needs is different at different
times and in different countries.
Therefore, poverty line may vary with time
and place. Each country uses an
imaginary line that is considered
appropriate for its existing level of
development and its accepted minimum
social norms. For example, a person not
having a car in the United States may be
considered poor. In India, owning of a car
is still considered a luxury.
While determining the poverty line in
India, a minimum level of food requirement,
clothing, footwear, fuel and light,
educational and medical requirement, etc.,
are determined for subsistence. These
physical quantities are multiplied by their
prices in rupees. The present formula for
food requirement while estimating the
poverty line is based on the desired
calorie requirement. Food items, such as
cereals, pulses, vegetable, milk, oil, sugar,
etc., together provide these needed
calories. The calorie needs vary depending
on age, sex and the type of work that a
person does. The accepted average calorie
requirement in India is 2400 calories per
person per day in rural areas and 2100
calories per person per day in urban
areas. Since people living in rural areas
engage themselves in more physical work,
calorie requirements in rural areas are
considered to be higher than in urban
areas. The monetary expenditure per
capita needed for buying these calorie
requirements in terms of food grains, etc.,
is revised periodically taking into
consideration the rise in prices.
On the basis of these calculations, for
the year 2011–12, the poverty line for a
person was fixed at Rs 816 per month for
rural areas and Rs 1000 for urban areas.
Despite less calorie requirement,the
higher amount for urban areas has been
fixed because of high prices of many
essential products in urban centres. In
this way in the year 2011-12, a family of
five members living in rural areas and
earning less than about Rs 4,080 per
month will be below the poverty line. A
similar family in the urban areas would
need a minimum of Rs 5,000 per month
to meet their basic requirements. The
poverty line is estimated periodically
(normally every five years) by conducting
sample surveys. These surveys are
carried out by the National Sample Survey
Organisation (NSSO). However, for
making comparisons between developing
countries, many international
organisations like the World Bank use a
uniform standard for the poverty line:
minimum availability of the equivalent of
$1.90 per person per day (2011, ppp).
  Let’s Discuss
Discuss the following:
• Why do different countries use different
poverty lines?
• What do you think would be the
“minimum necessary level” in your
locality?
Poverty Estimates
It is clear from Table 3.1 that there is a
substantial decline in poverty ratios in
India from about 45 per cent in 1993-94
to 37.2 per cent in 2004–05. The
proportion of people below poverty line
further came down to about 22 per cent
in 2011–12. If the trend continues, people
below poverty line may come down to less
than 20 per cent in the next few years.
Although the percentage of people living
under poverty declined in the earlier two
decades (1973–1993), the number of poor
declined from 407 million in 2004–05 to
270 million in 2011–12 with an average
annual decline of 2.2 percentage points
during 2004–05 to 2011–12.
2020-21
  Poverty as a Challenge  33
  Let’s Discuss
Study Table 3.1 and answer the following
questions:
• Even if poverty ratio declined between
1993–94 and 2004–05, why did the
number of poor remain at about 407
million?
• Are the dynamics of poverty reduction
the same in rural and urban India?
Vulnerable Groups
The proportion of people below poverty line
is also not same for all social groups and
economic categories in India. Social
groups, which are most vulnerable to
poverty are Scheduled Caste and
Scheduled Tribe households. Similarly,
Table 3.1: Estimates of Poverty in India (Tendulkar Methodology)
Poverty ratio (%) Number of poor (in millions)
Year Rural Urban Total Rural Urban Combined
1993–94 507 32 45 329 75 404
2004–05 42 26 37 326 81 407
2009–10 34 21 30 278 76 355
2011–12 26 14 22 217 53 270
Source: Source: Source: Source: Source:  Economic Survey 2017–18
among the economic groups, the most
vulnerable groups are the rural
agricultural labour households and the
urban casual labour households. Graph
3.1 shows the percentage of poor people
in all these groups. Although the average
for people below poverty line for all groups
in India is 22, 43 out of 100 people
belonging to Scheduled Tribes are not
able to meet their basic needs. Similarly,
34 per cent of casual workers in urban
areas are below poverty line. About 34
per cent of casual labour farm (in rural
areas) and 29 per cent of Scheduled
Castes are also poor. The double
disadvantage of being a landless casual
wage labour household in the socially
disadvantaged social groups of the
Graph 3.1: Poverty in India 2011–12: Most Vulnerable Groups
Source: Source: Source: Source: Source:  www.worldbank.org/2016/India-s-Poverty-Profile
2020-21
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