Class 9 Economics Chapter 3 Notes - Poverty as a Challenge

Introduction

In independent India, poverty is a major issue, with many people lacking the money and resources needed for a decent life. This includes examples such as landless labourers, overcrowded urban slums, and child workers. As of 2011-12, approximately 270 million (or 27 crore) people in India live in poverty, making it the country with the largest concentration of poor individuals globally. This highlights the seriousness of the challenge.

One of the biggest challenges for independent India has been lifting millions of its citizens out of severe poverty. This is a critical issue that both the government and experts are striving to address.

Mahatma Gandhi believed that India would only be truly independent when the poorest people were free from suffering.

What is Poverty?

Poverty involves hunger and the lack of shelter. It is a situation where parents cannot send their children to school or where sick individuals cannot afford medical care.

Poverty also signifies the absence of clean water and sanitation facilities, as well as a lack of regular employment at a decent minimum level. Most importantly, it means living with a sense of helplessness. Those who are poor often face mistreatment in various places, including farms, factories, government offices, hospitals, and railway stations.

• A lack of clean water and sanitation facilities.
• A lack of a regular job at a minimum decent level.
• Living with a sense of helplessness.
• Experiencing ill-treatment in various settings, including farms, factories, government offices, hospitals, and railway stations.

Two Typical Cases of Poverty

• Poverty is the condition where individuals or communities do not have enough resources to meet a basic standard of living.
• It often includes issues like hunger, no proper shelter, limited access to clean water and sanitation, and a lack of job opportunities.
• In independent India, poverty is a major concern, as the country can only be truly independent when its poorest citizens do not suffer.
• Approximately one in five people in India, or about 270 million individuals, live in poverty, making it the country with the largest number of poor people in the world.
• Poverty is a complex issue that impacts many areas of life.

Urban Case

• Ram Saran is a thirty-three-year-old daily wage labourer at a flour mill near Ranchi, Jharkhand.
• He earns about Rs 1,500 a month when he can find work, which is infrequent.
• This amount is not enough to support his family of six, including his wife and four children aged from 12 years to six months.Story of Ram Saran
• After paying rent, there is no money left for his elderly parents living in the village.
• The family resides in a one-room rented house on the city's outskirts.
• The children are undernourished and lack proper clothing, shoes, and healthcare access.

Rural Case

• Lakha Singh is a landless labourer in a small village near Meerut, Uttar Pradesh.
• He earns Rs 50 a day doing odd jobs for farmers and sometimes receives food or other goods instead of cash.
• His family of eight struggles to have two meals a day.
• Lakha lives in a kuchha hut on the village outskirts.
• Despite having a primary school in the village, Lakha never attended; he had to start working at the age of 10.
• His father, who had tuberculosis, died two years ago due to a lack of treatment, and now his mother suffers from the same illness.Cycle of Poverty
• New clothes are a rare luxury, and even basic items like soap and oil are unaffordable for them.
• They have no access to healthcare and cannot cover basic needs.
• These two examples highlight several aspects of poverty.
• They demonstrate that poverty involves hunger and inadequate shelter.
• It also means that parents cannot send their children to school or afford healthcare for the sick.
• Poverty signifies a lack of clean water and sanitation, along with the absence of stable, decent employment.
• Above all, it brings a feeling of helplessness.
• Poor individuals often face bad treatment in many places, including farms, factories, government offices, hospitals, and railway stations.
• Clearly, no one wishes to live in poverty.
• One of the greatest challenges for independent India has been to lift millions of its people out of severe poverty.
• Mahatma Gandhi always insisted that India would only be truly free when the poorest of its people are relieved from suffering.

Poverty as Seen by Social Scientists

Poverty is usually assessed by looking at income and spending. However, modern discussions also include other important factors like education, health, job opportunities, and access to clean water and sanitation. More recently, the analysis of poverty focuses on aspects such as social exclusion and vulnerability.

  Analysis of Poverty 

Poverty Line

Central to the discussions on poverty is the idea of the poverty line, which acts as a benchmark to identify who is considered poor based on their income.

Social Exclusion

• Poverty is not just about having low income; it also involves living in poor conditions and being excluded from the advantages that wealthier individuals have.
• Social exclusion can lead to poverty and can have more serious consequences than merely having a low income.
• Certain individuals or groups may be systematically denied access to services, benefits, and opportunities enjoyed by others.
• For instance, the caste system in India exemplifies social exclusion by preventing specific castes from having equal opportunities and social equality.
• The effects of social exclusion can be significant, as it limits access to resources and opportunities beyond just financial measures.

Vulnerability

Vulnerability refers to the higher likelihood of being negatively impacted compared to others when facing adverse events like floods, earthquakes, or job shortages. Several factors influence vulnerability:

• Community and Individual Factors: Members of disadvantaged communities (such as backward castes) or individuals with specific challenges (like widows or those with disabilities) are often more vulnerable.
• Options and Resources: Access to assets, education, healthcare, and job opportunities greatly affects vulnerability.
• Risk Exposure: Greater vulnerability is linked to increased risks from natural disasters (like earthquakes and tsunamis) and other crises.

Additionally, many researchers suggest expanding the definition of poverty to include human poverty, which covers not only income but also aspects like education, housing, healthcare, job security, self-esteem, and freedom from discrimination based on caste or gender. The ongoing issue of child labour further complicates the understanding of poverty. As society progresses, the definition of poverty continues to change, making its elimination a challenging goal.

In essence, poverty has numerous aspects, and while traditionally assessed through income levels, modern analyses increasingly consider social factors and the concepts of social exclusion and vulnerability. Addressing poverty effectively requires a thorough understanding of these elements.

Poverty Line

• A common way to measure poverty is by looking at income or consumption levels. A person is considered poor if their income or consumption is below a certain "minimum level" needed to meet basic needs. This minimum varies over time and between countries. Each country sets its own poverty line based on its level of development and social norms.

Determining the Poverty Line in India

• When determining the poverty line in India, a basic level of needs is identified, which includes food, clothing, footwear, fuel, light, education, and healthcare. The amount of each need is multiplied by current prices in rupees. The formula for food needs is based on the required calorie intake. Foods like cereals, pulses, vegetables, milk, oil, and sugar provide these necessary calories. The calorie requirements differ by age, sex, and type of work.
• The average calorie needs in India are set at 2400 calories per person per day for rural areas and 2100 calories per person per day for urban areas. Since rural residents typically engage in more physical work, their calorie requirements are higher.Pop of India above & below Poverty Line
• For the year 2011-12, the poverty line was established at Rs. 816 per month in rural areas and Rs. 1000 per month in urban areas. Thus, a family of five in rural areas earning less than about Rs. 4080 per month would be considered below the poverty line, while a similar family in urban areas would need at least Rs. 5000 per month.
• The poverty line is updated periodically, typically every five years, through sample surveys conducted by the National Sample Survey Organisation (NSSO). To compare developing countries, many international organisations, like the World Bank, use a standard poverty line of a minimum availability of the equivalent of $1.90 per person per day (as per 2011, PPP).

Is the Present Methodology of Poverty Estimation Appropriate?

• No, the current method for estimating poverty is not suitable. The official definition only addresses a small part of what poverty truly represents for individuals. It mainly focuses on a 'minimum' living standard, rather than what could be considered a 'reasonable' standard of living.
• Many experts argue that we need to expand our understanding to include human poverty. Poverty should be evaluated not just by income but also through various social factors, including:
  • Illiteracy
  • Malnutrition
  • Access to healthcare
• Moreover, it is essential to consider significant issues such as social exclusion and vulnerability.
• Questions arise about whether individuals have education, shelter, or how the concept of the 'poverty line' is defined.

Poverty Estimates

• There has been a significant drop in poverty ratios in India, from about 45 percent in 1993-94 to 37 percent in 2004-05. The number of people living in poverty decreased from 407 million in 2004-05 to 270 million in 2011-12, with an average annual decline of 2.2 percentage points during this time.
• The way poverty is reduced varies between rural and urban areas of India, which shows the need for specific strategies to tackle poverty.
• If this trend continues, the percentage of people below the poverty line could fall to less than 20 percent in the coming years.

Vulnerable Groups

• The number of people living below the poverty line varies across different social and economic groups in India. The most affected groups are those from the Scheduled Caste and Scheduled Tribe households.
• In terms of economic status, the groups most at risk are rural agricultural labour households and urban casual labour households.
• While the overall average of people below the poverty line in India is 22%, 43 out of 100 individuals from Scheduled Tribes struggle to meet their basic needs. Likewise, 34% of casual workers in cities live in poverty. Additionally, around 34% of casual labourers in rural areas and 29% of those from Scheduled Castes are also poor.
• The severe challenges faced by landless casual wage labour households from socially disadvantaged groups, such as Scheduled Castes or Scheduled Tribes, illustrate the gravity of the issue. Recent studies indicate that, apart from Scheduled Tribe households, all other groups—Scheduled Castes, rural agricultural labourers, and urban casual labour households—have experienced a decline in poverty since the 1990s.
• Women, the elderly, and female infants often lack equal access to resources within their families. Although all family members in poor households face hardship, some experience greater suffering. As a result, women, children (especially girls), and the elderly are among the most impoverished.

Story of Sivaraman

• Sivaraman resides in a small village close to Karur town in Tamil Nadu. He belongs to the Aryunthathiyar caste (cobbler) and currently works as an agricultural labourer earning Rs 160 per day, but this only lasts for five to six months a year. At other times, he takes on various odd jobs in town.
• His family consists of eight members. Sivaraman's wife, Sasikala, works alongside him but struggles to find employment. When she does work, she earns only Rs 100 per day for the same tasks as Sivaraman.
• Due to their financial situation, their children do not attend school. The girls are not sent to school and often miss out on basic nutrition, while their youngest child, a son, occasionally receives milk. The parents aspire for his education, reflecting the inequality within the family.
• The family faces considerable difficulty in managing even two meals a day, highlighting the extreme economic hardships they endure.

Story of Sivaraman

Inter-State Disparities

• Recent estimates indicate that while the all-India Head Count Ratio (HCR) was 21.9 percent in 2011-12, states such as Madhya Pradesh, Assam, Uttar Pradesh, Bihar, and Odisha had poverty levels exceeding the national average. Bihar and Odisha are the poorest states, with poverty rates of 33.7 and 32.6 percent, respectively. Urban poverty is also notably high in Odisha, Madhya Pradesh, Bihar, and Uttar Pradesh.
• In contrast, there has been a marked reduction in poverty in states like Kerala, Maharashtra, Andhra Pradesh, Tamil Nadu, Gujarat, and West Bengal. Punjab and Haryana have low poverty rates due to robust agricultural growth. Kerala has concentrated on human resource development, whereas West Bengal has enacted essential land reform measures to alleviate poverty. In Andhra Pradesh and Tamil Nadu, effective public distribution systems have played a key role in improving the poverty ratio.

Poverty Among Social Groups

• The percentage of people living below the poverty line varies among different social groups and economic categories in India. The most vulnerable groups include households from Scheduled Castes and Scheduled Tribes, along with rural agricultural labour households and urban casual labour households.

Poverty Ratio in the Selected Indian States- 2011 Census

Global Poverty Scenario

• The percentage of people living in severe economic poverty, which the World Bank defines as living on less than $2.15 per day, has decreased from 16.27 percent in 2010 to 9.05 percent in 2019. Despite this significant reduction in global poverty, there are notable differences between regions.
• Poverty has dropped sharply in China and Southeast Asia due to rapid economic growth and large investments in human development. In China, the poverty rate fell from 2.1 percent in 2014 to 1.2 percent in 2015, and further to 0.1 percent in 2020.
• In South Asia (which includes India, Pakistan, Sri Lanka, Nepal, Bangladesh, Bhutan, Afghanistan, and the Maldives), the rate has also fallen quickly, from 12.8 percent in 2017 to 10.9 percent in 2021. The number of poor people in this region has decreased from 233 million in 2017 to 207 million in 2021.
• In Sub-Saharan Africa, the poverty rate went down from 36.6 percent in 2017 to 35.4 percent in 2019.
• In Latin America and the Caribbean, however, the poverty rate increased from 4.4 percent in 2017 to 4.6 percent in 2021.
• Poverty has also returned in some former socialist countries like Russia, where it was previously not an issue.
• The new sustainable development goals set by the United Nations aim to eliminate all forms of poverty by 2030.

  Global Poverty Index 

Causes of Poverty

• Historical Context: A key historical factor contributing to poverty is the low level of economic development during the British colonial period, which harmed traditional crafts and hindered industrial growth, leading to minimal economic advancement and few job prospects.
• Population Growth: Rapid population growth alongside slow economic progress has resulted in a very low increase in income per person, which has continued to fuel poverty. This slow growth persisted until the 1980s.
• Urban Poverty: While poverty was originally a rural issue, it has now also become prevalent in urban areas. Many individuals have begun living in slums on the outskirts of cities due to a lack of suitable job opportunities.
• Irrigation and Green Revolution: Although the Green Revolution generated job opportunities in agriculture, its benefits were restricted to certain regions, leaving many job seekers unable to find work in this sector.
• Insufficient Job Creation: There are few job opportunities in both the public and private sectors, which results in some employment but not enough to meet the demand. Many individuals end up in low-income jobs (such as rickshaw drivers, street vendors, and construction workers) and reside in slums.
• Unequal Resource Distribution: Imbalances in land and resource distribution lead to high poverty rates. Significant income inequality is also a result of this unequal allocation of land and resources.
• Ineffective Land Reforms: Major initiatives like land reforms intended to redistribute resources in rural areas have often been poorly implemented by various state governments, failing to effectively tackle rural poverty.
• Social and Religious Expenses: To meet social obligations and participate in religious ceremonies, people in India, including those who are very poor, often spend substantial amounts of money, which worsens their financial difficulties.
• Indebtedness: Small farmers and the poor frequently borrow money for farming inputs and other costs. This high level of debt is both a cause and a consequence of poverty, as many are unable to repay their loans due to their financial situations.

Anti-Poverty Measures

Eliminating poverty is a key objective for India's development. The government's approach focuses on two main ideas:

 1. Promoting economic growth 

 2. Targeted anti-poverty programs.

Economic Growth

• From the 1950s to the early 1980s, there was little growth in per capita income and minimal reduction in poverty.
• Economic growth, which has reached around 6 percent annually, creates opportunities and resources for human development, encouraging people, including girls, to pursue education for better job prospects.
• However, the poor may struggle to benefit directly from the opportunities that arise from economic growth.
• Additionally, growth in the agriculture sector has fallen short of expectations, directly impacting poverty, as many poor people live in rural areas and rely on agriculture.

Need for Targeted Programs

• Given these challenges, there is a clear need for specific anti-poverty programs. One important scheme is the Antyodaya Anna Yozana (AAY), which will be discussed in the next chapter.
• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) ensures 100 days of employment for households in rural areas, providing 220 crore person-days of employment to 4.78 crore households.

Targeted Anti-Poverty Programs

1. Mahatma Gandhi National Rural Employment Guarantee Act, 2005

• Passed in September 2005, this Act guarantees 100 days of assured employment each year to every rural household in 200 districts, later expanded to 600 districts.
• One-third of the jobs are reserved for women.
• The Central Government set up National Employment Guarantee Funds, while state governments established State Employment Guarantee Funds for effective implementation.
• If an applicant is not provided employment within fifteen days, they are entitled to a daily unemployment allowance.
• As of March 2018, daily wage rates range from Rs 281 in Haryana to Rs 168 in Bihar and Jharkhand.

2. National Food for Work Programme (NFWP)

• Launched in 2004 in the 150 most backward districts, this programme is available to all rural poor in need of wage employment and seeking manual unskilled work.

3. Prime Minister Rozgar Yozana (PMRY)

• Initiated in 1993, this scheme aims to create self-employment opportunities.

The outcomes of these programs have been mixed. A significant factor for their limited effectiveness is the lack of proper implementation and accurate targeting. Despite good intentions, the benefits of these schemes do not fully reach those in need. Therefore, recent efforts focus on better monitoring of all poverty alleviation programs.

The Challenges Ahead

Poverty has indeed decreased in India. However, despite this progress, reducing poverty remains the country's most pressing challenge. Significant disparities in poverty levels exist between rural and urban areas, as well as among different states.

Government Schemes for Employment and Poverty Alleviation

1. Prime Minister Rozgar Yozana (PMRY)

• Prime Minister Rozgar Yozana (PMRY) started in 1993.
• The goal of the programme is to create self-employment opportunities for educated unemployed youth in rural areas and support small businesses.
• Participants receive help in setting up their small businesses.

2. Rural Employment Generation Programme (REGP)

• Launched in 1995, the Rural Employment Generation Programme (REGP) aims to create self-employment opportunities in rural areas and small towns.
• A target of creating 2.5 million new jobs has been set under the Tenth Five Year Plan.

3. Swarnajayanti Gram Swarozgar Yojana (SGSY)

• The Swarnajayanti Gram Swarozgar Yojana (SGSY) was launched in 1999.
• This programme aims to lift assisted poor families above the poverty line by organising them into self-help groups.
• It combines bank credit and government subsidies to achieve this goal.

4. Pradhan Mantri Gramodaya Yozana (PMGY)

• Launched in 2000, the Pradhan Mantri Gramodaya Yozana (PMGY) provides additional central assistance to states.
• This assistance is for basic services like primary health, primary education, rural shelter, rural drinking water, and rural electrification.

5. Antyodaya Anna Yozana (AAY)

• Launched in December 2000, the Antyodaya Anna Yozana (AAY) identifies one crore of the poorest families among those Below Poverty Line (BPL).
• These families are part of the targeted public distribution system, identified through a BPL survey by state rural development departments.
• Each eligible family receives 25 kilograms of food grains at subsidised rates: Rs. 2 per kg for wheat and Rs. 3 per kg for rice.
• This quantity increased to 35 kg starting April 2002.
• The scheme expanded twice, adding 5 million BPL families in June 2003 and August 2004, covering a total of 2 crore families under AAY.

Challenges in Implementation

• While these programs are well-intentioned, their effectiveness can vary due to inadequate implementation and improper targeting.
• Overlapping schemes and insufficient monitoring limit the benefits reaching those who truly need them.
• Recent initiatives focus on enhancing the monitoring of all poverty alleviation programmes to ensure their effectiveness.
• Certain social and economic groups are more susceptible to poverty, which is vital for understanding the dynamics of poverty.

The Challenges Ahead

• Poverty has indeed decreased in India; however, despite this progress, reducing poverty continues to be one of India’s most significant challenges.
• There are noticeable disparities in poverty rates between rural and urban areas, as well as among various states.
• Future poverty reduction is anticipated to improve over the next ten to fifteen years, driven mainly by:
  • Increased economic growth
  • Greater emphasis on universal free elementary education
  • Declining population growth
  • Empowerment of women and economically disadvantaged groups
• The official definition of poverty only partially reflects what it means to individuals, focusing on a “minimum” living standard rather than a “reasonable” one.
• Many experts argue that the concept of poverty should expand to include human poverty.
• Even if many people can feed themselves, there are ongoing concerns about their access to education, housing, and other essential services.
• An important initiative in this context is the Antyodaya Anna Yozana (AAY), aimed at ensuring food security for the poorest households.
• The results of these programmes have been varied.
• A key reason for their limited effectiveness is the lack of proper implementation and appropriate targeting.
• Additionally, there has been significant overlap among schemes.
• Despite good intentions, the benefits of these initiatives often do not reach the deserving poor.
• Consequently, recent efforts have concentrated on improving the monitoring of all poverty alleviation programmes.
• Ending poverty is always a moving target that includes achieving gender equality and dignity for the poor, which are even more significant challenges.

Difficult Words

• Social Exclusion: This is when certain people or groups are systematically kept from the rights, opportunities, and resources that others in society have access to, which are essential for being part of the community. It includes various aspects of poverty, such as social, economic, and political factors.
• Vulnerability: This refers to how different communities can find alternative ways to live based on their assets, education, health, and job options. In terms of poverty, it means that some groups are more likely to fall into poverty or be negatively affected by economic downturns or natural disasters because they lack proper social, economic, and environmental protections. Vulnerability also looks at the higher risks these groups face during events like natural disasters and their ability to cope with these challenges.
• Poverty Line: A common way to measure poverty is by looking at income or consumption levels. This financial threshold helps distinguish between those considered poor and those who are not, indicating how widespread poverty is in a country.
• Subsistence Level: The basic amount of resources needed for physical well-being, usually covering essential needs like food, water, and shelter. In poverty assessments, subsistence means the absolute essentials required to stay alive.
• Disguised Unemployment: This happens when more people are doing a job than is necessary. For example, if three people are working when only two are needed, the third person is considered to be disguisedly unemployed because their work does not increase overall productivity.
• Underemployment: This refers to people working less than they would like or in jobs that do not make full use of their skills and qualifications. It shows a waste of human resources.
• Scheduled Castes and Scheduled Tribes: These are specific groups in India that have been historically disadvantaged and are recognised in the Constitution of India. Members of these groups often experience higher levels of poverty and social exclusion.
• Universal Adult Franchise: Also known as universal suffrage, this is the right of all adult citizens to vote in elections without any restrictions based on race, sex, belief, wealth, or social status.
• National Food for Work Programme (NFWP): This initiative aims to reduce poverty by providing food in exchange for work. It focuses on the most underprivileged districts in the country to improve food security while creating jobs.
• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): This important labour law in India guarantees the 'right to work' by providing at least 100 days of paid employment in a year to every rural household whose adult members are willing to do unskilled manual labour.
• Below Poverty Line (BPL): This is a government classification in India used to identify families that are economically disadvantaged and require government support. Families below this line receive benefits from various government programmes.
• Pradhan Mantri Gramodaya Yozana (PMGY): A comprehensive scheme aimed at improving the availability and quality of essential services such as healthcare, education, and rural housing through additional central funding to states.
• Antyodaya Anna Yozana (AAY): A government programme designed to combat chronic hunger and malnutrition by providing highly subsidised food to the poorest members of society.