IASbaba’s Daily Current Affairs – 17th December, 2015

  • December 17, 2015
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IASbaba’s Daily Current Affairs – 17th December, 2015





  • General Studies 1:
    • Population and associated issues, poverty and developmental issues, urbanization, their problems and their remedies; Social empowerment
  • General Studies 2:
    • Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
    • Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections. 
    • Issues relating to development and management of Social Sector or Services relating to Health, Education, Human Resources; Issues relating to poverty and hunger. 
  • General Studies 2:
    • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. 
    • Inclusive growth and issues arising from it. 


Poverty in India: Methodology, Issues, Causes and Impact

What does poverty mean?

  • Poverty implies a condition in which a person is unable to maintain living standard adequate for his physical and mental efficiency. Poverty erodes self-esteem and opportunities to live life to the fullest. The cumulative effect is the wide gap between haves and have not’s.
  • The Human Development Report of 2010, measures poverty in terms of Multidimensional Poverty Index (MPI) replacing Human Poverty Index(HPI) being used since 1987.
  • According to World Bank, Poverty is deprivation in well-being and is multi-dimensional. It includes low incomes and inability to acquire the basic goods and services necessary for survival with dignity.

Dimensions of Poverty:

Poverty may be defined as either absolute or relative. Absolute poverty or destitution refers to the lack of means necessary to meet basic needs such as food, clothing and shelter.

  • Absolute poverty is a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income, but also on access to services.
  • Relative poverty views poverty as dependent on social context, hence relative poverty is a measure of income inequality. Usually, relative poverty is measured as the percentage of population with income less than some fixed proportion of median income.

Poverty estimation:

The estimation of the poverty is done by the planning commission on the basis of large sample survey of the consumer expenditure carried out by the National Sample Survey office(NSSO) carried out after an interval of 5 years.

The Ministry of Rural development conducts the Below Poverty Line(BPL) Census with the objective of identifying the BPL households in rural areas, who could be assisted under various programmes of the ministry.

Different committees on Poverty estimates are:

  • Alagh Committee (1977),
  • Lakdawala Committee (1989)
  • Tendulkar Committee (2005)
  • Saxena committee
  • Hashim Committee


Committees in detail:

Alagh Committee (1979): In 1979, a task force constituted by the Planning Commission for the purpose of poverty estimation, chaired by YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements. As per the recommendations poverty line was devised to be as given below:

Area                            Calories

Rural                           2400

Urban                          2100

Lakdawala Committee (1993): In 1993, an expert group constituted to review methodology for poverty estimation, chaired by DT Lakdawala, made the following suggestions:

  • consumption expenditure should be calculated based on calorie consumption as earlier;
  • state specific poverty lines should be constructed and these should be updated using the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas and Consumer Price Index of Agricultural Labour (CPI-AL) in rural areas;
  • Discontinuation of ‘scaling’ of poverty estimates based on National Accounts Statistics. This assumes that the basket of goods and services used to calculate CPI-IW and CPI-AL reflect the consumption patterns of the poor.

Tendulkar Committee (2009): In 2005, another expert group to review methodology for poverty estimation, chaired by Suresh Tendulkar, was constituted by the Planning Commission to address the following three shortcomings of the previous methods:

  • consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods and services, whereas there were significant changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates;
  • There were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time);
  • Earlier poverty lines assumed that health and education would be provided by the State and formulated poverty lines accordingly.

It recommended four major changes: (i) a shift away from calorie consumption based poverty estimation; (ii) a uniform poverty line basket (PLB) across rural and urban India; (iii) a change in the price adjustment procedure to correct spatial and temporal issues with price adjustment; and (iv) incorporation of private expenditure on health and education while estimating poverty.   The Committee recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates that were used in earlier methods for estimating poverty.

As per Tendulkar committee: Monthly percapita expenditure for Rural is 816 and for Urban is 1000 rs.

Rangarajan Committee: In 2012, the Planning Commission constituted a new expert panel on poverty estimation, chaired by C Rangarajan with the following key objectives: (i) to provide an alternate method to estimate poverty levels and examine whether poverty lines should be fixed solely in terms of a consumption basket or if other criteria are also relevant; (ii) to examine divergence between the consumption estimates based on the NSSO methodology and those emerging from the National Accounts aggregates; (iii) to review international poverty estimation methods and indicate whether based on these, a particular method for empirical poverty estimation can be developed in India, and (iv) to recommend how these estimates of poverty can be linked to eligibility and entitlements under the various schemes of the Government of India.

As per Rangarajan Committee: Monthly expenditure of Family of Five: 4860(RURAL); 7035(URBAN)

Recent Update:

  • A recent World Bank (WB) report brought out poverty ratios across countries. According to these estimates, poverty in India in 2011-12 could be as low as 12.4 per cent if we use “modified mixed reference period” (MMRP), in which there are three recall periods depending on the nature of items.
  • This contrasts with the Rangarajan committee estimates of 29.5 per cent.
  • The poverty line (PL) used by the Rangarajan committee for India was around Rs 1,105 per capita per month.
  • That translates to $2.44 per capita per day, in terms of purchasing power parity. As such, the WB’s PL of $1.90 per capita per day is only about 78 per cent of the PL used by the Rangarajan committee. The lower PL is the reason for the lower poverty ratio estimated by the WB.

Causes of Poverty:

Rural poverty is a multi-dimensional social problem. Its causes are varied. They are as follows:

  1. Climatic factors:

Climatic conditions constitute an important cause of poverty. The hot climate of India reduces the capacity of people especially the ruralites to work for which production severely suffers. Frequent flood, famine, earthquake and cyclone cause heavy damage to agriculture. Moreover, absence of timely rain, excessive or deficient rain affect severely country’s agricultural production.

  1. Demographic factors:

The following demographic factors are accountable for poverty in India.

(i) Rapid growth of population:

Rapid growth of population aggravates the poverty of the people. The growth of population exceeds the rate of growth in national income. Population growth not only creates difficulties in the removal of poverty but also lowers the per capita income which tends to increase poverty. The burden of this reduction in per capita income is borne heavily by the poor people. Population growth at a faster rate increases labour supply which tends to lower the wage rate.

(ii) Size of family:

Size of the family has significant bearing on rural poverty. The larger the size of family, the lower is the per capita income, and the lower is the standard of living. The persistence of the joint family system has contributed to the health and earning capacity of the ruralites.

  1. Personal causes:

(i) Lack of motivation:

Lack of motivation is an important cause of rural poverty. Some ruralites do not have a motive to work hard or even to earn something. This accounts for the poverty of the ruralites.

  1. Economic causes:

(i) Low agricultural productivity:

Poverty and real income are very much interrelated. Increase in real income leads to reduction of the magnitude of poverty. So far as agricultural sector is concerned, the farmers even today are following the traditional method of cultivation. Hence there is low agricultural productivity resulting in rural poverty.

(ii) Unequal distribution of land and other assets:

Land and other forms of assets constitute sources of income for the ruralites. But, unfortunately, there has been unequal distribution of land and other assets in our economy. The size-wise distribution of operational holdings indicates a very high degree of concentration in the hands of a few farmers leading to poverty of many in the rural sector.

(iii) Decline of village industries:

At present consequent upon industrialization new factories and industries are being set up in rural areas. Village industries fail to compete with them in terms of quality and price. As a result they are closed down. The workers are thrown out of employment and lead a life of poverty.

(iv) Immobility of labour:

Immobility of labour also accounts, for rural poverty. Even if higher wages are offered, labourers are not willing to leave their homes. The joint family system makes people lethargic and stay-at-home.

The ruralites are mostly illiterate, ignorant, conservative, superstitious and fatalistic. Poverty is considered as god-given, something pre­ordained. All these factors lead to abysmal poverty in rural India.

(v) Lack of employment opportunities:

Unemployment is the reflection of poverty. Because of lack of employment opportunities, people remain either unemployed or underemployed. Most of these unemployed and underemployed workers are the small and marginal farmers and the landless agricultural labourers.

  1. Social causes:

(i) Education:

Education is an agent of social change and egalitarianism. Poverty is also said to be closely related to the levels of schooling and these two have a circular relationship. The earning power is endowed in the individual by investment in education and training. But this investment in people takes away money and lack of human investment contributes to the low earning capacity of individuals.

In this way people are poor because they have little investment in themselves and poor people do not have the funds for human capital investment.

(ii) Caste system:

Caste system in India has always been responsible for rural poverty. The subordination of the low caste people by the high caste people caused the poverty of the former. Due to rigid caste system, the low caste people could not participate in the game of economic progress.

A Shudra was not allowed to become a trader and a Vaisya could earn his bread only by trade.

Birth would decide their occupation and their economic fate. K. V. Verghese rightly observes, “Caste system acted as a spring­board for class exploitation with the result that the counterpart of the poverty of the many is the opulence of the few. The second is the cause of the first.”

(iii) Joint family system:

The joint family system provides social security to its members. Some people take undue advantage of it. They live upon the income of others. They become idlers. Their normal routine of life consists in eating, sleeping and begetting children.

In this way poverty gets aggravated through joint family system.

(iv) Social customs:

The ruralites spend a large percentage of annual earnings on social ceremonies like marriage, death feast etc. As a result, they remain in debt and poverty.

(v) Growing indebtedness:

In the rural sector most of the ruralites depend on borrowings from the money-lenders and land-lords to meet even their consumption expenses. Moneylenders, however, exploit the poor by charging exorbitant rates of interest and by acquiring the mortgaged land in the event of non-payment of loans.

Indebted poor farmers cannot make themselves free from the clutches of moneylenders. Their poverty is further accentuated because of indebtedness. Such indebted families continue to remain under the poverty line for generations because of this debt-trap.


Consequences of Poverty:

  • Poverty has far reaching consequences on the society. People suffering from poverty will generally have a low standard of living. They are not able to afford education and lack access to health care and education. This will lead to a low quality of human capital and thus compromise economic growth.
  • Poverty takes a toll on poor children’s development. For example, poverty causes malnutrition which would affect the development of a child’s mental thinking and healthy body.
  • Poverty may also lead to political instability and lead to increased risk of war, mass emigration of population and terrorism.

Measures taken by Govt to tackle poverty as follows:


  • This scheme comes under Rural Development ministry.
  • In a financial year this scheme promises minimum 100 days of unskilled manual work to each rural household. Out of overall work force 1/3rd women participation is encouraged. Unemployment allowance is also provided to those who don’t get work within 15 days.

National Rural Livelihood Mission / Aajeevika:

  • Undertaken by Rural Development Ministry. Initially it was launched in 1999 under the banner called Swarnjayanti Gram Swarozgar Yojana (SGSY). Later renamed to National Rural Livelihood Mission (NRLM) which in turn changed to Aajeevika.
  • Motive is to lift rural families from abject poverty. By 2024, get one person (preferably woman) from each household, into an income generating Self-help groups (SHG), and empower the SHG by giving Bank loans n subsidy, training required.

National Urban Livelihood mission:

Undertaken by Ministry of Housing and Urban poverty alleviation. The Scheme was earlier called as Swarnajayanti Sahari Swarojgar Yojana. Later it was renamed as National urban livelihoods mission, with following features: self-help groups will be provided bank credit, subsidies, skill training required to start up a business to elevate poverty; street vendors also get easy loans and skill training; Shelters for the homeless.

Connecting the dots:

  • Explain the relation between poverty, unemployment and inequality. Comment on the method of determination of poverty line in India?
  • Why has the ‘Poverty line’ methodology given by the planning commission of India become controversial? Is the criticism really justified? Examine critically




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