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BPSC Mains GS-2 Masterclass · Indian & Bihar Economy

Poverty: Estimation, Causes & ProgrammesMeasuring It, Explaining It, Ending It

Who is poor depends on where you draw the line, and India has redrawn it many times since Dadabhai Naoroji. This page explains how poverty is measured, why it persists, and what the Centre and Bihar are doing to remove it.

Trend37% → 22%Poverty ratio

2004-05 to 2011-12 (Tendulkar method).

LineRs 32 / 47Rangarajan line

per day, rural / urban (2011-12 prices).

Calories2400 / 2100Kcal norm

rural / urban, Alagh Committee (1979).

Global$1.90World Bank line

a day for extreme poverty.

Progress273 mnOut of MPI poverty

2005-06 to 2015-16 (UN).

Bihar57 lakhJEEViKA households

mobilised into 5 lakh SHGs in Bihar.

Part 1 · The concept of poverty

What Is Poverty?

There is no universally accepted definition: poverty is a lack of resources for a minimum standard of living, and of opportunities.

A daily-wage worker's family outside a small hut, counting coins beside a ration card and school bag

A complex phenomenon

Poverty is a complex phenomenon and the notion of poverty has different meaning for different people. Though there is no universally accepted definition of poverty, it is generally viewed as a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living — life, food, clothing, shelter, safe drinking water etc. It also includes the deprivation of opportunities to health, education, skills, employment etc.

According to World Bank, the Extreme poverty level is living on less than $1.90 a day.

Amartya Sen's view

The Nobel laureate Amartya Sen said that "We cannot draw a poverty line and then apply it across the board to everyone the same way, without taking into account personal characteristics and circumstances."

He defined poverty as a failure to achieve certain minimum necessities.

Example: Two families spend the same Rs 1,000 a person a month. One has a disabled member who needs medicine; the other does not. By a single line both are 'not poor'; Sen's point is that the first family may still fail to meet its minimum needs.

Part 3 · History of poverty estimation (skip in the exam answer)

From Naoroji to Rangarajan

Every committee redrew the line: from the cost of a subsistence diet, to calorie norms, to state lines, to a basket of nutritional outcomes.

One of the earliest estimations of poverty was done by Dadabhai Naoroji in his book, 'Poverty and the Un-British Rule in India'. He formulated a poverty line ranging from Rs 16 to Rs 35 per capita per year, based on 1867-68 prices.
- The poverty line proposed by him was based on the cost of a subsistence diet consisting of 'rice or flour, dhal, mutton, vegetables, ghee, vegetable oil and salt'.
Next, in 1938, the National Planning Committee (NPC) estimated a poverty line ranging from Rs 15 to Rs 20 per capita per month. Like the earlier method, the NPC also formulated its poverty line based on 'a minimum standard of living perspective in which nutritional requirements are implicit'.
In 1944, the authors of the 'Bombay Plan' suggested a poverty line of Rs 75 per capita per year.

Poverty lines at a glance

Who / when	Basis	Line
Dadabhai Naoroji (1867-68 prices)	Cost of a subsistence diet	Rs 16–35 per capita per year
National Planning Committee (1938)	Minimum standard of living	Rs 15–20 per capita per month
Bombay Plan (1944)	—	Rs 75 per capita per year
Planning Commission working group (1962)	Separate rural / urban lines	Rs 20 / Rs 25 per capita per year
Dandekar & Rath (1971)	2250 calories a day	—
Alagh Committee (1979)	2400 kcal rural / 2100 kcal urban	—
Lakdawala (1993)	State-specific lines; CPI-AL / CPI-IW	—
Tendulkar (2009)	Nutritional outcomes; uniform urban PLB; MRP	Rs 26 rural / Rs 32 urban a day (2011-12)
Rangarajan (2014)	Separate rural / urban baskets	Rs 32 rural / Rs 47 urban a day; Rs 972 / Rs 1407 a month

Summary table compiled from the points above.

Part 4 · The factors responsible for poverty

Why Poverty Persists

Colonial exploitation, unequal land and income, population growth, slow and capital-intensive growth, weak schemes, social barriers, disasters and the pandemic.

Economic causes

Colonial exploitation: the policies of the colonial government led to de-industrialisation. At the time of Independence the incidence of poverty in India was about 80%. Domestic saving rate was only 10.4 percent of GDP.
Unequal distribution of land and resources is another vital cause for poverty in India.
Inequality in earning the income of the people is also a wide cause for poverty.
The rapid rate of increase in population is also a factor of poverty.
Growth is not as rapid as we need to eradicate poverty.
Models of growth may be unsuitable for poverty alleviation. For example, capital-intensive growth in a labour surplus country like India.
Example: A Rs 100-crore automated factory may employ 200 people; the same money in garment or food-processing units could employ thousands.
Poverty is a vicious cycle preventing investment and development.
Due to urbanisation, there has been a continuous decline in the productivity of agriculture.
Migration of qualified and educated citizens to other countries has reduced the economy of our country.
Shortage of Entrepreneurship.

Social, institutional and other causes

To fulfil the demands of social obligations and religious ceremonies the poor community end up spending a lot which leads to poverty.
Anti-poverty schemes not being effective due to institutional and other inadequacy.
Insurgencies as in North-Eastern India, Naxalism as in the eastern states, communal violence etc.
Caste ridden society, Patriarchal society.
- IMF had earlier said that equal participation of women in economic activity can boost India's GDP by 27%.
Lack of education and skills.
Natural and Man-made disasters cause huge economic destruction e.g. devastation of infrastructure, disruption of normal life.
Pandemic, like recent Covid-19 further aggravates the poverty situation in the country and hinders the progress towards poverty elimination.

Part 5 · Programmes to remove poverty

What the Centre and Bihar Are Doing

Self-employment, wage employment, food, housing, energy, livelihoods, social assistance and health; and Bihar's own missions and schemes.

By the Indian government

Integrated Rural Development Programme: started in 1980-81 in all blocks of the country and continued as a major self-employment scheme till April 1, 1999. Then, it was restructured as the Swarnjayanti Gram Swarozgar Yojana which aimed at self-employment of the rural poor.
Jawahar Rozgar Yojana (JRY): It was launched as Centrally Sponsored Scheme on 1st April, 1989 by merging National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP). Its main objective was generation of additional gainful employment for the unemployed and under-employed people in rural areas through the creation of rural economic infrastructure, community and social assets.
Jawahar Gram Samridhi Yojana: JRY has been strengthened and restructured as Jawahar Gram Samridhi Yojana w.e.f. 1st April, 1999. The main aim of this programme was the development of rural areas. Infrastructure like roads to connect the village to different areas, which made the village more accessible and also other social, educational (schools) and infrastructure like hospitals. Its secondary objective was to give out sustained wage employment.
MGNREGA: Providing not less than 100 days of unskilled manual work as a guaranteed employment in a financial year to every household in rural areas as per demand, resulting in creation of productive assets of prescribed quality and durability.
Deen Dayal Upadhyaya Antyodaya: for helping the poor in both rural and urban India by providing skill training. It includes both Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) and Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM).

Conclusion

Thus both Indian and Bihar government are constantly moving forward with the goal of eradication of poverty. According to UN report, India fared best in poverty alleviation in 10 years to 2016. About 273 million Indians moved out of multi-dimensional poverty between 2005-6 and 2015-16.

But, still India has highest population of poor people living in any country in the world. Going forward quality education, health, skill development as well as boosting the innovation and entrepreneurship spirit among citizens etc are key areas to focus upon.

“We cannot draw a poverty line and then apply it across the board to everyone the same way.”

— Amartya Sen, as quoted in the BPSC Mains answer, 2019

Curated for BPSC, UPSC & State PCS Civil Services Aspirants | Indian & Bihar Economy Master Module

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