Poverty Flashcards
Poverty
• Insecurity, powerlessness & exclusion of individuals, households, and communities. It means susceptibility to violence and it often implies living in marginal or fragile environments, without access to clean water or sanitation
Types of Poverty
- Absolute Poverty/ Extreme/ Abject poverty
- Relative Poverty
- Situational Poverty
- Generational Poverty
Absolute Poverty/ Extreme/ Abject poverty
Scarcity of necessities such as shelter, running water, and food. Families who live in absolute poverty tend to focus on day-to-day survival
Relative Poverty
It is defined from the social perspective that is living standard compared to the economic standards of population living in surrounding. It is a measure of income inequality
Situational Poverty
Temporary type of poverty based on occurrence of an adverse event like environmental disaster. job loss and severe health problem.
Generational Poverty
Handed over to individual and families from one generation to the one
Causes of poverty
- Poor fiscal capacity of government (due to tax evasion & avoidance)
- Lack of family planning
- Agricultural distress (Unprofitable nature agriculture due to vagaries of monsoon & structural bottlenecks in the APMC Market)
- Lack of financial planning
- Lack of financial inclusion, debt trap by informal money lenders
- Poor enforcement of labour law
- Social discrimination
- Poor Female Labour Force Participation Rate
- Corruption/leakage in poverty alleviation programs
Poverty Estimation
- Poverty Line: MIN expenditure (or income) required to purchase a basket of goods and services necessary to satisfy basic human needs and this MIN expenditure
- Poverty Ratio: Proportion of population BPL or HCR (Headcount Ratio)
History: Pre-Independence Poverty Estimation
- Dadabhai Naoroji through his book, “Poverty and Unbritish Rule in India” made the earliest estimation of poverty line (16- 35 Rs per capita per year)
- The poverty line proposed by him was based on the cost of a subsistence or minimum basic diet (rice or flour, dal, mutton, vegetables, ghee, vegetable oil, and salt). - National Planning Committee (1938) poverty line (ranging from Rs 15 to 20 per capita per month) was also based on minimum standard of living perspective in which nutritional requirements were implicit.
- Set up by Subhash Chandra Bose under chairmanship of Jawaharlal Nehru for purpose of drawing up an economic plan with the fundamental aim to ensure an adequate standard of living for the masses - The Bombay Plan (1944) proponents had suggested a poverty line of 375 per capita per year
History: Post-Independence Poverty Estimation
- Planning Commission Expert Group (1962). formulated separate poverty lines for rural and urban areas ( Rs. 20 & 25 per capita per year respectively)
2 VM Dandekar and N Rath (1971), made the first systematic assessment of poverty in India, based on National Sample Survey (NSS) data
- Considered subsistence living or basic minimum needs criteria as measure of poverty line.
- Expenditure based Poverty line estimation, generated a debate on minimum calorie consumption norms.
3 Alagh Committee (1979): Constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
-Poverty estimates for subsequent years were to be calculated by adjusting the price level for inflation.
Poverty Estimation committee
Refer Acads
SECC 2011
Refer Acads
Poverty Estimation: Challenges
- Components of PLB: Determining components of Poverty Line Basket (PLB) is one of the challenges of poverty line estimation because of the price differentials (of constituents of basket) which vary from state to state and period to period.
- Demographic and Economic Dynamics: Further consumption patterns, nutritional needs and prices of components keep on changing as per dynamics of macro economy and demography,
- Lack of consensus among the states over the acceptance of Tendulkar and Rangarajan committee report
- Some states such as Odisha and West Bengal supported the Tendulkar Poverty Line while others such as Delhi, Jharkhand, Mizoram etc. supported Rangarajan report
Poverty Estimation : Current Scenario
Poverty estimation in India is now carried out by NITI Aayog task force through calculation of poverty line based on the data captured by the National Sample Survey Office (NSSO) under Ministry of Statistics and Programme Implementation (MOSPI
Poverty Estimation: Way Ahead
- Redefining Poverty lines: Poverty lines have to be recalibrated depending on changes in income, consumption patterns and prices, as India is now a middle-income country, with an estimated per capita income of around $9.000 in purchasing power parity.
- Viable Poverty line; It makes sense to set the poverty line at a level that allows households to get two square meals a day and other basic necessities of life.
- Hybrid of Absolute and Relative Measurement of Poverty: The hybrid approach which would measure poverty frame the perspective of a common global standard of living and relative poverty within countries
- Political Economic Equilibrium: Indian political policy and administrative systems have to adjust to the new realities of the transition to a middle-income country, in which poverty does not mean living at the edge of hunger but rather lack of income to take advantage of the opportunities thrown up by a growing economy
- The focus of government spending should be on the provision of public goods rather than subsidies
