Origins of Poverty1

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CHAPTER-I

INTRODUCTION

Origins of Poverty

When man came on earth he did not live in a society or hierarchy nor was he

endowed with poverty. Good health, longevity, natural cheerfulness was his own

even as he found himself amidst plenty. Like other species he lived or perished as

the external resources permitted but he lived or perished as a group. Only when the

society organised itself into a hierarchy, it was possible for one layer to exist while

another persisted during times of scarcity. With the passing of time these

stratifications of society come to stay and even create a psychology by which even

the victim takes his victimization for granted. No question arises in his mind.

Life consists of matter, the animus of life, mind, and spirit. In society we are

moving well along towards the organization of matter, which enables infinite possibilities in the of the physical realm as seen in machines inventions,

technology, roads, infrastructure, shelter, life sciences, medicines, etc.

And yet the rest of life beyond the physical matter remains unorganized. There is

pain, suffering falsehood, ignorance, evil, conflict, contradiction, disharmony, hate,

desire, attachment, and on and on. This reflects as poverty, war, disease, famine,

and many other social ills.

Definition:-

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United Nations: Fundamentally, poverty is a denial of choices and opportunities, a

violation of human dignity. It means lack of basic capacity to participate

effectively in society. It means not having enough to feed and clothe a family, not

having a school or clinic to go to, not having the land on which to grow ones food

or a job to earn ones living, not having access to credit. It means insecurity,

powerlessness and exclusion of individuals, households and communities.

World Bank:Poverty is pronounced deprivation in well-being, and comprises

many dimensions. It includes low incomes and the inability to acquire the basic

goods and services necessary for survival with dignity. Poverty also encompasses

low levels of health and education, poor access to clean water and sanitation,

inadequate physical security, lack of voice, and insufficient capacity and

opportunity to better ones life.

According to a recent Indian government committee constituted to estimate

poverty, nearly 38% of Indias population (380 million) is poor. This report is

based on new methodology and the figure is 10% higher than the present poverty

estimate of 28.5%.

Poverty has many dimensions changing from place to place and across time. There

are two inter-related aspects of poverty - Urban and rural poverty. The main causes

ofurban poverty are predominantly due to impoverishment of rural peasantry that

forces them to move out of villages to seek some subsistence living in the townsand cities. In this process, they even lose the open space or habitat they had in

villages albeit without food and other basic amenities.

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When they come to the cities, they get access to some food though other sanitary

facilities including clean water supply still elude them. And they have to stay in the

habitats that place them under sub-human conditions. While a select few have

standards of living comparable to the richest in the world, the majority fails to get

two meals a day. The causes of rural poverty are manifold including inadequate

and ineffective implementation of anti-poverty programmes. The overdependence

on monsoon with non-availability of irrigational facilities often result in crop-

failure and low agricultural productivity forcing farmers in the debt-traps. The rural

communities tend to spend large percentage of annual earnings on social

ceremonies like marriage; feast etc. Our economic development since

Independence has been lopsided .There has been increase in unemployment

creating poverty like situations for many. Population is growing at an alarming

rate. The size of the Indian family is relatively bigger averaging at 4.2.The other

causes include dominance of caste system which forces the individual to stick to

the traditional and hereditary occupations.

Since the 1970s the Indian government has made poverty reduction a priority in its

development planning. Policies have focused on improving the poor standard of

living by ensuring food security, promoting self-employment through greater

access to assets, increasing wage employment and improving access to basic social

services. Launched in 1965, India's Public Distribution System has helped meet

people's basic food needs by providing rations at subsidized prices. Although it has

affected less than 20% of the Poor's food purchases, the system has been importantin sustaining people's consumption of cereals, especially in periods of drought.

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It has provided women and girls with better access to food and helped overcome

the widespread discrimination against female consumption within households. It

has also reduced the burden of women, who are responsible for providing food for

the household.

Rural poverty is largely a result of low productivity and unemployment. The

Jawahar Rozgar Yojana, a national public works scheme launched in 1989 with

financing from the central and state governments, provides more than 700 million

person days of work a year about 1% of total employment for people with few

opportunities for employment. The scheme has two components: a programme to

provide low-cost housing and one to supply free irrigation wells to poor and

marginalized farmers. The public works scheme is self-targeting. Since it offers

employment at the statutory minimum wage for unskilled manual labor, only those

willing to accept very low wages the poor are likely to enroll in the scheme. By

providing regular employment and thereby increasing the bargaining power of all

rural workers, the public works scheme has had a significant effect in reducing

poverty. It has also contributed to the construction of rural infrastructure (irrigation

works, a soil conservation project, drinking water supply).

Most of us live in comfort and security, but over one-fifth of the worlds

population lives in poverty. Around the world poverty appears when people are not

able to achieve the standard of living that is usual for their society. Today,

standards of living vary greatly among nations; however, the effects of poverty

remain constant: hunger, homelessness, lack of education, and resources to fulfill

basic human needs.

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Poverty is not only having no money. For those in developing countries it also is

not having the materials and resources to fulfill their basic needs. A person can be

poor when they dont have access to employment and basic healthcare, education

and essentials like food, clothing and water.

What is the real meaning of poverty?

Poverty in simple word means is the lack of human needs, like foods, water, air,

and all other basic needs.

Poverty is pronounced deprivation in well-being, and comprises many dimensions.

It includes low incomes and the inability to acquire the basic goods and services

necessary for survival with dignity. Poverty also encompasses low levels of health

and education, poor access to clean water and sanitation, inadequate physical

security, lack of voice, and insufficient capacity and opportunity to better ones

life. World Bank

Though INDIA boosts of a high economic rate it is shameful that most of the

people in INDIA are under poverty as INDIA'S population is estimated to be more

than 1 billion out of them nearly 300-400 million peoples are under poverty not

even having a single meal for one day.

Absolute poverty:-

Poverty is usually measured as eitherabsolute orrelative poverty (the latter being

actually an index of income inequality). Absolute poverty refers to a set standard

which is consistent over time and between countries.

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The World Bankdefines extreme poverty as living on less than US $1.25 (PPP) per

day, and moderate poverty as less than $2 or $5 a day (but note that a person or

family with access to subsistence resources, e.g. subsistence farmers, may have a

low cash income without a correspondingly low standard of living they are not

living "on" their cash income but using it as a top up). It estimates that "in 2001,

1.1 billion people had consumption levels below $1 a day and 2.7 billion lived on

less than $2 a day."[6] A dollar a day, in nations that do not use the U.S. dollaras

currency, does not translate to living a day on the amount of local currency as

determined by the exchange rate.[7] Rather, it is determined by the purchasing

power parity, which would look at how much local currency is needed to buy the

same things that a dollar could buy in the United States.[7] Usually, this would

translate to less local currency than the exchange rate in poorer countries as the

United States is a more expensive country.[7]

World Bank data shows that the percentage of the population living in households

with consumption or income per person below the poverty line has decreased in

each region of the world since 1990:[15][16]

Region 1990 2002 2004

East Asia and Pacific 15.40% 12.33% 9.07%

Europe and Central Asia 3.60% 1.28% 0.95%

Latin America and the Caribbean 9.62% 9.08% 8.64%

Middle East and North Africa 2.08% 1.69% 1.47%

South Asia 35.04% 33.44% 30.84%

Sub-Saharan Africa 46.07% 42.63% 41.09%

Other human development indicators have also been improving. Life expectancy

has greatly increased in the developing world since World War II and is starting to

close the gap to the developed world. Child mortality has decreased in every

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developing region of the world. The proportion of the world's population living in

countries where per-capita food supplies are less than 2,200 calories (9,200

kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the

1990s. Similar trends can be observed for literacy, access to clean water and

electricity and basic consumer items.[17]

Relative poverty

Relative poverty views poverty as socially defined and 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 somefixed proportion of median income. There are several other different income

inequality metrics, for example the Gini coefficient or the Theil Index.

Other Aspects

Economic aspects of poverty focus on material needs, typically including the

necessities of daily living, such as food, clothing, shelter, or safe drinking water.

Poverty in this sense may be understood as a condition in which a person or

community is lacking in thebasic needs for a minimum standard of well-being and

life, particularly as a result of a persistent lack of income.Analysis of social aspects

of poverty links conditions of scarcity to aspects of the distribution of resources

and power in a society and recognizes that poverty may be a function of the

diminished "capability" of people to live the kinds of lives they value. The social

aspects of poverty may include lack of access to information, education, health

care, orpolitical power.[20][21]

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Poverty may also be understood as an aspect of unequal social status and

inequitable social relationships, experienced as social exclusion, dependency, and

diminished capacity to participate, or to develop meaningful connections with

other people in society.[22][23][24] Such social exclusion can be minimized through

strengthened connections with the mainstream, such as through the provision of

relational care to those who are experiencing poverty.

CHAPTER II

REVIEW OF LITERATURE

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Introduction

Dr. Manmoban Singh, the Prime Minister of India, in his first broadcast to the

nation on June 24. 2004 stated: -Growth is not an end in itself: It is a means to

generate employment, banish poverty, hunger and homelessness and improve the

standard of living of our people. It must be environmentally sustainable.

"Equity anti efficiency are complementary; not contradictory and we must move

forward on both these while maintaining a high degree of fiscal and Financial

discipline and a robust external economic profile."

Dr. Singh in a very succinct manner has summarised the findings of the research

scholars on the theme of growth, poverty and employment and has also indicated

the strategies that need to be developed to promote equity and efficiency, as

complementary factors in the growth process.

Basically, two school or thought emerged in this canton. One led by the economists

of the World Bank - IMF who emphasized economic_ reforms and their primary

instruments were liberalisation, privatisation and globalisation which could raise

the rate of growth of GDR and unemployment and poverty removal were treated as

the corallines of the growth process. [Ahluwalia. MS. (2001); Bhaamati, Jagdish

(1993): Srinivasan, TN (2000)].

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On the other hand, quite a large number of eminent economists have been arguing

that growth per se is not likely to result in a pro-poor growth to take care of the

employment and poverty problem, but the content of growth with emphasis on

policies which help the poor to become a part of the development process, rather

than a residuary beneficiary was emphazied.

At the other end rural poverty as absolute phenomena measured in terms of per

capita calories in take has remained at approximately 50 per cent between 1960

and 198(1 which implies a sizable increase in the absolute number or persons

living below the poverty line. It is estimated that 2S percent of the population

suffers from nutritional inadequacies in one form or the other.

Within the broad objective of growth and self reliance, the 6 five year therefore

gives high priority to the eradication of poverty both as an absolute phenomenon

and as a quality of life of the people with special reference to the economically and

socially handicapped population and the deprived areas.

The Employment Generation scheme is one of the most important scheme divided

by the Government of Maharastra in recent years to attach directly the problem of

unemployment and poverty in the rural areas and arrest the flow of the rural poor

to the cities which have for several years been growing under the weight of ever

increasing years.

RURAL POVERTY AND UNEMPLOYMENT IN INDIA

Extent of Poverty

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Poverty in India has been defined as the situation in which an individual fails to

earn that much income which may be sufficient to buy him bare means of

subsistence. To quantify the extent of poverty and measure the number of the poor

in the country professional economists have made use of the concept of poverty

line. The concept of poverty line is based on three components, viz.. (a) the

minimum nutritional level for subsistence, (b) the cost of minimum diet that may

provide the minimum nutrition level and (c) the per capita consumption

expenditure incurred on diet. These economists, among whom are Dandekar and

Ruth, Bardham, Minhas, Ojha, Vaidyanathan, Da Costa etc.. have determined the

minimum nutritional level of subsistence, estimated the cost of this minimum diet

and on the basis of the per capita consumption expenditure have delineated the line

of poverty.

Regional Pattern of Poverty

There are disparities in the incidence of poverty as between different states. As

against the national average of 36.9 per cent of the total population living below

the line of poverty, the corresponding figure for six states was higher. The state

are: Bihar, Madhya Pradesh, Orissa, Tamil Nadu, Tripura, Uttar Pradesh and West

Bengal. Among these the highest incidence of poverty is to be found to Bihar

where 495 per cent of total population lives in below the line of poverty,

Percentage of population living below the line of poverty was as low as 12.30 in

Manipur and 13.80 in Punjab.

PROBLEM OF UNEMPLOYMENT

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Closely related to the problem of poverty is the problem of unemployment. We

must examine the nature and causes of unemployment and suggest suitable

measures to solve it.

What is Unemployment

Unemployment refers to a situation when a person is able and willing to work but

does not get opportunity to work, and thus, he is involuntarily unemployed. The

important forms of unemployment are as follows:

Diagram 2.1

(1) Cyclical Unemployment: The main cause of cyclical unemployment is the

slackness in business activities. This kind of unemployment is generally

witnessed in the developed countries.

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TYPES OF UNEMPLOYMENT

CYCLICAL

UNEMPLOYMENT

SEASONAL

UNEMPLOYMENT

STRUCTURAL

UNEMPLOYMENT

DISGUISED

UNEMPLOYMENT

TECHNOLOGICAL

UNEMPLOYMENT

FRICTIONAL

UNEMPLOYMENT


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(2)Technological Unemployment: When the introduction of new technology

causes displacement Workers. It is called technological unemployment. The

use of improved techniques of production makes it possible to produce more

output with lesser amount of labour force. The immediate effect would be to

throw some of the workers out of employment.

(3) Frictional Unemployment: The temporary unemployment which exists

during the period of the transfer of labour from one occupation to another is

called frictional unemployment. This type of unemployment arises due to the

imperfections of labour market. Imperfections in labour about the job

opportunities. This ignorance of labour restricts their mobility and they fail

to get back into a new job immediately after leaving the previous job.

(4)Seasonal Unemployment: Generally, seasonal unemployment is confined

to the agricultural sector because nature predominates in agriculture. The

demand for agricultural labour increases at the time of sowing and

harvesting; during the interval between sowing and harvesting, there is a fall

in employment.

MEANING AND NATURE OF RURAL UNEMPLOYMENT

Unemployment has been defined as a situation when a person able and willing to

work does not get a suitable employment opportunity, and hence is denied access

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to a source of income. The nature of unemployment in the rural sector differs, in

essence, from that found in the urban sector.

Poverty estimates

There has been no uniform measure of poverty in India. The Planning Commission

of India has accepted the Tendulkar Committee report which says that 37% of

people in India live below thepoverty line(BPL).The Arjun Sengupta Report (from

National Commission for Enterprises in the Unorganised Sector), based on data

between the period 1993-94 and 2004-05, states that 77% of Indians live on less

than 20 a day (about $0.50 per day). TheN.C. Saxena Committee report states, on

account of calorific intake apart from nominal income, that 50% of Indians live

below the poverty line.

A study by the Oxford Poverty and Human Development Initiative using a Multi-

dimensional Poverty Index (MPI) found that there were 650 million people (53.7%

of population) living in poverty in India, of which 340 million people (28.6% of

the population) were living in severe poverty, and that a further 198 million people

(16.4% of the population) were vulnerable to poverty. 421 million of the poor are

concentrated in eight North Indian and East Indian states of Bihar, Chattisgarh,

Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal.

This number is higher than the 410 million poor living in the 26 poorest African

nations. The states are listed below in increasing order of poverty based on the

Multi-dimensional Poverty Index

CHAPTER III

POVERTY IN TAMIL NADU

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Poverty Levels and Recent Evolution

Poverty remains an enormous challenge confronting policymakers in Tamil Nadu.

Analysis of the National Sample Survey Organization data for 1993/94 and 1999

indicate that at the time of the 1993/04 survey, 35.4 percent of the population was

poor. based on official Planning Commission poverty lines. Adjusted poverty lines,

that capture better spatial and temporal price variation, suggest that a more realistic

estimate of the incidence of poverty for 1993/94 is 30.3 percent.

Answering the question of how poverty in Tamil Nadu evolved between 1993 and

1999 is not straightforward due to concerns that have been expressed regarding the

comparability of the consumption data that have been collected in the 1993/94 and

1999/00 surveys. Unadjusted estimates that make no attempt to correct for

comparability problems. and that employ the official Planning Commission

poverty lines suggest that poverty declined markedly between the two time periods

from 35.4 percent to 21.1. According to these estimates, Tamil Nadu is now less

poor than India as a whole.

Adjusted estimates that employ the revised poverty lines and that also attempt to

correct for comparability problems suggest that poverty declined from 30.3 percent

to 20.0 percent during this interval. These adjusted estimates have been produced

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by Deaton and Dreze (2002) for all states in India. On the basis of these adjusted

estimates, poverty in Tamil Nadu is also below that for India as whole.

Depending on the set of poverty estimates that are employed. the number of poor

people in Tamil Nadu in 1999 varies between 13 and 17.7 Million.

Sectoral breakdown of poverty between rural and urban areas depend on the

poverty measurement procedure that has been followed. Adjusted estimates

proposed by Deaton and Dreze (2002) find the reverse, with the incidence of

poverty in urban areas less than half that of rural areas. The second set of adjusted

estimates by Kijima and Lanjouw (2003) also find that urban poverty is below

rural poverty, albeit by a smaller margin. A major departure in the Kip ma and

Lanjouw (2003) figures is that urban poverty appears to have possibly even risen

between 1993/94 and 1999/00. This is in contrast to the estimates in Deaton and

Dreze (2002) which suggest that urban poverty has fallen sharply.

Poverty Profile

Poverty and occupational status:

In urban areas. around two-fifths of households head are employed in salaried jobs.

and enjoy mean consumption levels that are much higher than those reported by

self-employed and casual labor households. While overall employment in casualwage labor decreased marginally between 1993/94 and 1999/00. there was a

sizeable increase of the share of household heads with such employment in the

bottom two quintiles of the consumption distribution in 1999/00.

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About two thirds of the rural working population is active in the agricultural sector:

agricultural labor accounts for 44 percent of rural employment, and cultivation for

a further 22 percent.

Agricultural laborers are disproportionately represented among the bottom income

quintiles. By contrast. a worker in the richest quintile is more than twice as likely

as the average rural worker to be employed in regular non-farm activities. Self-

employment activities in the non-farm sector of Tamil Nadu also occur more

frequently among the non-poor than among the poor. This is in contrast with many

other states of India. where rural self-employment activities are often associated

with distress.

The rural poor typically own less land than the non-poor and are highly represented

among the marginal landowners. Rural poverty is concentrated among those with

marginal landholdings. and is lowest among those with relative large landholdings.

Such findings are often invoked to justify policy intervention in land markets.

Village studies evidence indicates, however. that Tamil Nadu. like many other

states in India. has had mixed success with the implementation of land reforms.

The evasion of land ceilings, eviction of tenants and bureaucratic corruption are

some problems which have been observed to plague otherwise well-intentioned

reform.

An important observation is that poverty is higher among, marginal landholders

relative to the landless. This is consistent with a diversified rural economy in

which landlessness may be indicative of non-agricultural employment in some

instances. The landless thus comprise both the poor and the non-poor.

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Farming contributes to over 50 percent of rural income. The poorest in Tamil Nadu

tend to be reliant on agricultural labor. As one moves from the lowest to highest

income quintiles. the contribution of agricultural wage income to total income

decreases monotonically, while that of cultivation and non-farm sources increases

monotically.

Real average agricultural daily wage rates have risen by about 56 percent between

1995 and 1999, suggesting a tightening of the agricultural labor market and a lower

average degree of deprivation among agricultural wage laborers. However, real

wages in the North Coastal region are relatively low. at Rs. 37 compared to Rs. 41

for the state as a whole. There is also a striking gender gap. with women earning

daily wage rates w Inch are, on average, less than 2/3rds that of men. This may be

a result of a combination of factors viz, the gender division of agricultural tasks.

lower productivity for the same activities, and lower pay for similar productivity

and activities.

In terms of rice purchasing power. agricultural wages have risen substantially in all

regions with the exception of the Inland region. This is most likely driven by

evidence of significant increases in the price of rice in this region.

Poverty and education. With 83 percent enrolment of children aged 6-14.

education outcomes are higher in Tamil Nadu than the national average. and that of

all neighboring states, except for Kerala which has a comparable enrolment rate of

95 percent. Rural enrolment rates are lower than in urban areas, as are the

enrolment rates of girls relative to boys. Moreover, poor girls tend to have lower

education levels than rich girls and the gender gap in education is especially large

among poorer households. Scheduled Castes (SCs) and Scheduled Tribes (STs)18


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also have significantly lower educational attainment than non-SC/STs. It is

important to rectify gender and caste gaps as well as urban rural disparities. Tamil

Nadu-s success in improving girls' enrolment rates in particular over the past 15

years is encouraging in this respect.

Education is important in its own right and. furthermore, is strongly associated

with higher consumption. In both urban and rural areas. the share of household

heads with some education rises steadily as one moves from the lowest to the

highest consumption quintile. This relationship is much stronger in urban areas.

consistent with the notion that higher levels of education facilitate entry into better

remunerated jobs in the non-agricultural sector.

Poverty and gender, Family planning appears to enjoy fairly widespread currency

in Tamil Nadu w ith women increasingly making independent fertility decisions.

Moreover. there is some evidence that women perceive that their quality of life has

improved with increased education and employment opportunities. as well as the

increased representation of women in public office. However, domestic violence,

higher prevalence of dowries, and continued restrictions on women's full

participation in the labor market continue to be problematic and require redress.

Poverty and caste, SCs are highly represented among the poor. with average per

capita consumption levels of only about 79 percent and 69 percent those of

majority households in rural and urban areas respectively. This is due in part totheir lower asset ownership: SCs have significantly lower land holdings and

educational levels relative to majority households.

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Tamil Nadu is one of the 28 states ofIndia. Its capital is Chennai, the largest city.

Tamil Nadu lies in the southernmost part of the Indian Peninsula and is bordered

by the union territory of Pondicherry, and the states of Kerala, Karnataka, and

Andhra Pradesh. It is bound by the Eastern Ghats in the north, the Nilgiri, the

Anamalai Hills, and Palakkad on the west, by the Bay of Bengal in the east, the

Gulf of Mannar, the Palk Strait in the south east, and by the Indian Ocean in the

south.

Tamil Nadu is the eleventh largest state in India by area and the seventh most

populous state. It is the fourth largest contributor (as of 2010) to India's GDP and

ranks tenth in Human Development Index as of 2006. Tamil Nadu is also the most

urbanised state in India. The state has the highest number (10.56%) of business

enterprises and stands second in total employment (9.97%) in India, compared to

the population share of about 6%.

The region has been the home of the Tamil people since at least 500 BCE. Its

official language Tamil has been in use in inscriptions and literature for over 2000

years. Tamil Nadu is home to many natural resources, Hindu temples ofDravidian

architecture, hill stations, beach resorts, multi-religious pilgrimage sites and eight

UNESCO World Heritage Sites.

CHAPTER IV

POVERTY IN INDIA

Poverty is widespread in India, with the nation estimated to have a third of the

world's poor. According to a 2005 World Bank estimate, 41.6% of the total Indian

population falls below the international poverty line of US$ 1.25 a day (PPP, in

nominal terms 21.6 a day in urban areas and 14.3 in rural areas. According to 2010

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data from the United Nations Development Programme, an estimated 37.2% of

Indians live below the country's national poverty line. A recent report by the Oxford

Poverty and Human Development Initiative (OPHI) states that 8 Indian states have

more poor than 26 poorest African nations combined which totals to more than 410million poor in the poorest African countries. According to a new UN Millennium

Development Goals Report, as many as 320 million people in India and China are

expected to come out of extreme poverty in the next four years, while India's poverty

rate is projected to drop to 22% in 2015. The report also indicates that in Southern

Asia, however, only India, where the poverty rate is projected to fall from 51% in

1990 to about 22% in 2015, is on track to cut poverty in half by the 2015 target

date.The latest UNICEF data shows that one in three malnourished children

worldwide are found In India 42 percent of children under five were underweight. It

also showed that A total of 58 percent of children under five surveyed were stunted.

Rohini Mukherjee Of the Naadi foundation one of the Ngos which published the

report stated India is "doing worse than sub-Saharan Africa,". The 2011 Global

Hunger Index (GHI) Report ranked India 45th, amongst leading countries with hunger

situation. It also places India amongst the three countries where the GHI between1996 and 2011 went up from 22.9 to 23.7, while 78 out of the 81 developing countries

studied, including Pakistan, Nepal, Bangladesh, Vietnam, Kenya, Nigeria, Myanmar,

Uganda, Zimbabwe and Malawi, succeeded in improving hunger condition.

MPI rank StatesPopulation(in millions)

2007MPI

Proportionof poor

Averageintensity

Contributionto overallpoverty

Number oMPI poor

(in

millions)

India 1,164.7 0.296 55.4% 53.5% - 645.0

1 Kerala 35.0 0.065 15.9% 40.9% 0.6% 5.6

2 Goa 1.6 0.094 21.7% 43.4% 0.0% 0.4

3 Punjab 27.1 0.120 26.2% 46.0% 1.0% 7.1

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MPI rank StatesPopulation(in millions)

2007MPI

Proportionof poor

Averageintensity

Contributionto overallpoverty

Number oMPI poor

(inmillions)

4 Himachal Pradesh 6.7 0.131 31.0% 42.3% 0.3% 2.1

5 Tamil Nadu 68.0 0.141 32.4% 43.6% 2.6% 22.0

7 Maharashtra 108.7 0.193 40.1% 48.1% 6.0% 43.6

6 Uttarakhand 9.6 0.189 40.3% 46.9% 0.5% 3.9

9 Gujarat 57.3 0.205 41.5% 49.2% 3.4% 23.8

8 Haryana 24.1 0.199 41.6% 47.9% 1.3% 10.0

10 Jammu and Kashmir 12.2 0.209 43.8% 47.7% 0.7% 5.4

11 Andhra Pradesh 83.9 0.211 44.7% 47.1% 5.1% 37.512 Karnataka 58.6 0.223 46.1% 48.3% 4.2% 27.0

13 Eastern Indian States 44.2 0.303 57.6% 52.5% 4.0% 25.5

14 West Bengal 89.5 0.317 58.3% 54.3% 8.5% 52.2

15 Orissa 40.7 0.345 64.0% 54.0% 4.3% 26.0

16 Rajasthan 65.4 0.351 64.2% 54.7% 7.0% 41.9

19 Madhya Pradesh 70.0 0.389 69.5% 56.0% 8.5% 48.6

17 Uttar Pradesh 192.6 0.386 69.9% 55.2% 21.3% 134.7

18 Chhattisgarh 23.9 0.387 71.9% 53.9% 2.9% 17.220 Jharkhand 30.5 0.463 77.0% 60.2% 4.2% 23.5

21 Bihar 95.0 0.499 81.4% 61.3% 13.5% 77.3

Estimates by NCAER (National Council of Applied Economic Research) show

that 48% of the Indian households earn more than 90,000 (US$1,980) annually (ormore than US$ 3 PPP per person). According to NCAER, in 2009, of the 222

million households in India, the absolutely poor households (annual incomes below

45,000) accounted for only 15.6% of them or about 35 million (about 200 million

Indians). Another 80 million households are in income levels of 45,000 90,000

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per year. These numbers also are more or less in line with the latest World Bank

estimates of the below-the-poverty-line households that may total about 100

million (or about 456 million individuals)

Impact of poverty

Since the 1950s, the Indian government and non-governmental organizations have

initiated several programs to alleviate poverty, including subsidizing food and

other necessities, increased access to loans, improving agricultural techniques and

price supports, and promoting education and family planning. These measures

have helped eliminate famines, cut absolute poverty levels by more than half, and

reduced illiteracy and malnutrition.

Presence of a massive parallel economy in the form of black (hidden) money

stashed in overseas tax havens and underutilisation of foreign aid have also

contributed to the slow pace of poverty alleviation in India.

Although the Indian economy has grown steadily over the last two decades, its

growth has been uneven when comparing different social groups, economic

groups, geographic regions, and rural and urban areas. Between 1999 and 2008, the

annualized growth rates forGujarat (8.8%), Haryana (8.7%), orDelhi (7.4%) were

much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh

(3.5%) Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the

world's most extreme.

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Despite significant economic progress, one quarter of the nation's population earns

less than the government-specified poverty threshold of 32 rupees per day

(approximately US$ 0.6)

According to a recently released World Bank report, India is on track to meet its

poverty reduction goals. However by 2015, an estimated 53 million people will

still live in extreme poverty and 23.6% of the population will still live under

US$1.25 per day. This number is expected to reduce to 20.3% or 268 million

people by 2020.[ However, at the same time, the effects of the worldwide

recession in 2009 have plunged 100 million more Indians into poverty than there

were in 2004, increasing the effective poverty rate from 27.5% to 37.2%.

As per the 2001 census, 35.5% of Indian households availed of banking services,

35.1% owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a

bicycle, 11.7% a scooter, motorcycle or a moped, and 2.5% a car, jeep or van;

34.5% of the households had none of these assets. According to Department of

Telecommunications of India the phone density has reached 33.23% by December

2008 and has an annual growth of 40%. This tallies with the fact that a family of

four with an annual income of 1.37 lakh rupees could afford some of these luxury

items.

Reduction in poverty

Despite all the causes, India currently adds 40 million people to its middle class

every year. Analysts such as the founder of "Forecasting International", Marvin J.

Cetron writes that an estimated 300 million Indians now belong to the middle

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class; one-third of them have emerged from poverty in the last ten years. At the

current rate of growth, a majority of Indians will be middle-class by 2025.

Despite government initiatives, corporate social responsibility (CSR) remains low

on the agenda of corporate sector. Only 10 percent of funding comes from

individuals and corporates, and "a large part of CSR initiatives are artfully

masqueraded and make it back to the balancesheet". The widening income gap

between the rich and the poor over the years, has raised fears of a social backlash.

Efforts to alleviate poverty

Since the early 1950s, govt has initiated, sustained, and refined various planning

schemes to help the poor attain self sufficiency in food production. Probably the

most important initiative has been the supply of basic commodities, particularly

food at controlled prices, available throughout the country as poor spend about 80

percent of their income on food. The schemes have however not been very

successful because the rate of poverty reduction lags behind the rapid population

growth rate.

Outlook for poverty alleviation

Eradication of poverty in India is generally only considered to be a long-term goal.

Poverty alleviation is expected to make better progress in the next 50 years than in

the past, as a trickle-down effect of the growing middle class. Increasing stress on

education, reservation of seats in government jobs and the increasing

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empowerment of women and the economically weaker sections of society, are also

expected to contribute to the alleviation of poverty. It is incorrect to say that all

poverty reduction programmes have failed. The growth of the middle class (which

was virtually non-existent when India became a free nation in August 1947)

indicates that economic prosperity has indeed been very impressive in India, but

the distribution of wealth is not at all even.

After the liberalization process and moving away from the socialist model, India is

adding 60 to 70 million people to its middle class every year. Analysts such as the

founder of "Forecasting International", Marvin J. Cetron writes that an estimated

390 million Indians now belong to the middle class; one-third of them have

emerged from poverty in the last ten years. At the current rate of growth, a

majority of Indians will be middle-class by 2025. Literacy rates have risen from 52

percent to 65 percent during the initial decade of liberalization (19912001)

Controversy over extent of poverty reduction

The definition of poverty in India has been called into question by the UN World

Food Programme. In its report on global hunger index, it questioned the

government of India's definition of poverty saying:The fact that calorie deprivation

is increasing during a period when the proportion of rural population below the

poverty line is said to be declining rapidly, highlights the increasing disconnect

between official poverty estimates and calorie deprivation.

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While total overall poverty in India has declined, the extent of poverty reduction is

often debated. While there is a consensus that there has not been increase in

poverty between 199394 and 200405, the picture is not so clear if one considers

other non-pecuniary dimensions (such as health, education, crime and access to

infrastructure). With the rapid economic growth that India is experiencing, it is

likely that a significant fraction of the rural population will continue to migrate

toward cities, making the issue of urban poverty more significant in the long run.

Some, like journalist P Sainath, hold the view that while absolute poverty may not

have increased, India remains at an abysmal rank in the UN Human Development

Index. India is positioned at 132ond place in the 2007-08 UN HDI index. It is the

lowest rank for the country in over 10 years. In 1992, India was at 122 ond place in

the same index. It can even be argued that the situation has become worse on

critical indicators of overall well-being such as the number of people who are

undernourished (India has the highest number of malnourished people, at 230

million, and is 94th of 119 in the world hunger index), and the number of

malnourished children (43% of India's children under 5 are underweight

(BMI


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together with China, have shown the clearest trends of globalization with the

accelerated rise in per-capita income.

A 2007 report by the state-run National Commission for Enterprises in the

Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people,

lived on less than 20 rupees per day (USD 0.50 nominal, USD 2.0 in PPP), with

most working in "informal labour sector with no job or social security, living in

abject poverty." However, a new report from the UN disputes this, finding that the

number of people living on US$1.25 a day is expected to go down from 435

million or 51.3 percent in 1990 to 295 million or 23.6 percent by 2015 and 268

million or 20.3 percent by 2020.

A study by the McKinsey Global Institute found that in 1985, 93% of the Indian

population lived on a household income of less than 90,000 rupees a year, or about

a dollar per person per day; by 2005 that proportion had been cut nearly in half, to

54%. Thus, according to the report, between 1985 and 2005, more than 103 million

people have moved out of desperate poverty in urban and rural areas as well. They

project that if India can achieve 7.3% annual growth over the next 20 years, 465

million more people will be lifted out of poverty.

Contrary to popular perceptions, rural India has benefited from this growth:

extreme rural poverty has declined from 94% in 1985 to 61% in 2005, and they

project that it will drop to 26% by 2025. Report concludes that India's economic

reforms and the increased growth that has resulted have been the most successful

anti-poverty programmes in the country.

Persistence of malnutrition among children

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According to theNew York Times, is estimated that about 42.5% of the children in

India suffer from malnutrition. The World Bank, citing estimates made by the

World Health Organization, states that "About 49 percent of the world's

underweight children, 34 percent of the world's stunted children and 46 percent of

the world's wasted children, live in India." The World Bank also noted that "while

poverty is often the underlying cause of malnutrition in children, the superior

economic growth experienced by South Asian countries compared to those in Sub-

Saharan Africa, has not translated into superior nutritional status for the South

Asian child."

A special commission to the Indian Supreme court has noted that the child

malnutrition rate in India is twice as great as sub-Saharan Africa Data from The

World Bank shows that the percentage of underweight children in sub-Saharan

Africa is 24% while India has almost twice the amount at 47%. Out of the 47%,

50 % were from rural areas, 38% from urban areas, 48.9% of the underweight are

girls and 45.5% are boys.

Malnutrition is often associated with diseases like diarrhea, malaria and measles

due to the lack of access in health care which are also linked to the problem of

poverty. The United Nations had estimated that 2.1 million Indian children die

before reaching the age of 5 every year four every minute.

The Indian government had come up with the Integrated Childhood DevelopmentService (ICDS) in 1975 to combat the problem of malnutrition in the country.

ICDS is the worlds largest child development program but its effects on the

problem in India are limited. This is because the program failed to focus on

children under 3, the group that should receive the most help from the ICDS. This

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is due to the fact that most growth retardation would have developed during the

age of 2 and are mostly irreversible. With the lack of help, the chances that

newborn babies are unable to develop fully would be higher. The quality of ICDS

centers also varies from states to states and often, the states with the most serious

problem of malnutrition have the lowest amount of help given. Examples are

Rajasthan, Uttar Pradesh, Bihar, Orissa and Madhya Pradesh, all rank in the

bottom ten in terms of ICDS coverage. Despite the poor distribution of help, the

ICDS is still considered to be efficient in improving the health of the children in

the country. Statistics from UNICEF shows that the mortality rate of children

under 5 has improved from 118 per 1000 live births in 1990 to 66 in the year 2009.

However, malnutrition is still a problem for India; it has been found that

micronutrient deficiencies alone may cost India US$2.5 billion annually.

Malnutrition can lead to children not being able to attend school or perform to their

fullest potential, which in turn leads to a decrease in labor productivity, affecting

Indias economic growth as a whole.

CHAPTER V

SUGGESTION AND CONCLUSION

Poverty alleviation programmes are generally based on the economic

indication of poverty. Any economic indicator of poverty is only a

symptom of my road of circumstances affecting peoples well being group

affecting peoples well being, with the same symptoms are measured by

these economic indicators these, may nevertheless have very different

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propensities for improvement, in particular. Some groups are poised to

use outside assistance effectively, since.

Their expectations skills and organization are well adopted to capitalizing

on new supplied information financial resources and productive assets.

Other group are simply not mobilized for change hence poverty

programme must distinguish between groups that need help and com use

it, from groups that needs in but cannot absorb it.

Hence a decentralized plan must be framed with the objectives of

improving the economic condition of specific groups of specific groups of

population in various slums and urban hamlets.

As for as the study area is concerned the notable feature is the irregularity

in their employment and this causes a high incidence of poverty and high

inequality in the wealth, income and consumption expenditure. The plan

devised for the rural areas must see the creation of regular employment

opportunities of these poor households.

Origins of Poverty1

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Transcript of Origins of Poverty1