Poverty

1. POVERTY
LAVANYA K
ASSISTANT PROFESSOR
DEPARTMENT OF ECONOMICS
ETHIRAJ COLLEGE FOR WOMEN

2. POVERTY
Poverty is the state where one lacks usual or socially acceptable
amount of money or material possessions.
Poverty is said to exist when people lack the means to satisfy
their basic needs.
These may be defined as narrowly as “those necessary for
survival”.

3. POVERTY…..FACTS!!!!!
According to the World Bank, if you're
living on $1.90 a day or less, you're living
in extreme poverty.
767 million people in that category
have $1.90 a day or less in purchasing
power to fulfill their daily needs.
And here's another point to consider:
You can have more than $1.90 a day to
spend on the basic necessities and still
live in relative poverty.

5. POVERTY LINE - FACTS!!
"Not surprisingly, richer
countries tend to have
higher poverty lines, while
poorer countries have lower
poverty lines." -
WORLD BANK
That's why the World Bank has
come up with two new "poverty
line" figures for the world's
middle-income countries:
1. $3.20 a day for lower middle
income nations (like Egypt,
India and the Philippines) and
1. $5.50 a day for upper middle
income nations (like Brazil,
Jamaica and South Africa).

6. POVERTY LINE
Poverty line is the
level of income to
meet the minimum
living conditions
Poverty can be
measured in terms of
the number of people
living below this line
(with the incidence of
poverty expressed as
the head count ratio).
The PLB comprises goods
and services considered
essential to a basic
minimum standard of
living — food, clothing,
rent, conveyance, and
entertainment.
In India, 21.9% of
the population live
below the national
poverty line in
2011.
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2

7. Absolute Poverty:
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
Absolute poverty means about the
same everywhere, and can be eradicated
as demonstrated by some countries.
Quality of life is poor
Measured using Poverty Line
Relative Poverty:
Relative poverty occurs when
people do not enjoy a certain level of living
standards as and enjoyed by the bulk of the
population.
This varies from country to country,
sometimes within the same country. Relative
poverty refers to a phenomenon of relative
deprivation.
Quality of life is marginally better as
those living under relative poverty have
access to health care services
Measured Using the Gini - Coefficient
and Lorenz Curve

9. Poverty Estimation
A common method used to estimate
poverty in India is based on the
income or consumption levels and if
the income or consumption falls below
a given minimum level, then the
household is said to be Below the
Poverty Line (BPL).
Poverty Line Calculation
Poverty estimation in India is
now carried out by NITI Aayog’s
task force through the
calculation of poverty line based
on the data captured by the
National Sample Survey Office
under the Ministry of Statistics
and Programme Implementation
(MOSPI).

10. Need for Poverty Estimation
Impact of Welfare Schemes: Poverty estimates are
not just important for academic purposes but are
also crucial to track the impact and success of
various government policies, especially social welfare
schemes that are intended to eliminate poverty.
BPL Census is conducted by the Ministry of
Rural Development (along with the
partnership of state), in order to identify
the poor households.
Poverty Elimination Plan: The Poverty estimates in
the form of poverty line are used to formulate poor
centric poverty elimination plans.
Constitutional Requirement: Poverty estimation
paves the way for poverty elimination, that in
turn prepares the ground for a just and
equitable society.

11. Data Collection Methods
Uniform Resource Period (URP)
Up until 1993-94, the poverty line was based on
URP data, which involved asking people about their
consumption expenditure across a 30-day recall
period that is the information was based on the
recall of consumption expenditure in the previous
30 days.
Mixed Reference Period (MRP)
From 1999-2000 onwards, the
NSSO switched to an MRP method
which measures consumption of five
low-frequency items (clothing,
footwear, durables, education and
institutional health expenditure)
over the previous year, and all other
items over the previous 30 days.

12. B
I A
L S
R
ESTIMATION OF POVERTY
IN BRITISH INDIA
ESTIMATION OF POVERTY
IN INDEPENDENT INDIA
ALAGH COMMITTEE
LAKDAWALA FORMULA
SURESH TENDULKAR COMMITTEE
RANGARAJAN COMMITTEE

13. ESTIMATION OF
POVERTY IN BRITISH
INDIA
📖Dadabhai Naoroji through his book, “Poverty and
Unbritish Rule in India” made the earliest estimation of
poverty line (₹16 to ₹35 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 ₹15 to ₹20 per capita per month) was also based on a
minimum standard of living perspective in which nutritional
requirements were implicit.
📖In 1938, the National Planning Committee was set up by
Subhash Chandra Bose under the chairmanship of Jawaharlal
Nehru for the 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 ₹75 per capita per year.The Bombay Plan
was a set of a proposal of a small group of influential
business leaders in Bombay for the development of the
post-independence economy of India.

14. ESTIMATION OF POVERTY IN
INDEPENDENT INDIA
📖Planning Commission Expert Group (1962), working group
constituted by the Planning Commission formulated the
separate poverty lines for rural and urban areas (₹20 and
₹25 per capita per year respectively).
📖VM Dandekar and N Rath (1971), made the first
systematic assessment of poverty in India, based on
National Sample Survey (NSS) data.
📖Unlike previous scholars who had considered subsistence
living or basic minimum needs criteria as the measure of
poverty line, VM Dandekar and N Rath were of the view
that poverty line must be derived from the expenditure
that was adequate to provide 2250 calories per day in both
rural and urban areas.

15. Until 1979, poverty was calculated based on the income of the citizens. In
1979, based on the recommendation by a committee headed by Y K Alagh,
poverty was estimated based on the calories consumed by the population.
In an urban area, if a resident consumes less than 2100 calories per day
than he/she suffers from poverty.
According to this committee, poverty estimation differs in rural and urban
areas. In the rural area, if a resident consumes less than 2400 calories per
day, then he/ she belongs BPL population.
This is an assumption that the urban population need lesser calories as
they are not involved in physical works like that of the rural population.
The Alagh committee was the first in India to define the poverty line.
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Alagh Committee
1979

16. ·
In this method, the average of the
m i n i m u m n e c e s s a r y p e r c a p i t a
household expenditure is calculated to
estimate the poor.
The obtained value is the base for
the poverty line and
anyone who lives in a household with
per capita expenditure lesser than the
obtained average belongs to the BPL.
Through this method, it was
estimated that 36% of the population
were BPL in 2004-2005 and
22% of the population under BPL in
2011.
Poverty in India was estimated using
this method until 2011.
Proposed by Lakdawala Committee
that was headed by D.T.Lakdawala.
Lakdawala committee used the
same method used by the Alagh
committee.
That is based on household per
capita expenditure.
However, it included certain criteria
that were missing in the former. Health
and education were considered during the
estimation.
This committee used CPI-IL (Consumer
price index for Industrial Labourers) and
CPI-AL (Consumer price index for
Agricultural labourers to determine the
poverty line.
LAKDAWALA FORMULA (1993)

17. 📌Expert group
constituted by the
Planning Commission
and, chaired by
Suresh Tendulkar,
was constituted to
review methodology
for poverty
estimation and to
address the following
shortcomings of the
previous methods
📌Obsolete Consumption
Pattern: 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.
📌Inflation
Adjustment:
There were issues
with the
adjustment of
prices for
inflation, both
spatially (across
regions) and
temporally (across
time).
📌Health and
Education
Expenditure:
Earlier poverty
lines assumed that
health and
education would be
provided by the
state and
formulated poverty
lines accordingly.
SURESH TENDULKAR COMMITTEE (2009)

18. 📌Shift from Calorie
Consumption based Poverty
Estimation: It based its
calculations on the
consumption of the items
like cereal, pulses, milk,
edible oil, non-vegetarian
items, vegetables, fresh
fruits, dry fruits, sugar,
salt & spices, other food,
intoxicants, fuel, clothing,
footwear, education,
medical (non-institutional
and institutional),
entertainment, personal &
toilet goods.
📌Uniform Poverty line Basket:
Unlike Alagh committee (which
relied on separate PLB for
rural and urban areas),
Tendulkar Committee computed
new poverty lines for rural and
urban areas of each state
based on the uniform poverty
line basket and found that all
India poverty line (2004-05)
was:
● ₹446.68 per capita per
month in rural areas
● ₹578.80 per capita per
month in urban areas
📌Private Expenditure:
Incorporation of
private expenditure on
health and education
while estimating
poverty.
📌Mixed Reference
Period: The Committee
recommended using
Mixed Reference
Period based estimates
📌Price Adjustment
Procedure: The
Committee also
recommended a new
method of updating
poverty lines, adjusting
for changes in prices
and patterns of
consumption (to correct
spatial and temporal
issues with price
adjustment), using the
consumption basket of
people close to the
poverty line.
TENDULKAR COMMITTEE - Recommendations

19. 📌Formed in the year 2012,
this committee was chaired
by Rangarajan.
📌The Rangarajan Committee
goes back to the idea of
Lakdawala committee method
of calculating Rural and Urban
Poverty Separately. Add your words
here,according to
your need to draw
the text box size.
Rangarajan Committee (2012)
📌The Rangarajan group took the
view that the consumption basket
should contain a food component
that satisfied certain minimum
nutrition requirements, as well as
consumption expenditure on
essential non-food item groups
(education, clothing, conveyance
and house rent) besides a
residual set of behaviourally
determined non-food expenditure.

20. 📌The Rangarajan committee
estimated a daily per capita
expenditure of RS 32 and
RS 47, in rural and urban
areas respectively.
Add your words
here,according to
your need to draw
the text box size.
📌The Rangarajan expert group
estimates that 30.9 percent of
the rural population and 26.4
percent of the urban population
were below the poverty line in
2011-12.
The all-India ratio was 29.5
percent.
Rangarajan Committee

21. Current status of poverty line estimation
📌The task was given
14 member task force
headed by NITI Aayog vice-
chairman, Aravind Panagaria.
📌They too have failed and
have recommended setting
up of a new specialised panel
to debate the issue.
📌The above cases show the
complexity and difficulty in
the determination of the
poverty line.
📌Currently, the Indian
government still haven’t
found a solid solution to
estimate the poverty level
of the country.

22. Year
% Under
US $5.50
Per Day
Change
2011 86.80% -3.80%
2009 90.60% -1.90%
2004 92.50% -2.80%
1993 95.30% -0.20%
1987 95.50% -0.90%
1983 96.40% -0.60%
1977 97.00% -0.60%
POVERTY IN INDIA
Source : World Bank

23. Causes of Poverty in India
Low
Agricultural
Productivity
👍India’s population has steadily increased
through the years.
👍During the past 45 years, it has risen at a
rate of 2.2% per year, which means, on
average, about 17 million people are added to
the country’s population each year.
👍This also increases the demand for
consumption goods tremendously.
👍A major reason for poverty in the low
productivity in the agriculture sector. 👍
The reason for low productivity is manifold.
👍Chiefly, it is because of fragmented and
subdivided land holdings, lack of capital,
illiteracy about new technologies in farming,
the use of traditional methods of
cultivation, wastage during storage, etc.
👍There is underemployment and
disguised unemployment in the country,
particularly in the farming sector.
👍This has resulted in low agricultural
output and also led to a dip in the
standard of living.
👍Economic development has
been low in India especially in
the first 40 years of
independence before the LPG
reforms in 1991.
Population
Explosion
Inefficient
Resource
utilisation
Low Rate of
Economic
Development

24. 👍Price rise has been steady in the
country and this has added to the
burden the poor carry.
👍Although a few people have
benefited from this, the lower
income groups have suffered
because of it, and are not even able
to satisfy their basic minimum
wants.
👍The British colonisation and rule
over India for about two centuries
de-industrialised India by ruining its
traditional handicrafts and textile
industries.
👍Colonial Policies transformed India
to a mere raw-material producer for
european industries.
👍Unemployment is another factor causing
poverty in India. The ever-increasing population
has led to a higher number of job-seekers. 👍
However, there is not enough expansion in
opportunities to match this demand for jobs.
👍Apart from economic factors, there
are also social factors hindering the
eradication of poverty in India.
👍Some of the hindrances in this
regard are the laws of inheritance,
caste system, certain traditions, etc.
👍The shortage of capital and
entrepreneurship results in low level of
investment and job creation in the economy.
👍Most of India's poor belong to
the states of Bihar, UP, MP,
Chhattisgarh, odisha, Jharkhand,
etc. Natural calamities such as
frequent floods, disasters,
earthquakes and cyclones cause
heavy damage to agriculture in
these states.
Causes of Poverty in India
Colonial
Exploitation

25. POVERTY TRAP
LOW
ECONOMIC
GROWTH
LOW
INVESTMENT
LOW
SAVINGS
LOW
INCOME
LOW LEVEL
EDUCATION
AND
HEALTHCARE
LOWLEVELS
OFHUMAN
CAPITAL
LOW
INCOME
LOW
PRODUCTIVITY

26. POVERTY ALLEVIATION PROGRAMMES IN INDIA
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National Family Benefit Scheme
(NFBS)
Annapurna
Pradhan Mantri Gramin Awaas
Yojana
Aajeevika Grameen Express Yojana
(AGEY)
Integrated Rural Development
Programme (IRDP)
National Maternity Benefit Scheme
National Rural Employment
Guarantee Act (NREGA)
National Old Age Pension Scheme
(NOAPS)
KEYS
Jawahar Gram Samridhi
Yojana (JGSY)

27. 👉To eliminate rural poverty by providing income-
generated assets to the poorest of the poor.
👉Started in 1978-79.
👉Main aim is to create sustainable opportunities
for self-employment in the rural sector.
👉Assistance is given in the form of subsidy by
the government.
👉It is funded on 50:50 basis by the centre and
the state.
Integrated Rural
Development Programme
(IRDP)
👉It is for the familes below the poverty line.
👉Implemented by states and union
territories.
👉It provides a sum of Rs.500 to a pregnant
woman for the first two live births.
👉It was later changed into Janani Suraksha
Yojana with Rs.1440 for every institutional
birth.
National Maternity
Benefit Scheme
Poverty Alleviation Programs in India

28. National Rural Employment
Guarantee Act (NREGA)
● Came into force in 2006.
● It was later modified as the Mahatma Gandhi National Rural
Employment Guarantee Act (MGNREGA) in October 2, 2009.
● It is an Indian labour law and social security measure that
aims to guarantee the “right to work”.
● It was started to enhance the livelihood security in rural
areas by providing at least 100 days of guaranteed wage
employment in a financial year.
● If work is not provided within 15 days of applying, applicants
are entitled to an unemployment allowance.
National Old Age Pension
Scheme (NOAPS)
● To provide pension to people above the age of
65.
● Came into effect on 15 August 1995.
● Initially, 200 rupees per month was given but
later it was changed to 500 rupees as per 2011-
12 budget.
Poverty Alleviation Programs in India

29. Jawahar Gram
Samridhi Yojana
(JGSY)
National Family
Benefit Scheme
(NFBS)
Annapurna
● It is a comprehensive version of
previously launched “Jawahar Rozgar
Yojana (JRY)”.
● Started on 1 April 1999.
● Main objective: - For the
development of rural areas.
● Secondary objective: - To give out
sustained wage employment.
● This was only for the people living
below poverty line.
● Started in August 1955.
● Sponsored by the state government.
● From the year 2002-03 it was
transferred to the state sector
scheme
● It comes under the community and
rural development.
● It provides a sum of Rs.20000 to a
person who becomes the head of the
family after the death of the
primary breadwinner.
● Started in 1999-2000 by the
Central Government.
● Rs.100cr was allocated during
2000-01.
● It mostly covers groups of
“poorest of the poor” and
“indigent senior citizens”.
Poverty Alleviation Programs in India

30. ● It is a part of Deendayal Antyodaya
Yojana - National Rural Livelihood Mission
(DAY-NRLM).
● This will help to provide safe, affordable
and community monitored rural transport
services to connect remote villages with
key services and amenities
Poverty Alleviation Programs in India
Pradhan Mantri Gramin
Awaas Yojana
● It was started in 1999–2000.
● This scheme aimed at creating
housing for everyone.
● It aimed at creating 20 lakh
housing units out of which 13 lakhs
were in rural area.
Aajeevika Grameen
Express Yojana (AGEY)

31. Alternate measures of poverty:
The MULIDIMENSIONAL POVERTY
INDEX
● However, uses “outcomes” rather than
expenditure — the presence of an
undernourished person in the
household will result in it being
classified as “poor”, regardless of the
expenditure on nutritious food.
● The MPI is a more comprehensive
measure of poverty because it includes
components that capture the standard
of living more effectively.
● In 2011, Oxford University
researchers Sabina Alkire and James
Foster devised the multidimensional
poverty index (MPI) to capture
poverty using 10 indicators.
● These indicators include nutrition,
child mortality, years of schooling,
school attendance, ownership of assets,
and access to proper house, electricity,
drinking water, sanitation, and clean
cooking fuel.
● Poverty is measured in terms of
deprivation in at least a third
of these indicators.

32. MPI measures of India
In 2015-16, 369.546
million (nearly 37
crore) Indians were
estimated to meet the
deprivation cut-off
for three or more of
the 10 indicators.

33. THANK YOU