This document discusses several topics related to poverty in India. It first explains that a calorie-based norm is not adequate for identifying the poor because it does not differentiate levels of poverty, uses inappropriate proxies for income, and fails to consider other important factors associated with poverty beyond calorie intake. It then defines the "Food for Work programme" and explains why employment generation programs are important for poverty alleviation in India by creating jobs, raising standards of living, reducing rural-urban migration, and imparting skills. Finally, it discusses how creating income-earning assets can address poverty by generating employment and income opportunities.

1. Poverty In India
Prepared by
Navratan Sharma
Vice Principal
1. Why is calorie-based norm not adequate to identify the poor?
Ans. The calorie-based norm is not adequate to identify the poor because of the following reasons:
(a) This mechanism does not differentiate a very poor from other poor. It categorizes them into one
category that is poor. Consequently, it indicates whole class of poor and not, especially, those poor
who are the most needy.
(b) This mechanism uses inappropriate proxies for income like Monthly Per Capita Expenditure
(MPCE),etc. These items do not act as suitable and appropriate proxies for income to measure calorie
requirements.
(c) This mechanism does not consider various important factors that are associated with poverty,
These factors are health care, clean drinking water, proper sanitation and basic education. Mere
estimation of calorie intake does not reflect the true economic condition of an individual.
(d) Another shortcoming of calorie- based norm is that it fails to account for social factors that
exaggerate and worsen poverty like ill health, lack of access to resources, lack of civil and political
freedom, etc. Therefore, because of these shortcomings in the calorie-based norm, it cannot be used
to identify the poor.
2. What is meant by ‘Food for Work programme’?
Ans. The programme was initially launched w.e.f. February 2001 for five months and further
extended. This programme aims at augmenting food security through wage employment in the
drought affected rural areas in eight states, i.e., Gujarat, Chhattisgarh, Himachal Pradesh, Madhya
Pradesh,Maharashtra, Orissa, Rajasthan and Uttaranchal. Wagesby the state governmentcan be paid
partly in kind and partly in cash. The workers are paid the balance of wages in cash, such that they are
assured of the notified minimum wages.
3. Why are employment generation programmes important in poverty alleviation in India?

2. Ans. The importance of employment generation programmes in poverty alleviation efforts in India
areas follows:
(a) Direct Relationship between Employment and Poverty Alleviation: There exists a positive
relationship between employment and poverty alleviation. If government aims at creating new
employmentopportunities,thenmove people will be employedthatwill raise their income and, thus,
will pull them above the poverty line.
(b) Higher Standard of Living: With the increase in income, consequent to the new employment
opportunities, poverty trodden people can enjoy higher standard of living and greater accessibility to
education, better health facilities, proper sanitation. etc.
(c) Reduce Rural-Urban Migration: Poor people tend to migrate from rural to urban areas in sought of
better employment and earning opportunities. This creates undue burden on the urban areas to
provide ample job opportunities to these migrants. Failure of this leads to formation of informal
sector that makes these people more vulnerable in the urban areas. A positive point of employment
generationprogrammes is that it generates ample employment opportunities in rural areas to reduce
rural-urban migration.
(d) Creation of Durable Assets: The employment generation programmes aim at creation of durable
assets like watershed development works, water harvesting, irrigation facilities, canal building,
construction of roads connecting rural areas to urban areas and construction of dams. All these assets
play an important role in the social and economic developmentof the country. (e) Self-sufficiency aid
Self-reliant
Areas: The creation of these durable assets protects the poverty-trodden areas from natural
calamities such as floods and droughts thereby facilitating these areas to be self-sufficient and sell
reliant.(f) Impart and Enhance Skills:Most of the employmentgenerationprogrammeshelp in human
capital formation by enhancing knowledge and imparting skills to the unskilled labourers. Such skills
increase the employmentprospectof the unskilled labourers in the industrial and the service sectors.
This not only enhances income earning capacities of these people but also alleviates poverty
simultaneously. (g) Reduce underemployment and disguised unemployment: Indian agricultural
sector ¡s characterized by disguised unemployment. This implies that although a labourer is engaged
in agriculture but the total output will not be affected even if the labourer is withdrawn. The role of
employment generation programmes in reducing disguised unemployment is very important. These
programmes engage these 104 Poverty NCERT Textual Exercise (Solved) extra labourers in
economically fruitful activities, thereby, reducing unnecessary burden on the agricultural sector.
4. How can creation of income earning assets address the problem of poverty?
Creation of income earning assets generate employment opportunities through which poor can raise
their income which ultimately helps in improving standard of living. The income earning assets are
those assets the ownershipofwhich are controlledand owned by the membersofa household.These
are land, capital, labour and different levels of skills, Poverty and inequality of income arises due to

3. improper distribution of and access to such income-earning assets. Moreover, a substantial
proportion of population is engaged in the small scale production that often lacks capital and modern
technology. Consequently, such techniques directly hamper the income earning capabilities of small
scale industries.Inadditionto this poor people often lack access to social services like proper medical
and health care facilities, better education, proper sanitation, etc. The lack of access to such social
services affects health, productivity and finally income earning capabilities of the poor. In order to
alleviate the problem of poverty, the role of income earning assets cannot be substituted. There are
various measures that can create income earning assets for the poor people like providing proper
access to easy credit, capital, money assistance, imparting technical skills, allotment of land to the
landlessand marginal farmers arid better access to education health services along with better access
to information and support services for increasing their productivity. This in turn leads to increase in
the income opportunitiesarid earningcapabilities,thereby, contributing to the alleviation of poverty.
5.Is there any relationship between unemployment and poverty? Explain
Ans. Yes, there do exist a direct and positive relationship between unemployment and poverty.
Unemploymentleads to poverty and poverty in turn leads to unemployment. An unemployed person
has no means to earn money and cannot fulfil his own and his family’s basic needs. He and his family
cannot avail quality education, medical facilities and has no means to create income-earning assets
Such circumstances often compel indebtedness. Consequently, an unemployed person exaggerates
poverty for his family due to indebtedness, This confirms the positive relationship between
unemployment arid poverty. If government wants to alleviate poverty, then it should aim at creating
new employmentopportunities.Asa result,more people will getemployedand perhaps their income
will rise. This rise in income will improve their access to quality education, better health care and
other basic amenities, Further, these newly employed people will experience appreciation in their
living standards and can create income-earning assets. The combined result of all these factors leads
to alleviation of poverty. Hence, there exists a positive (but a negative) relationship between
unemployment (employment) and poverty.
6.Illustrate the difference between rural and urban poverty. Is it correct to say that poverty has
shifted from rural to urban areas?
The major difference betweenrural and urban poverty in India lies in the standard of living. The latter
enjoys higher living standard compared to the former and the standard of living may be attributable
to the wide income disparity and gap between the two. Another major difference is the level of
education and also access to education The urban poor enjoy better access to quality education than
the rural counterparts. Thirdly, health care facilities prevalent in the urban areas are far better than
that of in the rural areas. Also the rural poor people lack access to these health facilities arid
important medical information. Fourthly, the difference lies in the type of houses they live in. The
rural poor livesinkutcha (Raw)house,while the urban poor resides in pucca(cemented) houses which
are well developed with proper sanitation facilities. Fifthly, rural poverty is temporary as the rural
poor can migrate to urban areas to seek employment but, on the urban poverty is permanent.

4. Human Capital formation
1. What are the two major sources of human capital in a country?
Ans. Human capital refers to the Stock of skill and, expertise of a nation at a point of time. The two
major sources of human capital in a country are (i) Investment in education (ii) Investment in health
Education and health are considered an important input for the development of a nation. A better
educatedperson has greater skillsand knowledge andtherefore greater opportunity to work and earn
higher income. Similarly, a healthy person is an asset for the nation as he is more productive than a
sick person,who is unable to work efficientlydue tobad health.Hence, expenditure oneducation and
health is an important source of human capital formation.
2. Bring out the differences between human capital and human development. OR How is human
development a broader term as compared to human capital?
Difference between Human Capital and Human Development Human Capital Human Development
1. Human capital considers education and health as a means to increase labour productivity. Human
development considers education and health as an integral part of human well being.
2. Human capital treats human being as a means to achieve an end which is higher productivity. It
considers human beings as ends in themselves.
3. It considers that investment in health & education should increase labour productivity in the
country. It considers that good education and health are a fundamental right of every citizen.
3.What factors contribute to human capital formation?
Ans. Sources of Human Capital Formation: (a) Expenditure on Education (b) Training (c) Expenditure
on Health (d) Migration (e) Expenditure on Information (for detail refer text book)
4.Discuss the following as a sources of human capital formation (a) Health infrastructure; (b)
Expenditure on migration.
Ans. (a) Health Infrastructure (i) Health is another important source of human capital formation.
Preventive medicine (vaccination), curative medicine (medical intervention during illness), social
medicine (spread of health literacy) and provision of clean drinking water and good sanitation are the
various forms of healthexpenditures.(ii) Asicklabour is lessefficient than a healthy labour. (iii) Thus,
health expenditure directly increases the supply of healthy labour force and is, thus, a source of
human capital formation. (b) Migration (i) People sometimes migrate from one place to the other in

5. search of better job. (ii) It includes migration of people from rural areas to urban areas in India and
migration of labour from India to other countries of the world. (iii) Migration involves cost of
transport, higher cost of living in the migrated places and psychic costs of living in a strange socio-
cultural set-up. The enhanced earnings in the new place outweigh the costs of migration. Thus,
expenditure on migration is also a source of capital formation.
5. How does investment in human capital contribute to growth?
Ans. Role ofHuman Capital Formation inEconomic Growth: (a) RaisesProduction (b) Raises Efficiency
and Productivity (c) Brings Positive Changes in Outlook and Attitudes (d) Improves Quality of Life (e)
Raises Life Expectancy (f) Raises Social Justice.
6.What are the main problems of human capital formation in India?
Ans. Main problems of human capital formation in India are:
(i) Rising Population: Rapidly rising population adversely affects the quality of human capital
formation in developing countries. It reduces per capita availability of existing facilities. A large
population requires huge investment in education and health.
(ii) Long Term Process: The process of human development is a long term policy because skill
formation takes time. The process which produces skilled manpower is thus slow. 165 Human Capital
Formation in India)
(iii) High Regional and Gender Inequality: Regional and gender inequality lowers the human
development levels.
(iv) Brain Drain: Migration of highly skilled labour termed as ‘Brain Drain’ adversely affects the
economic development.
(v) Insufficient on-the-job-training in agriculture: Agriculture sector is neglected where the workers
are not given on-the-job-training to absorb emerging new technologies.
(vi) High Poverty Levels:A large proportion of the populationlivesbelowpoverty line and do not have
access to basic health and educational facilities. A large section of society cannot afford to get higher
education or expensive medical treatment for major disease