This document discusses poverty and informal settlements. It defines poverty as a lack of resources and dignity. Causes of poverty include population growth, low agricultural productivity, and unequal development. Measures of poverty include headcount ratios, poverty gaps, and severity indexes. Informal settlements like slums and squatter settlements form due to lack of affordable housing. Squatters illegally settle on public or vacant land. Rural to urban migration is driven by opportunities in cities but many migrants end up in low-wage informal jobs. Poverty leads to socioeconomic deprivation and environmental degradation. The informal sector provides subsistence but has issues like unequal employment that need addressing. Informal economic activities present challenges for urban planning authorities.

1. HOUSING AND COMMUNITY PLANNING
ASSIGNMENT- UNIT 4
POVERTY AND INFORMAL SECTOR
Submitted By:
SIMRAN VATS
MURP (sem 2)
Faculty of Urban Planning and Architecture, SUPVA, Rohatk, Haryana.

2. POVERTY AND POOR SETTLEMENT:
DEFINATION:
POVERTY: VIOLATION OF HUMAN DIGNITY
Poverty is scarcity, dearth, or the state of one who lacks a certain amount of material
possessions or money. It includes low incomes and the inability to acquire the basic
goods and services necessary for survival with dignity
 According to Mobile Orshansky who developed the poverty measurements used
by the U.S. government, “Poor is to be deprived of those goods, services and
pleasures which others around us take for granted.”
 According to David Kurten, Poverty also involves social disintegration and
environmental degradation which he describes as forming the threefold human
crisis in the world today.
Poverty has various dimensions:
 Income poverty
 Security poverty
 Education poverty
 Health – Nutrition Poverty
 Multiple deprivation
 Poor people’s perception of poverty level
Poverty is “welfare level below a reasonable minimum.”
The primary focus is on individuals or groups suffering from multiple deprivations:
CORE
POOR EDUCATION
HEALTH POOR
SECURITY POOR
POOR LIVING

3. Deprivation can be defined as the consequence of a lack of income and other resources,
which cumulatively can be seen as living in poverty. The relative deprivation approach to
poverty examines the indicators of deprivation, these can then be related back to income
levels and resources.
Causes of Poverty
Rapidly Rising Population:
The population during the last 45 years has increased at the rate of 2.2% per annum.
On average 17 million people are added every year to its population which raises the
demand for consumption goods.
Low Productivity in Agriculture:
The level of productivity in agriculture is low due to subdivided and fragmented holdings,
lack of capital, use of traditional methods of cultivation, illiteracy etc. This is the main
cause of poverty in the country.
Under Utilized Resources:
The existence of under employment and disguised unemployment of human resources
and under utilization of resources has resulted in low production in agricultural sector.
This brought a down fall in their standard of living.
Low Rate of Economic Development:
The rate of economic development in India has been below the required level.
Therefore, there persists a gap between level of availability and requirements of goods
and services. The net result is poverty.
Price Rise:
The continuous and steep price rise has added to the miseries of poor. It has benefited
a few people in the society and the persons in lower income group find it difficult to get
their minimum needs.

4. Unemployment:
The continuously expanding army of unemployed is another cause of poverty. The job
seeker is increasing in number at a higher rate than the expansion in employment
opportunities.
Shortage of Capital and Able Entrepreneurship:
Capital and able entrepreneurship have important role in accelerating the growth. But
these are in short supply making it difficult to increase production significantly.
Social Factors:
The social set up is still backward and is not conducive to faster development. Laws of
inheritance, caste system, traditions and customs are putting hindrances in the way of
faster development.
Political Factors:
The Britishers started lopsided development in India and reduced Indian economy to a
colonial state. They exploited the natural resources to suit their interests and weaken
the industrial base of Indian economy.
In independent India, the development plans have been guided by political interests.
Hence, the planning a failure to tackle the problems of poverty and unemployment.
Types of poverty
Absolute poverty
Absolute poverty refers to a threshold income (consumption) level defined in absolute
terms. Persons below a pre-defined threshold income are called poor.
Relative poverty
Relative poverty defined in relative terms with reference to level of living of another
person; or, in relation to an income distribution parameter.

5. Absolute Poverty Measurements
 Human Poverty Index
The Human Poverty Index (HPI)
country, developed by the United Nations
Not only poor countries but also but
human poverty . So economists introduced separate two indexes to measure the
poverty.
1. Human poverty index for developing countries. (HPI 1)
 Percentage of people who are living more than 40 years
 Adults percentage with illiteracy
 Percentage of people who are impossible to access for pure water.
 Percentage of low weight infants below 5 year old
2. Human poverty index for developing countries.(HPI 2 )
 Percentage of people who are not living more than 60 years from the total
population.
 Percentage of people who are inability to read and write in day today activities from
the total population.
Absolute Poverty Measurements
Human Poverty Index
Human Poverty Index (HPI) was an indication of the standard of living
United Nations.
Not only poor countries but also but also industrial countries also are suffering from the
human poverty . So economists introduced separate two indexes to measure the
Human poverty index for developing countries. (HPI 1)
Percentage of people who are living more than 40 years.(Longe
Adults percentage with illiteracy .(Knowledge)
Percentage of people who are impossible to access for pure water.
Percentage of low weight infants below 5 year old.( Decent standards of Poverty)
Human poverty index for developing countries.(HPI 2 )
rcentage of people who are not living more than 60 years from the total
Percentage of people who are inability to read and write in day today activities from
standard of living in a
also industrial countries also are suffering from the
human poverty . So economists introduced separate two indexes to measure the
.(Longevity)
Percentage of people who are impossible to access for pure water.
.( Decent standards of Poverty)
rcentage of people who are not living more than 60 years from the total
Percentage of people who are inability to read and write in day today activities from

6.  Segment of people who suffer from income poverty.
 Group of population suffer from the unemployment more than 12 months.
 Poverty Line
 Poverty Line ( Poverty Threshold)
Source: B.seebohm rowntree,Poverty: a study of townlife,100th edition,british
Library,2000
 Food poverty line
 Non food poverty line
 National poverty Line
Food poverty line
Minimum amount of food an individual must consume to stayhealthy
Source: Moazzem Hossain, Iyanatul Islam, Reza Kibria, South Asian Economic
Development:Transformation, Opportunities and Challenges,
Non food poverty line
Average per capita non-food expenditure of households whose per capita total
expenditure is close to the food poverty line.
Source: The Department of Census and Statistics Announces the Official Poverty Line
for SriLanka, 2004
National poverty Line
This is the percentage of people living below the national poverty line.
 Non Food Poverty Line
The lower bound of the non-food poverty line means average per capita
non-food expenditure of households whose per capita total expenditure is close to the
food poverty line.

7. The upper bound is defined means average per-capita non-food expenditure of
households whose per-capita food expenditure is close to the food poverty line.
Relative Poverty measurements
1. Lorenz curve and Gini coefficient
Lorenz curve is the line which shows the distribution of income among the households.
2. Gini Index
The Gini coefficient is usually defined mathematically based on the Lorenz curve , which
plots the proportion of the total income of the population (y axis) that is cumulatively
earned by the bottom x% of the population. The line at 45 degrees thus represents
perfect equality of incomes.

8. Measures of Poverty
There are Various measures of the extent of poverty .
 The head count index.
 The poverty gap index.
 The squared poverty gap (poverty severity) index.
Head count index
The most widely used measure is the headcount index.
It simply measures the proportion of the population that is counted as poor.
Head count index = No. of poor /Total no. of population
Poverty gap index
Poverty gap index is a measure of the intensity of poverty. It is defined as the average
poverty gap in the population as a proportion of the poverty line.
The poverty gap index is an improvement over the poverty measure headcount ratio
which simply counts all the people below a poverty line, in a given population, and
considers them equally poor.

9. Poverty gap index estimates the depth of poverty by considering how far, on the
average, the poor are from that poverty line.
Poverty gap index (PGI) is calculated as,
where is the total population of poor who are living at or below the poverty line and is
the income of then poor household.
Squared poverty gap index
Squared poverty gap index, also known poverty severity index or , is related to poverty
gap index.
It is calculated by averaging the square the poverty gap ratio. By squaring each poverty
gap data, the measure puts more weight the further a poor person's observed income
falls below the poverty line.
The squared poverty gap index is one form of a weighted sum of poverty gaps, with the
weight proportionate to the poverty gap.
Concerns for Poverty
 Increasing supply of basic needs.
 Increasing supply of food and other goods.
 Increasing supply of healthcare and education, water and energy utilities.
 Removing constraints on govt. services
 Reversing brain drains.
 Controlling overpopulation.
 Increasing personal income.

10. Poor Settlements:
Urban poor settlements are the most disadvantaged part of city, they are distinct as
settlement for poor people, poor quality of housing, lack of services or under standard,
isolated in terms of poor integration into border urban community, facing a health
problems, poor education and other negative perceptions.
Spontaneous settlements are referred to as an outward spread of built-up areas
caused by expansion, with inadequate provision of facilities. the formation of
spontaneous settlements is as a result of urbanization, where rents go high as the city
evolves thereby moving the low income earners to the suburbs for easy access to
places of opportunity for casual work at the same time not far away from the city.
Slums and Squatters
Slums" are highly congested urban areas marked by deteriorated, unsanitary buildings,
poverty, and social disorganization.
"Squatters" settle on land, especially public or unoccupied land, without right or title.
Squatters include those who settles on public land under regulation by the government,
in order to get title to it.
Simplifying
Slums refer to the environmental aspects of the area where a community resides, while
squatters refer to the legality of the land ownership and other infrastructure provision.
Differences between SLUMS and SQUATTERS
Slum Squatters
Yes Access to improved sanitation Yes
Yes Access to safe water Yes
Yes Durability of housing Yes
Yes Sufficient living area Yes

11. Yes Secure tenure No
Functions in urban contexts
Squatter settlements have a functional role in the process of urban development
ultimately integrated into city life embedded with their forming and transforming
processes and an intense craving for urban resources. However, dependency on urban
resources drives the squatters to exploit the available resources for subsistence and
livelihood and it generates diverse social, cultural and economic tribulations related to
the social structure of urban areas. Forming of squatters in Nepal embeds with different
social, physical, economic and legal characteristics that are very crucial for determining
their status. Their social and economic status is grim in shanty settlements with diverse
problems related to housing and basic rights fulfillment issues—good housing,
infrastructure related problems as roads, drinking water, and health. The squatters’
settlement is verboten, as such they are illegal settlers and many lack land ownership
documents. The issue of fake or professional squatters is also a problem. However,
they are transforming in the process of adjustment to the urban context.
Slum and Squatter Formation by illegal occupation
Squatter and slum settlements have formed mainly because of the inability of city
governments to plan and provide affordable housing for the low-income segments of the
urban population. Hence, squatter and slum housing is the housing solution for this low-
income urban population. In the mega urban regions or metropolitan areas, part of the
problem would lie in the coordination among different authorities that are in charge of
economic development, urban planning, and land allocation. Such coordination issues
also exist between the city and national governments
Age composition: The majority of the household population who was squatting where
between the age 25-34. Young population who migrate from the surrounding rural areas
to cities for searching of job opportunity, better life, and education caused the highest
squatting process .

12. Education status: In developing country for the advantage of education safety life
majority of the rural people migrates from rural area to urban. This indicates that, the
elite of the population is not willing to live around the rural areas for the search of quality
life which intern forced them to hold land illegally.
Occupational status: The majority of the household heads were government
employees with little income status which not afford them to have their own legal
housing. Therefore most people who were forced to squat around the free space,
agricultural land and other illegal holding areas were mostly government employees.
This was due to low income status of the employees which cannot make them
competent in land holding market activities.
Economic condition: Monthly income of the squatter settlements is very low with the
context of land lease price market of the state. This suggests that if they had
sustainable income they would have tenure security, because they had the funds to do
so. Therefore, there would be an incentive to invest more in their housing and improve
their immediate environments.
Migration
 Migration in general and rural-urban migration in particular is always seen as the
process of rebalancing economic resource in order to set up a new stage of
economic development.
 Urban informal sector acts as a major pull factor for rural - urban migration in
India.
 Rural-urban migration has its close connections to the development and spread
of urban informal sectors The massive influx of rural people into the urban areas
has changed the job structure of the destination places.
 Rural peoples are mainly attracted to migrate by economic incentives as well as
by other attractions of an urban life. But in reality very few of the fortunate
migrants are able to manage to secure jobs in industries. Some of others wait to
get a job in the formal sector and thus form a ‘reserve army of labour’ which in

13. case of India is ‘the number of open urban unemployment’. The rests get
absorbed only in the urban informal sector.
 Again low wage, low security, high labour intensity in the informal jobs has
reduced living standard of the migrants who are involved into those jobs. So,
simply there is a shift of poverty standards from rural-urban.
Socio-Economic deprivation and environment degradation
As per the definition given by Peter Townsend (1987), deprivation can be explained as
“a state of observable and demonstrable disadvantage relative to local community or
the wider society or nation to which the individual, family or group belongs”. Broadly, it
can be classified into two categories- material and social, indicating lack of access to
the basic necessities and social weakness respectively.
socio-economic deprivation can be described as the lack of social and economic
benefits which are considered to be basic necessities of a society or community or in a
broader sense of a region. The performances of HDI based indicators also reflect the
quality of life of people of any particular region.
Informal Sector
The main aim of the informal sector is considered to be the provision of subsistence to
families. Problems in the informal sector can be solved if issues like employment
relationships and inequality are solved. Informal activities are defined as 'a way of
doing things' characterized by:
 Ease of entry
 Small scale of the activity
 Self-employment, with a high proportion of family workers & apprentices
 Little capital & equipment
 Labor intensive technologies
 Low skills
 Low level of organization with no access to organized markets.

14. Informal economy
All economic activities by workers or economic units that are – in law or practice – not
covered or sufficiently covered by formal arrangements.
Employment in the informal economy
Sum of employment in the informal sector(d) and informal employment (f) outside the
informal sector.
Informal employment
Total number of informal jobs, whether carried out in formal sector enterprises, informal
sector enterprises, or households; including employees holding informal jobs (e);
employers and own-account workers employed in their own informal sector enterprises;
members of informal producers’ cooperatives; contributing family workers in formal or
informal sector enterprises; and own-account workers engaged in the production of
goods for own end use by their household.
Implication in Physical Planning
Urban planning in developing countries -- particularly in cities with rapid urbanization --
is facing a problem with the informal sector. The businesses that comprise the informal
sector, typically operating on streets and in other public places, are often seen as eye-
sores and undesirable activities. Thus, conflicts arise between urban authorities trying to
keep their cities clean and the urban informal sector operators who need space for their
activities.
Depending on whether the analytical focus is on people, activity, or habitat, the informal
sector is distinguished from the formal sector by:
(i) certain labor and employment characteristics
(ii) enterprise operation characteristics
(iii) land and housing characteristics of settlements

15. References
 https://www.semanticscholar.org/paper/Spontaneous-Settlements%3A-Roles-
and-Challenges-to-Ekandem
 http://www.yourarticlelibrary.com/poverty/measurement-of-poverty-absolute-and-
relative-poverty/38401
 https://prakashanthro.wordpress.com/2018/01/11/squatters-formation-process-
and-waft-of-transformations-in-pokhara-nepal/
 https://www.longdom.org/open-access/prapid-urbanization-squatter-settlements-
and-housing-policy-interface-in-ethiopia-the-case-of-nekemte-townp-2167-0587-
1000211.pdf
 https://shodhganga.inflibnet.ac.in/bitstream/10603/121356/12/12_chapter%206.p
df