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Poverty in India: Facts, Causes, Effects and Solutions

Poverty in India: Facts, Causes, Effects and Solutions

Assistant Editor

14 Mar, 2019

There are many reasons for poverty in the country. For one, the British had left the country with a starving population and limited resources. At the time of India’s independence, 80% of the population was in poverty. From that stage to where we are now (13.4% according to the WorldBank), India has done well in reducing poverty. Yet, the goal of eradicating poverty is still the top goal for policymakers. 

What are the causes of poverty in India, and what are its effects? What are the solutions to eradicate poverty in India? Here are some answers to these questions.

Poverty Facts

Poverty is a state where a person cannot meet basic needs like food, clothing, clean drinking water, and shelter. The NITI sary infrastructure.

Poverty is a state where a person cannot meet basic needs like food, clothing, clean drinking water, and shelter. The NITI Aayog’s Multidimensional Poverty Index (MPI) 2021, which takes health, education, and standard of living as three dimensions of poverty, suggests that 25.01% of the population in the county lives in poverty. 

There are various reasons for causes and effects of poverty in India. Hence, multiple committees have used different set of data to determine the poverty status.

 People or communities are said to be living in poverty if they are unable to purchase the required life essentials due to their low economic status. When a person is in a situation where earnings are too low for him to spend on at least his essential necessities (food, clothes, etc.), we attribute the person to being poor.

 The World Bank defines poverty as a shortage of resources that can cause devastation in many aspects of a person's life. That includes low wages and the inability of people to afford the essential qualities for physically and psychologically prosperous living.

Poverty is inadequate health care, education, clean water, sanitation, physical security, a voice, and the options to improve one's life.

 In 2011, a huge amount of people in India were living below the poverty line. In 2018, the world mean poverty line was set at $1.90 a day, leaving a large percentage of the world's population and their families to face the challenges of life with $1.90.

 Varying Forms of Economic Deprivation:

Absolute Poverty:  'Absolute poverty' is the name for a situation where a household's income is lower than the amount required to meet living expenses, including nourishment, shelter, and housing. In this connection, it is possible to draw a comparison not only between nations but also with regard to the issue of prosperity.

 The "dollar per day" poverty line, exceeded in 1990, was a threshold of absolute poverty using the criteria of the poorest nations. It was reestablished to 1.90 dollars per day (the amount was revised by the World Bank in October 2015).

 Relative Poverty: Sociologically speaking, relative poverty is the living condition defined in relation to the economic levels of the neighbourhood population. Hence, it is also a gauge for measuring economic inequality. Generally, the proportion of the population whose income is less than a certain percentage of the median income is the measure of relative poverty.

 Poverty Estimate in India

 An executive administrative unit of NITI Aayog renders the poverty line in India by means of the data produced from the National Sample Survey Office (MOSPI). The office has used several set of data to determine the causes and effects of poverty in India.

 In India, the expenditure of consumers, not their income levels, is used to compute the poverty line.

 Community expenditure data from the National Sample Survey Organisation are used to estimate the magnitude of poverty. Any family that does not have sufficient resources to meet its needs within a month is living in poverty.

 The poverty ratio, which is a proportion of the number of poor compared to the total population, is used to analyse the existence of poverty. In other words, it is called the "headcount ratio'.

 The poverty lines that were developed by the Alagh Committee in 1979 were based on the minimum daily calorie needs of adults living in rural areas (2400 calories) and those in urban areas (2100 calories).

 There was similar initiation on several committees, for example, the Lakdawala committee (1993), the Tendulkar committee (2009), and the Rangarajan committee (2012), which estimated the poverty rate.

 As per the study by the Rangarajan committee in 2014, the poverty line in urban areas is expected to be Rs. 11406 per household, which is nearly twice that of Rs. 58404 for rural households. 972. 

Causes and Effects of Poverty in India

1.      Demographics

a.      Poor Agricultural Infrastructure – Agriculture was the backbone of the Indian economy for a long time. The majority of the population in the country still has agriculture as the source of income. But, old agricultural practices, low productivity, and fragmented farmland ownership lead to low income and poverty in the agricultural community.

b.      Unequal distribution of assets – Over the decades, the upper and middle-income groups in India saw a faster increase in earnings compared to the lower-income groups leading to income inequality. The scenario in India is such that 80% of the wealth in the country is controlled by just 20% of the population. This unequal distribution of income is one of the reasons behind poverty.

c.      Unemployment – Unemployment is another factor that multiplies the effect of poverty in the country. Almost 77% of families do not have a regular source of income in India.

2.       Social

The various social issues that contribute to poverty are:

a.  Education and illiteracy – Lack of education is majorly responsible for poverty in India. Due to the increase in the illiteracy rates, the unemployment rate rises, and poverty rates increase.

b. Outdated Social Customs –Social customs like the caste system cause segregation and marginalization of certain sections of the society and play a prominent role in spreading poverty. Due to the caste system, certain social groups are disadvantaged in accessing basic things like food, water, and shelter in India.

c. Gender inequality – India is predominantly a patriarchal society where the female gender is discriminated against. The weak status attached to women is hugely responsible for the poor condition of women in the country. Discrimination in wages, access to education, and employment opportunities put women in poverty.

d. Corruption – Although the government promises to make considerable efforts now and then to make India corruption-free, the reality is very different. Corruption is deep-rooted in India. It is challenging to make India corruption-free. The rise in corruption rates is simultaneously increasing poverty rates.

3. Individual issues: An individual lack of effort also becomes a huge reason behind the increase in poverty rates. Some people are lazy and do not wish to work hard. Such people suffer from poverty due to a lack of personal efforts.

Effects of Poverty in India

Poverty in India is like a disease that has devastating effects on an individual and their family. The major effects of poverty in India are as follows:

1. Effect on Health

The biggest effect of poverty is on health. Those who suffer from poverty do not have access to enough food, adequate clothing, access to good quality medical facilities, and clean surroundings. The lack of all these basic facilities leads to poor health. Such individuals and their families suffer from malnutrition and illness that ultimately reduce their working days and push them further into poverty.

Other effects on health are

• High Infant Mortality

Each year around 1.4 million children die in India before their 5th birthday; India is one of the countries with the highest child mortality rates. The causes of death are pneumonia, malaria, diarrhea, and chronic malnutrition. Some of these are the results of poverty.

• Malnutrition

India is on top when it comes to malnutrition. More than a 200million people lack access to sufficient food, including 61 million children.

2. Effects on Society

The effects of poverty on society are as follows:

a. Violence and crime rate – The occurrence of violence and crime is geographically coincident. Due to unemployment and marginalization, poor people often indulge in wrong practices such as prostitution, theft, and criminal activities such as chain snatching, etc.

b. Homelessness – Poor people are usually homeless. They sleep on the roadsides at night. This makes the entire scenario very unsafe, especially for women and children.

c. Stress – Due to lack of money, poor people suffer from a lot of stress which leads to a reduction in individual productivity, thereby making poor people poorer.

d. Child labor – Poverty forces poor people to send their children to work instead of sending them to schools. This is because the families fail to bear the burden of their child/children. Among the poor families, children start earning at an average age of 5 years only.

According to law, children under 14 years are prohibited from working in India. But as per the official figures, 12.5 million children between the ages of 5 and 14 are working. Also, 65 million children between the ages of 6 and 14 do not go to school and instead work in fields, factories, quarries, private households, and in prostitution.

e. Terrorism – Youngsters from poor families are the targets for terror recruitment. These people are offered large amounts of money for the destructive task of terrorism.

3. Effect on Economy

Effects of Poverty in India is directly proportional to the success of the economy. The number of people living in poverty is reflective of how capable the economy is. When more people are working productively, a country’s economy flourishes.

Solutions to Eradicate Poverty In India

An all-inclusive approach emphasising economic, social, and structural factors is the need of the hour for the eradication of poverty in India.

The measures that should be taken to fight the demon of poverty in India are as follows:

1. Providing equal access to basic amenities

Access to basic amenities, especially in rural areas, is essential to eradicate poverty. With access to food, clean drinking water, and shelter, poor people will be capable of working productively and pulling themselves out of poverty.

2.      Improving agricultural income

With the majority of the population in the country still dependent on agriculture for income, improving agricultural income will surely bring many people out of poverty. The government’s Doubling Farmer’s Income by2022-23 is an essential step in this regard.

3.  Increasing non-farm employment

Generating non-farm employment is another important solution to eradicating poverty in the country. Sectors like food processing, transport, construction, sales, marketing, etc., can generate employment for many.

4.      Fair access to credit

Fair access to credit will allow enterprising youth to set up businesses and generate employment. But, the current system does not allow fair access, and steps are being taken to correct the system. One such step is the women-oriented credit facilities introduced by banks. Government schemesMudra Yojana, Stree Shakti Yojana, Annapurna Scheme, etc., are women-oriented schemes for credit accessibility.

5.    Girl education

Providing education to a girl child is essential in eradicating poverty. It will enable girls to access formal employment and become self-reliant.

6.      Accelerating economic growth

Accelerating economic growth will generate more jobs, and the government will receive more revenue in the form of taxes. The government can, in turn, uses the money to directly attack poverty by bringing poverty alleviation programs and building the necessary infrastructure to reduce the effects of poverty in India

7.Employment

Manufacturing, agriculture, and the services industry are three potential areas in which a lot of employment can be generated; therefore, policymakers should give priority to these areas in their efforts to stimulate growth in the economy that will be equitable and create more jobs.

8.Skill Development

 To enhance the employability rate as well as to align workers’ skills with what the labour market needs, a lot of attention should be accorded to skill development programmes.

9.Microfinance

 Provide access to small business loans and microcredit facilities to enable the less privileged, such as the less represented people and women, to start and grow their own enterprises, thus increasing their income.

10.Universal Basic Income (UBI)

 Imagine a targeted UBI programme where income is guaranteed for everyone, especially the poor, to help eliminate poverty.

11.Welfare Schemes

Support programmes for the poor and disadvantaged people have to be expanded and made stronger, including social security programmes like the NSAAP, the PDS, and the NREGA.

 12.Capacity Building

·       Health Insurance: Government should propose a further increase in average prescription drug pricing (Medicare) for all Indians and improve the quality of public healthcare systems, particularly for the underprivileged and rural communities.

·       Universal Education Access: Offer decent school facilities, find and hire the best teachers, and provide financial assistance to the kids so that they can get good education and remain in school.

Poverty Alleviation Initiatives in India

·       Integrated Rural Development Programme (IRDP): The IRDP was launched in 1978–79 and was extended all over the country from October 2, 1980. The programme, over successive plan periods, is aimed at providing the rural poor with many subsidies and bank credits to create productive employment opportunities.

·       Jawahar Rozgar Yojana/Jawahar Gram Samridhi Yojana: Intended to fight rural unemployment and underemployment, JRY emphasises the development of the economic infrastructure and community assets that will create productive jobs.

·       Rural Housing—Indira Awaas Yojana: The Indira Awaas Yojana (IAY) provides housing free of charge to below-poverty line (BPL) households living in rural areas, with a special emphasis on SC/ST households.

·       Food for Work Programme: This programme improves food security by offering wage employment opportunities, but the movement of the food grains from Food Corporation of India (FCI) warehouses has been very slow.

·       National Old Age Pension Scheme (NOAPS): NOAPS is implemented by the panchayats and municipalities across the states and union territories and is administered by the central government. It supports monthly pensions for the elderly, with higher amounts for the beneficiaries who are in their eighties.

·       Annapurna Scheme: Initiated in the year 1999-2000, this programme provides free food grains to senior citizens unable to take care of themselves, particularly the most vulnerable elderly not covered by NOAPS.

·       Sampoorna Gramin Rozgar Yojana (SGRY): Seeks to create wage employment, promote rural infrastructure, and also provide food security for the elderly in rural areas.

·       Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005: Promises 100 days of employment in a year for rural households, with a third of jobs earmarked for women, and provides for an unemployment allowance if employment is not provided within 15 days.

·       National Rural Livelihood Mission: Aajeevika (2011): Concentrates on creating regular financial activities for the rural poor, such as self-help groups and skill development programmes.

·       National Urban Livelihood Mission: NULM seeks to organise the urban poor into self-help groups, conduct skill development training, and create access to credit for self-employment ventures.

·       Pradhan Mantri Kaushal Vikas Yojana: Targets fresh labour market entrants, including class X and XII dropouts, by offering skill development training for employability.

·       Pradhan Mantri Jan Dhan Yojana: Strives for direct benefit transfers from subsidies, pensions, and also insurance through financial inclusion by opening bank accounts, especially for the poor who are do not have accounts.

These above schemes have a great impact on the effects of poverty in India. If implemented correctly, then the poverty will be minimised in India. 

Poverty is a state where a person cannot meet basic needs like food, clothing, clean drinking water, and shelter. The NITI Aayog’s Multidimensional Poverty Index (MPI) 2021, which takes health, education, and standard of living as three dimensions of poverty, suggests that 25.01% of the population in the county lives in poverty. 

There are various reasons for causes and effects of poverty in India. Hence, multiple committees have used different set of data to determine the poverty status.

 People or communities are said to be living in poverty if they are unable to purchase the required life essentials due to their low economic status. When a person is in a situation where earnings are too low for him to spend on at least his essential necessities (food, clothes, etc.), we attribute the person to being poor.

 The World Bank defines poverty as a shortage of resources that can cause devastation in many aspects of a person's life. That includes low wages and the inability of people to afford the essential qualities for physically and psychologically prosperous living.

Poverty is inadequate health care, education, clean water, sanitation, physical security, a voice, and the options to improve one's life.

 In 2011, a huge amount of people in India were living below the poverty line. In 2018, the world mean poverty line was set at $1.90 a day, leaving a large percentage of the world's population and their families to face the challenges of life with $1.90.

 Varying Forms of Economic Deprivation:

Absolute Poverty:  'Absolute poverty' is the name for a situation where a household's income is lower than the amount required to meet living expenses, including nourishment, shelter, and housing. In this connection, it is possible to draw a comparison not only between nations but also with regard to the issue of prosperity.

 The "dollar per day" poverty line, exceeded in 1990, was a threshold of absolute poverty using the criteria of the poorest nations. It was reestablished to 1.90 dollars per day (the amount was revised by the World Bank in October 2015).

 Relative Poverty: Sociologically speaking, relative poverty is the living condition defined in relation to the economic levels of the neighbourhood population. Hence, it is also a gauge for measuring economic inequality. Generally, the proportion of the population whose income is less than a certain percentage of the median income is the measure of relative poverty.

 Poverty Estimate in India

 An executive administrative unit of NITI Aayog renders the poverty line in India by means of the data produced from the National Sample Survey Office (MOSPI). The office has used several set of data to determine the causes and effects of poverty in India.

 In India, the expenditure of consumers, not their income levels, is used to compute the poverty line.

 Community expenditure data from the National Sample Survey Organisation are used to estimate the magnitude of poverty. Any family that does not have sufficient resources to meet its needs within a month is living in poverty.

 The poverty ratio, which is a proportion of the number of poor compared to the total population, is used to analyse the existence of poverty. In other words, it is called the "headcount ratio'.

 The poverty lines that were developed by the Alagh Committee in 1979 were based on the minimum daily calorie needs of adults living in rural areas (2400 calories) and those in urban areas (2100 calories).

 There was similar initiation on several committees, for example, the Lakdawala committee (1993), the Tendulkar committee (2009), and the Rangarajan committee (2012), which estimated the poverty rate.

 As per the study by the Rangarajan committee in 2014, the poverty line in urban areas is expected to be Rs. 11406 per household, which is nearly twice that of Rs. 58404 for rural households. 972. 

Causes and Effects of Poverty in India

1.      Demographics

a.      Poor Agricultural Infrastructure – Agriculture was the backbone of the Indian economy for a long time. The majority of the population in the country still has agriculture as the source of income. But, old agricultural practices, low productivity, and fragmented farmland ownership lead to low income and poverty in the agricultural community.

b.      Unequal distribution of assets – Over the decades, the upper and middle-income groups in India saw a faster increase in earnings compared to the lower-income groups leading to income inequality. The scenario in India is such that 80% of the wealth in the country is controlled by just 20% of the population. This unequal distribution of income is one of the reasons behind poverty.

c.      Unemployment – Unemployment is another factor that multiplies the effect of poverty in the country. Almost 77% of families do not have a regular source of income in India.

2.       Social

The various social issues that contribute to poverty are:

a.  Education and illiteracy – Lack of education is majorly responsible for poverty in India. Due to the increase in the illiteracy rates, the unemployment rate rises, and poverty rates increase.

b. Outdated Social Customs –Social customs like the caste system cause segregation and marginalization of certain sections of the society and play a prominent role in spreading poverty. Due to the caste system, certain social groups are disadvantaged in accessing basic things like food, water, and shelter in India.

c. Gender inequality – India is predominantly a patriarchal society where the female gender is discriminated against. The weak status attached to women is hugely responsible for the poor condition of women in the country. Discrimination in wages, access to education, and employment opportunities put women in poverty.

d. Corruption – Although the government promises to make considerable efforts now and then to make India corruption-free, the reality is very different. Corruption is deep-rooted in India. It is challenging to make India corruption-free. The rise in corruption rates is simultaneously increasing poverty rates.

3. Individual issues: An individual lack of effort also becomes a huge reason behind the increase in poverty rates. Some people are lazy and do not wish to work hard. Such people suffer from poverty due to a lack of personal efforts.

Effects of Poverty in India

Poverty in India is like a disease that has devastating effects on an individual and their family. The major effects of poverty in India are as follows:

1. Effect on Health

The biggest effect of poverty is on health. Those who suffer from poverty do not have access to enough food, adequate clothing, access to good quality medical facilities, and clean surroundings. The lack of all these basic facilities leads to poor health. Such individuals and their families suffer from malnutrition and illness that ultimately reduce their working days and push them further into poverty.

Other effects on health are

• High Infant Mortality

Each year around 1.4 million children die in India before their 5th birthday; India is one of the countries with the highest child mortality rates. The causes of death are pneumonia, malaria, diarrhea, and chronic malnutrition. Some of these are the results of poverty.

• Malnutrition

India is on top when it comes to malnutrition. More than a 200million people lack access to sufficient food, including 61 million children.

2. Effects on Society

The effects of poverty on society are as follows:

a. Violence and crime rate – The occurrence of violence and crime is geographically coincident. Due to unemployment and marginalization, poor people often indulge in wrong practices such as prostitution, theft, and criminal activities such as chain snatching, etc.

b. Homelessness – Poor people are usually homeless. They sleep on the roadsides at night. This makes the entire scenario very unsafe, especially for women and children.

c. Stress – Due to lack of money, poor people suffer from a lot of stress which leads to a reduction in individual productivity, thereby making poor people poorer.

d. Child labor – Poverty forces poor people to send their children to work instead of sending them to schools. This is because the families fail to bear the burden of their child/children. Among the poor families, children start earning at an average age of 5 years only.

According to law, children under 14 years are prohibited from working in India. But as per the official figures, 12.5 million children between the ages of 5 and 14 are working. Also, 65 million children between the ages of 6 and 14 do not go to school and instead work in fields, factories, quarries, private households, and in prostitution.

e. Terrorism – Youngsters from poor families are the targets for terror recruitment. These people are offered large amounts of money for the destructive task of terrorism.

3. Effect on Economy

Effects of Poverty in India is directly proportional to the success of the economy. The number of people living in poverty is reflective of how capable the economy is. When more people are working productively, a country’s economy flourishes.

Solutions to Eradicate Poverty In India

An all-inclusive approach emphasising economic, social, and structural factors is the need of the hour for the eradication of poverty in India.

The measures that should be taken to fight the demon of poverty in India are as follows:

1. Providing equal access to basic amenities

Access to basic amenities, especially in rural areas, is essential to eradicate poverty. With access to food, clean drinking water, and shelter, poor people will be capable of working productively and pulling themselves out of poverty.

2.      Improving agricultural income

With the majority of the population in the country still dependent on agriculture for income, improving agricultural income will surely bring many people out of poverty. The government’s Doubling Farmer’s Income by2022-23 is an essential step in this regard.

3.  Increasing non-farm employment

Generating non-farm employment is another important solution to eradicating poverty in the country. Sectors like food processing, transport, construction, sales, marketing, etc., can generate employment for many.

4.      Fair access to credit

Fair access to credit will allow enterprising youth to set up businesses and generate employment. But, the current system does not allow fair access, and steps are being taken to correct the system. One such step is the women-oriented credit facilities introduced by banks. Government schemesMudra Yojana, Stree Shakti Yojana, Annapurna Scheme, etc., are women-oriented schemes for credit accessibility.

5.    Girl education

Providing education to a girl child is essential in eradicating poverty. It will enable girls to access formal employment and become self-reliant.

6.      Accelerating economic growth

Accelerating economic growth will generate more jobs, and the government will receive more revenue in the form of taxes. The government can, in turn, uses the money to directly attack poverty by bringing poverty alleviation programs and building the necessary infrastructure to reduce the effects of poverty in India

7.Employment

Manufacturing, agriculture, and the services industry are three potential areas in which a lot of employment can be generated; therefore, policymakers should give priority to these areas in their efforts to stimulate growth in the economy that will be equitable and create more jobs.

8.Skill Development

 To enhance the employability rate as well as to align workers’ skills with what the labour market needs, a lot of attention should be accorded to skill development programmes.

9.Microfinance

 Provide access to small business loans and microcredit facilities to enable the less privileged, such as the less represented people and women, to start and grow their own enterprises, thus increasing their income.

10.Universal Basic Income (UBI)

 Imagine a targeted UBI programme where income is guaranteed for everyone, especially the poor, to help eliminate poverty.

11.Welfare Schemes

Support programmes for the poor and disadvantaged people have to be expanded and made stronger, including social security programmes like the NSAAP, the PDS, and the NREGA.

 12.Capacity Building

·       Health Insurance: Government should propose a further increase in average prescription drug pricing (Medicare) for all Indians and improve the quality of public healthcare systems, particularly for the underprivileged and rural communities.

·       Universal Education Access: Offer decent school facilities, find and hire the best teachers, and provide financial assistance to the kids so that they can get good education and remain in school.

Poverty Alleviation Initiatives in India

·       Integrated Rural Development Programme (IRDP): The IRDP was launched in 1978–79 and was extended all over the country from October 2, 1980. The programme, over successive plan periods, is aimed at providing the rural poor with many subsidies and bank credits to create productive employment opportunities.

·       Jawahar Rozgar Yojana/Jawahar Gram Samridhi Yojana: Intended to fight rural unemployment and underemployment, JRY emphasises the development of the economic infrastructure and community assets that will create productive jobs.

·       Rural Housing—Indira Awaas Yojana: The Indira Awaas Yojana (IAY) provides housing free of charge to below-poverty line (BPL) households living in rural areas, with a special emphasis on SC/ST households.

·       Food for Work Programme: This programme improves food security by offering wage employment opportunities, but the movement of the food grains from Food Corporation of India (FCI) warehouses has been very slow.

·       National Old Age Pension Scheme (NOAPS): NOAPS is implemented by the panchayats and municipalities across the states and union territories and is administered by the central government. It supports monthly pensions for the elderly, with higher amounts for the beneficiaries who are in their eighties.

·       Annapurna Scheme: Initiated in the year 1999-2000, this programme provides free food grains to senior citizens unable to take care of themselves, particularly the most vulnerable elderly not covered by NOAPS.

·       Sampoorna Gramin Rozgar Yojana (SGRY): Seeks to create wage employment, promote rural infrastructure, and also provide food security for the elderly in rural areas.

·       Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005: Promises 100 days of employment in a year for rural households, with a third of jobs earmarked for women, and provides for an unemployment allowance if employment is not provided within 15 days.

·       National Rural Livelihood Mission: Aajeevika (2011): Concentrates on creating regular financial activities for the rural poor, such as self-help groups and skill development programmes.

·       National Urban Livelihood Mission: NULM seeks to organise the urban poor into self-help groups, conduct skill development training, and create access to credit for self-employment ventures.

·       Pradhan Mantri Kaushal Vikas Yojana: Targets fresh labour market entrants, including class X and XII dropouts, by offering skill development training for employability.

·       Pradhan Mantri Jan Dhan Yojana: Strives for direct benefit transfers from subsidies, pensions, and also insurance through financial inclusion by opening bank accounts, especially for the poor who are do not have accounts.

These above schemes have a great impact on the effects of poverty in India. If implemented correctly, then the poverty will be minimised in India.

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