Poverty trends in India and the world are illustrated through the concept of the poverty line.
In our daily life, we come across many people who we think are poor. They could be landless labourers in villages or people living in overcrowded jhuggis in cities. They could be daily wage workers at construction sites or child workers in dhabas. They could also be beggars with children in tatters. We see poverty all around us. In fact, every fourth person in India is poor. This means, roughly 260 million (or 26 crore) people in India live in poverty. This also means that India has the largest single concentration of the poor in the world. This illustrates the seriousness of the challenge.
Poverty means hunger and lack of shelter. It also is a situation in which parents are not able to send their children to school or a situation where sick people cannot afford treatment. Poverty also means lack of clean water and sanitation facilities. It also means lack of a regular job at a minimum decent level. Above all it means living with a sense of helplessness. Poor people are in a situation in which they are ill-treated at almost every place, in farms, factories, government offices, hospitals, railway stations etc. Obviously, nobody would like to live in poverty.
One of the biggest challenges of independent India has been to bring millions of its people out of abject poverty. Mahatama Gandhi always insisted that India would be truly independent only when the poorest of its people become free of human suffering.
Poverty as seen by social scientists
Since poverty has many facets, social scientists look at it through a variety of indicators. Usually the indicators used relate to the levels of income and consumption. But now poverty is looked through other social indicators like illiteracy level, lack of general resistance due to malnutrition, lack of access to healthcare, lack of job opportunities, lack of access to safe drinking water, sanitation etc. Analysis of poverty based on social exclusion and vulnerability is now becoming very common.
According to this concept, poverty must be seen in terms of the poor having to live only in a poor surrounding with other poor people, excluded from enjoying social equality of better-off people in better surroundings. Social exclusion can be both a cause as well as a consequence of poverty in the usual sense. Broadly, it is a process through which individuals or groups are excluded from facilities, benefits and opportunities that others (their “betters”) enjoy. A typical example is the working of the caste system in India in which people belonging to certain castes are excluded from equal opportunities. Social exclusion thus may lead to, but can cause more damage than, having a very low income.
Vulnerability to poverty is a measure, which describes the greater probability of certain communities (say, members of a backward caste) or individuals (such as a widow or a physically handicapped person) of becoming, or remaining, poor in the coming years. Vulnerability is determined by the options available to different communities for finding an alternative living in terms of assets, education, health and job opportunities. Further, it is analysed on the basis of the greater risks these groups face at the time of natural disasters (earthquakes, tsunami), terrorism etc. Additional analysis is made of their social and economic ability to handle these risks. In fact, vulnerability describes the greater probability of being more adversely affected than other people when bad time comes for everybody, whether a flood or an earthquake or simply a fall in the availability of jobs!
At the centre of the discussion on poverty is usually the concept of the “poverty line”. A common method used to measure poverty is based on the income or consumption levels. A person is considered poor if his or her income or consumption level falls below a given “minimum level” necessary to fulfill basic needs. What is necessary to satisfy basic needs is different at different times and in different countries. Therefore, poverty line may vary with time and place.
Each country uses an imaginary line that is considered appropriate for its existing level of development and its accepted minimum social norms. For example, a person not having a car in the United States may be considered poor. In India, owning of a car is still considered a luxury.
While determining the poverty line in India, a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirement etc. are determined for subsistence. These physical quantities are multiplied by their prices in rupees. The present formula for food requirement while estimating the poverty line is based on the desired calorie requirement. Food items such as cereals, pulses, vegetable, milk, oil, sugar etc. together provide these needed calories. The calorie needs vary depending on age, sex and the type of work that a person does.
The accepted average calorie requirement in India is 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas. Since people living in rural areas engage themselves in more physical work, calorie requirements in rural areas are considered to be higher than urban areas.
The monetary expenditure per capita needed for buying these calorie requirements in terms of food grains etc. is revised periodically taking into consideration the rise in prices. On the basis of these calculations, for the year 2000, the poverty line for a person was fixed at Rs 328 per month for the rural areas and Rs 454 for the urban areas. Despite less calorie requirement, the higher amount for urban areas has been fixed because of high prices of many essential products in urban centres. In this way in the year 2000, a family of five members living in rural areas and earning less than about Rs 1,640 per month will be below the poverty line. A similar family in the urban areas would need a minimum of Rs 2,270 per month to meet their basic requirements.
The poverty line is estimated periodically (normally every five years) by conducting sample surveys. These surveys are carried out by the National Sample Survey Organisation (NSSO). However, for making comparisons between developing countries, many international organisations like the World Bank use a uniform standard for the poverty line:
minimum availability of the equivalent of $1 per person per day.
It is clear from the Table that there is substantial decline in poverty ratios in India from about 55 per cent in 1973 to 36 per cent in 1993. The proportion of people below poverty line further came down to about 26 per cent in 2000. If the trend continues, people below poverty line may come down to less than 20 per cent in the next few years. Although the percentage of people living under poverty declined in the earlier two decades (1973– 1993), the number of poor remained stable around 320 million for a fairly long period. The latest estimates indicate a significant reduction in the number of poor to about 260 million.
The proportion of people below poverty line is also not same for all social groups and economic categories in India. Social groups which are most vulnerable to poverty are scheduled caste and scheduled tribe households. Similarly, among the economic groups, the most vulnerable groups are the rural agricultural labour households and the urban casual labour households.
Although the average for people below poverty line for all groups in India is 26, 51 out of 100 people belonging to scheduled tribes are not able to meet their basic needs. Similarly, 50 per cent of casual workers in urban areas are below poverty line. About 50 per cent of landless agricultural workers and 43 per cent of scheduled castes are also poor. The double disadvantage, of being a landless casual wage labour household in the socially disadvantaged social groups of the scheduled caste or the scheduled tribe population highlights the seriousness of the problem. Some recent studies have shown that except for the scheduled tribe households, all the other three groups (i.e. scheduled castes, rural agricultural labourers and the urban casual labour households) have seen a decline in poverty in the 1990s.
Apart from these social groups, there is also inequality of incomes within a family. In poor families all suffer, but some suffer more than others. Women, elderly people and female infants are systematically denied equal access to resources available to the family. Therefore women, children (especially the girl child) and old people are poorest of the poor.
Poverty in India also has another aspect or dimension. The proportion of poor people is not the same in every state. Although state level poverty has witnessed a secular decline from the levels of early seventies, the success rate of reducing poverty varies from state to state. Recent estimates show that in 20 states and union territories, the poverty ratio is less than the national average. On the other hand, poverty is still a serious problem in Orissa, Bihar, Assam, Tripura and Uttar Pradesh. Orissa and Bihar continue to be the two poorest states with poverty ratios of 47 and 43 per cent respectively. Along with rural poverty urban poverty is also high in Orissa, Madhya Pradesh, Bihar and Uttar Pradesh. In comparison, there has been a significant decline in poverty in Kerala, Jammu and Kashmir, Andhra Pradesh, Tamil Nadu, Gujarat and West Bengal. States like Punjab and Haryana have traditionally succeeded in reducing poverty with the help of high agricultural growth rates. Kerala has focused more on human resource development. In West Bengal, land reform measures have helped in reducing poverty. In Andhra Pradesh and Tamil Nadu public distribution of food grains could have been responsible for the improvement.
Global Poverty Scenario
The proportion of people in developing countries living in extreme economic poverty— defined by the World Bank as living on less than $1 per day—has fallen from 28 per cent in 1990 to 21 per cent in 2001. Although there has been a substantial reduction in global poverty, it is marked with great regional differences. Poverty declined substantially in China and Southeast Asian countries as a result of rapid economic growth and massive investments in human resource development. Number of poors in China has come down from 606 million in 1981 to 212 million in 2001. In the countries of South Asia (India, Pakistan, Sri Lanka, Nepal, Bangladesh, Bhutan) the decline has not been as rapid. Despite decline in the percentage of the poor, the number of poor has declined marginally from 475 million in 1981 to 428 million in 2001. Because of different poverty line definition, poverty in India is also shown higher than the national estimates. In Sub-Saharan Africa, poverty in fact rose from 41 per cent in 1981 to 46 per cent in 2001. In Latin America, the ratio of poverty remained the same. Poverty has also resurfaced in some of the former socialist countries like Russia, where officially it was non- existent earlier. The Millennium Development Goals of the United Nations calls for reducing the proportion of people living on less than $1 a day to half the 1990 level by 2015.
Causes of Poverty
There were a number of causes for the widespread poverty in India. One historical reason is the low level of economic development under the British colonial administration. The policies of the colonial government ruined traditional handicrafts and discouraged development of industries like textiles. The low rate of growth persisted until the nineteen- eighties. This resulted in less job opportunities and low growth rate of incomes. This was accompanied by a high growth rate of population. The two combined to make the growth rate of per capita income very low. The failure at both the fronts: promotion of economic growth and population control perpetuated the cycle of poverty.
With the spread of irrigation and the Green revolution, many job opportunities were created in the agriculture sector. But the effects were limited to some parts of India. The industries, both in the public and the private sector, did provide some jobs. But these were not enough to absorb all the job seekers. Unable to find proper jobs in cities, many people started working as rickshaw pullers, vendors, construction workers, domestic servants etc. With irregular small incomes, these people could not afford expensive housing. They started living in slums on the outskirts of the cities and the problems of poverty, largely a rural phenomenon also became the feature of the urban sector.
Another feature of high poverty rates has been the huge income inequalities. One of the major reasons for this is the unequal distribution of land and other resources. Despite many policies, we have not been able to tackle the issue in a meaningful manner. Major policy initiatives like land reforms which aimed at redistribution of assets in rural areas have not been implemented properly and effectively by most of the state governments. Since lack of land resources has been one of the major causes of poverty in India, proper implementation of policy could have improved the life of millions of rural poor.
Many other socio-cultural and economic factors also are responsible for poverty. In order to fulfil social obligations and observe religious ceremonies, people in India, including the very poor, spend a lot of money. Small farmers need money to buy agricultural inputs like seeds, fertilizer, pesticides etc. Since poor people hardly have any savings, they borrow. Unable to repay because of poverty, they become victims of indebtedness. So the high level of indebtedness is both the cause and effect of poverty.
Removal of poverty has been one of the major objectives of Indian developmental strategy. The current anti-poverty strategy of the government is based broadly on two planks
(1) promotion of economic growth
(2) targeted anti-poverty programmes.
Over a period of thirty years lasting up to the early eighties, there were little per capita income growth and not much reduction in poverty. Official poverty estimates which were about 45 per cent in the early 1950s remained the same even in the early eighties. Since the eighties, India’s economic growth has been one of the fastest in the world. The growth rate jumped from the average of about 3.5 per cent a year in the 1970s to about 6 per cent during the 1980s and 1990s. The higher growth rates have helped significantly in the reduction of poverty. Therefore, it is becoming clear that there is a strong link between economic growth and poverty reduction. Economic growth widens opportunities and provides the resources needed to invest in human development. This also encourages people to send their children, including the girl child, to schools in the hope of getting better economic returns from investing in education.
However, the poor may not be able to take direct advantage from the opportunities created by economic growth. Moreover, growth in the agriculture sector is much below expectations. This has a direct bearing on poverty as a large number of poor people live in villages and are dependent on agriculture. In these circumstances, there is a clear need for targeted anti-poverty programmes. Although there are so many schemes which are formulated to affect poverty directly or indirectly, some of them are worth mentioning.
National Rural Employment Guarantee Act (NREGA) 2005 was passed in September 2005. The Act provides 100 days assured employment every year to every rural household in 200 districts. Later, the scheme will be extended to 600 districts. One third of the proposed jobs would be reserved for women. The central government will also establish National Employment Guarantee Funds. Similarly state governments will establish State Employment Guarantee Funds for implementation of the scheme. Under the programme if an applicant is not provided employment within fifteen days s/he will be entitled to a daily unemployment allowance.
Another important scheme has been the National Food for Work Programme (NFWP), which was launched in 2004 in 150 most backward districts of the country. The programme is open to all rural poor who are in need of wage employment and desire to do manual unskilled work. It is implemented as a 100 per cent centrally sponsored scheme and foodgrains are provided free of cost to the states. Once the NREGA is in force, the NFWP will be subsumed within this programme.
Prime Minister Rozgar Yozana (PMRY) is another scheme which was started in 1993. The aim of the programme is to create self-employment opportunities for educated unemployed youth in rural areas and small towns. They are helped in setting up small business and industries.
Rural Employment Generation Programme (REGP) was launched in 1995. The aim of the programme is to create self- employment opportunities in rural areas and small towns. A target for creating 25 lakh new jobs has been set for the programme under the Tenth Five Year plan.
Swarnajayanti Gram Swarozgar Yojana (SGSY) was launched in 1999. The programme aims at bringing the assisted poor families above the poverty line by organising them into self help groups through a mix of bank credit and government subsidy.
Under the Pradhan Mantri Gramodaya Yozana (PMGY) launched in 2000, additional central assistance is given to states for basic services such as primary health, primary education, rural shelter, rural drinking water and rural electrification.
Another important scheme is Antyodaya Anna Yozana (AAY).
The results of these programmes have been mixed. One of the major reasons for less effectiveness is the lack of proper implementation and right targeting. Moreover, there has been a lot of overlapping of schemes. Despite good intentions, the benefits of these schemes are not fully reached to the deserving poor. Therefore, the major emphasis in recent years is on proper monitoring of all the poverty alleviation programmes.
The Challenges Ahead
Poverty has certainly declined in India. But despite the progress, poverty reduction remains India’s most compelling challenge. Wide disparities in poverty are visible between rural and urban areas and among different states. Certain social and economic groups are more vulnerable to poverty. Poverty reduction is expected to make better progress in the next ten to fifteen years. This would be possible mainly due to higher economic growth, increasing stress on universal free elementary education, declining population growth, increasing empowerment of the women and the economically weaker sections of society.
The official definition of poverty, however, captures only a limited part of what poverty really means to people. It is about a “minimum” subsistence level of living rather than a “reasonable” level of living. Many scholars advocate that we must broaden the concept into human poverty. A large number of people may have been able to feed themselves. But do they have education? Or shelter? Or health care? Or job security? Or self- confidence? Are they free from caste and gender discrimination? Is the practice of child labour still common?
Worldwide experience shows that with development, the definition of what constitutes poverty also changes. Eradication of poverty is always a moving target. Hopefully we will be able to provide the minimum “necessary” in terms of only income to all people by the end of the next decade. But the target will move on for many of the bigger challenges that still remain: providing health care, education and job security for all, and achieving gender equality and dignity for the poor. These will be even bigger tasks.
Providing minimum basic needs to the people and reduction of poverty have been the major aims of independent India. The pattern of development that the successive five year plans envisaged laid emphasis on the upliftment of the poorest of the poor (Antyodaya), integrating the poor into the mainstream and achieving a minimum standard of living for all.
While addressing the Constituent Assembly in 1947, Jawaharlal Nehru had said, “This achievement (Independence) is but a step, an opening of opportunity, to the great triumphs and achievements that await us… the ending of poverty and ignorance and disease and inequality of opportunity.”
However we need to know where we stand today. Poverty is not only a challenge for India, as more than one- fifth of the world’s poor live in India alone; but also for the world, where more than 260 million people are not able to meet their basic needs. Poverty has many faces, which have been changing from place to place and across time, and has been described in many ways. Most often, poverty is a situation that people want to escape. So poverty is a call to action — for the poor and the wealthy alike — a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.
To know what helps to reduce poverty, what works and what does not, what changes over time, poverty has to be defined, measured and studied — and even experienced. As poverty has many dimensions, it has to be looked at through a variety of indicators — levels of income and consumption, social indicators, and indicators of vulnerability to risks and of socio/political access.
WHO ARE THE POOR?
You would have noticed that in all localities and neighbourhoods, both in rural and urban areas, there are some of us who are poor and some who are rich. Push cart vendors, street cobblers, women who string flowers, rag pickers, vendors and beggars are some examples of poor and vulnerable groups in urban areas. They possess few assets. They reside in kutcha hutments with walls made of baked mud and roofs made of grass, thatch, bamboo and wood. The poorest of them do not even have such dwellings.
In rural areas many of them are landless. Even if some of them possess land, it is only dry or waste land. Many do not get to have even two meals a day. Starvation and hunger are the key features of the poorest households. The poor lack basic literacy and skills and hence have very limited economic opportunities. Poor people also face unstable employment. Malnutrition is alarmingly high among the poor. Ill health, disability or serious illness makes them physically weak. They borrow from money lenders who charge high rates of interest that lead them into chronic indebtedness. The poor are highly vulnerable. They are not able to negotiate their legal wages from employers and are exploited. Most poor households have no access to electricity. Their primary cooking fuel is firewood and cow dung cake. A large section of poor people do not even have access to safe drinking water. There is evidence of extreme gender inequality in the participation of gainful employment, education and in decision-making within the family. Poor women receive less care on their way to motherhood. Their children are less likely to survive or be born healthy.
Scholars identify the poor on the basis of their occupation and ownership of assets. They state that the rural poor work mainly as landless agricultural labourers, cultivators with very small landholdings, landless labourers who are engaged in a variety of non-agricultural jobs and tenant cultivators with small land holdings. The urban poor are largely the overflow of the rural poor who had migrated to urban areas in search of alternative employment and livelihood, labourers who do a variety of casual jobs and the self-emloyed who sell a variety of things on roadsides and are engaged in various activities.
What is Poverty? Two scholars, Shaheen Rafi Khan and Damian Killen, put the conditions of the poor in a nutshell: Poverty is hunger. Poverty is being sick and not being able to see a doctor. Poverty is not being able to go to school and not knowing how to read. Poverty is not having a job. Poverty is fear for the future, having food once in a day. Poverty is losing a child to illness, brought about by unclear water. Poverty is powerlessness, lack of representation and freedom.
HOW ARE POOR PEOPLE IDENTIFIED?
If India is to solve the problem of poverty, it has to find viable and sustainable strategies to address the causes of poverty and design schemes to help the poor out of their situation. However, for these schemes to be implemented, the government needs to be able to identify who the poor are. For this there is need to develop a scale to measure poverty, and the factors that make up the criteria for this measurement or mechanism need to be carefully chosen.
In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of a Poverty Line. He used the menu for a prisoner and used appropriate prevailing prices to arrive at what may be called ‘jail cost of living’. However, only adults stay in jail whereas, in an actual society, there are children too. He, therefore, appropriately adjusted this cost of living to arrive at the poverty line. For this adjustment, he assumed that one-third population consisted of children and half of them consumed very little while the other half consumed half of the adult diet. This is how he arrived at the factor of three-fourths;
(1/6)(Nil) + (1/6)(Half) + (2/3)(Full) = (3/4) (Full).
The weighted average of consumption of the three segments gives the average poverty line, which comes out to be three-fourth of the adult jail cost of living.
In post-independent India, there have been several attempts to work out a mechanism to identify the number of poor in the country. For instance, in 1962, the Planning Commission formed a Study Group. In 1979, another body called the ‘Task Force on Projections of Minimum Needs and Effective Consumption Demand’ was formed. In 1989, an ‘Expert Group’ was constituted for the same purpose.
Besides these bodies, many individual economists have also attempted to develop such a mechanism. For the purpose of defining poverty we divide people into two categories; the poor and the non-poor and the poverty line separates the two.
However, there are many kinds of poor; the absolutely poor, the very poor and the poor. Similarly there are various kinds of non-poor; the middle class, the upper middle class, the rich, the very rich and the absolutely rich. Think of this as a line or continuum from the very poor to the absolutely rich with the poverty line dividing the poor from the non- poor.
There are many ways to categorise poverty. In one such way people who are always poor and those who are usually poor but who may sometimes have a little more money (example: casual workers) are grouped together as the chronic poor.
Another group are the churning poor who regularly move in and out of poverty (example: small farmers and seasonal workers) and the occasionally poor who are rich most of the time but may sometimes have a patch of bad luck. They are called the transient poor. And then there are those who are never poor and they are the non-poor.
The Poverty Line:
How to determine the poverty line. There are many ways of measuring poverty. One way is to determine it by the monetary value (per capita expenditure) of the minimum calorie intake that was estimated at 2,400 calories for a rural person and 2,100 for a person in the urban area. Based on this, in 1999- 2000, the poverty line was defined for rural areas as consumption worth Rs 328 per person a month and for urban areas it was Rs 454.
The government uses Monthly Per Capita Expenditure (MPCE) as proxy for income of households to identify the poor. Scholars state that a major problem with this mechanism is that it groups all the poor together and does not differentiate between the very poor and the other poor. Though this mechanism takes consumption expenditure on food and a few select items as proxy for income, economists question its basis. This mechanism is helpful in identifying the poor as a group to be taken care of by the government, but it would be difficult to identify who among the poor need help the most.
There are many factors, other than income and assets, which are associated with poverty; for instance, the accessibility to basic education, health care, drinking water and sanitation. The mechanism for determining the Poverty Line also does not take into consideration social factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and political freedoms.
The aim of poverty alleviation schemes should be to improve human lives by expanding the range of things that a person could be and could do, such as to be healthy and well-nourished, to be knowledgeable and participate in the life of a community. From this point of view, development is about removing the obstacles to the things that a person can do in life, such as illiteracy, ill health, lack of access to resources, or lack of civil and political freedoms. Though the government claims that higher rate of growth, increase in Safe drinking water and sanitation are essential for all agricultural production, providing employment in rural areas and economic reform packages introduced in the 1990s have resulted in a decline in poverty levels, economists raise doubts about the government’s claim. They point out that the way the data are collected, items that are included in the consumption basket, methodology followed to estimate the poverty line and the number of poor are manipulated to arrive at the reduced figures of the number of poor in India. Due to various limitations in the official estimation of poverty, scholars have attempted to find alternative methods. For instance, Amartya Sen, noted Nobel Laureate, has developed an index known as Sen Index. There are other tools such as Poverty Gap Index and Squared Poverty Gap.
THE NUMBER OF POOR IN INDIA
When the number of poor is estimated as the proportion of people below the poverty line, it is known as ‘Head Count Ratio’. You might be interested in knowing the total number of poor persons residing in India. Where do they reside and has their number or proportion declined over the years or not? When such a comparative analysis of poor people is made in terms of ratios and percentages, we will have an idea of different levels of poverty of people and their distribution; between states and over time. The official data on poverty is made available to the public by the Planning Commission. It is estimated on the basis of consumption expenditure data collected by the National Sample Survey Organisation (NSSO). Chart shows the number of poor and their proportion to the population in India for the years 1973-2000.
In 1973-74, more than 321 million people were below the poverty line. In 1999- 2000, this number has come down to about 260 million. In terms of proportion, in 1973-74, about 55 per cent of the total population was below the poverty line. In 1999- 2000, it has fallen to 26 per cent. In 1973-74, more than 80 per cent of the poor resided in rural areas and in 1999-2000, this has come down to about 75 per cent. This means that more than three-fourth of the poor in India reside in villages. Also poverty, which was prevailing predominantly in rural areas, has shifted to urban areas. In the 1990s, the absolute number of poor in rural areas had declined whereas the number of their urban counterparts increased marginally. The poverty ratio declined continuously for both urban and rural areas. During 1973-2000, there has been a decline in the number of poor and their proportion but the nature of decline in the two parameters is not encouraging. The ratio is declining much slower than the absolute number of poor in the country. You will also notice that the gap between the absolute number of poor in rural and urban areas did not narrow down until the early 1990s whereas in the case of ratio the gap has remained the same until 1999-2000.
The state level trends in poverty reveals that five states — Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa — account for about 70 per cent of India’s poor. During 1973-74, about half the population in most of these large states was living below the poverty line. In 1999-2000, only two states — Bihar and Orissa — were left near that same level. Though they also reduced their share of poor, compared to other states, their success is marginal. If we look at Gujarat, it reduced its people below the poverty line from 48 per cent to 15 per cent during 1973-2000. During this period, West Bengal has been just as successful; from nearly two-third, i.e. 63 per cent of the population below the poverty line the same was reduced to about 27 per cent.
WHAT CAUSES POVERTY?
Poverty is explained by individual circumstances and/or characteristics of poor people. Some examples are (i)low levels of education and skills, (ii) infirmity, ill health, sickness, (iii) discrimination.
These can be caused as a result of
(i) social, economic and political inequality
(ii) social exclusion
(v) unequal distribution of wealth.
Aggregate poverty is just the sum of individual poverty. Poverty is also explained by general, economy-wide problems, such as (i) low capital formation (ii) lack of infrastructure (iii) lack of demand (iv) pressure of population (v) lack of social/welfare nets.
Although the final impact of the British rule on Indian living standards is still being debated, there is no doubt that there was a substantial negative impact on the Indian economy and standard of living of the people. There was substantial de-industrialisation in India under the British rule. Imports of manufactured cotton cloth from Lancashire in England displaced much local production, and India reverted to being an exporter of cotton yarn, not cloth. As over 70 per cent of Indians were engaged in agriculture throughout the British Raj period, the impact on that sector was more important on living standards than anything else. British policies involved sharply raising rural taxes that enabled merchants and moneylenders to become large landowners. Under the British, India began to export food grains and, as a result, as many as 26 million people died in famines between 1875 and 1900. Britain’s main goals from the Raj were to provide a market for British exports, to have India service its debt payments to Britain, and for India to provide manpower for the British imperial armies. The British Raj impoverished millions of people in India. Our natural resources were plundered, our industries worked to produce goods at low prices for the British and our food grains were exported. Many died due to famine and hunger. In 1857-58, anger at the overthrow of many local leaders, extremely high taxes imposed on peasants, and other resentments boiled over in a revolt against British rule by the sepoys, Indian troops commanded by the British. Even today agriculture is the principal means of livelihood and land is the primary asset of rural people; ownership of land is an important determinant of material well-being and those who own some land have a better chance to improve their living conditions.
Since independence, the government has attempted to redistribute land and has taken land from those who have large amounts to distribute it to those who do not have any land, but work on the land as wage labourers. However, this move was successful only to a limited extent as large sections of agricultural workers were not able to farm the small holdings that they now possessed as they did not have either money (assets) or skills to make the land productive and the land holdings were too small to be viable. A large section of the rural poor in India are the small farmers. The land that they have is, in general, less fertile and dependent on rains. Their survival depends on subsistence crops and sometimes on livestock. With the rapid growth of population and without alternative sources of employment, the per -head availability of land for cultivation has steadily declined leading to fragmentation of land holdings. The income from these small land holdings is not sufficient to meet the family’s basic requirements. You must have heard about farmers committing suicide due to their inability to pay back the loans that they have taken for cultivation and other domestic needs as their crops have failed due to drought or other natural calamities. The scheduled castes and scheduled tribes are not able to participate in the emerging employment opportunities in different sectors of the urban and rural economy as they do not have the necessary knowledge and skills to do so.
The urban poor in India are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood. Industrialisation has not been able to absorb all these people. Most of the urban poor are either unemployed or intermittently employed as casual labourers. Casual labourers are among the most vulnerable in society as they have no job security, no assets, limited skills, sparse opportunities and no surplus to sustain them. Poverty is, therefore, also closely related to nature of employment. Unemployment or under employment and the casual and intermittent nature of work in both rural and urban areas that compels indebtedness, in turn, reinforces poverty. Indebtedness is one of the significant factors of poverty. A steep rise in the price of food grains and other essential goods, at a rate higher than the price of luxury goods, further intensifies the hardship and deprivation of lower income groups. The unequal distribution of income and assets has also led to the persistence of poverty in India. All this has created two distinct groups in society: those who posses the means of production and earn good incomes and those who have only their labour to trade for survival. Over the years, the gap between the rich and the poor in India has widened. Poverty is a multi-dimensional challenge for India that needs to be addressed on a war footing.
POLICIES AND PROGRAMMES TOWARDS POVERTY ALLEVIATION
The Indian Constitution and five year plans state social justice as the primary objective of the developmental strategies of the government.
To quote the First Five Year Plan (1951-56), “the urge to bring economic and social change under present conditions comes from the fact of poverty and inequalities in income, wealth and opportunity”.
The Second Five Year Plan (1956-61) also pointed out that “the benefits of economic development must accrue more and more to the relatively less privileged classes of society”.
One can find, in all policy documents, emphasis being laid on poverty alleviation and that various strategies need to be adopted by the government for the same. The government’s approach to poverty reduction was of three dimensions. The first one is growth- oriented approach. It is based on the expectation that the effects of economic growth — rapid increase in gross domestic product and per capita income — would spread to all sections of society and will trickle down to the poor sections also. This was the major focus of planning in the 1950s and early 1960s. It was felt that rapid industrial development and transformation of agriculture through green revolution in select regions would benefit the underdeveloped regions and the more backward sections of the community. The overall growth and growth of agriculture and industry have not been impressive. Population growth has resulted in a very low growth in per capita incomes. The gap between poor and rich has actually widened. The Green Revolution exacerbated the disparities regionally and between large and small farmers. There was unwillingness and inability to redistribute land. Economists state that the benefits of economic growth have not trickled down to the poor.
While looking for alternatives to specifically address the poor, policy makers started thinking that incomes and employment for the poor could be raised through the creation of incremental assets and by means of work generation. This could be achieved through specific poverty alleviation programmes. This second approach has been initiated from the Third Five Year Plan (1961-66) and progressively enlarged since then. One of the noted programmes initiated in the 1970s was Food for Work. The programmes that are being implemented now are based on the perspective of the Tenth Five Year Plan (2002-2007) Expanding self- employment programmes and wage employment programmes are being considered as the major ways of addressing poverty. Examples of self- employment programmes are Rural Employment Generation Programme (REGP), Prime Minister’s Rozgar Yojana (PMRY) and Swarna Jayanti Shahari Rozgar Yojana (SJSRY). The first programme aims at creating self- employment opportunities in rural areas and small towns. The Khadi and Village Industries Commission is implementing it. Under this programme, one can get financial assistance in the form of bank loans to set up small industries. The educated unemployed from low- income families in rural and urban areas can get financial help to set up any kind of enterprise that generates employment under PMRY. SJSRY mainly aims at creating employment opportunities — both self-employment and wage employment— in urban areas. Earlier, under self-employment programmes, financial assistance was given to families or individuals. Since the 1990s, this approach has been changed. Now those who wish to benefit from these programmes are encouraged to form self-help groups. Initially they are encouraged to save some money and lend among themselves as small loans. Later, through banks, the government provides partial financial assistance to SHGs which then decide whom the loan is to be given to for self- employment activities. Swarnajayanti Gram Swarozgar Yojana (SGSY) is one such programme. The government has a variety of programmes to generate wage employment for the poor unskilled people living in rural areas. Some of them are National Food for Work Programme (NFWP) and Sampoorna Grameen Rozgar Yojana (SGRY).
In August 2005, the Parliament has passed a new Act to provide guaranteed wage employment to every household whose adult volunteer is to do unskilled manual work for a minimum of 100 days in a year. This Act is known as National Rural Employment Guarantee Act – 2005. Under this Act all those among the poor who are ready to work at the minimum wage can report for work in areas where this programme is implemented.
The third approach to addressing poverty is to provide minimum basic amenities to the people. India was among the pioneers in the world to envisage that through public expenditure on social consumption needs — provision of food grains at subsidised rates, education, health, water supply and sanitation— people’s living standard could be improved. Programmes under this approach are expected to supplement the consumption of the poor, create employment opportunities and bring about improvements in health and education. One can trace this approach from the Fifth Five Year Plan, “even with expanded employment opportunities, the poor will not be able to buy for themselves all the essential goods and services. They have to be supplemented up to at least certain minimum standards by social consumption and investment in the form of essential food grains, education, health, nutrition, drinking water, housing, communications and electricity.”
Three major programmes that aim at improving the food and nutritional status of the poor are Public Distribution System, Integrated Child Development Scheme and Midday Meal Scheme. Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Gramodaya Yojana, Valmiki Ambedkar Awas Yojana are also attempts in the same direction. It may be essential to briefly state that India has achieved satisfactory progress in many aspects. The government also has a variety of other social security programmes to help a few specific groups. National Social Assistance Programme is one such programme initiated by the central government. Under this programme, elderly people who do not have anyone to take care of them are given pension to sustain themselves. Poor women who are destitute and widows are also covered under this scheme.
POVERTY ALLEVIATION PROGRAMMES — A CRITICAL ASSESSMENT
Efforts at poverty alleviation have borne fruit in that for the first time since independence, the percentage of absolute poor in some states is now well below the national average. Despite a variety of approaches, programmes and schemes to alleviate poverty; hunger, malnourishment, illiteracy and lack of basic amenities continue to be a common feature in many parts of India. Though the policy towards poverty alleviation has evolved in a progressive manner, over the last five and a half decades, it has not undergone any radical transformation. You can find change in nomenclature, integration or mutations of programmes. However, none resulted in any radical change in the ownership of assets, process of production and improvement of basic amenities to the needy.
Scholars, while assessing these programmes, state three major areas of concern which prevent their successful implementation. Due to unequal distribution of land and other assets, the benefits from direct poverty alleviation programmes have been appropriated by the non-poor. Compared to the magnitude of poverty, the amount of resources allocated for these programmes is not sufficient. Moreover, these programmes depend mainly on government and bank officials for their implementation. Since such officials are ill motivated, inadequately trained, corruption prone and vulnerable to pressure from a variety of local elites, the resources are inefficiently used and wasted. There is also non-participation of local level institutions in programme implementation. Government policies have also failed to address the vast majority of vulnerable people who are living on or just above the poverty line. It also reveals that high growth alone is not sufficient to reduce poverty. Without the active participation of the poor, successful implementation of any programme is not possible. Poverty can effectively be eradicated only when the poor start contributing to growth by their active involvement in the growth process. This is possible through a process of social mobilisation, encouraging poor people to participate and get them empowered. This will also help create employment opportunities which may lead to increase in levels of income, skill development, health and literacy. Moreover, it is necessary to identify poverty stricken areas and provide infrastructure such as schools, roads, power, telecom, IT services, training institutions etc.
We have travelled about six decades since independence. The objective of all our policies had been stated as promoting rapid and balanced economic development with equality and social justice. Poverty alleviation has always been accepted as one of India’s main challenges by the policy makers, regardless of which government was in power. The absolute number of poor in the country has gone down and some states have less proportion of poor than even the national average. Yet, critics point out that even though vast resources have been allocated and spent, we are still far from reaching the goal. There is improvement in terms of per capita income and average standard of living; some progress towards meeting the basic needs has been made. But when compared to the progress made by many other countries, our performance has not been impressive. Moreover, the fruits of development have not reached all sections of the population. Some sections of people, some sectors of the economy, some regions of the country can compete even with developed countries in terms of social and economic development, yet, there are many others who have not been able to come out of the vicious circle of poverty.
Reducing poverty has been one of the major objectives of India’s developmental strategies. The per capita consumption expenditure level which meets the average per capita daily requirement of 2,400 calories in rural areas and 2,100 calories in urban areas, along with a minimum of non-food expenditure, is called poverty line or absolute poverty. When the number of poor and their proportion is compared, we will have an idea of different levels of poverty of people and their distribution between states and over time. The number of poor in India and their proportion to total population has declined substantially. For the first time in the 1990s, the absolute number of poor has declined. Majority of poor are residing in rural areas and engage themselves in casual and unskilled jobs. Income and expenditure oriented approaches do not take into account many other attributes of the poor people. Over the years, the government has been following three approaches to reduce poverty in India: growth oriented development, specific poverty alleviation programmes and meeting the minimum needs of the poor. Government initiatives are yet to transform the ownership of assets, processes of production and meet the basic amenities of the poor.