POVERTY AND DEVELOPMENTAL ISSUES

Poverty can be defined as a state of deprivation characterized by the inability to access essential resources and opportunities required for a decent standard of living, encompassing inadequate income, lack of access to basic services, limited educational and employment opportunities, and social exclusion.

Types of Poverty

✔     Absolute poverty: A condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.

✔     Relative poverty: Relative poverty arises when individuals do not experience a designated minimum standard of living set by the government or enjoyed by the majority of the population. This threshold varies from country to country.

✔     Situational poverty: Situational poverty occurs when an unexpected crisis, such as a job loss, illness, or natural disaster, temporarily plunges an individual or family into economic hardship. Unlike chronic poverty, it’s often reversible with time or intervention.

✔     Generational poverty: It involves the transmission of poverty-related conditions and circumstances from parents to their children. The cycle may be perpetuated by a combination of systemic issues, social structures, and individual challenges that make it difficult for successive generations to escape poverty.

✔     Rural poverty: This occurs in rural areas, where there are less job opportunities, less quality education opportunities and less access to services.

✔     Urban poverty: Urban poverty is characterized by challenges such as inadequate housing, limited access to education and healthcare, high unemployment rates, and insufficient infrastructure for the people lives in cities and towns.

Causes of Poverty

✔     Economic Factors

●      Low agriculture productivity: It reduces the income of farmers, leading to widespread poverty in rural areas.

o   Example: Nearly 80% of the world’s extreme poor live in rural areas, with most relying on farming for their livelihood (World Bank)

●      Inflation and food price: This disproportionately impact low-income households by reducing their purchasing power and making it harder to afford essential goods and services.

o   Example: 71 million more people around the world experienced poverty as a result of soaring food and energy prices that climbed during Russia’s invasion of Ukraine (UNDP Report).

●      Unemployment and underemployment: High levels of unemployment or underemployment result in insufficient income to meet basic needs, leading to poverty for individuals and families.

o   Example: A 2020 OECD Report found that individuals unemployed for more than a year are 5 times more likely to be living in poverty compared to those in employment.

●      Poverty trap: A vicious poverty cyclereinforces the conditions of poverty and trapping individuals in a persistent state of economic hardship locking in poverty across generations.

✔     Social and Cultural Factors

●      Discrimination and social exclusion: Marginalized groups like women, disabled face discrimination in accessing employment, and essential services, increasing their vulnerability to poverty.

o   Example: Female Labour Force Participation rate is only 37% (Ministry of Women and Child Development)

●      Large population: Due to rapid population growth reduced the per capita availability of land, leaving households without adequate access to land to generate sufficient output and income.

o   Example: On an average, 17 million people are added every year to its population in India

●      Size of family: In larger families, resources must be stretched to support more members creating difficulty in meeting basic needs, thus perpetuating the cycle of poverty within the family.

●      Law of inheritance: Outdated inheritance laws prevent individuals, majorly women and marginalized groups, from accessing property rights, limiting their economic opportunities.

●      Caste: Due to the rigid caste system, the “lower caste” are mostly trapped in caste based economic opportunities which are mostly low income generating.

o   Example: Figure shows that Dalits are the least likely to start their own enterprises and most likely to work as labourers for others, with SCs having the lowest relative share in the self-employed category and the highest share in casual labourers.

✔     Political Factors

●      Corruption: It diverts resources away from essential services and development, exacerbating poverty by impeding equitable access to opportunities and hindering effective governance.

o   Example: Despite being Africa’s top oil producer, Nigeria’s persistent ranking among the most corrupt nations according to Transparency International leads to its high poverty rate of 40% of its population.

●      Failure to enact land reforms: It left a significant portion of land concentrated in the hands of a few wealthy landowners, while many small farmers or landless labourers lack access to productive land.

●      Colonial exploitation: Through the exploitation of resources, labour, and markets in colonized regions for the benefit of colonial powers, often leaving local economies weakened and dependent.

o   Example: Colonialism transformed India into mere market for the goods from European countries. It also disrupted textile and traditional handicrafts industry in India.

✔     Environmental factors

●      Climatic variations affecting agriculture: Climatic variations, such as droughts, floods, and extreme weather events, lead to crop failures and loss of livelihoods for farmers, thereby exacerbating poverty.

o   Example: Over 5 million hectares of agricultural area was affected due to heavy rains during 2021 (Ministry of Agriculture and Farmers Welfare

●      Natural disasters: It destroy homes, infrastructure, and livelihoods, forcing affected communities to spend their limited resources on recovery efforts instead of long-term development.

o   Example: In 2018 Kerala floods, more than 1000 houses were destroyed or damaged and more than 300 people lost their lives.

Methodologies for Calculation of Poverty

✔     Pre-Independence Estimation of Poverty

●      The book “Poverty and Unbritish Rule in India” by Dadabai Naoroji: The estimation was based on cost of subsistence or minimum basic diet by establishing the baseline using 1867-68 prices.

●      National Planning Committee (1938): The committee set up under chairmanship of Jawaharlal Nehru considered the essential minimum income to be between Rs.15 and Rs.25 per person per month, calculated at pre-war prices.

●      The Bombay Plan (1944): Advocates of the Bombay Plan proposed a poverty line of Rs.75 per person annually.

✔     Post-Independence Estimation of Poverty

●      Planning Commission (1962): Planning commission working group decided two different poverty lines of urban and rural areas as income limits of Rs.25 and Rs.20 capita per year respectively.

●      VM Dandekar and N Rath (1971): The poverty estimation was based on expenditure that was adequate for 2250 calories per day in both rural and urban areas. It was the first systematic assessment of poverty in India based on National Sample Survey data.

●      Y.K Alagh Committee (1979): It established a poverty threshold for both rural and urban areas (at 49.09 and Rs.56.64 per capita per month respectively at 1973-74 prices) by considering nutritional needs and associated consumption expenses.

●      Lakdawala Committee (1993): It advocated for a state specific poverty line, and it should be updated using Consumer Price Index- Industrial workers (CPI-IW) in urban areas and Consumer Price Index- Agricultural labourers (CPI-AL) in rural areas.

●      Suresh Tendulkar Committee (2005): The committee recommended a shift from measuring calorie intake to nutritional intake. The new poverty line considered monthly spending on education, health, electricity and transport.The Tendulkar committee set a standard daily per capita spending of Rs.27 for rural areas and Rs.33 for urban areas.

●      C Rangarajan Committee (2012-2014): The committee estimation was based on survey of households by Center for Monitoring Indian Economy (CMIE). Persons spending below ₹47 a day in cities and ₹32 in villages are considered poor. But it failed to examine in a multidimensional view of poverty.

●      NITI Aayog Task Force Task Force (2015): The committee was formed to identify the people living Below Poverty Lines (BPL). It proposes tracking the progress of the bottom 30% of the population over time in areas of poverty such as nutrition, housing, drinking water, sanitation, electricity, and connectivity.

Challenges of Poverty Estimation

✔     Not a holistic measurement: Due to its reliance on a consumption-based model, it might not encompass all dimensions of poverty, including access to healthcare, education, and other essential social services.

✔     Variation of price differentials: Price varies from state to state or commodities thus it creates difficult to select a Poverty Line Basket (PLB).

✔     Unchanged poverty line measurements: Current poverty line rely on the Tendulkar poverty line set at daily expenditures of ₹27.2 in rural areas and ₹33.3 in urban areas, are considered too low for present conditions.

✔     Lack of consensus among states: States like Odisha and West Bengal favour the Tendulkar Poverty Line, others such as Delhi, Jharkhand, and Mizoram support the Rangarajan report.

✔     Limited coverage: Poverty line measurement excludes households which are marginally above the line yet still encountering considerable difficulties in fulfilling their fundamental requirements.

Redefining Poverty Measures

✔     Redefining poverty lines: The poverty thresholds need to be adjusted periodically to reflect shifts in income, consumption behaviours, and price levels.

✔     Holistic measurement: Addition of dimensions like education, access to healthcare and essential social services in poverty line determination

✔     Hybrid of Absolute and Relative Measurement of Poverty: This would assess poverty based on a universal global standard of living while also considering relative poverty levels within individual countries.

✔     Rethinking Poverty Measures: Policies have to reflect the fact that poverty does not mean living at the edge of hunger but, rather, lack of income to take advantage of the opportunities thrown up by a growing economy.

Multidimensional Poverty

Multidimensional poverty is a more comprehensive understanding of poverty by considering multiple dimensions of well-being simultaneously.

✔     Global Multidimensional Poverty Index: It is the major index for measuring this is global multidimensional poverty and is released by United Nations Development Programme (UNDP), Oxford Poverty and Human Development Initiative (OPHI) to determine the degree of poverty among population across more than 100 developing countries.

✔     National Multidimensional Poverty Index: It is published by NITI Aayog in harmony with global methodology by measuring education, health and standard of living in equal weightages.

Parameters of Measuring Multidimensional Poverty Index

✔     Education: Its subcomponents are years of schooling and school attendance.

✔     Health: Its subcomponents include child and adolescent mortality, nutrition and maternal health

✔     Standard of living: Electricity, housing, drinking water, sanitation, cooking fuel, bank account and assets constitutes standard of living.

Findings of Global Multidimensional Poverty Report 2023

✔     Globally, 18% of the total population are acutely in multidimensional poverty.

✔     18.7% of Indian population falls under multidimensional poverty.

✔     India’s Progress in Poverty Reduction:

●      India is among 25 countries that successfully halved their global MPI values within 15 years.

●      Incidence of poverty in India declined from 55.1% in 2005-2006 to 16.4%in 2019-2021.

✔     Improvement in deprivation indicators:

●      The proportion of individuals experiencing multidimensional poverty and lacking proper nutrition declined from 44.3% in 2005-2006 to 11.8% in 2019-2021.

●      Reduction in child mortality rates from 4.5% to 1.5%.

Effects of Poverty

✔     On Social Parameters

●      Infant death: Poverty limits access to adequate healthcare, nutrition, and sanitation, thus increasing the risk of preventable illnesses and complications during pregnancy, childbirth, and infancy.

o   Example: Infant Mortality Rate in India is 26 among 1000 live births (World Bank Report 2021). The rate is more in Indian states with lower score in National Multidimensional Poverty index.

●      Malnutrition: Poverty limits access to nutritious food leading to malnutrition, food insecurity, and stunted growth, particularly among children which affects their overall health.

o   Example: 35.5% of children under five had stunting, 19.3% is wasted and 32.1% is underweight (National Family Health Survey-5).

●      Poor overall health: Poverty limit access to healthcare, nutritious food, clean water, and sanitation, it can lead to malnutrition, infectious diseases, chronic illnesses, and shorter life expectancies.

o   Example: South Sudan having one of the highest poverty rates, 82.3% have life expectancy of only 55 years.

●      Lack of education: Poverty often restricts access to quality education, as families may struggle to afford school fees, uniforms, and supplies thus leading to vicious cycle of poverty.

o   Example: Children from the poorest 20% of families are eight times as likely to be out of school as children from the richest 20% in lower-middle-income countries(UNESCO, 2020 Global Education Monitoring Report).

✔     On Economy

●      Poor Purchasing Power: Poverty diminishes the purchasing power of the poor by restricting their ability to afford basic necessities and access essential goods and services.

o   Example: The poorest half of the global population owns just 2% of the global total, while the richest 10% own 76% of all wealth (World Economic Forum).

●      Overall economic growth: Poverty hampers overall economic growth by reducing consumer spending, limiting human capital development, and exacerbating social inequality and instability.

●      Internal migration: Economic desperation pushes rural populations towards cities, resulting in an expansion of the informal sector and the proliferation of slums.

o   Example: 450 million people or 37% of the population are internal migrants (2011 census)

✔     On Vulnerable Sections

●      Child labour: Poverty can push children into exploitative labour to contribute to household income, hindering their development and perpetuating a cycle of poverty.

o   Example: 3.9% of total child population (10.1 million children) is working as child labour in India (International Labour Organisation- 2017 Report)

●      Child marriages: Poverty often drives families to arrange child marriages as a coping mechanism to alleviate financial burdens or secure resources.

o   Example: India has one third of global total of child marriages which accounts to 223 million child brides in India (UNICEF 2021 Report).

●      Impact on women: Poverty affects women by hindering their human resource development which increase vulnerabilities such as exploitation, discrimination, and lack of decision-making power.

o   Example: As per UN Women study, in lower and upper middle-income countries, adolescent girls fare far worse than adolescent boys in poverty, with the exception of sub-Saharan Africa.

●      On decision making: Poverty can influence decision-making among the poor by prioritizing short-term survival over long-term goals, leading limited opportunities for advancement.

✔     On Crime Levels

●      Addiction and criminal activities: Due to economic inequality and resource scarcity, individuals may resort to illegal activities in order to survive or as a result of limited economic opportunities.

●      Terrorism: In conditions of economic desperation and social disenfranchisement, extremist groups exploit to recruit individuals who feel marginalized and seek a sense of belonging or purpose.