BCom Poverty in India Notes Study Material
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BCom Poverty in India Notes Study Material
CONCEPT OF POVERTY
Poverty is a common phenomenon in developing countries like India. It can be defined as a situation in which a section of society is unable to fulfil even its basic necessities of life. The countries of the third world exhibit invariably the existence of mass poverty, although pockets of poverty exist even in the developed countries of Europe and America. (BCom Poverty in India Notes Study Material)
The high poverty levels are synonymous with poor quality of life, deprivation of goods and services, semi-starvation, poor health, and illiteracy and all of these have multiplied ill-effect on the economy of the country, social tension and ultimately lending to crimes and exploitation of poor. When a substantial segment of society is deprived of the minimum level of living and continues at a bare subsistence level, that society is said to be plagued with mass poverty. In India, the generally accepted definition of poverty emphasises on the minimum level of living rather than a reasonable level of living. (BCom Poverty in India Notes Study Material)
“Poverty, in common parlance, refers to social phenomena in which a section of the society is unable to fulfil the minimum basic requirements for life, health and efficiency.” (BCom Poverty in India Notes Study Material)
Generally, poverty is defined in two terms. These are absolute poverty and relative poverty. In the absolute standard, minimum physical quantities of cereals, pulses, milk, butter etc. are determined for a subsistence level and then the price quotations convert into monetary terms. The per capita consumer expenditure is calculated by aggregating all the quantities considered for the purpose, the population whose level of expenditures on incomes below the calculated amount is considered to be below the poverty line. Thus, absolute poverty is concerned with the types of poverty which are below the breadline and they are not able to meet the fundamental costs of living as human beings.
According to the relative standard, estimation is required to calculate the distribution of the population in different fractional groups. For which a comparison is undertaken to get the levels of living of the top 5 to 10 per cent with the bottom 5 to 10 per cent of the population under consideration. This type of poverty is concerned with the living and working conditions of other members of the same society at the same time. In India, the concept of ‘Absolute Poverty’ is to be taken into consideration. (BCom Poverty in India Notes Study Material)
MAGNITUDE OF POVERTY IN INDIA
In India to measure the extent of poverty, the concept of the poverty line has been used from time to time. Generally, poverty can be defined as a situation where a person fails to earn the income which is sufficient to buy him bare means of subsistence. Thus, the poverty line denotes the capacity to satisfy the minimum level of human needs. (BCom Poverty in India Notes Study Material)
Regarding the extent of poverty in India, several economists and organisations have conducted studies. Montek Singh Ahluwalia studied the trends in the incidence of rural poverty in India of the period 1956-57 to 1973-74. The most important thing of Montek Singh Ahluwalia’s study is the marked fluctuation over time in the extent or incidence of rural poverty. The proportion of rural poverty declined initially from over 50 per cent in the mid-fifties to around 40 per cent in 1960-61, rose sharply through the mid-sixties, reaching a peak in 1967-68, and then declined again.
He, therefore concludes: “The Indian experience over the past two decades cannot be characterised as showing a trend increase in the incidence of poverty in India as a whole. In general, the time series shows a pattern of fluctuation with the incidence of poverty falling in periods of good agricultural performance and rising in periods of poor performance.”
The latest estimates of Poverty are available for the year 2011-12. These estimates have been made on Tendulkar Committee Methodology using household consumption expenditure survey data collected by the NSSO in its sixty-eighth round (2011-12). Over a span of seven years, the incidence of poverty declined from 37.2 per cent to 21.9 per cent in 2011-12 for the country as a whole, with a sharper decline in the number of rural poor.
CAUSES OF POVERTY IN INDIA
The main causes of poverty in India are as follows:
(1) Economic Causes
(i) Vicious Circle of Poverty: Under the Indian economical set-up, people are poor because they are poor. People do not have sufficient money to save as their level of income is low. The lower savings creates low investment which is the main reason for lower production Thus, we are moving into a vicious circle of poverty. In this way, poverty never ends unless a big push to break this continuous process.
(ii) Backwardness of Indian Agriculture: India being an agriculture-dominated country, continuously faces a lack of agricultural facilities like equipment, seeds, fertilizer, water, warehousing, transportation, power and banking etc. Non-availabilities of these facilities adversely affect the productivity of agricultural produce. As a result, farmers remain in the clutches of poverty.
(iii) Poor Infrastructural Facilities: India is still facing with poor infrastructural facilities like roads, communication, power, finance etc. which are basic requirements for agricultural and industrial development. Lower growth of industrial development and agricultural development are responsible for lower per capita income and poverty. (BCom Poverty in India Notes Study Material)
(iv) Lower Capital Formation: Low per capita Income caused lower investment. Because poor people are getting lower income and they are unable to save for further investment. Thus, the rate of capital formation is also low.
(v) Inequalities in Income Distribution: Inequalities in income distribution are also responsible for poverty in India. Indian society has been divided into haves and haves not. As stated in “Economic Research Council” in one of its reports that, 20% of people in the country own 41% of the national income. Our progressive taxation system fails to ensure the proper distribution of income among different segments of society. (BCom Poverty in India Notes Study Material)
(vi) Poor Utilization of Natural Resources: Poor utilization of natural resources is another main cause of poverty. Our production is not sufficient to cover the large demand for commodities and services. Inadequate investment and exploitation of natural resources like land, forest, minerals, water and other environmental resources are responsible for poverty in India.
(2) Social Causes
(i) Population: Rapid growth of the population has been one of the major causes of poverty in India. As per the present census, 2011, the size of the population comes to 121 crores as against 84.63 crores in 1991 which shows that the rate of growth of the population is very high. In that case, a big size of the population do not get employment opportunity available in the country and due to this per capita income has become low. (BCom Poverty in India Notes Study Material)
(ii) Social Structure: Indian social structure is not good for economic development. Casteism, division of society, traditions, customs, ethos, male-dominated society etc. are responsible for poverty.
(iii) Poor Saving Habits: The poor segment of society is not able to generate savings because of low per capita income. On the other hand, the rich segment of the society does not desire as such to save and invest a substantial proportion of their income in the local economy. Thus, they do not add to the nation’s productive resources and development. (BCom Poverty in India Notes Study Material)
(iv) Corruption: Corruption is one of the biggest challenges for the Indian economy. The benefits of economic planning, poverty alleviation programmes, Govt. social welfare programmes do not reach the poor segments of society because of corruption and they are still poor.
(3) Political Causes
(i) Political Interference: Political interference in the execution of poverty alleviation programmes is not good for the betterment of the living standard of people. Our current political system already worked as a regulator and the basic motive behind Political intervention is to create problems in common welfare programmes through bureaucratic control and red-tapism.
(ii) Ineffective Implementation of Development Programmes: Various poverty alleviation programmes have been formulated by the Government of India and State governments for the wellness of the poor segment of society. But their implementation process is quite slow and not rewarding for the poor and common man. Approximately 15% to 20% of the total amount reaches the poor and the rest of the amount is taken away by the middlemen and government officials. In this way, how we can think to reduce poverty and the well-being of the common man?
(iii) Political Instability: It is one of the main causes of poverty in India. Our country has a democratic set-up with various political parties. Since independence to till date different political parties have been ruling in the Centre but no one has taken steps for long-term development and poverty alleviation. An elected party gets a chance for 5 years and after this, it may be possible that another party comes into power with a new agenda and vision. Thus, this type of change hampers poverty alleviation programmes.
MEASURES TO REDUCE POVERTY
For a developing economy with an aspiration of becoming a super economic power by 2020, it is all the more necessary to develop a basic needs approach to the poverty line, instead of a uni-dimensional poverty line based on the calorie intake of food primarily which is only a starvation line. This will entail greater efforts on the part of the state to take steps so that, the benefits of rapid economic growth reach will ‘aam admi’ (Common man). Then, it will shake us out of our complacency about poverty in India. We have miles to go before we sleep.
Towards a solution to the problem of poverty requires a two-pronged strategy: (i) The expansion of sectors which promises higher labour absorption and (ii) Empowering the poor with education, skill formation and health so that they can enter sectors which require higher competence and provide better remuneration. It enables to poor to cross the poverty line. Following are the steps to solve the problem of poverty in India:
(i) Adopt a Strategy of Pro-poor Growth Instead of Emphasizing Liberalization and GDP growth: Former Prime Minister Atal Bihari Vajpayee in his Independence Day Message (15th August 2001) can didly, stated: “The fruits of liberalization have not adequately reached the poor and the people living in rural areas. Inequalities have increased.” It would be, therefore, futile to pursue the failed strategy of liberalization which has focused on only 8% of the labour force in the organised sector. The need of the hour is to take care of 92% of the labour force engaged in the unorganised sector. The Government should re-appraise them and give priority to the removal of unemployment and recognizing the ‘Right to Work’ as a basic human right. (BCom Poverty in India Notes Study Material)
For this, emphasis should be laid on the development of irrigation and watershed development with people’s participation and greater emphasis should be given to housing for the poor and economically weaker sections. Rural infrastructure in the form of roads, and provision of power in rural areas should be strengthened and a programme of social infrastructure should be undertaken.
(ii) Empowerment of the Poor through Education and Skill Formation: To reach the objective of empowerment of the poor, it is necessary to strengthen educational institutions at all levels-primary, secondary and tertiary, both physical and human in a substantial manner. There is a gross failure in the provision of vocational education. Only 5% of the population in India in the age group 19-24 against the target set by the Education Commission (1964-66) was 25% by 1986. Thus, there is a need to develop effective strategies for demand-driven vocational education programmes. (BCom Poverty in India Notes Study Material)
(iii) Stimulating Agricultural Growth: Indian Government has been fixing the target of agricultural growth during the Ninth and Tenth plans at 4 per cent annum, but in practice, it was 2.7% in the 9th plan and only 1.7% in the 10th plan.
A Commission under the chairmanship of Dr M.S. Swaminathan was appointed on farmers and suggested the following 5-point action plan:
(1) To improve organic matter and macro and micronutrients for soil health enhancement. (BCom Poverty in India Notes Study Material)
(2) A sustainable water harvesting system should be established in rain-led areas lacking assured irrigation.
(3) The government should reduce the rate of interest on crop loans to per cent.
(4) The government should be accomplished training of farmers through the agency of Krishi Vigyan Kendras’ in both production and post-harvest technologies. (BCom Poverty in India Notes Study Material)
(5) The gap between what the rural producer gets and what the urban consumers pay should be narrowed down.
(iv) Increasing the Productivity and Job Quality of the Unorganised Sector: The government should be emphasized a shift in the strategy of development by emphasizing the growth of the unorganised sector as the surest method to reduce unemployment and poverty. All attempts should be made to increase the labour productivity of the unorganised sector rather than substituting labour with capital.
(v) Empowering the Poor through Provision of Better Health and Housing: To improve health care, a comprehensive approach is needed which comprises individual health, public health, sanitation, clean drinking water and knowledge of hygiene. There is also a need to remove the shortage of permanent houses in rural areas as well as urban areas. Not only that, an effort has to be made to provide the basic amenities of life, such as drinking water, toilets and electricity. (BCom Poverty in India Notes Study Material)
(vi) Empowerment through Skill Formation for our Expanding IT Sector: In the view of increasing use of computers and information technology, the poor are being priced out because they cannot afford expensive higher education and vocational training. The Government should provide subsidized higher education and vocational training for the poor and provide scholarships for the poor.
POVERTY ALLEVIATION PROGRAMMES
The government of India has introduced various employment-oriented and poverty alleviation programmes. during different planning, periods to generate additional employment and to raise the income level of the poor. Some ongoing programmes for poverty alleviation are as follows:
(i) Deen Dayal Upadhyaya Grameen Koushalya Yojana (DDU-GKY): It is a placement-linked skill development scheme for rural poor youth. This initiative is part of NRLM. The skilling programme for rural youth has now been refocused and reprioritized to build the capacity of rural poor youth to address the needs of the domestic and global skill requirements. A total of 51,956 candidates have been skilled under DDU-GKY out of which 28,995 candidates have been placed till November 2014 during 2014-15.
(ii) Mahatma Gandhi NREGA: Emphasis on Agriculture and Allied Activities to ensure that at least 60 per cent of the works in a district in terms of cost shall be for the creation of productive assets linked to agriculture and all activities through the development of land, water and trees. Intensive and Participatory Planning Exercise (IPPE) to prepare the labour budget for the financial year 2015-16 in selected 2,500 backward blocks has been initiated and special financial assistance of 147 crores for Staffing of Social Audit Unit has been provided for assistance of poor men. (BCom Poverty in India Notes Study Material)
(iii) National Livelihoods Mission (NRLM): This was launched after restructuring Swarnjayanti Gram Swarozgar Yojana (SGSY). It aims at organising all rural poor households and continuously nurturing and supporting them till they come out of abject poverty, by organizing one woman member from each household into affinity-based. (BCom Poverty in India Notes Study Material)
(iv) National Urban Livelihood Mission (NULM): Swarnjayanti Shahari Rozgar Yojana (SJSRY) which has been restructured into NULM, aims at organizing urban poor in self-help groups, imparting skill training to urban poor for self and wage employment and helping them to set-up self-employment venture by providing credit on the subsidized rate of interest. In addition, shelters for the urban homeless and infrastructure for street vendors can also be taken up under this mission. (BCom Poverty in India Notes Study Material)
(v) Support to Training and Employment Programme (STEP): The scheme is intended to benefit women who are in the age group of 16 years and above by providing skills to them for their employability. The scheme covers any sector for imparting skills related to employability and entrepreneurship, including but not limited to agriculture, horticulture, food processing, handlooms etc. and skills for the workplace such as spoken English, Gems and Jewellery, Travel & Tourism and Hospitality. (BCom Poverty in India Notes Study Material)
(vi) Upgrading the Skills and Training in Traditional Arts/Crafts for Development (USTTAD): It aims to conserve traditional arts/crafts of minorities and for building the capacity of traditional artisans and craftsmen belonging to minority communities.
(vii) MANAS: It aims to upgrade the entrepreneurial skills of minority youth and Cyber Gram’ to impart training for Digital Literacy. Training of 1,70,005 minority students has been sanctioned up to 31.12.2014.
(viii) Pradhan Mantri Jan Dhan Yojana (PMJDY): This scheme was launched on 28th August 2014 with a revised target of 10 crore bank accounts by 26th January 2015. The scheme has yielded deposits of 8,36,905.5 lakh with 1,063.9 lakh new bank accounts as of 03.01.2015. Banks have further been asked to provide universal coverage across all the six lakh villages of the try by providing at least one Basic Banking Account, per household with indigenous Rupay Debit card having inbuilt accident insurance of 1.00 lakh and life insurance cover of 30,000. (BCom Poverty in India Notes Study Material)
(ix) Swachh Swachh Bharat Mission (Gramin): This was launched on 2nd October 2014, which aims at attaining an open Defecation Free India by 2nd October 2019, by providing access to toilet facilities to all rural households and initiating solid and liquid waste management activities in all Gram Panchayats to promote cleanliness. Under SBM (G), the incentives for Individual Household Latrines (IHNLs) have been enhanced from Rs.10,000 to 12,000 to provide for water availability. (BCom Poverty in India Notes Study Material)
(x) Pradhan Mantri Suraksha Bima Yojana (PMSBY): The Prime Minister launched three ambitious social security schemes pertaining to the insurance and pension sector on 9th May 2015 in Kolkata. This would be a path-breaking initiative towards providing affordable universal access to essential social security protection in a convenient manner linked to an auto-debit facility from the bank account of the subscriber. PMSBY offers a renewable one-year accidental death-cum-disability cover of Rs.2 lakh to all saving bank account holders in the age group of 18 to 70 years for a premium of Rs.12 per annum per subscriber.
(xi) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): PMJJBY offers a renewable one-year life cover of two lakh to all saving bank account holders in the age group of 18 to 50 years, covering death due to any reason, for a premium of 330 per annum per subscriber. The scheme would be offered/administered through LIC or other life insurance companies willing to offer the product on similar terms on the choice of the bank/RRB/Cooperative bank concerned.
(xii) Atal Pension Yojana (APY): PPY, the third scheme has been launched, for the unorganised sector and provides subscribers with a fixed minimum pension of Rs.1,000, 2,000, 3,000, 4,000 or 5,000 per month starting at the age of 60 years, depending on the contribution option exercised on entering at an age between 18 to 40 years. The period of contribution by any subscriber under APY would be 20 years or more. The fixed minimum pension would be guaranteed by the Government. (BCom Poverty in India Notes Study Material)
While the scheme is open to bank account holders in the prescribed age group, the Central Government would also co-contribute 50% of the total contribution or Rs.1,000 per annum, whichever is lower, for a period of 5 years for those joining the scheme before 31st December 2015 and are not members of any Statutory Social Security Schemes and are not income tax payers.
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