Essay on Poverty in India

In this essay we will discuss about Poverty in India. After reading this essay you will learn about: 1. The Concept of Poverty 2. Absolute and Relative Poverty 3. Incidence 4. Recent Poverty Debate in India 5. Poverty Differential among Different States in India 6. Poverty Alleviation Programmes 7. Economic Reforms and Poverty Eradication Programme 8. World Bank’s New Perception.

Content:

1. Essay on the Concept of Poverty 
2. Essay on Absolute and Relative Poverty
3. Essay on the Incidence of Poverty in India
4. Essay on the Recent Poverty Debate in India
5. Essay on Poverty Differential among Different States in India
6. Essay on the Poverty Alleviation Programme
7. Essay on the Economic Reforms and Poverty Eradication Programme
8. Essay on the World Bank’s New Perception of Poverty

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Essay # 1. The Concept of Poverty:

Poverty is a peculiar problem from which various countries of the world, particularly the Third World, have been suffering. There cannot be a common definition of poverty which can be broadly accepted everywhere. Thus there are large differences between the definitions of poverty accepted in various countries of the world.

Leaving aside all these differences it can be broadly said that poverty is a situation where a section of the society, having no fault of their own, is denied of even basic necessities of life. In a country, where a chunk of the population is deprived of even minimum amenities of life since long period, the country is suffering from a vicious circle of poverty.

Poverty is considered as the greatest challenge faced by the societies in the third world countries. Poverty is also concerned with the comparison with respect to a fixed line—known as poverty line. However, the poverty line is fixed extraneously and, therefore, remains fixed for a certain period.

Poverty Line:

Normally poverty is defined with poverty line. Now the question which is relevant at this point is What is the poverty line and how is it fixed? The answer to the question is that the poverty line is a cut-off point on the line of distribution, which usually divides the population of the country as poor and non-poor.

Accordingly, people having income below the poverty line are called poor and people with income above poverty line are called non-poor. Accordingly, this measure, i.e., the percentage of people living below the poverty line is known as head count ratio.

Moreover, while fixing a poverty line we must take adequate care so that the poverty line is neither too high nor too low rather it should be reasonable one. While fixing the poverty line, consumption of food is considered as the most important criteria but along with it some non­food items such as clothing, and shelter are also included.

However, in India we determine our poverty line on the basis of private consumption expenditure for buying both food and non-food items. Thus it is observed that in India, poverty line is the level of private consumption expenditure which normally ensures a food basket that would ensure the required amount of calories.

Accordingly, the average caloric requirements for rural and urban person are fixed at 2,400 and 2,100 calories respectively. Thus, the required amount of calories would normally coincide with one of the class- interval or will fall between two intervals.

Using inverse interpretation method, one can find amount of consumption expenditure at which the minimum calorie requirement is met. This amount of consumption expenditure to meet the minimum calorie requirement for person is called the poverty line.

In India, broadly accepted definition of poverty emphasises more on minimum level of living rather than on reasonable level of living. Accordingly, it is broadly agreed that poverty can be termed as a situation where a section of the population fails to reach a certain minimum consumption standard. Differences arise with the fixing of this minimum consumption standard.

After a thorough examination, the study group set up by the Planning Commission in July 1962 recommended a standard of private consumption expenditure of Rs 20 (at 1960-61 prices) per capita per month as the bare minimum amount common to both rural and urban areas.

At the initial stage, the Planning Commission accepted the study Group’s poverty criterion. Various researchers like B.S. Minhas and A. Vaidyanathan also made their study on the basis of this definition. But other researchers like Dandekar and Rath, PK. Bardhan and Ahluwalia made their study on the basis of their own definition of poverty.

Later on, the “Task Force on Projections of Minimum Needs and Effective Consumption Demand” offered an alternative definition of poverty which has been adopted by the Planning Commission in recent years.

The Task Force defined the poverty line as the mid-point of the monthly per capita expenditure class which have a daily calorie intake of 2,400 per person in the rural areas and 2,100 in urban areas of the country. Accordingly, the minimum desirable standard was worked out at Rs 76 for the rural areas and Rs 88 for urban areas at 1979-80 prices.

Prof Galbraith once argued “Poverty is the greatest polluter”. There is definitely some logic in this argument. The entire world economy now considers poverty as their great enemy. In India, the problem of poverty is still quite acute. For the last forty-five years, Indian politicians have been holding the expectation and promise of poverty removal believing in the theory of the “trickle down”.

Most of them were of the opinion that the benefits of a high and sustained growth of the economy will eventually take care of bulk of the poor population of the country. But by the end of 1960s, it became quite clear that the benefits of growth could hardly trickle down and institutional reforms adopted in the country were strangled by vested class interests.

Considering this situation, a plethora of poverty alleviation measures were gradually adopted by the beginning of 1970s.

Again in 1987-88, the Planning Commission revised the standard of private consumption expenditure of 15.43 for rural areas and Rs 165.58 for urban areas per capita per month as a bare minimum amount for determining the poverty line. Again in 1999-2000, the same consumption expenditure per capita per month determined on the basis of NSSO data revised to Rs 211.30 for rural areas and Rs 454.11 for urban areas.

The Expert Group under the Chairmanship of Prof. S.D. Tendulkar revised the national poverty line at 2004-05 prices and accordingly the monthly per capita consumption expenditure of Rs 446.68 in rural areas and Rs 578.80 in urban areas in 2004-05.

Again in October, 2011 in response to the quarry of the Supreme Court, the Planning Commission made an attempt to revise the poverty line with the monthly per capita expenditure of Rs 965 for urban areas (Rs 32 per day) and Rs 781 in rural areas 26 per day).

But facing a severe criticism on the above prescription of below poverty line cap from several quarters, the UPA government at the Centre has now decided to revise the expenditure criteria by factoring in the 2009-10 NSSOs report on household expenditure.

The Planning Commission on October 3, 2011 was compelled to announce that a new methodology will be worked out to redefine the poverty line in consistent with the Food Security Bill passed recently by a new Expert Committee.

Planning Commission made another estimate of the poverty line in March 2012 and that was announced in the Parliament on 6th March, 2013. As per the latest available information, the poverty line at all India level for 2009-10 is estimated at monthly per capita consumption expenditure (MPCE) of Rs 673 (Rs 22.40 per day) for rural areas and Rs 860 (Rs 28.65 per day) for urban areas.

After 2004-05, this survey has been conducted in 2009-10.

The Planning Commission has updated this new poverty lines and poverty ratios for the year 2009-10 as per the recommendations of the Tendulkar Committee using NSS 66th Round (2009-10) data from the Household Consumer Expenditure Survey. Thus it has been estimated that the poverty lines at all India level as an MPCE of Rs 673 for rural areas and Rs 860 for urban areas in 2009-10.

Planning Commission made another estimate of poverty line in July 2013 by following the Tendulkar methodology, As per this latest estimate, the poverty line at all India level for 2011-12 is estimated at monthly per capita consumption expenditure (MPCE) of Rs 816 (Rs 27.20 per day) for rural areas and Rs 1,000 (Rs 33.33 per day) for urban areas.

The Planning Commission has updated this new poverty lines and poverty ratios for the year 2011-12. Thus, it has been estimated that poverty lines at all India level as an MPCE of Rs 816 for rural areas and Rs 1000 for urban areas.

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Essay # 2. Absolute and Relative Poverty:

Most of the time, the concept of poverty and its discussion is usually confined to absolute poverty. Accordingly, absolute poverty is measured by a pre-determined level of living which families or households should be able to afford. Thus in absolute sense, the concept of poverty is not related to the income and the distribution of consumption expenditure, which is usually done in the measure of relative poverty.

Thus in the measure of absolute poverty, the absolute minimum consumption basket includes consumption of food grains, vegetables, milk products and other important items which are necessary for attaining healthy living along with access to other important non-food items. While doing so, these standards are converted into monetary units to define it as ‘Poverty Line’.

People whose consumption expenditures are found below this threshold limit are usually considered as poor. For example, the one-dollar consumption expenditure per capita in PPP dollars is the absolute poverty line accepted internationally. This concept of absolute poverty is very much relevant to poor and less developed countries where large scale absolute poverty prevails.

Relative poverty, on the other hand, considers over all distribution of income and the relative position of a household within that distribution pattern. Here in this concept of relative poverty, the relative position of one section of people is compared with another group. This concept of relative poverty can also be extended to other countries to get a comparative estimate of poverty in a relative manner.

In 1871, Dadabhai Naoroji wrote a book entitled “Poverty and Un-British Rule in India” which shows that India was comparatively a very poor country. In 2003, the per capita income of USA was US $ 35,060 and that of United Kingdom was US $ 25,250 and thus UK can be considered as poor as compared to US.

Thus relative poverty is very much associated with the issues of inequality. Here the extent of income or consumption of the last quintile population (poorest) could be compared with the richest quintile showing a wide gap between the two.

In terms of relative poverty the last quintile population would be termed as poor whereas in terms of absolute poverty criterion the same last quintile group may not be termed as poor as they are maintaining the income and consumption bucket above the minimum level that represents poverty line.

If half of the population of the country is maintaining its average income below the per capita income of the country then they can be termed as poor on the relative criterion although they maintain the minimum basket of goods and services to remain above the poverty line. Thus relative poverty looks at the angle of inequality. Thus, the concept of relative poverty is completely different from Absolute poverty.

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Essay # 3. Incidence of Poverty in India:

In order to determine the strategy of development of the country, it is quite essential to make an appropriate estimate of incidence of poverty in India. But appropriate and reliable data for the estimation of the extent of poverty is not available in India.

However, on the basis of NSS data on consumption expenditure, various estimates of the extent of poverty have been made by Minhas, Dandekar and Rath, P.K. Bardhan and Ahluwalia. But due to the differences in their concept of poverty, their results vary widely.

Let us now discuss the findings of these estimates:

Estimates of B.S. Minhas:

The study of the extent of poverty made by Minhas covered the period 1956- 57 to 1967-68. Taking the annual per capita minimum expenditure of? 240 as the minimum standard (on the basis on NSS data), he found that the proportion of people below the poverty line declined from 64 per cent in 1956-57 to 50.6 per cent in 1967-68.

Estimates of Dandekar and Rath:

Dandekar and Rath estimated their own standard of poverty line taking 2,250 calories as the desired minimum level of nutrition. They observed “that level of consumer expenditure is desirable which secures a diet adequate at least in terms of calories. In 1960-61, this was Rs 170 per capita per annum for rural households and Rs 271 per capita per annum for urban household”.

Their estimates revealed that in 1968-69 nearly 40 per cent of the rural population (i.e., about 166 million) and over 50 per cent of the urban population (i.e., nearly 49 million) were living below the poverty line.

Total number of persons living below the poverty line also increased from 117 million in 1960-61 to 216 million in 1968- 69, although the proportion of population below the poverty line remained the same at 41 per cent.

Estimates of P.K. Bardhan:

Bardhan advocated a lower standard for estimating the poverty line and thus considered Rs 15 per capita per month at 1960-61 prices for the rural poverty line and Rs 18 for the urban line. On the basis of the NSSO data on consumption expenditure, Bardhan’s study revealed that in 1968-69 about 55 per cent of rural population and 41 per cent of the urban population of the country were lying below the poverty line.

Moreover, Bardhan concluded that the percentage of population below the poverty line rose from 38 per cent in 1960-61 to 55 per cent in 1968-69.

Estimates of M.S. Ahluwalia:

Ahluwalia studied the incidence of poverty in India for the period 1956- 57 to 1973-74. Taking the same concept of poverty line of Rs 15 per month at 1960-61 prices for rural areas and Rs 20 per head per month for urban areas he estimated that 54.1 per cent of the rural population in 1956- 57 was lying below the poverty line.

This extent of poverty declined to 38.9 per cent in 1960-61 and then again rose to 56.5 per cent in 1966-67. He further estimated that in 1973-74, about 46.1 per cent of the rural population was below the poverty line. This revealed that the incidence of poverty in India fluctuated over the years.

Planning Commission’s Estimates of Poverty in India:

In recent years, the Planning Commission has also estimated the incidence of poverty in India taking Rs 77 per capita per month (at 1979-80 prices) as the bare minimum consumption for drawing the poverty line for the rural population.

Later on the Planning Commission revised per capita monthly expenditure for drawing poverty line at Rs 115.43 for rural areas and Rs 165.58 for urban areas in 1987-88. Table 12.1 shows these estimates of incidence of poverty.

These estimates revealed that the proportion of rural population lying below the poverty line declined from 54.1 per cent in 1972-73 to 51.2 per cent in 1977-78 and then it again declined to 40.1 per cent in 1983-84 and 28.37 per cent in 1987-88.

Again the proportion of urban population lying below the poverty line declined from 41.2 per cent in 1972-73 to 38.2 per cent in 1977-78 and then again declined to 28.1 per cent in 1983-84 and then to 16.82 per cent in 1987-88.

Accordingly, these estimates revealed that the percentage of total population below the poverty line declined from 51.5 per cent in 1972-73 to 37.4 per cent in 1983- 84 and then to 25.49 per cent in 1987-88.

Planning Commission Revised estimates of Poverty (1993-94):

The Planning Commission estimates the incidence of poverty in rural and urban areas of the country using the quinquennial survey data on household consumption expenditure released by the National Sample Survey Organisation (NSSO), coupled with the poverty lines as set out in the Report of the Task Force on Projection of Minimum needs and Effective Consumption Demand, constituted by the Planning Commission in 1979. In view of the recent revisions in the aggregate private consumption expenditure made by CSO and the population data derived from census results, the poverty estimates for 1987-88 have been revised.

Expert Group Estimates, July 1993:

In view of the methodological issues raised in respect of the estimates on poverty and also poverty alleviation being an objective of economic and social development, the Planning Commission constituted an Expert Group on September 1989 for considering methodology and computational aspects of estimation of proportion and number of poor persons in the country.

While retaining the concept of poverty line as recommended by the Task Force, the Expert Group suggested certain basic changes in the price deflator to update the poverty line for its application in later years. This group suggested use of state specific price indices which can reflect the changes in cost of consumption basket of the people around the poverty line.

It also relied exclusively on the National Sample Survey (NSS) data on consumption expenditure to assess the incidence of poverty without adjusting the NSS Consumption that is obtained from macro-aggregates of the national accounts.

The Expert Group has estimated the percentage of population living below the poverty line under the new estimating pattern, as given in Table 12.2:

The report of the Expert Group which was submitted in July 1993, was subsequently released by the Planning Commission and its recommendations are under consideration. The new estimate has also confirmed a steady decline in proportion of population below the poverty line.

Together with the overall economic growth, the anti-poverty and employment generation programmes have helped in reducing the incidence of poverty over the long run.

Accordingly, the poverty ratio in rural areas declined from 56.4 per cent in 1973- 74 to 45.7 per cent in 1983 and then to 37.3 per cent in 1993-94. Again the poverty ratio in urban areas also declined from 49.0 per cent in 1973-74 to 40.8 per cent in 1983 and then to 32.4 per cent in 1993-94.

Moreover, the poverty ratio of the country as a whole has also declined from 54.9 per cent in 1973-74 to 44.5 per cent in 1983, 38.9 per cent in 1987-88 and then to 36.0 per cent in 1993-94 and finally to 26.1 per cent in 1999-2000 and 24.4 per cent in 2000-01.

In numerical terms, the number of persons living below the poverty line in India increased from 321 million in 1973-74 to 329 million in 1977-78 and then gradually declined to 307 million in 1987-88 and then again increased to 320 million in 1993-94 and then to 260 million in 1999-2000.

Planning Commission estimates on the basis of NSSO Data, 1999-2000:

Recent estimate of poverty was made by the Planning Commission on the basis of NSSO 55th round data for the year 1999-2000. Some of the key results of the 55th Round of the Household Consumer Expenditure Survey of the National Sample Survey Organisation (NSSO) covering the period July 1999 to June 2000, have now become available showing a very significant decline in poverty.

Accordingly, the rural poverty has declined to 27.1 per cent based on 30-day recall and 24.0 per cent on a 7-day recall methodology. Again the poverty ratio in urban areas has also declined to 23.6 per cent based on 30-day recall and 21.6 per cent on 7-day recall methodology.

Moreover, the poverty ratio of the country as a whole has declined to 26.1 per cent based on 30-day and 23.3 per cent on 7-day recall methodology. These two sets of estimates may not be strictly comparable to the earlier estimates of poverty. Nonetheless, they provide clear evidence indicating a substantial decline in the overall poverty ratio in the country during the 1990s.

As per the recent estimate based on NSSO data, it is observed that in 1999-2000 the country has 260 million population living below the poverty line (BPL); out of which 193 million live in rural areas and 67 million live in urban areas.

Thus the Planning Commission estimate of poverty on the basis of the NSSO 1999-2000 data is the latest official estimates of poverty and non official estimates on poverty are available beyond this data. Economic Surveys for 2003-04 and 2004-05, on the basis of the result of 55th round of NSSO, had indicated that there has been an impressive decline in the incidence of poverty in the 1990s.

However, the extent of the actual decline in the proportion below the poverty line (BPL) between 1993-99 and 1999-2000 has been a subject of an intense debate by academicians because of the change in methodology for collection of basic data in 1999-2000 and possible non-comparability with earlier rounds of the consumer expenditure surveys.

Planning Commission’s Estimates on the basis of NSSO Data, 2004-05:

Next official estimates of poverty incidence is based on the NSSO 61st round of large-scale sample survey in 2004-05. On the basis of the quinquennial large sample surveys on household consumer expenditure conducted by the National Sample Survey Organisation (NSSO), incidence of poverty is estimated by the Planning Commission for the year 2004-05.

Table 12.2(a) reveals this poverty estimate.

Table 12.2(a) reveals that the Uniform Recall Period (URP) consumption distribution data of NSS 61st Round yields a poverty ratio of 28.3 per cent in rural areas, 25.7 per cent in urban areas and 27.5 per cent for the country as a whole in 2004-05.

The corresponding poverty ratios calculated from the Mixed Recall Period (MRP) consumption distribution data are 21.8 per cent for rural areas, 21.7 per cent for urban areas and 21.8 for the country as a whole.

While the former consumption data (URP) uses 30-day recall/reference period for all items of consumption, the latter (MRP) uses 365-day recall/reference period for five infrequently purchased non-food items, namely, clothing, footwear, durable goods, education and institutional medical expenses and 30-day recall/reference period for remaining items.

The percentage of poor in 2004-05 estimated from URP consumption distribution of NSS 61st Round of consumer expenditure data (27.5 per cent) are comparable with the poverty estimates of 1993-94 (50th Round) which was 36 per cent for the country as a Whole, The percentage of poor in 2004-95 estimated from MRP consumption expenditure of NSS 61st Round of consumer expenditure data (21.8 per cent) are roughly comparable with the poverty estimates of 1999- 2000 (55th Round) which was 26.1 per cent for the country as a whole.

Average per capita consumption expenditure for rural and urban population as per 61st Round (2004- 05) is Rs 558.78 and Rs 1,052.36 respectively. NSSO Data also reveals that rural population on an average spends about 55 per cent of its consumption on food and remaining 45 per cent on non-food items.

Estimates of Poverty Ratio by Tendulkar Committee, 2004-05:

The above estimate of poverty ratio was prepared by an Expert Group under the Chairmanship of Professor Suresh D. Tendulkar Constituted by the Planning Commission in December 2005, which submitted its report in December 2009. The recomputed poverty estimates for the years 1993-94 and 2004-05 as recommended by the Tendulkar Committee have been accepted by the Planning Commission.

As per the Tendulkar Committee Report, the national poverty line at 2004-05 prices was a monthly per capita consumption expenditure of Rs 446.68 for rural and Rs 578.80 for urban areas in 2004-05. The above estimates of poverty line which refer to the national average, vary from state to state because of price differentials.

It its report, the Tendulkar Committee mentioned that the proposed poverty lines have been validated by checking the adequacy of actual private expenditure per capita near the poverty lines on food, education and health by comparing them with normative expenditures consistent with nutritional, educational and health outcomes.

In order to have a two point comparison of changes in head count ratio, the Expert Group has again re-estimated poverty ratio for 1993-94. The head count poverty ratio for 1993-94 and 2004-05 as released earlier by the Planning Commission on the basis of Lakdawala Methodology and also by using by the Tendulkar Methodology are shown in Table 12.2.(b).

It is observed that as per Lakdawala methodology, the poverty ratio in general in India declined from 36.0 per cent in 1993-94 to 27.5 per cent in 2004-05 showing poverty reduction to the extent of 8.5 per cent.

But as per Tendulkar methodology, the same poverty ratio declined from 45.3 per cent in 1993-94 to 37.2 per cent in 2004-05 showing poverty reduction of 8.1 per cent. However, in respect of both these two methodologies, the extent of poverty reduction is not much different.

Table 12.2(c) shows comparative estimate of the poverty incidence and growth rates in India and some other selected Asian countries.

Table 12.2(c) reveals that although the reduction of the overall poverty ratio in India from 54.9 per cent to 36 per cent during a period of three decades (1973-93) is quite significant, but the performance of poverty alleviation or reduction has been weak as compared to that of some East Asian countries.

While the poverty ratio in India has declined from 54.9 per cent in 1975 to -36.0 per cent in 1995, the same ratio has declined from 59.5 per cent to 22.2 per cent in China, 64.3 per cent to 11.4 per cent in Indonesia, 23.0 per cent to 5.0 per cent in Korea, 17.4 per cent to 4.3 per cent in Malaysia and 8.1 per cent to 0.9 per cent in Thailand during the same period.

It may be observed that the success of some East Asian countries (like China and Indonesia) lies in faster average (GDP) economic growth being 11.1 per cent in China, 6.6 per cent in Indonesia and 8.7 per cent in Korea during 1980-95 period as compared to that of only 5.6 per cent in India.

Moreover, the annual reduction in poverty ratio during the period 1975-95 was 0.9 percentage point in India as compared to that of 1.9 percentage point in China, 2.6 percentage point in Indonesia and 0.7 percentage point in Malaysia.

Planning Commission’s Estimates on the basis of NSSO Data, 2009-10:

The Planning Commission has updated the poverty lines and poverty ratios for the year 2009-10 as per the recommendations of the Tendulkar Committee using NSS 66th Round (2009-10) data from Household Consumer Expenditure Survey. It has estimated the poverty lines at all India level as an monthly per capita consumption expenditure (MPCE) of Rs 673 for rural areas and Rs 860 for urban areas in 2009-10.

Based on these cut-offs, the percentage of people living below the poverty line in the country has declined from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-10. Even in absolute terms, the number of poor people has fallen by 52.4 million during this period.

Of this 48.1 million are rural poor and 4.3 million are urban poor. Accordingly, the total number of poor in the country has been estimated at 34.47 crore in 2009-10 as against 40.72 crore in 2004-05.

The all India head count ratio (HCR) has declined by 7.3 percentage points from 37.2 per cent in 2004- 05 to 29.8 per cent in 2009-10, with rural poverty declining by 8 percentage points from 41.8 per cent to 33.8 per cent and urban poverty declining by 4.8 percentage point from 25.7 per cent to 20.9 per cent.

The sharp decline in poverty of over 10 percentage points was witnessed in Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, Sikkim, Tamil Nadu, Karnataka and Uttarakhand. It is also revealed from the report that the poverty has increased in North-Eastern States of Assam, Meghalaya, Manipur, Mizoram, and Nagaland.

Some of the bigger states such as Bihar, Chhattisgarh and Uttar Pradesh have shown only marginal decline in poverty ratio, particularly in rural areas. These estimates of poverty made by the Planning Commission are based on methodology recommended by the Tendulkar Committee, which includes spending on health and education, besides calorie intake.

It is also observed that poverty has declined on an average by 1,5 percentage points per year between 2004-05 to 2009-10. The annual averages rate of decline during the period 2004-05 to 2009-10 is twice the rate of decline during the period 1993-94 to 2004-05.

Planning Commission’s revised Estimates of Poverty Ratio on the basis of NSSO data, 2011-12:

The Planning Commission’s revised estimates of poverty ratio based on NSSO data, 2011-12 can be seen from the following Table 12.2(d).

The Planning Commission has revised the estimates of poverty lines and poverty ratios for the year 2011-12 following the Tendulkar methodology using the NSS 68th Round (2011-12) data from Household consumer expenditure Survey.

Accordingly, the poverty line at all India level for 2011-12 is estimated at monthly per capita consumption expenditure (MPCE) of 7 816 (Rs 27 per day) for rural areas and Rs 1000 (Rs 33 per day) for urban areas. Based on these cut-offs the proportion of people living below the poverty line in the country has declined from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12.

In absolute terms there were 26.93 crore people below the poverty line in 2011-12 as compared to 40.72 crore in 2004-05.

However, this current estimate of poverty has triggered controversy among different people. Some groups argue that the poverty ratio of 2011-12 is too low and far from reality. However, the impact of economic growth, agricultural and industrial development and effect of rural uplift and rural employment schemes cannot be totally denied.

Thus it is observed that 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. Table 12.2 (e) shows alternative estimates of poverty in India made by different experts and important bodies and also the criteria for determining such poverty line in the country.

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Essay # 4. Recent Poverty Debate in India:

In India, recently, a serious poverty debate is going on which is related to the concept and the measurement of poverty. The current debate centres on the estimation of price deflators, reference period for survey and also for determining the basis of poverty line.

Growth of per capita income over 3 per cent per annual during 1990’s and the increasing divergence in the per capita expenditure reflected in NSSO schedules and the national accounts systems have been cited to point out that the NSSO consumer expenditure surveys has under estimated consumption expenditure.

Accordingly, the incidence of poverty is considered to be overestimated. But, on the other hand, serious debate continued on the incidence of poverty after the release of official estimates of poverty by the Planning Commission for 1999-2000. In this report it is found that between 1993- 94 and 1999-2000, overall poverty in India declined by 10 per cent and in rural areas by more than 10 per cent.

On this matter many scholars have questioned about the comparability of the 1993-94 and 1999-2000 estimates due to the changes in the method of data collection. They observed that the incidence of poverty has been under estimated through over-reporting of expenditure by the surveyed households due to changes in the survey design.

Two subsequent studies made by Sundaram and Tendulkar (2003) and Sen and Himangshu (2003) argued that such decline in the incidence of poverty between 1993-94 and 1999-2000 would be in the range 7 per cent to 4.5 per cent respectively as compared to that to 10 per cent estimated officially earlier.

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Essay # 5. Poverty Differential among Different States in India:

A high degree of poverty differentials among the various states of India has been continuing from the very beginning. Although various measures were undertaken since the inception of planning for the eradication of poverty throughout the country and some degree of success has also been attained in reducing the poverty ratio in general among all the states but the high degree of poverty differentials still persist among different states of the country.

State-wise poverty ratios have witnessed a secular decline from 1973-74 to 2004-05. The poverty is estimated from the state-specific poverty lines and the distribution of persons by expenditure groups obtained from the NSS data on consumption expenditure.

It is observed that though poverty has declined at the macro level, rural-urban and inter-state disparities at the poverty ratio are clearly visible. The state specific poverty ratios at the national and state levels and the poverty differentials among different states from 1973-74 to 2004-05 can be seen from Table 12.3.

Table 12.3 reveals the poverty ratio of different states. It is observed that the poverty ratio both at the rural and urban level in different states has declined considerably but still a high degree of poverty differentials still exist between backward and relatively developed states of the country leading to mounting regional disparities.

The rural poverty ratio of relatively backward states in 1973-74 which were 67.28 per cent in Orissa, 62.99 per cent in Bihar, 62.66 per cent in Madhya Pradesh and 52.67 per cent in Assam, gradually declined to 60.80 per cent in Orissa, 55.70 per cent in Bihar, 53.60 per cent in Madhya Pradesh and 36.40 per cent in Assam in 2004-05.

But the present poverty ratios of backward states are still very high as compared to that of relatively developed states like Punjab (22.1 per cent), Gujarat (39.10 per cent) and Kerala (20.2 per cent).

Thus, the rural poverty ratio is still relatively high in Orissa, Bihar and North Eastern states. In Orissa, Madhya Pradesh, Bihar and Uttar Pradesh, the urban poverty ratios were in the range of 35.1 to 43.7 per cent in 2004-2005.

But the combined poverty ratio of the backward states during the period 1973-74 to 2004-05 gradually declined from 66.18 per cent to 57.2 per cent in Orissa, 61.91 per cent to 54.4 per cent in Bihar, 61.78 per cent to 48.6 per cent in Madhya Pradesh and 51.21 per cent to 34.4 per cent in Assam. But the performance of few other states in this regard has been found quite satisfactory.

The combined poverty ratio of states like Kerala, West Bengal, Tamil Nadu and Uttar Pradesh which were 59.79, 63.43, 54.94 and 57.07 in 1973-74 respectively, gradually declined substantially to 19.70, 34.3, 28.9 and 40.9 respectively.

Thus, there has been a significant reduction in poverty ratio during the period in Kerala, Jammu and Kashmir, Goa, Lakshadweep, Delhi, Andhra Pradesh, Gujarat, Tamil Nadu, Karnataka, West Bengal and Andaman and Nicobar Islands.

Thus, while some states such as Punjab and Haryana have succeeded in reducing poverty by following the path of modernisation of agriculture and high agricultural growth, others have focused on particular areas of development, e.g., Kerala has focused on human resource development, West Bengal on vigorous implementation of land reform measures and empowerment of Panchayats and Andhra Pradesh on direct public intervention in the form of public distribution of food grains.

The Approach Paper of the Tenth Plan also recorded the projections of poverty level at the end of Tenth Plan prepared by the plan panel. As per this projection, it is found that if macro-economic and sectoral projections for the Tenth Plan (2002-07) are achieved, the poverty ratio in India should fall to 19.2 per cent by the end of plan period.

While the urban poverty ratio is expected to drop to 14.6 per cent, rural poverty ratio is also projected to fall to 21.0 per cent. The poverty projections further show that 90 per cent of the poor will be concentrated in eight states, such as Bihar, Madhya Pradesh, Orissa, Uttar Pradesh, West Bengal, Assam, Maharashtra and Rajasthan.

All India GDP growth targets of more than 8.0 per cent accompanied by high agricultural growth in Haryana, Himachal Pradesh, Goa, Gujarat, Punjab and Delhi should make the poverty levels negligible in these states. Keeping in mind the migration factor from relatively poorer states to the prosperous ones, it has projected a poverty level of 2.0 per cent in these states by 2007.

Poverty Differentials of Different States as per Planning Commission Estimate on the Basis of NSSO Data, 1999-2000 and 2004-05:

As per the estimate made by the Planning Commission on the basis of NSSO data, 1999-2000, the poverty differentials among the different states of the country still persist at a wide level.

Orissa has the dubious distinction of having the maximum percentage of BPL population (47.15 per cent) while the Jammu and Kashmir has the least number of such population, i.e., 3.48 per cent. Besides Orissa, the only Other State with over 40 per cent BPL population is Bihar, in which 42.6 per cent of the total population is living below the poverty line (BPL).

The states with more than 30 per cent BPL population are Uttar Pradesh (31.15 per cent), Arunachal Pradesh (33.47 per cent), Assam (36.09 per cent), Madhya Pradesh (37.43 per cent), Nagaland (32.67 per cent), Sikkim (36.65 per cent) and Tripura (34.44 per cent).

Other states with below 10 per cent BPL population are Goa (4.4 per cent), Jammu and Kashmir (3.48 per cent), Himachal Pradesh (7.63 per cent), Haryana (8.74 per cent), Punjab (6.16 per cent), Chandigarh (5.75 per cent), Daman and Diu (4.44 per cent) and Delhi (8.23 per cent).

However in absolute terms, Uttar Pradesh has the highest number of those living below the poverty line at 52.98 million while Daman and Diu has just 6,000 BPL population.

Among those states with more than 10 million BPL population include—Andhra Pradesh (11.9 million or 15.77 per cent), Karnataka (10.44 per cent); Maharashtra (22.79 million or 25.02 per cent), Orissa (16.9 million or 47.15 per cent), Tamil Nadu (13.04 million or 21.12 per cent) and West Bengal (21.34 million or 27.02 per cent).

Thus wide inter-state disparities are visible in the poverty ratios between rural and urban areas as also in the rates of decline of poverty. Among major states like Orissa, Bihar, West Bengal and Tamil Nadu, more than 50 per cent of their population lived below the poverty line in 1983.

By 1999-2000, while Tamil Nadu and West Bengal had reduced their poverty ratio by nearly half, Orissa and Bihar continued to be the two poorest states with poverty ratios of 47 and 43 per cent respectively. In 1999-2000, 20 states and Union Territories had poverty ratios which were less than the national average.

Among other states, Jammu and Kashmir, Haryana, Gujarat, Punjab, Andhra Pradesh, Maharashtra and Karnataka also succeeded significantly in reducing the incidence of poverty.

Poverty Differentials of Different States as per Planning Commission Estimate on the Basis of NSSO Data, 2004-05:

As per the recent estimate made by the Planning Commission on the basis of NSSO data 2004-05, the poverty differentials among different states of the country still persists at a wide leve.

Among the states, orissa has again the dubious distinction of having maximum percentage of BPL population (52.2 per cent), followed by Bihar (54.4 per cent), which Kerela has the lowest poverty ratio of 19.7 per cent in 2004-05.

The states with more than 30 per cent BPL population as 2004-05 estimates are Madhya Pradesh (48.6 per cent), Uttar Pradesh (40.9 per cent), Maharashtra (38.1 per cent), Assam and Rajasthan (34.4 per cent), West Bengal (34.3 per cent), Karnataka (33.4 per cent) and Gujarat (31.8 per cent).

The states with below 30 per cent BPL population includes-Tamil Nadu (28.9 per cent) , Himachal Pradesh (24.1 per cent), Haryana (22.9 per cent), Andhra Pradesh (29.9 per cent), Punjab (20.9 per cent), and Kerela 19.7 per cent.

Thus there remains wide poverty differentials among the different states of India as per 2004-05 estimates.

This situation underscores the need for rapid growth of output and employment coupled with strengthening of the special programmes of poverty alleviation and employment generation. Thus this problem of poverty has to be dealt in the framework of the strategy of development laying emphasis on those sectors whose growth makes a significant impact on the income level of the underemployed.

Thus the findings of the study made by Minhas, Dandekar and Rath, Bardhan and others revealed that most of the people living below the poverty line belonging to landless agricultural labour households with small holdings, land-less non-agricultural rural labour households and small land operators with les than 1 hectare of land holdings.

Accordingly, Danekar and Rath observed tha, “The urban poor are only an overflow of the rural p[oor into the urban area. Fundamentally, they belong to the same class as the rural poor. However, as they live long enough in urban poverty, they acquire characteristics of their own. Little is known of their and labour in the growing cities.”

Thus the problem of poverty in India is quite chronic. Inspite of 4 decardes of planning, the problem of poverty is still persisting in the country.

Thus Amartya Sen rightly observed, “The poor is not an economic class, nor convenient category to use for analysing social and economic movements. Poverty is the common outcome of variety of desperate economic circumstances and a policy to tackle poverty must, of necessity, go beyond the concept of poverty. The need of discrimination is essential.”……. “ It is not sufficient to know how many poor people there are, but how exactly poor they are.”

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Essay # 6. Poverty Alleviation Programmes:

Although the problem of poverty has been persisting in India since the inception of planning but the serious programmes for the alleviation of poverty were introduced only in recent years. Poverty alleviation was accepted as one of the major objectives of planning since the Fifth Plan.

It is only during the 1970s the programmes like Small Farmer’s Development Agency (SFDA), Marginal Farmers and Agricultural Labourers Development Agency (MFAL), Drought Prone Areas Programme (DPAP), Crash Scheme for Rural Employment (CSRE) and Food for Work Programme (FWP) were introduced for benefitting the rural poor. Later on, the Integrated Rural Development Programme (IRDP) was introduced in 1978-79.

In order to provide wage employment to the rural poor, the National Rural Employment Programme (NREP) and the Rural Landless Employment Guarantee Programme (RLEGP) were introduced during the Sixth Plan. Later on, on April 1, 1989, NREP and RLEGP were merged into a single wage employment programme under Jawahar Rozgar Yojana (JRY).

IRDP is also being implemented by the Government since 1980 as a major instrument of its strategy to alleviate rural poverty. The objective of the programme is to assist poor families in developing skills and inputs to overcome their poverty. So far 41.3 million families have been assisted with a total investment of Rs 19,318 crore. The level of investment per family at the end of March 1993 was Rs 7,141.

Concurrent evaluation of IRDP carried out by the Ministry of Rural Areas and Employment reveals that as many as 16 per cent of families assisted under IRDP were able to cross the poverty line of Rs 6,400 during 1989. Again as per preliminary results of concurrent evaluation of IRDP carried out during September 1992 to February 1993, about 50 per cent of assisted families could cross the poverty line of Rs 6,400

During the Eighth Plan 18 million families were assisted under IRDP with plan provision of Rs 3,350 crore. At the end of March 1993, about 21 lakh families living below the poverty^/line were given income generating assets with a mixture of credit and subsidy.

Moreover, providing skills to rural youth belonging to families below poverty line and also to enable them to take up self or wage employment, the Training of Rural Youth for self Employment (TRYSEM) was introduced in August 1979.

A total of 26.6 lakh youths and 11.3 lakh women so far have been trained under this scheme, out of which 15.6 lakh youths have been fully employed. In 1992-93 and 1993-94 about 2.8 lakh and 3.04 lakh youths respectively were trained under TRYSEM and under JRY, about 7,821 lakh and 10,237 lakh man-days of employment respectively were generated.

During the first four years of the Eighth Plan (1992-93 to 1995-96), total number of youths trained was 11.47 lakh as against its target of 13.18 lakh and total number of man-days of employment generated under JRY was 365.54 crore as against its target of 362.86 crore. Again during the first four years of the Eighth Plan, total number of IRDP families assisted was 89.13 lakh as against its target of 65.6 lakh.

Family Credit Plan (FCP) is also a useful device to ensure higher investment for a beneficiary family under IRDP to enable the family to cross the poverty line. Under IRDP, all families in rural areas below the poverty line are eligible for assistance.

In 1993-94, two new programmes, namely the Employment Assurance Schemes (EAS) and the Prime Minister’s Rozgar Yojana (PMRY) were introduced. The EAS is now implemented in 3,175 backward blocks in the country. It aims at providing 100 days of unskilled manual work up to two members of a family in the age group of 18 to 60 years normally residing in villages within the blocks covered under EAS.

It is a need based programme hence no target of employment generation has been fixed. Under EAS/SGRY, total man- days of employment generated in 1993-94 was 494.94 lakh, 4,165.3 lakh in 1998-99, 8,223 lakh in 2004- 2005. Under PMRY, total employment generated in 1993-94 was 0.45 lakh and in 1994-95 was 2.83 lakh, in 2003-2004 was 1.8 lakh as against the target of 3.00 lakh.

The Economic Survey, 2002-03 in this connection observed, “The success of anti-poverty strategy is reflected in the decline in the combined poverty ratio from 54.9 per cent in 1973-74 to 36.0 per cent in 1993- 94. The poverty ratio declined by nearly 10 percentage points in the 5 year period between 1993-94 to reach 26.1 per cent in 1999-2000. While tile proportion of poor in the rural areas declined from 56.4 per cent in 1973-74 to 27.1 per cent in 1999-00, the decline in urban areas has been from 49 per cent to 23.6 per cent during this period. In absolute terms, the number of poor declined to 260 million in 1999-00 with about 75 per cent of these being in the rural areas.”

National Social Assistance Programme (NSAP):

The National Social Assistance Programme (NSAP) was announced on 15th August 1995 for providing succor to the aged and families below the poverty line. The NSAP for the poor encompasses old age pension, family benefit in case of the death of the bread-winner and maternity benefits.

The NSAP is a centrally sponsored programme with 100 per cent central funding and it is intended to ensure that social protection to the beneficiaries throughout the country is uniformly available without interruption.

The NSAP consists of the following three components:

(a) National Old Age Pension Scheme (NOAPS):

Providing a pension of Rs 75 per month to destitute and to person above 65 years of age living below the poverty line. This was expected to benefit 54 lakh people. In 2006-07, Rs 2,800 crore was allocated for the scheme.

(b) National Family Benefit Scheme (NFBS):

This scheme makes provision for lump-sum survivor benefit on the death of the primary bread winner in poor households of Rs 10,000 in the case of accidental death and Rs 5,000 in the case of death from unnatural causes. This scheme was expected to benefit 4.5 lakh families a year.

(c) National Maternity Benefit Scheme (NMBS):

This scheme provides maternity benefit of Rs 300 for expectant mothers per pregnancy up to the first two live births. This scheme was expected to benefit 46 lakh women each year. This programme involves an expenditure of Rs 867 crore in full year. An outlay of Rs 515 crore was provided during 1995-96 and a sum of Rs 725 crore was provided for the above three components of NSAP in 1999-2000 budget.

Targets of Tenth Plan:

Apart from an indicative target of an 8 per cent average GDP growth rate, specific monitor able targets of key indicators have been finalised for the Tenth Plan (2002-07) and beyond. One of these pertains to the reduction in poverty ratio by five percentage points by 2007 by 15 percentage points by 2012.

The poverty reduction target set by the Planning Commission for the Tenth Five Year Plan aimed at achieving a poverty ratio of 19.3 per cent for the country as a whole by 2007, 21.1 per cent for the rural and 15.1 per cent for the urban areas.

Critical Evaluation of Poverty Alleviation Programmes:

But all- these poverty alleviation programmes did not yield the desired result due to some of its shortcomings. These were:

(a) Allocation of funds and determination of targets were made without considering the size of the population and incidence of poverty leading to wrong identification of families;

(b) The selection of schemes was also not done in a rational manner;

(c) Poverty alleviation programmes failed to recognise importance of increased flow of social inputs through nutrition, family welfare, social security;

(d) This programme neglected the disabled, sick and socially handicapped persons;

(e) The present approach was almost blind about the existence of secondary poverty;

(f) The present poverty line crossing criterion for evaluation the income changes occurring below poverty line;

(g) The poverty alleviation programmes ignored the consequences of the earning activities of the poor people in terms of occupational health hazards and adverse ecological factors.

The Government is seriously reviewing its rural anti-poverty programmes in the light of lapses noticed and in the context of formulating the current five year plan. The Planning Commission has constituted a steering Group and six other groups to look into “poverty alleviation and area development programmes in rural India.”

So far, scrutiny of the working of the two major programmes—Integrated Rural Development programme (IRDP) and Jawahar Rozgar Yojana (JRY) has thrown up some major areas of concern. While on the positive side, under the IRDP scheme, beneficiaries were selectively chosen for assistance so as not to leave out the really needy.

On the flip side, it has been observed that a second dose of assistance given to beneficiaries was very low. Only 2.38 per cent of the total old beneficiaries were given a second dose, while new beneficiaries received less than 2.16 per cent assistance, implying enough attention has not been paid to providing subsequent doses of assistance to eligible families.

Moreover, the poverty alleviation schemes being administered by the banks must be evaluated and reviewed to ensure that benefits reach the intended target group. There is an urgent need to restructure the existing poverty alleviation schemes for focused and effective implementation as a large number of schemes were being implemented which resulted in “loss of focus”.

There is the need to compress the total number of schemes into two categories, i.e., those which generate employment and those which create assets for the benefit of the community.

Although the poverty alleviation programmes have four major objectives, i.e., generation of employment, creation of assets for community benefit, improvement of productivity and raising the general living standards of the people below the poverty line, but the thrust of all these schemes should be to create assets which directly benefit a large number of people.

Measures to be Adopted:

Success of poverty alleviation programmes not only depends on launching of wage employment and self-employment programmes but it also depends on the improvement of land relations in favour of the cultivators and redistribution of income in favour of the rural poor.

Thus the Approach paper of the Fifth Plan rightly observed that “Employment is the surest way to enable the vast numbers, living below the poverty level, to rise above it. Conventional fiscal measures for redistribution of income cannot by themselves make a significant impact on the problem.”

Thus in order to remove poverty steps must also be taken in the following directions:

(i) To impose ceiling on land and redistribution of ceiling—surplus land among the landless, small and marginal farmers.

(ii) To make provision for proper security of tenure for the tenant cultivators and share-croppers.

(iii) To provide employment to huge number of landless unemployed workers by developing agro-based small scale industries in the wage goods sector.

(iv) To take necessary steps for the reclamation of land and to arrange irrigation facilities for dry lands.

(v) To provide minimum amenities of life in rural areas and also in urban slum areas through Minimum Needs Programme.

(vi) To develop growth centres in order to run various projects like animal husbandry, dairy, fishing, poultry farming, farm forestry etc.

(vii) To ensure that rural development programmes like IRDP, JRY are redressed properly so that they can generate sufficient wage employment and self-employment opportunities to the rural poor. But the present contract system followed for the implementation of these programmes should be stopped and proper institutional framework should be provided so that rural workers can engage themselves with much vigour and responsibility.

Professor Sukhamoy Chakraborty rightly observed that “The solution to the problem of rural poverty will require that small farmers must also be given access to land-augmenting innovation along with a programme of well-conceived public works………………….. many of the specific tasks will need to be done on a decentralised basis.”

In order to implement these measures effectively, it will require a strong political will on the part of the government and active participation of the people with growing consciousness about their rights and responsibilities.

It can be observed further that India must sustain eight (8) per cent growth rate and aim for attaining nine (9) per cent growth rate as otherwise it would not be able to eradicate poverty.

The World Bank report entitled, “India : Achievements and Challenges in Reducing Poverty”, recently observed that the poverty level in India could go down from the current level of about 35 per cent to just 6.3 per cent by the year 2005 if the economy maintains its growth and income distribution levels.

The report further observed, “this would be a tremendous achievement for a country which is home to the largest concentration of poor in the world.”

The Bank noted that Indian economy has grown on an average by six per cent to seven per cent over the past few years. A senior World Bank economist Mr. Zoubida Allaoua, the principal author of the report said, “India has made substantial gains against widespread deprivation over the past 50 years.”

The Bank opined that the Indian Government should push for more growth so as to eradicate poverty within the least possible time.

Prime Minister’s Economic Advisory Council Chairman Mr. C. Rangarajan, while delivering a foundation day lecture at centre for Economic and Social Studies on 22nd February, 2014 observed that pro-poor policies by the government must be aimed at growth in the long run and also ensure flow of investments in the sectors working for poor.

Mr. Rangarajan also advocated public-private partnership model for delivery of social services such as health and education. He further observed that the design of policies has, therefore, to perform delicate balancing act. The pro-poor policies are necessary as they are to widen the opportunities and capabilities of the poor, must be so fashioned as to promote growth in the long run.

Pro-Poor policies should include not only income transfers which by their nature have to be limited, but also flow of investment to sectors and areas where poor work and live. Rural development including agriculture growth thus assumes major importance.

On the delivery of social services, he further argued that the delivery channel need not necessarily be through government administrative mechanism.

“Public-private partnerships in the delivery of these services need to be explored. Which taking advantage of superior administrative efficiency of private institutions, the larger public goals should not be sacrificed. Public-private partnership mode of delivery can thus supplement the direct delivery of services through government institutions.”

Such a model has proved to be a success in India in the case of AIDS programme where non-governmental organisations have played an extremely important role. Thus, one should try to realise seriously that social development and economic growth are not necessarily the same and thus different approaches need to be adopted for such programmes.

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Essay # 7. Economic Reforms and Poverty Eradication Programme:

Alleviation of poverty has been considered as an important element in the economic policy of the country since its inception.

To meet the objective of poverty alleviation of a part of our adjustment process under economic reforms, the Government has allocated a higher amount of outlays on elementary education, rural drinking water supply assistance to small and marginal farmers, programmes for the welfare of scheduled castes and scheduled tribes and other weaker sections of the society, programme for women and children and also on infrastructure and employment generation projects.

Effective implementation of grass-root level development programmes requires designing of alternative strategies to empower people to help themselves. The, then Finance Minister, Dr. Manmohan Singh was of the view that mere increasing of expenditure on social sectors and rural development, as has been done in the Eighth Plan, was not sufficient to eradicate poverty.

Designing of alternative strategies was necessary since economic reforms and the government efforts to remove poverty are primarily based on self-help.

In recent times, some experts as well as voluntary agencies have expressed concern that Government’s pre-occupation with economic growth may hamper social welfare, including the health sector. But there is need for better appreciation of this alternative approach on this issue.

Dr. Singh during his address to various forums, internationally and within the country, had himself stated that there were several areas of concern about effective implementation of grassroots development programmes. These involved active participation of the people in the design and implementation of rural development schemes.

Dr. Singh observed recently, “People at all times have to beat the centre of our concern and when we talk about people, our priority has to be the poorest among them. When we talk of encouraging private investment, we are under no illusion that the private entrepreneurs would go to the remote, far-flung or the poorest areas of our country to build schools, hospitals, roads or build drinking water facilities. What we are doing is to throw open certain sectors to private entrepreneurship so that the sources of the State that are released may be diverted to meeting the more basic human needs of the people.”

‘The emphasis is to use market forces where they can be productive enough to yield better results. At the same time, strengthening of the role of the State is sought in those areas where market forces cannot be relied upon to achieve social and economic objectives.

In the medium term, a high growth rate of six to seven per cent is needed to create enough job opportunities for all the new entrants to the labour force. Resources required for meeting the needs of the poorest and improving outlays on poverty alleviation can be mobilised only when the required growth momentum has been built up.

But the Government cannot depend on growth itself to trickle down speedily to the poor. Hence, there is need for more direct attack on the problem of mass poverty.

First and foremost, it is sought to make the whole growth process more labour-intensive. Expansion of exports which are labour-intensive, relies on the country’s endowment of skills and natural resources, will open up new employment opportunities.

Leading French economist, Mr. Guy Sorman, while delivering a lecture on “Development and civilization: is economic liberalization the right solution for India?” observed recently (February, 1995) that liberalization must be accompanied by policies to remove poverty for it to be successful in India.

He said, “Liberalization is fine but is not enough”…………… “Liberalization process would take years to percolate down to the grass roots and people would have not have patience to wait that long.”

He further said that unless the Government spent its surplus on redistribution of resources, including public distribution, drinking water, basic education and health care, the whole process could go away. Of late, there has been wide ranging controversy about the impact of economic reforms on the poor.

One set of experts are alleging that the reforms have accentuated destitution and widened disparities and others are maintaining that such negative situations, if any, are purely coincidental and having little correlation with the new policy measures.

This sort of controversy was sparked off when a recent study of economic reforms and their impact on the poor people revealed that rural poverty in India rose sharply in recent years. The study conducted by Prof. S.P. Gupta revealed that the population living below the poverty line steadily rose from 39.0 per cent in 1988- 89 to 40.69 per cent during July-December 1992.

Findings of Prof. Gupta’s study came as a great deal of embarrassment to the Government, Economic Survey (1995-96) continued to record the official figure of poverty ratio from 25.49 per cent in 1987-88 to 18.96 per cent in 1993-94. But the Planning Commission did not prepare the estimates of poverty on the basis of 47th and 48th rounds of N.S.S.

Findings of Prof. Gupta were also corroborated by two eminent economists, Prof. S.D. Tendulkar and Prof. L.R. Jain. Tendulkar and lain, in their study reported that rural poverty increased from per cm in July 1990-June 1991 to 42.06 per cent in July-December 1991 and then to 48.07 per cent during January- December 1992.

Moreover, the UNDP estimates of poverty also revealed that the percentage of population lying below the poverty line was 40 per cent in 1992. The above evidence on trends in rural poverty have added a new dimension to the debate on economic reform process in India.

While the critics argued that economic reforms have accentuated the marginalization of the poorer people in the rural areas, the proponents of economic reforms and new economic policy changes argued alternatively to defend the reforms.

For example, the critics pointed out that average monthly per capita consumption of cereals declined from 14.4 kgs in 1987-88 to 13.5 kg in 1992. Data available from Sample Registration System (SRS) were also cited to show that the crude death rate of population has started to go up in the early 1990s both in urban as well as in rural areas.

But the defenders of the new economic policy have utilised the NSS data on consumption of square meals. The percentage of rural households having two square meals a day increased from 88.3 per cent in 1990-91 to 92.3 per cent in 1992.

Accordingly, they argued that people were being fed better and this did not get reflected in the consumption of cereals as more and more people were switching over to the consumption of non-cereal food items to meet their caloric requirements.

Whatever may be argument in favour or against the impact of economic reforms on poverty, there is one point which is quite striking. During the 1980s, there was a consistent decline in the proportion of people living below the poverty line.

The official estimates showed that there was a considerable fall in the poverty ratio from 48.3 per cent in 1977-78 to 37.4 per cent in 1983-84 and 25.5 per cent in 1987-88. Again the expert Group’s corresponding figures depicted the poverty ratio at 51.8 per cent, 44.8 per cent and 39.3 per cent respectively during the same years.

Main point that arises here is that whether this regressive trend has any correlation with the ongoing economic reforms. In this connection, Tendulkar and Jain argued that the new economic policy changes have not directly contributed any increase in rural poverty, though they have admitted that there has been fiscal compression induced squeeze in anti-poverty spending which was directly related to reforms.

“In fact if one considers outlays under the IRDP, this decline from Rs 809.49 crore in 1990-91 to Rs 773.09 crore in 1991-92 and Rs 662.22 crore in 1992-93, as a result there was a sharp decline in the number of beneficiary families from 28.98 lakh to 25.37 lakh and 20.69 lakh over the same period.”

Considering this criticism, the outlay on IRDP was nearly doubled in 1993-94 to Rs 1,093 crore and thereby 25.39 lakh families were assisted by this programme. But in 1994-95 this programme could assist only 21.82 lakh families and during the first eight months of 1995-96, the number of assisted families under the IRDP was only 9.01 lakh families.

Another important point raised by Tendulkar and Jain is that there has been the possible erosion of purchasing power of the poor due to rising trend in the prices of food observed during 1990s.

Although the economic reform measures cannot be said to be solely responsible for such event but there are sufficient reasons to believe that strong linkages exist between the availability of food grains, PDS off take, food grains prices and poverty ratio. In spite of consistent rise in food grains production, most of this increased production has been channelized to fill up the buffer stock of the Government.

The stocks of food grains have not been offloaded from the PDS outlets as the issue prices have more or less similar to the open market prices. This like issue prices is mostly related to the government’s policy of raising the procurement prices frequently for compensating the farmers against cuts in fertilizer subsidy.

Although in the pre-reform period, the Government tried to bridge the widening gap between procurement price and issue price through allotment of food subsidies, but the present policy of adopting fiscal austerity also forces the government to reduce the gap through the like of issue prices.

Thus the fiscal compression- induced cuts in outlay for the social sector have indicated that economic reforms have started to exert adverse impact on poverty.

The Government has revamped programme for raising the incomes of the people living below the poverty line, particularly in rural areas and the public distribution system has been extended to the most backward block for supply of essential articles of mass consumption to provide a measure of protection to the poor against inflation.

The liberalisation programme has helped agriculture. Besides, as excessively high protection to industry comes down, the relative profitability of agriculture improved. Impediments to trade in farm products were removed. New incentives have given boost to farm exports, The rising trend in agro, horticulture, aquaculture and other exports has generated new employment opportunities in the rural sector.

Moreover, an adequate flow of institutional rural credit to agriculture is vital for the development of the rural sector and this flow at present is very low in relation to need. Thus considering the situation, several new schemes for social uplift and poverty alleviation were launched by the Government during the recent years of economic reforms.

These included:

(a) Employment Assurance Scheme for providing 100 days of unskilled manual labour to the rural poor, in the 2,475 backward blocks including those that are flood prone in the country;

(b) Prime Minister’s Rozgar Yojana aimed at providing employment to unemployed youth through the creation of micro-enterprises;

(c) National Social Assistance Programme which encompasses old age pension, family benefits in case of death of the bread earner and maternity benefits;

(d) Rural Group Life Insurance Scheme, with a subsidized premium;

(e) National Programme of Nutritional support to Primary education (also known as Mid-Day Meal scheme) aimed at providing a nutritious meal to children in primary school;

(f) Mahila Smridhi Yojana aimed to promote the saving habit among rural women; and

(g) Indira Mahila Yojana aimed at more effective empowerment of women.

Moreover, the nation-wide Public Distribution system for food grains and other essential commodities has since been strengthened, with the revamped PDS now operating in 1,775 backward blocks and expected to be extended to all 2446 blocks under the Employment Assurance Scheme.

The World Bank in its publication titled “IDA in action 1993-1996” observed in this connection that though there are still too many poor people in India, but the country has achieved “significant progress” in poverty eradication, “India’s performance in reducing poverty has been modest compared to some countries in east Asia, for example Indonesia and Thailand.”

Thus, to achieve success in the poverty eradication programmes along with the economic reforms introduced in the country, alternative strategies for empowering the people to help themselves are to be designed.

A mere increase in the amount of expenditure on social sectors and rural development will not be sufficient to eradicate poverty rather a change in strategy in the direction along with sincere and active participation of the people in the design and implementation of rural development schemes etc. are needed the most.

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Essay # 8. World Bank’s New Perception of Poverty:

The World Development Report (WDR), 2000-2001 released by the World Bank on 14th September, 2000 in Washington provided a new perception to poverty with an agenda sensitive to the needs of attacking poverty by promoting opportunities, facilitating empowerment and furthering security.

The report also mentioned about two new initiatives—a highly enhanced poor countries debt relief initiative and a comprehensive development framework.

The report sought to expand the understanding of poverty and its causes, while building on the Bank’s past strategy, drew heavily from the South-Asian experiences and Dr. Amartya Sen’s ideas of empowering the poor. The report admits that poverty remained a persisting dilemma and belied the improvement in human conditions with global wealth, global connections and technological capabilities.

The report observed that of the World’s 6 billion people, 2.8 billion lived on less than $ 2 a day and 1, 2 billion live on less than $ 1 a day with 44 per cent of the deprived ones living in South Asia alone.

Exacerbating the crisis of poverty is an overwhelming concentration of conflicts in poor countries, widening gaps between the rich and the poor countries leading to increasing worldwide income disparity and failure of reform programmes to deliver according to the expectations.

The scope of the report has substantially broadened perception of poverty, having drawn from the first- ever “Voices of the Poor” study based on experiences narrated by more than 60,000 poor women and men in 60 countries.

The experiences so gained dictated the World Development Report’s shift of emphasis in its approach to tackle poverty from the over-reaching emphasis of the 1950s on large investments in physical capital and infrastructure to the 1970s on health and education, the 1980s on economic management and the 1990s’ stress on governance and institutions.

The report proposed opening of opportunities by improving access to financial markets for the poor, raising resources and making public spending pro-poor by reducing military spending. Empowerment moved away from its perception of a solely economic process to an outcome of interaction of economic, social and political forces, and had to be achieved by making state institutions more responsive to the needs of people.

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