Uncategories Class 12 Economics - Ch 4 Poverty Indian Economy Development

Class 12 Economics - Ch 4 Poverty Indian Economy Development

Published on By Amresh Academy

 

POVERTY

Inability to fulfil minimum requirements of life like food, shelter and clothing is called Poverty.

RELATIVE AND ABSOLUTE POVERTY

Relative Poverty - Poverty across different classes, regions or countries is called Relative Poverty which is interpreted in terms of inequality of income within the country.

Absolute Poverty - Poverty line in India is used to measure absolute poverty.  Poverty line is the cut - offprint that divides people of a region as poor and non - poor. People spending ₹ 816 on consumption in rural areas and ₹ 1,000 in urban areas per month are treated above the poverty line.

Poverty Line Cut - Off should be determined in terms of consumption not income because consumption reflects the actual usage of goods and services by an individual as income only shows the purchasing capacity.

Poverty line Fixed in India by:

  1. While estimating only private consumption expenditure is considered.
  2. Includes food and non - food items both and per capita calorie consumption is taken for  consumption of food items.
  3. Head count ratio shows poor and non - poor separately for rural and urban areas.
  4. Average calorie requirement for urban population is 2,045 and rural is 2,435.

TREND OF POVERTY IN INDIA, INTER - STATE COMPARISON AND RURAL URBAN PICTURE

  • About 17 crore people that is 34 per cent of total population lived below poverty line during 1960 - 61. It declined to 21.9% in 2011 - 12.
  • Percentage of population below poverty line in India varies from state to state, highest is reported in UP, Bihar, Odisha, Chhattisgarh, Jharkhand, Manipur, Assam and Madhya Pradesh
  • Rural poverty edges our urban poverty although there is a significant decline in both.
  • With reference to Underdevelopment of Indian Economy & Reference to Unequal Distribution of Income.

CAUSES OF POVERTY

REFERENCE TO UNDERDEVELOPMENT OF INDIAN ECONOMY:

  1. Low Level of National Product (National Income):
  • Compared to the population size the national income was very low and as a result per capita income was low too. 
  1. Low Growth Rate:
  • Growth rate of economy very low during Five Year Plan in India because the growth rate of GDP was low too as a result per capita income sustained poverty.
  1. Heavy Pressure of Population:
  • Due to population growth mainly due to fall in death rate there was increase in demand of limited supply leading to poverty.
  1. Inflationary Spiral:

- It is a situation of consistent rise in prices. Due to this the people who are just marginally above the poverty line tend to fall below the poverty line.

  1. Chronic Unemployment and Underemployment:

- Poverty is a reflection of unemployment in a country. Unemployment and Underemployment directly lead to poverty.

  1. Capital Deficiency:

- Lack of capital meant low level of production capacity which means low level of employment leading to poverty.

  1. VII. Lack of able and efficient entrepreneurs:

- To accelerate the GDP growth skilled and efficient entrepreneurs are required which India lacks and  therefore India failed to tackle poverty.

  1. VIII. Outdated Social Institutions:

- Certain outdated  traditions and institutions hinder the changes in the economy due to which the growth rate is hampered and poverty prevails.

  1. Lack of Infrastructure

Underdeveloped social and economical infrastructure leads to slow pace of growth and poverty.

 REFERENCE TO UNEQUAL DISTRIBUTION OF INCOME

Poverty can also be explained with reference to unequal distribution of income. This unequal distribution shows not just the poverty but also is a reflection of widening gap between the rich and the poor.                    

  • Through GDP growth
  • Through/ by improving the income distribution.
  • Through population control
  • Improving quality of life of the poor.

MEASURES TO REMOVE POVERTY

  1. Through GDP Growth:
  • Increase in GDP growth leads to new employment opportunities and greater the employment, more the inclusive growth meaning lesser poverty.
  1. Distribution of Income through Fiscal and Legislative measures:

FISCAL MEASURES - policy of taxation and subsidies refers to fiscal measures.

  • Higher tax on rich and tax exemption for poor.
  • Subsidies to poor sections of society and capital grants offered to poor for the construction of their houses plus self - employment.

LEGISLATIVE MEASURES - refers to Minimum Wages Act where employers  have to mandatorily offer minimum wage to employees.  For example ‘Price  Floor’ and ‘Right to Education’.

  1. Through Population Control:

- Reducing the size of labour force that further will correct the structural imbalance between labour supply and capital stock.

  1. Enhancing Quality of Life of Poor:

1. Development of Agriculture -

- Modernised and mechanised agriculture, financial assistance to small farmers and land to landless farmers.

2. Stability in the Price Level and Effective Public Distribution System -

  • Prices to be stabilised  when production of  food grains and other goods of mass production is increased  and when these are distributed to the poor through fair price shops.
  • Food grains and coarse cloth to be provided at subsidised rate under direct government supervision.

3. Eradication of Unemployment and Opportunities of Self  Employment -

- Vocalisation of education and establishment of small - scale industries to eradicate unemployment and generate self employment.

4. Labour Intensive techniques of production - to reduce the level of poverty by generating the demand of labour.

5. Focus on Backward regions - concessions for backwards regions to encourage private investment.

   

POVERTY ALLEVIATION PROGRAMMES

YOJANAS

AIMS/OBJECTIVES

WAYS TO ACHIEVE

LAUNCHED

SWARANAJAYANTI GRAM SWAROZGAR YOJANA

To remove poverty from rural areas.

Through the establishment of small enterprises both on individual and collective basis like Self - Help Groups.

April, 1999

SAMPOORNA GRAMIN ROZGAR YOJANA

To provide employment opportunities to surplus workers and development of infrastructure.

Has a target of creating 100 crore man days for labour.

1 September, 2001

PRADHAN MANTRI GRAMODYA YOJANA

To improve standard of living by focusing on Housing, Roads, Health, Primary Education and Drinking water.

Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Gramin Awas Yojana, Pradhan Mantri Gramin Drinking Water Yojana.

2001

SWARNA JAYANTI SHAHRI ROZGAR YOJANA

Provide self - employment, wage employment to urban under and unemployed.

Urban Self - Employment Programme

Urban Wage Employment Programme

I December, 1997

MINIMUM NEEDS PROGRAMME

To raise the standard of level of living of the poor and quality of life of poorer sections of society.

Primary education, adult education, rural health, rural water supply, rural roads housing, electrification and ecological improvement of urban slums.

During Fifth Plan

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE ACT

(MGNREGA)

Provide employment to  people willing to work at given minimum wage for minimum period of 100 days.

Employment seekers can report to rural areas where it is launched.

2006

MICRO UNITS DEVELOPMENT REFINANCE AGENCY BANK (MUDRA BANK)

To meet credit needs of micro enterprises and self - employed reasons.

A loan entitled for ₹10 lakh per unit

April, 2015

ASSESSMENT OF POVERTY ALLEVIATION PROGRAMMES

  1. Failed to achieve the targets.
  2. No supervision from government to ensure judicious and effective working of programmes.
  3. Remote areas and poor households neglected.
  4. The delivery mechanism was controlled b y the power groups therefore large - scale leakage as a result the poor received only a fragment of aid.
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