24 (A) Proverty and Inequality Concepts

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Poverty is deprivation of basic needs that determine the quality of

life-food clothing, shelter, safe drinking water etc. It also includes the
deprivation of opportunities to health, education, skills, employment
etc.
Many different factors have been cited to explain why poverty occurs.
No single explanation has gained universal acceptance. The factors
responsible for poverty include:
Historical factors, for example imperialism and colonialism.

Overpopulation.
Growth is not fast enough to eradicate poverty.
Models of growth may be unsuitable for poverty alleviation. For example,
capital-intense growth in a labour surplus country.
Poverty itself, preventing investment and development etc.

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The strategy of the Government includes the following

elements:
The main plank to anti-poverty strategy is reducing poverty through

the promotion of economic growth In India, after reforms began in 1991
when growth rates increased Poverty levels fell quite steeply (NSSO
2005).
Socioeconomic Planning
Food security through the nation wide PDS- largest in the world.
Progressive taxation to gamer fiscal Resources for Spending on poor.
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Social safety net like the, National Social Assistance Programme (NSAP).
Open Society in Which Poverty is recognize as a nation1 challenge and
earnest efforts are made to tackle it (Amartya Sen).
Anti-poverty programmes - NREGA 2005.

Massive social sector expenditure for skill building
Decentralization through PRJ5 and Nagarapalikas for better delivery
models.
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It is the level of income below which one cannot afford to purchase

all the resources one requires to live. People who have an income
below the Poverty line have no disposable income.
When comparing Poverty across Countries the Purchasing power
parity exchange rates are used. These are used because poverty
levels otherwise would change with the normal exchange rates. Thus,
living for under $1 a day should be understood as having a daily
total consumption of goods and services comparable to the amount
of goods and services that can be bought in the U.S. for $1.
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The most common standard indicator is the incidence of poverty

(also called Poverty rate or headcount rate). This describes the
percentage of the population whose per capita incomes are below
the poverty line, that is, the population that cannot afford to buy a
basic basket of items. In many instances, a different poverty linea
much more austere one that generally only includes food itemsis
applied to derive the extreme poverty rate.
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PG is a measure of the intensity of poverty among the poor: the

difference between the mean income among the poor and the
poverty line. This indicator measures the magnitude of poverty as
well as its intensity number of poor and how poor they are.
The misery index was initiated by Chicago Economist Robert Barro in

the 1970s. It is the unemployment rate added to the inflation rate. It
is assumed that both a higher rate of unemployment and a
Worsening of inflation cause and intensify the misery.
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The Planning Commission as the Nodal agency in the Government of

India for estimation of poverty has been estimating the number and
Percentage of poor at - national and state levels. Estimates of
poverty are made from the large sample survey data on household
Consumer expenditure conducted by the National Sample (NSSO) of
the Ministry of Statistics and Programme Implementation.
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National Sample Survey Organisation (NSSO) collects household

consumer expenditure data every five years. Household consumer
expenditure surveys are also Conducted annually but the sample size
is much smaller Every five years full surveys on 1,20,000 households
are carried out. In the intervening period thin samples of around
20,000 households are surveyed. The thin samples do not indicate
trends fully.
The poverty line in India is defined as the monthly expenditure
incurred in getting a daily calorie intake of 2,400 calories in rural and
2,100 calories in urban areas.
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The 6lst round of the National Sample Survey (NSSO) used the
criterion of monthly per capita consumption expenditure below Rs.
356.35 for rural areas and Rs. 538.60 for urban areas.
The rural development ministry in 2008 appointed a committee

headed by M Shankar to ascertain the number of the poor people in
order to effectively identify beneficiaries for the Centres
programmes aimed at Poverty alleviation. NC Saxena headed the
committee after Mr. Shankar resigned.
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The committee chaired by NC Saxena recommended that 50% of

Indias population be given cards. Thus, it suggests expansion of the
social security net which means fiscal and administrative challenges.
While advocating exclusion of large number of families from the BPL
lists, the committee has recommended that those families having
double the land of the district average of the agricultural land or two
wheeler or one running bore well or income tax payers would be
deleted from the BPL lists.
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When discussing poverty, inequality often refers to the income gap

between the rich and poor of society. The greater the gap, the
greater the inequality. It essentially refers to disparities in the
distribution of economic assets and income- among individuals and
groups within a nation and among nations.
It may result from the operation of the economic system, access to
assets, nature of laws, education and skills, social factors like caste
and gender etc.
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The Lorenz curve was developed by Max O. Lorenz as a graphical

representation of income inequality. It can also be used to measure
inequality of income or assets or any other facility.
The Lorenz curve is used to calculate the Gini coefficient which is the
numerical indicator of inequality in a country. Gini coefficient is
derived by taking the following tow.
area between the line of perfect equality and the Lorenz curve (a)
area between the line of perfect equality and the line of perfect
inequality (b).
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Growing inequalities can dampen growth due to potential instability;

weaken social cohesion.
Urban-dominated growth in India has caused Social friction as a
result of the high levels of migration to cities and a shortage of
foreign investment in more isolated areas.
In societies where wealth is concentrated in the hands of a few, there
is danger of policy levers being captured by the rich for their own
benefit and a weakening of the institutional foundations of the
growth process
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Certain social conditions need protection to prevent further distressold age, poverty, unemployment, disability etc. Government provides
social protection by way of wage employment, food grain either free
or at affordable prices, old age pension etc. In some cases there is
social insurance- disability etc.
For many decades now, there have been laws in India that provided
social security:
Workmens compensation Act 1923: A beginning was made in

social security with the passing of the Workmens Compensation Act
in 1923. The Act provides for payment of compensation to workmen
and their dependents in case of injury and accident (including
certain occupational disease) arising out of
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and in the course of employment and resulting in disablement or death.
Maternity benefit scheme:
The Maternity Benefit Act, 1961

regulates employment of women in certain establishments for a
certain period before and after childbirth and provides for maternity
and other benefits.
Gratuity scheme :The Payment of Gratuity Act, 1972 provides for

payment of gratuity at the rate of 15 days wages for each completed
year of service subject to certain maximum.
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Employees provident fund:

Retirement benefits in the form of provident fund, family pension
and deposit-linked insurance are available to employees.
Employees Pension scheme

Aam Admi Bima Yojana
Rashtriya Swasthya Bima Yojana
Unorganised Workers Social Security Act 2008.
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The PMGSY was launched in 2000 as a 100 per cent Centrally

Sponsored Scheme with the primary objective of providing all
weather connectivity to the eligible unconnected habitations in the
rural areas.
The programme is funded mainly from the accruals of diesel cess in
the Central Road Fund.
In addition, support of the multilateral funding agencies and the
domestic financial institutions is being obtained to meet the financial
requirements of the programme.
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This scheme aims at providing dwelling units, free of cost, to the poor
families of the Scheduled Castes, Scheduled Tribes, freed bonded
labourers and also the non- SC/ST persons below the poverty line in
rural areas. The scheme is funded on a cost sharing basis of 75:25
between the Centre and the States.
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The 2011 UNDP Global Human Development Report The Real Wealth
of Nations: Pathways to Human Development introduced a new
index, the inequality-adjusted HD1 aimed at capturing the
distributional dimensions of human development. Three dimensions
of HDI i.e. income, education and health are adjusted for inequalities
in attainments across people. Globally, India is ranked 134 out of 187
countries but loses 32 percent of its value when adjusted for
inequalities.
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Wide inequalities among states affect human development

outcomes in India which is ranked 134 out of 187 countries India,
ranked 134 on the human development index (HDI) loses 30 percent
of its value when adjusted for inequality.
Indian states suffer a higher loss when adjusted for inequality in
health compared to the global average of 21 percent.
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The MPI was created for the 20th Anniversary edition of the UNDP
Human Development Report and uses different factors to determine
poverty beyond income- based estimation. It uses a range of
deprivations from which people suffer.
The measure assesses the nature and intensity of poverty at the
individual level in education, health outcomes, and standard of living.
The MPI has three dimensions: health, education, and standard of
living:
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A Committee under the Chairmanship of Dr. Pranob Sen was set up

by Ministry of HUPA to study the slum definition and to estimate
urban slum population for the whole country on the basis of
available data.
The summary of recommendations of the Committee is as follows:
The Committee estimated the slum population in all 5161 urban

areas of the country including the 3799 statutory towns (Read
ahead for a definition) to be 93.06 million by 2011.
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For the Slum Census 2011, the Committee has recommended that for
policy formulation purposes it is absolutely essential to count the
slum population even in cities having less than 20000 population. For
the purpose of planning for Rajiv Awas Yojana and Slum-free India it
would be necessary to count the population of slums in all statutory
towns in the country in the 2011.
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With an aim of crating a slum-free India, government approved the

launch of the phase-I of Rajiv Awas Yojana (RAY) to facilitate
affordable housing for slum dwellers.
The Centre would provide financial assistance to States willing to
assign property rights to slum dwellers; for provision of shelter and
basic civic and social services for slum re-development and; for
creation of affordable housing stock under the RAY scheme.
The scheme is expected to cover about 250 cities, mostly with
population of more than one lakh across the country by the end of
12th Plan (2017).
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Affordable housing is still a distant dream for the poor because of

the banks reluctance to give credit to this section of society for
various reasons. Centre set up a mortgage guarantee fund which
would cover the risk of home loans given to the poor by banks and
housing finance companies (HFCs).With a hedge fund to cover risk in
title instruments, more financial institutions would come forward
and foster the goal of inclusive growth of the downtrodden sections
of the society.
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2008
Q. Consider the following statements with reference to Indira Gandhi National
Old Age Pension Scheme (IGNOAPS):
1. All persons of 60 years or above belonging to the households below poverty
line in rural areas are eligible.
2. The Central Assistance under this Scheme is at the rate of Rs. 300 per month
per beneficiary. Under the Scheme, States have been urged to give matching
amounts.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
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24 (A) Proverty and Inequality Concepts

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www.iasexamportal.

Poverty is deprivation of basic needs that determine the quality of

Historical factors, for example imperialism and colonialism.

Poverty itself, preventing investment and development etc.

The strategy of the Government includes the following

The main plank to anti-poverty strategy is reducing poverty through

Anti-poverty programmes - NREGA 2005.

It is the level of income below which one cannot afford to purchase

The most common standard indicator is the incidence of poverty

PG is a measure of the intensity of poverty among the poor: the

The misery index was initiated by Chicago Economist Robert Barro in

The Planning Commission as the Nodal agency in the Government of

National Sample Survey Organisation (NSSO) collects household

The rural development ministry in 2008 appointed a committee

The committee chaired by NC Saxena recommended that 50% of

When discussing poverty, inequality often refers to the income gap

The Lorenz curve was developed by Max O. Lorenz as a graphical

Growing inequalities can dampen growth due to potential instability;

Workmens compensation Act 1923: A beginning was made in

and in the course of employment and resulting in disablement or death.

Maternity benefit scheme:

The Maternity Benefit Act, 1961

Gratuity scheme :The Payment of Gratuity Act, 1972 provides for

Employees provident fund:

Employees Pension scheme

The PMGSY was launched in 2000 as a 100 per cent Centrally

Wide inequalities among states affect human development

A Committee under the Chairmanship of Dr. Pranob Sen was set up

The Committee estimated the slum population in all 5161 urban

With an aim of crating a slum-free India, government approved the

Affordable housing is still a distant dream for the poor because of

Online Coaching for IAS Exams

Books for IAS Exams

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