Page 30
Poverty
This and the subsequent chapters will be covered very briefly as it needs to be covered w.r.t
the contemporary issues of our times in detail— mostly, when we cover Ramesh Singh.
India’s development pattern has envisaged from the beginning—
Emphasis on the upliftment of the poorest of the poor (Antyodaya)
Integration of the poor into the mainstream
Achieving a minimum standard of living for all
Poverty-struck—
On the basis of their occupation and ownership of assets:
Rural poor work mainly as landless agricultural labourers, cultivators with very small
landholdings, landless labourers who are engaged in a variety of non-agricultural jobs and
tenant cultivators with small land holdings.
Urban poor- largely the overflow of the rural poor who have migrated to urban areas in
search of alternative employment and livelihood, labourers who do a variety of casual jobs
and the self-employed who sell a variety of things on roadsides and are engaged in various
activities. Most of the urban poor are either unemployed or intermittently employed as
casual labourers.
Casual labourers are among the most vulnerable in society: no job security, no assets, limited skills,
sparse opportunities and no surplus to sustain them
Poverty: Very closely related to nature of employment—Unemployment or under employment and
the casual and intermittent nature of work in both rural and urban areas that compels indebtedness,
in turn, reinforces poverty.
Indebtedness is one of the significant factors of poverty
Page 31
How does the government identify the poor?
First to discuss the concept of a Poverty Line: Dadabhai Naoroji
Used the menu for a prisoner and used appropriate prevailing prices to arrive at what
may be called ‘jail cost of living’.
Absence of children in jail led him to appropriately adjust this cost of living to arrive at
the poverty line
Arrived at the weighted average of consumption of the three segments— gives the
average poverty line, which comes out to be three-fourth of the adult jail cost of living
Categorising Poverty
Chronic Poor: People who are always poor and those who are usually poor but who may
sometimes have a little more money (example: casual workers)
Churning poor: they regularly move in and out of poverty (example: small farmers and
seasonal workers) and the occasionally poor who are rich most of the time but may
sometimes have a patch of bad luck (transient poor)
Non-poor: Those who are never poor
The Poverty Line:
Determine it by the monetary value (per capita expenditure) of the minimum calorie
intake that was estimated at 2,400 calories for a rural person and 2,100 for a person in
the urban area (earlier)
In 1999-2000, the poverty line was defined for rural areas as consumption worth Rs. 328
per person a month and for urban areas it was Rs. 454.
Page 32
What do you think—is the Government calculating the Poverty Line appropriately? Which
are the committees that have formulated formulas/benchmarks on these?
Issues faced by the poverty-line mechanism
Groups all the poor together and does not differentiate between the very poor and the
other poor
Though helpful in identifying the poor as a group to be taken care of by the government,
it’s difficult to identify who among the poor need help the most.
Does not take into consideration social factors that trigger and perpetuate poverty such
as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and
political freedoms
Aim of poverty alleviation schemes: To improve human lives by expanding the range of
things that a person could be and could do
Government claims of decline in poverty levels on the basis of: Higher rate of growth,
increase in agricultural production, providing employment in rural areas and economic
reform packages introduced in the 1990s. Critics do not support this viewpoint and point
out that the way the data is collected, items that are included in the consumption basket,
methodology followed to estimate the poverty line and the number of poor is manipulated
to arrive at the reduced figures of the number of poor in India.
Page 33
Think:
1. What are the limitations exhibited by the official estimation of poverty?
2. Are you aware about the ‘Sen Index’ and the tools used to measure the level and spread
of poverty?
3. Present estimation of poverty line is based on which committee?
Head Count Ratio: When the number of poor is estimated as the proportion of people
below the poverty line
Data on poverty: Estimated on the basis of consumption expenditure data collected by the
National Sample Survey Organisation (NSSO)
Major shift: From rural to urban
In the 1990s, the absolute number of poor in rural areas had declined whereas the number
of their urban counterparts increased marginally
Note: The poverty ratio is declining continuously for both urban and rural areas
Causes behind Poverty
Low levels of education and skills
Infirmity, ill health, sickness
Discrimination
These can be caused as a result of
Social, economic and political inequality
Social exclusion
Unemployment
Indebtedness
Unequal distribution of wealth
Page 34
Economy-wide problems:
Low capital formation
Lack of infrastructure
Lack of demand
Pressure of population
Lack of social/welfare nets
Aggregate poverty: Sum of individual poverty
Impact of the British rule on Indian living standards
De-industrialisation in India- Imports of manufactured cotton cloth from Lancashire in
England displaced the local production, and India reverted to being an exporter of cotton
yarn (not the cloth)
Unequal distribution of income and asset? has led to the persistence of poverty in India
Creation of two distinct groups in society:
Those who possess the means of production and earn good incomes
Those who have only their labour to trade for survival
Gap between the rich & poor: Ever-widening
Features of Poverty Alleviation Schemes
Primary objective of the developmental strategies: Social justice
Government’s approach to poverty reduction consisted of three dimensions—
a. Growth-oriented approach: Based on the expectation that
The effects of economic growth — rapid increase in gross domestic product and per
capita income — would spread to all sections of society and will trickle down to the poor
sections also (1950s and early 1960s)
Page 35
Rapid industrial development and transformation of agriculture through green
revolution in select regions would benefit the underdeveloped regions and the more
backward sections of the community
Population growth has resulted in a very low growth in per capita incomes with the gap
between poor and rich widening
It was thought that creation of incremental assets would increase the incomes and
employment for the poor
b. As pointed out by the FYPs, self-employment programmes and wage employment
programmes
c. Addressing poverty is to provide minimum basic amenities to the people i.e. social
consumption needs — provision of food grains at subsidised rates, education, health, water
supply and sanitation— people’s living standard could be improved—
To supplement the consumption of the poor
Create employment opportunities
Bring about improvements in health and education
Think:
1. So what factors do you think contributed towards the famines (between 1875 and 1900)?
2. Which sectors in India is experiencing globalisation related shock? How is the
government taking care of saving them in a situation like this?
3. Discuss the distress among cotton farmers of India.
4. Discuss the relationship between unemployment and poverty.
Refer:
Poverty in India
Page 36
Human Capital Formation
(Will be covered with the contemporary issues in the later part (During coverage of Ramesh Singh)
Think:
Is education the same as being skilful?
What is the relation between economic development and expanding educational
opportunities?
Compare and bring out both the differences as well as similarities between Physical and
Human Capital.
What constitutes Human Capital?
Investment in Education- similar to spending on capital goods by companies with the
objective of increasing future profits over a period of time
Investments in health: for maintaining productivity— directly increases the supply of
healthy labour force
On- the job training: return of such expenditure is in the form of enhanced labour
productivity and is more than the cost of it
Migration: enhanced earnings in the new place outweigh the costs of migration
Information: necessary to make decisions regarding investments in human capital as
well as for efficient utilisation of the acquired human capital stock. Expenditure incurred
for acquiring information relating to the labour market and other markets
Human Capital and Economic Growth:
Education: Economic growth means the increase in real national income of a country; and
so naturally, the contribution of the educated person to economic growth is more than that
of an illiterate person— stimulates innovations and creates ability to absorb new
technologies & the availability of educated labour force facilitates adaptation to new
technologies.
Page 37
Health: If a healthy person could provide uninterrupted labour supply for a longer period of
time, then health becomes an important factor for economic growth
Human Capital (HC) & Human Development (HD)
HC: considers education and health as a means to increase labour productivity
HD: based on the idea that education and health are integral to human well-being because
only when people have the ability to read and write and the ability to lead a long and
healthy life, they will be able to make other choices which they value
HC: treats human beings as a means to an end; the end being the increase in productivity.
In this view, any investment in education and health is unproductive if it does not enhance
output of goods and services
HD: human beings are ends in themselves. Human welfare should be increased through
investments in education and health even if such investments do not result in higher labour
productivity.
In India…
Government Expenditure on Education is expressed in two ways—
As a percentage of ‘total government expenditure’:
Indicates the importance of education in the scheme of things before the
government
Elementary education takes a major share of total education expenditure and the
share of the higher/tertiary education (institutions of higher learning like colleges,
polytechnics and universities) is the least— but ‘expenditure per student’ in tertiary
education is higher than that of elementary
Need to increase expenditure on all levels of education
As a percentage of Gross Domestic Product (GDP): how much of our income is being
committed to the development of education in the country
Page 38
Think: Is ‘Education for all’ still a distant dream or is it achievable? Discuss
Refer:
Education
New Education Policy
Future of Indian Education
UGC— A Silent Spectator (1956—2016)
Inequalities in educational access in India
Reforming teacher management in public school system
Health
A case of public health in India
Healthcare Funding
Jobs
Jobs & Economic Growth
The India Labour and Employment Report 2016
India’s jobless growth
(Related topics will be covered more holistically in subsequent value adds for topics like
inclusive growth, growth and development, poverty, employment issues et.al but just to
fuel your anxiety we’ve shared the links of the concepts we’ve covered earlier)
Poverty
This and the subsequent chapters will be covered very briefly as it needs to be covered w.r.t
the contemporary issues of our times in detail— mostly, when we cover Ramesh Singh.
India’s development pattern has envisaged from the beginning—
Emphasis on the upliftment of the poorest of the poor (Antyodaya)
Integration of the poor into the mainstream
Achieving a minimum standard of living for all
Poverty-struck—
On the basis of their occupation and ownership of assets:
Rural poor work mainly as landless agricultural labourers, cultivators with very small
landholdings, landless labourers who are engaged in a variety of non-agricultural jobs and
tenant cultivators with small land holdings.
Urban poor- largely the overflow of the rural poor who have migrated to urban areas in
search of alternative employment and livelihood, labourers who do a variety of casual jobs
and the self-employed who sell a variety of things on roadsides and are engaged in various
activities. Most of the urban poor are either unemployed or intermittently employed as
casual labourers.
Casual labourers are among the most vulnerable in society: no job security, no assets, limited skills,
sparse opportunities and no surplus to sustain them
Poverty: Very closely related to nature of employment—Unemployment or under employment and
the casual and intermittent nature of work in both rural and urban areas that compels indebtedness,
in turn, reinforces poverty.
Indebtedness is one of the significant factors of poverty
Page 31
How does the government identify the poor?
First to discuss the concept of a Poverty Line: Dadabhai Naoroji
Used the menu for a prisoner and used appropriate prevailing prices to arrive at what
may be called ‘jail cost of living’.
Absence of children in jail led him to appropriately adjust this cost of living to arrive at
the poverty line
Arrived at the weighted average of consumption of the three segments— gives the
average poverty line, which comes out to be three-fourth of the adult jail cost of living
Categorising Poverty
Chronic Poor: People who are always poor and those who are usually poor but who may
sometimes have a little more money (example: casual workers)
Churning poor: they regularly move in and out of poverty (example: small farmers and
seasonal workers) and the occasionally poor who are rich most of the time but may
sometimes have a patch of bad luck (transient poor)
Non-poor: Those who are never poor
The Poverty Line:
Determine it by the monetary value (per capita expenditure) of the minimum calorie
intake that was estimated at 2,400 calories for a rural person and 2,100 for a person in
the urban area (earlier)
In 1999-2000, the poverty line was defined for rural areas as consumption worth Rs. 328
per person a month and for urban areas it was Rs. 454.
Page 32
What do you think—is the Government calculating the Poverty Line appropriately? Which
are the committees that have formulated formulas/benchmarks on these?
Issues faced by the poverty-line mechanism
Groups all the poor together and does not differentiate between the very poor and the
other poor
Though helpful in identifying the poor as a group to be taken care of by the government,
it’s difficult to identify who among the poor need help the most.
Does not take into consideration social factors that trigger and perpetuate poverty such
as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and
political freedoms
Aim of poverty alleviation schemes: To improve human lives by expanding the range of
things that a person could be and could do
Government claims of decline in poverty levels on the basis of: Higher rate of growth,
increase in agricultural production, providing employment in rural areas and economic
reform packages introduced in the 1990s. Critics do not support this viewpoint and point
out that the way the data is collected, items that are included in the consumption basket,
methodology followed to estimate the poverty line and the number of poor is manipulated
to arrive at the reduced figures of the number of poor in India.
Page 33
Think:
1. What are the limitations exhibited by the official estimation of poverty?
2. Are you aware about the ‘Sen Index’ and the tools used to measure the level and spread
of poverty?
3. Present estimation of poverty line is based on which committee?
Head Count Ratio: When the number of poor is estimated as the proportion of people
below the poverty line
Data on poverty: Estimated on the basis of consumption expenditure data collected by the
National Sample Survey Organisation (NSSO)
Major shift: From rural to urban
In the 1990s, the absolute number of poor in rural areas had declined whereas the number
of their urban counterparts increased marginally
Note: The poverty ratio is declining continuously for both urban and rural areas
Causes behind Poverty
Low levels of education and skills
Infirmity, ill health, sickness
Discrimination
These can be caused as a result of
Social, economic and political inequality
Social exclusion
Unemployment
Indebtedness
Unequal distribution of wealth
Page 34
Economy-wide problems:
Low capital formation
Lack of infrastructure
Lack of demand
Pressure of population
Lack of social/welfare nets
Aggregate poverty: Sum of individual poverty
Impact of the British rule on Indian living standards
De-industrialisation in India- Imports of manufactured cotton cloth from Lancashire in
England displaced the local production, and India reverted to being an exporter of cotton
yarn (not the cloth)
Unequal distribution of income and asset? has led to the persistence of poverty in India
Creation of two distinct groups in society:
Those who possess the means of production and earn good incomes
Those who have only their labour to trade for survival
Gap between the rich & poor: Ever-widening
Features of Poverty Alleviation Schemes
Primary objective of the developmental strategies: Social justice
Government’s approach to poverty reduction consisted of three dimensions—
a. Growth-oriented approach: Based on the expectation that
The effects of economic growth — rapid increase in gross domestic product and per
capita income — would spread to all sections of society and will trickle down to the poor
sections also (1950s and early 1960s)
Page 35
Rapid industrial development and transformation of agriculture through green
revolution in select regions would benefit the underdeveloped regions and the more
backward sections of the community
Population growth has resulted in a very low growth in per capita incomes with the gap
between poor and rich widening
It was thought that creation of incremental assets would increase the incomes and
employment for the poor
b. As pointed out by the FYPs, self-employment programmes and wage employment
programmes
c. Addressing poverty is to provide minimum basic amenities to the people i.e. social
consumption needs — provision of food grains at subsidised rates, education, health, water
supply and sanitation— people’s living standard could be improved—
To supplement the consumption of the poor
Create employment opportunities
Bring about improvements in health and education
Think:
1. So what factors do you think contributed towards the famines (between 1875 and 1900)?
2. Which sectors in India is experiencing globalisation related shock? How is the
government taking care of saving them in a situation like this?
3. Discuss the distress among cotton farmers of India.
4. Discuss the relationship between unemployment and poverty.
Refer:
Poverty in India
Page 36
Human Capital Formation
(Will be covered with the contemporary issues in the later part (During coverage of Ramesh Singh)
Think:
Is education the same as being skilful?
What is the relation between economic development and expanding educational
opportunities?
Compare and bring out both the differences as well as similarities between Physical and
Human Capital.
What constitutes Human Capital?
Investment in Education- similar to spending on capital goods by companies with the
objective of increasing future profits over a period of time
Investments in health: for maintaining productivity— directly increases the supply of
healthy labour force
On- the job training: return of such expenditure is in the form of enhanced labour
productivity and is more than the cost of it
Migration: enhanced earnings in the new place outweigh the costs of migration
Information: necessary to make decisions regarding investments in human capital as
well as for efficient utilisation of the acquired human capital stock. Expenditure incurred
for acquiring information relating to the labour market and other markets
Human Capital and Economic Growth:
Education: Economic growth means the increase in real national income of a country; and
so naturally, the contribution of the educated person to economic growth is more than that
of an illiterate person— stimulates innovations and creates ability to absorb new
technologies & the availability of educated labour force facilitates adaptation to new
technologies.
Page 37
Health: If a healthy person could provide uninterrupted labour supply for a longer period of
time, then health becomes an important factor for economic growth
Human Capital (HC) & Human Development (HD)
HC: considers education and health as a means to increase labour productivity
HD: based on the idea that education and health are integral to human well-being because
only when people have the ability to read and write and the ability to lead a long and
healthy life, they will be able to make other choices which they value
HC: treats human beings as a means to an end; the end being the increase in productivity.
In this view, any investment in education and health is unproductive if it does not enhance
output of goods and services
HD: human beings are ends in themselves. Human welfare should be increased through
investments in education and health even if such investments do not result in higher labour
productivity.
In India…
Government Expenditure on Education is expressed in two ways—
As a percentage of ‘total government expenditure’:
Indicates the importance of education in the scheme of things before the
government
Elementary education takes a major share of total education expenditure and the
share of the higher/tertiary education (institutions of higher learning like colleges,
polytechnics and universities) is the least— but ‘expenditure per student’ in tertiary
education is higher than that of elementary
Need to increase expenditure on all levels of education
As a percentage of Gross Domestic Product (GDP): how much of our income is being
committed to the development of education in the country
Page 38
Think: Is ‘Education for all’ still a distant dream or is it achievable? Discuss
Refer:
Education
New Education Policy
Future of Indian Education
UGC— A Silent Spectator (1956—2016)
Inequalities in educational access in India
Reforming teacher management in public school system
Health
A case of public health in India
Healthcare Funding
Jobs
Jobs & Economic Growth
The India Labour and Employment Report 2016
India’s jobless growth
(Related topics will be covered more holistically in subsequent value adds for topics like
inclusive growth, growth and development, poverty, employment issues et.al but just to
fuel your anxiety we’ve shared the links of the concepts we’ve covered earlier)
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