Meaning of poverty
Poverty is the inability to get the minimum consumption requirements for life, health requirements include food, clothing, housing, education and basic health requirements. Man suffers and efficiency.” Poverty is the inability to fulfill even the basic requirements of life. These minimum hardships in case these minimum human needs are not fulfilled and there is loss of health and efficiency. As a result, it becomes difficult to increase production and to get rid of poverty in future. In this poverty and fall in productivity become interdependent. The term poverty is defined in two ways:
(1) Absolute Poverty and (2) Relative Poverty.
(1) Absolute Poverty: Absolute poverty refers to the measure of poverty, keeping in view the economic conditions of a country. Economists have given many definitions of poverty in this regard but in a large number of countries poverty has been defined in the context of capita intake of calories and minimum level of per capita consumption-expenditure. We shall study absolute poverty in India in both these contexts.
(i) Calorie Criteria: The energy that an individual gets from the food that he eats everyday is measured in terms of calories. In India, Planning Commission is of the opinion that an individual in rural area must get 2,400 calories and in urban area 2,100 calories per day. Those getting less than this minimum will be treated as living below starvation /poverty line.
(ii) Minimum Consumption Expenditure Criteria: An Expert Committee appointed by the Planning Commission to determine poverty line, adopted Minimum Consumption Expenditure Criteria. As per this committee, those people will be treated as living below the poverty line whose per capita consumption expenditure at 2004 prices is below 368 per month in rural areas and below 559 per month in urban areas. These consumption expenditures were fixed by National Sample Survey Organisation (NSSO) in the year 2004. In 2011-12, Tendulkar committee raised the poverty line based on consumption expenditure as per 68th survey of NSSO and price level in 2011-12 to 816 per capita per month in rural areas and 7 1,000 per capita per month in urban areas.
(2) Relative Poverty: Relative poverty refers to poverty on the basis of comparison of per capita income of different countries. The country whose per capita income is quite less in comparison to other countries is treated as relatively poor nation. In poor nations the part of population which is living at the bottom (whose income is less), is unable to fulfill the basic requirements of life. In Table 1, India's per capita income is compared with the per capita income of some other countries.
What is poverty line
Poverty line is the line which indicates the level of purchasing power required to satisfy the minimum needs of a person. In other words, it represents the capacity to satisfy the minimum level of human needs. The purchasing power can be expressed in the form of average per capita monthly Expenditure. If we have an idea of the minimum level of purchasing power required to keep a person at a minimum level of living, a little below which he would be considered as poor, this “Purchasing Power" could then be called poverty line. This line divides the population in two groups, one of those who have this purchasing power or more and the other group of those people who do not have this much of purchasing power. The former group is regarded as living “Above the Poverty Line (APL)”. These people are not regarded as poor. The latter group is considered as living “Below the Poverty Line (BPL)". These people are called poor. Thus, the poverty line divides the people into two groups (i) One of those who have the minimum required purchasing power or more. This group is not considered as poor, and (ii) The other group of those people, who do not have this much of purchasing power, are called poor.
DETERMINATION OF POVERTY LINE IN INDIA
The determination of poverty line in the Indian context was by a working group of eminent economists like Prof. D.R. Gadgil Lokanathan, etc. After taking into account the requirement of minimun based recommendation, the working group recommended a minimum con of 20 per capita per month for rural areas and 25 per capita per month for prices. It means that people in rural areas whose per month expenditure is less than areas less than 25, will be treated as living below the poverty line. mpted for the first time in 1962 Gadgil, Dr. B.N. Ganguli, Dr. Ps. minimum standard of living and diet um consumption expenditure level or month for urban areas at 1960-61 than 20 and in urban conducts a large survey to estimate
Now, in India poverty line is defined on the basis of consumption expenditure National Sample Survey Organisation. Once in 5 years, NSSO conducts a large surve poverty. As per NSSO reports of the year 2004-05, poverty line is defined as monthly a required for a daily intake of 2,400 calorie per person in rural areas and 2,100 calorie per pers areas. This expenditure was 368 per person per month in rural areas and 559 per person per in urban areas in the year 2004. Tendulkar committee recommended to raise poverty line to expenditure of 447 per person per month in rural areas and 579 per person per month in urban areas at 2004-05 prices. In 2009-10 Tendulkar committee raised the poverty line based on consumption expenditure as per 66th survey of NSSO and price level in 2009-10 to 3 673 per capita per month in rural areas and 3 860 per capita per month in urban areas. In 2011-12, poverty line was further raised on the basis of 68th survey of consumption expenditure of NSSO to 816 per capita per month in rural areas and 3 1,000 per capita per month in urban areas. As per this criterion, in 2011-12, 21.9 per cent of India's population was living below poverty line. As per international poverty line of 1.25 US dollar per day, 3.. per cent of India's population was living below poverty line in year 2011. As per World Develop Report 2013, if poverty line of US $2 per person per day is taken then 68.7 per cent of India s pope is living below poverty line. Asian Development Bank has defined poverty line taking base of expenditure of US On this criteria, 55 per cent of India's population was living below poverty line in year 2 committee under the chairmanship of Dr. C. Rangarajan has been set up to review delining the poverty line keeping in view the international nu atilase of expenditure of US $1.35 per day. poverty line in year 2007-08. An expert set up to review all issues related to defining poverty line keeping in view the international practices
CAUSES OF POVERTY
(1) Heavy Pressure of Population: Population in India has been increasing very rapidly. As per census 2011, our population size was 121 crore and growth rate of population was 1.3 per cent. This pressure of population is a major obstacle in economic development. In spite of increase in total production, per capita income, per capita land, per capita availability of different social services and foodgrains has been very less. Thus the main cause of poverty in India is large size of population.
(2)To Increase in Prices: In India prices show increasing tendency. In 2013-14, the average rise in prices has been 6.11 per cent. Rise in prices has worst effect on poor population. Poor persons are unable to meet their basic needs. It expands poverty.
(3) Less National Income and Slow Economic Growth: As compared to population. growth of national income of India is very low. Hence per capita income is also low. Net national income of India in year 2012-13 at 2004-05 prices was 47,66,754 crore and its population was 121 crore. Per capita income was * 39,168 per annum only. Low national income and low per capita income are the cause of our poverty. Growth rate of Net Domestic Product (NDP) has also been very low during the period of five year plans in India. It has been 5.1 per cent during the period of planning. On the other hand, population has been growing at the rate of 2 per cent. Thus, growth rate of national income has been slow. On account of slow economic growth rate, poverty could not be eradicated.
(4) Chronic Unemployment and Under-employment: Problem of unemployment is a big cause of poverty. In India, the problem of unemployment is very serious. In 2011-12, the number of unemployed in India was around 2.45 crore. In December 2011, about 4.02 croree ducated unemployed persons were registered with 969 employment exchanges.
(5) Rural Economy: Indian economy is predominantly rural economy. The main occupation in rural areas is agriculture. About 49 per cent of population of India is dependent on agriculture, whereas in other countries, a very small proportion of population is engaged in agriculture. For example, in U.K. 1.2 per cent, in U.S.A. 1.6 per cent and in Japan 3.7 per cont population is engaged in agriculture. In India, 48.9 per cent of the total population is aced in agriculture but its contribution to the national income is only 13.9 per cent. It mone that despite India being predominantly an agricultural country, it is very much backward in agriculture.
(6) Capital Deficiency: Capital has a special role to play in the establishment of industry, Irrigation and other means of development. Hence, an important factor accounting for the economic backwardness of a country is the deficiency of capital l. India is no exception.here the power of the people to save capital is very little. Here the power of the people to save capital is very little less investment, which in turn leads to less income in the country
(7) Lack of Able and Efficient Entrepreneurs: In the early of a country there is need for such entrepreneurs who are intiative and creative, who are competent and proficient in their trade and who can take risk in a bold manner