Poverty is a state in which a person or a family is unable to meet the minimum level of income and consumption required to maintain a basic standard of living. It is one of the most persistent problems of the Indian economy. In India, poverty is defined and measured using a poverty line, which is a threshold level of income or consumption expenditure below which a person is considered poor. A person who fails to command the minimum consumption of food, clothing, health, education, and shelter is said to be living in poverty.
Poverty has two major dimensions: absolute poverty and relative poverty. Absolute poverty refers to a condition where a person is unable to meet the basic minimum needs, measured by a fixed poverty line. Relative poverty refers to the poverty of one section of society compared with others, reflecting inequality in the distribution of income. Poverty is also classified into rural and urban poverty, and chronic poverty (a lifelong condition) and transient poverty (a temporary condition).
The causes of poverty in India include the colonial inheritance of backwardness, the slow growth of income relative to the population, the high rate of unemployment and underemployment, the inequality of asset distribution, rapid population growth, and the failure of several anti-poverty programmes to reach the poor effectively. Poverty alleviation therefore requires both growth and targeted programmes.
The poor in India include landless agricultural labourers, small and marginal farmers, casual workers, urban slum dwellers, and workers in the unorganised sector. Poverty is more concentrated in rural areas, among scheduled castes and scheduled tribes, among women-headed households, and among casual labourers. The poverty ratio in India has declined over time, but the absolute number of poor people remains large because of the large size of the population.
The poverty line in India is defined in terms of the per capita monthly expenditure required to meet minimum calorie requirements and basic needs. Since 2011-12, the Tendulkar Committee methodology has been used to estimate poverty, and later the National Multidimensional Poverty Index was also adopted to capture deprivations in health, education, and living standards.
Poverty is measured using a poverty line based on minimum calorie intake. Historically, a person consuming less than 2,400 calories per day in rural areas and less than 2,100 calories per day in urban areas was considered poor. The poverty line is expressed as a monetary value of this minimum requirement, adjusted for changes in prices.
Two commonly used measures are the Head Count Ratio (HCR), which is the proportion of the population below the poverty line, and the Poverty Gap Index, which measures the depth of poverty by showing how far the poor are from the poverty line. The Gini coefficient measures income inequality, which is closely related to relative poverty.
$$\text{Head Count Ratio} = \frac{\text{Number of Poor}}{\text{Total Population}} \times 100$$
The causes of poverty in India are both historical and contemporary. Historically, the colonial rule destroyed Indian industry and drained wealth. After independence, the growth rate was too slow to absorb the rapidly growing population into productive employment. The unequal distribution of land and other assets meant that a large section of the population had no productive assets. The high rate of population growth added to the pressure on land and employment.
Other causes include the low level of education and skill among the poor, the prevalence of unemployment and underemployment, the neglect of agriculture in the reform period, the low productivity of agriculture, and social discrimination against marginalised groups. The poor also suffer from a lack of access to credit, health care, and other services, which perpetuates the poverty cycle.
India has implemented a variety of anti-poverty programmes over the years. The self-employment and wage-employment programmes are the two broad categories.
Economic growth is the most powerful instrument for poverty reduction because it expands employment opportunities and raises the incomes of the poor. However, growth alone is not sufficient, because the benefits of growth do not automatically reach the poor. The growth must be inclusive, meaning that it must generate employment, raise agricultural productivity, and improve access to education, health, and credit for the poor. This is why the government combines growth-oriented policies with targeted anti-poverty programmes.
$$\text{Poverty Reduction} = \text{Inclusive Growth} + \text{Targeted Anti-Poverty Programmes}$$
| Type | Description |
|---|---|
| Absolute poverty | Inability to meet basic minimum needs |
| Relative poverty | Poverty relative to others, inequality |
| Chronic poverty | Lifelong poverty |
| Transient poverty | Temporary poverty |
| Rural/Urban poverty | Based on geographical location |
| Cause | Explanation |
|---|---|
| Colonial legacy | Destruction of industry, drain of wealth |
| Slow growth | Growth below population needs |
| Unemployment | High unemployment and underemployment |
| Unequal assets | Landlessness and unequal distribution |
| Rapid population growth | Pressure on land and jobs |
| Social discrimination | Caste and gender discrimination |
| Programme | Type | Objective |
|---|---|---|
| MGNREGA | Wage employment | 100 days of guaranteed work |
| NRLM | Self-employment | Livelihoods for rural poor |
| PDS | Food security | Subsidised foodgrains |
| National Food Security Act | Food security | Legal right to food |
Poverty is a multidimensional and persistent challenge for the Indian economy, rooted in the colonial past, slow growth, unemployment, unequal distribution of assets, and social discrimination. Its measurement through the poverty line, the Head Count Ratio, and the multidimensional poverty index helps track progress. While economic growth is the most powerful instrument for reducing poverty, it must be inclusive and supplemented by targeted programmes. MGNREGA, NRLM, the Public Distribution System, and the National Food Security Act represent India's efforts to combine employment, self-employment, and food security for the poor. The ultimate goal remains the creation of a society in which every person can enjoy a life of dignity, free from the deprivation that defines poverty.