REDUCE POVERTY

IN INDIA

Help yourself

Alphabet I comes before U

Stand before a good mirror and ask yourself, if the step you

contemplate is going to be of any use to him. Will he gain

anything by it? Will it restore him to a control over his own life

and destiny? Forget Gandhiji!

Even the Lord helps those who help themselves so that

others (politicians including) can also follow.

After 2011, there are more than 1210 million people in India,

including you. About 250 millions are considered „BPL‟.

Charity begins at home and of course does not stop there.

What should your public relations do?

Employ yourself fully utilizing your talents to earn money through legitimate activities.

Achieve your social security by keeping good company and maintain good family relations.

Provide drinking water and sanitation in your surroundings.

Can you avail (BPL) housing in a poor friend’s name?

Why don’t you write to government for rural connectivity?

Do water harvesting if it rains or from public tap.

Help others thru these:

Find if such SHP exist now, inform poor

How does prosperity spread?

Transmission of technologies

Science-based methods to organize production

Historical examples: Steam engine

Factory machinery

Railroads

Global steamers Suez, Panama canals

Electrification

Internal Combustion engine

Nitrogen-based fertilizer

Five development Interventions

Boost Agriculture

Improve basic health

Invest in education

Power, Transport and Communications

Safe Drinking water and Sanitation

Absence of these leads to poverty.

Oh poor, ask thyself

Can I guarantee to me at least a minimum level of

living necessary for physical and social

development?

Estimated cost of food, clothing, hut, oil for lamp,

barber and domestic utensils to arrive at

„subsistence per head‟ _ Legitimate Income for these

is removal of poverty. (Not becoming a JRI _ jail

resident Indian!)

In economics, what is poverty?

Poverty may be characterized by:

Deprivation in income, illiteracy, malnutrition,

mortality, morbidity, access to water and

sanitation, vulnerability to economic shocks.

Income deprivation is linked in many cases to

other forms of deprivation, but do not always

move together with others.

BPL Income: India 2004-05

A monthly per capita consumption expenditure of Rs.

356 and 539 for rural and urban areas respectively for

2004-05.

More than a quarter of India‟s population remained below

PL in 2004-05.

28.3% Rural 25.7% Urban 27.5% Total

Absolute no.: 302 million in 2004-05

(Statistics in Development Economics.)

Two basic ingredients in measuring

poverty:

(1)Poverty Line: definition of threshold

income or consumption level

(2)Data on size distribution of income or

consumption (collected by a sample

survey representative of the population)

Measurement of Poverty

Absolute PL refers to a threshold income (consumption)

level defined in absolute terms. Persons below a pre-

defined threshold income are called poor.

Relative PL defined in relative terms with reference to level of

living of another person; or, in relation to an income

distribution parameter.

Examples: 50% of mean income or median, mean minus one

standard deviation.

Poverty Line (PL): Absolute vs. Relative

n

mHCR

Head Count Ratio (HCR), Poverty Gap (PG)

and Squared Poverty Gap (SPG)

)(1

1

m

i

i

z

yz

nPG

2

1

1

m

i

i

z

yz

nSPG

m= no. of poor population, n = total population,

z= poverty line, yi =income of i-th person

Poverty Measures

Poverty depends on per capita household income which in turn

is affected by employment, wage rate, land productivity,

industrialisation, expansion of service sector and other general

growth and distribution factors.

Special role of:

per capita agricultural income

Employment and real wage rate

Inflation rate and relative food prices

Government expenditure

Per capita development expenditure

Social sector expenditure

Reasons for weak participation of poor:

limited access to education, land, credit;

low agricultural growth,

underdeveloped infrastructure such as irrigation,

roads and

electricity in poorer states

Poverty could be reduced faster provided

inequality is under control, labour intensive

activities must grow, removal of rigidities in land

and labour market critical for reallocation of

resources

Government can afford to devote more resources

for poverty removal programmes: wage

employment (NREGA) or self employment type

(SJSY).

This should not happen in villages:

• Growing unemployment and underemployment

• Falling purchasing power

• Declining per capita availability of food grains

• Reduced farm incomes and real wage growth

• Indebtedness and land alienation, esp. for small and marginal farmers.

• Deceleration in agricultural growth, productivity per worker and rural non-agricultural employment growth

• Slackening pace of poverty reduction and worsening poverty amongst marginalized social groups and ethnic minorities

The National Rural Employment Guarantee Act 2005 is a law

whereby any adult who is willing to do unskilled manual work

at the minimum wage is entitled to being employed on local

public works within 15 days of applying, with a guarantee of

100 days of unskilled manual work per household per year.

NREGA and Poverty Reduction

Potential: NREGA held a huge promise for poverty reduction

with a supplementary average annual household income.

Creation of social and economic infrastructure too would

have gone a long way in reducing poverty.

Poverty results either due to permanent non-

availability of two square meals a day because of

lack of work and income, or due to shocks such

as ill health or crop failure. These shocks can be

temporary if the households have assets to sell

or access to credit, otherwise these households

can eventually be pushed below the poverty line.

Income poverty is accepted to be an inadequate indicator of

actual conditions of life, as it does not capture various other

forms of deprivation, including the fulfilment of various social

and economic rights. The concept of human poverty is wider.

An alternative indicator to consider is that of nutrition and

calorie intake. Income poverty estimates in both China and

India are implicitly based on calorie intake, since the poverty

lines are derived from the income / consumption expenditure

level associated with the ability to purchase sufficient food to

meet some specified calorie intake.

In both countries, the per capita requirements on which the

original poverty lines were based were 2400 kcal per day in

rural areas and 2100 kcal per day in urban areas, and these

lines have been subsequently adjusted with consumer price

indices.

Compare poverty reduction more than economic

growth per se, what has mattered is the nature of the

growth: whether it is associated with inequalities that

do not allow the benefits of growth to the poor;

whether the structural change in the growth

generates opportunities for productive non-

agricultural employment; whether basic needs and

essential social services are provided.

Government mediation of these and of global

economic integration is important in determining

different outcomes.

China is typically described as becoming the

“workshop” or “factory” of the world through the

expansion of manufacturing production, and India as

becoming the “office” of the world, in particular

because of its ability to take advantage of IT-

enabled services off-shoring.

Factors behind the poverty

trends in India:

What explains this persistence of poverty

and the divergence between growth rates

and poverty reduction?

Increasing inequality is a factor. The

benefits of growth have been concentrated.

It has meant that the benefits of the growth have

been concentrated and have not “trickled down”

sufficiently to ensure improved consumption

among the lower income groups. But the pattern

described here also emphasizes the crucial

importance of the nature of the growth.

Thus, the period 1973–1974 to 1987–1988

witnessed faster reduction in rural poverty

because the pattern of growth especially in

the 1980s, involved a shift of public

expenditure at the margin to rural areas,

and this generated multiplier effects and

more employment that benefited the rural

poor to some extent.