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India's economy is one of the world's fastest expanding. Despite this, India has a relatively high level of poverty. Poverty eradication has been a key concern since India's independence, and it is central to India's national development plan in order to establish a just and equal society. 

What is poverty?

There are various ways to define poverty. Perceptions of what defines poverty change over time and among nations. 

• Poverty takes place when a person is unable to get the most basic necessities of life. 
• Basic necessities include food, shelter, clothing, sanitation, medical facilities, etc.
• Poverty varies greatly depending on the circumstances. Within a country, the disparities between the affluent and the poor might be significant.

According to the World Bank Poverty is a serious loss of well-being with several dimensions. Examples include low incomes and the inability to get vital items and services required for a decent living. Poor also encompasses a lack of access to good drinking water and sanitation, a lack of physical security, a lack of a voice, and a lack of the capacity and opportunity to better one's life.

Classification of poverty

Poverty can be classified into the following categories based on social, economic, and political factors:

• Absolute poverty

1. It is often known as Extreme poverty or abject poverty, which is defined by a lack of essential food, clean water, health, housing, education, and knowledge.
2. People living in abject poverty struggle to survive, and many children die from avoidable ailments.
3. Absolute poverty is unusual in wealthy countries.
4. The "dollar a day" poverty level, initially set in 1990, defined absolute poverty by the criteria of the world's poorest countries; in 2015, the World Bank updated it to $1.90 a day.
1. Because this figure is problematic, each country has its own absolute poverty line.

• Relative Poverty

1. It is defined from a social standpoint, that is, living standards in comparison to the economic standards of the surrounding population. 
2. It's a measure of income inequality..
3. Typically, relative poverty is defined as the percentage of the population earning less than a certain percentage of median income.
4. It is a frequently used metric for determining poverty rates in affluent industrialized countries.

• Situational poverty

1. It is a sort of temporary poverty caused by an unpleasant event such as an environmental disaster, job loss, or a serious health crisis.
2. Individuals may help themselves even with tiny amounts of support since poverty is the result of unfortunate circumstances.

• Generational poverty

1. It is passed on from generation to generation to individuals and families.
2. This is more complex since there is no way out because the individuals are caught in the cause and lack access to the tools needed to escape.

• Rural Poverty

1. This occurs in remote locations, where there are fewer employment possibilities, fewer access to services, less assistance for people with disabilities, and fewer opportunity for a decent education.
2. Residents here mostly rely on farming and other unskilled work accessible in the area.

• Urban Poverty

1. The following are the key issues that urban residents confront as a result of poverty:
2. Access to health and education is limited.
3. Housing and services are insufficient.
4. Because of congestion, the environment is violent and unpleasant.
5. There is little or no social protection.

Terms related to poverty Poverty Rate The poverty rate is the ratio of the number of persons (in a specific age group) whose income falls below the poverty line divided by half the whole population's median household income. Information is also provided by age category, including child poverty (0-17 years old), working-age poverty, and senior poverty (66-year-olds or more). Yet, the relative income level of the poor in two nations with the same poverty rate may differ. Poverty Gap The poverty gap is the ratio by which the poor's average income falls below the poverty line. The poverty line is defined as half of the whole population's median family income. The poverty gap contributes to the refinement of the poverty rate by providing an indication of a country's poverty level. This indicator is calculated for the entire population, as well as for those aged 18-65 and over 65.

Causes of poverty

Population demographics

• Inadequate Agricultural Infrastructure - Agriculture has traditionally been the backbone of the Indian economy. Agriculture is the primary source of income for the vast majority of the country's inhabitants. Yet, among the agricultural community, antiquated agricultural techniques, low productivity, and fragmented property ownership contribute to low income and poverty.
  
  
• Unequal asset distribution - During the decades, top and middle-income groups in India witnessed quicker increases in incomes than lower-income groups, resulting in income inequality. The situation in India is such that only 20% of the people control 80% of the country's wealth. The uneven distribution of income is one of the causes of poverty.
  
  
• Unemployment - Another factor that amplifies the impact of poverty in the country is unemployment. In India, about 77% of families do not have a steady source of income.
  
  
• Social

The following are some of the societal concerns that lead to poverty:

• Education and illiteracy - In India, illiteracy is a major cause of poverty. The increase in illiteracy rates raises the unemployment rate and the poverty rate.
• Obsolete Social Customs - Social customs such as the caste system segregate and marginalize some groups of society and have a significant influence on the growth of poverty. Some socioeconomic groups in India face barriers to basic necessities such as food, water, and shelter as a result of the caste system.
• Gender inequality - India is mostly a patriarchal country in which women face discrimination. The low status of women is a major contributor to the country's bad women's situation. Women are impoverished as a result of pay discrimination, lack of access to education, and limited work prospects.

Impact of poverty in India

Poverty in India is like a sickness, wreaking havoc on an individual and their family. The following are the key consequences:

• Health Impact

• Poverty has the greatest impact on health. People living in poverty do not have enough food, suitable clothing, access to high-quality medical care, or clean surroundings. All of these fundamental necessities contribute to bad health. Malnutrition and disease affect these people and their families, reducing their working days and pushing them further into poverty.
• Additional negative health impacts include: 

• Increased infant mortality

• Every year, nearly 1.4 million children in India die before the age of five; India has one of the world's highest child mortality rates.
•  Pneumonia, malaria, diarrhea, and chronic malnutrition are the leading causes of mortality. Several of these are caused by poverty.
  
  
• Malnutrition 
• India ranks first in the world in terms of malnutrition. More than 200 million people, including 61 million children, do not have enough food.

 

• Social Implications

Poverty has the following consequences for society:

 

• The rate of violence and crime - The prevalence of violence and crime coincides spatially. Because of unemployment and marginalization, impoverished individuals frequently engage in illegal activities such as prostitution, theft, and criminal actions such as chain snatching.
  
  
• Homelessness - Most poor people are homeless. They sleep on the sides of the roadways at night. This makes the entire situation extremely dangerous, especially for women and children.
  
  
• Stress - Because of a lack of money, poor individuals experience a lot of stress, which leads to a decrease in individual productivity, making poor people poorer.
  
  
• Child labor - Poverty drives impoverished families to send their children to work rather than study. This is because families are unable to handle the weight of their child(ren). Children in low-income homes typically begin working at the age of five.
  
  
• Terrorism - Terrorist recruiting targets children from low-income homes. These individuals are promised significant sums of money in exchange for the destructive mission of terrorism.
  
  
• Economic Impact

Poverty is directly proportional to economic achievement. The number of individuals living in poverty reflects the economy's capacity. A country's economy thrives when more people work effectively.

Poverty Reduction Strategies in India

The following are the steps that should be implemented to combat the monster of poverty in India:

•  Giving equitable access to fundamental necessities

• Access to basic necessities, particularly in rural regions, is critical for poverty eradication.
• Poor individuals will be able to work successfully and lift themselves out of poverty if they have access to food, clean drinking water, and housing.

• Increasing agricultural income

• With agriculture still providing the bulk of the country's revenue, increasing agricultural income will undoubtedly lift many people out of poverty. Increasing Farmer Income by 2022-23 is an important step in this direction.

• Expanding nonfarm employment

• Creating non-farm jobs is another crucial step towards reducing poverty in the country. Many people can find work in industries such as food processing, transportation, construction, sales, and marketing.

• Equitable credit access

• Equitable credit access will enable innovative teenagers to start enterprises and create jobs. However, the existing system does not provide equal access, and actions are being done to fix that. Banks' introduction of women-oriented lending facilities is one such initiative. Women-oriented government programs for loan access include Mudra Yojana, Stree Shakti Yojana, Annapurna Scheme, and others.

• Female education

• Educating a female kid is critical to alleviating poverty. It will allow females to gain official work and become self-sufficient.

• Rising economic growth

• More employment will be created as the economy grows faster, and the government will get more income in the form of taxes. In exchange, the government may utilize the funds to directly combat poverty by implementing poverty-relief programs and constructing the required infrastructure.

Methodology to calculate poverty

The traditional method of measuring poverty is to determine the minimum spending (or income) required to acquire a basket of goods and services required to meet basic human needs. This is referred to as the poverty line.

Countries throughout the world use different metrics to define poverty, but the basic idea is the same: a poverty line is computed based on the amount of consumption necessary to sustain a certain minimal level of life in the country.

• The poverty line is the amount of money required for a person to meet his/her basic necessities. It is defined as the monetary worth of the goods and services required to supply an individual with basic necessities.
• The poverty line varies per country, depending on how poverty is defined.
• Poverty is high in industrialized nations with improved standards of living and welfare ideas, as basic living standards involve increased consumption requirements and access to numerous products and services.

The poverty measure

• Headcount Ratio (HCR)

1. Poverty can be calculated in terms of the number of persons living below the poverty line, with the incidence of poverty represented as the HCR or the poverty ratio - the number of poor as a proportion of the entire population.
2. It is calculated by using the number of people below the poverty line (HC) divided by the total population of the country or region (n)

• Drawback

1. The head-count ratio has the obvious drawback of failing to represent the amount to which individual income (or spending) falls below the poverty level.
2. The use of the headcount as a measure of poverty routinely prejudices policy in favor of people living on the edge of poverty.

• Poverty gap ratio (PGR) and Income gap ratio (IGR)

1. PGR is defined as the ratio of the average income (or additional consumption) required to lift all impoverished individuals out of poverty divided by the society's mean income (or consumption). 
2. The rationale for dividing by the average for society as a whole is to get a notion of how big the gap is in relation to the resources that could be utilized to close it. 
3. In this respect, the PGR is a measure of the resources needed to remove poverty rather than poverty itself.
4. In highly unequal (but generally wealthy) countries with a large number of impoverished individuals, dividing by average economywide income may offer a deceptive sense of poverty. The PGR in such cultures may appear tiny, despite the fact that the condition of the poor is exacerbated by this tactic. 
5. As a result, the income gap ratio (IGR), a close relative of this, is frequently used.
1. This is the same as dividing the entire gap between the poor from the poverty line by the total income necessary to get all of the poor individuals to the poverty line.
2. This provides a somewhat different viewpoint on the situation. It depicts the severity of poverty more directly since it quantifies it in relation to the total income required to alleviate poverty.

Methodologies used in India

• The former Planning Commission was India's primary organization for poverty estimates. Since the 1960s, India has conducted periodic evaluations of the prevalence of poverty using the approach provided by the Planning Commission's expert Groups/Committees.
• The poverty ratio in India was calculated using an exogenously defined poverty line quantified in terms of per capita consumption spending over a month and the class distribution of people derived from the National Sample Survey Office's (NSSO) large sample survey of consumer expenditure data. 
• Households with consumption expenditures below the poverty line are referred to as "Below the Poverty Line (BPL)" and are classified as impoverished. Consumption is calculated using a set of commodities and services known as reference Poverty Line Baskets (PLB)
• Hence, poverty estimate in India has been predicated on two important components:
• The NSS consumer expenditure surveys offer information on consumption expenditures and their distribution among families; 
• These expenditures by households are evaluated in relation to a particular poverty level.
• Estimate of the Poverty Line
• To estimate poverty, the first step is to identify and specify a poverty line.

Poverty Estimation Before Independence

• India's Poverty and Unbritish Rule (1901)
• Dadabhai Naoroji, in his book 'Poverty and Un-British Rule in India,' produced the first estimate of the poverty line at 1867-68 prices (16 to 35 per capita per year), based on the expense of a subsistence meal for emigrant coolies living in a condition of quietude throughout their trip.

• National Planning Committee (1938)

• Under the presidency of Jawaharlal Nehru, the National Planning Committee proposed a poverty line (varying from $15 to $20 per capita per month) based on a minimal level of life in 1938.

• The Bombay Plan (1944)

• Proponents of the Bombay Plan proposed a poverty level of $75 per capita per year, which was substantially lower than the NPC.

Post- Independence Poverty Estimation

Several expert committees appointed by the Planning Commission have approximated the number of poor people in India:

• Working Party (1962)
• This Group assessed the poverty line in India for the first time in 1962 in terms of a basic necessity (food and non-food) of persons for healthy living. 
• The Panel seems to have considered the Nutrition Advisory Group of the Indian Council of Medical Research's(ICMR ) advice of a balanced diet in 1958. 
• The Group established two poverty levels for rural and urban regions (20 and 25 per capita per month in 1960-61 prices, respectively) with no geographical diversity. 
• The poverty level does not include spending on health and education, both of which are essential. It was anticipated that these would be given by the state. While not official poverty lines, these were commonly used in the 1960s and 1970s to estimate national and state poverty ratios.

• VM Dandekar and N Rath's research (1971)

• Although this was not a Planning Commission-commissioned research, the origins of India's poverty line may be found in the important work of these two economists.
• They began by determining the quantities of intake necessary to fulfill a minimal calorie standard of 2,250 calories per capita per day.
• Unlike, earlier experts who used subsistence living or basic minimal requirements criterion to determine poverty, they determined the poverty line from spending sufficient to give 2250 calories per day in both rural and urban settings.
• They found that poverty levels for rural families were Rs. 15 per capita per month and for urban families were Rs. 22.5 per capita per month, at 1960–1961 prices.

• Dr. Y. K. Alagh chairs the Task Group on "Projections of Minimal Requirements and Effective Consumption Demand" (1979)

• This Task Force was formed in 1977, and its report was delivered in 1979. Based on the concept of this Task Force, official poverty counts commenced for the first time in India.  
• The poverty line was defined as the level of per capita consumption expenditure required to fulfill the average daily calorie requirement of 2400 kcal per capita in rural regions and 2100 kcal per capita in urban areas.
• The Task Force established rural and urban poverty thresholds of Rs.49.09 and Rs.56.64 per capita per month in 1973-74 prices.

• Lakdawala Expert Group (1993)

• In 1989, The Planning Commission created the Lakdawala Expert Group to "look into the technique for measurement of poverty and to re-define the poverty line if required". 
• In 1993, the Expert Group delivered its report. It did not redefine the poverty standard and kept the Alagh Committee's recommendation of separating rural and urban poverty lines at the national level based on minimal nutritional requirements.
• But, in order to capture inter-state pricing differentials, it disaggregated them into state-specific poverty lines. It proposed updating them using the Consumer Price Index of Industrial Workers (CPI-IW) in cities and the Consumer Price Index of Agricultural Labour (CPI-AL) in rural regions rather than National Accounts Data. This believed that the basket of goods and services used to calculate CPI-IW and CPI-AL reflected poor people's spending patterns.
• From 1997 to 2004-05, the former Planning Commission adopted the practice of measuring poverty levels in rural and urban regions in the states using state-specific poverty lines in conjunction with national data. This strategy has lost credibility over time. The pricing data was inaccurate, and subsequent poverty lines failed to maintain the initial calorie requirements.

• Tendulkar Expert Group (2009) 

• In 2005, another expert committee led by Suresh Tendulkar was formed to study poverty estimate methodologies. 
• It was designed to overcome three major flaws of earlier methods
•  Poverty estimates based on 1973-74 poverty line baskets (PLBs) of goods and services did not reflect significant changes in poor consumption patterns over time;
• Problems with price adjustment for inflation, both spatially (across regions) and temporally (across 6 times); and 
• Assumption that only the state provides health and education. In 2009, the Expert Group delivered its report.
• It did not develop a poverty line and instead used the officially measured urban poverty limit of 2004-05 (25.7%) based on Expert Group (Lakdawala) methodology. It worked backward to establish the poverty limits that resulted in such a poverty rate. 
• The Tendulkar Committee proposed many modifications to the way poverty was measured. 
• To begin, it advocated for a change away from basing poverty lines on calorie norms, which had been utilized in all poverty assessments since 1979, and towards goal nutritional objectives instead2.
•  Second, instead of two different poverty lines for rural and urban India, it advocated a single all-India urban PLB for both rural and urban India. 
• Finally, it advised adopting Mixed Reference Period (MRP) estimations rather than Uniform Reference Period (URP) estimates utilized in previous techniques for estimating.
• It suggested that when assessing poverty, private investment in health and education be included. It verified the poverty levels by examining the sufficiency of real private consumption spending per capita at the poverty line.
• By comparing them to normative expenditures commensurate with nutritional, educational, and health results, the poverty line on food, education, and health is determined.
• Instead of monthly family consumption, consumer expenditure was divided into per person per day consumption, yielding figures of Rs 32 and Rs 26 per day for urban and rural regions, respectively. In rural areas, the national poverty line was projected to be Rs. 816 per person per month and Rs. 1,000 in urban areas for 2011–12.

• Rangrajan Committee (2014)

• It was established in 2012 in response to considerable criticism of the Tendulkar Committee strategy, as well as changing circumstances and people's expectations in India. 
• In June 2014, this Committee submitted its report. It resorted to using separate all-India rural and urban poverty line baskets to derive state-level rural and urban estimates. It proposed distinct consumption baskets for rural and urban regions, with food products ensuring necessary calorie, protein, and fat intake and non-food goods such as clothes, education, health, housing, and transportation. 
• At 2011-12 rates, this committee increased daily per capita spending to Rs 47 for urban and Rs 32 for rural from Rs 32 and Rs 26 respectively. At the national level, a monthly per capita consumer expenditure of Rs. 972 in rural regions and Rs. 1407 in urban areas is proposed as the poverty line. The government did not make a decision on the Rangarajan Committee's findings.