POVERTY

Inability to fulfil minimum requirements of life like food, shelter and clothing is called Poverty.

RELATIVE AND ABSOLUTE POVERTY

Relative Poverty - Poverty across different classes, regions or countries is called Relative Poverty which is interpreted in terms of inequality of income within the country.

Absolute Poverty - Poverty line in India is used to measure absolute poverty.  Poverty line is the cut - offprint that divides people of a region as poor and non - poor. People spending ₹ 816 on consumption in rural areas and ₹ 1,000 in urban areas per month are treated above the poverty line.

Poverty Line Cut - Off should be determined in terms of consumption not income because consumption reflects the actual usage of goods and services by an individual as income only shows the purchasing capacity.

Poverty line Fixed in India by:

1. While estimating only private consumption expenditure is considered.
2. Includes food and non - food items both and per capita calorie consumption is taken for  consumption of food items.
3. Head count ratio shows poor and non - poor separately for rural and urban areas.
4. Average calorie requirement for urban population is 2,045 and rural is 2,435.

TREND OF POVERTY IN INDIA, INTER - STATE COMPARISON AND RURAL URBAN PICTURE

• About 17 crore people that is 34 per cent of total population lived below poverty line during 1960 - 61. It declined to 21.9% in 2011 - 12.

• Percentage of population below poverty line in India varies from state to state, highest is reported in UP, Bihar, Odisha, Chhattisgarh, Jharkhand, Manipur, Assam and Madhya Pradesh

• Rural poverty edges our urban poverty although there is a significant decline in both.

• With reference to Underdevelopment of Indian Economy & Reference to Unequal Distribution of Income.

CAUSES OF POVERTY

REFERENCE TO UNDERDEVELOPMENT OF INDIAN ECONOMY:

1. Low Level of National Product (National Income):

• Compared to the population size the national income was very low and as a result per capita income was low too. 

1. Low Growth Rate:

• Growth rate of economy very low during Five Year Plan in India because the growth rate of GDP was low too as a result per capita income sustained poverty.

1. Heavy Pressure of Population:

• Due to population growth mainly due to fall in death rate there was increase in demand of limited supply leading to poverty.

1. Inflationary Spiral:

- It is a situation of consistent rise in prices. Due to this the people who are just marginally above the poverty line tend to fall below the poverty line.

1. Chronic Unemployment and Underemployment:

- Poverty is a reflection of unemployment in a country. Unemployment and Underemployment directly lead to poverty.

1. Capital Deficiency:

- Lack of capital meant low level of production capacity which means low level of employment leading to poverty.

1. VII. Lack of able and efficient entrepreneurs:

- To accelerate the GDP growth skilled and efficient entrepreneurs are required which India lacks and  therefore India failed to tackle poverty.

1. VIII. Outdated Social Institutions:

- Certain outdated  traditions and institutions hinder the changes in the economy due to which the growth rate is hampered and poverty prevails.

1. Lack of Infrastructure

Underdeveloped social and economical infrastructure leads to slow pace of growth and poverty.