Poverty - Meanings, Poverty Line in India, Detailed Review

 Poverty

Poverty is the inability to fulfil the basic requirements of life. The minimum requirements include food, clothing, housing, education and health facilities. If these minimum needs are not fulfilled, man undergoes pain and suffering. There is loss of health and efficiency. Sickness and disabilities render him helpless in all walks of life. Generation after generation he lives in poverty, grows in poverty and dies in poverty. Poverty breeds or multiplies itself.

Relative and Absolute Poverty: How are the Poor Classified?

Relative poverty and absolute poverty are the two main modifications of poverty.

Following is their brief description:

(1) Relative Poverty: It refers to poverty across different classes, regions or countries.

The country or class of people whose level of living is low is treated as poor or relatively poor in comparison to the nation or class of people having high level of living.

Relative poverty is also interpreted in terms of inequality of income within the country. For example, in India, share in the national income of 20 per cent of the people at the bottom is barely 8.1 per cent while that of 20 per cent  of the people at the top is 45.3 per cent.

(2) Absolute Poverty: In India, the concept of poverty line is used as a magnitude of absolute poverty.

Poverty line refers to the cut-off point (in terms of per capita expenditure) that divides people of a region as poor and non-poor.

In India, who spend Rs. 816 on consumption in rural areas and Rs. 1000 in urban areas per month are treated as below the poverty line.

Based on the new official poverty line, in 2011-12, poverty rate in India is estimated to be 21.9 per cent.

In terms of the total number of absolutely poor, 21.9 per cent in India covers over 50 per cent of the absolutely poor in the world.

WHAT IS POVERTY LINE?

It refers to a cut-off point (usually in terms of per capita expenditure) which divides people of a region as poor or non-poor. To illustrate, if per capita expenditure of Rs. 1500 per month is taken as a cut-off point then those surviving on the monthly expenditure of less than Rs. 1500 will be taken as poor and those making a monthly expenditure of more than Rs. 1500 will be taken as non-poor. Percentage of population below poverty line is referred as 'head count ratio' or 'poverty incidence ratio' in the economy.

The Concept of Head Count Ratio: It refers to the measurement of poverty in terms of the number of persons below poverty line, where poverty line means some cut-off point with respect to the individual consumption expenditure per month.

Should the 'Poverty Line Cut-off' be determined in terms of Income or in terms of Consumption?

Poverty line cut-off may be determined either in terms of income or in terms of consumption.

However, if one is to choose between the two, consumption should definitely be a preferred parameter than income. This is because:

1. Consumption reflects actual use of the goods and services by an individual, as well as the type of goods actually used, while income only shows the capacity to purchase, and
2. Data is not available on the distribution of income.

How is Poverty Line Fixed in India: Some Measure Details

Following observations relate to procedural details while fixing the poverty line in India:

1. In the evaluation of consumption cut-off, only private consumption expenditure is considered.
2. In private consumption expenditure, we consider not only food items but non-food items as well.
3. For the consumption of food items, we work out per capita consumption of calories. Frequency distribution is formed with different class intervals showing the range of calorie consumption and the level of calorie consumption. Higher class shows higher range of calorie consumption.
4. Frequencies are recorded against each class interval. Each frequency counts the number of heads residing to a particular consumption class.
5. Finally head-count ratio is worked out showing poor and non-poor (corresponding to the poverty line cut-off), separately for the rural and urban areas. The ratio fairs the percentage of population below poverty line in the nation.

Fixation of Calorie Norms for the Rural and Urban Households

Average calorie requirement is determined to be 2,435 and 2,045 respectively for the rural and urban population. It is higher in the case of rural population, because hard-working male population is found to be higher in rural areas.

TREND OF POVERTY IN INDIA: NUMBER AND PERCENTAGE OF THE POOR

In 1960-61, about 17 crore people (34 per cent of the total population) lived below poverty line. In 1993-94, as many as 32 crore people (36 per cent of population) were living below poverty line. In 1999-2000, 26 crore people (26 per cent of population) were living below the poverty line. The Planning Commission of India estimated those below poverty line to be around 29.8 per cent of the population in 2009-10 based on the new poverty line. It declined to 21.9 per cent in 2011-12.

Inter-state Comparison

Here, following observations are of notable significance:

1. The percentage of population below poverty line is different in different states of India.
2. It is reported to be highest in UP, Bihar, Odisha, Chattisgarh, Jharkhand, Manipur, Assam, and Madhya Pradesh.
3. Nearly, 29.4 per cent of population of UP, 33.7 per cent of Bihar, 32.6 per cent of Odisha and 31.7 per cent Madhya Pradesh population is estimated to be living below the poverty line.
4. In Punjab only 8.3 per cent of population is below poverty line.
5. In Haryana 11.2 per cent and in Rajasthan 14.7 per cent of the population is living below the poverty line.

Rural-Urban Picture of the Poverty Trends

1. Rural poverty continues to have an edge over urban urban poverty, though both have shown a significant decline over time.
2. Rural poverty has declined from 54 per cent in 1972-73 to 25.7 per cent in 2011-12, urban poverty has declined from 42 per cent to 13.7 per cent during the same period.

However, percentage reduce by no means should be interpreted to mean the total decline as well.

Owing to an explosive rise in population over time, the total number of those below poverty line has continued to swell both in the rural and urban areas, despite a fall in their percentage number.