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Poverty Class 12 Notes Economics Indian Economic Development

Poverty class 12 notes facilitate all you need to know about what poverty stands for, the state of poverty in India, causes of poverty in India class 12, how poverty is measured in India, what are the different types of poverty in India, etc.

This poverty notes chapter assists you with quick revision and review of your preparation so far. It facilitates small and easy pointers to help you in getting an overview of the chapter.

Poverty Notes Class 12 Economics

Poverty
The poverty line in India
Causes of poverty in India
Three-dimensional approach of government remove poverty
Critical assessment of Poverty alleviation programs (PAP)
Conclusion

What is Poverty in India?

Poverty class 12 notes start with an introduction to the basic history of the term poverty. The major aim of India has been providing minimum basic needs to the people and reduction of poverty.

The pattern of development envisaged by the successive five-year plans focused on the census of the poorest of the poor (Antyodaya) to integrate the poor into the mainstream and achieve a minimum standard of living for all.

Poverty is a challenge for India, as India alone is home to more than a fifth of the world’s poor; It is a challenge for the world also, where around 300 million people cannot satisfy their basic needs.

Definition of Poverty

It refers to a situation in which an individual fails to earn income sufficient to meet the basic requirements of life.

The minimum requirement for necessities of life includes food, clothing, housing, education, and health facilities.

Who is poor?

Individuals who are unable to fulfill even the necessities of life are poor.
In urban areas, most of the poor people are among the casual workers, daily wage workers, rickshaw pullers, vendors, Street cobblers, child workers working in canteens and harbors, baggers, rag pickers, etc.
In rural areas, poor people generally belong to landless laborers, small and marginal farmers, and Agricultural and casual workers, artisans, etc.

Characteristics of Poverty.

Starvation and hunger is the key feature of poverty.
Poverty and illiteracy go hand in hand because parents are unable to send their children to school.
Poor people are generally physically weak due to ill health because they cannot afford treatment.
Malnutrition, especially in the case of children, is alarmingly high among the poor.
They have limited economic opportunities due to illiteracy and lack of skills so they do not get regular jobs and have to face unstable employment.
Poor families generally are large, which makes their economic condition worse.
A large section of poor people does not even have access to safe drinking water, electricity, and sanitation facilities.
They borrow from money lenders at high rates of interest to meet their basic needs and are unable to repay. These push them into chronic indebtedness.
They are ill-treated in almost every place.

How are poor people identified?

In pre-independent India, Dadabhai naoroji was the first person who not only gave the concept of the poverty line but measured it. He used the ” adult jail cost of living” to calculate the poverty line.
The jail cost of living refers to the consumption of adult prisoners and he used the menu for prisoners and prevailing prices to arrive at the cost of consumption.

Jail Cost of living

The estimated poverty notes line based on Jail’s cost of living is as follows.

(1) He divided the population into two parts:

(a) One-third population consisted of children.

(b) Two-thirds of the population consisted of adults.

(2) He assumed that out of the children population, half of them consumed very little (almost zero) while other

half-consumed half of the adult diet and adults consumed a full diet.

Half of the total children consumed almost zero + other half consumed half diet + adults consumed a full diet

1/2 x 1/3×0 (zero diets) + 1/2×1/3×1/2 (half of the adults) +2/3×1 (full diet)

= 0+1/12 +2/3=1/12 + 2/3=9/12

= 3/4 of adult jail cost living.

The poverty notes line comes out to be three fourth (3/4) of adults’ jail cost of living.

In 1979 ‘ task force on the projection of minimum needs and effective consumption demand’ determined the poverty line in terms of minimum nutritional requirement for subsistence.
The planning commission defined the poverty line based on the recommended nutritional requirement of 2400 calories per person per day for rural areas and 2100 calories for urban areas.
The Indian government uses monthly per capita expenditure as a proxy for the identification of the poor.
Based on this, in 2011-12, the Poverty line was defined for rural areas as consumption worth rupees 816 per person per month and urban areas consumption worth rupees 1000.

POVERTY LINE IN INDIA

To define poverty, we divide people into two categories; poor and non-poor.
There are three categories of poor

Chronic poor
Transient poor
Non-poor or never poor

Chronic poor.

It includes two kinds of people:

Always poor They always live below the poverty line or are always unable to fulfill basic needs
Usually poor; People who sometimes may have income higher than the poverty Like casual workers.

Transient poor

It includes two kinds of people:

Churning poor:- People who regularly move in and out of poverty or sometimes remain poor and sometimes cross the poverty line like small and marginal farmers.
Occasionally poor:- people normally are rich most of the time but may sometimes have a patch of bad luck. Normally have income higher than the poverty line but due to bad luck sometimes may remain below the poverty line.

Non-poor or never poor

People who always live above the poverty line like doctors, lawyers, professionals, etc.

Poverty line Notes

The poverty line is a cutoff point on the line of distribution, which usually divides the population of the country as poor and non-poor.

People having an income below the poverty line are poor and above the poverty line are non-poor.

Criticism of Poverty line in India

This method does not differentiate between the very poor and the poor. Although it helps in the identification of the poor as a group, it is difficult to identify the poor amongst the group of poor who need help the most.
There are many factors, other than income and assets, which are associated with poverty like accessibility to basic education, health care, drinking water, etc. which have been ignored.
The method does not consider social factors like- lack of civil and political freedom, joint family system, etc.

The number of poor in India

When the number of poor is estimated as the proportion of people who are below the poverty line, this is known as the “headcount index”.
The National Sample Survey Organization (NSSO) conducts a large sample survey and collects data related to consumption expenditure after every five years.
Poverty is estimated based on consumption expenditure data collected by NSSO by the planning commission and is made available to the public.
The proportion of poor in India during 1973-2012 has come down from 55 to 22 percent.
During 1973-2012, many Indian states reduced the poverty levels to a considerable extent.
Yet, the poverty levels in Odisha, Madhya Pradesh, Bihar, and Uttar Pradesh are still far above the national poverty level.
Andhra Pradesh, Rajasthan, West Bengal, and Tamil Nadu reduced the poverty level much better than other states.

Causes of Poverty in India Class 12

Poverty class 12 notes trace all the reasons behind Poverty in India which are as follows;

Low level of economic growth.
Rapid population growth.
Inflationary pressure.
Unemployment.
Outdated social institution.
Political factors.
Inequality in the distribution of income and wealth.
Lack of infrastructure.
The poor state of agriculture.
High illiteracy rate.

THREE DIMENSIONAL APPROACH OF GOVERNMENT TO REMOVE POVERTY

Poverty class 12 notes trace all the approaches present in front of the policymakers and what approaches should be adopted further. Growth with social justice has been the primary objective of the development policies/ strategies and programs of the government.

In all five years plans, maximum emphasis has been given to poverty reduction, and the government adopted three-dimensional approaches to eradicate poverty follows as;

Growth-oriented approach

The growth-orient approach of the government is based on the assumption that the benefits would spread to all sections of society and finally trickle down to the poor section also.

It was felt that rapid industrial growth and the transformation of agriculture would benefit the underdeveloped regions and backward sections of society.

That is why the government made economic growth its main /prime objective in all five years’ plans.

However, the Growth-oriented approach proved to be ineffective because

The benefits of economic growth did not trickle down to the poor.
The growth of the industrial and agriculture sectors was not impressive.
Failure of land reforms due to lack of political will.
The green revolution has brought a revolutionary increase in crop production but it intensified regional disparity.

Due to the ineffectiveness of the growth-oriented approach, the government adopted a second approach.

Poverty alleviation programs

This second approach has been initiated from the third five-year plan and progressively enlarged since then. The government has introduced a variety of programs for the reduction of poverty like MGNREGA, SGSY, SGRY, national food for work, Prime minister Rozgar Yojana (PMRY), Pradhan Mantri Gramodaya Yojana (PMGY), etc.

The basic aims of implementation of these programs are

a. To ensure food security

b. To create wage jobs and self-employment opportunities.

c. To develop infrastructure

Providing minimum basic amenities to the people

This approach has been initiated from the fifth five-year plan. It aims to provide minimum basic amenities to the people.

Under this approach

It was expected that the Lathe living standards of people could be improved through public expenditure on social consumption needs (food grains at subsidized art, education, health, water supply, and sanitation).

Programs under this approach are expected to supplement the consumption of the poor, create employment opportunities and bring improvement in health and education.

Three major programs have been implemented that aim at improving the food and nutritional status.

1) Public distribution system

2) integrated child development scheme

3) Midday Meal scheme

Mahatma Gandhi’s National Rural Employment Guarantee Law.

Mahatma Gandhi Rural Employment Guarantee National Scheme Act, which was passed in September 2005 and introduced in the first phase on February 2, 2000, in the 200 most backward districts. It spread to other districts in 2007-08 and spread to the entire country in April 2008.

The ongoing programs of Sampoorna Gramin Rojgar Yojna (SGRY) and National Food for Work (NFFW) have been integrated/ subsumed within the MGNREGA.

Mahatma Gandhi’s National Rural Employment Guarantee Act (MGNREGA) aims to improve the livelihoods of people in rural areas by providing a rural household, whose adult members volunteer, one hundred (100 ) days in a fiscal year Job offers with guaranteed salary unskilled labor.

Those among the poor who are ready to work at a minimum wage, can report (register themselves) or work in areas where this program is implemented. If they do not get any work within fifteen days of registration, they will be entitled to an employment allowance.

Other measures to reduce poverty.

High growth rate

Accelerating the pace of economic growth is the first and foremost measure (ultimate measure) to eradicate poverty. A fast-growing economy produces an increasingly larger amount of goods and services and creates greater employment opportunities.

Production of large amounts of goods and services and greater employment means more generations to come and improvement of living standard and hence, lesser poverty.

Population control

The increasing population is also an important factor that aggravates the problem of poverty. In addition to high economic growth, serious efforts should be made to control/check high rates of population growth, especially among the poor.

An increase in national income is significantly offset by the crease in population. Accordingly, Per capita income (availability of per capita goods and services) continues to remain low despite a substantial rise in GDP. Poverty can be reduced /removed only if the growth rate of the population is checked. To check the fast rate of population:

By promoting female education and employment

By persuading people to adopt the family planning method

By making available family planning methods and providing financial assistance.

By distributing essential goods to the poor through fair-price shops.

Creation of employment opportunities

Widespread unemployment and underemployment among both rural and urban workers is also the major reason responsible for poverty in India. Most of the rural poor are either disguised unemployed or seasonal unemployed and most of the urban poor are either unemployed or temporarily employed as casual workers.

Poverty can be eliminated by providing more employment opportunities so that people can meet their basic needs. For this purpose

Labour intensive technology should be adopted
Cottage and small industries are employment-oriented and can play a crucial role in providing employment, so small-scale industries and construction activities should be encouraged in rural areas.
Educational facilities should be more diversified and more emphasis should be given to providing vocational education.
Special training programs implemented to develop skills among the educated unemployed.

Loans or financial assistance should be offered for setting up small enterprises as means of self-employment.

Special focus on backward regions: Some regions in India like Bihar, UP, Orissa, etc. are extremely backward and poor. More than 90% of India’s rural poor live in the states of Bihar, A.P, Orissa, MP, Maharashtra, Tamil Nadu, Uttar Pradesh, and West Bengal. Government should offer special concessions and facilities to these regions to encourage private investment and industrialization.

CRITICAL ASSESSMENT OF POVERTY ALLEVIATION PROGRAMMES(PAP)

Under the second approach of three-dimensional approaches of government, various poverty alleviation programs are undertaken by the government since the third five years plan.

The main achievements of these programs are:

The proportion of the population below the poverty line has declined significantly from 46% in 1973-74 to 21.9 in 2011-12.
An increase in wage rate/ income of the poor has improved living standards and increased the nutritional level of the poor.

Despite a variety of programs to alleviate poverty, hunger, malnourishment, and lack of basic amenities continue to be a common feature in many parts of India because of the following reasons:

Lack of resources- Financial limits allocated for different is fixed without reference to actual cost. So, as compared to the magnitude of poverty, the number of resources allocated for these programs is not sufficient.
Improper implementation- Implementation of these programs mainly depends on bank officials and government officials. However, corruption, lack of training, etc. result in the improper implementation of these programs and leads to inefficient utilization (wastage) of resources.
Poor households who are mostly located in the interior part of villages or remote areas which are not easily accessible were neglected.
Power groups in villages started exercising control over the delivery system and collude with the implementation authority to manipulate in their favor against poor groups.
Despite it, in charge of programs favored the educated, rich, and resourceful persons as against the poor. So, the benefits of programs have been appropriated by the non-poor.
Lack of participation of poor people-The PAP was largely government-sponsored and lacked the participation of people. So, the poor would not be able to take advantage of these programs owing to their lack of awareness and active participation. Lack of infrastructure facilities like-school, roads, power, telecom, IT services, training institutions in poverty-stricken areas created many obstacles in the implementation of these programs.

Conclusion

Poverty class 12 notes state the objective of all the policies adopted by the government to eradicate poverty and foster rapid economic growth since independence. Promoting rapid and balanced economic development with fulfilling the objective of social justice has been the objective of government for seven decades.

Poverty has also been identified as the main challenge in front of policymakers. Thus, it is essential to study the state of poverty at early stages.

CBSE Economics Class 12 Notes Term I Syllabus

Part A: Introductory Macroeconomics

Part B: Indian Economic Development

Development Experience (1947-90) and Economic Reforms since 1991:- 12 Marks

Current challenges facing Indian Economy – 10 Marks