Class 12-science NCERT Solutions Economics Chapter 4 - Poverty

The government uses Monthly Per Capita Expenditure (MPCE) as an alternative for income of households to identify the poor. The estimation of the poverty line is calculated by multiplying the prices of minimum calorie intake in rupees, i.e. 2,400 calories per person in rural areas and 2,100 calories per person in urban areas. The calorie-based norm is not sufficient to identify the poor because of the following reasons:

1. It does not differentiate between the very poor and the other kind of poor because it groups all the poor together.
2. It considers the expenditure on food and other selective items as an alternative for income without any concrete base for measurement of poverty.
3. It is difficult to identify who among the poor really require the most assistance.
4. It does not take into account important factors associated with poverty such as access to education, health and water.
5. It does not take into account social factors responsible for people living in poverty.

Thus, the calorie-based norm is not sufficient to identify the poor in the country.

To provide wage employment to rural households, in 2005, the government passed a new Act known as Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA). 

According to this Act, guaranteed wage employment is provided to every rural household whose adult volunteer is willing to do unskilled manual work for a minimum of 100 days in a year. This scheme is now known as Deen Dayal Upadhyaya.

Poverty and unemployment are twin problems in India. Poverty is one of the directing principles in the process of economic planning in India. Active participation of the poor is always important for implementation of any programme in the country. The eradication of poverty will be effective only with the contribution of the people to the growth process. Thus, employment generation programmes were launched to eradicate poverty in India.

Importance of employment generation programmes to eradicate poverty in India:

1. Relationship between unemployment and poverty: If employment opportunities are created, then more people will be employed in the country. This leads to an increase in the income level and it reduces the level of poverty. Hence, there is significant relationship between unemployment and poverty.
2. Decrease in rural-urban migration: Poverty, lack of employment opportunities, natural disasters and other socio-cultural factors are responsible for people migrating from rural to urban areas. As a result, there is enormous growth of the informal sector in the urban areas and the condition of these people become worse. Hence, generation of employment programmes in rural areas can help decrease migration from rural to urban areas.
3. Reduction in disguised unemployment: In rural areas, disguised unemployment-more people engaged in an activity than the number of persons required-is generally found in the agricultural sector. Mostly, all members of a family work in a small farm. If seven members of a family are working in a field measuring two hectares, then even if we withdraw three people from the field, the productivity of the field will not be affected. Hence, generation of employment programmes in rural areas can reduce the problem of disguised unemployment and improve the standard of living of the people.
4. Access to basic facilities: Generation of employment programmes leads to an increase in the income level of people. As a result, the poor can get access to basic facilities such as education, health facilities and sanitation.
5. Creation of assets: Employment schemes aim to create assets such as irrigation facilities, water harvesting and construction of dams to develop socio-economic conditions of the rural poor and thus help eradicate poverty.
6. Creation of skills: Formation of human capital is an important element of employment generation programmes. These programmes enable to provide skills to unskilled workers through training and to enhance their income-earning capacity.

Income-earning assets are resources which serve as a base for earning a livelihood. If people have access to land, social network and fixed public assets such as wells, clinics, schools, education, dams and bridges, then it will generate more employment opportunities. For example, providing land to landless rural workers will encourage self-employment through agriculture and animal husbandry. It is the most effective way to improve the rate of participation of the poor and to assure them with appropriate skills, knowledge and better health. This will increase the earning capacity of workers and help them in overcoming the problem of poverty. Thus, it can be concluded that the problem of poverty can be solved by generating income-earning assets.  

Three dimensions of the government approach to reduce poverty:

1. Economic growth-oriented approach: This approach anticipated that the indicators of economic growth such as gross domestic product and per capita income will affect all sections of society. Growth of GDP will be an appropriate solution to overcome the problem of poverty. This will generate new employment opportunities and thus more workers will find jobs in farms and factories.
2. Specific poverty alleviation programme: Policy makers made an attempt to increase income and employment for the poor through poverty alleviation programmes.   
3. Providing minimum basic amenities of the poor: This approach focused on providing minimum basic amenities to the poor such as food, housing, education and health facilities. 

The government was not successful in poverty alleviation through the three-dimensional approach because of the following reasons:

1. Although various initiatives were taken by the government to alleviate poverty, hunger and malnourishment,  there is lack of basic amenities and educational facilities in many regions of India.
2. The amount of resources allocated for poverty alleviation programmes was not sufficient to cope with the magnitude of the poverty level in India.
3. Unequal distribution of income, corruption and mismanagement of poverty alleviation programmes created obstacles in the process of removing poverty in India.

Thus, employment generation, economic growth and poverty alleviation programmes failed to alleviate poverty in India. Government policies failed to tackle the majority of vulnerable groups.

The government has adopted National Social Assistance Programme to help the elderly, poor and destitute women. This programme was initiated on 15^th August 1995 to provide a 100% centrally sponsored scheme for the elderly as social assistance. This programme also focused on poor and destitute women who are alone and have no one to take care of them. The government provided financial assistance in the form of pensions to the elderly, poor and destitute women.

Unemployment and poverty are directly related to each other. That is, poverty increases with an increase in the unemployment level. This is because unemployed people are not able to support their families and educate their children. This makes the entire family dependent on the nation, and hence, an increase in unemployment level leads to an increase in the number of dependents on the working population. The per head consumption expenditure will tend to decline, implying an increase in people lying below the poverty line. The government initiated various programmes to alleviate poverty by generating employment opportunities to the poor such as Swarna Jayanti Shahari Rozgar Yojana (SJSRY), Prime Minister's Rozgar Yojana (PMRY) and Swarna Jayanti Gram Swarozgar Yojana (SGSY). Thus, there is a positive and direct relationship between poverty and the level of unemployment. 

I will apply under the Prime Minister's Rozgar Yojana (PMRY) for setting up a petty shop.

Prime Minister's Rozgar Yojana (PMRY) provides financial assistance to unemployed educated individuals. Under this scheme, educated individuals from low income families in rural and urban areas can avail financial assistance to set up a business. This scheme provides loans up to Rs 1,00,000 to start own enterprise and Rs 2,00,000 for other activities.

Nature of rural poverty is different from nature of urban poverty:

1. Occupation: The urban poor include people who have migrated from rural areas in search of employment, casual workers and self-employed as cobblers and vendors, whereas the rural poor include landless agricultural labourers and marginal farmers.
2. Standard of living: The living condition of the urban poor is better than the rural poor. There is a wide economic gap between the urban and rural poor.

Poverty shifted from rural to urban areas:

Poverty trend in India:

Source: Planning Commission Estimates

It is clearly indicated in the table that the level of poverty gets shifted from rural to urban areas. Decline in the poverty level is more in rural areas than in urban areas. The rural poverty has significantly declined from 56.4% to 28.3% over the years. On the other hand, urban poverty has decreased from 49% to 25.7% which is not so significant. Rural people migrated to urban areas in search of jobs, but they were not able to find jobs beyond subsistence. Hence, it added to the percentage of population living below the poverty line in urban areas.

Measures to overcome the problem of poverty:

1. Identifying the poorest group who is in need of assistance.
2. Allocation of funds for poverty alleviation programmes must be increased to meet the requirement.
3. Certain schemes need to be focused more on providing income-generating assets which can provide sustainable income for the poor.
4. Vocational training should be provided to the youth to earn their livelihood.
5. An enhanced delivery mechanism should be encouraged in schools so that the level of education is brought up to the minimum required standards.
6. Credit facilities through banks should be provided to save people from indebtedness to exploitative moneylenders.
7. Farmers should be provided land for cultivation and irrigation.
8. Targeted Public Distribution System (TPDS) should be adopted to provide food security to below poverty line (BPL) families. 

Following are some of the measures that can be adopted to improve their living conditions:

1. Targeted Public Distribution System (TPDS) should be adopted to provide them food security.
2. Provide training for skill development to the youth so that they become employable and can support their family financially. 
3. Provision of affordable housing so that their living conditions are improved.
4. Encourage the parents to send their children to school especially those below 14 years of age so that they can at least get primary education.
5. Create employment opportunities through government employment generation programmes so that they can work and earn for their living. 
6. Minimum financial support for meeting their basic needs can be provided by the government.