Poverty has a simple definition. Its onset is when a person or family does not have enough to meet their basic needs. Food, clothing, and shelter are the most basic needs. Contextually, poverty can have varied meanings, such as no electricity, no sanitization facility, no education, etc. But the worldwide meaning of poverty is rooted in the most essentials required for sustaining a person.
The World Bank Organization classified poverty as being hungry and not having food to eat, lack of shelter, being sick, and not being able to afford medicine. As per the World Bank, poverty is not about not having access to school or being illiterate.
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How is Poverty Measured?
In most countries, poverty is measured by comparing a person’s or family’s income to a national threshold amount. Any person or family with income below this threshold is said to be poor. In India, this category of people is classified into the BPL (Below Poverty Line) category.
There are Various Phases to Measure Poverty:
Identification Stage
Governments across the world have their thresholds for defining poverty. On both sides of this threshold, the poor, the middle-class, and the rich are identified. There has always been discussions and deliberations on the welfare indicators and dimensions that are to be used for measuring poverty. The two approaches in this regard are absolute and relative regarding the median poverty line.
Absolute Poverty vs. Relative Poverty
Absolute poverty is when the income of a household falls below a certain threshold. Lack of income makes it not possible for a person or family to take care of its basic needs. In such a state of poverty, there is no influence on the country's economic growth on the person or family. Mainly because poverty becomes a vicious cycle, coming out of it may take drastic measures by the individuals of the family. Absolute poverty measures household income based on a pre-determined income level. This threshold income level is generally not revised and is constant. Absolute poverty varies by country.
Relative poverty is when households have money but still not enough money. This type of poverty is less severe. It can be changed depending on the economic conditions of the country. Sometimes referred to as relative deprivation, people in this category may not enjoy the same lifestyle as families above the poverty line. As an example, a household that does not have a television, Internet connection, refrigerator, microwave oven in a developed country could be classified as having relative poverty.
What is Multi-dimensional Deprivation?
Multi-dimensional deprivation is another type of poverty that is a combination of absolute poverty and relative poverty, as well as severe poverty. It is linked to being socially isolated. People in these strata of society lack access to essential goods, commodities, amenities, or services. Non-monetary indicators and deprivation variables are used to frame poverty measures. Multi-dimensional deprivation is a form of severe poverty. The following image shows data from the World Bank on regional disparities.
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What is Severe Poverty?
Extreme poverty, absolute poverty, or severe poverty are defined by the United Nations as poverty. The affected are severely or fatally denied access or do not have the means to provide for food, shelter, clothing, and medicines. So this type of poverty is a combination of absolute poverty and multi-dimensional poverty.
What are Some of the Factors that Exacerbate Absolute and Relative Poverty?
Extreme poverty is difficult to shed off by societies unless societies and the government undertake a concerted, focused effort. Some of the factors that prolong or worsen poverty are:
Weak Institutions
Despite receiving funding from international charitable entities and the local government or beneficiaries, institutions that implement poverty eradication schemes might be plagued by fraudulent practices. Corruption and misappropriation of funds could deny people below the poverty line a chance to redeem themselves and get out of the crisis. Weak institutions also refer to governments, government policies, and schemes that do not adopt a structured approach to mitigate poverty, slow it down, and eventually eradicate it. They seldom have the long term vision and focus to achieve it.
Civil Conflict
In many countries, internal strife squeezes all government resources, including relief funds and reserve funds, leaving little or nothing for eradicating poverty. The aftereffects of civil wars are far-reaching – their economic impact on a nation last several years. During this time, people affected with absolute poverty are unable to rebuild their situations because of incumbent economic conditions. A relative poverty definition is not applicable in such regions as generally, a majority of the population is affected.
Did you know? Children and young adults represent two-thirds of the world's population affected by poverty, and amongst this demographic, women are the most affected.
Some Facts to Ponder Over
In the Middle East and North Africa, as of 2018, poverty doubled from 3.8% to 7.2% because of the Yemen and Syrian war. That almost 70 people poor per 1000 people. Absolute poverty definition, in this case, is due to war contributed to economic strife.
Multi-dimensional poverty affects children the most. 644 million of those affected are children.
FAQs on Understanding Causes of Poverty
1. What are the main economic causes of poverty in India as per the NCERT syllabus?
The main economic causes of poverty in India are multifaceted and deeply rooted in the country's economic structure. Key factors include:
- Low Rate of Economic Development: Historically slow growth in national income and per capita income failed to generate sufficient resources and opportunities for the rapidly growing population.
- High Population Growth: A high growth rate of population increases the dependency burden and dilutes the benefits of economic growth, putting pressure on resources.
- Widespread Unemployment: Chronic unemployment and underemployment, especially in rural areas (disguised unemployment) and among the urban educated, directly result in a lack of purchasing power.
- Inflationary Pressures: A continuous rise in the prices of essential commodities, particularly food items, erodes the real income of the poor, making it difficult for them to meet their basic needs.
- Unequal Distribution of Wealth: High levels of income and asset inequality mean that the benefits of growth are concentrated in the hands of a few, leaving a large segment of the population in poverty.
2. How is poverty measured in India, and what is the concept of a poverty line?
In India, poverty is primarily measured using the concept of a poverty line. This is a benchmark representing the minimum level of income or consumption required to meet basic human needs. It is typically determined based on the monetary value of a minimum calorie intake, known as the Monthly Per Capita Expenditure (MPCE). Individuals or households with consumption expenditure below this line are classified as Below Poverty Line (BPL). The NITI Aayog is the nodal agency for estimating poverty in India, which periodically uses data from the National Sample Survey Office (NSSO) to update these estimates.
3. What is the difference between absolute poverty and relative poverty? Give an example for each.
Absolute and relative poverty are two different ways to understand deprivation. The key difference lies in the benchmark used for comparison.
- Absolute Poverty refers to a condition where a person lacks the financial resources to afford fundamental necessities like food, clothing, and shelter. It is measured against a fixed standard (the poverty line) that remains constant over time. For example, a family that cannot afford two meals a day or a safe place to live is in absolute poverty.
- Relative Poverty refers to a condition where a person's income or standard of living is significantly lower than the average standard of living in their society. It is a measure of inequality. For example, a household in a developed city that cannot afford an internet connection or a refrigerator might be considered relatively poor, even if they are not in absolute poverty.
4. Explain the concept of the 'vicious cycle of poverty'.
The vicious cycle of poverty is a concept that explains why poverty tends to persist across generations. It operates in a circular manner where one factor of poverty leads to another, creating a self-perpetuating trap. The cycle can be described as follows: Low income leads to low savings and investment. This results in poor health, nutrition, and a lack of education (low human capital). Low human capital, in turn, leads to low productivity and skills, which again results in low income. This cycle makes it extremely difficult for individuals and communities to escape poverty without external intervention.
5. What are some key social factors that contribute to poverty in India?
Social factors create barriers that prevent people from accessing opportunities and resources, thus causing and perpetuating poverty. Key social factors in India include:
- Caste System: Historically, the caste system has restricted occupational mobility and access to education and resources for certain social groups, leading to long-term poverty.
- Gender Inequality: Discrimination against women in terms of education, health, and property rights limits their economic potential and contributes to the poverty of the entire household.
- Lack of Education: High illiteracy rates prevent individuals from securing better-paying jobs, trapping them in low-wage, unskilled labour.
- Social Customs: Extravagant spending on social ceremonies like weddings and funerals often leads to heavy debt, pushing families into poverty.
6. How does unemployment in urban areas differ from unemployment in rural areas as a cause of poverty?
While unemployment is a universal cause of poverty, its nature differs between urban and rural settings. In rural areas, poverty is often caused by seasonal and disguised unemployment. Seasonal unemployment occurs because agriculture offers work for only a few months a year. Disguised unemployment happens when more people are employed in a job (like a family farm) than are actually needed, meaning their marginal productivity is zero. In urban areas, poverty is more commonly linked to industrial and educated unemployment, where there are not enough jobs for factory workers or for the large number of educated individuals, leading to a direct loss of income and inability to meet urban living costs.
7. What is meant by 'multidimensional poverty' and how does it provide a better understanding of the issue?
Multidimensional poverty is a broader measure of poverty that goes beyond just income or consumption. It captures the various deprivations an individual faces simultaneously in different aspects of their life. Instead of just looking at who is poor based on money, it assesses poverty based on indicators in three key dimensions:
- Health: Measured by factors like nutrition and child mortality.
- Education: Measured by years of schooling and school attendance.
- Standard of Living: Measured by access to electricity, sanitation, clean drinking water, and housing.
This approach provides a more holistic and accurate picture of poverty, as it shows that a person can be income-rich but still suffer from poor health or lack of education.
8. Why are some government poverty alleviation programmes in India not fully effective?
Despite numerous government initiatives, the effectiveness of poverty alleviation programmes can be limited due to several reasons. These include:
- Implementation Gaps: Inefficiencies and corruption at the administrative level often prevent the benefits from reaching the intended recipients.
- Lack of Proper Targeting: It is difficult to identify and target the genuinely needy, leading to the inclusion of non-poor and exclusion of the deserving poor (leakages).
- Insufficient Resources: The financial resources allocated to these programmes are often inadequate compared to the magnitude of the poverty problem.
- Lack of Active Participation: The passive role of the poor and a lack of community involvement in the planning and implementation process can reduce the programme's impact and sustainability.
