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Poverty in India

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In New Delhi, a woman wields a pickaxe on a footpath maintenance project while her husband rests and her baby sleeps

Although recent positive economic developments have helped the Indian middle-class a great deal, India still suffers from substantial poverty. The National sample survey organisation (NSSO) estimated that 22.15% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 26% in 2000[1]. The criterion used was monthly consumption of goods below Rs. 211.30 for rural areas and Rs. 454.11 for urban areas. 75% of the poor are in rural areas with most of them comprising daily wagers, self-employed households and landless labourers.

As of 2004, India's Human Development Index is 0.611, higher than that of nearby countries line Bangladesh (0.530) and Pakistan (0.539), but lower than Vietnam (0.709) or China (0.768).

Causes of poverty in India

The major causes for poverty have been:

  • high level of dependence on primitive methods of agriculture
  • rural urban divide
  • 75% of indian population depends on agriculture whereas the contribution of agriculture to the GDP was 22%
  • while services and industry have grown at double digit figures, agriculture growth rate has dropped from 4.8% to 2%

high level of inequality arising from rural-urban divide

  • protectionist policies pursued till 1991 that prevented high foreign investment [3][4]

Despite this, India currently adds 40 million people to its middle class every year.Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an estimated 300 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. At the current rate of growth, a majority of Indians will be middle-class by 2025. Literacy rates have risen from 52 percent to 65 percent in the same period.[5]

Historical trends

File:BPL Data GOI .png
Chart showing the percentage of population in India below poverty line
Caste and community profile of people below poverty line as reported in Sachhar committee report.
Percentage of population in 1999 – 2000 living below poverty line, by states. (Primary data: NSSO, 1999-2000.) States with lighter shades have more people living below the poverty line.[4]

The proportion of India's population below the poverty line has fluctuated widely in the past, but the overall trend has been downward. However, there have been roughly three periods of trends in income poverty.

1950 to mid-1970s: Income poverty reduction shows no discernible trend. In 1951, 47% of India's rural population was below the poverty line. The proportion went up to 64% in 1954-55; it came down to 45% in 1960-61 but in 1977-78, it went up again to 51%.

Mid-1970s to 1990: Income poverty declined significantly between the mid-1970s and the end of the 1980s. The decline was more pronounced between 1977-78 and 1986-87, with rural income poverty declining from 51% to 39%. It went down further to 34% by 1989-90. Urban income poverty went down from 41% in 1977-78 to 34% in 1986-87, and further to 33% in 1989-90.

After 1991: This post-economic reform period evidenced both progress and setbacks. Rural income poverty increased from 34% in 1989-90 to 43% in 1992 and then fell to 37% in 1993-94. Urban income poverty went up from 33.4% in 1989-90 to 33.7% in 1992 and declined to 31% in 1993-94 [6].

In summary, the NSS recorded poverty rates are:

Year Round Poverty Rate (%) Poverty Reduction (over 5 years) (%)
1977-78 32 51.3
1983 38 45.65 11.01
1987-88 43 39.09 14.37
1993-94 50 37.27 4.66
1999-2000 55 26.09 30.00
2004-2005 61 22.15 15.10

History of attempts to alleviate poverty

Since the early 1950s, government has initiated, sustained, and refined various planning schemes to help the poor attain self sufficiency in food production. Probably the most important initiative has been the supply of basic commodities, particularly food at controlled prices, available throughout the country as poor spend about 80 percent of their income on food.

Programmes like Food for work and National Rural Employment Programme have attempted to use the unemployed to generate productive assets and build rural infrastructure.[4] Other anti poverty programs include Rural Landless Employment Guarantee Programme.

The Rural Landless Employment Guarantee Programme was instituted in FY 1983 to address the plight of the hard-core rural poor by expanding employment opportunities and building the rural infrastructure as a means of encouraging rapid economic growth. There were many problems with the implementation of these and otherschemes, but observers credit them with helping reduce poverty. To improve the effectiveness of the National Rural Employment Programme, in 1989 it was combined with the Rural Landless Employment Guarantee Programme and renamed Jawahar Rozgar Yojana, or Jawahar Employment Plan (see Development Programs, ch. 7).

In August 2005, the Indian Parliament passed the Rural Employment Guarantee Bill, the largest programme of this type in terms of cost and coverage, which promises 100 days of minimum wage employment to every rural household, in 200 of India's 600 districts. Template:Inote The question of whether economic reforms have reduced poverty or not has fueled debates without generating any clearcut answers, and has also put political pressure on further economic reforms, especially those involving downsizing of labour and reduction of agricultural subsidies.[3][7]

Outlook for poverty alleviation

Eradication of poverty in India can only be a long-term goal. Poverty alleviation is expected to make better progress in the next 50 years than in the past, as a trickle-down effect of the growing middle class. Increasing stress on education, reservation of seats in government jobs and the increasing empowerment of women and the economically weaker sections of society, are also expected to contribute to the alleviation of poverty. It is incorrect to say that all poverty reduction programmes have failed. The growth of the middle class (which was virtually non-existent when India became a free nation in August 1947) indicates that economic prosperity has indeed been very impressive in India, but the distribution of wealth is not at all even.

Controversy over extent of poverty reduction

While overall poverty in India has declined, the extent of poverty reduction is often debated[8]. The Indian debate has run parallel to, and is itself a large part of, the wider debate about globalization and poverty. The economic reforms of the early 1990s were followed by rates of high economic growth. The effects on poverty remain controversial, and the official numbers published by the Government of India, showing a reduction of poverty from 36% (1993–94) to 26% (1999 – 00), to 22% (2004 - 05), have been challenged both for allegedly showing too little and too much poverty reduction[9].

While there is a consensus on the fact that liberalization has led to a reduction of income poverty, the picture is not so clear if one considers other non-pecuniary dimensions (such as health, education, crime and access to infrastructure). With the rapid economic growth that India is experiencing, it is likely that a significant fraction of the rural population will continue to migrate toward cities, making the issue of urban poverty more significant in the long run [10].

Economist Pravin Visaria has defended the validity of many of the statistics that demonstrated the reduction in overall poverty in India, as well as the declaration made by India's Finance Minister Yashwant Sinha that poverty in India has reduced significantly. He insisted that the 1999-2000 survey was well designed and supervised and felt that just because they did not appear to fit preconceived notions about poverty in India, they should not be dismissed outright[11]. Nicholas Stern, vice president of the World Bank, has published defenses of the poverty reduction statistics. He argues that increasing globalization and investment opportunities have contributed significantly to the reduction of poverty in the country. India, together with China, have shown the clearest trends of globalization with the accelerated rise in per-capita income[12].


References

  1. ^ Economic Times
  2. ^ India tackles adult illiteracyBBC
  3. ^ a b Datt, Ruddar & Sundharam, K.P.M. "22". Indian Economy. pp. 367, 369, 370.{{cite book}}: CS1 maint: multiple names: authors list (link)
  4. ^ a b c Cite error: The named reference survey was invoked but never defined (see the help page).
  5. ^ Dr. Marvin J, Cetron
  6. ^ Infochange Poverty
  7. ^ "Jawahar gram samriddhi yojana". Retrieved July 9. {{cite web}}: Check date values in: |accessdate= (help); Unknown parameter |accessyear= ignored (|access-date= suggested) (help)
  8. ^ Poverty in IndiaWorld Bank
  9. ^ Data and dogma: the great Indian poverty debateA. Deaton (Princeton Univ.) and V.Kozel(World bank)
  10. ^ The Multidimensions of Urban Poverty in India,Centre de Sciences Humaines - New Delhi
  11. ^ Lifting The Poverty Veil J. Ramesh, India Today
  12. ^ World BankICRIER


Further Reading


External links

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