Economics

Chapter 3 POVERTY AS A CHALLENGE

I. Choose the correct answer:

1. NFWP is stand for:

(a) National Federation for Work and Progress
(b) National Forest for Wildlife Protection
(c) National Food and Wheat Processing
(d) National Food for Work Programme

2. How many people in India live below the poverty line?

(a) 30 crores (b) 26 crores (c) 28 crores (d) 24 crores

3. Which social group is most vulnerable to poverty in India?

(a) Scheduled castes (b) Scheduled tribes
(c) Casual labourers (d) All the above

4. Poverty line in rural areas is (As per 1999 – 2000 prices)

(a) Rs 328 (b) Rs. 370 (c) Rs 454 (d) Rs. 460

5. What is the poverty ratio in the state of Orissa?

(a) 50% (b) 47% (c) 60% (d) 57%

6. In which state have the land reform measures helped to reduce poverty?
(a) Tamil Nadu (b) Punjab (c) West Bengal (d) Kerala

7. In which state is the public distribution system responsible for the reduction in poverty?
(a) Andhra Pradesh (b) Tamil Nadu
(c) Both (a) and (b) (d) None of the above

8. Which of the following is responsible for high poverty rates?

(a) Huge income inequalities (b) Unequal distribution of land
(c) Lack of effective implementation of land reforms
(d) All the above

9. Nutritional level of food energy is expressed in the form of

(a) calories per day (b) wheat consumption
(c) rice consumption per day (d) none of the above

10. Poverty ratio in India as compared to Pakistan is

(a) same (b) half (c) two times (d) two and a half times
11. Which one from the following is considered as poor?
(a) A rich landlord (b) A businessman
(c) A landless labourer (d) A teacher

12. Which state has the largest percentage of poors in India?

(a) Bihar (b) Orissa (c) Kerala (d) Punjab

13. Who advocated that India would be truly independent only when the poorest of its
people become free of human suffering ?
(a) Mahatma Gandhi (b) Indira Gandhi
(c) Jawahar lal Nehru (d) Subhash Chandra Bose

14. Who do not come under the category of urban poor?

(a) The casual workers (b) The unemployed
(c) The shopkeepe (d) Rickshawpullers

15. Which scheme was started in 1993 to create self-employment opportunities for
educated unemployed youth in rural areas and small towns?
(a) Prime Minister Rojgar Yojana
(b) National Rural Employment Guarantee Act
(c) Rural Employment Generation Programme
(d) Swarnajayanti Gram Swarojgar Yojana

16. Which one of the social groups is vulnerable to poverty?

(a) Scheduled caste (b) Urban casual labour
(c) Rural agricultural households (d) All the above

17. Which one are not the major causes of income inequality in India?
(a) Unequal distribution of land (b) Lack of fertile land
(c) Gap between rich and the poor (d) Increase in population

18. The calorie requirement is higher in the rural areas because:

(a) they do not enjoy as much as people in the urban areas.
(b) food items are expensive. (c) they are engaged in mental work.
(d) people are engaged in physical labour.

19. Which of the following is not a valid reason for the poverty alleviation programme in
India?
(a) Lack of proper implementation (b) Lack of right targeting
(c) Corruption at the highest level (d) Overlapping of schemes

20. Which one from the following states is above the national average of poverty ratio?
(a) West Bengal (b) Tamil Nadu (c) Andhra Pradesh (d) Karnataka
II. Answer the followings:

1. Describe how the poverty line is estimated in India.

A common method used to measure poverty is based on income or consumption levels. A
person is considered poor if his or her income or consumption level falls below a given
“minimum level” necessary to fulfill basic needs. While determining the poverty line in
India, a minimum level of food requirement, clothing, footwear, fuel and light, educational
and medical requirement, etc. are determined for subsistence. These physical quantities are
multiplied by their prices in rupees. The resent formula for food requirements while
estimating the poverty line is based on the desired calorie requirement.

As per 2000 figures; a family of five which is earning less than Rs. 1,640 per month is
considered to be living below the poverty line. This figure is Rs. 2,270 per month for the
urban area. The expected calorie intake has been fixed at 2400 calories per person in rural
areas and 2100 calories in urban areas. A person consuming less than this amount is
considered to be living below the poverty line.

2. Do you think that the present methodology of poverty estimation is appropriate?

No, the present methodology of poverty estimation is not appropriate because it takes into
account only the basic needs of food, clothing, fuel etc. But the quality of these basic
necessities is the lowest quality available. The amount which is fixed as the poverty line
does not include the margin for the constant price fluctuations. The poverty line should
include some corrections for inflation and market fluctuations.

3. Describe poverty trends in India since 1973.

As per the data, there has been a substantial decline in poverty ratios in India from 45
percent in 1993-94 to 37.2 percent in 2004-05. There was a further decline to 22 percent in
2011-12. Although the number of poor people declined from 1973 to 1993, there was a
significant reduction in the number of the poor (about 407 million) in 2004-05 and a
further 270 million in 2011-12 with an average annual decline of 2.2 percent. It may also
be noted that poverty ratios always remained higher in rural areas as compared to urban
areas. If the present trend continues, the people below the poverty line may come down to
less than 20 percent in the next few years.

4. Discuss the major reasons for poverty in India.

There were a number of causes for the widespread poverty in India. One historical reason
is the low level of economic development under the British colonial administration. The
low rate of growth persisted until the nineteen-eighties. This resulted in fewer job
opportunities and a low growth rate of incomes. This was accompanied by a high growth
rate of the population. The two combined to make the growth rate of per capita income
very low. Another feature of high poverty rates has been the huge income inequalities.
One of the major reasons for this is the unequal distribution of land and other resources.
Despite many policies, we have not been able to tackle the issue in a meaningful manner.
5. Identify the social and economic groups which are most vulnerable to poverty in India.
Social groups, which are most vulnerable to poverty, are scheduled caste and scheduled
tribe households. Similarly, among the economic groups, the most vulnerable groups are
the rural agricultural labour households and urban casual labour households.

6. Describe global poverty trends.

The proportion of people in developing countries living in extreme economic poverty—
defined by the World Bank as living on less than $1 per day—has fallen from 28 percent
in 1990 to 21 percent in 2001. Although there has been a substantial reduction in global
poverty, it is marked with great regional differences. Poverty declined substantially in
China and Southeast Asian countries as a result of rapid economic growth and massive
investments in human resource development. The number of poor people in China has
come down from 606 million in 1981 to 212 million in 2001.

In the countries of South Asia (India, Pakistan, Sri Lanka, Nepal, Bangladesh, Bhutan) the
decline has not been as rapid. Despite the decline in the percentage of the poor, the number
of poor has declined marginally from 475 million in 1981 to 428 million in 2001. Because
of different poverty line definition, poverty in India is also shown higher than the national
estimates. In Sub-Saharan Africa, poverty in fact rose from 41 percent in 1981 to 46
percent in 2001 (see graph 3.3). In Latin America, the ratio of poverty remained the same.

Poverty has also resurfaced in some of the former socialist countries like Russia, where
officially it was nonexistent earlier. The proportion of people living under poverty in
different countries is defined by the international poverty line (means population below $1
a day).

7. Describe the current government strategy of poverty alleviation.

The current anti-poverty strategy of the government is based broadly on two planks

• promotion of economic growth

• targeted anti-poverty programs.

8. What do you understand by human poverty?

Many scholars advocate that we must broaden the concept of poverty into human poverty.
A large number of people may have been able to feed themselves. But they do not have
education or shelter or health care or job security or self-confidence.
They are not free from caste and gender discrimination. The practice of child labour is still
common.
9. Describe how the poverty line is estimated in India.
Removal of poverty is one of the major objectives of the Indian developmental strategy.
The current government strategy of poverty alleviation is based on two planks:

1. Promotion of Economic Growth

2. Targeted Anti-poverty Programmes

Some of the targeted anti-poverty programmes undertaken by the government are:

1. Prime Minister’s Rozgar Yojana (PMRY). This programme was started in 1993. It
aims at creating self-employment opportunities for educated unemployed youth in
rural areas and small towns.
2. Pradhan Mantri Gramodaya Yojana (PMGY). This programme was launched in
2000. It aims at creating and improving basic services like primary health, primary
education, rural shelter, rural drinking water and rural electrification.
3. Rural Employment Generation Programme (REGP). This programme was
launched in 1995. It aims at creating self-employment opportunities in rural areas and
urban towns.
4. Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA). This act was passed in September 2005. The act provides 100 days
assured employment every year to every rural household in 200 districts. Later, the
scheme would be extended to 600 districts. One-third of the proposed jobs have been
reserved for women.

10. Who are the poorest of the poor?

(ii) Women, children (especially the girl child) and elder people in a poor family are
regarded as the poorest of the poor because they are systematically denied equal access to
resources available to the family.

11. What are the main features of the National Rural Employment Guarantee Act 2005?
The main features of the National Rural Employment Guarantee Act 2005 are:

o The Act assures 100 days of employment every year to every rural household.
o One-third of the jobs are reserved for women.
o It also aimed at sustainable development to address the cause of drought,
deforestation and soil erosion.
o The share of SCs, STs and women are 23 percent, 17 percent and 53 per cent
respectively.
o Under this, the average wage has increased from ₹ 65 in 2006-07 to ₹ 132 in
2013-14.
o The scheme provided employment to 220 crores person-days of employment to
4.78 crore households.