Introduction to the Module
Poverty and development issues lie at the heart of India's socio-economic challenges, profoundly impacting the lives of a significant portion of its population. Despite decades of economic growth and various policy interventions, addressing poverty remains a multifaceted problem intertwined with issues of inequality, unemployment, and access to basic services.
This module offers a comprehensive examination of the different dimensions and causes of poverty in India, analyzes the evolution and effectiveness of government poverty alleviation and social security programs, and delves into the persistent challenge of inequality—spanning income, wealth, opportunity, and regional disparities—along with the overarching goal of achieving inclusive growth.
4.1.1: Dimensions of Poverty
Poverty is a complex phenomenon, extending beyond mere lack of income to encompass multiple deprivations.
4.1.1.1: Absolute vs. Relative Poverty
Absolute Poverty
- Definition: A condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information. It depends not only on income but also on access to social services.
- Measurement: Measured against a fixed standard of living, typically a "poverty line" representing the minimum income required to acquire basic necessities.
- Relevance: Primarily focuses on survival and basic subsistence.
- Source: World Bank; Ramesh Singh, Indian Economy.
Relative Poverty
- Definition: A condition in which people lack the minimum amount of income or resources needed to maintain the average standard of living in the society in which they live. It is about comparative disadvantage.
- Measurement: Defined in relation to the median or average income/expenditure of a given population (e.g., falling below 50% of the median income).
- Relevance: Focuses on inequality and social exclusion, even if basic needs are met.
- Source: UN Development Programme (UNDP); Sociological texts.
4.1.1.2: Multidimensional Poverty Index (MPI)
A measure of acute poverty that captures multiple deprivations faced by individuals in developing countries in their health, education, and living standards. Developed by UNDP and Oxford Poverty and Human Development Initiative (OPHI).
Components & Indicators (weighted equally across 3 dimensions):
Health (1/3 weight)
- Nutrition: Malnourished person under 70 or child under 5.
- Child Mortality: Child under 18 died in household in last 5 years.
Education (1/3 weight)
- Years of Schooling: No member aged 10+ completed 6 years of schooling.
- School Attendance: Any school-aged child not attending school.
Living Standards (1/3 weight)
- Cooking Fuel, Sanitation, Drinking Water, Electricity, Housing, Assets.
India's Performance (Latest MPI 2023 - UNDP/OPHI, based on NFHS-5 2019-21 data):
- Significant Decline: India successfully reduced its MPI headcount from 55.1% in 2005-06 to 16.4% in 2019-21, lifting a staggering 415 million people out of poverty in 15 years.
- Deprivations: The biggest reductions were in indicators like "cooking fuel", "sanitation", and "access to drinking water".
- Still Challenges: Despite progress, India still has the largest number of poor globally (230.1 million in 2019-21), particularly in rural areas and among certain social groups.
- Source: UNDP Human Development Report (MPI updates), NITI Aayog's National MPI dashboard.
4.1.1.3: Poverty Lines & Estimation Debates
A threshold of income or consumption expenditure that distinguishes the poor from the non-poor. India has a long history of official poverty estimation, starting with the Dandekar and Rath (1971) approach, followed by various expert groups.
- Approach: Shifted from solely calorie consumption-based poverty line to a multi-commodity poverty line incorporating expenditure on food, education, health, clothing, and footwear.
- Recommendations: Proposed a poverty line of Rs. 27 per person per day for rural areas and Rs. 33 per person per day for urban areas (2011-12 prices).
- Outcome: Resulted in a higher poverty headcount than previous estimates (21.9% in 2011-12).
- Approach: Re-evaluated the poverty line, considering separate consumption baskets for rural and urban areas and introducing a new methodology based on certain normative levels of adequate nourishment, clothing, shelter, education, and essential non-food expenses.
- Recommendations: Proposed a higher poverty line of Rs. 32 per person per day for rural areas and Rs. 47 per person per day for urban areas (2011-12 prices).
- Outcome: Led to a higher poverty headcount than Tendulkar estimates (29.5% in 2011-12).
- Low Poverty Line: Criticism that the official poverty lines are too low, not reflecting actual living costs.
- Methodology: Debates over consumption expenditure vs. income, calorie norms, and inclusion of non-food items.
- Urban-Rural Divide: Differences in cost of living between urban and rural areas.
- Lack of Consensus: No single universally accepted poverty line, leading to challenges in measuring progress.
- Absence of New Official Data: India has not updated its official poverty estimates since 2011-12 (NSO's 2017-18 consumption expenditure survey data was withheld).
- Source: Economic Survey; Planning Commission (now NITI Aayog) reports; Ramesh Singh.
4.1.2: Causes of Poverty in India
Poverty in India is a complex outcome of intertwined economic, social, and political/governance factors.
Economic Factors
- Unemployment & Underemployment: Lack of income, reduced purchasing power.
- Low Productivity: Subsistence farming, small landholdings, informal sector.
- Inflation: High food inflation disproportionately affects the poor.
- Debt (Indebtedness): Farmers trapped in debt cycle, high interest rates.
- Lack of Assets: Landlessness, limited access to financial capital.
Source: Economic Survey; Ministry of Labour & Employment; NABARD reports.
Social Factors
- Caste: Historical discrimination, occupational segregation, exclusion.
- Gender: Feminization of poverty, wage gap, lack of asset ownership.
- Disability: Discrimination in education/employment, lack of accessibility.
- Illiteracy & Lack of Skills: Restricts access to formal sector jobs.
- Lack of Access to Basic Services: Inadequate healthcare, education, water, sanitation.
Source: NCERT Class 12; Ministry of Social Justice; Oxfam India reports.
Political/Governance Factors
- Corruption: Leakage of funds, bribery.
- Ineffective Implementation of Schemes: Bureaucratic hurdles, lack of monitoring, political will.
- Exclusion: Marginalized groups left out due to lack of documents/awareness.
- Weak Local Governance: PRIs/ULBs lack resources and capacity.
Source: Second ARC reports; CAG reports; NITI Aayog.
4.1.3: Government Poverty Alleviation Programs
India has a long history of anti-poverty programs, evolving significantly post-1991.
Rural Programs
MGNREGA (2005)
Guarantees 100 days of wage employment to adult members of any rural household willing to do unskilled manual work. Rights-based approach.
PM-KISAN (2019)
Provides income support of Rs. 6,000 per year to all eligible farmer families in three equal installments. Direct income support.
PMAY-G (2016)
Financial assistance for construction of pucca houses to eligible rural households. Addresses rural housing shortage.
PMGSY (2000)
Provides all-weather road connectivity to unconnected habitations. Improves market access, education, healthcare.
NRLM (2011)
Organizes rural poor into SHGs, provides financial assistance and capacity building for livelihood activities. Women's empowerment.
Urban Programs
NULM (2013)
Aims to reduce poverty and vulnerability of urban poor by enabling access to self-employment and skilled wage employment opportunities.
Social Security
NSAP (1995)
Financial assistance to elderly, widows, persons with disabilities from BPL households (IGNOAPS, IGNWPS, IGNDPS, NFBS).
PMJJBY (2015)
Life insurance scheme, Rs. 2 lakh coverage for death due to any cause at a low premium.
PMSBY (2015)
Accidental death and disability insurance scheme, Rs. 2 lakh coverage at a very low premium.
APY (2015)
Guaranteed minimum pension for unorganized sector workers, contributing to long-term financial security.
Food Security
NFSA (2013)
Provides for food and nutritional security by ensuring access to adequate quantity of quality food at affordable prices. Covers up to 75% rural and 50% urban population.
PDS Reforms
- Targeting & Leakage Reduction (computerization, Aadhaar-based authentication).
- One Nation One Ration Card (ONORC): Portability for beneficiaries.
Skill Development
Skill India Mission (2015)
Umbrella initiative to integrate various skilling efforts, aiming to train over 40 crore people (initial target). Addresses skill gap, boosts employability.
PMKVY (2015)
Flagship scheme of Skill India Mission, providing short-term skill training to youth to make them employable.
4.1.4: Inequality
Inequality, particularly income and wealth disparities, is a growing concern that often exacerbates poverty and hinders inclusive development.
4.1.4.1: Income & Wealth Inequality
Key Trends in India
- Rising Inequality: Significant rise in both income and wealth inequality, especially post-1991 reforms.
- Extreme Concentration: Small percentage of population (top 1% or 10%) holds disproportionately large share of national income/wealth.
Gini Coefficient & Oxfam Reports
Gini Coefficient: Statistical measure (0=perfect equality, 1=perfect inequality). India's Gini has shown an increasing trend.
Oxfam India's 'Inequality: The India Story' 2024: Highlights that the top 10% own >60% of India's wealth, and the top 1% own >40%. Emphasizes gender & caste-based disparities.
4.1.4.2: Inequality of Opportunity
Unequal chances for individuals to improve their socio-economic status due to factors beyond their control (e.g., birth circumstances, caste, gender, region), rather than differences in effort or talent.
Access to Education
Quality disparity between public/private, urban/rural. Limited access to higher education for marginalized groups.
Access to Health
Unequal access to quality healthcare. High out-of-pocket expenditure is a major barrier.
Access to Digital Resources
Digital Divide: Unequal access to internet, devices, literacy. Excludes from online services, jobs.
Source: NFHS data; AISHE reports; NITI Aayog; WEF IDI.
4.1.4.3: Regional Disparities
Unequal levels of development and socio-economic progress across different states or regions within India.
Causes
- Historical Factors (colonial legacy).
- Geographical Factors (resource endowments).
- Policy & Governance (uneven investment).
- Social Factors (caste, human capital).
Implications
- Migration (rural-urban, inter-state).
- Social Unrest (regionalism, Naxalism).
- Inefficient Resource Allocation.
- Political Fragmentation.
Policy Responses
- Special Category Status.
- Targeted Schemes (Aspirational Districts).
- Fiscal Transfers (Finance Commission).
- Infrastructure Development.
Source: Economic Survey; NITI Aayog; Finance Commission reports.
4.1.4.4: Inclusive Growth
Economic growth that is distributed fairly across society and creates opportunities for all, including the poor and marginalized. It is growth with equity. Key Pillars: Equity, equality of opportunity, participation, social security, environmental sustainability, and regional balance.
Challenges
- High Inequality (income & wealth).
- Jobless Growth (not enough quality jobs).
- Informal Sector Dominance.
- Social Exclusion (caste, gender, disability).
- Regional Disparities.
- Climate Change impacts on poor.
Strategies
- Human Capital Development (education, health, skill).
- Employment Generation (labor-intensive, MSMEs).
- Robust Social Safety Nets (universalizing schemes).
- Land Reforms & Inclusive Finance.
- Bridging Digital Divide.
- Strengthening Local Governance.
- Progressive Taxation.
Source: NITI Aayog; World Bank; Economic Survey; Govt of India's 12th Five Year Plan document.
Prelims-ready Notes
- Poverty: Absolute (basic needs), Relative (societal average). MPI (UNDP/OPHI): 3 dimensions (Health, Education, Living Standards), 10 indicators. India lifted 415M out of poverty (2005-06 to 2019-21), now 16.4% MPI poor (2023 report). Poverty Lines: Tendulkar (2009) Rural Rs 27/day, Urban Rs 33/day (2011-12) - 21.9% poor. Rangarajan (2014) Rural Rs 32/day, Urban Rs 47/day (2011-12) - 29.5% poor.
- Causes of Poverty: Economic (Unemployment, Low Productivity), Social (Caste, Gender, Illiteracy), Political/Governance (Corruption, Ineffective Implementation).
- Poverty Alleviation Programs:
- Rural: MGNREGA (2005), PM-KISAN (2019), PMAY-G (2016), PMGSY (2000), NRLM (2011).
- Urban: NULM (2013).
- Social Security: NSAP (1995), PMJJBY (2015), PMSBY (2015), APY (2015).
- Food Security: NFSA 2013, PDS reforms, ONORC.
- Skill Development: Skill India Mission (2015), PMKVY (2015).
- Inequality: Income & Wealth (Rising trend, Gini coefficient, Oxfam Reports highlighting extreme wealth concentration), Opportunity (Unequal access to quality education, health, digital), Regional Disparities, Inclusive Growth (Growth with equity).
Prelims Summary Table: Key Government Poverty & Welfare Schemes
| Scheme Name | Launch Year | Ministry | Primary Objective/Focus Areas |
|---|---|---|---|
| MGNREGA | 2005 | Rural Development | 100 days guaranteed rural wage employment. |
| PM-KISAN | 2019 | Agriculture & Farmers Welfare | Income support (Rs. 6000/year) to farmer families. |
| PMAY-Gramin | 2016 | Rural Development | Housing for rural poor. |
| NRLM (DAY-NRLM) | 2011 | Rural Development | Livelihoods through SHGs (women's empowerment). |
| NFSA | 2013 | Consumer Affairs, Food & P.D. | Legal entitlement to subsidized food grains. |
| PMJJBY & PMSBY | 2015 | Finance | Affordable life & accident insurance. |
| APY | 2015 | Finance | Guaranteed minimum pension for unorganized sector. |
| Skill India Mission / PMKVY | 2015 | Skill Dev. & Entrep. | Skilling youth for employability. |
| NULM (DAY-NULM) | 2013 | Housing & Urban Affairs | Poverty reduction & livelihood support for urban poor. |
Mains-ready Analytical Notes
Major Debates/Discussions
- Tendulkar vs. Rangarajan: Adequacy of poverty line, underestimation criticism.
- Consumption vs. Income: Debate on methodology.
- Relevance of MPI: Holistic picture, different narrative from traditional lines.
- Data Gap: Absence of new official consumption expenditure data post-2011-12.
- Should focus be on high economic growth ("trickle-down") or direct redistribution?
- Indian Context: Post-1991 growth reduced poverty but increased inequality. Shift towards direct transfers.
- Challenge: Balancing growth imperatives with equity concerns.
- Strengths: Safety net (MGNREGA), food security (NFSA), women empowerment (NRLM).
- Weaknesses: Implementation gaps, corruption, leakages, targeting errors, inadequate funding, lack of capacity.
- Conclusion: Progress made, but deep-seated issues persist, requiring continuous evaluation and better governance.
Historical/Long-term Trends & Changes
Poverty Reduction
Significant strides in reducing absolute poverty, accelerated post-1991. MPI data highlights this progress.
Rising Inequality
Concurrent with poverty reduction, income and wealth inequality have steadily risen, a major socio-economic concern.
Shifting Policy Focus
From early community development (pre-LPG) to a mix of growth-oriented policies and targeted direct benefit transfer/social security (post-LPG).
From Supply-side to Rights-based
Shift from ad-hoc welfare to rights-based entitlements (e.g., MGNREGA, NFSA), providing legal guarantees.
Contemporary Relevance/Significance/Impact
Post-COVID-19 Impact
Pandemic disproportionately affected poor, increasing job losses, food insecurity. PMGKAY was crucial.
Digital India & DBT
Improved transparency and reduced leakages in welfare schemes through direct benefit transfers.
Aspirational Districts
Focuses on improving socio-economic indicators in India's most backward districts, addressing regional disparities.
Universal Basic Income
Debate around UBI as a potential replacement for fragmented welfare schemes to address poverty and precarity.
Climate Change & Poverty
Disproportionately affects the poor, making climate resilience crucial for poverty alleviation.
Real-world/Data-backed Recent Examples
- UNDP-OPHI Global MPI 2023 Report (July 2023): Highlighted India's achievement of lifting 415 million people out of multidimensional poverty between 2005-06 and 2019-21. (Source: UNDP, OPHI website).
- Oxfam India's 'Inequality: The India Story' Report 2024 (January 2024): Revealed extreme wealth concentration; richest 1% owning 40% of the country's wealth. (Source: Oxfam India website).
- Continuation of PMGKAY (Dec 2023): Union Cabinet extended Pradhan Mantri Garib Kalyan Anna Yojana for another five years from Jan 1, 2024, providing free food grains. (Source: PIB, Dec 2023).
- Progress of PMAY-G (2023-24): Ministry of Rural Development continues to report significant progress in house completions, directly impacting rural housing poverty. (Source: Ministry of Rural Development dashboard).
- Economic Survey 2023-24 (Expected): Anticipated to provide insights into employment trends, inflation, crucial for understanding current state of poverty and inequality.
UPSC Previous Year Questions (PYQs)
Prelims MCQs
UPSC 2023:
Q. Consider the following statements:
1. The Minimum Support Price (MSP) of wheat is higher than that of rice.
2. The MSP for various crops is fixed by the Commission for Agricultural Costs and Prices (CACP).
3. The Government of India has a legal obligation to procure all agricultural produce at MSP.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) 1 and 2 only
- (d) 1, 2 and 3
Answer: (b)
Hint: Relates to agricultural income, a key factor in rural poverty. MSP aims to address agrarian distress, a push factor for migration.
UPSC 2021:
Q. In India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers?
- (a) Central Statistical Office
- (b) Department for Promotion of Industry and Internal Trade
- (c) Labour Bureau
- (d) NITI Aayog
Answer: (c)
Hint: Relates to employment and industrial issues, direct causes of poverty.
UPSC 2020:
Q. With reference to the 'Multidimensional Poverty Index', which of the following statements is/are correct?
1. MPI is released by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI).
2. It is based on three equally weighted dimensions: health, education, and living standards.
3. India's MPI value has remained stagnant over the last decade.
Select the correct answer using the code given below:
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Answer: (a)
Hint: Directly tests the understanding of MPI. Statement 3 is incorrect as India's MPI value has significantly declined.
Mains Questions
UPSC 2022:
"The growth of 'gig economy' has both socio-economic advantages and disadvantages for labour in India. Discuss." (10 marks)
Direction: Directly relates to poverty and inequality. Discuss how gig economy can provide income for the poor/unemployed but also leads to precarious work, lack of social security, potentially exacerbating vulnerabilities for already poor/marginalized workers.
UPSC 2021:
"How do the India-Myanmar trade relations impact India’s Look East Policy? (15 marks)"
Direction: While on IR, it can be linked to regional disparities and development. Improved trade could bring development to India's North-Eastern states, addressing some causes of poverty and regional inequality in that area.
UPSC 2019:
"Despite the constitutional provisions and various government initiatives, incidents of caste-based discrimination continue to occur in India. Analyze the reasons for the persistence of casteism and suggest measures to eradicate it." (15 marks)
Direction: Directly links social factors (caste discrimination) to poverty. Discuss how caste-based exclusion from land, education, and employment contributes to intergenerational poverty and inequality for SCs/STs.
UPSC 2018:
"What are the impediments in the attainment of the objective of universal primary education in India?" (10 marks)
Direction: Directly links education to poverty. Lack of access to quality education, high dropout rates (especially due to economic reasons), and child labor are significant factors perpetuating poverty and hindering equality of opportunity.
Trend Analysis
Prelims Trends
Questions on Poverty & Development are consistently asked, with a strong focus on key definitions (absolute/relative poverty, MPI), specific poverty estimation committees (Tendulkar, Rangarajan), and the details of major government poverty alleviation and social security schemes (MGNREGA, PM-KISAN, NFSA, PMJJBY, etc.).
Recent trends include factual data from latest reports (NFHS, MPI, Oxfam) and questions on contemporary economic phenomena like the gig economy.
Mains Trends
This is a high-priority topic for Mains, often appearing in GS Paper 1 (Society) and GS Paper 3 (Economy). Questions are typically analytical and problem-solution oriented. They require candidates to discuss the multi-dimensional nature of poverty, its complex causes (economic, social, political), the effectiveness and challenges of various government programs, and the overarching issue of inequality (income, wealth, opportunity, regional).
Emphasis is on understanding how growth is translated into inclusive development. Expect questions requiring critical evaluation of policies, proposing comprehensive solutions, and linking poverty/inequality to other social issues (caste, gender, migration, health).
Original MCQs for Prelims
Q. Consider the following statements regarding India's Multidimensional Poverty Index (MPI) performance:
- 1. The latest MPI report (2023) indicates that India has successfully halved its MPI poverty headcount between 2005-06 and 2019-21.
- 2. The largest reduction in deprivations in India's MPI was observed in the "health" dimension, particularly in child mortality.
- 3. Despite significant progress, India still accounts for the largest number of multidimensionally poor people globally.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 1 and 3 only
- (c) 2 and 3 only
- (d) 1, 2 and 3
Answer: (b)
Explanation: Statement 1 is correct (55.1% to 16.4%). Statement 2 is incorrect (largest reductions in cooking fuel, sanitation, drinking water). Statement 3 is correct.
Q. Which of the following poverty alleviation schemes are specifically focused on providing social security in the form of insurance or pension?
- 1. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
- 2. Pradhan Mantri Awas Yojana-Gramin (PMAY-G)
- 3. Atal Pension Yojana (APY)
- 4. National Social Assistance Programme (NSAP)
Select the correct answer using the code given below:
- (a) 1 and 2 only
- (b) 1, 3 and 4 only
- (c) 2, 3 and 4 only
- (d) 1, 2, 3 and 4
Answer: (b)
Explanation: PMJJBY is life insurance, APY is pension, NSAP provides pensions. PMAY-G is a housing scheme.
Original Descriptive Questions for Mains
Question 1 (15 marks)
"Despite India's impressive economic growth post-1991 reforms, significant income and wealth inequality persists, raising concerns about the 'inclusiveness' of this growth. Analyze the key drivers of this widening inequality and suggest comprehensive strategies to foster truly inclusive growth in India."
- Introduction: Acknowledge India's growth story but flag the parallel rise in income/wealth inequality as a critical challenge to inclusive growth. Define inclusive growth.
- Key Drivers of Widening Inequality: Skill-biased Technological Change; Formal vs. Informal Sector Divide; Globalization & Liberalization; Regressive Taxation; Weak Social Protection; Unequal Access to Opportunities (education, healthcare, digital); Concentration of Assets.
- Comprehensive Strategies for Inclusive Growth: Human Capital Investment; Job Creation; Strengthening Social Safety Nets; Progressive Taxation; Asset Redistribution & Access; Bridging Digital Divide; Empowering Local Governance; Addressing Regional Disparities.
- Conclusion: Summarize that growth alone is insufficient. A deliberate, multi-pronged policy approach focused on equitable opportunity, robust social protection, and fair redistribution is essential.
Question 2 (10 marks)
"India's journey of poverty alleviation has seen significant progress, yet the persistence of 'chronic poverty' among certain segments remains a challenge. Critically analyze the socio-cultural factors that perpetuate this chronic poverty and discuss how targeted government interventions can address these specific vulnerabilities."
- Introduction: Acknowledge overall poverty reduction but highlight 'chronic poverty' among specific vulnerable groups.
- Socio-Cultural Factors: Caste-based Exclusion (SCs/STs); Gender Inequality (feminization of poverty); Disability (stigma, lack of infrastructure); Geographical Isolation (PVTGs); Lack of Awareness/Agency; Cultural Practices.
- Targeted Government Interventions: For SC/STs (PoA Act, FRA, reservations); For Women (NRLM, Beti Bachao Beti Padhao); For Persons with Disabilities (RPwD Act 2016); For Remote/Vulnerable Groups (Aspirational Districts, tribal sub-plans); Universal Social Security.
- Conclusion: Eradicating chronic poverty requires a holistic approach addressing deep-seated socio-cultural barriers and institutional exclusion.