Poverty and Unemployment

Assessment of the growth experience: Poverty and Unemployment

  • Poverty and unemployment are closely related
  • High poverty has a multiplier effect on quality of life, deprivation, malnutrition, illiteracy and low human resource development.


  • Poverty lines
    • Normative nutritional requirement per person per day at some base point.
    • This is debated
    • 2400 cal (rural), 2100 cal (urban)
    • Nutrient requirement then needs to be translated to monetary terms.
  • Poverty has declined as per NSSO estimates.
  • However, recent committees like the Tendulkar committee have reviewed the methodology of measuring poverty and concluded that poverty levels are much higher than those presented through the NSSO estimates.
  • Data on poverty reduction <put>
  • Rural-urban and regional disparity
    • Even when poverty has declined there has been a marked disparity in its reduction in rural and urban areas as well as across different regions in the country
    • — states have poverty ratio below the national average
    • Significant reduction in Andhra, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab and WB
    • Most poor states of Bihar, MP, Orissa and UP have shown little progress in poverty reduction
    • Over 54 pc of India’s poor lived in these states in 2004-05
    • These states have more poor than 26 sub-Saharan African countries according to the 2010 HDR
    • North-western states (P, H, HP, J&K) comprise only 2.2 pc of India’s poor. Rural urban disparity is minimal
    • More than half of India’s urban poor live in the states of Maharashtra, MP, UP and TN
    • There is no evidence for convergence in the incidence of poverty across the states of India
    • Coeffcient of variation (CV) of poverty reveals widening inter-state inequalities in poverty reduction. Between 1993-94 and 2004-2005 CV increased from 36 to 54.
  • Non-income dimensions of poverty
    • NFHS-3 and District level Household Survey on Reproductive Health
      • 46 pc children under 3 and 49 pc children under 6 malnourished
      • 79 pc children anaemic
      • 59 pc deliveries did not take place in institutional agencies
      • 32 pc have no electricity, 55 no toilet
    • Multidimensional Poverty Index
  • Economic Growth and Poverty
    • Necessary for poverty reduction, but not sufficient
    • This is because
      • Poverty is not only income poverty. There are various other unfreedoms. The MDPI captures this well
      • Enabling role of basic education, good health, land reforms, social security
      • The fruits of economic growth may not be automatically utilised to expand basic social services
    • Eliminating deprivation is as much a matter of public action as one merely of economic growth.
    • There has been no significant acceleration in the process of poverty reduction during 1980-2005 despite an acceleration in the growth of per capita GDP
  • Since public action is required, schemes such as NREGS and SGSY are important
  • Chronic Poverty
    • Higher among rural casual labour households than urban casual labour households
    • Varies significantly across social and occupational groups and is highest for SCs
  • Poverty in India vs other developing countries
    • China
      • Poverty in China declined from 53 pc in 1981 to 8 pc in 2001. In the same period India reduced poverty by 17 pc
      • India fares badly even on non-income dimensions of poverty like malnutrition, infant mortality
      • Concerns about equity and disparity remain in China too. India has fared better than China in achieving lower inequality
    • Poverty and Planning/inclusive growth <see poverty notes>
    • Strategy to deal with the problem
      • Recognize that poor are hetrogenous. So strategies need to be specifically designed to deal with chronic poor and other poor
      • Design safety nets
      • Strengthen livelihood and make them more productive



Obsession with economic growth? <Notes from Sen’s article>

  • Economic growth helps in advancing living standards and in battling poverty
  • Growth, however, should not be taken to be an end in itself
  • Sustainable economic growth
  • Focus on development
  • The good thing about economic growth is that it generates resources for the government to spend according to its priorities


India-China comparision

Parameter India China
LE 64.4 73.5
IMR 50 17
U-5 MR 66 19
Literacy 65 94
Mean years of schooling 4.4 7.5


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