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Explain absolute and relative poverty.

Vidyadip · Accepted Answer

1. Introduction: * The most important problem of India is poverty. * Some part of the society cannot satisfy their primary needs. * Poverty is a made-man problem. * Poverty is a qualitative concept. * There are two tunes of poverty: (1) Absolute poverty (2) Relative poverty. 2. Absolute poverty and poverty line:(1) Absolute Poverty: * Absolute Poverty is called as a pure poverty. * This concept is related to primary needs of person. * Whatever concepts are shown in poverty is ultimately absolute poverty. * The minimum expenditure or income required to satisfy the minimum basic needs and services is known as poverty line. * The population having income or expenditure below the poverty line are said to be absolutely poor. * The other name of this poverty is complete poverty. * The person’s minimum requirement is food, cloth and shelter. * If his income is below that then it is called these absolute poor. * The concept of absolute poverty help us to categorize people living below poverty line and to reduce poverty among these, target oriented policies can be framed. (2) Poverty Line: * Poverty line is not like a geometry line, but it is low per capita household consumption expenditure. * To understand absolute poverty, the minimum consumption expenditure required to fulfill the minimum physical amount of cereals, pulses, milk, butter etc. should be studied. * To calculate the measurement of poverty line planning commission and most of the economists take calories to consider. * To ascertain this minimum per capita consumption expenditure, in the initial years of planning, Indian council of Medical Research has decided that for rural areas for a person per day 2400 calories and for urban areas per day 2100 calories is required. * This method was accepted by planning commission in 1969 and taking 1960-61 prices as base year Rs.20 per month expenditure was decided as the measuring rod for poverty. * On another side Dandekar and Rath for rural areas, on the basis of 1960-61 prices decided Rs.15 per month expenditure as poverty line and for urban areas is Rs.22.50 expenditure per month. * Later on planning commission appointed an expert committee under the chairmanship of Prof. D.T. Lakdawala which estimated poverty for the year 1993, taking 1973-74 prices as base year prices, for rural areas Rs.49 per month and for urban areas Rs.57 per month consumption expenditure was estimated to fulfill the requirements for the poverty line. * In the method of calculating poverty line, one of the major drawbacks is it only takes calories as a consumption and human development index like education, health are n0t considered. * Poverty is economic situation when hunger is a physical situation. * So that poverty line becomes "Starvation line". * To understand deeply the concept of poverty, the minimum standard of quality life should be decided and for that required facilities for quality life such as nutritive food. * balanced food, fuel, kitchen fuel, electricity, clothing, housing, education expenditure etc. should be included. * With the help of that we can actually measure the poverty and make perfect strategies to reduce poverty. * In this context, Prof. Suresh Tendulkar redefined the measuring rod of poverty and submitted its report to the Government in the year 2009. * In this committee they developed a new method of measuring poverty. * They also measured education and health with minimum calorie. * According to new poverty method in the year 2011-12 per capita monthly consumption expenditure for rural areas Rs.816 and urban areas Rs.1000 was decided as the poverty line. * At international level they consider the cost of all resources consumed by an average adult. * At international level world bank consider 2005 as a base year, ppp (Purchase Power Parity) decided as 1.25 per day which was 1 for the year in 1990 and 1.90 in the year 2015. * Below this level, people is called as a poor. (3) Proportion of Absolute Poverty in India: * In India work of estimation of poverty is done by planning commission. * In 60th round of NSSO (National Sample Survey Organization) (2011-12) using for joint family expenditure data, Tendulkar committee estimated that in India in the year 2004-05 the measurement are as under: Poverty 2004-05( %) 2011-12( %) Rural 41.8 25.7 Urban 25.7 13.7 Total 67.5 39.4 * (a) Analysis of India: * (1) From 2004-05 to 2011-12 Poverty reduced from 37.2 % to 21.9 % it means 15.3 % reduction. * (2) Rural poverty reduce from 41.8 to 25.7 % it means reduction was 16.1 % * (3) Urban areas poverty reduced from 25.7 % to 13.7 % in the year 2011-12. * (4) As compared to rural areas, urban areas poverty reduced less. * (b) Analysis of State: * In India state wise poverty is different. The situation of state wise poverty in 2011-12 are as under: * (1) In Goa, Kerala, Sikkim, Himachal Pradesh, Punjab and Andhra Pradesh poverty is less than 10 %. * (2) In Jammu Kashmir, Haryana, Tamilnadu, Gujarat, Rajasthan, Maharashtra, Tripura poverty is between 10 to 20 %. * (3) Madhya Pradesh, Assam, Bihar, Orissa, Jharkhand, Chhattisgarh, Arunachal Pradesh have 30 to 40 % * (4) According to Annual Report 2013, among various states of India, Goa has the lowest poverty 5.09 % and highest in Chhattisgarh which is 39.93 %. 3. Relative Poverty: * The absolute poverty is related to minimum consumption expenditure to satisfy human needs while in relative poverty income inequality existing in different groups of people living in society is considered. * Just because of unequal distribution of income, few part of the society get high income as compared of poor people. * Commonly in every economy, income disparity is seen In that case lower income class is considered relatively poor than the higher income class. * In this system we can easily seprate two classes of people in the country. * To study relative poverty, society is divided into different income groups and unequal distribution of income is studied. * In this system poor income family are poor compared to rich family. * To understand relative poverty, the people of society are divided into different income groups. * Then, how much shares each group gets out of national income indicates how one group is richer or poorer than the others. * Such estimates shows relative poverty from this angle in comparison to the richest country. * The concept of relative poverty can be studied with the help of a hypothetical example. * For E.g. A notion's population is divided on the basis of Live income groups. Group Income group (In Rs.) Group 1 Group 2 Group 3 Group 4 Group 5 0-50,000 50,000-1 lakh 1 lakh - 2 lakh 2 lakh - 10 lakh 10 lakh and above * In the above example the class in group 2 has more income of people then in group 1. * It can be said that people in group 1 are relatively poor than group 2. * But the same way group 2 is poor than group 3. * Group 3 is poor than group 4. * and group 4 is poor than group 5. * It means people of group 1, 2, 3, 4 are relatively poor than group 5. * To measure relative poverty, Lorenz Curve and Gini Co-efficient are useful.

Poverty	$2004-05(\%)$	$2011-12(\%)$
Rural	$41.8$	$25.7$
Urban	$25.7$	$13.7$
Total	$67.5$	$39.4$

Group	Income group $($In $Rs.)$
Group $1$ Group $2$ Group $3$ Group $4$ Group $5$	$0-50,000$ $50,000-1$ lakh $1$ lakh $-\ 2$ lakh $2$ lakh $-\ 10$ lakh $10$ lakh and above

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