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POVERTY — Economics STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsPOVERTY5 Marks
Question
Explain Nature of Poverty.
✓

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 $\text{NSSO (National Sample Survey Organization) (2011-12)}$ 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.

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