Poverty Alleviation Programmes

Remedies for Poverty

Increase in Saving: In order to get rid of the supply side vicious circle in these countries, efforts should be made to increase savings so that investment in productive channels may be encouraged. To increase saving, expenditure on marriages, social ceremonies, etc., should be curtailed. In under developed countries, the possibility of voluntary savings is slim. 

Thus, in this regard, government interference is necessary. The government can increase saving, by altering its fiscal policy. The government can impose heavy taxes on luxury goods. Moreover, it can increase the role of direct taxes. Thus, the government can curtail consumption by altering the tax system.

Increase in Investment: To break the vicious circle of poverty, apart from increasing savings, investment of saving in productive channels is also of immense use. The policies of short run and long run investment should be coordinated. 

By short period investment, people can get the necessary goods at fair rates, which will have a favourable impact on their skill. Moreover, along with short period investment, investment in the establishment of multipurpose projects, iron and chemical fertilizers etc should be properly encouraged.

 In UDCs, proper monetary and banking policies should be adopted which may provide facilities and encouragement to small savings.

Balanced Growth: To resolve the demand side vicious circle in underdeveloped countries, the extension of the market is to be done so that people may get inducement to invest. In this regard, Prof. Nurkse advocated the doctrine of balanced growth. According to the principle of balanced growth, investment should be made in every sphere of an economy so that demand of one sector can be fulfilled by another sector.

       Thus, an increase in demand will lead to extension of the market, and would provide inducement to investments. On the other hand, economists like Hirschman, Singer, and Fleming do not consider the policy of balanced growth effective. According to them, the policy of unbalanced growth would be more useful.

Human Capital Formation: In underdeveloped countries, the main obstacle to economic growth is the backwardness of human capital. Human capital should no longer be neglected.

Many suggestions can be made to increase skill of manpower. For instance, in these countries, education, technical knowledge, and vocational training should be enlarged. Health facilities should be enhanced, which may increase the efficiency of the workers. Transportation and communication should be developed.

Industrialisation: Poverty can be eradicated by a self-sustaining process of industrialisation. All industries should have linkage to build a powerful process of ancillary industries and occupations. The percolation effect of industries can be strong through the establishment of auxiliary industries. Industry should be linked to agricultural growth.

 Agro-based industries should grow to provide employment to village people as they are very much labour intensive. Industrialisation can contribute to the growth process and bring improvement in the standard of living of people.  

Other Measures for Poverty Reduction

More employment opportunities:

    Poverty can be eliminated by creating more employment  opportunities, so that people may be able to meet their basis needs Minimum needs programmes: providing minimum needs to the poor people can help to reduce the problem of poverty.

Social security programmes: 

Various social security schemes, like worker's compensation, maternity 

benefit. Provident fund, etc., can make a frontal attack on poverty.

Small scale industries: 

Encouraging and establishing small scale industries can create jobs in rural areas, which can reduce poverty.

Spread of education: 

Education can create awareness and build confidence among people to find methods to overcome poverty.

Empowerment of poor:

Poor people are voiceless due to the ruthless system of development. So, empowerment of poor people will reduce poverty.

Land reforms:

 Land belongs to the absentee landlords in India. Therefore, land reform is needed for giving rights to the actual tiller of the soil.

Asset creation:

 Productive assets must be created which will ensure regular income for the poor people.

Political will: Political will and thrust is needed to face the challenge of poverty. The Government policies should be designed with determination for having a poverty free country.

Social change: Social strata and traditional values should be free from dogmas. The caste system should not discriminate any people for anything. Social reforms are also needed to remove poverty among the lower caste and women.

Measures to Reduce Rural Poverty

During different Five Year Plans, the Government of India has adopted several strategies and devised several schemes to remove poverty in India. The following are some steps.

IRDP: The Integrated Rural Development Programme was initiated in 1976 in 20 selected districts of India. Then, it was extended to all blocks in 1980.The objective of this program was to enable the selected families to cross the poverty line by creating productive assets for the poor people.

NREP: The National Rural Employment Programme was launched in 1980 in order to generate gainful employment in rural areas.

RLEGP: The Rural Landless Employment Guarantee Programme was launched in August 1983 to generate additional employment opportunities for the landless people in the villages.

TRYSEM: The Training of Rural Youth for Self Employment was launched in 1979 with the aim of generating self employment opportunities for unemployed educated rural youth.

 It has been laid down that the coverage of youth from SC and ST communities should be at least 50 per cent of the rural youth trained. Out of the total beneficiaries, at least 40 per cent should be women.

DWCAR: The Programme of Development of Women and Children in Rural Areas (DWCRA) aims to improve the socio-economic status of the poor women in the rural areas through creation of group of women for income generating activities on a self-sustaining basis.

JRY: Jawahar Rozgar Yojana (JRY) is a wage employment programme with its main objective of generation of employment in the lean agriculture season to the unemployed and underemployed rural people both men and women living below the poverty line. The significant aspect of the scheme is that it is implemented by the Panchayats at the village, block and district levels in the ratio of 70:15:15 respectively.

DPAP: The Drought Prone Area Programme was started in 1970 for drought areas with a view to create jobs through labour intensive schemes.

DDP: The Desert Development Programme was started in 1977 to control the expansion of deserts and raise local productivity of desert areas.

MNP: The Minimum Needs Programme was introduced in the Fifth Plan, in order to achieve growth with justice.

PMRY: The Prime Ministers Rozgar Yojana was implemented in 1993 for providing self-employment to educated unemployed youth had been designed to provide employment to more than a million persons by setting up

of seven lakh micro enterprises in Eighth Plan. During the Eighth Plan, loan in 7.70 lakh cases were sanctioned and 5.76 lakh cases disbursed.

SGSY: The Swarnjayanti Gram Swarozgar Yojana was launched with effects from April 1999 as a result of amalgamating certain erstwhile programmes viz. IRDP, DWCRA, TRYSEM, MWS into single integrated programme.

 It is aiming to promote micro-enterprise through SHGs Scheme is being implemented on cost sharing basis in ratio of 75:25 between Center and State.

PMIUPEP: The Prime Ministers Integrated Urban Poverty Eradication Programme was implemented in 1995 to reduce urban poverty.

EAS: The Employment Assurance Scheme (EAS) has been universalised so as to make it applicable to all the rural blocks of the country.

It aims at providing 100 days of unskilled manual work up to two members of a family in the age group of 18 to 60 years normally residing in villages in the lean agriculture season, on demand, within the blocks covered under EAS. A sum of Rs.1990 crore has been provided during 1998-99 (BE).

 During 1998-99, a total of 237.61 million man-days have been generated under the scheme with an expenditure of Rs.1572 crore up to November 1998.

MSW: The Million Wells Scheme (MWS), which was earlier a sub-scheme of JRY, is funded by the Centre and states in the ratio of 80:20. The objective of the MWS is to provide open irrigation wells free of cost to poor, small and marginal farmers belonging to SCs/STs and freed bonded labour.

SJRY: The Swama .Jyanti Rozgar Yojana was launched in 1997 for the urban poor.

JGSY: The Jawahar Gram Samridhi Yojana is the new name of Jawahar Rozgar Yojana with effect from 1999.

PMGY: Pradhan Mantri Grarnodaya Yojana.

AAY : Antyodaya Anna Yojana.

JPRGY: Jai Prakash Rozgar Guarantee Yojana.

VAMBAY: Valmiki Ambedkar Awas Yojana.

SJSRY: The Swarna Jayanti Shahari Rozgar Yojana (SJSRY) which came into operation from 1.12.1997, sub-summing the earlier urban poverty alleviation programmes viz., Nehru Rozgar Yojana (NRY), Urban Basic Services Programme (UBSP) and Prime Minister's Integrated Urban Poverty Eradication Programme (PMIUPEP).

    The scheme aims to provide gainful employment to the urban unemployed or underemployed poor by encouraging the setting up of self-employment ventures or provision of wage employment. It is being funded on a 75:25 basis between Centre and the states.

           It comprises two special schemes i.e. The Urban Self-Employment Programme (USEP) and the Urban Wage Employment Programme (UWEP). The scheme gives a special impetus to empowering and uplifting the poor women and launches a special programme,

 namely, Development of Women and Children in urban areas under which groups of urban poor women setting up self-employment ventures are eligible for subsidy up to 50% of the project cost.

MGNREGA: The National Rural Employment Guarantee Act (NREGA) of 2005 is perhaps the most significant social policy initiative in India in the last decade.
The NREGA states that,[its main objective is] to provide enhancement of livelihood security of the households in rural areas of the country by providing at least 100 days of guaranteed

wage employment to every household in unskilled manual work. During 2006–07, NREGP involved an expenditure of Rs 88 billion and generated a little less than one billion person days of employment. 

                A controversial aspect of NREGP is the provision of employment on demand at the minimum wage rate. As argued elsewhere, given that the slack season agricultural wage rates are typically way below the minimum wage rates, there is a strong incentive for the (relatively) affluent to masquerade as poor. As a result, the self-selection mechanism of workfare is weakened and the poor are crowded out.

References

http://planningcommission.nic.in/plans/annualplan/ap2021pdf/ap2021ch4-1.pdf

http://indiabudget.nic.in/es2004-05/chapt2005/chap103.pdf

Think about

1. Discuss the remedies for poverty in India. 
2. Discuss various poverty alleviation programmes adopted by the Government of India.

Myths about Hunger

       The conceptual origins of "Myths about Hunger" are found in a publication provided by FOOD FIRST in an article entitled "Hunger Is Not a Myth, But Myths Keep Us From Ending Hunger." Food First reminds us that between 400 million and a billion people do not get enough to eat. Of those, twenty million will die. Most of those who die are children.

     Increased food production, advanced agricultural techniques, and billions of dollars in foreign aid are not solving the problem of hunger. Part of the explanation is that foreign aid is inevitably tied to existing "structures of misery" (Michael Harrington, 1984). By becoming aware of the misconceptions associated with hunger, it is hoped that as a world community we can come closer to addressing the true dynamics of hunger.

MYTH #1:     Scarcity – People are hungry because there is not enough food

        Enough grain is grown worldwide to provide every man, woman, and child with 3500 calories per day, which is what the average North American consumes. Enough food is grown in worldwide to provide everyone with an adequate diet.

The one common denominator in every country where hunger is prevalent is that a few powerful people wield an ever tightening control over food production, distribution, and other economic resources . A United Nations study found that in eighty-three countries worldwide, 3 percent of the population controls more than 80 percent of food production. Redistributing control of food production would help to eliminate hunger.

MYTH #2:     Overpopulation – Hunger exists where there are too many people to feed

                Population density by itself does not directly correspond to the prevalence of hunger. Food First notes that Bolivia has six times as much land under cultivation (per person) as China while 45 percent of Bolivia's people are hungry. China, on the other hand, has eliminated widespread hunger.

There are obvious long term problems associated with rapid population growth, but rapid population growth is not in its self a cause of hunger. Rapid population growth is a symptom of poverty . Families who live in poverty give birth to several children to:

Ensure the survival of some children because infant mortality rates are high.

and because poor families depend on children to gather resources.

Overpopulation will cease to be a problem when poverty is no longer a problem.

MYTH #3:     Increased Production – The solution to hunger is to use improved technology to produce more food. Foreign aid facilitates this process.

         Often efforts to increase food production have ended up increasing the prevalence of hunger . Often increased production is financed by First-World countries. Foreign assistance provided by the United States government is often distributed by AID (Agency for International Development).

    Food produced via First-World financing is often exported back to the core leaving the local population more hungry than before the aid arrived in their country.

Although fifty percent of AID's budget goes for agriculture, rural development, and nutrition, AID does not do much to alleviate hunger and malnutrition. AID's concentration in agriculture is designed to increase agricultural production in crops destined for the U.S. and to increase consumption of U.S. technology and farm products like fertilizer and pesticides.

         While local farmers grow, process, and package fresh vegetables for export to more affluent countries that can afford the exports, local hunger and poverty persist and actually increases (Barry et al., 1983:91). Although the aggregate economy of the local government expands, the daily lives of individuals become more desperate. This is a sad contradiction in U.S. policy toward Central America.

Foreign investment distorts the local economy in the following ways .

A.     Further Concentration of Wealth:

        Foreign aid causes a further concentration of wealth in poor countries. Farmers who can benefit from increased production use their profits to buy out poorer farmers or they invest their profits in other sectors of the economy. Land, therefore, is further concentrated in the hands of fewer people.

B.     Problems Associated with Advanced Technology:

       High technology itself is a problem because machinery replaces human labor, thereby creating more unemployment and more poverty.

C.     Inflation:

       The influx of large amounts of money creates other economic problems, such as inflation, thereby further exacerbating the existence of those who have to live at a subsistence level. Inflation occurs when foreign money is used to buy farm implements. When extra money is available to purchase certain items, the price of those items invariably goes up. Money that may originally be intended to improve the immediate conditions of the poor may create a situation where locals can no longer afford to buy necessary items.

MYTH #4:     Foreign Assistance is designed to Alleviate Hunger

     Of course, the assumption that foreign assistance is designed to help the poor, the hungry, and the dispossessed is itself a myth . If the sole reason for foreign aid were to improve the conditions of people living in developing countries, the goal should have already been met in Central America.

      In 1982 alone, El Salvador received enough aid to triple the per capita income of its one million poorest people (Barry et al., 1983: 243).

           The main purpose of foreign aid has never been to help the world's starving masses or to encourage the economic development of the Third-World in a manner that benefits the majority of people who live there. Foreign aid is "an instrument of American national security policy " (Nathan and Oliver, 1985:250). Foreign aid seeks markets for U.S. investment and seeks to short circuit attempts to nationalize U.S. interests. U.S. foreign aid also attempts to arrange treaties so that U.S. interests are further promoted (Barry et al., 1983:83).

While speaking before the House Subcommittee of Foreign Operations, Clarence Long sarcastically characterized U.S. foreign aid as a process that takes "money from the poor in rich nations and gives it to the rich in poor nations" (Barry et al., 1983:111).

             Often, U.S. foreign aid has decisively anti-humanitarian consequences. As First-World demand for agricultural exports increase, the value of Third-World farm land also increases.

MYTH #5:     Land Redistribution – Redistributing control over resources would mean even less food production for the hungry because such redistribution would decrease the efficiency of food production.

Three aspects of centralized ownership act to produce more hunger.

A.     Centralization Discourages Food Production

          Anti-democratic systems of land tenure often leave large tracts of land unused. Food First cites Brazil as an example where most Brazilian land is in the hands of a few owners. In Brazil, only about 15 percent of arable land is under cultivation.

B.     Land Redistribution Encourages Production

           Large scale producers grow less food per acre than do small scale producers. To survive, small scale producers have to cultivate every available acre. Large scale producers, on the other hand, can profit by keeping acreage out of production. Large scale enterprises have significant impact on local economies because they tend to control most of a given commodity. By drying up supplies in specific commodities, the monopolies can cause the price per unit of specific commodities to rise.

          When land ownership is concentrated in the hands of a few, returns from production are seldom invested in making agriculture more productive. Instead, profits are invested in other areas of the economy that can make even more profits for the landowners and further concentrate power and resources.

MYTH #6:     Rich vs. Poor – Providing assistance to hungry people in poor countries is a threat to high standards of living enjoyed by those in rich countries

          The terms "rich country" and "poor country" are not very meaningful when it comes to describing hunger because all countries have hungry people. Furthermore, hunger is not a Third-World issue. The United States has more than twenty million people who are considered hungry while more than two billion pounds of government surplus food sit in storage (Food First).

         Similar economic conditions are in operation to cause hunger in all countries of the world. In the U.S., and Third World countries, small and mid-size farmers are being squeezed out of business because they are unable to compete with corporate farms.
  

          More and more, the economy is a world-economy. Forces that affect poor people in the U.S. are the same ones that affect people in Nicaragua or Southern Africa. When mega-corporations move to Mexico to take advantage of "cheap" labor, poor Mexicans are exploited and Americans lose jobs.

      The poor in foreign lands are not our enemy. They should be our allies in a common effort to achieve secure and satisfying lives. As corporations operate ever more on the world level, labor organizations as well must encourage worker-unity on a world level.

MYTH #7:     Goodwill – Everyone wants to end hunger

        Corporations can benefit from hunger. Keeping land idle can create huge profits. When supplies of a particular commodity are scarce, demand and, therefore, prices rise. While land lies idle, those who are already poor are pushed further into poverty. High levels of poverty and unemployment are good for profits. When many people are desperate for work, none can demand decent wages.

   Governments of countries that have many poor people also benefit from hunger. In some poor countries in Africa, the government can pay as little as 20 percent of the market price for crops.

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Poverty: Measurement and Causes

Absolute Poverty

When Income of a person is not sufficient to provide the basic necessities of life, he/she is said to be in absolute poverty.

Relative Poverty

Relative poverty occurs when a comparison of the standard of living or income distribution of various income groups is undertaken in a country. The income inequalities between different groups are a reflection of relative poverty.

In India people living below poverty line are quite high as compared to other Asian countries like Malaysia, Thailand and China. According to the projections of the Planning Commission poverty is expected to decline to 18 per cent in 2002 and further to 4 per cent in 2012.

Measurement of Poverty

The Planning Commission set up a Study Group in July 1962 to examine the question of poverty in the country. The Study Group suggested a private consumption expenditure of Rs. 20 (at 1960-61 prices) per capita per month as a basic minimum requirement of life, below which are regarded as poor. In 1979, following the recommendation of the Task Force on Projection of Minimum Needs and Effective Consumption Demand, the poverty line is defined as “the per capita monthly expenditure needed to obtain the consumption of 2,400 calories per-capita per day in rural areas and 2,100 in urban areas in the base year 1973-74.” The poverty line so defined was Rs. 49.10 for rural areas and Rs. 56.60 for urban areas per capita per month. The same poverty line was updated for subsequent years using stable indicators of changes in cost of living.

International Poverty Line

World Banks estimates suggest that the percentage of people living below $1.25 a day in 2005 (which, based on India's PPP rate, works out to Rs 21.6 a day in urban areas and Rs 14.3 in rural areas in 2005 ) decreased from 60% in 1981 to 42% in 2005. Even at a dollar a day ( Rs 17.2 in urban areas and Rs 11.4 in rural areas in 2005 ) poverty declined from 42% to 24% over the same period.

Poverty in India

Indian Poverty Line

India's official poverty measure has long been based solely upon the ability to purchase a minimum recommended daily diet of 2,400 kilocalories (kcal) in rural areas where about 70 percent of people live, and 2,100 kcal in urban areas. Rural areas usually have higher kcal requirements because of greater physical activity among rural residents.

The National Planning Commission, which is responsible for the estimate, currently estimates that a monthly income of about Rs. 356 (about US$7.74) per person is needed to provide the required diet in rural areas and Rs. 539 in urban areas. Factors such as housing, health care, and transportation are not taken into account in the poverty estimates.

The Planning Commission's estimates are significant since they are used to determine the official national and state level below poverty line (BPL) population. The BPL population is currently estimated at 29 percent in rural areas and 26 percent in urban areas. The BPL estimates set a rough ceiling on how many people are eligible for BPL identity cards, which provide some commodities at greatly reduced prices.

         The income amounts given above to estimate the BPL population have been criticised by critics as “ridiculously low” and “astounding”. To address the issue, the Tendulkar Committee was set up in 2008 and reported its recommendations in November 2009. It proposed that the previous calorie requirement be eliminated and that national and state poverty lines be based on the current urban estimate of 26 percent. After adjustment, the rural poverty percentage was increased from 29 percent to 42 percent. The monetary cutoffs were raised to Rs. 447 of expenses a month for rural areas and Rs. 579 a month for urban areas.

These new poverty lines also accounted for education and health needs. Although the direction of change was clearly correct, it was branded as “meager” by one researcher who pointed out that raising the rural daily minimum income from Rs. 12 to Rs. 15 alone added over 100 million to the BPL population.

In addition, given the fact that the 2004-2005 NSS showed that 77 percent of the population had an average daily income of just Rs. 16, there are vast numbers barely above the poverty line who are nonetheless excluded from BPL benefits. The committee was also careful to point out that, despite the higher estimate of poverty, their analysis of past surveys showed that poverty had declined as the government had previously claimed.

In 2008, the Union (national) Rural Development Ministry set up a commission to examine alternative methods of estimating poverty. The commission reported its findings in late 2009. The Commission felt that monetary amounts specified by the Planning Commission for a minimal diet were too low. Instead of Rs. 356 a month per person in rural areas, Rs. 700 was considered necessary (Rs. 1,000 in urban areas). The Commission recommended that the proportion of the rural population living below poverty be raised to at least 50 percent.

     But the figure was achieved by lowering the rural kcal requirement to 2,100, the same as in urban areas, and adding a minimum monthly cereal consumption of 12.25 kilograms. If the 2,400 kcal criterion had been kept, the percentage of India's rural population living in poverty would have risen to about 80 percent.

         Two other Indian estimates are worth mentioning. The National Commission for Enterprises in the Unorganised Sector (NCEUS) was established in 2004 to examine ways to provide the welfare of that group. The unorganized sector comprises 86 percent of the Indian labour force and nearly always works below the daily minimum wage of Rs. 152 per day, have no benefits, pay no taxes, and often have little or no job security. In its study, NCEUS set an overall minimum of Rs. 20 per day per person as its poverty cut-off and calculated that 77 percent of Indians live below poverty. The figure of Rs. 20 per day was cited in the Central Government's Economic Survey 2008-2009, but in recalculating poverty based on the 2004-2005 NSS it estimated that 60.5 percent lived in poverty nationally – 72 per cent in rural areas and 32 percent in urban areas.

The World Bank estimates that 41.6 percent of India's population lives below $1.25 per day and 75.6 percent live below $2 per day measured on PPP basis.

       It is clear from the studies cited above that relatively minute changes in daily rupee cut-offs can add hundreds of millions of people to the poverty population. Thus, the official BPL figure currently used defines those living in truly abject poverty. The NCEUS, in its reports, noted that India's recent economic growth had simply bypassed the vast majority of the population, benefitting a relative few.

Statewise Poverty Comparison

Incidence of poverty varies largely across states. On the one end of the spectrum lie the developed states like Punjab and Haryana where poverty ratio lies within a single digit, while Orissa and Bihar lie at the other end with above 40 percent of the population remaining below the poverty line in recent years.

The overall ranking of states has not undergone much change over the years. The highest poverty incidence continues to prevail in Orissa for rural areas and in Madhya Pradesh for urban areas. Bihar and Uttar Pradesh too have high poverty.

Poverty incidence is the least in Punjab at 5-6% of the population in both rural and urban areas. Haryana ranks second best with 8-10% poverty. Kerala and Andhra Pradesh have made big progress in reducing rural poverty to a low level of about 10% in rural areas, but not as much in urban areas. Kerala, Andhra Pradesh, Punjab, Haryana and Gujarat are among the best performing states in terms of poverty reduction. These are also the states which have been doing better than average on the growth front. Karnataka and West Bengal, the two best performers on the growth front in the post reform era, have reduced poverty only moderately.

Incidence of Poverty 

Incidence of poverty varies widely across social groups. High incidence of poverty prevails among the scheduled tribe and scheduled caste population, which have suffered from social and/or economic exclusion for centuries in India. More than 45% of households among the ST group are poor while the corresponding number is only 15% among the non-backward households classified under the ‘others' category, Data suggests that the ¾th of the rural poor belong to the category of landless labourers and marginal farmers. The incidence of poverty is highest among agricultural labour households (59%), labour households (38.5%) and among Marginal Farmers (30%).

        Factors responsible for poverty are Unemployment or underemployment among rural labourers. It has been established that incidence of unemployment is highest among the casual labourers. Even when they are employed, their weak bargaining power results in low wages being paid to them. The market forces are so strong that the minimum wage legislation is observed more in breach than in compliance.

Another cause of rural poverty is low asset base of the poor.

         According to data – worst 10 percent of rural population owns virtually nothing and bottom 30 percent just own 2 percent of total assets. It may also be noted that large number of rural poor remain in poverty not only because they have very few assets, but also because most of these assets are in the form of durable consumer goods, rather than assets such as land, implements, livestock etc. which can increase their productive capacity.

        Another major cause is low educational attainment of the poor. These educational differentials are one of the main factors for relatively lower level of income among poor.

Another popular myth for poverty is rapid increase in population. Population growth puts pressure on the land base and as a consequence the real per capita income falls. Semi-feudal agrarian relation is another important cause of poverty. Land reforms initiated after independence has not brought about substantial changes in agrarian relations.

Trend of Poverty in India

The proportion of India's population below the poverty line has fluctuated widely in the past, but the overall trend has been downward. However, there have been roughly three periods of trends in income poverty.

• 1950 to mid-1970s: income poverty reduction showed no discernible trend. In 1951, 47 per cent of India's rural population was below the poverty line. The proportion went up to 64 per cent in 1954-55; it came down to 45 per cent in 1960-61, but in 1977-78, it went up again to 51 per cent. 
• Mid-1970s to 1990: Income poverty declined significantly between the mid-1970s and the end of the 1980s. The decline was more pronounced between 1977-78 and 1986-87, with rural income poverty declining from 51 per cent to 39 per cent. It went down further to 34 per cent by 1989-90. Urban income poverty went down from 41 per cent in 1977-78 to 34 per cent in 1986-87, and further to 33 per cent in 1989-90. 
• After 1991: This post-economic reform period evidenced both setbacks and progress. Rural income poverty increased from 34 per cent in 1989-90 to 43 per cent in 1992 and then fell to 37 per cent in 1993-94. Urban income poverty went up from 33.4 per cent in 1989-90 to 33.7 per cent in 1992 and declined to 32 per cent in 1993-94. Also, NSS data for 1994-95 to 1998 show little or no poverty reduction. The evidence till 1999-2000 was that rural poverty had increased during post-reforms period. However, the official estimate of poverty for 1999-2000 was 26.1 per cent, a dramatic decline that led to much debate and analysis.

The latest NSS survey (2004-05) shows poverty at 28.3 per cent in rural areas, 25.7 per cent in urban areas and 27.5 per cent for the country as a whole, using uniform recall period consumption. These suggest that the decline in rural poverty over the period during 1993-94 to 2004-05 actually occurred after 1999-2000.

Vicious Circle of Poverty

The vicious circle of poverty refers to the interconnectedness of different factors that reinforce each other for generating poverty. According to Nurkse and Kindleberger the reasons for this vicious circle of poverty can be classified into three groups.

• Supply side factors
• Demand side factors
• Market imperfection

Supply Side Factors

       The supply side of the vicious circle indicates that in underdeveloped countries, productivity is so low that it is not enough for capital formation. According to Samuelson, "The backward nations cannot get their heads above water because their production is so low that they can spare nothing for capital formation by which their standard of living could be raised." According to Nurkse on the supply side there is small capacity to save, resulting from low level of national income.

    The low real income is the result of low productivity, which in turn, is largely due to the lack of capital. The lack of capital is a result of the small capacity to save, and so, the circle is vicious. Thus, it becomes clear from the above diagram that the main reason of poverty is the low level of saving. Consequently, investment is not possible in production channels. A huge chunk of GDP is used for consumption purposes.

            People cannot save. So, there is lack of investment and capital formation. Although rich people can save, they spend their surplus in some on luxurious goods instead of saving. They gave preference to high priced items and foreign products. Thus, their demand does not enlarge the size of the market. The developing countries, therefore, lack investment facilities.

Demand Side Factors

         According to Nurkse, poverty is caused by several factors in the demand side. In underdeveloped countries the inducement to invest is low because of the low purchasing power of the people, which is due to their small real income. The main reason for poverty in these countries is the low level of demand. Consequently, the sizes of markets remain low. The small size of the market becomes a hurdle in the path of inducement to invest.

Market Imperfections

            According to Meier and Baldwin, the existence of market imperfections prevents optimum allocation and utilization of natural resources, and the result is underdevelopment, and this, in turn, leads to poverty. The development of natural resources depends upon the character of human resources. But due to lack of skill and low level of knowledge, natural resources remain unutilized, underutilised and misused.

Causes of Poverty in India

Colonial Exploitation: Colonial rule in India is the main reason of poverty and backwardness in India. The Indian economy was purposely and severely de-industrialized through colonial privatizations. British rule replaced the wasteful warlord aristocracy by a bureaucratic-military establishment. However, colonial exploitation caused backwardness in India. In 1830, India accounted for 17.6 per cent of global industrial production against Britain's 9.5 per cent, but, by 1900, India's share was down to 1.7 per cent against Britain's 18.5 per cent.
        This view claims that British policies in India, exacerbated by the weather conditions led to mass famines, roughly 30 to 60 million deaths from starvation in the Indian colonies. Community grain banks were forcibly disabled, land was converted from food crops for local consumption to cotton, opium, tea, and grain for export, largely for animal feed.

Lack of Investment for the Poor: There is lack of investment for the development of poorer section of the society. Over the past 60 years, India decided to focus on creating world class educational institutions for the elite, whilst neglecting basic literacy for the majority. This has denied the illiterate population – 33 per cent of India – of even the possibility of escaping poverty. Thus, there is no focus on creating permanent income-generating assets for the poor people.

Social System in India: The social system is another cause of poverty in India. The social subsystems are so strongly interlocked that the poor are incapable of overcoming the obstacles.

India's Economic Policies: In 1947, the average annual income in India was US$439, compared with US619 for China, US$770 for South Korea. But South Korea became a developed country by the 2000s. License Raj prevailed with elaborate licenses, regulations and accompanying red tape. Corruption flourished under this system.

Over-reliance on Agriculture: In India there is high level of dependence on primitive methods of agriculture. There is a surplus of labour in agriculture. Farmers are a large vote bank and use their votes to resist reallocation of land for higher-income industrial projects. While services and industry have grown at double digit figures, the agriculture growth rate has dropped from 4.8 per cent to 2 per cent. About 60 per cent of the population depends on agriculture, whereas the contribution of agriculture to the GDP is below 18 per cent. The agricultural sector has remained very unproductive. There is no modernization of agriculture despite some mechanization in some regions of India.

High Illiteracy: Indian literacy rate rose almost tenfold during the British era. In 1947, India's literacy rate matched China's. However, in 2007, China reported at 91 per cent literacy rate versus 66 per cent for India. Now India suffers from about 35 per cent illiteracy among the adult population. Literacy levels among SC, ST and females are very low.

High Unemployment: There is high degree of underutilization of resources. The whole country suffers from a high degree of unemployment. India is marching with jobless economic growth. Employment is not growing, neither in the private sector, nor in the public sector. The IT sector has become elitist, which does not improve the poverty situation in the country. Disguised unemployment and seasonal unemployment is very high in the agricultural sector of India. It is the main cause of rural poverty in India.

Lack of Entrepreneurship: The industrial base of India has remained very slender. The industrial sickness is very widespread. The whole industrial sector suffers from capital deficiency and lack of entrepreneurial spirit.

Causes for Urban Poverty

The causes of urban poverty in India are:

1. Migration of Rural Youth towards Cities 
2. Lack of Vocational Education / Training 
3. Limited Job Opportunities of Employment in the Cities
4. Rapid increase in Population 
5. Lack of Housing Facilities 
6. No proper Implementation of Public Distribution System

References

Agrawal, AN (Latest Edition), Indian Economy, Biswa Pakashan, New Delhi.

Dutta, R and KPM Sundarama (Latest Edition), Indian Economy, S. Chand &

Sons, New Delhi.

Sen, Amartya (I 999), Development as Freedom, Oxford University Press, London.

World Bank (2000), Attacking Poverty, World Development Report 2000, ?

Washington

Think about

1. What is absolute poverty? 
2. What is relative poverty? 
3. What are the yardsticks to measure poverty? 
4. Discuss the causes of poverty in urban India. 
5. How is poverty line in India different from the international poverty line? 
6. What do you mean by supply side factors of poverty? 
7. What do you mean by demand factors of poverty? 
8. What do you mean by market imperfection?

                                                           *******************

National Policy on Education

      The National Policy on Education (NPE) was adopted by Parliament in May 1986. A committee was set up under the chairmanship of Acharya Ramamurti in May 1990 to review NPE and to make recommendations for its modifications. That Committee submitted its report in December 1990. At the request of the Central Advisory Board of Education (CABE) a committee was set up in July 1991 under the chairmanship of Shri N. Janardhana Reddy, Chief Minister of Andhra Pradesh, to consider modifications in NPE taking into consideration the report of the Ramamurti Committee and other relevant developments having a bearing on the Policy, and to make recommendations regarding modifications to be made in the NPE. This Committee submitted its report in January 1992. The report of the Committee was considered by the CABE in its meeting held on 5-6 May, 1992. While broadly endorsing the NPE, CABE has recommended a few changes in the Policy.

         Education has continued to evolve, diversify and extend its reach and coverage since the dawn of human history. Every country develops its system of education to express and promote its unique socio-cultural identity and also to meet the challenges of the times. There are moments in history when a new direction has to be given to an age-old process. That moment is today. The country has reached a stage in its economic and technical development when a major effort must be made to derive the maximum benefit from the assets already created and to ensure that the fruits of change reach all sections. Education is the highway to that goal. With this aim in view, the Government of India announced in January 1985 that a new Education Policy would be formulated for the country. A comprehensive appraisal of the existing educational scene was made followed by a countrywide debate. The views and suggestions received from different quarters were carefully studied.

The 1968 Education Policy and After

        The National Policy of 1968 marked a significant step in the history of education in post Independence India. It aimed to promote national progress, a sense of common citizenship and culture, and to strengthen national integration. It laid stress on the need for a radical reconstruction of the education system, to improve its quality at all stages, and gave much greater attention to science and technology, the cultivation of moral values and a closer relation between education and the life of the people.

       Since the adoption of the 1968 Policy, there has been considerable       expansion in educational facilities all over the country at all levels. More than 90 per cent of the country's rural habitations now have schooling facilities within a radius of one kilometre. There has been sizeable augmentation of facilities at other stages also. Perhaps the most notable development has been the acceptance of a common structure of education throughout the Country and the introduction of the 10+2+3 system by most States. In the school curricula, in addition to laying down a common scheme of studies for boys and girls, science and mathematics were incorporated as compulsory subjects and work experience assigned a place of importance. A beginning was also made in restructuring of courses at the undergraduate level. Centres of Advanced Studies were set up for post-graduate education and research. And we have been able to meet our requirements of educated manpower. While these achievements are impressive by themselves, the general formulations incorporated in the 1968 Policy did not, however, get translated into a detailed strategy of implementation, accompanied by the assignment of specific responsibilities and financial and organisational support.

       As a result, problems of access, quality, quantity, utility and financial outlay, accumulated over the years, have now assumed such massive proportions that they must be tackled with the utmost urgency. Education in India stands at the crossroads today. Neither normal linear expansion nor the existing pace and nature of improvement can meet the needs of the situation. In the Indian way of thinking, a human being is a positive asset and a precious national resource, which needs to be cherished, nurtured and developed with tenderness, and care, coupled with dynamism. Each individual's growth presents a different range of problems and requirements, at every stage from the womb to the tomb. The catalytic action of Education in this complex and dynamic growth process needs to be planned meticulously and executed with great sensitivity.

Technical and Management Education

      Although the two streams of technical and management education are functioning separately, it is essential to look at them together, in view of their close relationship and complementary concerns. The reorganization of Technical and Management Education should take into account the anticipated scenario by the turn of the century, with specific reference to the likely changes in the economy, social environment, production and management processes, the rapid expansion of knowledge and the great advances in science and technology. The infrastructure and services sectors as well as the unorganized rural sector also need a greater induction of improved technologies and a supply of technical and managerial manpower. This will be attended to by the Government. In order to improve the situation regarding manpower information, the recently set up Technical Manpower Information System will be further developed and strengthened. Continuing education, covering established as well as emerging technologies, will be promoted.

        As computers have become important and ubiquitous tools, a minimal exposure to computers and training in their use will form part of professional education. Programmes of computer literacy will be organised on wide scale from the school stage. In view of the present rigid entry requirements to formal courses restricting the access of a large segment of people to technical and managerial education, programmes through a distance learning process, including use of the mass media will be offered. Technical and management education programmes, including education in polytechnics, will also be on a flexible modular pattern based on credits, with provision for multi-point entry A strong guidance and counseling service will be provided. In order to increase the relevance of management education, particularly in the no corporate and under-managed sectors, the management education system will study and document the Indian experience and create a body of knowledge and specific educational programmes suited to these sectors. Appropriate formal and non-formal programmes of technical education will be devised for the benefit of women, the economically and socially weaker sections, and the physically handicapped.

      The emphasis of vocational education and its expansion will need a large number of teachers and professionals in vocational education, educational technology, curriculum development, etc. Programmes will be started to meet this demand. To encourage students to consider "self-employment" as a career option, training in entrepreneurship will be provided through modular or optional courses, in degree or diploma programmes. In order to meet the continuing needs of updating curriculum, renewal should systematically phase out obsolescence and introduce new technologies of disciplines.

Making the System work

       It is obvious that these and many other new tasks of education cannot be performed in a state of disorder. Education needs to be managed in an atmosphere of utmost intellectual rigor, seriousness of purpose and, at the same time, of freedom essential for innovation and creativity. While far-reaching changes will have to be incorporated in the quality and range of education, the process of introducing discipline into the system will have to be started, here and now, in what exists. The country has placed boundless trust in the educational system. The people have a right to expect concrete results. The first task is to make it work. All teachers should teach and all students study. The strategy consists of:

1. Better deal to teachers with greater accountability;
2. Provision of improved students services and insistence on observance of acceptable norms of behavior;
3. Provision of better facilities to institutions; and
4. Creation of a system of performance appraisals of institutions according to standards and norms set at the National or State levels.

Conclusion

         The 1986 policy led to encouragement to emerging sectors like Information Technology, which witnessed an upsurge following the opening up of the technical education sector, particularly in capacity expansion in the private sector. Although the 1986 policy spoke against commercialization of education, the explosion in the number of private engineering and medical institutions, according to educationists, has only given a further impetus to the menace of capitation fee. The rapid expansion of private institutions has also, according to the Yashpal Committee, resulted in deterioration in quality.


          The concerns over quality led the Centre to review all deemed universities. Today's education system in India is not paced with global rate. Private universities have just become the factories to produce useless products and only concentrated on profit accumulation. Today India needs to overhaul its education system in such a way that it could compete with the pace of globalisation has.

References

New National Policy on education coming. (2011, August). The Hindu . India: The Hindu.

www.ncert.nic.in/oth_anoun/npe86. pdf