UNIT 2 INEQUALITY AND POVERTY

Structure

2.0
2.1

Objectives
Introduction

2.2

Functional Distribution of Income and Implication for Poverty

\
'
Poverty Defined
Measurement of Poverty

2.3
2.4

2.4.1

Approaches to Measure Poverty

2.4.2

Poverty Indicators

Poverty and Marginalized Groups

2.6 Poverty Estimates
2.7 Poverty and Nutrition
2.8 Poverty and Social Conflict
2.9 Let Us Sum UP
2.10 Key Words
2.1 1 Some Useful BooksIReferences
2.12 AnswersIHints to Check Your Progress Exercises
2.5

2.0 OBJECTIVES
After going through this Unit, you should be in a position to:
explain various concepts of poverty;
distinguish between poverty line and poverty gap;
identify functional implications of poverty eradication measures; and
explain social conflicts in the context of poverty and inequalities.
L

2.1 INTRODUCTION
In recent years, the debate on inequality amongst people and nations has become
more intense and wide-ranging. While global wealth is on the rise, there is an
increase in deprivation and inequality. Africa, for example, has lost out during the
past two decades and inequality and poverty has increased in most of the African
countries. The rise in inequality has led to a number of deprivations that people
across nations have experienced over the decades. A discussion on the levels and
pattern of inequality is directly related to the study of poverty. It has been observed
that income inequalities are associated with deprivations in other areas like quality of
life, availability of health care, education, quality of housing and employment.
Poverty can be conceived as absolute or relative. Absolute poverty is defined as lack
of income or failure to attain capabilities. It can be chronic or temporary, is
sometimes closely associated with inequity, and is often correlated with
vulnerabilities and social exclusion. The concepts used to define poverty determine
the methods employed to measure it and the subsequent policy and programme
packages designed to address it.
If defined in broad human deprivation terms, poverty is often viewed as a form of
underdevelopment. The Human Development Report 1997 distinguishes between

Society and ~conomic

Development: Some Hard Facts

poverty and underdevelopment by associating the former with individuals and the
latter with an aggregate perspective. The process of development informs us about
the degree of progress made by society but this picture would not be complete unless
the advances made by each segment and strata in society are assessed. As mentioned
earlier, large numbers of people have not been part of the prosperity which is being
experiericed globally. We cannot overlook the negative consequences of
development if the process is not just and egalitarian.

2.2 FUNCTIONAL DISTRIBUTION OF INCOME

AND IMPLICATIONS FOR POVERTY
Functional distribution of income refers to the returns to labour, land and capital as
determined by factor prices, utilization levels, and the consequent share of the
.national income that accrue to the owners of each factor. The theory of functional
distribution is also known as the theory of factor prices as it deals with factor prices
like rent, wages, interest and profits. In the Eighteenth century, Ricardo analysed the
income distribution among social classes based on the analysis of the functional
distribution as the capitalists and landlords owned the means of production and
received profit and rent respectively for using their resources and labour received
wages as they had only their labour power to sell. Later, Marxconsidered only profit
and wages as two major components of functional distribution of income which
would indicate the pattern of income distribution in society. Both Ricardo and Marx
argued that the process of economic growth will lead to inequality as the share of
landowners (Ricardo's argument) and profits of capitalists (Marx's argument) will go
up with progress.
The functional distribution of income also considers the decomposition of incomes
based on profits and interest, transfer payments, pension rights. The finer
decomposition of income distribution provides a correct picture of income
distribution, therefore, it is important to study the distribution of other assets like
stocks, land, houses and other forms in which wealth is stocked. A long term study of
the functional distribution or the decomposition of income would give an accurate
assessment of the size distribution of income levels in a country. Size distribution of
income is an indicator of the spread of income levels amongst households. A more
equal distribution of income occurs when greater share of the incremental income
goes to the lower income classes.
The implications of functional distribution of income on poverty refer to factor price
distortions that enter in economic decision-making as a result of various factors. As
economies progress and the levels of economic activities go up, there will be changes
in the value of stocks and assets such as land or houses. This would lead to changes
in incomes of various households with access to such assets. It could also deal with
policy interventions for altering the functional distribution of the share of factors
engaged in the development process. Structural distribution of the factors of
production particularly land has direct consequences for poverty in developing
countries where more than half the population is dependent for livelihood on
agriculture and related activities. Rapid rise in land and property prices in India in
recent years has distorted the factor prices thus leading to speculative profits in
trading of such assets.

2.3 POVERTY DEFINED

Poverty is often defined in terms of income levels of a set of population. The income
criteria are preferred as an indicator of poverty as it is easy to establish the income
earned by a person or a household. A number of other indicators can be added to
these measurements based on their money value to arrive at a compreheiisive

measurement of poverty. Money values denote objective standards of poverty

measurement. Let us look into some poverty concepts available in thc literature.
Poverty refers to different forms of deprivation that can be expressed in a variety of
terms (i.e., income, basic needs, human capabilities).

Per Capita Income Concept

Per capita income can be used as a measure of household welfare. A threshold level
of income is used to differentiate the poor from the non-poor. There are three
deficiencies with this approach. First, the level of income of a household may vary
considerably during the course of a year under study. Second, income of households
during a particular year may not be representative income over an extended number
of years. Third, the self-employed and informal sector may pose a problem as
households may not report their true income for fear of being taxed.
In addition to the above, there are certain other limitations associated with the
income indicators of poverty particularly in the context of price and commodity
differentials, the exclusion of non-cash and "free" items (such as publicly provided
goods and services), and the omission of other factors, such as time required to
obtain a commodity. In spite of these limitations, income indicators continue 'to be
the most widely used means of measuring poverty, partly because of the relative
abundance of data and partly because of its simplicity.

Basic Needs Concept

This approach measures welfare of individuals or households on the basis of certain
basic needs such as food, clothing, housing, education and simple medical treatment.
The basic needs concept of poverty defines poverty as the deprivation of
requirements, mainly material for meeting basit human needs. The poverty
measurement based on this approach includes access to such necessities as food,
shelter, schooling, health services, potable water and sanitation facilities,
employment opportunities, and even touches on opportunities for community
participation. Inclusion of these indicators increases the magnitude and scope of
poverty estimates.
The advantage of the basic needs approach over the per capita income approach is
that they measure goods and services directly in terms of human welfare. For
example, a rise in housing or essential transport costs would be counted as a decline
in well-being using basic needs indicators, while per capita GDP would record this as
an increase. There are problems i n adding up or aggregating the consequences of
decline in well being as a result of increase in transport costs or healthcare facilities.
Cross-country comparisons also have to be done using this data very carefully.

Food Ratio Concept

'The Engel coefficient, derived from the Engel curve (see MEC-001: Microeconomic
Analysis), proposes that the ratio of food to non-food expenditure could serve as a
useful welfare indicator. Studies have shown that households with higher levels of
income usually spend a smaller fraction of their total income on food while the
reverse applies to households with lower incomes. It is also noted that the ratio of
food to non-food expenditure increases with family size. This approach, however,
needs to be qualified by the findings that the poorest households in developing
countries do not necessarily spend a higher fraction of their budget on food items.

Per Capita Food Consumption

'This approach hinges directly on a household's propensity to consume food items. In
this approach welfare is measured strictly in terms of per capita food consumption.
An advantage of this approach is that data requirements for poverty estimation under

Inequality and Poverty

Society and Economic

Dtve'Opment: Some Hard Facts

this approach are limited. A serious weakness of this approach, however, is that nonfood consumption items, such as clothing and shelter, are ignored.

Calories Concept
This definition of poverty focuses on calorie intake instead of expenditure on food
items and therefore is based on nutritional requirements of human beings. Once there
is an agreement on the acceptable calorie intake, the measure allows for comparisons
across time and space. This concept is based on the premise that every individual
must satisfy certain basic nutritional requirements for survival. A basket of goods is
selected in such a way as to maximize one's nutrient intake at the lowest possible
cost. The market cost of the selected basket is then derived and the monetary value of
purchasing the selected basket of basic food is calculated. Households unable to meet
the cost of obtaining the basket of food items are categorized as critically poor, or
indigent, underprivileged and deprived. The market cost of the basic food basket
represents the lower limit of poverty and is the critical poverty line. 'This method,
like the per capita food consumption concept mentioned above, ignores non-food
requirements of households.

Medical Data Concept

iI

Medical indicators and data on nutrition can also be used as an indicator of welfare.
This approach is especially important when the focus of the study is on young
children. This approach can however be misleading because although health status is
strongly correlated to household welfare, it is not identical with it. Under-nutrition of
children in a household, leading to low weight and height for age, and low birth
weight may be an indicator of inequality in the household rather than of the
incapacity of the household to provide adequate needs of all its members.

Per Adult Equivalence Consumption

This approach to defining poverty uses total consumption expenditure, adjusted for
household equivalent scales, as a measure of household welfare. Equivalent scales
control for differences in household composition based on age and gender. 'This
definition of poverty is particularly attractive, because it systematically includes the
nutritional requirements appropriate to the respective members of the household, that
is, it allows the poverty criterion to be household specific.

Check Your Progress 1

1)

What are the implications of functional distribution of income for poverty?

2)

How do you define poverty? Compare different approaches to define poverty.

................................................................................................

Inequality and Poverty

2.4 MEASUREMENT OF POVERTY

I

1
i
I

'The approach to study the population in poverty is based on the perceived causes of
poverty based on various types of deprivations. These can be in the realm of
physiological needs, economic and sociological needs. These needs are mostly
interrelated and can also be termed as the vicious circle of poverty. People are poor
because they lack income, food, clothing and shelter and they cannot improve their
skills and income earning capacity as they lack the essential needs for survival. The
income and basic needs concepts of poverty focus on physiological deprivations.
However, the concept of poverty needs to be wider to include all other deprivations.
Accordingly, it is important to focus on increasing the income/consumption of the
poor and their attainment of basic needs, such as health and education.

2.4.1 Approaches to Measure Poverty

There has been a lot of research on poverty in the past five decades. Various
measures based on income levels, food consumption, expenditure data and large
scale surveys are used to measure the percentage of population in a country who can
be identified as poor. People who live below a specified minimum level of real
income can be characterized as living in absolute poverty. The World Bank uses both
food and non-food expenditure for constructing 'poverty line'. Food requirements
are derived based on nutritional requirements set by th'e indigence line, while nonfood expenditures are set on the basis of a relative measure, namely, the average nonfood expenditure of the poorest 40% of the population. The Indian government
conducts large-scale sample surveys which are done by the National Sample Survey
Organisation (NSSO) to collect information on consumption expenditure. The
population surveyed is divided into expenditure-based groups to study their calorific
consumption.

The Poverty Line

The poverty line is a monetary measure of the minimum~consumptionof goods and
services that a household should obtain in order to ensure that its basic needs are
adequately met. The monetary measure of US$ 1 per day is used to make global
comparison of population living below the poverty line. The poverty line, therefore,
represents a minimum budget that a household should spend over a defined period if
it is to meet its basic food and non-food requirements. In India the poverty line is
defined on the basis of calorie intake of a person. The calorie intake has been placed
at 2250 calories per capita per day in urban areas and 2400 calories per person per
day in rural areas. In Section 2.6 we will give details of the empirical evidence of the
head count measure of poverty in India.

Table 2.1 : Poverty Line in India

(Rupees Per Capita per Month)

Category

1993-94

1999-2000

Rural

21 1.30

335.46

Urban

274.88

451.19

In effect, the population, which is considered to be in absolute poverty, is limited to

the expenditure levels of Rs. 1 1 to Rs. 15 per day per person in 1999-2000. Anybody
else classified in a higher expenditure bracket is not considered as poor.

The Poverty Gap

The poverty gap is the average of the differences between the income of each
individual poor and the poverty line. Poverty gap measures the total amount of

Society and Economic

Development: Some Hard Facts

income necessary to raise everyone who is below the poverty line up to that line. To
put it in a simple manner, the total poverty gap can be considered as the amount of
money per day it would take to bring every poor person in an economy up to our
defined minimum income standards.

Human Capability
The human capability approach, developed by Amartya Sen, attempts to measure
poverty in terms of outcomes or "ends". This approach defines poverty as the
absence of basic human capabilities to function at a minimally acceptable level
within a society. An emphasis is placed on people's abilities and opportunities to
enjoy long, ,healthy lives, to be literate, and to participate freely in their society. The
capability indicators generally used are: life expectancy, literacy rates, malnutrition,
and housing. The capability indicators measure well-being in terms of final outcomes
rather than the proxies (such as income, consumption and nutrition) for those
outcomes.
Availability of national level data on several capabilities indicators has made it
possible to estimatk poverty level through capabilities approach. The United Nations
Development Programme (UNDP) regularly brings out the Human Development
Report that provides comparative analysis on global trends in economic and social
development. The Planning Commission of India has also initiated a process to bring
out national and state level reports on similar lines. Broadly, the capability indicators
used by the UNDP and the Planning Commission of India can be grouped as the
capability to meet the basic needs, self-esteem and the ability to choose.

Human Development Index

This is a composite index based on per capita GNP and the level of educational
attainment and life expectancy of a population. A series has been generated by the
UNDP with the basic index and data are now regularly published on the performance
of countries over time. The UNDP brings out an annual Human Development
Report, which covers a number of indicators, and countries are ranked on the basis of
an index.

2.4.2 Poverty Indicators

The data sources used for measuring poverty are a study of income distribution, disaggregation of other indicators by subgroups and time-use studies. Various studies
use all of the following or a few of these indicators to measure the extent of poverty
levels in a country.
1)

Proportion of population below minimum level of dietary energy consumption

(indigent)

2)

Poverty gap ratio (incidence multiplied by depth of poverty)

3)

Share of poorest quintile in national consumption

4)

Prevalence of underweight children (under five years of age)

5)

Proportion of population below $1 per day (PPP-values)

Most of the national governments conduct sample surveys to implement poverty

alleviating programmes. The World Bank has conducted several studies called the
Living Standards Measurement Survey (LSMS). lnformation on the poverty levels of
specific groups can be arrived at by disaggregating poverty indicators based on
gender, caste, age, race and location. Similarly, time-use data can be used to study
sub-groups of population in terms of the economic value of their work (i.e., paid or
unpaid), types of activities performed, and intensity of activities. This data is often
used for measuring gender equity and intra-household divisions of labour.

2.5 POVERTY AND MARGINALIZED GROUPS

Though there are several causes of poverty, the common one is structural. 'The
ownership of assets particularly land, is a primary reason for poverty in rural areas.
In most cases it is observed that poverty in a household stems out either from
unemployment or unproductive employment. Social discrimination, apart from lack
of asset base is another cause of poverty. In India, caste division leads to restrictions
on occupational mobility of people, thus they are forced to earn their livelihood from
their traditional occupations. Eden in a developed nation such as the US, for
example, the Blacks are found to earn less than the whites in similar jobs.
It is observed that there are specific groups of population where poverty is endemic.
The level and pattern of poverty depends on the level of per capita income and the
unequal distribution of the prevailing level of income. Under such circumstances, it
is important for policy makers to study the spread of population which is poor.

Gender and Poverty

Women make a substantial proportion of poor people. Studies have shown that
women headed household in rural areas are the poorest. The income disparity
between men and women is evident due to vast differentials in wages paid to men
and women. Women are increasingly employed in the unorganized sector as
unskilled labour. They are also engaged in home-based work where they get piece
wages. Female-headed households are often poor, as women do not get jobs or credit
to set up their own businesses. In recent years, the term 'feminisation of poverty' is
used to denote the specific characteristics of poverty where women are directly
affected adversely as a result of development process.

Rural Poor
In most of the developing world, large proportion of population work in rural areas
and are engaged in low wage agriculture or allied activites. Though most often, the
governments of these countries are aware of the imminent rural poverty, the path of
development followed by them is in favour of urban areas. This bias in favour of
urban areas in terms of healthcare facilities, educational institutions, housing and
other infrastructure has put the rural population further into poverty.

Caste and Poverty

In India, specifically, caste hierarchy has often been closely associated with poverty.
l'here are a number of castes, which have stayed at the lowest rung of economic
hierarchy for generations as they are associated with low paying menial tasks.
There has been a clear example of social and economic exclusion of these sections
from the fruits of the development process in the country.

Ethnic Minorities and Indigenous Population

In several countries and in lndia as well, large segments of indigenous population
(known as adivasis in India) are poorer than the rest of the population. The scheduled
tribes in lndia largely inhabit in their natural surroundings and engage themselves in
traditional occupations. They have been displaced from their natural habitat without
being settled in other places or vocations.

2.6 POVERTY ESTIMATES

Globally, the decade of 1990s is considered a decade of jobless growth, which mean
economic growth has taken place, but employment growth has stagnated. This has

Inequality and Poverty

Society and Economic

Development: Some Hard Facts

forced a large number of people to stay unemployed or take up low paying jobs in
the unorganised sectors. We have been witnessing a paradox of poverty with growth.
This brings into focus the need for effective policies for equitable distribution of
national wealth so that various kinds of deprivations faced by people can be
removed. The strategy of removing poverty has to be a comprehensive one and
should not be restricted to taking note of only some of its more visible features.

In recent decades, a lot of literature on poverty has emerged from all the countries.
Developed countries have been trying to tackle the issue of poverty in their
economies. Though the extent of poverty is not the same as in the developing
countries, there are pockets of poverty and deprivation in developed countries as
well. The poverty levels are extremely high and endemic in the continent of Afiica
which appears to have faced decline in growth in the past two decades. South Asia
also has vast sections of population in absolute poverty. In recent years, it has been
observed that large sections of people in developing countries are facing increased
joblessness, lack of health care facilities and food security. Malnutrition, illiteracy
and lack of livelihood appear to have become crucial issues to resolve the problem of
deprivation and poverty.
Table 2.2: Population below Poverty Line in India
No. of persons in lakhs
States
198788

1993-94

25.2

25.1

7.5

19992000

Poverty Ratios
(% of Population)
1987
-88

1993
-94

14.5

13.2

11.8

15.9

5.1

15.5

25.4

43.9

17.3

160.4

154.0

Kerala

88.5

Gujarat
Rajasthan

19992000

Poverty Reduction
87-88 to
93-94

93-94 to
99-00

6.2

1.4

5.6

28.4

7.6

-12.9

20.8

16.6

25.1

8.7

-8.5

16.4

119.0

25.9

22.2

15.8

3.7

12.1

76.6

.
41 O

31.8

25.4

12.7

6.4

6.3

122.4

105.2

67.9

31.5

24.2

14.1

7.3

6.8

142.9

128.5

81.8

35.2

27.4

15.3

7.8

7.5

75.8

96.4

94.6

36.2

40.9

36.1

-4.7

4.8

Karnataka

158.6

156.5

104.4

37.5

33.2

20.0

4.2

13.2

All India

3070.5

3203.7

2602.5

38.9

36.0

26.1

2.9

9.9

Maharashtra

296.3

305.2

228.0

40.4

36.9

25.0

3.5

11.9

Uttar Pradesh

536.5

604.5

529.9

41.5

40.9

31.2

0.6

9.7

Madhya Pradesh

264.3

298.5

298.5

43.1

42.5

37.4

0.6

5.1

Tamil Nadu

231.1

202.1 ,

130.5

43.4

35.0

27.0

8.4

13.9

West Bengal

283.6

254.6

213.5

44.7

35.7

42.6

9.0

8.7

Bihar

420.9

493.4

425.6

52.1

55.0

47.1

-2.9

12.4

Orissa

165.9

160.6

169.1

55.6

48.6

17.1

7.O

1.5

Punjab
Himachal Pradesh
Haryana
Andhra Pradesh

Assam

Note: States have been arranged in the ascending order of poverty ratio in 1987-88.

Source: Planning Commission of India

Poverty Level in India

The prevalence of a large proportion of population which can be called absolute poor
is overwhelming in India. The process of development as implemented over the past

two decades does not appear to have benefited these people. As a result, the rural and
urban poor exist in large numbers. This has been accentuated by a decline in the
growth of job availability particularly in the organized sector. In fact, the jobless
growth of the 1990s has increased the intensity of deprivation and poverty amongst
the rural and urban poor.

Inequality and Poverty

According to the World Resources Report 2005, published by the World Resources
Institute, in the year 1999-2000 the percentage of population living on less than $1
per day in India is 8 per cent. If we consider $2 per day then the percentage of
population living on less than $2 per day constitute 35 per cent.

2.7 POVERTY AND NUTRITION

The basic requirement for survival is sufficient nutrition which not only enables a
person to live a healthy life but also enables himther to participate actively in
improving his economic and social well being. Chronic diseases due to
lnalnourishment put a heavy toll on creative abilities of people. In particular,
childhood malnutrition hampers proper growth of children, which finally becomes an
impediment to their physical, intellectual and emotional development.

Table 2.3: Calorie Intake at Different Expenditure Level (1999-2.000)

Expenditure
Class
IMPCEJ
Rs.

Proportion
of
perso
ns %

'

Rural
Cumu- Calorie
lative
Intake1
YO
capital
day

Expendit- Expendure on
iture
food %
Class

Proportion of
persons

Urban
Cumul- Calorie
ative % intake

YO

Expenditure
on food
YO

1398
5.1
5.1
1388
67
0-225 5O
.
5.O
64
0-300
-

1
1

225-255

5.0

10.1

1609

67

300-350

5.1

10.1

1854

64

255-300

10.1

20.2

1 733

66

350-425

9.6

19.7

1729

62

300-340

10.0

30.2

1868

65

425-500

10.1

29.8
-

1912

60

340-380

10.3

40.5

1957

65

500-575

9.9

39.7

1968

58

380-420

9.7

50.2

2054

64

575-665

10.0

49.7

2091

56

420-470

10.2

60.4

2173

63

665-775

10.1

59.8

21 87

54

470-525

9.3

69.7

2289

62

775-91 5

10.0

69.8

2297

52

525-615

10.3

80.0

2403

60

91 5-1 120

10.0

79.8

2467

49

615-775

9.9

89.9

258 1

58

1 1201500

10.1

89.9

2536

45

775-950

5.0

94.9

2735

55

15001925

5.0

94.9

2736

41

950
more

5.0

100.0

3778

46

1925
more

5.O

100.0

2938

32

All

99.9

All

99.9

2 149

Source: Nutritional intake in India NSS 55"' Round. Report No. 471 in Alternative
Economic Survey (2004)

2156

Society and Economic

Development: Some H a r d Facts

POVERTY AND SOCIAL CONFLICT

The rise in inequality and the stark variation in living standards of the rich and the
poor globally have led to an increase in social tensions in societies. As a result, a
large number of the poor are getting attracted to political movements, which in their
perception and understanding can improve their economic condition. In India, it has
been observed that large territories are under the control of Naxalites who are
organizing people for achieving economic equality with the rest of the society. This
is further made complex due to caste differentiation where economic and social
mobility is restricted in our social system.

Poverty and Vulnerability

It has been observed that poor people are vulnerable to a number of discrimination.
Vulnerability creates impediment in the implementation of various development
programmes. Some groups may be at risk of becoming poor because of inherent
vulnerabilities (i.e., different types of discrimination based on class, gender, caste,
ethnicity, or factors such as disability, region of residence and family configuration).
Furthermore, certain combinations of vulnerability may be strongly correlated with
poverty, such as female-headed households or families living in remote and isolated
mountainous regions or some castes from specific occupational background. Such
correlations between vulnerabilities and poverty make it necessary to pay special
attention to these segments of population.

Poverty and Exclusion

The issue of exclusion is varied as there can be social exclusion as well as economic
exclusion. In several situations, the two types of exclusion are also directly
interrelated. Exclusion based on caste, whatever economic group you belong to,
would imply social exclusion. More specifically, social exclusion refers to issues of
participation, empowerment and social rights. However, the inter-related nature of
economjc and social exclusion in India would mean that some castes are both
economically and socially excluded from the procebs of development. Because of a
vast range of deprivations, certain castes have been restricted to their traditional
occupations or to other low wage unskilled work. For policy makers, it is important
to go beyond the narrow definition of poverty based on income indicators only and
take note of social exclusion too.

Check Your Progress 2

1)

Distinguish between various measures of poverty.

2)

How does poverty affect the marginalized sections of society'?

3)

Write short notes on:

i)

Poverty line

ii)

Human capability approach

Inequality and Poverty

1
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2.9 LET US SUM UP

As a multidimensional phenomenon, poverty is defined and measured in different
ways. The structural inequities and inherent disadvantages lead to social and
economic exclusion where it is dificult for people to have access to credit, land,
health care and education. It has been observed that unless the structural inequalities
in societies are not tackled the problem of poverty will persist. The distribution of
assets, particularly land in rural areas, access to credit, education and healthcare is
essential for eradicating poverty. Similarly, the human capability concept of poverty
focuses on expanding people's opportunities to enable them to live up to their
potential.

2.10 KEY WORDS

Exclusion

Economic exclusion refers to denial of access to economic

opportunities and social exclusion refers to exclusion from
of participation, empowerment and social rights.

Inequality

Inequality refers to disparity in a set of population in respect

to their material (cash or kind) possessions.

Poverty Gap

It is the average of the differences between the income of

each individual poor and the poverty line. It measures the
total amount of income necessary to raise everyone who is
below the poverty line up to that line.

Poverty Line

The poverty line is a monetary measure of the minimum

consumption of goods and services that a household should
obtain in order to ensure that its basic needs are adequately
met.

Poverty

It refers to lack of access to minimum standard of living in

society.

Social Conflict

he rise in inequality and the stark variation in living

standards of the rich and the poor globally have led to an
increase in social tensions in societies. As a result, a large
number of the poor are getting attracted to political
movements, which in their perception and understanding can
improve their economic condition. This anger can also be
misdirected into socially unacceptable direction.

2.1 1 SOME USEFUL BOOKSJREFERENCES

McKinley, Terry, 1 997, 'Beyond the Line: Implementing Complementary Methods of
Poverty Measurement', UNDP Poverty Reduction Series.
Todaro, Michael and Stephen Smith, 2005, Economic Development, Pearson
Education, London

Society and Economic

Development: Some Hard Facts

UNDP website: www. undp.org for The Human Development Reports

Yujiro Hayami, 2001, Development Economics- From the Poverty to the Wealth of
Nations, Oxford University Press, New York.

2.12 ANSWERSIHINTS TO CHECK YOUR

PROGRESS EXERCISES
Check Your Progress 1
1)

See Section 2.2 and answer.

2)

See Section 2.3 and answer.

Check Your Progress 2

1)

See Section 2.4 and answer.

2)

See Section 2.5 and answer.

3)

See Sub-section 2..4.2and answer.