Poverty and Economic Disparity
Meetanshi Gaba
EY Internship
Poverty has been defined as a "pronounced deficit in well-being" and being poor as "being
hungry, lacking shelter and clothing, unwell and uncared for, illiterate and unschooled... Poor
individuals are more vulnerable to uncontrollable circumstances. They are frequently mistreated
by institutions of the state and society. They are denied a voice and authority in such
organisations." (IBRD, 2000.) Using income as a measure of poverty, the Globe Development
Report (2000-01) refers to "deep poverty amid abundance" in the world, stating that one-fifth of
the world's inhabitants live on less than $1 per day, with South Asia accounting for 44 per cent of
them. Being poor means not being able to participate in society on equal terms with others, and
thus, in the long run, being omitted by compatriots or stepping away from social and civic life
due to a lack of economic resources, usually in conjunction with the guilt of not being able to
live a life like them (Sen 1983). Economic hardship has an impact on one's standard of living,
purchasing patterns, and leisure time activities, and this is directly or indirectly connected to the
ability to make or retain friends or acquaintances: Poverty is reflected by the lack of proper
clothing or a car; by the inability to finance vacations, restaurant visits, or organising dinner
parties (Mack and Lansley, 1985)
Severe poverty is defined in three ways:
i) those who are chronically or severely below the poverty line, or who have incomes of 75% of
the poverty line or less;
ii) those who suffer from hunger, or who do not get even two square meals a day as an extreme
form of deprivation, and
iii) those who suffer from malnutrition. Inability to handle shocks can also lead to extreme
poverty, malnutrition, and suicide.
The chronically impoverished are likely to face deprivation in a variety of ways. Poverty is the
result of a variety of circumstances, including not only money and calorie consumption, but also
access to land and finance, nourishment, health and wellbeing, literacy and education, as well as
safe drinking water, sanitation, and other infrastructural services. As a result, multidimensional
measures of poverty, such as indicators of human and sexual development and capacity building,
must be included. State-level estimates of HDI, GDI, GEM, and HPI, as well as infant mortality
estimates, are provided and analysed to determine if persons living in regions with a high
prevalence of severe income poverty also lack access to literacy, education, nourishment, voice,
and infrastructure.
According to Kozel and Parker (2001), "poverty is not a simple, unidimensional, or homogenous
reality.... three basic types of the poor emerged: ?? the destitute poor, who have had peculiar
shocks, disasters, or other major problems that have left them without a livelihood or chronically
indebted;?? the structural poor, whose poverty is strongly linked to social identity (caste was the
primary determinate of social identity); and?? the "mobile" poor, who have experienced more
resources compared to either of the two additional groups, are virtually debt-free and have the
greatest Risk and vulnerability emerged as major issues for all types of poor people, but
especially for the impoverished and structurally poor.
According to the Tendulkar Committee methodology, the national poverty line (in Rs per capita
per month) for 2011-12 was Rs 816 in rural areas and Rs 1000 in urban areas. The National
Sample Survey Organisation assessed poverty at 21.9 per cent of the population (269 million) in
2011-12 using this technique. That is, persons whose daily income was less than Rs 27 in the
countryside and Rs 33 in cities were classified as poor. The succeeding Rangarajan Committee,
on the other hand, set the poverty threshold at Rs 32 in rural regions and Rs 47 in urban areas.
On this basis, the number of impoverished people in India living below the poverty line in 2011-
2012 was revised to 29.5 per cent.
In comparison, the World Bank's worldwide poverty level, as revised in October 2015, is
US$1.90 per day (2011 PPP). In 2011, it was projected that 21.2 per cent of India's entire
population was living below the poverty level. In India, household expenditure is taken into
account while measuring poverty levels. This strategy takes into consideration people's
purchasing capacity for food and several vital non-food products. Though the situation in cities
has remained mostly unchanged in recent years, government welfare programmes have
significantly reduced the incidence of poverty in rural India. Schemes such as MNREGA have
resulted in a faster reduction in poverty in rural regions than in urban areas.
Despite these efforts, the overall number of impoverished in India continues to rise and pose a
challenge. Poverty is like an illness that causes a slew of other issues such as crime, slow growth,
and so on. In India, there are still many individuals who live on the streets and beg for food all
day. Underprivileged children are unable to attend school, and those who do go have the option
of dropping out after a year or so. People living in poverty live in filthy circumstances and are
predisposed to a variety of health issues. As a result, the vicious cycle of ill health, lack of
education, and increased poverty continue.
Impoverished people do not just have a lack of access to economic capital, in terms of goods,
property and resources; but they lack access to social and cultural capital (as defined by Pierre
Bourdieu). Cultural Capital is what gives you access to good economic opportunities and vice
versa. They are cut off from society in terms of lack of possession of all three forms of capital.
Inequality reigns supreme in a country like India where poverty remains a huge challenge.
Moreover, the poorest in India are the Dalit and Adivasi people, for whom the burden of
discrimination is manifold, as they face prejudice based on their socio-political as well as their
economic strata.
While economic development is a potent weapon for poverty reduction, the impact of higher
growth on poverty reduction is highly dependent on growth patterns and levels of inequality. The
Indian economy has experienced significant structural changes as a result of its fast expansion in
recent years. As a result, inclusive growth has emerged as a significant policy objective, defined
as the process through which a large part of the population shares the advantages of expansion.
Poverty has also significantly reduced, as earlier mentioned, but economic growth still hasn’t
come to par with the growth in population, so while we move a step forward in terms of
eradication of poverty, we still somehow manage to take two steps back.
The rapid population growth in India is one of the primary causes of poverty. This leads to a high
incidence of illiteracy, inadequate healthcare facilities, and a lack of financial resources.
Furthermore, rapid population expansion has an impact on per capita income, making it even
lower. It is anticipated that India's population will exceed 1.5 billion by 2026, making it the
world's largest country. However, the Indian economy is not rising at the same rate. This implies
a labour scarcity. Nearly 20 million more employment would be required for this demographic.
If such a large number of jobs are not produced, the number of impoverished people will
continue to rise.
Our society is very certainly imbalanced. Wealth is primarily concentrated in the hands of very
few people. According to an Oxfam analysis titled "Inequality Virus," the richest 10% of India's
population controls 77% of the country's wealth. The wealth of India's richest one per cent is
more than four times that of the poorest 70 per cent. India has the world's fourth-lowest
healthcare spending. Inadequate health funding creates a significant disparity between private
and public healthcare systems. Private hospitals in India are more equipped and organised, but
public hospitals lack basic medical equipment, hence private hospitals are the most sought after,
yet demand expensive fees. In India, there is a "high out-of-pocket expenditure" for health,
pushing a large population into poverty or extreme poverty.
Economic disparities interact and frequently lead to other types of equally stark social, political,
and cultural inequality, limiting social mobility and widening intergenerational divides (Sastry
2004). A greater concentration of wealth in the hands of a few causes inequality, which may
harm economic stability as well as challenge social fairness values and erode social
cohesiveness. Furthermore, research has found that rising inequality can skew an economy by
reducing overall middle-class demand for consumer goods and even fueling debt crises (Keeley
2015).
Eradicating poverty is a huge challenge that does not just require policy changes, but immense
cooperation between the state and the citizens of a country. Social Inequality which stems from
poverty needs to be redressed in a way that the privileged individuals contribute significantly to
reducing this imbalance. Some of the policy changes that can be implemented are:
Sustained Inclusive Economic Growth which caters to all sections of the population: Promoting
economic growth raises overall societal revenue, producing more employment and income that
may be dispersed. However, not all income and riches will definitely flow down to the lowest.
There is fear that economic progress would increase relative poverty since it will favour the
highly trained and rich classes more than the poor. It is imperative that economic growth be all-
inclusive and wealth be distributed equitably amongst the sections of society. Putting a bar on the
number of profits that an entrepreneur or a business can earn might be one solution to ensure that
wealth and property are not concentrated in the hands of the richest strata of the population.
Ensuring that there is a (more than) minimum wage guaranteed to all workers and policy
measures for ensuring the well-being of self-employed labourers are also important.
Lower Unemployment: Unemployment is a key source of poverty since jobless people have little
income and rely on government assistance. Unemployment may be addressed by both supply-
side and demand-side measures, such as free training programmes for the structurally jobless.
Poverty and unemployment are frequently geographical issues, with poorer regions seeing higher
levels of poverty. Government incentives for enterprises located in poor regions might be
included in policies to combat geographical poverty. Building stronger infrastructure
(transportation and communication) in impoverished areas can also provide an economic impetus
for employment creation.
Investment in Agriculture: Over a 40-year period, China helped more than 800 million people
escape poverty by growing the country's agriculture industry. Low-interest loans, educational
subsidies, and increased agricultural production investment enabled impoverished farmers to
generate a respectable income, allowing them to escape poverty. Investing in agriculture offers
jobs for lower-income farmers.
Progressive Taxation: Increasing progressive taxes, such as raising the income tax rate from 40%
to 50%, will take more revenue away from the wealthy. This allows for reductions in regressive
taxes (such as VAT/Sales tax) and greater welfare payments, which assist raise the income of the
poor. This has the potential to be an effective method of reducing relative poverty.
Availability of easier credit to farmers and poor people: Credit should be made relatively easier
for farmers and poor people through cooperatives and NBFCs. This will give them a chance to
start their own small businesses or increase their agricultural production capacity leading to more
sales and alleviation of poverty.
In-Kind Advantages: In-kind benefits are a non-monetary alternative to traditional benefits. The
objective is to give low-income families and people direct access to the items and services they
require to improve their level of living. For example, there are several organisations (both
government and non-government) that offer food, housing, or clothes to individuals in need.
In-kind benefit supporters say that this sort of assistance guarantees that the needy have access to
what they require the most. They also restrict beneficiaries from utilising government assistance
to purchase undesired goods and services.
Rapid Infrastructure Development: Rapid infrastructure development is an important factor for
creating job opportunities for the poor and increasing productivity. Because the private sector is
unwilling to spend enough in infrastructure, state investment must be increased to support its
development. Infrastructure development includes the construction of roads, highways, ports,
telecommunications, electricity, and irrigation systems. They mostly require labor-intensive
building tasks. In a country like India, where the physical and social infrastructure bequeathed
from the pre-liberalisation period is weak and large land redistribution is not practicable, public
investment in physical infrastructure in less developed regions must be increased.
Accelerating Human Resource Development: In addition to physical infrastructure development,
human resource development may help to eliminate poverty. Greater investment in educational
institutions such as schools to promote literacy, technical training institutes, and vocational
colleges to import skills to the population is required for human resource development.
Furthermore, human resource development necessitates public investment in Primary Health
Care Centers, clinics, and hospitals.
This human resource development not only creates a large number of job chances, but also
increases the productivity and income of the poor. Furthermore, persons with talents, education,
and excellent health may easily find wage or self-employment with increased production.
Other than the aforementioned measures, the government can launch more unemployment
programs for the rural and the urban poor. MNREGA, for instance, helped a lot in the alleviation
of poverty. More such programs will help in the upliftment of the poorest sections of society.
Poverty is a very deep-rooted issue that needs to be nipped in the bud, and while that will take a
significant amount of time, it is imperative to start immediately so a certain amount of change
can be brought about.
