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Indian Economy (SSC, Railway, Police & All State exam)Chapter Unit

Poverty, Unemployment, and Government Schemes

Poverty: Definition and Types

  • Poverty:

    • A condition where individuals lack sufficient income to meet basic needs like food, clothing, and shelter.
    • Measured in terms of income or consumption levels.

  • Types of Poverty:

    1. Absolute Poverty:
      • Inability to meet the minimum subsistence level of income or consumption.
      • Measured using a poverty line.
    2. Relative Poverty:
      • Economic inequality within a society.
      • Focuses on income disparities rather than minimum subsistence.
    3. Urban and Rural Poverty:
      • Urban Poverty: Poor living conditions in cities, often in slums.
      • Rural Poverty: Poverty in villages due to lack of infrastructure and employment opportunities.

Measurement of Poverty in India

  1. Poverty Line:

    • A threshold income level below which individuals are classified as poor.
    • Determined by expenditure required for minimum caloric intake:
      • Rural Areas: 2,400 calories per day.
      • Urban Areas: 2,100 calories per day.

  2. Estimation Committees:

    • Tendulkar Committee (2009):
      • Poverty line based on monthly per capita expenditure (₹816 in rural and ₹1,000 in urban areas).
    • Rangarajan Committee (2014):
      • Revised poverty line to ₹972 in rural and ₹1,407 in urban areas.

  3. Global Poverty Index:

    • World Bank definition: Living on less than $1.90 per day (international poverty line).

Causes of Poverty in India

  1. Unemployment:
    • Lack of job opportunities leads to income insecurity.
  2. Low Agricultural Productivity:
    • Dependence on traditional farming methods and monsoons.
  3. Overpopulation:
    • Strains resources and reduces per capita income.
  4. Inequitable Distribution of Wealth:
    • Economic benefits are concentrated in the hands of a few.
  5. Inflation:
    • Rising prices reduce purchasing power, especially for low-income groups.
  6. Social Inequality:
    • Caste and gender discrimination hinder economic participation.

Unemployment: Definition and Types

  • Unemployment:

    • A condition where individuals willing and able to work cannot find suitable employment.

  • Types of Unemployment:

    1. Disguised Unemployment:
      • More workers employed than required, common in agriculture.
    2. Seasonal Unemployment:
      • Occurs in industries like agriculture during off-seasons.
    3. Frictional Unemployment:
      • Temporary unemployment during job transitions.
    4. Structural Unemployment:
      • Mismatch between workers’ skills and job requirements.
    5. Cyclical Unemployment:
      • Caused by economic downturns or recessions.
    6. Urban Unemployment:
      • Prevalent in cities due to rapid urbanization and lack of jobs.
    7. Rural Unemployment:
      • Results from dependence on agriculture and lack of industrialization.

Causes of Unemployment in India

  1. Population Growth:
    • High population creates excessive competition for jobs.
  2. Skill Mismatch:
    • Lack of alignment between education and market demands.
  3. Low Industrial Growth:
    • Insufficient industrial development to absorb the labor force.
  4. Dependence on Agriculture:
    • Seasonal nature of agricultural jobs.
  5. Technological Advancements:
    • Automation reduces demand for manual labor.
  6. Economic Slowdown:
    • Periods of low economic growth reduce job creation.

Effects of Poverty and Unemployment

  1. Economic Impact:
    • Low productivity and reduced national income.
  2. Social Impact:
    • Increased inequality, social unrest, and crime rates.
  3. Health and Education:
    • Poor access to healthcare and education perpetuates poverty.
  4. Political Instability:
    • Economic disparity fuels dissatisfaction and weakens governance.

Government Schemes for Poverty Alleviation

The Indian government has implemented several schemes aimed at reducing poverty and improving living standards:

  1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

    • Launched: 2005.
    • Objective:
      • Provide at least 100 days of guaranteed wage employment to rural households.
    • Features:
      • Focus on unskilled manual labor.
      • Employment linked to rural infrastructure development (e.g., roads, water conservation).
    • Impact:
      • Reduction in rural unemployment and migration to cities.

  2. Pradhan Mantri Awas Yojana (PMAY):

    • Launched: 2015.
    • Objective:
      • Provide affordable housing to all by 2022.
    • Components:
      • PMAY (Urban) and PMAY (Gramin) for urban and rural areas, respectively.
    • Features:
      • Subsidized housing loans for economically weaker sections (EWS) and low-income groups (LIG).

  3. National Food Security Act (NFSA):

    • Launched: 2013.
    • Objective:
      • Provide subsidized food grains to 75% of the rural and 50% of the urban population.
    • Features:
      • Food grains at ₹3/kg for rice, ₹2/kg for wheat, and ₹1/kg for coarse grains.

  4. Deendayal Antyodaya Yojana:

    • Components:
      1. National Rural Livelihood Mission (NRLM):
        • Focus: Empower rural poor through Self-Help Groups (SHGs).
      2. National Urban Livelihood Mission (NULM):
        • Focus: Enhance skills and livelihoods of urban poor.

  5. Pradhan Mantri Jan Dhan Yojana (PMJDY):

    • Launched: 2014.
    • Objective:
      • Financial inclusion by opening bank accounts for all households.
    • Features:
      • Zero balance accounts, RuPay debit cards, overdraft facilities.

Government Schemes to Combat Unemployment

  1. Skill India Mission:

    • Launched: 2015.
    • Objective:
      • Enhance skill development and employability.
    • Features:
      • Programs like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to provide industry-relevant training.

  2. Startup India:

    • Launched: 2016.
    • Objective:
      • Promote entrepreneurship and job creation.
    • Features:
      • Tax exemptions, funding support, and simplification of compliance.

  3. Stand-Up India:

    • Launched: 2016.
    • Objective:
      • Provide loans to SC/ST and women entrepreneurs.
    • Features:
      • Loans between ₹10 lakh and ₹1 crore for greenfield enterprises.

  4. Atmanirbhar Bharat Abhiyan:

    • Launched: 2020.
    • Objective:
      • Boost self-reliance and job creation through MSMEs and local industries.
    • Features:
      • Emergency credit lines for small businesses.

  5. Rural Employment Generation Programme (REGP):

    • Objective:
      • Create self-employment opportunities in rural areas.
    • Implemented by:
      • Khadi and Village Industries Commission (KVIC).

  6. Make in India:

    • Launched: 2014.
    • Objective:
      • Transform India into a global manufacturing hub.
    • Impact:
      • Increase in manufacturing jobs and foreign investments.

Impact of Government Schemes

  1. Reduction in Poverty:
    • Significant decline in absolute poverty levels.
    • Improved access to food, shelter, and basic amenities.
  2. Job Creation:
    • Enhanced employment opportunities in rural and urban areas.
  3. Financial Inclusion:
    • Increased banking penetration through schemes like PMJDY.
  4. Women Empowerment:
    • Focused programs like Stand-Up India and SHGs promote gender equity.
  5. Infrastructure Development:
    • MGNREGA and PMAY contribute to rural and urban infrastructure growth.

Challenges in Implementation

  1. Leakages and Corruption:
    • Diversion of funds and inefficiencies in delivery mechanisms.
  2. Awareness Gaps:
    • Lack of awareness among beneficiaries about available schemes.
  3. Targeting Issues:
    • Difficulty in identifying eligible beneficiaries.
  4. Resource Constraints:
    • Insufficient funds and overburdened administrative systems.

Impact of Poverty and Unemployment on Society

  1. Social Impact:
    • Rising inequality and social unrest.
    • Increased incidence of crime due to economic hardships.
  2. Economic Impact:
    • Loss of productivity and reduced economic growth.
    • Pressure on public resources due to higher demand for subsidies and welfare programs.
  3. Health and Education:
    • Poor access to healthcare and education perpetuates the poverty cycle.
  4. Political Instability:
    • Economic disparities weaken governance and can lead to political instability.

Comprehensive Anti-Poverty Programs

  1. Integrated Rural Development Program (IRDP):

    • Launched: 1978.
    • Objective:
      • Provide assets and skills to the rural poor for self-employment.
    • Beneficiaries:
      • Small farmers, landless laborers, artisans.
    • Status:
      • Merged into Swarnjayanti Gram Swarozgar Yojana (SGSY).

  2. Antyodaya Anna Yojana (AAY):

    • Launched: 2000.
    • Objective:
      • Provide heavily subsidized food grains to the poorest families.
    • Features:
      • 35 kg of food grains per family per month at ₹3/kg for rice and ₹2/kg for wheat.

  3. Swarnjayanti Gram Swarozgar Yojana (SGSY):

    • Launched: 1999.
    • Objective:
      • Promote self-employment through micro-enterprises.
    • Features:
      • Formation of Self-Help Groups (SHGs) for rural poor.
    • Status:
      • Subsumed under Deendayal Antyodaya Yojana - NRLM.

  4. National Rural Health Mission (NRHM):

    • Launched: 2005.
    • Objective:
      • Strengthen healthcare infrastructure in rural areas.
    • Features:
      • Accredited Social Health Activists (ASHAs) to connect rural populations with healthcare services.

Key Measures to Combat Unemployment

  1. Focus on Labor-Intensive Sectors:
    • Promote industries like textiles, construction, and agriculture that generate high employment.
  2. Encouraging Startups:
    • Financial incentives and ease of doing business for startups.
  3. Skill Development:
    • Enhance workforce readiness through vocational training and certifications.
  4. Support for MSMEs:
    • Provide credit, subsidies, and infrastructure support to small businesses.

Global Comparisons

  1. India’s Poverty Scenario:
    • India has achieved significant progress in reducing absolute poverty, but regional disparities persist.
    • Urban areas fare better than rural regions in poverty alleviation.
  2. Unemployment Trends:
    • India’s unemployment rate fluctuates between 6–8% (post-COVID-19 recovery phase).
    • Higher unemployment among youth and urban graduates compared to global averages.
  3. Global Examples:
    • Scandinavian countries have minimal poverty and unemployment due to robust welfare systems.
    • Developing economies face challenges similar to India, including informal employment and income inequality.

Future Directions

  1. Universal Basic Income (UBI):
    • Explore feasibility of providing a minimum guaranteed income to every citizen to reduce poverty and unemployment.
  2. Social Security Expansion:
    • Broaden pension, insurance, and health coverage for vulnerable groups.
  3. Inclusive Growth:
    • Focus on integrating marginalized communities into mainstream economic activities.
  4. Technological Advancements:
    • Use AI and big data to identify beneficiaries and track the effectiveness of schemes.
  5. Strengthening Governance:
    • Reduce corruption and improve delivery mechanisms through digitization and accountability.

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