Poverty
Topic: Poverty and Inequality: Measurement and Policy · NCERT: Class 11, Ch 1 "Indian Economy on the Eve of Independence"; Class 11, Ch 4 "Human Capital Formation in India"; Class 11, Ch 5 "Rural Development"; Class 11, Ch 7 "Environment and Sustainable Development"; Class 11, Ch 8 "Comparative Development Experiences of India and its Neighbours"; Class 11, Ch 1 "Introduction (Statistics for Economics)"
Meaning
Poverty means lacking the income or consumption needed for basic needs such as food, clothing, shelter, health and education. It can be measured in three ways:
- Absolute: below a fixed minimum level.
- Relative: below a share of the society's median living standard. The median is the middle value.
- Multidimensional: deprived in several areas of life at the same time.
In the income view, a person is poor if their spending falls below a money threshold called the poverty line. In Amartya Sen's capability view, poverty is the lack of real freedoms, such as being well-fed, healthy and literate. What we choose to count decides how many poor we find and how policy targets them.
Example
India's Tendulkar poverty line put the head-count ratio (share of people who are poor) at 21.9% in 2011-12, about 27 crore people. NITI Aayog's Multidimensional Poverty Index (MPI) instead counts gaps in health, education and living standards. On that measure, 11.28% of Indians were poor in 2022-23. This was an extrapolated estimate.
Don't confuse with
- Inequality: poverty is about who falls below a threshold. Inequality is about how income is spread across everyone. Poverty can fall while inequality rises.