GURU NANAK DEV UNIVERSITY

UNIVERSITY SCHOOL OF FINANCIAL STUDIES

PROJECT REPORT

ON

POVERTY IN INDIA

SUBMITTED TO : SUBMITTED BY :

DR. LAKHWINDER SINGH AANCHAL

B.com (Hons) (semester-IV)

ROLL NO. :17241882922

 CERTIFICATE

This is to certify that Aanchal student of |B.Com(Hons.), Fourth Semester, School of

Financial Studies, Guru Nanak Dev University has completed the project work entitled
“Poverty in India”, under my supervision and guidance.
It is further certify that the candidate has made sincere efforts for the completion of the
project work.

SUPERVISOR NAME

(Dr. Lakhwinder Singh)

 ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals. I would like to extend my sincere thanks to all of them.

I am highly indebted to my teacher Dr. Lakhwinder Singh for his guidance and constant
supervision as well as for providing necessary information regarding the project & also for
his support in completing the project.

I would like to express my gratitude towards my parents for their kind co-operation and
encouragement which help me in completion of this project.

My thanks and appreciations also go to my colleague in developing the project and people
who have willingly helped me out with their abilities.
Contents
INTRODUCTION.....................................................................................................................................5
Classification of poverty........................................................................................................................6
POVERTY LINE........................................................................................................................................8
CAUSES OF POVERTY IN INDIA.............................................................................................................11
EFFECTS OF POVERTY..........................................................................................................................14
Poverty Alleviation Programmes in India.............................................................................................16
CONCLUSION.......................................................................................................................................19
BIBLIOGRAPHY.....................................................................................................................................20
 INTRODUCTION

Poverty refers to a situation in which a person remain underprivileged from the basic necessities
of life. In addition, the person does not have an inadequate supply of food, shelter, and clothes. In
India, most of the people who are suffering from poverty cannot afford to pay for a single meal a
day. Also, they sleep on the roadside; wear dirty old clothes. In addition, they do not get proper
healthy and nutritious food, neither medicine nor any other necessary thing. Poverty is a peculiar
problem from which various countries of the world, particularly the Third World, have been
suffering. There cannot be a common definition of poverty which can be broadly accepted
everywhere. Thus there are large differences between the definitions of poverty accepted in
various countries of the world. Leaving aside all these differences it can be broadly said that
poverty is a situation where a section of the society, having no fault of their own, is denied of
even basic necessities of life. In a country, where a chunk of the population is deprived of
even minimum amenities of life since long period, the country is suffering from a vicious
circle of poverty.
Poverty is considered as the greatest challenge faced by the societies in the third world
countries. Poverty is also concerned with the comparison with respect to a fixed line—known
as poverty line. However, the poverty line is fixed extraneously and, therefore, remains fixed
for a certain period. As India is one of the fastest-growing economies in the world, poverty is
on the decline in the country, with close to 44 Indians escaping extreme poverty every
minute, as per the World Poverty Clock. India has been able to lift a significant percentage of
its population out of poverty, but many still live in it. India had 73 million people living in
extreme poverty which makes up 5.5% of its total population, according to the Brookings
report. In May 2012, the World Bank reviewed and proposed revisions to their poverty
calculation methodology and purchasing power parity basis for measuring poverty
worldwide. It was a minimal 3.6% in terms of percentage. As of 2016, the incidence of
multidimensional poverty has almost halved between 2005–06 and 2015–16, declining from
54.7 percent to 27.5 percent.
 Classification of poverty

On the basis of social, economical and political aspects, there are different ways to identify
the type of Poverty:
1.  Absolute poverty.
2.  Relative Poverty.
3.  Situational Poverty.
4.  Generational Poverty.
5.  Rural Poverty.
6.  Urban Poverty.
Now let us understand them one by one:

1. Absolute poverty: Also known as extreme poverty or abject poverty, it involves the

scarcity of basic food, clean water, health, shelter, education and information. Those who
belong to absolute poverty tend to struggle to live and experience a lot of child deaths from
preventable diseases like malaria, cholera and water-contamination related diseases. Absolute
Poverty is usually uncommon in developed countries.

It was first introduced in 1990, the “dollar a day” poverty line measured absolute poverty by
the standards of the world's poorest countries. In October 2015, the World Bank reset it to
$1.90 a day. This number is controversial; therefore each nation has its own threshold for
absolute poverty line.

"It is a condition so limited by malnutrition, illiteracy, disease, squalid surroundings, high

infant mortality, and low life expectancy as to be beneath any reasonable definition of human
decency." Said by Robert McNamara, the former president of the World Bank

2. Relative Poverty: It is defined from the social perspective that is living standard compared
to the economic standards of population living in surroundings. Hence it is a measure of
income inequality. For example, a family can be considered poor if it cannot afford vacations,
or cannot buy presents for children at Christmas, or cannot send its young to the university.
Usually, relative poverty is measured as the percentage of the population with income less
than some fixed proportion of median income.

It is a widely used measure to ascertain poverty rates in wealthy developed nations.

In European Union the "relative poverty measure is the most prominent and most–
quoted of the EU social inclusion indicators"

3. Situational Poverty: It is a temporary type of poverty based on occurrence of an adverse

event like environmental disaster, job loss and severe health problem.
People can help themselves even with a small assistance, as the poverty comes because of
unfortunate event.

4. Generational Poverty: It is handed over to individual and families from one generation to
the one. This is more complicated as there is no escape because the people are trapped in its
cause and unable to access the tools required to get out of it.

“Occurs in families where at least two generations have been born into poverty.  Families
living in this type of poverty are not equipped with the tools to move out of their situation”
(Jensen, 2009).

5. Rural Poverty: It occurs in rural areas with population below 50,000. It is the area where
there are less job opportunities, less access to services, less support for disabilities and quality
education opportunities. People are tending to live mostly on the farming and other menial
work available to the surroundings.

The rural poverty rate is growing and has exceeded the urban rate every year since data
collection began in the 1960s. The difference between the two poverty rates has averaged
about 5 percent for the last 30 years, with urban rates near 10–15 percent and rural rates near
15–20 percent (Jolliffe, 2004).

6. Urban Poverty: It occurs in the metropolitan areas with population over 50,000. These are
some major challenges faced by the Urban Poor:
•    Limited access to health and education.
•    Inadequate housing and services.
•    Violent and unhealthy environment because of overcrowding.
•    Little or no social protection mechanism.

POVERTY LINE

Poverty line is the level of income below which a person is not able to meet its basic needs. It
different across countries and no two countries can have same line. World Bank has defined
$1.90 per day as international poverty line. Some of its earlier poverty lines in the past were:

 1990 -> $1
 2008 -> $1.25
 2015 -> $1.90

Poverty Line in India

The erstwhile planning commission and now NITI AAYOG is the nodal agency for
estimation of poverty line in India. It is calculated on the basis of data collected by NSSO.
Some the famous committees appointed so far along with their recommendations are:

 Suresh Tendulkar panel’s recommendations in 2011-12, the poverty line had been
fixed at Rs 27 in rural areas and Rs 33 in urban areas. About 22% of the population
lives below this line.
 Rangarajan committee raised these limits to Rs.32 and Rs.47, respectively, and
worked out this line at close to 30%
The old formula for estimating the poverty line is based on the desired calorie requirement.
Food items such as cereals, pulses, vegetables, milk, oil, sugar etc. together provide these
needed calories. The calorie needs vary depending on age, sex and the type of work that a
person does. The accepted average calorie requirement in India is 2400 calories per person
per day in rural areas and 2100 calories per person per day in urban areas. Since people living
in rural areas engage themselves in more physical work, calorie requirements in rural areas
are considered to be higher than urban areas. On the basis of these calculations, for the year
2000, the poverty line for a person was fixed at Rs 328 per month for the rural areas and Rs
454 for the urban areas. In this way in the year 2000, a family of five members living in rural
areas and earning less than about Rs 1,640 per month will be below the poverty line.
The data pegged the poverty ratio at 29.8% of the population in 2009-10, down from 37.2%
in 2004-05. However, in recent times, various committees led by economists have come up
with different ways to measure the extent of poverty. The official line delivers a poverty rate
of around 32% of the population. A committee under Suresh Tendulkar estimated it at 37%,
while another led by NC Saxena said 50%, and in 2007 the Arjun Sengupta commission
identified 77% of Indians as "poor and vulnerable". The World Bank’s PPP estimate of
Indian poverty was higher than 40% in 2005, while the Asian Development Bank arrived at
almost 50%. The UNDP's Multidimensional Poverty Index finds the proportion of the poor to
be higher than 55%.

Condition of Indian States in BPL Population: (NSSO data)

It’s very pathetic that India is called a developing country and still it has such a big
population as below poverty line.
The current poverty line is $14 per month ($0.46 per day) in rural areas and $17 per month
($0.56 per day) in urban areas. India's nationwide average poverty line differs from each
state's poverty line.

CAUSES OF POVERTY IN INDIA

1. Demographic  - The main factor that contributes to poverty-ridden state of the country
from a demographical point of view is the problem of over population. The growth of
population in the country has so far exceeded the growth in economy and the gross
result is that the poverty figures have remained more or less consistent. In rural areas,
size of the families is bigger and that translates into lowering the per capita income
values and ultimately lowering of standard of living. Population growth spurt also
leads to generation of unemployment and that means diluting out of wages for jobs
further lowering income.

 2. Economic -There are a host of economic reasons behind persistence of the poverty
problems which are outlined hereunder:-

a. Poor Agricultural Infrastructure – Agriculture is the backbone of Indian economy. But

outdated farming practices, lack of proper irrigation infrastructure and even lack of formal
knowledge of crop handling has affected the productivity in this sector tremendously. As a
consequence there is redundancy and sometimes complete lack of work leading to decreased
wages that is insufficient for meeting daily needs of a labourer’s family plunging them into
poverty.

b. Unequal distribution of assets – With the economy changing directions rapidly, the
earning structure evolves differently in different economic income groups. Upper and middle
income groups see a faster increase in earnings than lower income groups. Also assets like
land, cattle as well as realty are distributed disproportionately among the population with
certain people owning majority shares than other sectors of the society and their profits from
these assets are also unequally distributed. In India it is said that 80% wealth in the country is
controlled by just 20% of the population.

c. Unemployment – Another major economic factor that is causative of poverty in the

country is the rising unemployment rate. Unemployment rates is high in India and according
to a 2015 survey data, at the all-India level, 77% of families do not have a regular source of
income.

d. Inflation and Price hike – The term Inflation may be defined as an increase in prices of
commodities coinciding with the fall in the purchasing value of money. As a direct
consequence of inflation, effective price of food, clothing items as well as real estate rises.
The salaries and wages do not rise as much in keeping up with the inflated prices of
commodities leading to effective decrease of the per capita income.

e. Faulty economic liberalization –The LPG (Liberalization-Privatization-Globalization)

attempts initiated by the Indian Government in 1991 were directed towards making the
economy more suited to international market-trends to invite foreign investments. Successful
to certain extent in reviving the economy, the economic reforms had detrimental effects on
increasing the wealth distribution scenario. Rich became richer, while the poor remained
poor.
3. Social – The various social issues plaguing the country that contributes towards poverty
are:-

a. Education and illiteracy – Education, rather its lack thereof and poverty form a vicious
cycle that plagues the nation. Not having enough resources to feed their children, the poor
consider education to be frivolous, preferring children to start contributing to the family’s
income rather than draining them. On the other hand, lack of education and illiteracy prevent
individuals from getting better paying jobs and they get stuck at jobs offering minimum
wages. Improvement of quality of life gets hindered and the cycle once again comes into
action.

b. Outdated Social Customs – Social customs like the caste system cause segregation and
marginalization of certain sections of the society. Certain castes are considered untouchables
still and are not employed by upper caste, leaving very specific and low paying jobs that they
can live off. Economist K. V. Verghese put forth the problem in a very lucid language, “Caste
system acted as a springboard for class exploitation with the result that the counterpart of the
poverty of the many is the opulence of the few. The second is the cause of the first.”

c. Lack of skilled labour – Lack of adequate vocational training makes the huge labour force
available in India largely unskilled, which is unsuitable for offering maximum economic
value. Lack of education, much less higher education, is also a contributing factor towards
this.

d. Gender inequality–The weak status attached with women, deep-rooted social

marginalization and long embedded perceptions of domesticity renders about 50% of the
country’s population unable to work. As a result the women of the family add to the number
of dependents that need to be fed instead of being able to contribute considerably in the
family income which might assuage the poverty situation of the family.

e. Corruption –Despite considerable efforts from the government in the forms of various
schemes to mollify the poverty situation, allegedly only 30-35% actually reaches the
beneficiaries due to wide-spread practices of corruption in the country. Wealthy people with
privileged connection are able to acquire more wealth simply by bribing government officials
to maximize their profits from such schemes while the poor remain in a state of neglect for
not being able to assert such connections.
4. Individual  – Individual lack of efforts also contribute towards generating poverty. Some
people are unwilling to work hard or even not willing to work altogether, leaving their
families in the darkness of poverty. Personal demons like drinking and gambling also leads to
draining of the family income inciting poverty.

5. Political  – In India, socio-economic reform strategies has been largely directed by political
interest and are implemented to serve a choice section of the society that is potentially a
deciding factor in the elections. As a result, the issue is not addressed in its entirety leaving
much scope of improvements.

6. Climatic  – Maximum portion of India experiences a tropical climate throughout the year
that is not conducive to hard manual labour leading to lowering of productivity and the wages
suffer consequently.

EFFECTS OF POVERTY

1. Effect on Health  – One of the most devastating effects that poverty has is on the overall
health of the nation. The most prominent health issue stemming from poverty is malnutrition.
The problem of malnutrition is widespread in all age-groups of the country but children are
most adversely affected by this. Limited income in larger families leads to lack of access to
sufficient nutritious food for their children. These children over time suffer from severe
health problems like low body weight, mental, physical disabilities and a general poor state of
immunity making them susceptible to diseases. Children from poor backgrounds are twice as
susceptible to suffer from anemia, nutrient deficiencies, impaired vision, and even cardiac
problems. Malnutrition is a gross contributor of infant mortality in the country and 38 out of
every 1,000 babies born in India die before their first birthday. Malnutrition among adult also
leads to poor health in adults that leaches their capacity for manual labour leading to a
decrease in income due to weakness and diseases. Poverty also causes definite decline in the
sanitary practices among poor who cannot afford proper bathrooms and disinfectants. As a
result susceptibility to waterborne diseases peak among the poor. Lack of access to as well as
means to procure appropriate treatment also affects overall mortality of the population which
is lower in poor countries than developed nations like the USA.

2. Effects on Society   – Poverty exerts some gravely concerning effects over the overall
societal health as well. These may be discussed along the following lines:-

a. Violence and crime rate – Incidence of violence and crime have been found to be
geographically coincident. In a backdrop of unemployment and marginalization, the poor
resort to criminal activities to earn money. Coupled with lack of education and properly
formed moral conscience, a poverty ridden society is more susceptible to violence by its
people against its own people from a sense of deep-seated discontent and rage.

b. Homelessness – Apart from a definite drop in the esthetic representation of the country,
homelessness affects child health, women safety and overall increase in criminal tendencies.

c. Stress – Lack of money is a major cause of stress among the middle-class and the poor and
leads to decline in productivity of individuals.

d. Child labour – One of the hallmarks of a poverty-ridden society is the widespread

practices of exploitation and the worst of it comes in the form of child labour. Large families
fail to meet the monetary needs of the members and children as young as 5 years are made to
start earning in order to contribute to the family income.

e. Terrorism – Proclivity of youth towards terrorism stems from a combination of extreme

poverty and lack of education making them susceptible to brainwashing. Terrorist
organizations offer poverty-ridden families money in exchange for a member’s participation
in their activities which induces a sense of accomplishment among the youth.
3. Effect on Economy –Poverty is a direct index indicating success of the economy of the
country. The number of people living under the poverty threshold indicates whether the
economy is powerful enough to generate adequate jobs and amenities for its people. Schemes
providing subsidies for the poor of the country again impose a drain on the economy.

 
 Poverty Alleviation Programmes in India
As per the 2011-2012 estimation by the Planning Commission of India, 25.7 percent of the
rural population was under the below-poverty line and for the urban areas, it was 13.7
percent. The rate of poverty in the rural areas is comparatively higher than that in the urban
areas due to the lack of proper infrastructure, insufficient food supply and poor employment
system. 

The major Poverty Alleviation Programmes that were developed with an initiative to
eradicate poverty are mentioned in the table below:

List of Poverty Alleviation Programmes in India

Name of the Year of Government Objectives

Scheme/Programme Formation  Ministry

Integrated Rural Development
Programme (IRDP)
1978 Ministry of Rural To raise the families of identified
Development target groups living below the
poverty line through the
development of sustainable
opportunities for self-employment
in the rural sector.

Pradhan Mantri Gramin Awaas 1985 Ministry of Rural  To create housing units for
Yojana Development everyone along with
providing 13 lakhs housing
units to the rural areas.

 To provide loans at
subsidized rates to the
people.

 To augment wage
employment opportunities
to the households by
providing employment on-
demand and through
specific guaranteed wage

Indira Gandhi National Old Age
Pension Scheme (NOAPS)
National Family Benefit
Scheme (NFBS)
Jawahar Gram Samridhi Yojana
(JGSY)
Annapurna
National Maternity Benefit
employment every year. 
15th August Ministry of Rural  To provide pension to the
1995 Development senior citizens of India of
65 years or higher and
living below the poverty
line. 
 It provides a monthly
pension of Rs.200 for those
aged between 60-79 years
and Rs.500 for the people
aged above 80 years. 
August 1995 Ministry of Rural To provide a sum of Rs.20,000 to
Development the beneficiary who will be the
next head of the family after the
death of its primary breadwinner. 
1st April Implemented by  Developing the
1999 the Village infrastructure of the rural
Panchayats. areas which included the
connecting roads, schools
and hospitals. 
 To provide sustained wage
employment to the families
belonging to the below
poverty line.  
1999-2000 Ministry of Rural To provide 10 kg of free food
Development grains to the eligible senior
citizens who are not registered
under the National Old Age
Pension Scheme. 
2016 Ministry of  To provide a sum of
Scheme Health & Family Rs.6000 to a pregnant
Welfare mother who is aged above
(MoHFW) 19 years. 

 The sum is provided

normally 12–8 weeks
before the birth in three
instalments and can also be
availed even after the death
of the child.

Apart from eradicating poverty in India, the Poverty Alleviation Programmes also took an
initiative in providing employment opportunities to the households of the BPL categories. 
The Government of India developed the Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) with an aim to provide a legal guarantee for one hundred days
of employment to the adult members of any rural household in every financial year. 

CONCLUSION
Therefore we have been able to learned that poverty is one of the major issues in the world
that need to be address quickly in the poorest villages in which thousands of people are
dying, and most of these people are children’s. We have learned that poverty refers to the
condition of not having the means to afford basic human needs such as clean water, nutrition,
healthcare, clothing, food, and a place to live, poverty is a deadly issue that’s killing our
population slow and that we as the affected ones need to take actions against it. We have also
learned that poverty that affect mostly poor people, because of the little resources they have,
this means that poverty is an issue that’s harming poor people that want to get out of poverty,
but they can’t because they don’t have the support of rich people. Even though there are a lot
of people trying to stop poverty, it is impossible to stop it without the support of rich
countries, this is because to fight poverty we have to fight it with a lot of money and their
only a few countries that could support us with this need. Something else that we have
learned is that poverty today is looking worst then when it first started; millions of kids are
living on piles of trash dying of starvation. The reason there are so many people living in
poverty is because millions of other people are spending money in things they don’t need.
This leads us to the effects of this issue that are deadly illnesses that make people fall and
give up on their life, we learned that poverty lead people to abuse of drugs or to abuse of
other people. And even though many people support the idea of helping those people who
live in poverty, there are also those that don’t support people who are trying to stop poverty.
And the most important thing that we have all learned from this research is that poverty can
be stop, but to be able to stop it we must all support each other, with no hate or anything that
could harm us. So for those that are willing to help don’t help because you feel pressure, do it
because you want to and your heart is telling you to do it.
 BIBLIOGRAPHY

1. https://www.jagranjosh.com/general-knowledge/definition-poverty-poverty-

line-in-india-1448357553-1

2. https://en.wikipedia.org/wiki/Poverty_in_India

3. https://www.drishtiias.com/to-the-points/paper3/poverty-estimation-in-india

4. https://learn.culturalindia.net/essay-poverty-india-causes-effects-

solutions.html