Module 1

Meaning of Law
Law, the discipline and profession concerned with the customs, practices, and rules of conduct of
a community that are recognized as binding by the community. Enforcement of the body of rules
is through a controlling authority. Definition of law is a rule of conduct developed by the
government or society over a certain territory. Law follows certain practices and customs in
order to deal with crime, business, social relationships, property, finance, etc. The Law is
controlled and enforced by the controlling authority.

Law has also been defined as “a body of rules of action or conduct prescribed by a controlling
authority, and having binding legal force. That which must be obeyed and followed by citizens
subject to sanctions or legal consequence is a law.”

Law is a set of rules created by state institutions which make laws through the authority of the
state. The laws have sanctions which are recognised by the state and enforced by state-authorised
bodies. This is quite a wordy definition but it highlights some of the important factors in law-
making:

1. the authority of the state is needed

2. only certain institutions can make law
3. the institutions that make law have been given the authority to do so
4. sanctions exist for breaking the law
5. the sanctions are imposed by those given state authority to do so.

Concept of poverty
Poverty is an economic state where people are experiencing scarcity or the lack of certain
commodities that are required for the lives of human beings like money and material things.
Therefore, poverty is a multifaceted concept inclusive of social, economic and political elements.
The word poverty comes from French word “poverté” which means poor. Poverty is a state or
condition in which a person or community lacks the financial resources and essentials for a
minimum standard of living. Poverty means that the income level from employment is so low
that basic human needs can't be met. Poverty-stricken people and families might go without
proper housing, clean water, healthy food, and medical attention. Each nation may have its own
threshold that determines how many of its people are living in poverty.

Poverty, the state of one who lacks a usual or socially acceptable amount of money or material
possessions. Poverty is said to exist when people lack the means to satisfy their basic needs. In
this context, the identification of poor people first requires a determination of what constitutes
basic needs. There are two concepts of poverty in economics. They are absolute poverty and
relative poverty.
(1) Absolute Poverty:

If a person’s income or consumption expenditure is so low that he cannot live at minimum

subsistence level, he is said to be absolutely poor. It basically indicates deprivation of some sort
resulting in hunger and starvation.

People are said to be in absolute poverty if their earnings are insufficient to obtain the minimum
necessities for the maintenance of physical efficiency. Such minimum necessities are usually
measured in terms of minimum nutritional requirements.

(2) Relative Poverty:

Relative poverty concept indicates inequalities of income. The people of low income groups are
relatively poor as compared to the people whose incomes are high. Here poverty is viewed in
terms of inequality between the poorest group and the rest of the community. It is to be noted
that relative poverty cannot be eradicated without transfers from the rich to the poor. At the same
time the relatively poor may be living above the minimum subsistence level.

Types of Poverty
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

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.

Issues
1. Lack of good jobs/job growth

This is the first reason a lot of people think about. When you don’t have a good job, you aren’t
getting a good income. In many countries, traditional jobs like farming are disappearing. The
Democratic Republic of Congo is a good example, where most of the population live in rural
areas stripped of natural resources from years of colonialism. Half of the DRC live below the
poverty line. Even in nations like the United States where many people do have jobs, those jobs
aren’t paying enough. According to the Economic Policy Institute, large groups of workers with
full-time, year-round employment are still below federal poverty guidelines.

2: Lack of good education

The second root cause of poverty is a lack of education. Poverty is a cycle and without
education, people aren’t able to better their situations. According to UNESCO, over 170 million
people could be free of extreme poverty if they only had basic reading skills. However, in many
areas of the world, people aren’t getting educated. The reasons vary. Often times, families need
kids to work, there aren’t schools close by, or girls aren’t being educated because of sexism and
discrimination.

3: Warfare/conflict

Conflict has a huge impact on poverty. In times of war, everything stops. Productivity suffers as
well as a country’s GDP. It’s very difficult to get things going again as foreign businesses and
countries won’t want to invest. For families and individuals, war and conflict can make it
impossible to stay in one place. It’s also very common for women to become the primary
breadwinners, and they deal with many barriers like sexual violence and discrimination.

4: Weather/climate change

According to the World Bank, climate change has the power to impoverish 100 million people in
the next decade or so. We know climate change causes drought, floods, and severe storms, and
that can take down successful countries while pulling poor ones down even further. Recovering
is extremely difficult, as well, especially for agricultural communities where they barely have
enough to feed themselves, let alone prepare for the next harvest year.

5: Social injustice

Whether it’s gender discrimination, racism, or other forms of social injustice, poverty follows.
People who are victims of social injustice struggle with getting a good education, the right job
opportunities, and access to resources that can lift them out of poverty. The United Nations
Social Policy and Development Division identifies “inequalities in income distribution and
access to productive resources, basic social services, opportunities” and more as a cause for
poverty. Groups like women, religious minorities, and racial minorities are the most vulnerable.

6: Lack of food and water

Without access to basic essentials like food and water, it’s impossible to get out of poverty’s
cycle. Everything a person does will be about getting food and water. They can’t save any money
because it all goes towards their daily needs. When there isn’t enough sustenance, they won’t
have the energy to work. They are also way more likely to get sick, which makes their financial
situation even worse.

7: Lack of infrastructure

Infrastructure includes roads, bridges, the internet, public transport, and more. When a
community or families are isolated, they have to spend a lot of money, time, and energy getting
to places. Without good roads, traveling takes forever. Without public transport, it may be next
to impossible to get a good job or even to the store. Infrastructure connects people to the services
and resources they need to better their financial and life situation, and without it, things don’t get
better.

8: Lack of government support

To combat many of the issues we’ve described, the government needs to be involved. However,
many governments are either unable or unwilling to serve the poor. This might mean failing to
provide (or cutting) social welfare programs, redirecting funds away from those who need it,
failing to build good infrastructure, or actively persecuting the population. If a government fails
to meet the needs of the poor, the poor will most likely stay that way.

9: Lack of good healthcare

People who are poor are more likely to suffer from bad health, and those with bad health are
more likely to be poor. This is because healthcare is often too expensive or inaccessible to those
who need it. Without money for medicine and treatment, the poor have to make really tough
decisions, and usually essentials like food take priority. People who are sick get sicker, and then
they can’t work, which makes the situation even more dire. If people do seek treatment, the cost
often ruins their finances. It’s a vicious cycle.

10: High costs

The last root of poverty is simple: stuff costs too much. Even the basics can be too expensive.
According to stats from the World Food Programme, the poorest households in the world are
spending 60-80% of their incomes on food. Food prices are also very unpredictable in certain
areas, so when they rise, the poor have to keep cutting out other essentials. Housing is another
essential that is rising. Global house markets have been climbing, according to the International
Monetary Fund. Income growth, however, has not.

Dimensions
1. Absolute Poverty is a condition in which people do not even get a minimum income needed
to maintain their lives. India has higher prevailing rates of malnutrition, hunger,
homelessness, unemployment and hence its absolute poverty also remains high.
2. Relative poverty refers to a comparative perspective where a section of population is
relatively deprived compared to another better off section of population. This definition is
more broader and includes amenities like a well sanitised pucca house, access to education,
healthcare, social security benefits, leisure, comfort etc.,
3. While poverty is considered as a single dimensional measure, the term Social Exclusion is
even more broader and multidimensional. It indicates that a section of population is not able
to participate effectively in social life. I.e, taking part in activities of society like festivals,
getting an employment or indulging in leisure activities. From an Indian point of view it
includes the weaker sections like SC/STs, disabled, women, etc.,
4. Inequality refers to the social and economic divide between the rich and poor. In India the
inequality between well off sections of the society and the rest of the population is
increasing. According to Credit Suisse the richest 1% of population in India owns 53% of its
total wealth.
5. In India, there is a Regional dimension of poverty as some states like Delhi, Punjab,
Haryana, Kerala, Tamil Nadu etc., have significantly reduced their poverty whereas states
like Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal etc., have a higher proportion of
poor people.
6. At another level there is Rural-Urban disparity as generally the Urban areas have less
poverty indices than compared to rural areas because of the availability of jobs in
manufacturing, service sector etc., Even informal employment that pays a meagre wage is
mostly concentrated in urban areas, also the agricultural sector is not much profitable in rural
areas due to crop failures, fragmentation of land holdings etc.,. As a result there is
widespread rural- urban migration for search of better jobs and livelihood.

Poverty Line
Poverty line is the level of income to meet the minimum living conditions. Poverty line is the
amount of money needed for a person to meet his basic needs. It is defined as the money value of
the goods and services needed to provide basic welfare to an individual.

Poverty line differs from one country to another, depending upon the idea of poverty

Poverty line changes from one country to another. In developed countries, where there is
advanced standard of living and welfare concepts, poverty line is high as basic standard to live
include higher consumption requirements and accessibility to many goods and services.

On the other hand, in many less developed countries, the basic requirements will be low and
contains mostly essential consumption items needed to sustain life. This means that poverty line
is set by the welfare standard in a particular society (economy).

Poverty is ‘relative’ and what poverty in the US or in an advanced West European country may
not be poverty in Bangladesh.
Poverty line in India

India is having a well-designed poverty measurement mechanism under the erstwhile Planning
Commission. The Planning Commission was the nodal agency for estimation of poverty. For
setting poverty line and methodology of constructing it, the Planning Commission appointed
Expert Groups from time to time. For example, the Rangarajan Committee is the latest among
those Expert groups. Traditionally, the planning commission estimates the number of people
below poverty line in states as well as in the rural and urban areas based upon the prevailing
poverty estimation methodology submitted by the expert groups.

Methodology for constructing the poverty line

The poverty estimation methodology was revised many times with new expert group/task force
appointed by the Planning Commission to look into the matter. Each expert group/task force has
devised certain methodology in determining the poverty line.

For measuring poverty, a poverty line is set. The poverty line is the level of income needed to
meet the minimum standard of living. People who have an income less than this is considered as
below poverty line.

The concept about minimum consumption standards and consumption levels were changed based
upon recommendations of the various expert groups/task force. These expert groups uses the
NSS (National Sample Survey) estimate about the consumption pattern of households from time
to time. The NSS’s periodically makes extensive household surveys on expenditure. Here, from
the preferred consumption basket of the people, the expert groups pick up the most essential
commodities. These commodities are placed under a poverty line basket (PLB).

Minimum standard of living is thus expressed as the basket of goods and services commonly
used by the people. Based on this consumption pattern, the Expert Groups estimate the minimum
consumption levels (and the income needed to buy these) and the income needed to obtain these
goods and services in both rural and urban areas. This income level acts as the poverty line.

BPL
Below Poverty Line is a benchmark used by the government of India to indicate economic
disadvantage and to identify individuals and households in need of government assistance and
aid. It is determined using various parameters which vary from state to state and within states.
The present criteria are based on a survey conducted in 2002. Going into a survey due for a
decade, India's central government is undecided on criteria to identify families below poverty
line.
Internationally, an income of less than ₹150 per day per head of purchasing power parity is
defined as extreme poverty. By this estimate, about 12.4% of Indians are extremely poor.
Income-based poverty lines consider the bare minimum income to provide basic food
requirements; it does not account for other essentials such as health care and education.

Beneficiaries

Certain groups, specifically those under Scheduled Castes (SC) and Scheduled Tribes (ST),
suffer from exclusion in the poverty debates. While the National Sample Survey (NSS) data
showed a decline in overall poverty from 36% in 1993-94 to 28% in 2004-05, the numbers told a
different story for areas with tribal populations. The 2004-05 NSS also showed that “the average
consumption of Adivasis (ST) was a mere 70% of the average, and that of Dalits (SC) less than
80% of the average.” This census also showed that STs and SCs make up a large proportion of
India’s poor. The government’s programmes for the these groups tend to be executed not as
strongly and also tend to progress very slowly. STs and SCs also suffer from displacement,
caste-based violence and discrimination in education and employment. States hold the power to
make special arrangements for these groups through “reserved seats” in educational institutions
and special grants and scholarships. In addition, certain “income generation programs” along
with financial organizations that provide coaching in “entrepreneurial skills” do exist for these
groups. A certain number of government jobs are set aside for these minority groups as well. A
study found that in an area where member of SC/ST groups are assigned roles of leadership,
more funds are allocated towards welfare programs. In other words, political representation of
the poor makes a huge impact on allocation of resources.

Criticism of BPL

The National Sample Survey Office originally focused on capturing absolute poverty by looking
at the per capita consumption as representative of the overall welfare of individuals. This left out
factors that are involved in individual social and economic well being. These factors are the non-
income dimensions of poverty - such as education, religious factors. gender related problems,
and issues surrounding employment. Although the measures of poverty in India show reduction
in the numbers, the gap of inequality has actually increased among the rich and the poor; that is
exactly why examining factors other than income are crucial to understanding the reality of both
absolute and relative poverty.

The BPL method employed to measure the number of people living in poverty in India takes
food, clothing, housing, and sanitation into account along with literacy and labor status. This
approach is top-down, meaning that officials in power decide what indicators to use and how
much each indicator should weigh. This method is criticised to be exclusive of the people it is
assessing, as it does not take their opinions into account.

The food indicator of the BPL method counts the number of meals a family has and completely
ignores the quality and nutritional factors. For instance, if an individual eats by begging on the
street or picks up food from garbage, he or she still earns four points. There is an emphasis on
school attendance as an indicator of better opportunities; quality of education and skills is
ignored measuring poverty.

Physical and mental disability are also factors that the BPL does not take into account. As
government records show, there are a total of 11.31 lakh disabled people in the state of Madhya
Pradesh, 8.9 lakh of which live below the poverty line; yet only 3.8 lakh receive government
help in the form of social security pension.

In order to become a beneficiary of the BPL and receive benefits like the Public Distribution
System, the government requires identification documents and a permanent address. For families
that are homeless and reside on pavements and parks, they have no means of obtaining ration
cards and cheap food grains. They are essentially denied their rights as citizens and left
vulnerable in a critical situation.

Government Schemes to Control Poverty and Support Development

Several poverty alleviation programmes in India meant to address poverty alleviation directly or
indirectly have been launched by the incumbent government such as the Pradhan Mantri Jan
Dhan Yojana (PMJDY) – a financial inclusion scheme, the Pradhan Mantri Gramin Awaas
Yojana – a housing scheme for the rural poor, the Atal Pension Yojana (APY) – aimed at
increasing pension scheme beneficiaries in India, the Sansad Adarsh Gram Yojana (SAGY) –
aimed at fostering infrastructure development in rural areas, the Pradhan Mantri Fasal Bima
Yojana (PMFBY) – a crop insurance scheme, the Pradhan Mantri Gram Sinchai Yojana –
aimed at attracting irrigation investments, the Deen Dayal Upadhyaya Grameen Kaushalya
Yojana (DDUGKY) – for skill development of rural youth, being some examples (Sarkari
Yojana, 2018).

Many of these schemes are quite nascent and performance evaluations of these schemes are
rather difficult. In the decades shortly after the turn of the century, the Mahatma Gandhi
National Rural Employment Guarantee Act (MNREGA) and the Public Distribution
System (PDS) are prominent examples of the running policies for poverty alleviation in rural
India. Before the MGNREGA and the PDS working under new legislation, the Integrated Rural
Development Program (IRDP), the Mid-Day Meal Scheme (MDMS), the National Family
Benefit Scheme (NFBS) and the National Old Age Pension Scheme (NOAPS) represent some
of the older schemes aimed at benefitting poor people in rural India. The MGNREGA came into
force in 2006 and the scheme guarantees 150 days of paid work a year to people in rural areas.
The policy aims to improve opportunities for rural people in gaining employment by providing
guaranteed wage employment for unskilled manual work. By 2018, 1.5 million households were
registered under the MGNREGA (Ministry of Rural Development – GoI, 2018).

The Public Distribution System (PDS) is another programme that helps in improving the quality
of life of impoverished populations in India. The National Food Security Act (NFSA), 2013
ties up with the PDS for distribution of food in India for providing subsidized food grains. About
50 per cent of the urban population and about 75 per cent of the rural population is covered by
the purview of the Act and beneficiaries are entitled to receive 5 kg of food grains in a month per
person at subsidized rates of Rs 3/2/1 per kg of rice, wheat or coarse grains respectively. The Act
has been implemented in all of the states and union territories in India and the government claims
that out of a coverage target of 813.4 million people, the policy has reached 807.2 million people
in total for both rural and urban areas (GoI, 2018). There are some discrepancies however, over
the implementation of certain provisions of the Act by some states (ET, 2017).

With greater revenue available for social programmes, policy-makers can now look forward to
more far-reaching poverty alleviation programmes in India. The NitiAayog constituted a task
force for the elimination of poverty on March 16, 2015 headed by Dr. Arvind Panagariya, the
vice chairman at the NitiAayog. Using the methodology described by the recommendations of
the Tendulkar Committee, the task force fixed that those earning less than Rs 27.20 in rural areas
are below the poverty line. The estimate was controversial and generated much debate in policy
circles. Based on these estimates which fixed the poverty line in urban areas at Rs 33.33 per day
in urban areas in addition to the low income in rural areas, 22 per cent of the people in the
country could be classified as poor (ET, 2017). Many believed that the proportion of the poor can
be much larger in India while others questioned the extremely low income cited as the poverty
line. This is important since many of the government’s rural poverty alleviation programmes in
India are targeted schemes.

In contemporary times enumerative devices such as one’s UIDAI is also assuming importance in
terms of policy orientation in rural poverty alleviation programmes in India. For example, after
the 2015-16 budget, insurance schemes were introduced that made use of bank accounts linked
to the Adhaar scheme. New poverty alleviation programmes in India such as the Jan Dhan
Yojana make use of Adhaar identification. The UIDAI in poverty alleviation can be important
given that many of the target beneficiaries do informal work. It can also help in establishing
regimes of identification for poorer people at the margins such that their needs can be addressed
by policy. Using one’s Adhaar card to collect compensation in the event of a natural disaster
such as floods is one example.

The use of mobile cum banking is also gaining prominence in financial transactions although
many in rural India still prefer dealing in cash. One good however, is that access to cash has been
made easier in rural areas by the intervention of government schemes. The problem for rural
areas has for a long time been a lack of access to financial support or opportunities. Rural
poverty alleviation programmes in India look to improve access to employment, food, finances
and other such basic needs for people in rural India, many of whom can sometimes live in remote
areas outside the purview of large-scale development. A basic needs approach is all the more
necessary in addition to fixing a poverty line in rural areas given that access to developmental
processes and facilities might be more limited in far-flung rural areas.
Niti Ayog and It’s Recommendation
NITI Aayog was established on 1st January 2015, which was a replacement of the Planning
Commission. It serves as an advisory body or a “Think Tank” of the government of India to
advice on social and economic issues. Since it serves as a think tank of the government or as a
directional and policy dynamo, it provides advice on strategic policy matters to the governments
at the Center and the States.

The Aayog provides direction to the Monitoring and Evaluation (M & E) activities in India. It
also pegs importance to the quality standards, ethical procedures and provides appropriate
institutional mechanisms. Therefore, NITI Aayog means:

 A group of people that the Government entrusts for formulating and regulating policies
concerning the transformation of India.
 A Commission assists the Government in both social and economic issues.
 An institution with experts
 A body that actively monitors and evaluates the implementation of the Government’s
programs and initiatives.

Aims of the NITI Aayog

1. Provide a critical directional and strategic input to the development process of India.
2. Serve as a think tank of the Government both at the Center and State-level. Also, provide
relevant strategic and technical advice on key policy matters.
3. Try to replace the center-to-state, one-way flow of policy with an amicably settled policy
which a genuine and continued partnership of state frames.
4. Seek to put an end to the slow and tardy implementation of the policy. This is possible
through better Inter-Ministry and state-to-state coordination.
5. Further, it help to evolve a shared vision of national development priorities and foster
cooperative federalism. Work with the view that strong states = a strong nation.
6. Develop mechanisms to formulate credible plans at the village level. Further, aggregate these
plans progressively at the higher levels of the Government. In other words, ensure that
special attention is paid to the sections of the society which carry the risk of not benefitting
from the overall economic progress of the country.
7. Create a Knowledge, Innovation, and Entrepreneurial system through a collaborative
community of national and international experts and practitioners. Offer a platform for the
resolution of inter-sectoral and inter-departmental issues to accelerate the implementation of
the development agenda.
8. Monitor and evaluate the implementation of programs and also focus on upgrading
technology and building capacity.
The NITI Aayog tries to accomplish the following objectives and opportunities:

1. Creating an effective administration paradigm in which the Government is an enabler rather

than a provider of the first and last resort.
2. Attaining progress from food security. Focusing on a mix of agricultural production and the
actual returns that farmers get from their produce.
3. Ensuring that India is an active participant in global debates and deliberations.
4. Ensuring that the economically vibrant middle-class is actively engaged and utilized to its
full potential.
5. Leveraging India’s pool of entrepreneurial, scientific, and intellectual human capital.
6. Incorporating the geo-economic and geopolitical strength of the NRI Community.
7. Using urbanization as an opportunity to creating a secure habitat via modern technology.
8. Using technology to reduce opacity and potential for misadventures in governance.

The measures were taken by the NITI Aayog to help India face complex challenges

1. Leverage India’s demographic dividend and realize the potential of young men and women.
This is done through imparting education, skill development, the elimination of gender bias
and providing employment opportunities.
2. Eliminate poverty and offer Indians a better chance to live a life of dignity and respect.
3. Redress inequalities based on gender bias, caste, and econmic disparities.
4. Integrate villages into the development process of the country.
5. Provide policy support to more than 50 million businesses – a major source of employment
generation.
6. Safeguard our environmental and ecological assets.

International Dimensions of Poverty

The Multidimensional Poverty Index (MPI) is a composite measure of the percentage of
deprivations that the average person would experience if the deprivations of poor households
were shared equally across the population. The Global Multidimensional Poverty Index (MPI) is
a new measure designed to capture the severe deprivations that people face at the same time. The
Global MPI reflects both the incidence of multidimensional deprivation, and its intensity – how
many deprivations people experience at the same time. It can be used to create a comprehensive
picture of people living in poverty, and permits comparisons both across countries, regions and
the world and within countries by ethnic group, urban/rural location, as well as other key
household and community characteristics. The Global MPI builds on recent advances in theory
and data to present the first global measure of its kind, and offers a valuable complement to
traditional income-based poverty measures.

The 2010 Human Development Report (HDR) estimated the Global MPI for 104 countries with a
combined population of 5.2 billion (92 percent of the population in developing countries).
According to the report, about 1.75 billion people in the 104 countries covered by the Global
MPI—a third of their population — lived in multidimensional poverty — that is, with at least 30
percent of the indicators reflecting acute deprivation in health, education and standard of living.
This exceeded the estimated 1.44 billion people in those countries who lived on $1.25 a day or
less (though it was below the share who live on $2 or less).

Since then the Global MPI Winter 2014/2015 results cover 110 countries in total, which are
home to 78 per cent of the world’s population. Of this proportion, 30 per cent of people (1.6
billion) are identified as multidimensionally poor. Using the January 2015 updates of the MPI
released today, the study team looked at more than 230 regions of countries where
multidimensional poverty is at least as high as the 25 poorest Least Developed Countries
(LDCs), identified by the United Nations (Economic and Social Council). They found that nearly
60 per cent of the 768 million multi-dimensionally poor people in these subnational regions live
in countries that are not classified as LDCs, and all but one non-LDC region were in countries
classed as middle-income: India, Nigeria, Pakistan, Cameroon, Cote D’Ivoire, Ghana, Namibia
and the Republic of Congo.

Dimensions of poverty

It is important to understand and adequately measure dynamic aspects of poverty, such as: the
intergenerational transmission of poverty, but also the different meaning of poverty for different
generations within the same community; and the significant movements in and out poverty,
compounded by factors such as life-cycle events, seasonality, illness/addiction, demographic
growth as well as outside factors such as armed conflicts and climate change.

Poverty is generally a recurrent phenomenon (Walker and Tomlinson 2010); which should be
analysed using a dynamic measure. This measure could depend on the duration of being in
poverty and on the number of times an individual crosses the multidimensional poverty line.

Some aspects of mobility have direct implications for people’s opportunities. For example:

 Physical mobility can offer opportunities to escape poverty. Therefore, poverty can be
characterized by limitations to physical mobility due to health problems, lack of knowledge,
financial restrictions, or simply lack of adequate transportation.
 Social mobility or the opportunity to access social promotion is also relevant to evaluate the
depth of poverty, as it is interlinked with another relevant aspect: inequality. This is also
related to the concept of a “poverty trap”, which implies that people in similar situations (as
measured by similar values for certain indicators) might have more or less opportunities to
pull themselves out of poverty depending on other environmental circumstances (e.g. conflict
or the marginalization of specific groups).

Other dynamic elements of poverty are those related to the special circumstances of:
 The livelihood of persons without official addresses, e.g. those who move to urban fringes
and live there, often with continuing rural links.
 Deprivation among mobile populations
 Poverty among displaced populations, who may continue to live in “temporarily-long-term”
special circumstances.

The social and cultural dimensions of poverty

Research on social capital has highlighted the need to take into consideration social aspects of
interaction with an impact of poverty such as membership, family and feelings of belonging to a
national, tribal, religious, faith, language or tradition group, which makes diversity central to the
poverty discourse. Other neglected domains such as the expression of affection and recreation
needs are also relevant in determining well-being. In addition to the inner value that people may
attribute to these dimensions, social safety nets can play an important role in escaping poverty.
An analysis of the various interfaces between individual-group-national-global levels of society
could generate richer insights into the debate.

Moreover, there is an increasing recognition of the role of culture in poverty alleviation both for
its instrumental value in generating income and in the way culture influences how poverty is
perceived and the effectiveness of poverty reduction interventions. For example, culture might
impact the economic sphere, as demonstrated by the role of a “saving culture” in promoting
investment in the Asian emerging economies. Other contributors have compared a culture of
“effort and work” with a culture privileging “short cuts” such as bribery and nepotism. Other
elements of culture have an impact on our “conscience” and on the way we conceive societal
progress.

Although contributors are aware of the difficulties in defining and measuring these subtle aspects
of poverty, they advocate for measures which can help improve our understanding and
promotion of culture, psychological well-being and community vitality.

Meaning of Development
Development is the process that creates growth, progress, positive change or the addition of
physical, economic, environmental, social and demographic components. The purpose of
development is a rise in the level and quality of life of the population, and the creation or
expansion of local regional income and employment opportunities, without damaging the
resources of the environment. Development is visible and useful, not necessarily immediately,
and includes an aspect of quality change and the creation of conditions for a continuation of that
change.

Development means “improvement in country’s economic and social conditions”. More

specially, it refers to improvements in way of managing an area’s natural and human resources.
In order to create wealth and improve people’s lives.
The international agenda began to focus on development beginning in the second half of the
twentieth century. An understanding developed that economic growth did not necessarily lead to
a rise in the level and quality of life for populations all over the world; there was a need to place
an emphasis on specific policies that would channel resources and enable social and economic
mobility for various layers of the population.

Dudley Seers while elaborating on the meaning of development suggests that while there can be
value judgements on what is development and what is not, it should be a universally acceptable
aim of development to make for conditions that lead to a realisation of the potentials of human
personality.

Features of Development:
1. Development is a continuous process

The process of growth and development continues from the moment of conception until the
individual reaches maturity. It takes place at a slow but regular pace rather than by leaps and
bounds. Development of both physical and mental traits continues gradually until these traits
reach their maximum growth.

2. Development follows a pattern

Development occurs in an orderly manner and follows a certain sequence. Thus, infancy, early
childhood, later childhood, adolescence and maturity is the sequence of development in the
human beings.

3. Development proceeds from general to specific responses.

The responses or the reactions of a child are of general nature to start with. He reacts to the
situations and external stimuli with the whole of his body. Gradually, he learns to have specific
responses. This is not only true of his physical responses only, but also of his intellectual and
emotional responses. The responses of a child which are of general nature first, gradually
become more and more specific. This is a sign of development and maturation.

4. Different aspects of growth develop at different rates

Though development is a continuous process, yet the rate of growth is not uniform. Thus, there
are periods of accelerated growth and pef decelerated growth. During the first three years of
infancy, the rate of growth is rapid, then, the rate of growth slows down, which is again
accelerated at the adolescent stage. Similarly, neither all parts e body grow at the same rate, nor
do all aspects of mental growth progress equally. Thus, they reach maturity at different times.

5. Most traits are correlated in development

Generally, it has been obsed that the child, whose intellectual development is above average, is
also superior in so many other aspects, e.g. health, sociability and special aptitudes. Similarly,
this mental development is intimately related to his physical growth.

6. Development is a product of interaction of the organism and environment

Neither heredity alone, nor the mere environment ponsible for the development of an individual.
Both are responsible for human growth and development though, it is not possible to indicate
exactly in what proportion heredity and environment contribute to the development of an
individual.

7. There are wide individual differences in growth pattern

Individuals differ fromch other in their pattern and rate of growth. There is defie evidence to
show that differences in physical structure are le marked than the differences in intellectual
capacity. Similarly, it has een found out that personality differencesre far more marked tnither
physical or intellectual differences. The individuaferences are caused by differences in hereditary
endowment and envnment influences. This has also been established that dividual differences in
rates of development remain constant. For ample, a child who is sw in learning iearly childhood
will remain so throughout. A bright child will be so from his early childhood.

8. Growth is both quantitative and qualitative

As the child grows physically, he also develops regarding the qualitative aspects of his
personality. That means, as the child grows in age, his mental and emotional functions also
develop. Thus these two aspects are inseparable.

9. Development is predictable

The rate of development of each child is fairly constant, that is, a slow learner will ever remain
so, and a superior child is so from the very beginning. Thus, it is possible to predict at an early
age the range within which the mature development of the child is likely to fall; though the
prediction cannot be made accurately.

10. Development is affected by many factors

Human growth and development is a very complex phenomenon. It is affected by a number of

factors. These factors are intelligence, physical health, sex, nutrition, glands of internal secretion,
position in the family, social status of the family and the general environment at different stages
in varying degrees.

Indicators of Development
The following points highlight the four key indicators of economic development. The key
indicators are:
1. Per Capita Income:

The most important indicator of economic underdevelopment is low per capita income. Usually,
an LDC is defined as one in which per capita real income is low when compared with that of
USA, Canada, Australia and Western Europe. Statistical studies show low-in- come countries are
much poorer than advanced countries like the USA.

In fact, their measured per capita incomes are above 20% of those in high-in- come countries.
However, Prof. Samuelson states that standard comparisons are distorted by the use of official
exchange rates to compare living standards.

A new technique, looking at ‘purchasing-power parity’, or what incomes will actually buy
suggests that incomes in poorer countries are probably considerably exists.” What is more
serious is that over the years the gap, instead of narrowing, is actually widening.

However, some economists have expressed the view (and rightly so) that one cannot treat a
country as developed only because its per capita income is as high as that of the USA, or
Switzerland. As Joan Robinson has commented, “For several of the Arab States, GNP per capita
suddenly jumped to levels which exceed that of the richest western states. Yet, in these countries
are found some of the poorest and least developed communities in the world”.

Similarly, Italy is a developed country by current standard. But some parts of the country that the
level of development or the state of underdevelopment of a country may not necessarily be
reflected in its per capita income or the average living standards.

2. Poverty:

The second important indicator of economic underdevelopment is poverty. Not only per capita
income is low, there is inequality in the distribution of income. Many people in LDCs do not get
the minimum level of income necessary for a minimum caloric intake are said to be living below
the poverty line. In India it is 25% at present.

It is easier to describe poverty than to measure it. Typically, poverty is defined in an absolute
sense: a family is poor if the income falls below a certain level. The World Bank uses per capita
GNP of less than $480 as its criterion of poverty.

Poverty is also a relative concept. Family income in relation to other incomes in the country or
region is important in determining whether or not a family feels poor.

• Basic Human Needs:

Since per capita income figures of different countries are a rough indicator of poverty, some
economists suggest indicators of how basic human needs are being met. Although there is hardly
any agreement on the exact definition of basic human needs, the general idea is to set minimal
levels of caloric intake, health care, clothing and shelter.
• PQLI:

An alternative to per capita income is a physical quality-of-life index to evaluate living

standards. The most common approach uses life expectancy, infant mortality and literacy as
indicators. In this context Boyes and Melvin comment that “Per capita GNP and quality-of-life
indexes are not the only measures used to determine a country’s level of economic development,
economists use several indicators to assess economic progress.”

3. Social and Health Indicators:

There are also certain social and health indicators of economic backwardness. These show the
effects of poverty in poor countries. Life expectancy at birth is low, but rate of infant mortality is
high. The percentage of illiterate people in total population is high. Educational attainment by
most people is modest, reflecting low levels of investment in human capital.

4. Operational Pattern:

Another important indicator of economic backwardness is occupational pattern. It is widely

believed that the countries in which most of national output or national income is derived from
the primary sector (i.e., agriculture, forestry, animal husbandry, mining etc.) are underdeveloped.

In other words, the greater the contribution of agriculture, the more economically backward a
country is supposed to be. Most people in LDCs live in rural areas and work on farms. In India,
for example, 70% of the total population depends on agriculture directly or indirectly.

In advanced countries most people work on factories or are engaged in trade and professions.
Similarly, the contribution of agriculture and allied activities to net national product is quite high.
In India, it is around 40% at present. In advanced countries the percentage is between 8 to 10.

However, a related point may also be noted in this context. There is great diversity in income and
living standard among developing countries. Some live under severe hardship and are on the
verge of starving (e.g., Bangladesh or Ethiopia).

Others that were in this category two or three decades ago have achieved some progress and
move into the rank of middle-income countries, (e.g., Egypt, Philippines, and Mexico). The most
successful ones are called the newly industrialising countries (e.g., Hong Kong, South Korea and
Taiwan).

Development index
The Human Development Index (HDI) is a statistical tool used to measure a country's overall
achievement in its social and economic dimensions. The social and economic dimensions of a
country are based on the health of people, their level of education attainment and their standard
of living.
The HDI was created to emphasize that people and their capabilities should be the ultimate
criteria for assessing the development of a country, not economic growth alone. The HDI can
also be used to question national policy choices, asking how two countries with the same level of
GNI per capita can end up with different human development outcomes. These contrasts can
stimulate debate about government policy priorities.

The Human Development Index (HDI) is a summary measure of average achievement in key
dimensions of human development: a long and healthy life, being knowledgeable and have a
decent standard of living. The HDI is the geometric mean of normalized indices for each of the
three dimensions.

The health dimension is assessed by life expectancy at birth, the education dimension is
measured by mean of years of schooling for adults aged 25 years and more and expected years of
schooling for children of school entering age. The standard of living dimension is measured by
gross national income per capita. The HDI uses the logarithm of income, to reflect the
diminishing importance of income with increasing GNI. The scores for the three HDI dimension
indices are then aggregated into a composite index using geometric mean. Refer to Technical
notes for more details.

The HDI simplifies and captures only part of what human development entails. It does not reflect
on inequalities, poverty, human security, empowerment, etc. The HDRO offers the other
composite indices as broader proxy on some of the key issues of human development, inequality,
gender disparity and poverty.

How Is the HDI Measured?

The HDI is a summary measurement of basic achievement levels in human development. The
computed HDI of a country is an average of indexes of each of the life aspects that are examined:
knowledge and understanding, a long and healthy life, and an acceptable standard of living. Each
of the four components is normalized to scale between 0 and 1, and then the geometric mean of
the three components is calculated.

The health aspect of the HDI is measured by the life expectancy, as calculated at the time of
birth, in each country, normalized so that this component is equal to 0 when life expectancy is 20
and equal to 1 when life expectancy is 85.

Education is measured on two levels: the mean years of schooling for residents of a country and
the expected years of schooling that a child has at the average age for starting school. These are
each separately normalized so that 15 mean years of schooling equals one, and 18 years of
expected schooling equals one, and a simple mean of the two is calculated.

The metric chosen to represent the standard of living is GNI per capita based on purchasing
power parity (PPP), a common metric used to reflect average income. The standard of living is
normalized so that it is equal to 1 when GNI per capita is $75,000 and equal to 0 when GNI per
capita is $100. The final Human Development Index score for each country is calculated as a
geometric mean of the three components by taking the cube root of the product of the normalized
component scores.

Limitations of the Index

The HDI is a simplification and an admittedly limited evaluation of human development. The
HDI does not specifically reflect quality-of-life factors, such as empowerment movements or
overall feelings of security. In recognition of these facts, the Human Development Report Office
(HDRO) provides additional composite indices to evaluate other life aspects, including
inequality issues such as gender disparity or racial inequality.3 Examination and evaluation of a
country's HDI are best done in concert with examining these and other factors, such as the
country's rate of economic growth, expansion of employment opportunities, and the success of
initiatives undertaken to improve the overall quality of life within a country.

Several economists have raised the criticism of the HDI that it is essentially redundant as a result
of the high correlations between the HDI, its components, and simpler measures of income per
capita. GNI per capita (or even GDP per capita) correlates very highly with both the overall HDI
and the other two components in both values and rankings. Given these strong and consistent
correlations, it would be simpler and clearer to just compare per capita GNI across countries than
to spend time and resources collecting data for the additional components that provide little or no
additional information to the overall index.

Indeed, a fundamental principle of the composite index design is to not include multiple
additional components that are strongly correlated in a way that suggests that they might reflect
the same underlying phenomenon. This is to prevent inefficient double counting and to avoid
introducing additional sources of potential errors in the data.

In the case of HDI, the inclusion of the components is problematic because it is easily plausible
that higher average incomes directly lead to both more investment in formal education and better
health and longevity, and definitions and measurement of years of schooling and life expectancy
can vary widely from country to country.

Economic Plan on Poverty

1. Sustained economic growth

The argument is that promoting economic growth increases total income in society, creating
more jobs and income which could be redistributed. In the past 100 years, economic growth has
been a major factor in reducing the levels of poverty which were seen in pre-war Britain and the
US. However, it is not necessarily the case that income and wealth will trickle down to the
poorest. There is a concern that economic growth could widen relative poverty because it
benefits the highly skilled and wealthy classes more than those at the bottom. See: Inequality and
economic growth

2. Reduce Unemployment

Unemployment is a major cause of poverty because the unemployed have little income, relying
on state benefits. Unemployment can be reduced through both supply-side policies, such as free
training schemes for those who are structurally unemployed.

Poverty and unemployment are often geographical problems, with depressed areas seeing higher
levels of poverty. Policies to overcome geographical poverty could include government subsidies
for firms to set up in depressed areas. Also building better infrastructure (transport and
communication) in depressed areas can provide an economic stimulus to create new jobs.

3. Progressive Taxes

Increasing progressive taxes, such as the higher rate of income tax from 40% to 50%, will take
more income from those on high-income levels. This enables cuts in regressive taxes (e.g.
VAT/Sales tax) and increased welfare benefits which help increase the income of the poor. This
can be an effective way to reduce relative poverty.

However, critics argue higher income taxes create a disincentive to work., leading to less output.
This is because higher tax makes work less attractive and reduces the opportunity cost of leisure.
Therefore people work less and enjoy more leisure. This is known as the substitution effect.
Similarly higher corporation tax may discourage investment in the UK

However, this is disputed by other economists, who point out that higher tax reduces incomes
and this may encourage people to work more, to maintain their income. (This is known as the
income effect)

Evidence suggests that higher income tax has little incentive on the supply of labour, suggesting
labour supply is relatively inelastic. However, it also depends at what level income tax is set.
There is certainly a level where higher income tax will reduce incentives to work.

Other problems with increasing income tax, include tax evasion and the fact firms may adjust
wages to compensate for the higher taxes.

4. Increasing benefits to the poor

Means-tested benefits involve increasing welfare benefits to those on low incomes. For example,
universal tax credit, food stamps or child benefit.

Advantages of means-tested benefits:

1. They allow money to be targeted to those who need it most. e.g family tax credit or pension
credit.
2. It is cheaper than universal benefits and reduces the burden on the taxpayer.

However, the problem with using benefits to reduce poverty include:

 Means-tested benefits are often unpopular because people are stigmatised as being poor.
 Also, it may create a disincentive to earn a higher wage because if you do get a higher paid
job you will lose at least some of your benefits and pay more tax. This is known as “the
benefits trap” or the “poverty trap”. The poverty trap occurs where people on low incomes
are discouraged from working extra hours or getting a higher paid job because any extra
income they earn will be taken away in lost benefits and higher taxes. To avoid the poverty
trap the government can grade benefits so that there isn’t an immediate cut off point.
 Some relatively poor may fall just outside the qualifying limit.
 Also, not everyone entitled to means-tested benefit will collect them because of ignorance or
difficulties in applying.

The government used to prefer universal benefits because it avoided the above problem, and
people feel if they contribute towards taxes they deserve their benefits regardless of their wealth.

However, in recent years, the welfare state has faced increased demands due to demographic
factors leading to more calls for means-tested benefits.

5. National Minimum Wage: The government could increase the national minimum wage.
This is an effective way of increasing the incomes of the low paid and therefore reducing wage
inequality. A related concept is the Voluntary Living Wage – an attempt to encourage firms to
pay higher wages.

In recent years, minimum wages have become more important in tackling in-paid work in both
the UK and US.

 In the UK, the number of workers benefitting from the minimum wage has increased from
830,000 in 1999 to 2 million in 2018.
 In the US, there is a proposal to increase federal minimum wage to $15 by 2024 – a move
that could see 33.5 million U.S. workers and 6.2 million workers in poverty see a rise in the
minimum wage.
 A potential problem of increasing the minimum wage is that it may cause unemployment
because firms may not be able to afford the workers. If it does cause unemployment, poverty
could worsen. However, if firms have monopsony power, then they will be able to afford
higher wages. Empirical evidence suggests that we can increase minimum wages fairly
significantly before the cost of falling employment and higher prices outweigh the benefit of
rising wages and higher productivity. See more on raising the minimum wage
6. Benefits in kind. These are important public services which are provided free at the point of
use (or subsidised). They mainly involve education and health care. Free education enables those
from low-income families to gain skills and qualifications which can help lead to better jobs and
higher incomes in the future.

7. Universal basic income (UBI) A universal basic income or citizen’s income involves giving
every citizen a weekly benefit – regardless of circumstances and income. The idea is to ensure
everyone has a minimum income guarantee, but without any disincentives of losing means-tested
benefits from working more. See more at Universal basic income (UBI)

Economic Plan on Hunger

Widespread hunger and malnutrition in a world of plentiful food implies that extreme poverty is
the root cause of undernourishment. It is not always understood, however, that hunger and
malnutrition (including micronutrient deficiencies) are in turn major causes of poverty. They
affect the ability of individuals to escape poverty in several ways through:

1. Reducing the capacity for physical activity and hence the productive potential of the labour
of those who suffer from hunger - and that is usually their only asset.
2. Impairing people's ability to develop physically and mentally, retarding child growth,
reducing cognitive ability and seriously inhibiting school attendance and performance - thus
compromising the effectiveness of investment in education.
3. Causing serious long-term damage to health, linked to higher rates of disease and premature
death.
4. Passing from generation to generation: hungry mothers give birth to underweight children
who start life with a handicap.
5. Contributing to social and political instability that further undermines government capacity to
reduce poverty.

The cost of a twin-track approach comprising a combination of direct actions against hunger and
other development measures is difficult to quantify. There is no question, however, that
translating it into reality in the developing world will require mobilization of resources and
institutional capacities far in excess of present levels.

38. Probably as little as 10 percent of the required level of resources is currently devoted to
nutrition programmes. A recent study of eight Asian countries4 - home to 60 percent of the
population of the developing world - inferred this from data on spending and coverage of major
programmes (ADB, 2001). Similar spending gaps are likely to be found in other developing
regions although precise estimates of current spending are not available.

Data on food-aid flows are more readily available. Food aid trends are volatile and closely linked
to short-term shocks and availability, as shown by the peak in response to the 1997-98 Asian
crisis. Apart from that peak, however, there was a worrying fall in food-aid levels in the 1990s.
The level in 2000 was only 56 percent of the 1992 level, despite increasing needs. The share of
food aid for low-income food deficit countries (LIFDCs) has also fluctuated considerably over
time. During the 80's LIFDCs received between 90 percent of total food aid. However in the 90'
s, their share has varied between 65 and 88 percent. Food aid is expected to account only for 8
percent of the import requirement of such countries. In conclusion food aid is dramatically
declining for the countries who need it most.

Economic Plan on Malnutrition

Various government initiatives have been launched over the years which seek to improve the
nutrition status in the country. These include the Integrated Child Development Services
(ICDS), the National Health Mission, the Janani Suraksha Yojana, the Matritva Sahyog Yojana,
the Mid-Day Meal Scheme, and the National Food Security Mission, among others. However,
concerns regarding malnutrition have persisted despite improvements over the years. It is in this
context that the National Nutrition Strategy has been released. Key features of the Strategy
include:8

 The Strategy aims to reduce all forms of malnutrition by 2030, with a focus on the most
vulnerable and critical age groups. The Strategy also aims to assist in achieving the targets
identified as part of the Sustainable Development Goals related to nutrition and health.
 The Strategy aims to launch a National Nutrition Mission, similar to the National Health
Mission. This is to enable integration of nutrition-related interventions cutting across sectors
like women and child development, health, food and public distribution, sanitation, drinking
water, and rural development.
 A decentralised approach will be promoted with greater flexibility and decision making at the
state, district and local levels. Further, the Strategy aims to strengthen the ownership of
Panchayati Raj institutions and urban local bodies over nutrition initiatives. This is to enable
decentralised planning and local innovation along with accountability for nutrition outcomes.
 The Strategy proposes to launch interventions with a focus on improving healthcare and
nutrition among children. These interventions will include: (i) promotion of breastfeeding for
the first six months after birth, (ii) universal access to infant and young child care (including
ICDS and crèches), (iii) enhanced care, referrals and management of severely
undernourished and sick children, (iv) bi-annual vitamin A supplements for children in the
age group of 9 months to 5 years, and (v) micro-nutrient supplements and bi-annual de-
worming for children.
 Measures to improve maternal care and nutrition include: (i) supplementary nutritional
support during pregnancy and lactation, (ii) health and nutrition counselling, (iii) adequate
consumption of iodised salt and screening of severe anaemia, and (iv) institutional childbirth,
lactation management and improved post-natal care.
 Governance reforms envisaged in the Strategy include: (i) convergence of state and district
implementation plans for ICDS, NHM and Swachh Bharat, (ii) focus on the most vulnerable
communities in districts with the highest levels of child malnutrition, and (iii) service
delivery models based on evidence of impact.