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Poverty in India: Concepts, Measurement and Trends
Poverty in India: Concepts, Measurement and Trends
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m= no. of poor population n = total
population
!= po"#rt$ lin# $i =in%om# of i&t' p#r(on
(lternative Poverty Measures
Bead Count -atio 9BC-::proportion o" total
population that "alls )elo# poverty threshold income
or e%penditure !ased on either national P; or dollar-
a-day P;
Poverty Hap Inde% 9PHI:: unli/e BC-, it gives us a
sense o" ho# poor the poor are It is e*uivalent to
income gap )elo# P; per head o" total population, and
e%pressed as a percentage o" the poverty line
$*uared Poverty Hap inde% 9$PH:: (dds the
dimension o" ine*uality among the poor to the poverty
gap inde% Ior a given value o" the PHI, population
#ith greater dispersion o" income among poor
indicates a higher value "or the $PH
&onotonicity'(iom:)otsatis*iedbyHC
+rans*er'(iom:)otsatis*iedbyHCandP#I
Incidence o" poverty a""ected )y t#o "actors:
92:Hro#th in average income 9<:,istri)ution
Poverty reduction "ast #hen average income rises
and ine*uality "alls
Iluctuations in poverty incidence till early 23E4s
primarily due to slo# per capita income gro#th
Incidence o" poverty started to "all a"ter mid-23E4s
#hen there #as mar/ed acceleration in per capita
H,P gro#th rate to a)ove ? per cent
;oren= curve: a curve that represents relationship )et#een
cumulative proportion o" income and cumulative proportion
o" population in income distri)ution )y si=e, )eginning #ith
the lo#est income group
I" per"ect income e*uality, ;oren= curve coincides #ith @5-
degree line
Hini coe""icient: a commonly used measure o" ine*uality;
ratio o" area )et#een ;oren= curve and @5-degree line,
e%pressed as a percentage o" area under @5-degree line
I" per"ect e*uality, Hini coe""icient ta/es value 4
I" per"ect ine*uality, e*uals 2
Internationally, Hini coe"" normallyranges )et#een 4<5 J 4E
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From Househol in!ome"e#peniture $ur%e&
'ompute ata on ea!h househol(s in!ome"e#peniture
)an* the +amilies +rom lowest in!ome to hi,hest in!ome-
> o" Pop
9Pi:
> o" Inc Cumulative
> o" Pop
Cummulative
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,oren-Curve
Cumulati"# ) of *opulation
Cumulati"#
) of +n%om#
,=-r#a of t'# 'at%'#. r#/ion
0ini %o#ffi%i#nt = 1,2503100
(verage (nnual Hro#th -ates: -eal H,P
./0.12to
./3413.
./3.132
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Coe**iciento*@ariationinPerCapita#%DP
among.5&a9or%tates
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Fa!tors a++e!tin, Po%ert&
Po%ert& epens on per !apita househol in!ome
whi!h in turn a++e!te b& emplo&ment. wa,e rate. lan
prou!ti%it&. inustrialisation. e#pansion o+ ser%i!e
se!tor an other ,eneral ,rowth an istribution
+a!tors
$pe!ial role o+
7
per !apita a,ri!ultural in!ome
7
/mplo&ment an real wa,e rate
7
0n+lation rate an relati%e +oo pri!es
7
1o%ernment e#peniture
'%*ertilitydrops,ratioo*workerstonon1
workersrises.
Providesanwindowo*opportunityprovided
potentialworkersac$uireskillsand*ind
productiveemployment
'bouta*ourtho*povertyreductioncouldbe
attributedtodemographic*actorsinIndia
ighteconomicpoliciescritical,otherwisethe
scenariocouldturnouttobedemographic
liability
Dividend*or217decadesonlysinceproportion
o*olderpopulationwouldeventuallyincrease
increasingdependencyratioagain
,ongtermscenario*orPoverty
7
Lon, term ,rowth prospe!ts +airl& optimisti!3 0nia li*el& to
!ontinue amon, the +aste ,rowin, e!onomies. 4)0' to
ominate worl e!onom&
7
0nia mi,ht surpass 5apan an 1erman& in terms o+ total
si6e o+ the e!onom&. &et its per !apita in!ome woul be less
than worl a%era,e +or a lon, time
7
Po%ert& !oul be reu!e +aster pro%ie ine7ualit& is uner
!ontrol. labour intensi%e a!ti%ities must ,row. remo%al o+
ri,iities in lan an labour mar*et !riti!al +or reallo!ation
o+ resour!es
7
1o%ernment !an a++or to e%ote more resour!es +or po%ert&
remo%al pro,rammes3 wa,e emplo&ment 89)/1:; or sel+
emplo&ment t&pe 8$5$<;-