Rajiv Gandhi National University of Law, Patiala

Finding a Solution to India’s Poverty Problem

Subject: Economic- II

Submitted to: Submitted by:

Dr. Brindpreet Kaur Harshitaa Joshi

(Assistant Professor of Law) (22006)
 Finding a Solution to India’s Poverty Problem

Contents

Finding a Solution to India’s Poverty Problem

BONAFIDE CERTIFICATE..............................................................................................................2
ACKNOWLEDGEMENT..................................................................................................................3
Introduction.........................................................................................................................................4
How is Poverty measured?..................................................................................................................5
Factors Contributing to the Poverty Problem...................................................................................7
Policies adopted in India.....................................................................................................................8
Conclusion............................................................................................................................................9
References..........................................................................................................................................11

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 Finding a Solution to India’s Poverty Problem

BONAFIDE CERTIFICATE

This research paper titled ‘Why Marital Rape Must Become an Offence Against Marriage’ is
an original work by Harshitaa Joshi a bonafide student of Rajiv Gandhi National University
of Law.

Dr. Brindpreet Kaur

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 Finding a Solution to India’s Poverty Problem

ACKNOWLEDGEMENT

It is always an honor to mention and let people know the backbones of a particular project.
Firstly, I would like to express my gratitude towards my university for promoting research
based academic projects that allowed me to explore and understand the concepts better.
Further, I would like to thank the Vice- Chancellor of the university Prof. Jai Shankar Singh
for being the guiding light to the faculty and the students as well, he has prompted us with
new methods of research and new methodology for working on varied projects. Great
teachers focus not just on teaching but also mentoring their students, and likewise I found my
mentor in Dr. Brindpreet Kaur. She has always been supportive and was always approachable
while I was working on this project. She guided me, explained me, and closely observed the
developments of this project along the way. I would also like to thank my family and friends,
without them this project would always have had been a thought in my mind. They pushed
me to enter the shoes of my true potential and has been constantly supportive of my
endeavors. I hope I have you with me today and tomorrow.

Harshitaa Joshi

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 Finding a Solution to India’s Poverty Problem

Introduction
Poverty, within the context of economics, encompasses a multifaceted and complex
phenomenon characterized by inadequate access to resources necessary for a decent standard
of living. At its core, poverty reflects a state of deprivation where individuals or communities
lack essential goods and services required to meet basic human needs, such as food, shelter,
healthcare, education, and sanitation 1. Amartya Sen, a Nobel laureate economist, defines
poverty as the deprivation of basic capabilities, such as the ability to lead a long and healthy
life, access education, and participate in economic and social activities. Sen's approach
focuses on individuals' freedom to achieve well-being and emphasizes the importance of
expanding capabilities rather than merely increasing income. 2 Economists often measure
poverty in terms of income levels, where individuals or households fall below a certain
threshold deemed necessary to afford a minimum standard of living which reflects the
absolute poveryt. This threshold can vary significantly across different countries and regions
due to variations in living costs, societal norms, and government policies. The concept of
poverty is not only confined to material deprivation but also encompasses broader dimensions
such as social exclusion, limited opportunities for advancement, and unequal distribution of
wealth and resources. Persistent poverty can trap individuals and communities in a cycle of
deprivation, hindering their ability to escape poverty and participate fully in economic and
social life.3 Moreover, poverty tends to be intergenerational, with children born into
impoverished households facing greater obstacles in breaking free from the cycle of poverty.
Economists utilize various measures to quantify and analyse poverty, with one of the most
commonly used indicators being the poverty line. The poverty line represents the income
level below which individuals or households are considered to be living in poverty. 4
Governments often establish official poverty lines based on the cost of a basket of essential
goods and services, adjusted for factors such as household size and geographic location. By
comparing individuals' or households' incomes to the poverty line, economists can assess the
extent of poverty within a given population and track changes over time. 5 In addition to the
poverty line, economists also employ other measures such as the poverty rate, which

1
Barder, O.M., 2009. What is poverty reduction?. Center for Global Development Working Paper, (170).
2
Sen, A., 1981. Issues in the Measurement of Poverty. In Measurement in public choice (pp. 144-166). London:
Palgrave Macmillan UK.
3
Banerjee, A.V., Benabou, R. and Mookherjee, D. eds., 2006. Understanding poverty. Oxford University Press.
4
Townsend, P., 2020. Measuring poverty. In Welfare Law (pp. 3-10). Routledge.
5
Ibid. p. 5.

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 Finding a Solution to India’s Poverty Problem

calculates the proportion of the population living below the poverty line. 6This metric provides
insights into the prevalence of poverty within a society and helps policymakers evaluate the
effectiveness of anti-poverty interventions and social welfare programs. Furthermore,
economists examine poverty dynamics, including factors contributing to poverty persistence
or mobility, such as education, employment opportunities, social networks, and access to
financial services.

In a huge country like India, distribution of resources is no doubt a problem. Years of

colonial plunder left India grasping to feed its population. Although with a robust Public
Distribution System India fed masses and ensured to eliminate widespread hunger, the
scheme had to be focused only on low income groups with financial strain and liberalization.
The 2023 Multidimensional Poverty Report found that as many as a third of all poor people
in South Asia reside in India, the figure standing at 389 million. Although UNDP highlighted
that 415 million have come out of poverty in 15 years, the corpus is still staggering and an
impediment to overall development. Poverty is a leakage of resources that wastes much
resource with capital potential. This paper seeks to address the solution to this poverty
problem from socio-economic perspective.

How is Poverty measured?

There are several ways to measure poverty. The poverty headcount ratio measures the
proportion of the population living below a certain poverty line or threshold. This threshold
can be based on income, consumption, or other indicators of well-being. For example, the
World Bank's international poverty line is set at $1.90 per day (in 2011 purchasing power
parity terms) for extreme poverty.7 The MPI goes beyond income-based measures and
considers multiple dimensions of poverty, such as education, health, and living standards. It
identifies individuals who are deprived in at least one-third of weighted indicators, providing
a more comprehensive understanding of poverty.8 While not a poverty index per se, the Gini
coefficient measures income inequality within a population. Higher Gini coefficients indicate
greater income inequality, which can exacerbate poverty by concentrating wealth in the hands

6
Ibid. p. 9.
7
World Research Digest, vol. 11 no. 2 (2017).
8
Atkinson, A.B., 1987. On the measurement of poverty. Econometrica: Journal of the Econometric Society,
pp.749-764.

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 Finding a Solution to India’s Poverty Problem

of a few. Similar to the Gini coefficient, the Palma ratio compares the income share of the top
10% of the population to the income share of the bottom 40%. 9 It provides insights into the
concentration of income at the top and the relative deprivation experienced by the bottom
segments of society. To understand the gravity of India’s poverty problem we must look into
India’s position in some of these indices. According to the World Bank, India's Gini
coefficient stood at around 35.7 in 2011-2012, indicating relatively high income inequality. 10
Official estimates from the Government of India's Planning Commission (now NITI Aayog)
indicated a decline in poverty from around 45% in the early 1990s to less than 23% by 2011-
2012. Subsequent estimates from other sources and surveys, such as the World Bank and the
National Sample Survey Organization (NSSO), have provided additional insights into
poverty trends and patterns in India.11 Despite progress in poverty reduction, disparities
persist across regions, states, and population groups, highlighting the need for targeted
interventions to address the multidimensional nature of poverty. Factors such as income
inequality, access to education, healthcare, employment opportunities, and social exclusion
contribute to the persistence of poverty in India. The Tendulkar Committee, appointed by the
Indian government, recommended a poverty line based on consumption expenditure.
According to this measure, in 2011-12, the poverty line was set at ₹32 per capita per day in
rural areas and ₹47 per capita per day in urban areas for monthly per capita consumption
expenditure.12 According to the Ministry of Rural Development and the Ministry of Housing
and Urban Poverty Alleviation, the poverty rates in India vary between rural and urban areas.
As of 2011-12, the poverty rate was estimated to be around 25.7% in rural areas and 13.7% in
urban areas. India also uses the MPI to measure multidimensional poverty, which considers
various deprivations in health, education, and living standards. According to the Per Capita
Consumption Expenditure Per day,, around 271 million people (21.9% of the population)
were living in multidimensional poverty in India as of 2009-10.13

9
Ibid.
10
Malakar, K., Mishra, T. and Patwardhan, A., 2018. Inequality in water supply in India: An assessment using
the Gini and Theil indices. Environment, Development and Sustainability, 20, pp.841-864.
11
"India registers remarkable reduction in poverty; 415 million exit in 15 years". mint. 11 July 2023.
Retrieved 31 July 2023.
12
Sepoy, Inzamul (2019). Indian Economic Development. p. 84.
13
"Poverty Estimates for 2009–10". Press Information Bureau, Government of India. Retrieved 21
October 2017.

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 Finding a Solution to India’s Poverty Problem

Factors Contributing to the Poverty Problem

India, with its high economic growth in recent decades, has made progress in reducing
poverty. However, the issue of poverty in India still persists and requires a comprehensive
solution which calls for addressing multiple dimensions and factors. Some potential solutions
to India's poverty problem include implementing targeted social welfare programs to provide
assistance and support to those living in poverty, improving access to quality education to
ensure equal opportunities for all, promoting sustainable and inclusive economic growth that
generates employment opportunities, empowering women through financial inclusion and
gender equality measures, investing in critical infrastructure development, and promoting
inclusive policies that prioritize the needs and well-being of marginalized communities.
Addressing issues of land ownership and distribution, implementing effective healthcare
initiatives, enhancing rural development, and promoting entrepreneurship are also important
strategies to tackle poverty in India. Furthermore, addressing corruption and ensuring good
governance is crucial to eliminate the systemic barriers that perpetuate poverty. Moreover,
promoting strong collaborations between the government, non-governmental organizations,
and international partners can lead to effective poverty alleviation strategies. These strategies
must be implemented in a coordinated, sustainable, and inclusive manner to ensure long-term
progress in reducing poverty and improving the overall well-being of India's population.
Implementing a combination of targeted social welfare programs, improving access to quality
education, promoting sustainable economic growth, empowering women, investing in
infrastructure development, addressing

Unemployment and underemployment also contribute to poverty by depriving individuals of

stable incomes and financial security. Economic downturns, technological advancements, and
structural changes in industries can lead to job losses and exacerbate unemployment rates,
particularly among vulnerable populations with limited skills or access to employment
opportunities.14 Moreover, informal employment, characterized by low wages, lack of social
protections, and precarious working conditions, perpetuates poverty by trapping workers in a
cycle of poverty. Social factors such as discrimination, marginalization, and exclusion based
on factors like gender, race, ethnicity, or disability can also drive poverty. Discriminatory
practices in employment, education, and access to public services limit individuals'
14
Philip, D. and Rayhan, I., 2004. Vulnerability and Poverty: What are the causes and how are they related?.

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 Finding a Solution to India’s Poverty Problem

opportunities for socioeconomic advancement, perpetuating cycles of poverty and inequality

within society.15 Inadequate social safety nets, such as limited access to healthcare, housing
assistance, and social assistance programs, also leave individuals vulnerable to economic
shocks and further entrench poverty.16 Political instability, corruption, and ineffective
governance can also exacerbate poverty by undermining economic development, impeding
investment in infrastructure and social services, and exacerbating social tensions. 17 Lack of
political will to address poverty and implement effective policies further perpetuates
socioeconomic disparities and prevents individuals from escaping poverty traps.

Policies adopted in India

One of the most prominent policies is the implementation of the Mahatma Gandhi National
Rural Employment Guarantee Act which was enacted in the year 2005. MGNREGA
guarantees 100 days of wage employment per year to rural households, thereby providing
income security and employment opportunities to the rural poor. The program focuses on
creating assets and infrastructure in rural areas while also enhancing livelihoods and reducing
distress migration and recently the Government has even decided to hike the wages. 18 The
National Rural Livelihoods Mission was launched in the year 2011 with an aim to alleviate
poverty by promoting self-employment and entrepreneurship amongst rural poor, especially
women.19 Introduced in 2014, Pradhan Mantri Jan Dhan Yojana aims to promote financial
inclusion by providing access to basic banking services such as savings accounts,
remittances, credit, insurance, and pension to all households, especially those from
marginalized communities.20 The program helps empower the poor by enabling them to save,
access credit, and build financial resilience. As has already been mentioned that poverty is
also an infrastructural impediment, we must also acknowledge the Swachh Bharat Mission’s
contribution in an attempt to alleviate poverty. The Mission was focused on a competitive all-
15
Brandt, L., 1908. The causes of poverty. Political Science Quarterly, 23(4), pp.637-651.
16
Galbraith, J.K., 1979. The nature of mass poverty. Harvard University Press.
17
Yapa, L., 1996. What causes poverty?: A postmodern view. Annals of the Association of American
Geographers, 86(4), pp.707-728.
18
Back
Centre revises MGNREGA wages ahead of Lok Sabha polls; Check new NREGS wage rates for financial year
2024-25. 28th March 2024. Mint. [Link]
[Link].
19
[Link] Retrieved from Aajeevika on 23 July 2013
20
Prime Minister to Launch Pradhan Mantri Jan Dhan Yojana Tomorrow, Press Information Bureau, Govt. of
India, 27 August 2014

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 Finding a Solution to India’s Poverty Problem

round cleanliness of the surrounding. Swachh Bharat Mission aims to achieve universal
sanitation coverage and eliminate open defecation by constructing toilets, promoting behavior
change, and ensuring the proper disposal of solid and liquid waste. Access to sanitation
facilities is essential for improving health outcomes and reducing poverty, particularly in
rural areas.21

Despite these solutions the problem remains largely unresolved, the reason is the lack of
social push. Since poverty is not only an economic phenomenon but also a social one,
investments need to be made in education and health guaranteeing quality service to
everyone. If we look at the richest country that is Luxemburg, what we find different is a
favourable tax regime for start-ups and entrepreneurs. Important industries in India must be
identified and given impetus. This includes renewable energy sector, real estate and naturally
banking. This impetus will not only streamline resource utilisation but also resolve the
underemployment and unemployment issue thereby uplifting the lower strata. An economic
evil that needs to be resolved to find a solution to the poverty problem is corruption. 22 A
report in 2014 highlighted that India is losing $1 trillion every year to corruption. 23 The figure
is jarring. It cannot be ensured that the benefit of government policy will reach the poor
section unless corruption is addressed.

Conclusion
Poverty is not solely an economic issue but also a moral and ethical concern. Inadequate
access to basic necessities deprives individuals of their dignity and undermines their
fundamental human rights. Moreover, poverty has far-reaching implications for economic
growth, social stability, and sustainable development. High levels of poverty can impede
economic productivity by limiting human capital development, constraining consumer
spending, and exacerbating social tensions. Addressing poverty requires a comprehensive
approach that addresses its root causes, including structural inequalities, discrimination,
inadequate social safety nets, and lack of access to education and healthcare. Efforts to

21
"Restructuring of the Nirmal Bharat Abhiyan into Swachh Bharat Mission". 24 September 2014 – via
Business Standard.
22
Negin, V., Abd Rashid, Z. and Nikopour, H., 2010. The causal relationship between corruption and poverty: A
panel data analysis.
23
India losing $1 trillion annually to corruption: Study. 3 rd September 2014. India losing $1 trillion annually to
corruption: Study | Latest News India - Hindustan Times

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 Finding a Solution to India’s Poverty Problem

alleviate poverty typically involve a combination of policies and interventions aimed at

promoting inclusive economic growth, enhancing access to education and healthcare,
strengthening social safety nets, and empowering marginalized communities. These
initiatives may include targeted cash transfer programs, job creation initiatives, investment in
infrastructure and social services, and measures to promote equitable distribution of wealth
and resources. Moreover, addressing poverty requires collaboration among governments,
civil society organizations, the private sector, and international development agencies to
mobilize resources, share knowledge, and coordinate efforts effectively. In conclusion,
poverty in economics refers to a state of deprivation characterized by inadequate access to
essential goods and services necessary for a decent standard of living. It encompasses
material deprivation, social exclusion, and unequal distribution of wealth and opportunities.
Economists employ various measures to quantify and analyze poverty, including the poverty
line and poverty rate, to assess its extent and dynamics within a population. Addressing
poverty requires a multifaceted approach that addresses its underlying causes and involves
coordinated efforts from governments, civil society, and the private sector to promote
inclusive growth, social justice, and sustainable development. Poverty arises from a complex
interplay of economic, social, and political factors that limit individuals' or communities'
access to resources and opportunities necessary for a decent standard of living. One primary
driver of poverty is economic inequality, where disparities in income and wealth distribution
concentrate resources in the hands of a few, leaving others with limited means to meet their
basic needs. Structural inequalities, such as unequal access to education, employment, and
financial services, further exacerbate poverty by perpetuating cycles of disadvantage across
generations. Lack of access to quality education is a significant contributor to poverty.
Education equips individuals with the skills and knowledge needed to secure employment
and achieve economic mobility. However, barriers such as inadequate school infrastructure,
high tuition costs, and social norms that prioritize boys' education over girls' can hinder
access to education, particularly for marginalized groups. Without educational opportunities,
individuals are more likely to face limited job prospects and lower earning potential, trapping
them in poverty.

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 Finding a Solution to India’s Poverty Problem

References
1. "India registers remarkable reduction in poverty; 415 million exit in 15 years" . Mint.
11 July 2023. Retrieved 31 July 2023.
2. "Poverty Estimates for 2009–10". Press Information Bureau, Government of India.
Retrieved 21 October 2017.
3. "Restructuring of the Nirmal Bharat Abhiyan into Swachh Bharat Mission" . 24
September 2014 – via Business Standard
4. Atkinson, A.B., 1987. On the measurement of poverty. Econometrica: Journal of the
Econometric Society, pp.749-764.
5. Banerjee, A.V., Benabou, R. and Mookherjee, D. eds., 2006. Understanding poverty.
Oxford University Press.
6. Barder, O.M., 2009. What is poverty reduction?. Center for Global Development
Working Paper, (170).
7. Brandt, L., 1908. The causes of poverty. Political Science Quarterly, 23(4), pp.637-
651.
8. Centre revises MGNREGA wages ahead of Lok Sabha polls; Check new NREGS
wage rates for financial year 2024-25. 28 th March 2024. Mint.
[Link]
[Link].
9. Galbraith, J.K., 1979. The nature of mass poverty. Harvard University Press.
10. [Link] Retrieved from
Aajeevika on 23 July 2013
11. India losing $1 trillion annually to corruption: Study. 3 rd September 2014. India losing
$1 trillion annually to corruption: Study | Latest News India - Hindustan Times
12. Malakar, K., Mishra, T. and Patwardhan, A., 2018. Inequality in water supply in India:
An assessment using the Gini and Theil indices. Environment, Development and
Sustainability, 20, pp.841-864.
13. Negin, V., Abd Rashid, Z. and Nikopour, H., 2010. The causal relationship between
corruption and poverty: A panel data analysis.
14. Philip, D. and Rayhan, I., 2004. Vulnerability and Poverty: What are the causes and
how are they related?.
15. Prime Minister to Launch Pradhan Mantri Jan Dhan Yojana Tomorrow , Press
Information Bureau, Govt. of India, 27 August 2014

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 Finding a Solution to India’s Poverty Problem

16. Sen, A., 1981. Issues in the Measurement of Poverty. In Measurement in public
choice (pp. 144-166). London: Palgrave Macmillan UK.
17. Sepoy, Inzamul (2019). Indian Economic Development. p. 84.
18. Townsend, P., 2020. Measuring poverty. In Welfare Law (pp. 3-10). Routledge.
19. World Research Digest, vol. 11 no. 2 (2017).
20. Yapa, L., 1996. What causes poverty?: A postmodern view. Annals of the Association
of American Geographers, 86(4), pp.707-728.

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