Poverty in India: An Empirical Analysis
Bobby Ghosh
I have personally visited Calcutta, India, wondering exactly why so many people line the streets in absolute destitution. Seeing homeless and poverty stricken people is sad anywhere in the world; I have seen it in much of the United States and in other countries as well. But nowhere is it as vast and grave a problem as it is in India. Every time someone asks for a few rupees on the street, it is an eye-opening experience that makes you realize how many people in this world are living below the poverty line – with not enough to eat, nowhere to live, no quality of life to speak of. India holds about one sixth of the world’s population, yet is responsible for thirty-five percent of the world’s poverty. If one wants to begin fighting the world’s poverty problems, India is probably the place to start.
In the year 2000, twenty-six percent of the people of India were living under the poverty level. This is a fairly shocking statistic, especially when one considers the World Bank definition of poverty – income of less than one dollar a day, per capita. As surprising as this statistic may be, the situation has in fact improved drastically in the last quarter century. In fact, from 1951 to 1974, during India’s first quarter of independence, the poverty rate increased from 47 percent to 56 percent, but the last 25 years have seen this figure drop to 26 percent. (Nathan) With this paper, I seek to understand the determinants of this decreasing yet alarmingly high rate of poverty in India. I will focus on the state-by-state effects, especially as relating to factors such as religion, caste breakdown, proportion of agrarian workers, literacy rate and other demographic factors. In addition, I will examine what has been done in India with regard to hunger and poverty elimination efforts, take a look at what has been successful and what might need to be changed in the future.
The problem of poverty in India arises in the rural population. (Dahiwale) Urban slums are growing in number because of the movement of poor people from the villages to the cities. As mentioned earlier, poverty levels have decreased across India. They have not, however, done so equally in all regions. For example, in examining the data given in Rural Poverty and Slums by Dahiwale, India’s decline in poverty from 1970 to 1988 was 12.35 percent. But it was just 3.72 in the state of Maharashtra and 15.02 percent in the state of Gujarat. It is interesting to note that both these states have a similar level of urbanization. The place where the difference arises is in the rural setting. Both states saw a drop in poverty of almost the same percentage in urban centers. But Gujarat saw a drop in poverty in rural areas that was 7 times as much as that of Maharashtra.
Breaking down the issue of differential poverty, let us move beyond the states to the actual demographics of the poor in India. There is a very evident caste breakdown. Although the caste system is not formally used anymore, many of the associations continue to this day, especially in rural areas. The “scheduled castes” are a designation given to the lowest caste, consisting of those formerly associated with the designation of “untouchables” amongst others. A second lower caste is the “scheduled tribes.” This group of aboriginal people generally rejects the caste system and chooses to reside in jungles, forests and mountains. (Daniel) These two castes make up a disproportionate fraction of the poor in India. In fact, in 1988, 54.2 percent of the scheduled castes and 62.2 percent of the scheduled tribes were living below the poverty line. One of the reasons that we saw a higher percentage in Maharashtra as compared to Gujarat was that there is a higher population percentage of scheduled castes in that state as compared to Gujarat.
If religious groups are considered, India has 6 significant religious groups: Hinduism, Islam, Christianity, Sikhism, Buddhism, and Jainism. The majority of the country identifies with the Hindu faith, about 82 percent. Islam represents about 12 percent of all Indians, while Christianity, Sikhism, Buddhism, and Jainism represent much smaller percentages of people – 2.5 percent, 2 percent, .7 percent, and .5 percent, respectively. (Daniel) In examining the data, there appears to be a correlation with higher percentage of poverty with the Islam religion. According to a 1987-1988 consensus survey, 35 million of the nations 76 million Muslims, or 46 percent, were living below the poverty line. Muslims also exceeded Hindus in urban poverty levels by more than 17 percent. (Dahiwale) The reason for this is possibly due to the different backgrounds from which the Muslims arrived in India. In the 8th century, Arabs and other Muslims began invading India. Since then, those Indians that converted to Islam were from two main groups: the lower classes of Indian society and the ruling classes from various Indian kingdoms. The former of these two classes is a likely contributor to the large proportions of poor Muslims in present day India.
Next let us examine the proportion of agricultural laborers, since most people in the rural communities take part in agriculture. According to the World Bank, 45.6 percent of people in rural households are in poverty. The highest level of poverty, on state lines, was in Maharashtra, where there were 56.6 percent of rural labor households under the poverty line. Maharashtra also has a higher ratio of agricultural workers to all other workers. (Dahiwale) All of this evidence points to the conclusion that agricultural laborers are, on the average, more likely to be living under the poverty line than the average laborer. Census data, interestingly, also suggest that a reduction in the proportion of agricultural workers causes unemployment to decrease. From all of this information on agricultural labor, we might conclude that reduction in agricultural labor, relative to all other labor, and therefore a reduction in rural labor unemployment, could help decrease the incidence of poverty.
If we take a look at education, we find another correlation. Slum and rural poor areas can be identified with low literacy rates as well as educational levels. For example, in a slum in the city of Kanpur, a literacy rate of 36.2 percent was found, as compared to a literacy rate of 50.8 percent in the rest of the city. Some cities found literacy rates as low as 20 percent in slums. There is also a correlation between literacy rates and caste. As found in Kohalpur city in the study done by Dahiwale, the backward castes, in which the scheduled castes are included, showed a literacy rate of 18.1 percent, while the upper castes had a literacy rate of 88.2 percent – a tremendous differential. While all of this data on literacy rates is interesting to note, we cannot make any decisive conclusions based on this because there is no evident causation. In fact the correlation likely runs in the opposite way: being born into a destitute family, you have little or no money. Children are forced to find work to make money just so they can eat, and in the process are unable to attend school. The correlation can be extrapolated to a state level – Kerala’s poverty rate is a bit lower than other countries and we see a very high literacy rate in Kerala, the highest in the nation.
Going beyond the numbers of people that are in poverty, let us take a lok at the conditions in which they are living. The most important of their living conditions to take a look at, with regards to poverty, is their food situation. It is important to see what sort of nourishment the poor have, and what sort of food security measures are in place because it gets at the core of the problem: those under the poverty level are undernourished. Before we go into the programs that have been tried, or should be tried, let us examine the current situation with regards to nutrition. India has actually made rapid progress over the years when it comes to food production, having nearly achieved self-sufficiency in the 1970’s with regard to availability of foodgrains. (Chelliah and Sudarshan) The 1980’s saw an increase in food production per capita of 1.6 percent per year. Interestingly, however, foodgrain and cereal consumption has been decreasing since the early 1970’s. Especially in the more well-off states such as Punjab and Haryana, people are consuming less cereals and more milk and milk products, eggs, meat, fish, vegetables, fruits and so on. This changing diet, on the whole implies a less efficient means of getting calories. While this is fine for those that can afford it, it falls hard upon those that cannot. With an overall decrease in the consumption of cereals, we find that the poor become very succeptible to a sudden change of price of cereals. Furthermore, as non-cereal consumption is proportionately increased, the cereal prices are destabilized by lesser consumption. Thus this overall trend is hurtful to the nations poor both by creating unstable prices, and making the poor more vulnerable to these volatile prices. (Chelliah and Sudharshan)
These trends of changing diets have also not necessarily improved nourishment. In fact, according to surveys taken in 1994, the lowest 30 percent of rural populations were only taking in about 1680 calories per day, when a minimum of 2000 is needed for a healthy diet. (Chelliah and Sudarshan) In addition, many experience a lack of protein and certain essential micro-nutrients. Many poor households suffer from a lack of Vitamin A, Riboflavin, and Niacin, for instance. (National Nutrition Monitoring Bureau) Thus, this change in consumer preferences shows that even though there has been a decline in income-poverty between 1972 and 1992, there has not been much of a decline in food-poverty. In fact, overall the problem of food-poverty is much worse than the issue of income poverty. As of 1994, over one half of all children under the age of 15 were either severely or moderately malnourished. Similarly 46 percent of all rural adults suffered from chronic energy deficiency. (Chelliah and Sudharshan) It is quite evident that dietary nourishment is a major problem in India, even beyond those who are living under the poverty level, and the problem is augmented the less money you have.
During the 1960’s there was a foodgrain shortage which caused the birth of a program called the Public Distribution System, or PDS. It focused mostly upon stabilization of prices in urban areas until the 1980’s when it began expanding to rural areas as well. Since then, it has tried to maintain a supply of foodgrains especially to protect the poor who might be affected by sudden price hikes either due to natural fluctuations in the economy, or from the effects of economic reforms. If we take a look at some of the data provided for who has benefited from the PDS over the years, we see that those states with high incidence of poverty have not necessarily been the states that have received a lot of aid from PDS. Kerala, for instance has a low incidence of poverty, yet a high share in PDS. Meanwhile, Uttar Pradesh has an incidence of poverty that is more than six times as high as Kerala, yet its share in PDS is lower than that of Kerala. There appears, therefore, to be some sort of an inter-regional bias in how the PDS operates. There also seems to be an urban bias with the PDS. The States of Jammu and Kashmir as well as West Bengal show a large urban bias. On the whole, it is evident that the Public Distribution System is not providing the safety net it intends to for the rural poor in India. (Chelliah and Sudarshan)
Given the vast nature of the problem of poverty in India, many programs beyond the Public Distribution System have been tried out in an attempt to alleviate the situation. Many of these programs have focused on eliminating rural poverty, since, as mentioned earlier, rural poverty is largely where all poverty in India stems from. The following is a listing of programs enacted since 1971:
Program / Launching year / Objectives1 / Small Farmers Development Agency / 1971 / Controlling soil conservation and promoting agricultural
productivity
2 / Tribal Area Development Program / 1972 / Improving Economy of the tribal
3 / Minimum Needs Program / 1972 / Providing construction assistance and controlling drop-out rate of children in school and improving health
4 / Drought Prone Area / 1973 / Promoting dryland agriculture
5 / Twenty-Point Program / 1975, 1982, 1986 / Eradicating poverty under various schemes
6 / Food for Work Program / 1977 / Improving the consumption level of the poor
7 / Training Rural Youth for Self Employment / 1979 / Upgrading the technical skills of rural youth for taking up self-employment ventures
8 / Integrated Rural Development Program / 1979 / Providing assistance for acquisition of productive assets for self-employment
9 / National Rural Employment Program (NREP) / 1980 / Providing wage employment for assets creation
10 / Rural Landless Employment Guarantee Program (RLEGP) / 1983 / Providing wage employment to landless agricultural laborers for creating a social forestry and for construction activities
11 / Jawahar Rojgar Yojana (JRY) / 1989 / NREP and RLEGP merged into JRY for generating additional employment on productive works. It is to be implemented in all villages in the country
12 / Urban Basic Services Scheme, Urban Basic Services for the poor (revised) / 1986 / Aiming at child survival development. Assistance to handicapped and street children
13 / Nehru Rojgar Yojana / 1986 / Encouraging unemployed youth to take up self-employment ventures and providing/upgrading shelter to pavements/slum dwellers
14 / National Poverty Line Benefit Schemes / 1995 / Paying Rs.300 to a pregnant woman, a pension of Rs. 75 per month to an old aged and a sum of Rs. 5,000 in the event of a death of the bread earner and Rs. 10,000 in the case of an accident
15 / Prime Minister’s Integrated Urban Poverty Eradication Program (PMIUPEP) in 345 Class II cities / 1995 / Uplifting the urban poor by mobilizing the women power and encouraging for self-employment and training
Table 1. Anti-Poverty Programs
(Taken from Table 1.4 of Rural Poverty and Slums)
Basically all of these programs are of four basic types.
1) Programs that promote economic growth and overall development,
2) Programs that promote human development with emphasis on health, education and minimum needs,
3) Programs that directly target poverty eradication through creation of employment, training and creating asset endowments of the poor
4) Lastly, the targeted Public Distribution System (PDS) mentioned earlier, which provides protection from inflationary pressures by providing food at affordable prices.
The Integrated Rural Development Program (IRDP), started in 1979, works to help poor families in rural areas by providing them with government subsidies for food. The program brought about an incremental income of more than Rs 2000 for 57 percent of households affected and less for all other families. (Chelliah and Sudharshan) While the IRDP did in fact bring extra income to families, it has generally not been enough extra income to allow these families to cross the poverty line. Other similar programs for self-employment, such as the Development of Women and Children in Rural Areas (DWCRA) and the Training of Rural Youth for Self-Employment have met with similar weak results. Studies have pointed out two major reasons for this: there has been very little interaction with the actual people being affected after the program has been enacted, and there has been a lack of concern for responding to actual markets. In other words the programs have received little feedback, have not adapted to meet changing demands of its beneficiaries, and have not created opportunities that have been viable in existing markets.
In addition to self-employment programs, there have been different wage-employment programs intended for poverty alleviation. One major example is the Jawahar Rozgar Yojana (JRY). The JRY was actually created as a merger of two earlier plans known as the National Rural Employment Program (NREP) and the Rural Landless Employment Guarantee (RLEGP). The main objective for the JRY is to create rural economic infrastructure and community and social assets, providing employment as a by-product. The employment offered through the program is a minimum wage for unskilled labor. The wage is generally below the market rate for such work, but the opportunities are created at many rural areas and for anyone who is willing to work. Specifically, the JRY projects are two-fold. One area, called the Indira Awas Yojana (IAY) works on creating housing, and the Million Wells Scheme (MWS) aims to create open irrigation wells free of cost to the needy in rural agricultural areas.
Generally the JRY program has been moderately successful. It has created millions of jobs, while contributing to the development of projects such as medium irrigation, soil conservation, land development, drinking water wells, rural roads, construction of school buildings, Panchyat offices (Panchyats are those responsible for project direction at the local levels), women’s club buildings, housing and sanitation and social forestry. (Chelliah and Sudarshan) Despite this, however, there has been much criticism of the program’s inefficacy. According to evaluations of the program, more than half of the Panchyat heads had no training for the projects they were undertaking. Shortage of funds and organization led to about half the projects not being completed on time. There were very few women’s jobs created, and differential rates were paid to women and men. Local resources were not properly utilized, driving up production costs. The overall organization was not impressive either, as annual action plans were rarely discussed.