Poverty- As an Economic Concern

Shravan KumarSatish Medishetty

Rupesh HoleJoel D’souzaNawaj KhanAchu Kottor

Coverage Poverty in India Definition of Poverty Types of Poverty BPL Line Analysis Of Concept Measurement of Poverty Problems of Proverty

After the independence of India’s economic structure has changed dramatically ; among the most dynamic economies recently.The Indian Economy got Boom In 1991, When India opened his door to World. The Privatization, Liberalization & Globalization Taken place. Till Then India is going faster than any economy in world. India Is standing on the verge of becoming a superpower but it still facing some basic problem The Poverty is one of them.Benefits of growth not widely spread to various sections in society, reached only marginally to low income groups.

Poverty in India

Definition of Proverty (Layman term)

Poverty is the deprivation of food, shelter, money and clothing when people can’t satisfy their basic needs. Poverty can be understood simply as a lack of money or more broadly in terms of barriers to everyday human life.

ORA state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that's considered acceptable in society.

The World Bank defines poverty in absolute terms. The bank defines extreme poverty as living on less than US$1.25 per day> (PPP), and moderate poverty as less than $2 a day. It has been estimated that in 2008, 1.4 billion people had consumption levels below US$1.25 a day and 2.7 billion lived on less than $2 a day.

Definition of poverty by world bank

Definition of poverty by Planning Commission

The Family Having Per capita Consumption expenditure of Rs 972 in rural areas and Rs 1407 in urban areas is treated as the poverty line at all the india level. This implies a monthly Consumption Expenditure of Rs 4860 in rural areas and Rs 7035 in urban areas.

Types of Poverty Absolute poverty:-refers to a set standard which is consistent over time and between countries. An example of an absolute measurement would be the percentage of the population eating less food than is required to sustain the human body (approximately 2000–2500 calories per day).

Vs.

Relative poverty:- in contrast, views poverty as socially defined and dependent on social context. One relative measurement would be to compare the total wealth of the poorest one-third of the population with the total wealth of the richest 1% of the population. In this case, the number of people counted as poor could increase while their income rises. There are several different income inequality metrics one example is the Gini coefficient.

Different Measures of Poverty

nmHCRHead Count Ratio

)(11

m

i

i

zyz

nPGPoverty Gap Index

2

1

1

m

i

i

zyz

nSPGSquared Poverty Gap

m= No. of Poor Population, n = Total Population,z= Poverty line, yi =Income of i-th Person

Head Count Ratio (HCR): Proportion of total population that falls below poverty threshold income or expenditure. Based on either national PL or dollar-a-day PL.Poverty Gap Index (PGI): Unlike HCR, it gives us a sense of how poor the poor are. It is equivalent to income gap below PL per head of total population, and expressed as a percentage of the poverty line. Squared Poverty Gap index (SPG): Adds the dimension of inequality among the poor to the poverty gap index. For a given value of the PGI, population with greater dispersion of income among poor indicates a higher value for the SPG

Different Measures of Poverty

Other Parameter used To Determine Poverty

Lorenz Curve: A curve that represents relationship between cumulative proportion of income and cumulative proportion of population in income distribution by size, beginning with the lowest income group. If perfect income equality, Lorenz curve coincides with 45-degree line.

Use of Lorenz CurveThe concept is useful in describing inequality among the size of individuals in ecology, and in studies of biodiversity, where cumulative proportion of species is plotted against cumulative proportion of individuals. It is also useful in business modeling.

A commonly used measure of inequality; ratio of area between Lorenz curve and 45-degree line, expressed as a percentage of area under 45-degree line.

If perfect equality, Gini coefficient takes value 0If perfect inequality, equals 1. Internationally, Gini coeff. Normally ranges between 0.25 & 0.7

GINI Coefficient

)(1

1

m

iiii QCQCPL

Poverty Line

A minimum level of living necessary for physical and social development of a person. Estimated as: total consumption expenditure level that meets energy (calorie) need of an average person.

•PL comprises of both food and non-food components of consumption.

•Considers non-food expenditure actually incurred corresponding to this total expenditure.

•Difficult to consider minimum non-food needs entirely on an objective basis

Below Poverty Line is an economic benchmark and poverty threshold used by the government of India to indicate economic disadvantage and to identify individuals and households in need of government assistance and aid.

Below Poverty Line

STATES No. Of People BPL % of People BPLBIHAR 425.64 42.60

MADHYA PRADESH 298.54 37.43MAHARASHTRA 227.99 25.03

ORISSA 169.09 47.15TAMIL NADU 130.48 21.12

UTTAR PRADESH 529.89 31.15WEST BENGAL 213.49 27.02

GOA 0.70 4.40GUJARAT 67.89 14.07HARYANA 17.34 8.74

HIMACHAL PRADESH 5.12 7.63

JAMMU & KASHMIR 3.46 3.48KERALA 41.04 12.72PUNJAB 14.49 6.16

No. Of people Below Poverty Line(in Millions)

India’s Ranking In Human Poverty Index

One third of deaths — some 18 million people a year or 50,000 per day — are due to poverty-related causes. That's 270 million people since 1990, the majority women and children, roughly equal to the population of the US. Every year nearly 11 million children die before their fifth birthday. In 2001, 1.1 billion people had consumption levels below $1 a day and 2.7

billion lived on less than $2 a day. 800 million people go to bed hungry every day. Around 1.29 billion people were in absolute poverty in 2008. About 400 million people in absolute poverty in India and 173 million

people in china. Sub - Saharan Africa at 47% had the highest incidence rate of absolute

poverty in 2008.

Facts About World Poverty

Problems of Poverty

HealthHunger

EducationHousing Violence