Poverty Class 11 Economics Revision Notes

Class 11 Notes

Please see Poverty Class 11 Economics Revision Notes provided below. These revision notes have been prepared as per the latest syllabus and books for Class 11 Economics issues by CBSE, NCERT, and KVS. Students should revise these notes for Chapter 4 Poverty daily and also prior to examinations for understanding all topics and to get better marks in exams. We have provided Class 11 Economics Notes for all chapters on our website.

Chapter 4 Poverty Class 11 Economics Revision Notes

Two major problems that the developing countries of the world face are mass poverty and mass unemployment. They are interconnected.
People are poor because they do not have income. That is because they are unemployed. There are also cases where people are employed and poor. For centuries, the problem of poverty is there in India. Reducing poverty is one of the major goals of planning in India. We must have knowledge about the poor and their precise social and economic circumstances. Only then the government can adopt effective policies for removing poverty.

Definitions of Poverty

Poverty has been defined in a number of ways. The World Bank (1990) has defined poverty as “the inability to attain a minimal standard of living”.
In the words of Dandekar (1981) “want of adequate income, howsoever defined is poverty…” Thus, lack of adequate income to buy the basic goods for subsistence living is an important element in the definitions of poverty.

Types of poverty

Absolute poverty and Relative poverty When people do not have adequate food, clothing and shelter, we say they are in absolute poverty.

Relative poverty refers to differences in income among different classes of people or people within the same group or among people of different countries. If we divide the population of a country into different class intervals based on income and if we compare say, the top 20 percent of population with the bottom 20 percent of population, then we can say we are studying about relative poverty.

Temporary or chronic poverty

In countries like India, when there is poor rainfall, the crops fail and the farmers temporarily enter into a poverty sample. But when they are poor for long, then we call it chronic or structural poverty. For example, when agriculturists in many poor countries are dependent upon rain and when agriculture is marked by low productivity, we say farmers are in chronic poverty.

3. Primary Poverty and Secondary Poverty

Rowntree (1901) made a distinction between primary poverty and secondary poverty. Primary poverty refers to “families whose total earnings are insufficient to obtain the minimum necessities for the maintenance of merely physical efficiency”. “Secondary poverty refers to a condition in which earnings would be sufficient for the maintenance for merely physical efficiency were it not that some portion of it is absorbed by other expenditure, either useful or wasteful such as drink, gambling and inefficient housekeeping.” Rowntree said that secondary poverty prevented many
more people from meeting what he called “human needs standard” than did primary poverty (that is, inadequate incomes).

4. Rural Poverty and Urban Poverty

A majority of the people in rural areas are poor because they do not own assets like land and they work as agricultural labourers; their wages are low and they get work only for a few months in a year. The urban poor, on the other hand, work for long hours but they get low incomes.
They are employed mostly in the unorganized or informal sector. Theyare “sub-employed”. Sub-employed are those 1) who work part- time but want full – time work; 2) family heads working full time who do not earn enough to bring their families over the poverty line and 3) discouraged workers who no longer seek work.

Other Dimensions of Poverty

In addition to the income based or economic view of poverty, there are other dimensions of poverty. For example, one can think of being housing poor, healthcare poor, education poor, poor in the possession of desirable physical or mental attributes.

Characteristics of Poor Households

Generally, households with lowest income per person tend to be large, with many children or economically dependent members. Over a typical year, the poor spend nearly all their income on consumption of one sort or another and half of this consumption is likely to be in the form of food. Naturally the relative prices of food staples (food grains, dhalls, oil, vegetables) are crucial to their welfare. Poor households generally invest in education for boys than for girls. The poor play little part in politics. In one sense they are disenfranchised. Of course, there are some exceptional cases. Crime, ill-health and lack of access to the poor are considered other correlates of poverty.

In many countries, poverty is correlated with caste and race. The scheduled caste and tribal people in India and the Blacks in the USA are classic examples. The extent of poverty in a country depend mainly on two factors:
(1) the average level of national income and (2) the degree of inequality in its distribution.

Poverty Line

Poverty Line refers to the minimum income, consumption, or, more generally access to goods and services below which individuals are considered to be poor. The poverty line is the expenditure level at which a minimum calorie intake and indispensable non-food purchases are assured.

It may be noted that even among the poor, there are differences in the degrees of poverty. So the focus of the government policies should be on the poorest of the poor.

Nutrition based poverty lines are used in many countries.

Poverty in India

Dandekar and Rath estimated the value of the diet with 2,250 calories as the desired minimum level of consumption. While the Planning Commission accepted Rs.20/- per capita per month (i.e. Rs.240/- p.a.), Dandekar and Rath suggested a lower minimum for rural population (Rs.180/- per capita p.a.) and a higher minimum (Rs.270/- per capita p.a.) for urban population at 1960-61 prices. At 1968-69 prices, the corresponding figures for the rural and urban population was Rs.324/- and Rs.486/- respectively. On this basis, they estimated that 40 percent of the rural population and about 50 percent of the urban population were below the poverty line.

According to P.D.Ojha, the percentage of those below the poverty line in rural sector increased from 52 percent in 1960-61 to 70 percent in 1967-

B.S.Minhas by taking per capita annual consumption expenditure of Rs.240/- as the barest minimum concluded that nearly half of the rural population (50.6 percent) was living below the poverty line in 1968. P.K.Bardhan’s study concluded that the percentage of rural population below the poverty line increased from 38 percent in 1960-61 to 54 percent in 1968-69.
Montek Singh Ahluwalia’s study of rural poverty (1977) arrived at the conclusion that the rural poverty declined initially from 50 per cent in mid – 1950s to around 40 percent in 1960-61, but increased to 56.5 percent in 1967-68. Whenever agricultural performance was good, rural poverty declined and whenever it was poor, it rose. It may be noted that Ahluwalia used an expenditure level of Rs.15/- in 1960-61 prices for rural areas and Rs.20/- per person per month for urban areas. Ahluwalia accepted that this level of expenditure represents an extremely low level of living.

The Seventh Finance Commission used a concept called “the augmented poverty line”. In it, along with private consumer expenditure per capita, public expenditure on (1) health and family planning; (2) water supply and sanitation; (3) education; (4) administration of police, jails and courts; (5) roads; and (6) social welfare were taken into account. According to  the estimate of Seventh Finance Commission, 52 percent of the population was below the poverty line. It also said that this percentage (52 percent) was applicable to urban as well as rural areas.

The Planning Commission estimated the poverty line by taking Rs.49.1 and Rs.56.6 per capita monthly expenditure for rural and urban areas respectively. The World Bank estimated for India that in 1988, 39.6 percent of the population was below poverty line. The percentage for rural areas was 41.7 percent and urban areas 39.6 percent.
According to the Planning Commission, the incidence of poverty for all-India declined form 54.9 percent in 1973-74 to 39.3 percent in 1987-88. For the same years, rural poverty declined from 56.4 percent to 39.1 percent and urban poverty declined from 49.2 percent to 40.1 percent.

Table 1: Percentage and Number of Poor in India

Source: Planning Commission, Government of India.

At present as per Government of India, poverty line for the urban areas is Rs. 296 per month and for rural areas Rs. 276 per month. That is people who earn less than Rs. 10 per day is considered to be below the poverty line. As per GOI, this amount will buy food equivalent to 2200 calories per day, medically enough, to prevent death. At this level of earning, even in a poor country like India, survival on Rs. 10 per day is a nightmare. The greater developmental tragedy in India is that about 260 million people are still living without even Rs. 10 per day.

Causes of Poverty in India

The main causes of rural poverty in India are as follows :

1. Unemployment and underemployment: Even during the year in which there are good rains, agricultural labourers do not get work throughout the year.

2. Population pressures : Because of population pressure, there are many dependents per every earning member. And there is the problem of disguised unemployment. On a farm, there may be work for only four persons. But six or seven persons may be there on the farm. The marginal productivity of the extra persons is almost zero.

3. Indian agriculture is marked by low productivity. So majority of those engaged in agriculture are poor.

4. A majority of people in rural areas do not have enough assets, especially land. The main reason for this is the concentration of land in the hands of a few families. The regional variations in the incidence of poverty are also high. For example, in 1987-88, 58 percent of the poor people in India were living in five states, namely, Uttar Pradesh, Bihar, Maharashtra, West Bengal and Madhya Pradesh. Many workers in urban areas suffered from sub-employment. They are the working poor. And migration of people from rural to urban areas is also one of the causes of urban poverty.

Poverty alleviation programmes

The problem of poverty eradication is one of providing employment and raising the productivity of low level of employment. The following measures have been taken by the government to remove poverty from the country.

1. Land Reforms

Land reforms legislation has been passed by the state governments, which aim at improving the economic conditions of agricultural landless labourers. For instance, with the abolition of the Zamindari system, the exploitation associated with the system has been removed. Tenancy Laws have been passed in most of the states for protecting the interests of the tenants and helping them to acquire possession over the lands they cultivate.
Every state has passed the necessary legislation fixing ceiling on agricultural holdings by which the maximum amount of land which a person can hold has been fixed by law. The surplus lands thus acquired were to be distributed to the landless labourers and small peasants.

2. Jawahar Gram Samridhi Yojana (JGSY)

It was introduced in April 1999 as a successor to Jawahar Rozgar Yojana on a cost sharing basis of 75 : 25 between the Union and States.

3. National Social Assistance Programme (NSAP)

It was launched on August 15, 1995 to provide social assistance benefits to poor households affected by old age, death of primary bread winner or need for maternity care.

4. Employment Assurance Scheme (EAS)

It was started on October 2, 1993 in 1778 backward blocks in drought prone, desert, tribal and hill areas. It was expanded to cover all the 5,488 rural blocks of the country. It gave wage employment to the rural poor. In September 2001, it was merged into new Sampoorna Gramin Rozgar Yojana along with Jawahar Gram Samridhi Yojana.

5. Pradhan Mantri Gramodaya Yojana (PMGY)

It was introduced in the Budget for 2000-2001 with an allocation of Rs. 5,000 crore. Its focus is on health, primary education, drinking water, housing and rural roads.

Common Property Rights in grazing lands, wastelands, forests and water resources were made available to the rural people in the past. They have been cancelled in the recent past due to commercialisation and privatisation of these rural community resources in the country.

6. Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

Urban self-employment and urban wage-employment are the two special schemes under it. It substituted in December 1997 various programmes operated earlier for urban poverty alleviation. It is funded on 75: 25 basis between the Union and the States. The expenditure under this scheme was only Rs. 45.5 crore at the revised stage. It was Rs. 39.21 crore in 2001-02 and an allocation of Rs. 105 crore was provided for 2002-03 (Economic Survey, 2002-03, p.217).

7. Integrated Rural Development Programme (IRDP)

The concept of an Integrated Rural Development Programme was first proposed in the central budget for 1976-77, and a beginning was made in this regard. This programme was intended to assist rural population to derive economic benefits from the development of assets of each area. The programme with some modifications was introduced on an expanded scale in 1978-79, beginning with 2,300 blocks, of which 2000 were under common coverage with SFDA, DPAP and CADP, with another 300 blocks added up during 1979-80. Its coverage was extended to all the blocks of the country since October 2, 1980.

Besides the smaller and marginal farmers, this programme was more specific in regard to agricultural workers and landless labourers, and additionally brought within its purview rural artisans also. The programme emphasised the family rather than the individual approach in the identification of the beneficiaries.


Meaning of Full Employment

Full employment refers to a situation in which all the workers who are capable of working and willing to work get an employment at reasonable wages. It does not imply that all adults have jobs.

Meaning of unemployment

Unemployment refers to a situation in which the workers who are capable of working and willing to work do not get employment.

Unemployment Estimates

A person working 8 hours a day for 73 days of the year is regarded as employed on a standard person year basis. The following are the three estimates of unemployment generated in the 27th round of NSS (National Sample Survey).

1. Usual Principal Status unemployment:

It is measured as number of persons who remained unemployed for a major part of the year.
This measure is more appropriate to those in search of regular employment e.g., educated and skilled persons who may not accept casual work. This is also referred to as ‘open unemployment’.

2. Weekly Status unemployment: It refers to the number of persons who did not find even an hour of work during the survey week.

3. Daily Status unemployment: It refers to the number of persons who did not find work on a day or some days during the survey week.

Causes of Unemployment

1. High Population growth: The galloping increase in population of our country during the last decade has further aggravated the unemployment problem in the country. Due to rapidly increasing population of the country, a dangerous situation has arisen in which the magnitude of unemployment goes on increasing during each plan period.

2. Insufficient Rate of Economic Progress: Although India is a developing country, the rate of growth is inadequate to absorb the entire labour force in the country. The opportunities of employment are not sufficient to absorb the additions in the labour force of the country, which are taking place as result of the rapidly increasing population in India.

3. Absence of employment opportunities in activities other than agriculture: As enough other employment opportunities are not available, agriculture is the principal area of employment in our country. Thus, pressure on land is high, as about 2/3 of the labour force is engaged in agriculture. Land is thus overcrowded and a large part of the work force is underemployed and suffer from disguised unemployment.

4. Seasonal Employment: Agriculture in India offers seasonal employment; thus agricultural labour remains idle during the off-season.

5. Joint Family System: Existence of joint family system in India promotes disguised unemployment. Usually the members of a family work on their family farms or do family business. There are more workers on a family farm than what would be needed on them.

6. Increasing turnout of students from Indian Universities:
During the last decade, educated unemployment has increased due to rapid turnout of graduates by the Indian universities. Moreover, in the Indian educational system, more emphasis is placed on engineering and other Technical subjects rather than on Arts subjects. But there is unemployment amongst technical graduates as well. There is a lack of proper vocational education in the country.

7. Slow Developing of Industries: Industrialization is not rapid in our country and industrial labour finds few job opportunities. The agricultural surplus labour force is not absorbed by the industrial sector. This leads to disguised unemployment in agriculture.

Measures to Solve Unemployment Problem in India

A close reading of the Five-Year Plans reveals that in every Five-Years Plan, employment expansion has been emphasised as an objective of development. Despite all the plan pronouncements, the backlog of unemployment has increased. This is because each Plan was not even able to absorb the new entrants in the labour force. The following measures have been suggested for solving the unemployment problem in our country:

1. A Change in the pattern of investment

The planning process in the initial stages gave importance to an investment-allocation pattern with a high capital-labour ratio. Therefore, a shift in the emphasis to mass consumer goods industries would generate more employment to absorb the unemployed labour force. Moreover, increase in the supply of such goods may help arrest the rising price-level and increase the economic welfare of the people. This is the wage-goods model of development suggested by Vakil and Brahmanand.

2. Encouragement to small enterprises as against big enterprises

The employment objective and the output objective can be achieved, if greater investment is directed to small enterprises rather than to large enterprises. Now that the Government wants to undertake decentralised development with emphasis on small-scale enterprises, it would be desirable to reorient credit, licensing, raw material allocation and other policies in such a manner that both employment and output are enlarged simultaneously.

3. Problem of Choice of technique
It would be better to switch over to intermediate technologies till the process of industrialisation gets such a powerful momentum that the new entrants to labour force can be absorbed. During the period of rapid growth in the labour force, it would be advisable to adjust the choice of techniques consistent with the employment objective. Intermediate technology would be more suited to Indian conditions.

4. Encouragement of New Growth Centres in Small Towns and Rural Areas

Experience of planning has revealed that the overcrowded metropolitan centres have received a large share of investment. Therefore, the smaller towns should be developed as new growth centres for the future. The establishment of small industrial complexes can increase employment opportunities and provide flexibility to the economy.

5. Subsidies on the Basis of Employment

All schemes of subsidies and incentives to large and small industries have helped output maximisation and greater use of capital resources. The pattern of subsides should be altered. Creation of more employment should be treated as the basis for the grant of subsides and incentives. This will shift the entire structure of government support from the large-scale producer to the small-scale producer as this is more consistent with the objective of employment generation and achieving equality and social justice.

6. Reorientation of Educational Policy

One great defect of our educational system is that it leads one to take up the professional degree only. The high degree of unemployment among the educated signifies the urgent need to reorient our educational system to greater employment opportunities. Education system should be more diversified. It should have more short term vocational courses that will cater to the local employment needs. Development of quality education is a prerequisite for the development of a nation as it is the remedy for all problems including the problem of unemployment in the country. Hence, a high priority needs to be accorded for education in public expenditure.

7. Underemployment in Rural Areas

N.S.S. data have revealed the existence of a high degree of underemployment in India. The total number of underemployed persons available and willing to take up additional work is estimated to be more than two crores. It is necessary to organise the Rural works Programme. Failure of implementation of Rural Works Programme underlines the relatively low importance given to the rural sector to provide additional employment to millions of landless labourers and small and marginal farmers. Urgent action is needed in this direction so that work opportunities grow in the rural areas. This will raise the level of income and employment in rural areas and reduction in poverty levels..

Choose the correct answer

Question: Basic needs like food, clothing and shelter are …………..needs.
a. Physical
b. Social
c. Psychological
d. Cultural     



Question: All poverty alleviation programmes implemented so far have less or no effect due to
a. Unemployment
b. Joint family system
c. inequality
d. corruption   



Question: When a person lives below the minimum subsistence level, he is said to live in poverty.
a. Absolute
b. Relative
c. Abstract
d. Non 



Question: Agriculture gives rise to……….. unemployment.
a. cyclical
b. stru.
c. seasonal
d. professional 



Question: The Planning Commission of India defined poverty on the basis of
a. Income
b. Consumption
c. Calorie intake of food
d. Employment 



Fill in the blanks

Question: Poverty is of ……….. types.  



Question: Our planning was not at all ……………..  


Employment oriented 

Question: India presently suffers from………….. unemployment which exists in open and disguised forms.    



Question: Existence of joint family system in India promotes…………


Disguised unemployment

Question: Many workers in urban areas suffered from ………….



Match the following

1. Employment assurance scheme – April 1999 A. April 1999
2. Disguised unemployment B. Engineering
3. Jawahar gram samridhi yojana C. Rural works programme
4. Indian Educational System D. low productivity employment
5. Underemployment E. 1991

1, A
2, D
3, E
4, B
5, C

Answer the following in a word or two

Question: What was the basis on which Planning Commission defined poverty line in rural areas?
Answer: Rs.49.1% per capita

Question: What is the major goal of planning in India?
Answer: Reducing poverty

Question: What is the main reason for poverty in India?
Answer: Population Pressure

Question: How many underemployed persons are there in India?
Answer: More than 2 crores

Question: What is the prerequisite for the development of a nation?
Answer: Quality education

Poverty Class 11 Economics Revision Notes