Poverty UPSC Notes: Current Issues and Policies in India

The 2023 Multidimensional Poverty Index (MPI) Report reveals a stark reality—over a third of the world’s poor live in South Asia, totaling around 389 million people. Shockingly, India contributes nearly 70% to this surge in extreme poverty, highlighting the persistent socio-economic disparities.

Poverty in India remains a major challenge in governance, policymaking, and sustainable development. Poverty UPSC notes require a deep dive into causes, measurement methods, and recent government initiatives.

In this blog, we will explore current poverty trends in India, key government policies, and critical challenges, helping you build a strong conceptual foundation for UPSC Prelims and Mains. Let’s begin!

According to the World Bank, “Poverty is pronounced deprivation in well-being and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity.”

The United Nations Development Programme (UNDP) further expands this definition by emphasizing multidimensional poverty, which includes lack of access to education, healthcare, and basic infrastructure. 

Let’s find out the major causes of poverty in India that hinder sustainable growth and equitable development.

Major Causes of Poverty in India

• Overpopulation and limited job opportunities 
• Dependence on outdated farming techniques
• Unpredictable monsoons and fragmented land holdings 
• Poor infrastructure, bureaucratic delays, and corruption 
• Caste-based discrimination, gender inequality, and historical marginalization of certain communities 
• Low levels of education and skill development
• Informal sector and lack of social security
• Inflation and rising cost of living 
• Regional disparities in economic growth 
• Impact of climate change and natural disasters 
• Ineffective implementation of welfare schemes
• Ineffectiveness of poverty alleviation programs

Types of Poverty

Poverty is a multidimensional issue that can be classified into different types based on income levels, living conditions, and social comparisons. 

1. Absolute Poverty

Absolute poverty refers to a condition where individuals lack access to fundamental necessities such as food, clean water, shelter, healthcare, and education. It is measured based on a fixed threshold, often defined by international poverty lines.

• The World Bank defines absolute poverty as living on less than $2.15 daily (2022 revised figure).
• India measures absolute poverty using the Tendulkar Committee's methodology. According to this, poverty is measured based on monthly per capita consumption expenditure (MPCE), adjusted for inflation and essential needs.
• In 2014, Rangarajan Committee proposed:
• Rural: ₹972 per month (~₹32 per day)
• Urban: ₹1,407 per month (~₹47 per day)
• Estimated 29.5% of Indians were below this poverty line in 2011-12.
• NITI Aayog (Post-2014): India has not officially adopted a new poverty line since the Rangarajan Committee report. However, it primarily uses Multidimensional Poverty Indices (MPI) in collaboration with UNDP and Oxford to assess poverty beyond just income.

2. Relative Poverty

Relative poverty is defined as the economic status of individuals compared to the rest of society. It does not necessarily indicate deprivation of basic needs but highlights income inequality and lack of access to resources enjoyed by others.

• Determined by comparing an individual's income to the median income of a population.
• More prevalent in urban settings, where disparities in education, employment, and access to quality services create economic inequalities.
• India uses relative poverty indicators to design policies such as reservations, social security benefits, and progressive taxation to bridge the economic gap.

India has adopted multiple methodologies to measure poverty, each with its significance and challenges. Here are the major dimensions used to assess poverty in India.

1. Income and Consumption Expenditure-Based Measurement

India primarily follows the consumption expenditure approach, which estimates household spending on essential goods and services. It determines whether individuals fall below the poverty line based on their monthly per capita expenditure (MPCE).

• The Tendulkar Committee (2009) recommended shifting from calorie-based poverty estimation to expenditure-based poverty estimation, considering education, health, and other basic needs.
• The Rangarajan Committee (2014) revised poverty thresholds, suggesting higher expenditure limits for rural and urban areas.
• Periodic Labour Force Surveys (PLFS) and National Sample Survey (NSS) provide crucial data for poverty analysis.

2. The Poverty Line Basket (PLB) Approach

The Poverty Line Basket (PLB) is a set of essential goods and services required to maintain a minimum standard of living. It includes:

• Food items (based on caloric intake recommendations).
• Clothing, shelter, education, healthcare, and transportation costs.
• Different poverty committees (such as Planning Commission estimates, World Bank thresholds, and NITI Aayog’s MPI-based assessment) have varied benchmarks for PLB.

The PLB helps governments determine poverty lines and structure welfare programs like free ration schemes (PDS), MNREGA, and direct cash transfers.

3. Social and Gender-Based Poverty Dimensions

Poverty disproportionately affects certain social groups, including women, Scheduled Castes (SCs), Scheduled Tribes (STs), and religious minorities.

• Caste and Tribal Disparities: STs and SCs have higher poverty rates due to historical marginalization and lack of access to resources.
• Gender Poverty Gap: Women face economic and social disadvantages, with lower workforce participation and wage disparities.
• Religious and Ethnic Minorities: Muslims and other marginalized communities often experience higher poverty rates due to socio-economic exclusion.

4. Regional and Urban-Rural Disparities in Poverty

Poverty levels vary significantly across Indian states and between rural and urban areas.

Rural vs. Urban Poverty:

• Rural areas suffer from agricultural distress, lack of infrastructure, and job scarcity.
• Urban areas experience income inequality, slum expansion, and informal employment issues.

5. Digital and Financial Inclusion as a New Dimension

With rapid digitization, access to digital financial services is becoming a key factor in poverty reduction.

• Financial Exclusion: Many poor individuals lack access to banking services, credit, and digital payment systems.
• Digital Divide: Limited internet penetration in rural areas creates barriers to financial empowerment.
• Government Initiatives: Schemes like Jan Dhan Yojana, UPI, and digital literacy programs aim to improve financial inclusion.

6. Environmental and Climate-Related Poverty Dimensions

Environmental changes disproportionately impact the poor, worsening their economic conditions.

• Impact of Climate Change: Extreme weather events (droughts, floods, and heatwaves) destroy livelihoods, especially in agriculture.
• Air and Water Pollution: Poor communities suffer from higher pollution levels, leading to health issues.
• Deforestation and Land Degradation: Reduces agricultural productivity and food security for rural populations.

Also read: Strengthening Environmental Regulations in India for Sustainable Development

Poverty remains a critical socio-economic challenge in India, despite significant progress over the years. Various government initiatives, economic reforms, and social welfare programs have helped lift millions out of poverty. The 2023 Multidimensional Poverty Index (MPI) Report highlights key trends in India's poverty reduction:

• Massive Reduction in Poverty: Over 415 million people escaped multidimensional poverty between 2005-06 and 2019-21, showing substantial progress.
• Decline in Deprivation Indicators: Significant improvements in nutrition, child mortality, sanitation, and access to electricity have contributed to poverty reduction.
• India’s Share in Global Poverty: Despite progress, India still accounts for a large portion of the world's poor, with 228.9 million people living in multidimensional poverty.
• Urban vs. Rural Disparity: Rural areas have seen faster poverty reduction, but urban poverty remains a concern, particularly in informal settlements and slum areas.
• COVID-19 Impact: The pandemic slowed poverty reduction efforts, with economic shocks disproportionately affecting low-income groups.

The Need for Updated and Accurate Poverty Data

India has not conducted a household consumption expenditure survey since 2011-12, leading to gaps in poverty assessment. Although reports like the Global MPI and NITI Aayog’s National MPI provide estimates, accurate poverty measurement requires frequent national-level surveys. Updated data is essential for:

• Targeted policy formulation to address specific regional challenges.
• Better resource allocation for social welfare programs.
• Monitoring the real impact of government initiatives like PM Garib Kalyan Anna Yojana and Aspirational Districts Programme.

Must cover this topic: Global Alliance Against Hunger & Poverty: Key Facts for UPSC Current Affairs

"Poverty is the worst form of violence." – Mahatma Gandhi

India has been striving to eradicate poverty through a series of targeted policies and welfare programs. Over the years, the government has introduced various initiatives to provide employment, food security, housing, and skill development to uplift marginalized communities. These schemes play a crucial role in improving the standard of living and ensuring inclusive growth. Below are some key government initiatives aimed at tackling poverty in India.

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): Provides guaranteed 100 days of wage employment to rural households, reducing unemployment and ensuring financial stability.
2. Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Aims to enhance employability by providing skill training to youth, helping them secure better job opportunities.
3. National Food Security Act (NFSA) & Food-Related Schemes: Ensures subsidized food grains to poor families through schemes like Antyodaya Anna Yojana and Mid-Day Meal Program.
4. Pradhan Mantri Awaas Yojana (Gramin & Urban): Focuses on providing affordable housing to economically weaker sections in rural and urban areas.
5. Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY): Offers free health insurance up to ₹5 lakh per family annually, benefiting low-income groups.
6. Deendayal Antyodaya Yojana (DAY-NRLM & NULM): Promotes self-employment and skill development through rural and urban livelihood missions.
7. Saubhagya Scheme (Pradhan Mantri Sahaj Bijli Har Ghar Yojana): Ensures electricity access to all households, improving living standards in rural areas.
8. PM Garib Kalyan Anna Yojana (PMGKAY): Launched during COVID-19, it provides free ration to vulnerable families to ensure food security.
9. Stand-Up India & MUDRA Yojana: Encourages entrepreneurship by offering financial support to small businesses and startups, particularly for women and marginalized communities.
10. Jal Jeevan Mission: Aims to provide safe drinking water to rural households, improving health and sanitation.

These programs collectively address different dimensions of poverty and aim to create a more equitable society. However, effective implementation and continuous monitoring remain essential for their success.

Also read: Pradhan Mantri Janjatiya Unnat Gram Abhiyan (PMJUGA) – Tribal Development Scheme

India has launched numerous poverty alleviation programs, yet millions still struggle with basic necessities. While these schemes aim to uplift the poor, their impact is often diluted due to structural inefficiencies, corruption, and lack of regional adaptability. Identifying the challenges in current policies is essential to improve their effectiveness and ensure that resources reach those who need them the most.

Key Challenges in Poverty Alleviation Policies

1. Identification and Targeting Inefficiencies: Many genuinely poor households are excluded due to outdated data and bureaucratic loopholes, while ineligible beneficiaries often receive benefits.

Example: Errors in the Socio-Economic Caste Census (SECC) database have led to misidentification of beneficiaries for schemes like NFSA.

2. Overlaps in Schemes and Corruption Issues: Multiple schemes with similar objectives lead to duplication of efforts and fund mismanagement, creating opportunities for corruption.

Example: Rural housing and employment schemes sometimes overlap, causing inefficiencies in fund allocation.

3. Lack of Adaptability to Regional Variations: A one-size-fits-all approach ignores local economic, geographic, and social differences, making some schemes ineffective in certain areas.

Example: MGNREGA is less effective in urban areas where daily wage rates are higher than the guaranteed wage.

4. Bureaucratic Delays and Red Tape: Lengthy administrative processes slow down the implementation of welfare programs, reducing their immediate impact.

Example: Delays in PMAY (Pradhan Mantri Awaas Yojana) have resulted in beneficiaries waiting for years to receive housing assistance.

5. Leakages and Middlemen in Welfare Distribution: Corruption and inefficiencies in the Public Distribution System (PDS) lead to the diversion of essential goods, depriving intended beneficiaries.

Example: A significant percentage of subsidized food grains under NFSA do not reach the poor due to leakages.

6. Low Awareness and Accessibility: Many eligible beneficiaries, especially in rural areas, are unaware of government programs or lack access due to complex application processes.

Example: Women and marginalized groups often struggle to avail benefits due to a lack of digital literacy and documentation.

7. Inadequate Budget Allocation and Resource Constraints: Many schemes face fund shortages, limiting their reach and effectiveness.

Example: Healthcare spending under Ayushman Bharat remains insufficient to cover all beneficiaries comprehensively.

8. Political Interference and Policy Discontinuity: Frequent changes in governments lead to shifts in priorities, disrupting long-term poverty alleviation strategies.

Example: Some state-led social security schemes are discontinued when a new government takes charge, affecting beneficiaries.

As you dive into this important topic, enhance your preparation by practicing PYQs on Poverty UPSC and other key syllabus topics with SuperKalam!

India's fight against poverty requires a forward-thinking, multi-pronged approach that goes beyond traditional welfare measures. A long-term vision should focus on sustainable economic growth, social equity, and technological advancements to ensure that poverty eradication is both effective and lasting.

1. Strengthening Data-Driven Policy Making

• Regular updates to poverty data using AI-driven analytics and satellite mapping can help in better-targeting beneficiaries.
• Implementation of a centralized and dynamic database to track real-time progress and minimize exclusion errors.
• Conducting large-scale socio-economic surveys to assess the impact of existing schemes and modify policies accordingly.

2. Enhancing Employment Opportunities and Skill Development

Expanding MGNREGA to cover urban unemployment, ensuring a steady income for the informal workforce.

Strengthening vocational training and digital literacy programs under Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to align with the job market demands.

Encouraging entrepreneurship through MUDRA loans, microfinance institutions, and startup incubation programs, especially for rural youth and women.

3. Reforming Social Welfare Distribution Systems

• Shifting to a Direct Benefit Transfer (DBT) model to reduce leakages and corruption in welfare programs like PDS and LPG subsidies.
• Strengthening the One Nation, One Ration Card scheme to allow seamless food security benefits across states, aiding migrant workers.
• Introducing blockchain technology for transparent fund disbursement and beneficiary tracking.

4. Bridging Regional Disparities and Customizing Policies

• Adopting a region-specific approach where poverty alleviation programs are tailored to local economic and environmental conditions.
• Special assistance for backward states such as Bihar, Jharkhand, and Odisha, where poverty rates remain high.
• Promoting sustainable agriculture and rural industries in poverty-stricken states to ensure inclusive growth.

5. Strengthening Public Healthcare and Education

• Expanding Ayushman Bharat to cover outpatient care, diagnostics, and preventive healthcare services.
• Increasing public spending on education and skilling programs, particularly in rural areas, to break the intergenerational cycle of poverty.
• Ensuring universal access to quality education, including digital learning tools, in economically weaker regions.

6. Leveraging Technology for Financial Inclusion

• Strengthening Jan Dhan Yojana by linking it with microcredit facilities and social security schemes.
• Promoting FinTech solutions for better financial planning and credit access to small businesses and farmers.

7. Climate Resilience and Sustainable Development

• Implementing green job initiatives to employ while tackling climate change.
• Promoting climate-resilient agriculture through efficient irrigation techniques, organic farming, and agroforestry.
• Expanding social protection measures for vulnerable populations affected by climate change-induced disasters.

8. Ensuring Policy Stability and Governance Reforms

• Reducing political interference and ensuring continuity in long-term poverty alleviation programs.
• Establishing independent monitoring bodies to oversee implementation and address policy failures.
• Encouraging greater public-private partnerships (PPPs) in welfare programs to enhance efficiency and scalability.

Must read: AI and India's Economy: Growth, Challenges, and Future Strategies

For India to achieve sustainable and inclusive poverty eradication, it must move beyond short-term relief measures and focus on structural reforms. By integrating technology, strengthening governance, and promoting equitable economic opportunities, India can pave the way for a future where no citizen is deprived of basic necessities and economic dignity. A multi-sectoral, data-driven, and region-specific approach will be key in making poverty history.

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