Saturday 9 January 2016

Indian Economics for SSC Exam

Poverty
The ultimate objective of development planning is human development. Increased social welfare of the people requires a more equitable distribution of development benefits along with better living environment. Development process needs to continuously strive for broad- based improvement in the standard of living and quality of life of the people through an inclusive development strategy that focuses on both income and non income dimension. The development of human resources contributes to sustained growth and productive employment.
The biggest challenge to develop planning in India is posted by the problems of poverty, inequality and unemployment. The poor are those who live below the poverty line. The poverty line is defined in terms of per capita household expenditure. Poverty manifests itself in the form of both absolute poverty as well as relative poverty.
Absolute Poverty: - when people do not have enough money to meet the basic threshold to buy food, shelter, clothing etc that is needed for survival, it is known as Relative poverty. It is also defined in terms of insufficiency of basic needs. In India, these basic needs are measured in terms of calorie intake of 2400 in rural areas per person per day and 2100 in urban areas.
Relative Poverty: this concept is related to the general standard of living in a society when people are poor in comparison to other around them, but may still have enough money to survive. Relative poverty relates to inequalities in a society. India is characterized by both in extreme measures i.e. absolute and relative poverty.
Poverty and inclusive Growth
The Human Development Report 2010 measures poverty in terms of a new parameter, namely multidimensional poverty index (MPI), which replaced the human poverty index (HPI) used since 1997. The MPI indicates the share of the population that is multi- dimensionally poorly adjusted by the intensity of deprivation in terms of living standards, health and education. The differences in population below poverty line (BPL) widens substantially in case of india when this indicator is used instead of the national poverty line indicator while for other countries, there is less difference and in some cases even a fail.
A very significant development on poverty- estimation front in India has been the role of the Supreme Court which directed the Union government to clear the mess surrounding the issue of identification of the poor.. in response to this directive, the planning Commission has come out with revised monthly expenditure data to define the poor in urban and rural areas. In its affidavit to the Supreme Court in September 2011, the Planning Commission has stated that anyone with a monthly expenditure below Rs. 965 in urban areas and Rs. 25 a day in rural areas. The above numbers are an improvement over Tendulakar Committee members of Rs. 579 per month in urban areas and Rs. 447 per month in rural areas (at 2004-05 prices). The revised figures set a shamefully low bar for determining poverty and make a mockery of the whole exercise.
Cause of Poverty: the extent of poverty in an economy is due to a wide range of factors as follow:
(i) Underdeveloped nature of economy.
(ii) Rapid growth of population in an overpopulated country; even if the national income increases, the per capita income remains the same due to increase in population.
(iii) Large inequalities in the ownership of earning assets such as land, buildings, industry etc.
(iv) Low level of productivity in agriculture and industry.
(v) Large scale unemployment and under- employment.
(vi) Inequality of opportunity in acquiring education and skills.
(vii) State Policy.
(viii) Regional disparities.
The main determinants of poverty in a country like India are generally reflected in terms of:
(i) Lack of income due to a lack of productive employment and under- employment.
(ii) Increasing prices of food grains which constitute the major item in the consumption basket.
(iii) Inadequate social infrastructure affecting the quality of life of the people and their ability to take up gainful employment.
Among various factors contributing to poverty alleviation, economic growth in terms of its trickledown effect has always been regarded as an important factor. However, it is not economic growth but also the sectoral composition of growth. If growth is concentrated more in agriculture and rural sectors, it may lead to much large alleviation of poverty in India than if it is concentrated say, in large scale industries. Similarly, factors like physical and social infrastructure, focus on increasing productivity of small farmers, generation of employment opportunities, control of population, expenditure on human development etc. help alleviate poverty to a large extent. The main focus of poverty to a large extent. The main focus of poverty alleviation in the first two decades of Planning was on achieving a high rate of growth of GDP. It was assumed that a high rate of growth would bring about what was known as the trickledown effect and thereby take care of the trickledown effect and thereby take care of the poor and the downtrodden. However, by early 1970s it became clear that trickledown effect had not taken place and poverty alleviation would require redistribution policies. Hence, from mid 70’s anti- poverty strategy has focused on direct attack on poverty in the form of special Poverty Alleviation and Employment generation Programmes.
Anti-poverty strategy has three broad components-
Promotion of economic growth.
Promotion of human development and target programs of poverty alleviation.

Employment generation to address multi-dimensional nature of poverty.

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