Model Answer
0 min readIntroduction
Poverty, at its core, represents a denial of opportunities and choices for individuals to live a life of dignity. While traditionally defined as a lack of income, modern understanding recognizes its multi-dimensional nature encompassing health, education, and living standards. India has made significant strides in poverty reduction, with the share of the population below the poverty line declining from 37% in 2005-06 to 15.2% in 2012-13 (Rangarajan Committee Report, 2014). However, the COVID-19 pandemic and subsequent economic disruptions have reversed some of these gains, necessitating a re-evaluation of poverty measures and policy interventions. This answer will discuss the various measures of poverty and their policy implications for effective poverty removal.
Absolute Poverty Measures
Absolute poverty measures define a specific income level below which individuals are considered poor, irrespective of the prevailing living standards in the society.
- Head-Count Ratio (HCR): This is the most common measure, representing the percentage of the population below the poverty line. It’s simple but doesn’t reflect the intensity of poverty.
- Poverty Gap Index (PGI): This measures the average distance of the poor from the poverty line, expressed as a percentage of the poverty line. It indicates the depth of poverty.
- Squared Poverty Gap Index (SPGI): This gives more weight to the poorest of the poor, reflecting the severity of poverty.
Policy Implications: Absolute poverty measures justify targeted social assistance programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA, 2005) and the Public Distribution System (PDS) aimed at providing a safety net and ensuring minimum consumption levels.
Relative Poverty Measures
Relative poverty measures define poverty in relation to the overall distribution of income or consumption in a society.
- Income Quintile Ratio: This compares the income of the poorest 20% of the population to the richest 20%. A higher ratio indicates greater income inequality and relative poverty.
- Gini Coefficient: This measures income inequality on a scale of 0 to 1, where 0 represents perfect equality and 1 represents perfect inequality.
Policy Implications: Relative poverty measures highlight the need for policies promoting inclusive growth, reducing income inequality, and ensuring equal opportunities. These include progressive taxation, investment in education and healthcare, and affirmative action policies.
Multi-dimensional Poverty Index (MPI)
The MPI, developed by the Oxford Poverty and Human Development Initiative (OPHI) and the UNDP, goes beyond income to capture multiple deprivations at the household level across three dimensions: health, education, and standard of living.
Policy Implications: The MPI provides a more nuanced understanding of poverty and informs targeted interventions addressing specific deprivations. For example, identifying households lacking access to sanitation can lead to focused investments in sanitation infrastructure under the Swachh Bharat Mission (2014).
Consumption Expenditure Based Measures
These measures rely on household consumption expenditure as a proxy for welfare. The National Sample Survey Office (NSSO) conducts periodic surveys to collect data on household consumption expenditure.
Policy Implications: Changes in consumption expenditure patterns can inform policies related to food security, inflation control, and consumer protection. The National Food Security Act (NFSA), 2013, is a direct response to concerns about food security and access to affordable food grains.
Other Measures & Considerations
- Social Exclusion: Recognizing that poverty is not solely an economic phenomenon, social exclusion – based on caste, gender, religion, or disability – exacerbates vulnerability. Policies must address these systemic inequalities.
- Asset-Based Measures: Considering the assets owned by households (land, livestock, housing) provides a more comprehensive picture of their economic well-being.
The choice of poverty measure significantly influences policy design. A sole reliance on income-based measures may overlook the non-monetary dimensions of poverty, while a purely multi-dimensional approach may be data-intensive and complex to implement.
Conclusion
Effectively addressing poverty requires a multi-pronged strategy informed by a comprehensive understanding of its various dimensions. While absolute poverty measures are crucial for providing immediate relief, relative poverty and MPI highlight the need for long-term structural changes promoting inclusive growth and reducing inequalities. A dynamic and adaptable approach, utilizing a combination of these measures and continuously monitoring their effectiveness, is essential for achieving sustainable poverty reduction and ensuring a dignified life for all citizens. The focus should shift from merely alleviating poverty to empowering individuals and communities to break the cycle of poverty.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.