It is a multifaceted issue that impacts individuals, communities, and nations. It represents a state where people lack the financial resources and essentials for a basic standard of living, leading to a denial of choices, opportunities, and human dignity.
Meaning of Poverty
Poverty means not having enough of what you need to live a decent life. It’s more than just not having money; it includes not having access to basic necessities like food, clean water, healthcare, and education. It also means lacking opportunities to improve your life, feeling insecure, and often being excluded from society. In essence, it is about a lack of choices and the inability to live with dignity and participate fully in the world around you.
Types of Poverty
It can be categorized in several ways. The following are some important types:
Absolute Poverty
When people lack the fundamental resources needed for survival, this situation is termed as absolute poverty. There is a lack of basic human needs like food, water, shelter, health, education. The World Bank currently uses $2.15 a day (as of 2022) as the international poverty line for extreme poverty, adjusted for purchasing power parity (PPP). This means if you live on less than $2.15 a day, you are considered to be in absolute poverty.
Example: A family in a developing country unable to afford enough food to avoid malnutrition, lacking access to clean water, and living in a makeshift shelter.
Relative Poverty
Unlike absolute poverty, it isn’t about mere survival, but about being significantly worse off than the average person in your society. It highlights inequality within a country. Income or resources are substantially lower than the median or average in a given society, preventing participation in typical activities or access to common amenities. Typically measured as a percentage of the median household income in a country (e.g., individuals earning less than 50% or 60% of the median income are considered relatively poor). The exact percentage varies by country.
Example: A person in a developed country who earns significantly less than the average wage, making it difficult for them to afford housing in a safe neighborhood, quality healthcare, or education for their children, even if they can technically afford food and basic necessities.
Situational Poverty
This type is often temporary and caused by a specific, unforeseen event that disrupts an individual’s or family’s financial stability. It is caused due to job loss, serious illness or injury, natural disasters (earthquakes, floods, droughts), divorce, death of a primary wage earner.
Example: A family whose home is destroyed by a flood, leaving them without shelter and resources, even if they were financially stable before the disaster or an individual who loses their job unexpectedly and struggles to pay bills until they find new employment.
Generational Poverty
It means when a family’s poverty is passed down for at least two generations, forming a difficult-to-break cycle due to factors like lack of education, limited jobs, poor health, and social isolation.
Example: A child growing up in a household where parents and grandparents also experienced long-term unemployment, limited educational attainment, and a lack of access to quality healthcare, perpetuating the cycle of poverty.
Cyclical Poverty
This type is characterized by its periodic nature, often tied to economic fluctuations or seasonal variations. It affects a broad group of people but is not necessarily permanent. Its main causes are Seasonal unemployment (e.g., agricultural workers after harvest), economic recessions, periods of widespread food shortages due to climate patterns.
Example: Farmers in regions heavily reliant on rain-fed agriculture who experience periods of poverty during droughts or off-seasons, only to recover when crops can be cultivated again. Or workers in industries that experience regular boom-and-bust cycles.
Collective Poverty
This term describes that it is widespread and affects a large segment of a society or specific large groups within it, indicating a general low standard of living. It describes the average level of life in a society or large concentrations of people living in poverty. This can be seen at a national level where a significant portion of the population lives below a certain income threshold.
Example: A developing country where the majority of the population lacks consistent access to clean water, electricity, and adequate housing due to systemic underdevelopment and resource scarcity or a large urban slum where millions live in deprived conditions.
Case Poverty
It focuses on individual or family struggles within an otherwise prosperous environment. It is caused due to disability, chronic illness, mental health issues, single parenthood without adequate support, addiction, lack of marketable skills, or other personal disadvantages that prevent them from participating fully in the economy.
Example: An individual living with a severe chronic illness in a wealthy nation who is unable to work and struggles to afford medical care and basic necessities, even though resources are generally available in that society.
What is Poverty Line?
The poverty line is a minimum income level that a person or household needs to meet their basic necessities of life, such as food, shelter, clothing, and other essential goods and services.
It serves as a benchmark to identify who is considered “poor” and therefore eligible for certain government assistance programs. Its calculation varies from country to country and can be influenced by factors like:
- Cost of living: This includes prices for food, housing, transportation, healthcare, and education.
- Methodology: Some countries use an “absolute” poverty line, based on the cost of a fixed basket of goods for survival. Others use a “relative” poverty line, which is set as a percentage of the median income in that society, reflecting inequality.
- International standards: The World Bank sets an International Poverty Line (IPL), currently at $2.15 a day (as of September 2022, adjusted for purchasing power parity), compare it across different countries.
In essence, if a person’s income falls below this line, they are officially considered as poor.
Also Read: How Inflation changed in 1990 vs 2025 and effects
How Poverty is Measured?
It is measured using several approaches, which can be broadly categorized into:
Monetary Measures (Income/Consumption-Based)
- Poverty Line: This is the most common method. A minimum income or consumption level is established that’s considered necessary to meet basic needs. Anyone falling below this line is counted as poor.
- Absolute Poverty Line: A fixed threshold based on the cost of a basic basket of goods (food, shelter, clothing). The International Poverty Line (IPL) set by the World Bank (currently $2.15 a day, adjusted for Purchasing Power Parity or PPP) is an example, used to measure extreme poverty globally.
- Relative Poverty Line: Defined in relation to the average or median income within a specific country. For instance, individuals earning less than 50% or 60% of the median income might be considered relatively poor. This approach highlights inequality within a society.
- National Poverty Lines: Individual countries set their own poverty lines based on local costs and living standards.
- Headcount Index: This is a simple measure that calculates the percentage of the population whose income or consumption falls below the poverty line.
- Poverty Gap Index: This measures the intensity of poverty, showing how far below the poverty line the poor are, on average. It indicates the total shortfall of income.
- Squared Poverty Gap Index (Poverty Severity Index): This goes a step further by giving more weight to individuals who are further below the poverty line, and inequality among the poor.
Multidimensional Poverty Index (MPI)
- This approach acknowledges that poverty is about more than just a lack of money. It captures deprivations across multiple dimensions of life, often including:
- Health: Child mortality, nutrition.
- Education: Years of schooling, school attendance.
- Living Standards: Access to clean drinking water, sanitation, electricity, cooking fuel, housing, and assets.
- An individual is considered multidimensionally poor if they experience deprivations in a certain number (or weighted proportion) of these indicators. The MPI combines the incidence (percentage of people who are poor) with the intensity (average proportion of deprivations experienced by the poor).
Qualitative and Participatory Approaches
- These methods focus on understanding poverty from the perspective of the poor themselves. They use techniques like surveys, interviews, and participatory poverty assessments (PPAs) to gather insights into the lived experiences, priorities, and definitions within communities. This helps to identify social exclusion and vulnerability beyond just monetary measures.
Governments and international organizations often use a combination of these methods to get a comprehensive picture, monitor progress, and design effective poverty reduction strategies.
Main Causes of Poverty
It is a complex issue with numerous interconnected causes, varying significantly across regions and countries. However, some common underlying factors consistently contribute to its existence and persistence.
Historical Factors
Colonial Exploitation
British rule greatly hurt India’s economy. They shut down all the local shops and factories in order to sell their own British goods. They also took India’s most valuable natural resources like cotton and minerals for their own benefit. This unfair system made India poorer and helped Britain get richer, and its effects on India’s wealth and jobs are still felt today.
Legacy of Inequality
During British rule, India’s economy was set up to benefit Britain, not Indians. This created a situation where a few people became very rich, while most remained poor. Even after the British left, this unequal system continued. This meant that the way money and power were distributed was always skewed, and the government systems put in place weren’t strong enough to fix it. This persistent imbalance and weak governance still make it harder to fight poverty today.
Economic Factors
Low Agricultural Productivity
A large amount of population depends upon agriculture, but productivity remains low due to various factors such as fragmented landholdings, lack of capital, reliance on traditional methods, inadequate irrigation, and wastage during storage. This leads to low income for a large segment of rural population.
Unemployment & Underemployment
Even though India’s economy is growing, there aren’t enough new jobs being created to keep up with the large number of people looking for work, especially young people. This leads to unemployment, where people are actively searching but can’t find any job, and underemployment, where people have jobs but either work fewer hours than they want, or are in jobs that don’t fully use their skills or education.
Unequal Distribution of Wealth and Resources
There’s a significant disparity in income and wealth distribution. A small percentage of the population holds a large share of the nation’s wealth, limiting access to essential resources and opportunities for the majority.
Social Factors
Limited Access to Quality Education
Despite improvements in literacy rates, access to quality education remains a significant barrier for many, especially those in remote areas or marginalized groups. This limits their employment prospects and perpetuates intergenerational poverty.
Inadequate Healthcare Infrastructure
The healthcare system, particularly for the poor, is often inadequate. Lack of access to affordable and quality healthcare can lead to serious health issues, overwhelming debt, and reduced productivity, trapping families in poverty.
Rapid Population Growth
A continuously growing population puts immense pressure on available resources, jobs, and public services, making it challenging to meet the basic needs of all individuals.
Governance and Environmental Factors
Weaknesses in Governance and Corruption
Corruption, inefficiency, and a lack of transparency in governance hinder the effective implementation of poverty alleviation programs and the equitable distribution of resources.
Natural Disasters and Climate Change
India is prone to natural disasters like floods, droughts, and storms, which can destroy crops, infrastructure, and livelihoods. Climate change exacerbates these risks.
10 Key Solutions for Overall Growth
Tackling poverty effectively means using a complete strategy that offers immediate help while also building lasting solutions for the future. Here are 5 key solutions for poverty reduction and overall growth:
Promote Inclusive Economic Growth and Job Creation
- Invest in sectors that create decent, well-paying jobs, especially for marginalized groups.
- Support small and medium-sized enterprises (SMEs) and entrepreneurship.
- Implement fair wage policies and strengthen labor rights.
Increase Access to Quality Education and Skill Development
- Focus on education for girls and women, as it has a strong multiplier effect on poverty reduction.
- Ensure universal access to quality primary, secondary, and vocational education.
- Provide opportunities for lifelong learning and skill development to match evolving job markets.
Strengthen Social Protection Systems
- Establish and expand social safety nets, such as unemployment benefits, food assistance programs, and pensions for the elderly and disabled.
- Implement universal health coverage to reduce financial burdens from illness.
Improve Healthcare Access and Nutrition
- Promote nutrition programs, especially for mothers and children, to combat malnutrition and its long-term effects.
- Invest in affordable and accessible healthcare services, particularly in rural and underserved areas.
Invest in Sustainable Infrastructure
- Develop and upgrade essential infrastructure, including roads, clean water and sanitation systems, reliable electricity, and digital connectivity.
- This improves access to markets, services, and opportunities.
Empower Women and Promote Gender Equality
- Support women’s leadership and political participation.
- Address gender-based discrimination in education, employment, and property rights.
- Increase women’s economic participation and access to financial resources (e.g., microloans).
Foster Good Governance and Combat Corruption
- Promote transparency, accountability, and rule of law in government.
- Strengthen institutions and combat corruption to ensure resources are used effectively for public benefit.
Implement Sustainable Agricultural Practices and Food Security
- Ensure consistent access to nutritious food for all.
- Support smallholder farmers with access to modern farming techniques, improved seeds, and markets.
- Develop climate-resilient agriculture to cope with environmental changes.
Address Climate Change and Environmental Degradation
- Invest in climate adaptation and mitigation strategies to protect vulnerable communities from environmental shocks.
- Promote sustainable resource management to preserve natural capital.
Promote Financial Inclusion
- Increase access to affordable financial services like banking, savings, credit, and insurance for the poor.
- Financial literacy programs can empower individuals to manage their money effectively.
Conclusion
By focusing on these interconnected solutions, societies can work towards breaking the cycle of poverty and fostering inclusive and sustainable overall growth.