(Indian Economic Development) CHAPTER 4: POVERTY (NCERT Class-XII)


  • The poor people possess few assets and reside in kutcha hutments with walls made of baked mud and roofs made of grass, thatch, bamboo and wood.
  • The poorest of them do not even have such dwellings. In rural areas many of them are landless. Even if some of them possess land, it is only dry or waste land.
  • Many do not get to have even two meals a day. Starvation and hunger are the key features of the poorest households. The poor lack basic literacy and skills and hence have very limited economic opportunities. Poor people also face unstable employment.


  • In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of a Poverty Line. He used the menu for a prisoner and used appropriate prevailing prices to arrive at what may be called jail cost of living‘. However, only adults stay in jail whereas, in an actual society, there are children too. He, therefore, appropriately adjusted this cost of living to arrive at the poverty line.
  • In 1962, the Planning Commission formed a Study Group. In 1979, another body called the  Task Force on Projections of Minimum Needs and Effective Consumption Demand‘ was formed. In 1989 and 2005, an  Expert Group‘ was constituted for the same purpose.
  • For the purpose of defining poverty we divide people into two categories; the poor and the non-poor and the poverty line separates the two. However, there are many kinds of poor; the absolutely poor, the very poor and the poor. 
  • Similarly there are various kinds of non-poor; the middle class, the upper middle class, the rich, the very rich and the absolutely rich. Think of this as a line or continuum from the very poor to the absolutely rich with the poverty line dividing the poor from the non- poor.


  • The causes of poverty lie in the institutional and social factors that mark the life of the poor. The poor are deprived of quality education and unable to acquire skills which fetch better incomes.
  • These can be caused as a result of

(i) social, economic and political inequality

(ii) social exclusion

(iii) unemployment

(iv) indebtedness

(v) unequal distribution of wealth. Aggregate poverty is just the sum of individual poverty.

  • Poverty is also explained by general, economy-wide problems, such as

(i) low capital formation

(ii) lack of infrastructure

(iii) lack of demand

(iv) pressure of population

(v) lack of social/welfare nets.


  • The Indian Constitution and five year plans state social justice as the primary objective of the developmental strategies of the government. 
  • First Five Year Plan (1951-56): The urge to bring economic and social change under present conditions comes from the fact of poverty and inequalities in income, wealth and opportunity.
  • The Second Five Year Plan (1956-61): the benefits of economic development must accrue more and more to the relatively less privileged classes of society. 
  • Third Five Year Plan (1961-66): progressively enlarged since then. One of the noted programmes initiated in the 1970s was Food for Work.
  • Fifth Five Year Plan: even with expanded employment opportunities, the poor will not be able to buy for themselves all the essential goods and services.
  • They have to be supplemented up to at least certain minimum standards by social consumption and investment in the form of essential food grains, education, health, nutrition, drinking water, housing, communications and electricity.

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