Poverty, Inequality and Unemployment

 

Poverty, Inequality and Unemployment

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Poverty

Poverty refers to a state where individuals lack sufficient income to meet basic needs such as food, shelter, clothing, healthcare, and education. It is a multi-dimensional problem in India, affecting millions despite decades of economic growth.

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Types of Poverty

1. Absolute Poverty
   • Individuals earn below a defined poverty line, unable to meet minimum nutritional or living standards.
   • Measured using calorie intake-based poverty line (Tendulkar Committee) or expenditure thresholds.
2. Relative Poverty
   • Individuals whose income is significantly lower than the average income in society, creating income inequality.
   • Common in developed economies.

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Causes of Poverty in India

• High population growth.
• Unemployment and underemployment.
• Low agricultural productivity.
• Poor access to quality education and healthcare.
• Social exclusion based on caste, gender, region.
• Structural issues (land ownership patterns).

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Measures to Alleviate Poverty

1. Targeted Subsidies – PDS for food security.
2. Wage Employment Programs – MGNREGA.
3. Self-Employment Programs – NRLM, PMEGP.
4. Direct Benefit Transfers (DBT) – Subsidy transfers directly into bank accounts.
5. Skill Development Initiatives – Skill India Mission.

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Inequality

Inequality refers to the uneven distribution of income, wealth, and opportunities across different sections of society. It can be economic, social, regional, or gender-based.

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Dimensions of Inequality in India

• Wealth Inequality – A small section owns disproportionate wealth.
• Regional Disparities – Urban areas richer than rural areas; southern states better off than northern states.
• Social Inequality – Caste, gender, religion-based exclusion.
• Digital Divide – Unequal access to digital infrastructure and internet.

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Indicators of Inequality

• Gini Coefficient – Measures income inequality (0 = perfect equality, 1 = perfect inequality).
• Palma Ratio – Ratio of income of top 10% to bottom 40%.
• Human Development Index (HDI) – Composite indicator of income, education, and health.

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Unemployment

Unemployment refers to the condition where people willing and able to work at the prevailing wage rate cannot find jobs.

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Types of Unemployment in India

1. Structural Unemployment
   • Mismatch between skills and job requirements.
   • Example: Skilled weavers losing jobs due to automation.
2. Frictional Unemployment
   • Temporary unemployment due to job transitions.
   • Example: A software engineer switching jobs.
3. Disguised Unemployment
   • More workers employed than required, with marginal productivity close to zero.
   • Example: Family farms in rural India.
4. Seasonal Unemployment
   • Workers unemployed during off-seasons in agriculture and tourism.
   • Example: Sugarcane workers post-harvest.
5. Cyclical Unemployment
   • Linked to economic cycles (recessions causing job losses).
   • Example: Job losses during the COVID-19 lockdown.

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Government Programs for Employment Generation

• MGNREGA – Guaranteed rural employment.
• Skill India Mission – Enhancing youth employability.
• Startup India – Promoting entrepreneurship.
• Prime Minister’s Employment Generation Programme (PMEGP) – Credit-linked subsidy for micro-enterprises.

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Statement-based MCQs

MCQ 1
Which of the following correctly differentiates between absolute poverty and relative poverty?

1. Absolute poverty measures basic survival needs, while relative poverty compares individual income to societal averages.
2. Relative poverty is commonly used in developed countries, while absolute poverty is more relevant to developing countries.

Select the correct answer using the code below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

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MCQ 2
Which of the following is used to measure income inequality?

1. Human Development Index (HDI)
2. Gini Coefficient
3. Palma Ratio

Select the correct answer using the code below:
a) 1 only
b) 2 and 3 only
c) 1 and 2 only
d) 1, 2 and 3

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MCQ 3
Which of the following is an example of disguised unemployment?
a) An MBA graduate working as a delivery boy.
b) A family of 5 working on a small farm, only needing 2 workers.
c) A software engineer between jobs.
d) A factory worker laid off during an economic recession.

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MCQ 4
Consider the following programs:

1. MGNREGA
2. Skill India Mission
3. Stand-Up India

Which of the above focuses on employment generation?
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3

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MCQ 5
Which of the following is/are correct regarding India’s poverty alleviation strategy?

1. Direct cash transfers to the poor under DBT (Direct Benefit Transfer).
2. Promotion of self-employment through livelihood missions.
3. Mandatory urban employment guarantee programs in all cities.

Select the correct answer using the code below:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3