📚 Chapter 17: Poverty and Unemployment Notes

1. Introduction to Economic Problems

The Indian economy faces many serious and complex economic and social
problems such as population growth, price rise, black money, poverty,
unemployment, starvation, corruption, and terrorism. Economic problems like
poverty, unemployment, price rise, and population increase are major
challenges.

2. Poverty *
Definition and Concept
• Poverty is a situation where a large number of people are deprived of
satisfying their basic and essential requirements of life, such as food,
clothes, shelter, education, and health services.
• Such a situation is known as comprehensive poverty.
• People living in such a condition are called 'poor'.
• Poverty is a qualitative concept. In India, poverty is viewed as the lowest
level of life.
• The concept of the poverty line changes according to time, location, and
circumstances.
Features of People Living Below Poverty Line (BPL)
• They are not able to get two meals a day.
• They suffer from the problem of unavailability of a dwelling place.
• They are forced to live in shabby or slum areas.
• Their income is less than the determined expected income.
• Their life span is less than the National Average life expectancy.
• Generally, they are illiterate.
• They very often suffer from various diseases due to lack of nutritious food.
• Children take up the responsibility of looking after the family at the age
when they are supposed to study.
• The death rate is high due to malnutrition.
 • Families with very little income in cities and villages are called 'Antyoday
family' or families living below the poverty line (BPL).
Determining the Poverty Line
• The concept of poverty was first propounded by the director of WHO BYOD
ORR.
• Factors considered for calculating the poverty line include expenditure on
food, clothing, accommodation, education, health, clean drinking water,
electricity, sanitation, transportation facilities, income, and the intake of
calories.
• On the basis of these factors, a particular standard of living is fixed, which is
known as the poverty line.
• There are two ways of measuring the number of people living below the
poverty line:
1. On the basis of expenditure behind various commodities or services
by a family.
2. On the basis of the total income of the family.
Note - (a family means a minimum of 5 members).
Types of Poverty
1. Absolute Poverty (A): Those people who are not able to purchase the
basic necessities of life like food grains, pulses, milk, and vegetables at the
lowest market rate are said to be absolute poor.
2. Relative Poverty (B): In a society with different income groups, a group
with low income compared to others is considered relatively poor. This
concept is more prevalent in developed countries.
Poverty in India
• To decide the poverty line in 2011-12, the Planning Commission of India
declared per capita expenditure for the rural area as ₹816 (₹4080 per
family) and for the urban area as ₹1000 (₹5000 per family).
• On the basis of this new criteria, the number of poor reduced to 27 crore in
2011-12, and the rate of poverty reduced to 21.9 percent.
• In 2009-10, the ratio of poverty was 29.8 percent (approximately 35.47
crore people).
• The World Bank decided per capita income as $1.90 US (dollar) in 2012 as
the scale for the poverty line to ensure international equality.
• As per the UNDP-2015 report, India's poverty ratio in 2011-12 was 21.92%.
 • Out of 26.93 crore poor people, 21.65 crore people (25.7%) were in
rural areas, and only 5.28 crore people were in urban areas.
• Chhattisgarh (36.93%) is the poorest state in India.
• Goa (5.09%) has the lowest poverty rate.
• Gujarat's proportion of poverty is 16.63%.
• States like Chhattisgarh, Assam, Uttar Pradesh, Bihar, etc., have more than
30% proportion of poverty.
Types of Poor People
1. Rural Poor (A): Generally, landless laborers, farm laborers, artisans of
cottage/small scale industries, marginal farmers, beggars, forced laborers,
inhabitants of forest/mountainous regions, tribals, and temporary craftsmen.
2. Urban Poor (B): Temporary laborers, daily wage laborers, domestic
workers, rickshaw-pullers, workers in tea stalls/hotels/dhabas, garage
workers, and beggars who are unable to satisfy their minimum and basic
necessities.
Reasons of Poverty
Poverty is more deep-rooted in rural areas compared to urban areas.
• Agricultural Decline: Decrease in income from agriculture due to
insufficient development and irrigation facilities.
• Lack of Employment: Lack of alternative employment apart from farming,
and lack of knowledge regarding other employment, education, skill, or
training in rural areas.
• Social Debt: Increase in debt due to excessive unproductive expenditure
because of caste system, orthodoxy, traditions, and customs.
• Exploitation: The poor become victims of exploitation and in justice due to
illiteracy, and they cannot get proper benefits of government schemes due
to lack of information.
• Economic Policy Issues: Economic policies ignored the necessities and
economic welfare of the poorest section of society. The encouragement of
cash crops over edible crops led to a scarcity of foodgrains/pulses and price
rise, making it hard for people to get meals twice a day.
• Breakdown of Rural Economy: Economic reforms caused the collapse of
the rural economy, cottage/small scale industries broke down, migration
increased, and agriculture sector income decreased.
 • Health Costs: Poor people became victims of malnutrition and diseases,
increasing expenditure on health and medicines while income was static.
• Technological Change: Change in technology deteriorated traditional
businesses and cottage industries, increasing unemployment.
• Population Growth and Price Rise: Increase in population and average
life span caused the supply of labor to exceed demand, increasing
unemployment. The simultaneous decrease in production of basic
necessities and price rise led to a downfall in purchasing power,
deteriorating the living standard, thus increasing poverty.

3. Strategy for Poverty Eradication

The focus is on developing villages through the idea that "the upliftment of the
country is possible only through the upliftment of villages" (Gramoday se
bharat uday).
Main Strategies
1. Growth Strategy: Post-independence, the government stressed the
development of large-scale industries along with the slogan "Gareebi
Hatao" (Remove poverty). Green Revolution and land reform acts were
implemented to develop the agriculture sector, aiming to increase
production and employment. However, this strategy proved to be an
"optimistic bubbler" because the economic development speed remained
slow, and the distribution of income was inequitable, concentrating wealth
in the hands of a few.
2. Taxation and PDS: To remove income disparity, the government framed a
taxation policy where heavy tax was levied on luxurious goods/services
used by rich people. Essential commodities were provided to the poor from
"Fair Price Shops" (FPS) under the Public Distribution System (PDS) to
improve their living standard.
3. Land Reforms: The government implemented programmes like the land
ceiling act, regulation of tenancy act, and security of cultivating rights to
decrease the income of rich farmers/landlords and increase the income of
farm laborers/tenants.
4. Employment Generation:
• Policies were announced to encourage agriculture-related industries
(cattle rearing, dairy, pisciculture, afforestation), small irrigation
schemes, household, cottage, and small-scale industries.
 • Stress was laid on labour-intensive industries to increase
employment.
• Objective-based education, training, and skill development
programmes were started to provide rural youth with opportunities for
alternative employment and make them self-reliant.
5. Basic Infrastructure and Education:
• Improved structure for education, health, residence, employment,
communication, and family planning.
• Advanced irrigation facilities, roads, crop protection, and bank loans
for seeds/fertilizer/tractor were implemented for rural upliftment.
• Schools, colleges, technical, and vocational courses were established
at close distances to prevent youth migration to cities.
• Economic help (scholarships, fee reduction) was provided for higher
studies and girls' education, and women empowerment programmes
were started.
Poverty Alleviation Programmes (PAP)
The basic objective is to create employment, improve agriculture, ensure food
security, and develop skills to bring families above the poverty line. Programmes
are divided into five sections: (1) Wage-based employment, (2) Self-employment,
(3) Food security, (4) Social safety, and (5) Urban poverty elimination.
• Pradhan Mantri Krishi Sinchai Yojna: Aims to increase the agriculture
growth rate by improving irrigation facilities, including drip irrigation and
construction of check dams, to ensure water reaches every agricultural land.
• Prime Minister Farm Safety Insurance Plan: Provides economic support
to farmers during natural calamity by improving farm safety insurance.
• National Drinking Water Programme: Programmes for providing water
to every field, improving the canal network, preventing salinity, and
constructing ponds, tanks, and check dams to create rural employment.
• E-Nam Scheme: Sets up an online agriculture market where online traders
can bid for farmers' products. The objective is to save farmers from losses
faced due to mediators and brokers and ensure they get better
remuneration.
• From Gramoday to Bharat Uday: Includes farmer-oriented plans to
prevent crop damage from wild animals (fencing help), grass production
during drought, rain forecasting, and help for mechanization (mini
tractors/subsidy).
• Dindayal Upadhyay Gramjyoti Yojna: Effort to supply electricity to rural
areas 24 *7 at concessional rates for 18000 villages. This includes laying
new lines for villages without electricity and providing subsidies for
agricultural equipment and solar energy.
• Vanbandhu Kalyan Yojana: Provides subsidy for the all-round
development of Adivasis, including training for women in livestock rearing,
organic farming, and establishing Samras hostels/Smart Ashrams.
• Encouragement to Organic Farming: Provides help for registration,
training, low-rate finance, market setup, environment protection, and
reduction of expenditure in agriculture.
• Chief Minister Village Road Scheme: Planning and implementation of
work related to roads, helping village panchayats connect villages, and
construction of toilets.
• "MAA Annapurna Yojna": Gujarat Government provides 35 Kg of food
grains free of cost to absolute poor and BPL families. Middle-class poor get 5
Kg at low rates (Wheat ₹2/kg, Rice ₹3/kg). This saves a large sum of money
spent on food, allowing them to improve their living standard.
• Sansad Adarsh Gram Yojna: The objective is to stop migration from
villages to cities by having Members of Parliament adopt villages and
improve education, health, and employment facilities there, creating an
ideal village.
• Mahatma Gandhi National Rural Employment Guarantee Act
(MANREGA): A popular employment-oriented programme with the slogan
"Our village, Our work, along with reasonable price".
• Objective: To guarantee wage employment for at least 100 days
(7 hours per day) in a financial year to one adult member of every
rural family who is willing to do unskilled physical labour.
• If the government fails to provide employment after being asked, it
must pay unemployment allowance.
• Works include construction of personal toilets/wells, land leveling,
horticulture, cattle sheds, and cleaning canals.
• Mission Mangalam: State government unites BPL women in 'sakhi
mandal' or 'self-helping groups'. They are given skill-based training to
generate self-employment through household industries (like making papad,
pickle, etc.) and escape poverty.
 • Dattopant Thegdi Vyaj Shay Yojna: Provides loans to artisans of
handicraft and handloom cottage industries at a low interest rate to
purchase raw material.
• Jyoti Gramodyog Vikas Yojna: Provides self-employment opportunities to
the rural unemployed by giving economic help and subsidy for establishing
industrial plants, implements, and land. It also supports youth interested in
setting up industries through "Start up India".
• Bajpai Bankable Yojna: Provides training and finance to urban and rural
unemployed youth (age 18-65, educated till 4th standard) so they can set
up industry or carry on traditional crafts, thus generating self-employment.
• Agro Business Policy 2016: State government implemented a plan to
provide employment to 10 lakh people by setting up agro-food processing
units and helping in the export of processed food products.

4. Unemployment
Meaning of Unemployment
• A person is unemployed if they are an adult (age 15-60 years), ready to
work at the prevalent market rate of wages, have the energy and
qualification to work, and are in search of work but are not getting it.
• This condition in a group is called unemployment.
• Unemployment that must be faced involuntarily is called employment
against one's wish.
• People NOT considered unemployed: Those who demand wages higher
than the market rate, those outside the 15-60 age group, the handicapped,
sick, old, lazy, or housewives who are not willing to work.
Types of Unemployment
1. Seasonal Unemployment: When farmers remain unemployed for 3 to 5
months due to lack of irrigation facilities, irregularity in rainfall, and lack of
alternative employment.
2. Frictional Unemployment: When new technology is introduced in place of
old technology, and laborers remain unemployed for some time.
3. Structural Unemployment: Caused by the backwardness of the Indian
economy, social backwardness, traditional orthodoxy, customs, illiteracy,
and lack of structural facilities.
4. Disguised Unemployment: When more workers than required are
involved in an occupation. Even if a few laborers are removed, no decrease
 is recorded in the total production, so the extra laborers are considered
unemployed in a disguised way.
5. Industrial Unemployment: When a person remains unemployed for the
short or long term due to changes taking place in the industrial sector.
6. Educated Unemployment: If a person has obtained at least secondary
education or a degree and is unemployed.
Proportion of Unemployment in India
• According to the 2011 census, 116 million people were in search of
employment.
• 32 million were uneducated unemployed, and 84 million were educated
unemployed.
• Approximately 4.70 crore people in the 15-24 age group were unemployed.
• According to the Labour Bureau (2013-14), the unemployment rate in India
was 5.4%.
• In Gujarat, 12 persons per 1000 (1.2%) were unemployed.
• The ratio of educated unemployed was more in the urban area.
• Unemployment is high in states like Sikkim, Kerala, West Bengal, and
Tripura.
• The ratio of unemployment is low in Himachal Pradesh, Haryana, Karnataka,
and Gujarat.
Main Reasons for Increasing Unemployment
• Increase in population.
• Education focused on theoretical knowledge only, lacking practical or
technical knowledge/skill.
• Irregularity in rainfall in agriculture and improper irrigation facilities.
• Losing interest in the agriculture sector and lack of alternative employment
during non-agriculture seasons.
• Weak condition of cottage, household, and small-scale industries.
• Caste system and joint family system force people to follow traditional
business.
• Lack of courage to set up new businesses.
• Immobility of labor and flawed planning of labour.
 • Low growth rate of industrial development and less rate of saving tendency,
leading to a decrease in capital creation and lack of investment for new
industry setup.
Impact of Unemployment
• Poverty and unemployment are two sides of the same coin, and
unemployment is the main reason for poverty.
• It negatively affects the social and mental condition of educated youth,
leading to disappointment.
• Long-term unemployment can lead to involvement in anti-social/immoral
activities (e.g., drug trafficking, robberies, recovering ransom).
• It increases social and economic inequality and class discrimination, leading
to a fall in living standards.
• When price rise joins unemployment, the condition becomes pathetic, and
the person may turn towards narcotic drugs and other addictions.
• Unemployment is deadly for the individual, family, and economy.
Efforts to Reduce Unemployment
1. High Economic Growth: Aiming for high economic development (e.g.,
10% per year) to increase capital investment and employment
opportunities.
2. Labour-Intensive Units: Stressing the development of units using labour-
intensive methods for production, small/cottage industries, and
handloom/handicraft skill.
3. Rural Employment: Developing methods to take more than one crop from
the field to remove seasonal unemployment, bringing new land under
cultivation, arranging water/electricity, and constructing dams/ponds/canals.
Also, encouraging agriculture-related activities (poultry, fishery, cattle
rearing, afforestation) to increase employment in villages and reduce
migration to cities.
4. Rural Quality of Life: Improving health, education, pure drinking water,
roads, banking, internet, and constructing permanent public property to
achieve qualitative life and result-oriented improvement.
5. Skill and Education Development:
• Developing skills and providing employment as per qualification to
decrease educated unemployment.
• Adopting business-oriented or technical education policies to
produce skilled artisans.
 • The curriculum should satisfy the requirement of local industries, and
training should be given to improve quality of production and increase
income.
6. National Missions and Education: Implementing "Make in India,"
"Skill India," and "Digital India" to enhance knowledge and work
capacity. Technical colleges, universities, and higher institutions like IIT and
IIM are being established. Vocational and technical education with modern
technology is being promoted.
7. New Employment Fields: Opening new areas in computer technology,
information technology, business management, catering, event
management, and share-stock marketing. Short-term diploma or certificate
courses (like spinning, weaving, mobile/A.C. repairing) are started to meet
manpower needs.
8. Self-Employment and Entrepreneurship: Providing loans at a less rate
of interest to entrepreneurs under 'start up India'. Self-employment is
fostered with government's economic help to promote a switch from white-
collar jobs.

World Labour Market

This section provides key points on the global dynamics that affect employment
and workers across the world:
• Concept and Scope: The global labour market represents the interaction
between the supply of labour (workers) and the demand for labour
(employers) on an international scale, fundamentally shaped by
globalization.
• Price of Labour: Wages act as the price of labour. Wages rise in a tight
market (when demand for workers exceeds supply) and fall in a slack
market (when supply exceeds demand).
• Driving Factors: The global market is constantly being reconfigured by five
main macrotrends: technological change (Automation/AI), the green
transition (shift to sustainable practices), geoeconomic fragmentation,
economic uncertainty, and demographic shifts.
• Technological Impact: The rapid advancement of the Fourth Industrial
Revolution is simultaneously displacing routine jobs through automation
and creating demand for new, high-skill roles in areas like data science and
cybersecurity.
• Demographic Imbalances: Developed economies face challenges from
aging and shrinking workforces, potentially leading to labour shortages,
while many low-income countries grapple with high rates of youth
unemployment.
• Informal Economy: A significant portion of the global workforce (estimated
near 60%) is engaged in informal employment, which means they lack
contracts, job security, and basic social protection (like health coverage or
pensions).
• Persistent Inequalities: Global efforts continue to address severe
inequalities, particularly the gender pay gap and the underrepresentation
of women in managerial and decision-making positions.
• Policy Focus: International bodies like the ILO focus on promoting 'decent
work' for all—work that is productive, delivers a fair income, provides
security, and offers social protection—as a core goal for global poverty
reduction.

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