Meaning
Poverty is the inability to secure the minimum human needs of food, clothing, housing, education and health. When a person is unable to fulfil these basic needs, it leads to pain and distress.
It can be categorised in many ways. In one of the methods of categorising it, the people who always remained poor or are usually poor but sometimes have a little more money are grouped together and are known as chronic poor. The people who are rich most of the time but sometimes become poor are known as occasionally poor. The people who are never poor are called the non-poor. They can be categorised as not so poor, middle class, upper-middle-class, rich, very rich, millionaires and billionaires.
Relative Poverty
When we compare the incomes of different people and if some people are poorer than others, it is called relative poverty. Hence, if some people have lower incomes than others, then they are relatively poor. These relative deprivations are found in developed countries, whereas less developed countries are more concerned with absolute poverty.
Absolute Poverty
It is the minimum physical quantity of cereals and pulses which are necessary for maintaining a subsistence level of living and the price quotations convert the physical quantities into monetary terms. The per capita consumption expenditure (PCE) per month is determined by aggregating all these price quotations. If a person’s PCE remains below that fixed level, then he/she is considered below the poverty line. Here, the magnitude of poverty is expressed in terms of the absolute number of poor persons in a society.
The ‘Gini’ method is one of the methods which can be used to measure relative poverty in terms of income. Income distribution of a population in different fractile groups is estimated and compared with the levels of living of the highest 5–10%. This method brings out the relative position of different statuses of people in income segregation.
Poverty Line
The poverty line is the cut off level of per capita consumption expenditure per month which is needed to maintain a minimum acceptable standard of living in a country. In pre-independent India, Dadabhai Naoroji was the first person to discuss the concept of a poverty line. After Independence, several attempts were made to identify a mechanism to measure the number of poor in the country. Accordingly, the ‘Taskforce on projections of minimum needs and effective consumption demand’ was formed in 1979. Currently, the poverty line in India is based on private consumption expenditure which would be necessary to consume a food basket for the required amount of calories. The Planning Commission has fixed the daily minimum nutritional requirements for survival at 2400 calories for rural areas and 2100 calories for urban areas. People who cannot undertake this minimum amount of calories per day fall below the poverty line. The Planning Commission has fixed the daily minimum nutritional requirements for survival. Accordingly, the new formula states that the poverty line is consumption worth Rs 672.8 per person a month in rural areas and Rs 859.6 per person a month in urban areas.
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