Poverty and unemployment go hand in hand. They are factors that have crippled Indian economy from time to time, only to make it weaker and restrict its progress. However, it is not something that comes from outside and affect a country’s economy and development. Poverty and unemployment are deep rooted in India economy and need to be paid attention to and uprooted so as to prevent it from growing into a tree that would eventually overshadow our country’s progressive approach.
Poverty in India is still rampant despite an impressive economic growth. An estimated 250 million people are below the poverty line and approximately 75 per cent of them are in the rural areas.
In general, poverty can be defined as a situation when people are unable to satisfy the basic needs of life. The definition and methods of measuring poverty differs from country to country. According to the definition by Planning Commission of India, poverty line is drawn with an intake of 2400 calories in rural areas and 2100 calories in urban areas. If a person is unable to get that much minimum level of calories, then he/she is considered as being below poverty line.
Causes of Poverty in India
• High level of dependence on primitive methods of agriculture
• High population growth rate
• High Illiteracy (about 35% of adult population)
• Regional inequalities
• Protectionist policies pursued till 1991 that prevented high foreign investment
Government has introduced a number of anti-poverty programs since independence to alleviate poverty. These include various employment guarantee programmes such as National Rural Employment Programme, Rural Landless Employment Guarantee Programme etc. Recently, Government has initiated National Rural Employment Guarantee Program (NREGP). As per NREGP, the government will provide 100 days of employment per year to whosoever is willing to work. NREGP is considered as a landmark program in poverty alleviation measures.
One of the major problems with poverty alleviation programs is their implementation. Rajiv Gandhi once said that out of 100 paisa allocated for poor only 14 paisa reaches them. But in spite of their weaknesses, poverty alleviated program can be credited for their success in alleviating poverty to an extent. Greater public-private partnership and committed and efficient bureaucratic machinery is required to tackle poverty.
Poverty can be of different types like absolute poverty and relative poverty. There may be many other classifications like urban poverty, rural poverty, primary poverty, secondary poverty and many more. Whatever be the type of poverty, the basic reason has always been lack of adequate income. Here comes the role of unemployment behind poverty. Lack of employment opportunities and the consequential income disparity bring about mass poverty in most of the developing and under developed economies of the world.
Economic reforms may have given a boost to industrial productivity and brought in foreign investment in capital intensive areas. But the boom has not created jobs. This was not unexpected. According to a report by the Washington-based Institute of Policy Studies (IPS), the combined sales of the world's top 200 MNCs is now greater than the combined GDP of all but the world's nine largest national economies. Yet, the total direct employment generated by these multinationals is a mere 18.8 million - one-hundredth of one per cent of the global workforce.
India's labour force is growing at a rate of 2.5 per cent annually, but employment is growing at only 2.3 per cent. Thus, the country is faced with the challenge of not only absorbing new entrants to the job market (estimated at seven million people every year), but also clearing the backlog.
Sixty per cent of India's workforce is self-employed, many of whom remain very poor. Nearly 30 per cent are casual workers (i.e. they work only when they are able to get jobs and remain unpaid for the rest of the days). Only about 10 per cent are regular employees, of which two-fifths are employed by the public sector.
More than 90 per cent of the labour force is employed in the "unorganised sector", i.e. sectors which don't provide with the social security and other benefits of employment in the "organised sector."
In the rural areas, agricultural workers form the bulk of the unorganised sector. In urban India, contract and sub-contract as well as migratory agricultural labourers make up most of the unorganised labour force.
Unorganised sector is made up of jobs in which the Minimum Wage Act is either not, or only marginally, implemented. The absence of unions in the unorganised sector does not provide any opportunity for collective bargaining.
Sector-wise absorption of labour
Agriculture -
Manufacturing & construction- 16 per cent
Services -
Sundry / miscellaneous jobs - 12 per cent
Sources of Unemployment
Lack of effective aggregate demand of labour is one of the principal reasons for unemployment. In the less developed economies a substantial portion of the total workforce works as surplus labour. This problem is particularly prevalent in the agricultural sector. Due to excess labour, the marginal productivity of the workforce may be zero or even negative. This excess pool of labour is the first to become unemployed during the period of economic or social crisis.
Measures to Prevent Unemployment and Poverty
Economic reforms, changes in the industrial policy and better utilization of available resources are expected to reduce the problem of unemployment and poverty that results from it. The economic reform measures need to have major impacts on the employment generating potential of the economy. The governmental bodies are also required to initiate long term measures for poverty alleviation. Generation of employment opportunities and equality in income distribution are the two key factors that are of utmost importance to deal with the dual problem of unemployment and poverty.
Poverty in India is still rampant despite an impressive economic growth. An estimated 250 million people are below the poverty line and approximately 75 per cent of them are in the rural areas.
In general, poverty can be defined as a situation when people are unable to satisfy the basic needs of life. The definition and methods of measuring poverty differs from country to country. According to the definition by Planning Commission of India, poverty line is drawn with an intake of 2400 calories in rural areas and 2100 calories in urban areas. If a person is unable to get that much minimum level of calories, then he/she is considered as being below poverty line.
Causes of Poverty in India
• High level of dependence on primitive methods of agriculture
• High population growth rate
• High Illiteracy (about 35% of adult population)
• Regional inequalities
• Protectionist policies pursued till 1991 that prevented high foreign investment
Government has introduced a number of anti-poverty programs since independence to alleviate poverty. These include various employment guarantee programmes such as National Rural Employment Programme, Rural Landless Employment Guarantee Programme etc. Recently, Government has initiated National Rural Employment Guarantee Program (NREGP). As per NREGP, the government will provide 100 days of employment per year to whosoever is willing to work. NREGP is considered as a landmark program in poverty alleviation measures.
One of the major problems with poverty alleviation programs is their implementation. Rajiv Gandhi once said that out of 100 paisa allocated for poor only 14 paisa reaches them. But in spite of their weaknesses, poverty alleviated program can be credited for their success in alleviating poverty to an extent. Greater public-private partnership and committed and efficient bureaucratic machinery is required to tackle poverty.
Poverty can be of different types like absolute poverty and relative poverty. There may be many other classifications like urban poverty, rural poverty, primary poverty, secondary poverty and many more. Whatever be the type of poverty, the basic reason has always been lack of adequate income. Here comes the role of unemployment behind poverty. Lack of employment opportunities and the consequential income disparity bring about mass poverty in most of the developing and under developed economies of the world.
Economic reforms may have given a boost to industrial productivity and brought in foreign investment in capital intensive areas. But the boom has not created jobs. This was not unexpected. According to a report by the Washington-based Institute of Policy Studies (IPS), the combined sales of the world's top 200 MNCs is now greater than the combined GDP of all but the world's nine largest national economies. Yet, the total direct employment generated by these multinationals is a mere 18.8 million - one-hundredth of one per cent of the global workforce.
India's labour force is growing at a rate of 2.5 per cent annually, but employment is growing at only 2.3 per cent. Thus, the country is faced with the challenge of not only absorbing new entrants to the job market (estimated at seven million people every year), but also clearing the backlog.
Sixty per cent of India's workforce is self-employed, many of whom remain very poor. Nearly 30 per cent are casual workers (i.e. they work only when they are able to get jobs and remain unpaid for the rest of the days). Only about 10 per cent are regular employees, of which two-fifths are employed by the public sector.
More than 90 per cent of the labour force is employed in the "unorganised sector", i.e. sectors which don't provide with the social security and other benefits of employment in the "organised sector."
In the rural areas, agricultural workers form the bulk of the unorganised sector. In urban India, contract and sub-contract as well as migratory agricultural labourers make up most of the unorganised labour force.
Unorganised sector is made up of jobs in which the Minimum Wage Act is either not, or only marginally, implemented. The absence of unions in the unorganised sector does not provide any opportunity for collective bargaining.
Sector-wise absorption of labour
Agriculture -
Manufacturing & construction- 16 per cent
Services -
Sundry / miscellaneous jobs - 12 per cent
Sources of Unemployment
Lack of effective aggregate demand of labour is one of the principal reasons for unemployment. In the less developed economies a substantial portion of the total workforce works as surplus labour. This problem is particularly prevalent in the agricultural sector. Due to excess labour, the marginal productivity of the workforce may be zero or even negative. This excess pool of labour is the first to become unemployed during the period of economic or social crisis.
Measures to Prevent Unemployment and Poverty
Economic reforms, changes in the industrial policy and better utilization of available resources are expected to reduce the problem of unemployment and poverty that results from it. The economic reform measures need to have major impacts on the employment generating potential of the economy. The governmental bodies are also required to initiate long term measures for poverty alleviation. Generation of employment opportunities and equality in income distribution are the two key factors that are of utmost importance to deal with the dual problem of unemployment and poverty.
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