Poors and Causes of Poverty: Relative Poverty, Absolute Poverty

The compilation of these Poverty Notes makes students exam preparation simpler and organised.

Poors and Causes of Poverty

You know how the famous saying goes, India is not poor Indians are. This is something you can see while simply taking a walk down your colony. Many homeless and destitute are out on the road begging for alms. There are many causes of poverty in India. We will learn about these causes of poverty in the current chapter.

The Poverty Story

When we study economics, the assessment of poverty is crucial to understand the rate of development in a country. Let us understand first who are poor and how do we define poverty and the causes of poverty.

In simplest of terms, we can say that poverty refers to the inability of a person to meet the basic needs of life viz. food, clothing, and shelter. Those who cannot afford these are considered poor. Or in more technical terms, below the poverty line.

Causes of Poverty

Economists have further disintegrated poverty into several parts, here we’ll discuss some of them one by one.

Relative Poverty
As the name suggests, it means poverty in comparison to others. It will vary from region to region. Relatively poor are those who can manage the basics but are still not quite into the category of the middle class.

Absolute Poverty
This refers to people who are living below the poverty line. We measure absolute poverty on the basis of two things:

  • Criteria for minimum calories consumption
  • Criteria for minimum consumption expenditure

Let us elaborate further on these two criteria.

Minimum Calories Consumption
When people are not able to get a minimum of 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas, these people are categorized as living below the poverty line.

Minimum Consumption Expenditure Criteria
Going by the above explanation, further, we assess the poverty of a family based on their capacity to spend a minimum amount per day as their consumption expenditure. This amount is set by the government for both rural and urban poor and keeps changing annually or biannually depending on the inflation rate and other factors.

The poverty line thus refers to a line that portrays the average per capita expenditure needed by a person to meet their basic needs. This per capita is calculated on a monthly basis. As per the Tendulkar committee, the poverty line has been set as 816 rupees in rural areas and 1000 rupees in urban areas as monthly income.

Anything below this is poor. This amount keeps changing. According to the latest survey, about 32% of the Indian population is below the poverty line.

The Tendulkar Committee

The government set up a Committee headed by Suresh Tendulkar, which was the Tendulkar committee. This committee did a study and came to a conclusion that we could determine poverty line based on the above two criteria of calories intake and expenditure potential for consumption needs.

The committee determined that the ideal calorie intake for a person to not be in the poverty line is to be able to consume 2100 calories per day in urban areas and 2400 in rural areas.

Government’s Approach to Curb Poverty

The government on its part keeps on attempting to fight poverty and combat this issue by coming up with new schemes. The approach adopted by the government may be categorized as under:

  • Enhancement of Economic Growth
  • Specific Programmes for Poverty Alleviation
  • Fulfilling of Minimum Needs of the poor

Vicious Circle of Poverty

One of the major causes of long persisting poverty in India is the vicious circle of poverty enveloping us. A vicious circle refers to the phenomenon of a self-enforced situation due to which a circular motion of poverty comes into existence. As part of this, the poor remain poor and poverty continues, so does under development.

An example of a vicious circle would be, where the government provides funds for the creation of medical benefits based on statistics of the number of people in poor families. By the time the funds reach them, the population increases considerably leading to a shortage of funds.

As a result, the poor are not able to use the benefits and thus kids remain weak and unhealthy. There are many similar reasons which induce the circle to remain. Until and unless some stern steps take place on part of the government along with strict implementations, it is unlikely that this vicious circle will break.

Causes of Poverty

There are several causes that lead to poverty. Some of these are listed here:

  • Inflation
  • The constant rise in population
  • Unemployment.
  • Poor growth rate
  • Lack of capital
  • Excessive debts in rural areas
  • Colonization Hangover
  • Poor Education
  • The pressure of constant inflation
  • Migration from rural to urban towns
  • Ineffective implementation of the policies and reforms


Why is the calorie-based norm not adequate to identify the poor?
The calorie-based norm is not adequate to identify the poor because of the following reasons:

  • This mechanism groups all people together and does not differentiate between a very poor from other poor making it difficult to identify who are the neediest.
  • The norm only uses expenditure on food and some selected few items as the basis for estimating the poor.
  • This norm does not consider various important factors that are associated with poverty. These factors are health care, clean drinking water, proper sanitation, and basic education.
  • It also fails to account for social factors that exaggerate and worsen poverty like ill health, lack of access to resources, lack of civil and political freedom, etc.