Poverty as a challenge

EconomicsArticles / Tutorial Titles

Poverty is one of the major challenges for developing countries like India. Poverty affects human resources and lets people perform weakly in terms of economic growth. As people suffering from poverty cannot take part in economic growth, it acts as a burden on economic growth. Therefore, poverty acts as a challenge for the government and economists in countries like India.

Two Typical Cases of Poverty

Depending on the demographics, poverty can be divided into two typical cases −

  • Urban Cases
  • Rural Cases.

Urban Case

In the urban case, the poverty seen in urban locations is considered. In this case, although the person suffering from poverty has an income, it is insufficient. Poor people often cannot access education and healthcare well enough. The income is not enough to provide nutrition to children and the income earned always falls short of all necessities in life. Poor people in urban areas often live in unhealthy and crowded slums on the outskirts of cities and they are never able to earn enough to take care of the basic needs of humans.

Rural Case

This type of poverty is seen in rural areas like villages. People in rural areas living in poverty often work as part-time laborers in agriculture industries. They help big farmers and do not have their own land. Poor people in rural areas do not have access to even basic amenities that are needed for living life. They cannot access health and education facilities and often suffer from diseases due to a lack of healthful conditions or good food. These people work only when there is a need for extra workers in the farmlands and hence their work is not permanent.

Poverty as Seen by Social Scientists

Social scientists check poverty with a variety of indicators because there are many facets of poverty. These indicators may include lack of access to healthcare and education, lack of resistance due to malnutrition, lack of job opportunities, etc. However, at present-day, there are two factors on which social scientists pay more attention to address poverty holistically. These two facets are −

  • Social Exclusion
  • Vulnerability.

Social Exclusion

Social Exclusion means the exclusion of the poor from better living conditions and confining them in surroundings that are availed by people with poor incomes. Social exclusion causes strata in a society where poor people are forced to live in poor surroundings and locations where conditions of living are worse than the places where people with better incomes live. In this process, the poor people are kept away from facilities enjoyed by people who are better off.


Vulnerability means the chances of people suffering from poverty facing more obstacles or dangers in life than people who have a better income. Vulnerable people have more chances of living under to remain poor in the coming days. They have more chances of suffering from diseases, and their life is more vulnerable than people with a better income to occurrences that may threaten their lives such as natural disasters.

Poverty Estimates

India is still a developing nation. Although India’s economy is growing fast, poverty is still a major challenge for the country. However, poverty is declining in India. According to the International Monetary Fund (IMF), extreme poverty, which is defined by the World Bank as living on US$1.9 or less a day in terms of purchasing power parity (PPP), in India was as low as 0.8% in 2019.

India managed to keep the level intact in 2020 despite the COVID-19 outbreak.

World Bank data shows that extreme poverty has reduced by 12.3% between 2011 and 2019 in India. It was 22.5% in 2011 which went down to 10.2% in 2019. The bank mentioned that rural poverty declined from 26.3% to 11.6% in the same period. The decline in urban poverty was from 14.2% to 6.3% in that period.

The poverty level in rural and urban areas decreased by 14.7 and 7.9 percentage points, respectively in the given period. According to United Nations Development Programme (UNDP) Administrator Achim Steiner, India was able to lift 271 million people out of extreme poverty in a 10-year time period from 2005-06 to 2015-16.

A 2020 World Economic Forum study revealed that 220 million Indians earned less than Rs 32 / day—the poverty line considered for rural India— in 2013.

Vulnerable Groups

All social groups and economic categories are not equally vulnerable to poverty in India. In terms of social groups, the scheduled tribes (ST) and scheduled castes (SC) are more vulnerable than other groups.

Among the economic groups, the rural agricultural labor households and the urban casual labor households are the most vulnerable. The average of people living under the poverty line is 22% but 43 out of 100 people from ST social groups live under the poverty line. 34% of casual workers in rural as well as urban areas and 29% of SC people are also under the poverty line.

According to studies, except for the ST households, all the other three groups - scheduled castes, rural agricultural laborers, and urban casual labor households had a decline in poverty in the 1990s.

Interstate Disparities

Poverty is not equally distributed among the states in India.

Bihar and Odisha are two of the poorest states in India with poverty ratios of 47 and 43 percent, respectively. Both rural and urban poverty is quite high in these states.

On the other hand, states like Andhra Pradesh, Tamil Nadu, Gujarat, Kerala, Punjab, Jammu, Kashmir, and West Bengal have shown a notable decline in poverty.

Some factors responsible for the decline in poverty in these states are −

  • Focus on the tourism sector
  • public distribution of food grains
  • enhancement of human resource development
  • scientific agricultural development, and
  • land reform measures.


Poverty is the biggest roadblock to economic growth and eradication of poverty is therefore a major aim of the Indian government for decades. With the advent of economic reforms and liberalization, India has opened its doors to prosperity but the destination has not been reached yet. India is trying its best to get rid of poverty and it is progressing steadily on the path to prosperity. However, the focus should remain intact and more policies to make it richer should continue until the last person living under the poverty line is lifted out of poverty.

Poverty is a social evil and it creates social disparities. Therefore, to build an equitable economy, poverty must be abolished. The policies of governments and other authorities play an important role in the whole process and hence a holistic approach must be taken to eradicate poverty from its roots.


Q1. What are the two basic types of poverty?

Ans. Two basic types of poverty are Rural poverty and urban poverty. Rural poverty refers to poverty in rural places, such as villages while urban poverty refers to poverty in cities and developed towns.

Q2. Why is poverty harmful to the nation?

Ans. Poverty stalls economic progress and people cannot embrace all progressive policies of the government when they are in poverty. This creates social disparities and creates barriers among people which may lead to social evils. That is why poverty is considered harmful.

Q3. Which are the two poorest states in India?

Ans. Bihar and Odisha are the two poorest states in India.

Updated on 13-Oct-2022 11:19:47