Chapter 06 · Economics

Poverty and Unemployment

Poverty Measurement · Committees · MPI · Unemployment Types · Govt. Schemes — SSC / Railway / UPSC / BPSC

Poverty — Meaning
  • Lack of access to basic necessities (food, shelter, clothing)
  • According to Amartya Sen, poverty is a multi-dimensional problem
Ways to Measure Poverty
TypeDescription
Absolute PovertyPoverty against a fixed minimum living standard/threshold. Boyd Orr linked poverty, poor diet and ill health and became FAO's first Director-General; he is not credited here with first using absolute poverty.
Relative PovertyLack of income/consumption compared to average living standard; measured using Lorenz Curve (Max O. Lorenz, 1905 — income inequality) and Gini Coefficient (Corrado Gini, 1912 — income/wealth inequality)
⚠ EXAM TRAP
Lorenz Curve (1905) and Gini Coefficient (1912) are related but different tools — Lorenz is a graphical curve, Gini is a numerical coefficient derived from it.
Poverty Line & Recall Methods

Poverty Line: Level of income or consumption expenditure below which a person is considered poor. Poverty is based on consumption expenditure.

MethodDescription
Uniform Recall PeriodFood and non-food items considered for the last 30 days
Mixed Recall Period365-day recall: clothing/bedding, footwear, education, institutional medical care and durables; 30 days for other items
Head Count Ratio
  • Measures absolute poverty
  • Percentage of population below the poverty line
  • Sen Poverty Index combines headcount ratio, average poverty gap and inequality among the poor; it does not simply replace HCR with an income-gap ratio
Poverty Assessment in India
Name / CommitteeYearKey Facts
Dadabhai Naoroji1867–68Pioneering pre-Independence estimate using the cost of a subsistence diet; Poverty and Un-British Rule in India was published in 1901
VM Dandekar & N. Rath1971Widely cited systematic post-Independence poverty assessment using NSS data; approximately 2,250 calories/person/day for both rural and urban areas
Y.K. Alagh Committee19792400 calories in rural areas; 2100 calories in urban areas
Lakdawala Committee1993Separate CPI for rural and urban areas; CPI-IW for industrial workers; CPI-AL for agricultural labourers
Suresh Tendulkar CommitteeConstituted December 2005; report December 2009Moved away from direct calorie norms, used a common urban poverty-line reference basket, and included private health/education spending. 2011–12 MPCE: Rural ₹816/month (25.7% poor); Urban ₹1,000 (13.7%); All India 21.9%.
C. Rangarajan CommitteeFormed 2012; Report 20142011–12 poverty lines: rural ₹972/person/month; urban ₹1,407; all-India poverty ratio ~29.5%

Consumption measurement now uses NSO HCES with Modified Mixed Reference Period (MMRP); the last official Tendulkar poverty ratio remains the 2011–12 estimate.

⚠ EXAM TRAP
Dandekar–Rath (1971): about 2,250 calories in rural and urban areas. Alagh Task Force (1979): rural 2,400; urban 2,100 calories. Tendulkar group: constituted 2005, reported 2009.
Multidimensional Poverty Index (MPI)
Released ByNITI Aayog: first National MPI baseline report, 2021; global MPI was introduced by UNDP/OPHI in 2010
3Equally Weighted Dimensions
12Indicators

The three dimensions are Health, Education, and Standard of Living, represented through 12 indicators.

Highest Multidimensionally Poor (2023)Bihar
Lowest Multidimensionally Poor (2023)Kerala
⚡ QUICK RECALL
Bihar topping the multidimensional poverty share in 2023 is a directly BPSC-relevant fact — expect this in Bihar-focused sections too.
Unemployment — Meaning & Types

Unemployment: without work while seeking/available for work under survey rules. Causes include insufficient suitable jobs, skills mismatch, structural change, seasonality and underemployment; not overpopulation alone.

TypeDescription
Seasonal UnemploymentWork is available only in particular seasons or parts of the year; duration varies by activity
Frictional UnemploymentTime gap between leaving one job and joining another
Disguised UnemploymentMore workers than needed; some can withdraw without reducing output (zero marginal productivity is the textbook limiting case)
Cyclical UnemploymentUnemployment caused by downturns in aggregate demand and business-cycle contractions
Open UnemploymentAble and willing to work, seeking/available for work, but no employment
Structural UnemploymentMismatch between workers' skills and job requirements
Long-term UnemploymentSituation of unemployment for a long duration
⚠ EXAM TRAP
Disguised Unemployment (common in Indian agriculture) vs Cyclical Unemployment (common in developed/industrial economies) — a frequently confused pair.
Bhagwati Committee (appointed 1970; final report 1973) — Activity-Status Measures
ConceptDescription
Usual StatusActivity status over a 365-day reference period; captures relatively long-duration/chronic employment or unemployment
Current Weekly StatusNo work even for one hour in the preceding seven days, while seeking or available for work
Current Daily StatusEmployment/unemployment in person-days, including half-days, for each day of the reference week; sensitive to underemployment
Key Terms & Formula
Full EmploymentCyclical unemployment essentially absent; employment near potential, not literally zero unemployment
Labour ForceNo. of employed + No. of unemployed
Headline PLFS reporting age (India)15 years and above (headline PLFS indicators)
Working Age Population (OECD)15–64 years
Unemployment Rate = (No. of Unemployed ÷ Labour Force) × 100
⚡ QUICK RECALL
India's headline PLFS indicators commonly cover ages 15 and above; OECD's conventional working-age range is 15–64. These are different reporting conventions.
Major Poverty Alleviation / Employment Programmes (2019–2024)
ProgrammeYearKey Features
PM Vishwakarma2023Financial support to traditional artisans and craftsmen
PM YUVA Yojana2021Nurtures young writers under 30 years of age
PM Ji-VAN Yojana2019 (Amended 2024)Promotes advanced biofuel projects; develops ethanol from surplus biomass and agricultural waste
PM Garib Kalyan Ann Yojana2020COVID-era scheme began 2020; free NFSA foodgrains continued for ~81.35 crore beneficiaries for five years from 1 January 2024
Atmanirbhar Nidhi (PM SVANidhi)2020Affordable working-capital micro-credit and related incentives for eligible street vendors
PM Garib Kalyan Rojgar Abhiyan2020125-day campaign launched 20 June 2020 for returnee migrants and affected persons in 116 districts across six states
One Nation One Ration CardPilot: August 2019; nationwide: June 2022Subsidised food grains from government ration shops, portable nationwide
PM Shram Yogi Maandhan Pension Yojana2019For unorganised sector workers earning up to ₹15,000/month (aged 18–40); pension of ₹3000/month post age 60
Major Poverty Alleviation / Employment Programmes (2005–2018)
ProgrammeYearKey Features
Ayushman Bharat Yojana2018PM-JAY: up to ₹5 lakh per family/year for eligible secondary/tertiary hospitalisation; later extended to all persons aged 70+
National Vayoshree Scheme2017BPL elders and senior citizens; physical aid and assisted-living devices
PM Matru Vandana Yojana2017Effective 1 January 2017; cash benefit for first child; PMMVY 2.0 also provides ₹6,000 for a second child if a girl
PM Vaya Vandana Yojana2017Assured-return/pension scheme for ages 60+; closed to new subscriptions after 31 March 2023
Project SWAYAM2017National online-learning platform; many courses free to learn, while certification/exams may carry a fee
PM Ujjwala Yojana2016Deposit-free LPG connections for eligible adult women from poor households; applicable benefits may include first refill and stove
PM Awas Yojana (Gramin)2016Cumulative target: about 4.95 crore pucca rural houses by 2029, including 2 crore additional houses for FY 2024–29
Shyama Prasad Mukherjee Rurban Mission2016Integrated rural development projects
PM Suraksha Bima Yojana2015Age group 18–70 years; ₹20 annual premium; ₹2 lakh on death/permanent disability, ₹1 lakh on partial disability
Atal Pension Yojana2015Eligible ages 18–40; contributory pension ₹1,000–₹5,000/month after 60; income-tax payers cannot open new APY accounts from 1 October 2022
Beti Bachao Beti Padhao2015Preventing female foeticide and promoting education
Deendayal Upadhyay Gram Jyoti Yojana2014Feeder separation and rural power-distribution infrastructure/electrification; scheme closed 31 March 2022
PM Adarsh Gram Yojana2009–10Pilot in 2009–10; integrated development of villages with more than 50% Scheduled Caste population
MGNREGA2005Act enacted 2005; effective 2 February 2006. Up to 100 days of wage employment per financial year to each rural household whose adults volunteer for unskilled manual work
⚡ QUICK RECALL
MGNREGA: enacted 2005, effective 2 February 2006; up to 100 days of wage employment per financial year per eligible rural household, not per individual.
Quick Reference Summary
TopicKey Fact
Poverty (Amartya Sen)Multi-dimensional problem
Lorenz CurveBy Max O. Lorenz (1905); Income inequality
Gini CoefficientBy Corrado Gini (1912); Income/wealth inequality
Absolute PovertyFixed minimum living threshold; Boyd Orr linked poverty, diet and ill health (first FAO DG)
Head Count Ratio% of population below poverty line
First Poverty Study IndiaDadabhai Naoroji (1867–68)
First Calorie-based Poverty LineVM Dandekar and N. Rath (1971); 2250 cal/day
Y.K. Alagh Committee1979; Rural: 2400 cal, Urban: 2100 cal
Lakdawala Committee1993; CPI-IW (industrial workers), CPI-AL (agri labourers)
Tendulkar CommitteeReport 2009; 2011–12 MPCE lines rural ₹816/mo, urban ₹1,000/mo; all-India ratio 21.9%
Rangarajan Committee2014; Rural: ₹972/mo; Urban: ₹1407/mo
MPIBy NITI Aayog (2021); 3 dimensions; 12 indicators
Highest Multidimensional PoorBihar (2023 report)
Lowest Multidimensional PoorKerala (2023 report)
Disguised UnemploymentZero marginal productivity; more workers than needed
Bhagwati CommitteeAppointed December 1970; final report 1973; Usual, Current Weekly and Current Daily Status measures
Headline PLFS reporting age (India)15 years and above (headline PLFS indicators); OECD: 15–64 years
Unemployment Rate Formula(No. of Unemployed ÷ Labour Force) × 100
MGNREGAAct 2005; effective 2 February 2006; up to 100 days/financial year per eligible rural household
Ayushman BharatPM-JAY, 2018; up to ₹5 lakh/family/year for eligible hospitalisation; extended to all ages 70+
Beti Bachao Beti Padhao2015; Preventing female foeticide; promoting education
PM SVANidhi1 June 2020; working-capital micro-credit for eligible street vendors
PM Suraksha Bima2015; ₹20 premium; ₹2 lakh on death/permanent disability
Atal Pension Yojana2015; eligible entrants 18–40; pension after 60; new income-taxpayer accounts barred from 1 October 2022
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