Chapter 06 · Economics

Poverty and Unemployment

Poverty Measurement · Committees · MPI · Unemployment Types · Govt. Schemes — BPSC / BSSC

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 PovertyIndividuals/communities living below the poverty line; first used by Sir John Boyd Orr (first Director-General of FAO); measured on the basis of minimum subsistence levels
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 PeriodFood items over 30 days; non-food items over 365 days
Head Count Ratio
  • Measures absolute poverty
  • Percentage of population below the poverty line
  • Amartya Sen introduced the Income Gap Ratio (I) instead of Head Count Ratio (H) — known as the Sen Poverty Coefficient
Poverty Assessment in India
Name / CommitteeYearKey Facts
Dadabhai Naoroji1867–68First study of poverty in India; used cost-of-living theory; first poverty line estimate in "Poverty and Un-British Rule in India"; ₹16–35 per capita annual income
VM Dandekar & N. Rath1971First scientific method for poverty line; first use of calorie basis; 2250 calories/day → not poor
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 CommitteeFormed 2004; Report 2009Introduced cost-of-living concept; 6 Basic Needs (Education, Health, etc.); 2011–12 Poverty Line by MPCE: Rural ₹816/month (₹27/day) → 25.7%; Urban ₹1000/month (₹33/day) → 13.7%; Total: 21.9%
C. Rangarajan CommitteeFormed 2012; Report 2014Minimum consumption expenditure: Rural ₹972/month (₹32/day); Urban ₹1407/month (₹47/day)

At present, the poverty line is estimated on the basis of data collected by NSSO (MoSPI).

⚠ EXAM TRAP
Alagh Committee set calorie norms (1979); Dandekar-Rath introduced the calorie concept first (1971) — don't reverse the sequence of "first use" vs "refinement."
Multidimensional Poverty Index (MPI)
Released ByNITI Aayog (first time in 2021)
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: A person willing to work at the prevailing wage rate may not get any work. Major cause: Overpopulation.

TypeDescription
Seasonal UnemploymentIn agriculture; only 7–8 months of work in a year, no work for the remaining months
Frictional UnemploymentTime gap between leaving one job and joining another
Disguised UnemploymentZero marginal productivity — more workers employed than needed
Cyclical UnemploymentJob loss due to market fluctuations, typically in developed countries
Open UnemploymentUnemployment situation with negligible work
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, 1973 — 3 Concepts
ConceptDescription
Normal StatusEmployment for less than 183 days in a year
Current Weekly StatusNot even an hour of work in a week
Current Daily StatusWork only a few days in a week, searching for work on remaining days; used since the 11th Five-Year Plan
Key Terms & Formula
Full Employment8 hours/day work → 273 days
Labour ForceNo. of employed + No. of unemployed
Working Age Population (India)15–59 years
Working Age Population (OECD)15–64 years
Unemployment Rate = (No. of Unemployed ÷ Labour Force) × 100
⚡ QUICK RECALL
India defines working age as 15–59 years, while OECD countries use 15–64 years — a common cross-country comparison trap.
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 Yojana2020Free food to more than 80 crore people
Atmanirbhar Nidhi (PM SVANidhi)2020Supports holistic development of street vendors
PM Garib Kalyan Rojgar Abhiyan2020Provides assistance to migrant labourers across the country
One Nation One Ration Card2020Subsidised 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 Yojana2018World's largest insurance scheme; ₹5 lakh health insurance
National Vayoshree Scheme2017BPL elders and senior citizens; physical aid and assisted-living devices
PM Matru Vandana Yojana2017DBT to pregnant women and lactating mothers for the first child; maternity benefit post-delivery
PM Vaya Vandana Yojana2017Pension insurance for those aged 60 years or above
Project SWAYAM2017Provides free quality education
PM Ujjwala Yojana2016LPG connections to BPL families; financial assistance of ₹1600 per family
PM Awas Yojana (Gramin)2016Housing for all rural families by 2029
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 Yojana2015Pension for unorganised-sector workers aged 18–40; pension after 60 years
Beti Bachao Beti Padhao2015Preventing female foeticide and promoting education
Deendayal Upadhyay Gram Jyoti Yojana2014Rural electrification for all households
PM Adarsh Gram Yojana2009–10Prioritises villages with over 50% SC population; 36,000 villages covered
MGNREGA2005Each rural household guaranteed at least 100 days of unskilled work per year
⚡ QUICK RECALL
MGNREGA (2005) is the oldest and most heavily tested employment guarantee scheme in this list — 100 days of guaranteed unskilled rural work.
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 PovertyFirst used by Sir John Boyd Orr (FAO)
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 Committee2009; MPCE-based; Rural: ₹816/mo; Urban: ₹1000/mo; 21.9% poor
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 Committee1973; Proposed 3 concepts of unemployment measurement
Working Age Population (India)15–59 years; OECD: 15–64 years
Unemployment Rate Formula(No. of Unemployed ÷ Labour Force) × 100
MGNREGA2005; 100 days unskilled work guarantee per rural household
Ayushman Bharat2018; ₹5 lakh health insurance; World's largest insurance scheme
Beti Bachao Beti Padhao2015; Preventing female foeticide; promoting education
PM SVANidhi2020; Street vendors holistic development
PM Suraksha Bima2015; ₹20 premium; ₹2 lakh on death/permanent disability
Atal Pension Yojana2015; Unorganised sector; pension after 60 years
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