Ch-9 - 120 INDIAN ECONOMIC DEVELOPMENT CHAPTER 9 Poverty in...

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120 INDIAN ECONOMIC DEVELOPMENT C HAPTER 9 Poverty in India Introduction Poverty is perhaps the greatest challenge that the societies like ours are facing. Poverty, in any society, is intimately associated with inequality. Everybody may have worked for himself/herself. Such societies may not have had the system of private property nor would people therein have produced to sell to others and thereby exchange goods. But we have had, by now for thousands of years, societies with poverty, both in absolute sense and relative sense. There were always sensible people who wanted to alleviate, if not abolish, poverty and there were people who wanted to do away with inequalities of various varieties. We shall have, however, a limited agenda to understand the present position of our own poverty and inequality and measures being undertaken to alleviate them. We shall concentrate more on measurement of poverty and its estimates for India. Towards the end of the Chapter, we shall narrate some of the specific measures undertaken by the Government of India to alleviate poverty. Absolute and Relative Poverty There are poor societies and rich societies. Within a given society also, there are poor people and rich people. Governments all over the world use many criteria to identify the poor so that they can be given special attention that may lead to improvement in their livelihood status. When we speak in terms of relatively poor or rich, we make pair-wise comparison. Person A may be poorer than or richer than or equal to person B by the scale of income criterion which we take into account for comparison. Call it relative poverty or inequality. We need not fix a level or point on the scale of criterion. It is a comparison between two persons. If there are n persons, there are n (n-1)/2 pairs if one’s comparison with oneself is not done; otherwise pairs are n 2 /2 . Inequality for each pair may be thought of in terms of the absolute difference between incomes of the persons of a given pair. For measuring the level of inequality in the society as a whole, these comparisons have to be condensed in some way. One such measure is known as Gini coefficient, which is very popular among researchers. Instead of considering all pairs, one can compare one’s position vis-a-vis some parameter (say, the mean) of the distribution. Now there are n
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POVERTY IN INDIA 121 comparisons. For measuring the level of inequality, these comparisons, again measured by the difference of one’s income from the mean income, have to be condensed into one single number. Standard deviation (or its division by the mean) is one such measure of inequality. Some attempts have also been made to choose only some values of the distribution. Range, for example, is one such measure. Range is defined as the difference between maximum and minimum value. Some people prefer to divide the range by the mean.
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This note was uploaded on 04/20/2010 for the course CEDT 601 taught by Professor Ypr during the Spring '00 term at Indian Institute of Technology, Kharagpur.

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Ch-9 - 120 INDIAN ECONOMIC DEVELOPMENT CHAPTER 9 Poverty in...

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