Poverty, Hunger and Inequality — UPSC Economy Notes

Introduction

Poverty is not just about low income but about deprivation of choices and opportunities to live a decent life.

According to the Human Development Report (1997), poverty is the denial of choices and opportunities to enjoy a basic standard of living.

Eliminating poverty is both a moral responsibility and a human right.

What is Poverty?

A social condition where a section of society cannot meet its survival needs.

UN Human Rights Council: Poverty = persistent deprivation of resources, choices, security, and power needed for adequate living and rights.

Poverty is multidimensional – includes lack of education, healthcare, and social inclusion, not just income.

Global Standard

The UN aims to end extreme poverty everywhere by 2030 (SDG Goal 1).

World Bank defines extreme poverty as living on less than 2.15 per day (International Poverty Line).

Multidimensional Poverty in India

NITI Aayog Report (2023): Poverty in India reduced from 29.17% (2013-14) to 11.28% (2022-23).

Nearly 24.82 crore people moved out of poverty in 9 years.

Largest improvements seen in Uttar Pradesh, Bihar, and Madhya Pradesh.

Global Poverty Facts

At 2.15/day line, 8.5% of the world’s population (659 million people) still live in poverty.

Poverty reduction is uneven across regions – South Asia and Sub-Saharan Africa remain most affected.

Key Reports and Surveys on Poverty

National Multidimensional Poverty Index (NITI Aayog, 2023): Poverty reduced from 29.17% in 2013-14 to 11.28% in 2022-23; 24.82 crore people moved out of poverty. Biggest reductions: Uttar Pradesh (5.94 crore), Bihar (3.77 crore).

Oxfam Report (2023): Top 10% of Indians own 77% of the total national wealth, highlighting inequality.

Global Multidimensional Poverty Index (2005–2021): India moved 415 million people out of poverty. Poverty incidence dropped from 55.1% to 16.4%.

World Bank (2023): Using 2.15/day line, poverty in India = 11.9%. Pandemic & recession pushed 1.4% of global population into extreme poverty.

Pew Research Report: During pandemic, India’s poor doubled from 60 million to 134 million in one year.

Household Consumption Expenditure Survey (2022-23): Rural poverty fell from 25.7% (2011-12) to 7.2% (2022-23). Urban poverty fell from 13.7% to 4.6% in same period.

Approaches to Understanding Poverty

Monetary Approach: Poverty = lack of money. Solution: increase income and employment opportunities.

Capability Approach (Amartya Sen): Poverty = lack of capabilities like education, health, nutrition. Solution: strengthen public goods and services.

Social Exclusion Approach: Poverty = exclusion from participating in society’s economic, cultural, and social life. Solution: inclusion and access to opportunities.

Participatory Approach: Poverty is understood from the perspective of the poor themselves. Solutions are tailored to local needs.

Types of Poverty

Absolute Poverty: When people cannot meet basic needs like food, shelter, clothing. Defined by UN as severe deprivation of essentials such as food, water, sanitation, health, education. World Bank sets absolute poverty line at 2.15/day (PPP, 2017).

Relative Poverty: Poverty measured in comparison with society’s standard of living. A person may not be poor in one country but poor in another due to different living standards.

Environmental Poverty: Lack of access to environmental resources like clean water, fertile land, clean air, and healthy ecosystems. Example: Rajasthan’s Barmer district, where families fetch contaminated water from far distances.

Collective Poverty: When entire groups or communities remain poor due to systemic or historical factors. Example: Gond and Santhal tribes facing poverty due to social exclusion.

Human Poverty: Lack of basic human capabilities like literacy, nutrition, and healthcare.

Income Poverty: Lack of sufficient income to meet minimum consumption needs.

Extreme Poverty: Defined by World Bank as living on less than 1.90 per day.

Categorisation of Poor

Chronic Poor: People who are persistently poor (e.g., casual laborers).

Churning Poor: People who frequently move in and out of poverty (e.g., small farmers, seasonal workers).

Occasionally Poor: People who are usually well-off but sometimes fall into poverty (e.g., during illness, crop failure, or job loss).

Transient Poor: the churning poor and the occasionally poor together – people who move in and out of poverty, as opposed to the chronic poor.

What is Poverty Line?

The poverty line is a monetary threshold (income/consumption limit) below which a person is considered poor.

It separates poor and non-poor, but within these categories there are subgroups (absolutely poor, very poor, poor; middle class, rich, very rich, absolutely rich).

It is not fixed and changes with inflation, needs, and living standards.

In India, the National Sample Survey Organization (NSSO) collects data to estimate poverty levels.

Earlier poverty lines were based on minimum calorie intake required for survival.

Minimum calorie requirement: 2,400 calories/day in rural areas and 2,100 calories/day in urban areas.

In 2011-12, the poverty line was fixed at Rs 816 per person/month in rural areas and Rs 1,000 per person/month in urban areas.

Government uses Monthly Per Capita Expenditure (MPCE) as a proxy for income to identify the poor.

Challenges in Estimation

Determining exact cost of basic needs (food, shelter, clothing) is difficult because of regional differences, inflation, and changing lifestyles.

Calorie intake alone is not enough – now nutritional quality and health standards are also considered.

Formula for Head Count Ratio (HCR)

HCR = (Number of people below poverty line ÷ Total population) × 100

Poverty Gap Index: the average shortfall of the poor's income from the poverty line (as a share of the line) – shows the depth of poverty, unlike the head-count ratio.

Squared Poverty Gap: squares each shortfall so the poorest get more weight – shows the severity of poverty and inequality among the poor.

Pre-Independence

Dadabhai Naoroji (1867–68)

He is called the 'Grand Old Man of India'. In his book 'Poverty and Un-British Rule in India', he gave the first estimate of poverty line.

He calculated that a person needed between ₹16 to ₹35 per year (at 1867–68 prices) to survive at a basic level.

This was the earliest attempt to put a number to poverty in India.

Bombay Plan (1944)

Prepared by leading Indian industrialists before independence.

Suggested that ₹75 per person per year should be considered the minimum income required to avoid poverty.

Post-Independence

VM Dandekar and N Rath Committee (1971)

This was the first scientific attempt to measure poverty using data from the National Sample Survey (NSS).

They said that poverty should be defined not just by money but by how much food (calories) a person can afford.

They fixed the standard at 2250 calories per person per day for both rural and urban areas.

This was a shift from earlier 'minimum needs' approach to a 'calorie intake' approach.

Alagh Committee (1979)

A task force set up by the Planning Commission under Y.K. Alagh.

Defined poverty line based on how much food a person eats (nutritional requirements) and the money spent on it.

Calorie norms fixed: 2400 calories/day for rural areas (because more physical work is done) and 2100 calories/day for urban areas.

These poverty lines were updated over time with inflation and changing prices.

Lakdawala Committee (1993)

Expert group chaired by Prof. D.T. Lakdawala.

Recommended continuing calorie-based method but linked it to actual spending patterns of poor households.

Introduced state-specific poverty lines (because costs vary across states).

Recommended updating poverty lines using Consumer Price Index for Agricultural Labourers (CPI-AL) in rural areas and Consumer Price Index for Industrial Workers (CPI-IW) in urban areas.

Tendulkar Committee (2009)

Formed to fix problems in earlier methods.

Problems included: using old 1973–74 baskets despite changes in lifestyle, poor adjustment of prices, and ignoring private spending on health and education.

Key recommendations:

Move away from calorie-based poverty measurement.

Use the same poverty line basket (PLB) for rural and urban India.

Include household spending on health and education.

Improve price adjustment methods (to reflect regional and time differences).

C Rangarajan Committee (2012)

Formed after criticism of the Tendulkar Committee, because people felt its poverty line was set too low.

Recommended higher poverty lines:

Daily per person expenditure: ₹32 (rural), ₹47 (urban).

Monthly per capita expenditure: ₹972 (rural), ₹1407 (urban).

This raised the official poverty line to a more realistic level compared to Tendulkar’s estimates.

Present System

All three major committees (Lakdawala, Tendulkar, Rangarajan) used per capita consumption expenditure as the main basis for measuring poverty.

NITI Aayog (earlier Planning Commission) uses NSSO data, which conducts large surveys on household consumption expenditure every 5 years.

The Ministry of Rural Development conducts Below Poverty Line (BPL) census to identify poor households for government welfare schemes.

Many Faces of Poverty

Poverty is not a single concept – it exists in different forms:

Absolute Poverty: When people do not have enough to meet minimum needs like food, clothing, shelter.

Relative Poverty: When people are poor compared to others in the same society.

Extreme Poverty: When people live on less than 2.15 a day (World Bank standard).

Income Poverty: When income is below the poverty line.

Multidimensional Poverty: Looks at multiple aspects like education, health, sanitation, housing, and not just money.

The challenge is that definitions of these vary between countries, so a universal measure is difficult.

Invisible Dimensions of Poverty

Some aspects of poverty cannot be measured directly with numbers.

For example, insecurity, fear, and vulnerability are daily struggles for the poor.

Emotional aspects like anxiety about the next meal, inability to afford medicines, or fear of job loss are real but hard to capture.

Traditional income or calorie-based measures ignore these invisible dimensions.

Survey Struggles

Most poverty measurement depends on large household surveys (like NSSO in India).

Surveys are costly, time-consuming, and require trained staff.

In poor countries, lack of resources often reduces survey accuracy.

Even when surveys are done, some families may underreport or overreport income, leading to errors.

Government’s Influence

Governments often have the power to set or adjust the poverty line.

Sometimes, to show progress, governments may lower the standard of poverty line (e.g., very low income threshold).

This manipulation can make statistics look good but does not actually improve people’s living conditions.

Thus, political influence can distort poverty data.

Traditional Approach

Earlier, poverty was measured mainly by income or consumption levels.

If a family’s income was below the poverty line (say, 2.15/day as per World Bank), they were considered poor.

Problem: Income does not capture other aspects of well-being like health, education, or living conditions.

Multidimensional Poverty Approach

Recognizes that poverty is not just lack of money, but also lack of opportunities and basic services.

Includes multiple dimensions:

Health: nutrition, child mortality, access to healthcare.

Education: years of schooling, literacy, children attending school.

Standard of Living: clean water, sanitation, electricity, housing, cooking fuel, assets.

Purpose of Measuring Multidimensional Poverty

Gives a broader, more accurate picture of how people are deprived.

Helps identify which areas (health, education, housing, etc.) need urgent attention.

Allows governments to design specific programs – e.g., building toilets (sanitation), improving schools (education), providing electricity (standard of living).

Gives a 'human face' to poverty rather than just looking at money.

What is MPI?

The Multidimensional Poverty Index (MPI) was created in 2010 by OPHI (Oxford Poverty and Human Development Initiative) along with UNDP (United Nations Development Programme).

Earlier, poverty was measured only by income or money (e.g., World Bank’s 2.15/day poverty line). But this missed other important aspects of life.

MPI goes beyond income and looks at whether people are deprived in basic human needs like health, education, and standard of living.

Dimensions and Indicators

MPI is based on 3 dimensions, and each dimension has specific indicators:

Health: (1) Nutrition, (2) Child Mortality.

Education: (3) Years of Schooling, (4) School Attendance.

Standard of Living: (5) Cooking Fuel, (6) Sanitation, (7) Drinking Water, (8) Electricity, (9) Housing, (10) Assets.

If a household is deprived in one-third or more of these indicators, it is considered multidimensionally poor.

How MPI is Scored

MPI score ranges from 0 to 1.

Score = 0 → No one is poor.

Score closer to 1 → High poverty and many deprivations.

MPI also looks at two things: (1) How many people are poor, (2) How poor they are (intensity of poverty).

Limitations of MPI

Some indicators measure inputs/outputs (like years of schooling or cooking fuel) rather than actual capabilities (like quality of education).

Health data may not capture all aspects, especially malnutrition.

MPI measures poverty at household level, so differences within a family (e.g., women vs men, children vs adults) are not captured.

MPI in India

Between 2005-06 and 2015-16, poverty reduced sharply: 55.1% people were multidimensionally poor in 2005-06, which came down to 27.7% in 2015-16 (UNDP data). About 271 million people escaped poverty.

NITI Aayog’s MPI shows that poverty further declined from 24.85% to 14.96%, which means around 135 million people moved out of multidimensional poverty.

MPI Progress Report 2023 (India)

Between 2015-16 and 2019-21, 13.5 crore (135 million) Indians came out of multidimensional poverty.

Uttar Pradesh alone accounted for 3.43 crore people moving out of poverty, making it the state with the largest improvement.

At the national level, MPI poverty reduced from 24.85% to 14.96%.

MPI value (0.117 → 0.066) almost halved, meaning overall poverty burden reduced significantly.

Intensity of poverty (average deprivation faced by poor) reduced from 47% to 44%.

Districts in Madhya Pradesh, Gujarat, Uttar Pradesh, and Rajasthan showed the fastest progress.

These improvements indicate India is on track to achieve SDG Target 1.2 (reduce multidimensional poverty by half by 2030).

Global MPI 2024

Developed by UNDP and OPHI, covering 112 countries.

About 1.1 billion people (18% of world population) live in acute multidimensional poverty.

India has the largest number of poor: 234 million in extreme poverty.

Countries affected by wars or conflicts show higher deprivations across all 10 MPI indicators compared to peaceful countries.

National MPI (India)

Developed by NITI Aayog, modeled on Global MPI.

Uses the same 10 indicators from Global MPI, but adds 2 extra indicators important for India:

1. Maternal Health (care for pregnant women).

2. Bank Account (financial inclusion).

Functions of National MPI:

Helps design targeted and inclusive poverty interventions.

Shows overlapping deprivations (e.g., poor health + no education + lack of sanitation).

Aids in inclusive policy-making by identifying specific needs of different groups.

Data 2023 (NITI Aayog): 14.96% of India’s population is multidimensionally poor.

Between 2005-06 and 2019-21, 415 million people in India exited multidimensional poverty (55.1% → 16.4%).

According to World Bank: In 2022-23, 145.71 million Indians were poor, and 34.4 million lived in extreme poverty.

Causes of Poverty in India

Overpopulation

With more than 1.3 billion people, resources like food, jobs, and housing are under huge pressure.

Creates unemployment and underemployment (part-time/low-paid jobs).

Leads to income instability and hunger.

Agricultural Issues

Majority still depend on traditional farming with outdated methods.

Lack of modern technology and irrigation lowers productivity.

Farmers often face debt and poverty.

Widespread Corruption

Corruption in government programs diverts funds away from poor people.

Resources for welfare and poverty alleviation are misused or wasted.

Caste-based Discrimination & Social Inequalities

Deep-rooted caste discrimination restricts access to education, jobs, and healthcare.

Marginalized communities remain trapped in poverty with fewer opportunities.

Limited Access to Healthcare

Rural areas and slums lack proper hospitals and doctors.

Families spend heavily on medical bills, often falling deeper into poverty.

Illness reduces productivity and income opportunities.

Inadequate Infrastructure

Many villages lack proper roads, transport, electricity, and internet.

Limits access to jobs, markets, education, and healthcare.

Keeps people disconnected from development opportunities.

Natural Disasters

Floods, droughts, cyclones, and pandemics hit India regularly.

Destroy crops, homes, and livelihoods.

Push affected communities back into poverty, slowing progress.

Consequences of Poverty

Child Labour

Poor families cannot afford to send children to school.

Children are forced to work in fields, factories, or as domestic workers.

This deprives them of education and keeps the cycle of poverty alive.

Terrorism

According to UN Secretary-General Antonio Guterres, poverty, inequality, and social exclusion act as fuel for terrorism.

Frustration, unemployment, and marginalisation create fertile ground for extremist groups.

Crimes

Lack of jobs and marginalisation often push people into theft, robbery, or violent crimes.

Example: In Pakistan, the 2022 floods worsened poverty, leading to a rise in violent crimes.

Lack of Education

UNICEF reports that 25% of children in India do not receive proper education.

Without education, chances of getting a decent job with good income are very low.

This continues the poverty cycle across generations.

Migration

Poverty forces people to move within the country (inter-state) or even across borders.

Example: In Africa’s Sahel region, where 80% live on less than 2/day, poverty drives large-scale migration.

Poverty Trap

A poverty trap is a situation where people cannot escape poverty even if they try.

To break free, one needs enough money or resources (capital), but poor people often lack these.

Without capital, they cannot improve their education, healthcare, or skills → which keeps them poor.

Thus, it becomes a self-reinforcing cycle (poverty leads to more poverty).

Example: After the COVID-19 pandemic, more than 200 million people in India fell into poverty, making it harder for them to recover.

Poverty Alleviation

Poverty alleviation refers to programs and policies designed to reduce poverty.

These may include employment schemes, free healthcare, education programs, food security schemes, financial inclusion, and social welfare measures.

What is Feminisation of Poverty?

It describes how women increasingly form a large proportion of the poor population.

Causes: Gender discrimination, lower wages, unequal education opportunities, unpaid care work, lack of property rights, and social barriers.

Key Indicators

GDP Contribution: Women are 48% of India's population but contribute only 18% to GDP (NFHS).

Labour Force Participation: Female Labour Force Participation Rate (FLFPR) was only 37% in 2023 (Economic Survey).

Literacy Gap: 2011 Census shows literacy rate of women at 65.46% vs overall 74%.

Unpaid Care Work: Women's unpaid domestic and care work in India equals 15–17% of GDP, yet it is unrecognized.

Facts and Data

Globally, unpaid work by women equals 10 trillion annually (Oxfam) – 43 times Apple’s turnover.

In India, 18.3% of labour is unpaid (Economic Survey 2024).

Women’s unpaid work is valued at 3.1% of GDP; total care economy = 17% of GDP (₹34.5 lakh crores).

Women spend 7.2 hours daily on unpaid work vs men’s 2.8 hours.

Way Forward

1. Invest in Social Sectors

Expand girl’s education campaigns (e.g., Beti Bachao Beti Padhao).

Education increases earnings: Each extra year of schooling = 10% rise in income (World Bank 2018).

Improve sanitation via Swachh Bharat Abhiyan to reduce diseases and improve women’s quality of life.

2. Build Climate Resilience

Promote climate-smart agriculture (drought-resistant crops, better irrigation).

Helps protect women farmers who are highly vulnerable to climate shocks.

3. Strengthen Social Safety Nets

Improve Public Distribution System (PDS) for food security.

Use technology for better targeting so benefits reach women and marginalized groups.

4. Foster Inclusive Growth

Launch skill development programs aligned to market demand.

Implement fair wage policies and strengthen minimum wages.

Provide protection to informal workers (majority of whom are women).

Famous Quotes on Poverty

“Poverty is not an accident. Like slavery and apartheid, it is man-made and can be removed.” – Nelson Mandela

“Poverty is not just a lack of income, it is a lack of choices.” – Amartya Sen

“Poverty is the worst form of violence.” – Mahatma Gandhi

“The only way to fight poverty is with education.” – Kofi Annan

Introduction

Thomas Piketty: 'You need some inequality for growth, but extreme inequality is detrimental as it limits mobility and captures democracy.'

Joseph Stiglitz: 'Inequality is not just moral, it is economic – it slows growth and creates instability.'

Robert Reich: 'Economic inequality is a driver of social instability.'

What is Inequality?

Inequality refers to gaps in wealth, income, or opportunities between groups or individuals in society.

It can exist in various forms: income, wealth, gender, education, rural-urban divide, and opportunities.

Data and Examples (India)

Wealth Inequality: India is among the most unequal countries; rich accumulate wealth much faster than the poor (Oxfam report).

Income Inequality: Top 1% of population gets 22.6% of national income (World Inequality Database 2022-23), higher than even the US.

Rural-Urban Divide: Rural monthly per capita expenditure = ₹3,773 vs Urban = ₹6,459 (HCE Survey 2022-23).

Gender Pay Gap: Men earn 82% of labour income vs Women 18% (World Inequality Report 2022).

Types of Inequality

1. Income Inequality: Unequal distribution of income within a population. (Example: CEO earning 500x more than a worker).

2. Lifetime Inequality: Differences in earnings of an individual across their lifetime (e.g., unskilled worker vs skilled professional).

3. Wealth Inequality: Gap in assets like land, houses, savings, shares, etc. across households at a given time.

4. Inequality of Opportunity: Differences caused by circumstances beyond individual control (caste, gender, family background).

Note

Income Inequality: Compares disparity in incomes of top vs bottom percentiles.

Wealth Inequality: Compares disparity in wealth/assets rather than income.

Economic Inequality: Measured using the Lorenz Curve, which shows income/wealth distribution across society.

What is Lorenz Curve?

A Lorenz Curve is a commonly used tool to measure income or wealth inequality.

It shows how much of the total income/wealth is owned by cumulative percentages of the population.

Example: It can show what percentage of wealth is owned by the bottom 50% of the population compared to the top 10%.

How it Works

X-axis: Represents cumulative share of the population (sorted from poorest to richest).

Y-axis: Represents cumulative share of income/wealth owned by that share of the population.

Line of Equality (45° line): Perfect equality – every % of population earns the same % of income (e.g., bottom 10% earns 10%, bottom 50% earns 50%).

Lorenz Curve (solid line): Actual distribution of income/wealth, which usually bows below the line of equality.

The more the curve bends away from the equality line, the greater the inequality.

Relation with Gini Coefficient

The Gini coefficient is derived from the Lorenz Curve.

It measures inequality numerically from 0 to 1 (or 0% to 100%).

Gini = 0 → Perfect equality; Gini = 1 → Perfect inequality (one person owns everything).

Key Insight

Lorenz Curve helps policymakers understand how income or wealth is distributed.

It provides a visual tool to compare inequality across time and countries.

What is Gini Coefficient?

It is a numerical value that measures inequality in income or wealth distribution.

Range: 0 → Perfect equality (everyone has the same income).

Range: 1 → Perfect inequality (one person has everything, others have nothing).

It is based on the Lorenz Curve and is often used to compare countries and periods of time.

Usually, it measures inequality after redistribution through taxes and transfers (disposable income/consumption).

Shortcomings of Gini Coefficient

1. Not Decomposable/Additive: Cannot easily separate inequality within and between groups.

2. Insensitive to Middle Transfers: Focuses more on extremes (rich vs poor) rather than income transfers in the middle.

3. Different Distributions, Same Gini: Two countries with very different distributions can have the same Gini value.

4. No Demographic Insights: Does not show inequality between subgroups (gender, caste, region).

5. Data Dependence: Depends heavily on GDP and income data, which may not always be reliable.

6. Informal Economy Ignored: Does not account for unrecorded income in informal sectors.

Key Insight

Despite its shortcomings, Gini coefficient is widely used due to its simplicity.

Helps policymakers assess inequality trends and design redistributive policies.

Theil Index

Theil Index measures economic inequality by calculating the 'distance' between the actual income distribution and the ideal equal distribution.

Range: 0 → perfect equality; higher values → higher inequality.

Advantage: Decomposable – can separate inequality within and between groups.

Palma Ratio

Focuses on income disparity between top 10% earners and bottom 40% of population.

Ignores the middle 50% since their income shares are relatively stable worldwide.

Useful for highlighting the extremes of inequality.

Kuznets Ratio

Developed by Simon Kuznets, it compares the income share of the richest x% with the poorest y%.

Forms the basis of the Kuznets Curve: inequality first rises with growth (industrialisation) and later falls as economies mature → inverted U-shape.

Shows the relationship between development and inequality.

Hoover Index

Also called Ricci-Schutz coefficient, Pietra Index, or Robin Hood Index.

Measures the proportion of income that must be redistributed to achieve equality.

Range: 0 → perfect equality; 1 → perfect inequality.

Graphically: maximum vertical distance between Lorenz Curve and equality line.

Why Multiple Measures?

Gini is popular but has limitations (cannot capture extremes or subgroup differences).

These alternative indices highlight different aspects – extremes (Palma), decomposability (Theil), development dynamics (Kuznets), and redistribution needed (Hoover).

Atkinson Index

Developed by economist Anthony Barnes Atkinson.

Focus: Which parts of the income distribution contribute most to inequality.

Range: 0 → Perfect equality; 1 → Perfect inequality.

Unique feature: Shows how much of society’s income people are willing to sacrifice to achieve equality.

Useful for policy because it highlights distributional sensitivity (e.g., whether inequality is driven more by the poor, middle, or rich segments).

Status of Inequality in India

World Inequality Lab Report (1922–2023)

Inequality declined post-independence until 1980s, but rose sharply after liberalisation in 1990s.

Since 2000s, inequality has surged dramatically.

Average income grew 2.6% annually (1960–2022).

Rise of Billionaires: 1 billionaire (1990) → 52 (1991) → 162 (2011) → 200 (2024).

Top 1% Control: In 2022–23, top 1% held 22.6% of income and 40.1% of wealth.

Called “Billionaire Raj,” now more unequal than British Raj.

Forbes Billionaires List 2024

India has 200 billionaires with total wealth 954 billion.

Wealth grew 41% compared to previous year.

Oxfam India Report (2023)

Top 5% Indians own 60% of wealth.

Bottom 50% own only 3%.

From 2012–21: Top 1% gained 40% of new wealth, bottom 50% got only 3%.

Gini coefficient rose from 0.32 (1983) → 0.36 (2019).

SBI Economic Research

Signs of narrowing inequality in taxable incomes.

Tax base expanded, more people moved into higher tax brackets.

Small firms transitioned into larger businesses.

Post-pandemic: Bottom 90% consumption rose by ₹8.2 lakh crore.

Gini coefficient for taxable income improved: 0.472 (2014) → 0.402 (2022).

Female Tax Filers

Women = 15% of tax filers in India.

Higher proportions in Kerala, Tamil Nadu, Punjab, West Bengal.

Causes of Inequality in India

Unemployment and Underemployment: Large sections of the workforce are either jobless or working in low-paying, unproductive jobs. Economic growth has not created enough jobs for all, linking poverty, unemployment, and inequality together.

Inflation: Rising prices hurt the poor more. While profits may rise for businesses, wage earners—especially in the unorganised sector—struggle as their real income (purchasing power) falls.

Tax Evasion: High tax rates in the past encouraged tax evasion and black money, concentrating income among a few and fueling inequality.

Regressive Taxation: Indirect taxes (like GST, excise duty) affect the poor more because they spend a larger share of their income on consumption.

Green Revolution Strategy: Benefited rich farmers with land and technology, while landless labourers and marginal farmers remained poor, deepening rural inequality.

Gender and Social Inequalities: Women, lower castes, and minorities face systemic discrimination, leading to fewer opportunities in education, jobs, and income.

Consequences of Inequality

Social Conflict: Rising inequality triggers social tensions. Example: caste-based reservation demands by Jaats, Marathas, and Patels often turn violent.

Ethnic and Religious Tensions: Minority groups may feel excluded, leading to demands for autonomy or separatism.

Low Development Indicators: High inequality correlates with poor health and education outcomes – high infant mortality, low literacy, low per capita income.

Neglect of Public Services: Rich people rely on private hospitals and schools, leaving public services underfunded and poor in quality for the rest.

Challenges in Addressing Inequality

Low Female Labour Force Participation: Women often leave the workforce due to lack of education, early marriage, and family responsibilities.

Weak Coverage of Schemes: Many welfare schemes fail to reach the poorest, leading to high out-of-pocket spending on health and education.

Global Uncertainties: Shocks like COVID-19 and the Russia-Ukraine war increase inflation and widen inequality.

High Informal Sector Employment: Nearly 80–90% of workers are in informal jobs with no job security or benefits, leading to low wages.

Skewed Economic Growth: Certain regions and industries benefit more (IT, big cities), while rural and small-scale sectors lag behind.

Steps Taken to Reduce Inequality

Progressive Taxation: Higher income groups are taxed more than lower-income groups.

Land Reforms: Redistribution of surplus land after independence aimed at reducing rural inequality (though implementation was weak in many states).

Social Security Measures: Schemes like pensions, subsidised grains under PDS, and employment schemes like MGNREGA.

Jan Dhan–Aadhaar–Mobile (JAM) Trinity: Enabled financial inclusion, direct benefit transfers, and reduced leakages.

Minimum Wage Revisions: Periodically updated to protect low-income workers.

Free Education and Health Services: Offered by the government, though quality remains a concern.

World Bank Shared Prosperity Goal (2013): Focuses on increasing incomes of the poorest 40% along with ending extreme poverty.

Way Forward

Wealth and Super Tax: Tax the ultra-rich (billionaires and multimillionaires) to redistribute wealth more fairly.

Raise Minimum Wages: Especially in the informal sector (e.g., gig workers) to ensure decent living conditions.

Invest in Education and Health: Allocate at least 6% of GDP to education and 2.5% to healthcare for equitable development.

Reduce Exclusion Errors: Use digital platforms and JAM to ensure welfare benefits reach the intended poor.

Balanced Growth: Focus on lagging regions and sectors to reduce regional and rural-urban inequality.

Introduction

Hunger = food deprivation or undernourishment, defined as less than 1,800 calories a day per person.

Malnutrition = both undernutrition (not enough food/nutrients) and overnutrition (too much unhealthy food).

UN Hunger Report: Hunger refers to severe food insecurity – when people go entire days without food due to lack of money, food, or resources.

UN Food Security Report (2023): About 74.1% of Indians (1.04 billion people) could not afford a healthy diet in 2021.

India’s undernourished population estimated at 16.6% (2020–22). For comparison: Bangladesh = 66%, Pakistan = 82%, Iran = 30%, China = 11%, Russia = 2.6%, US = 1.2%, UK = 0.4%.

Government of India disputes FAO’s 16.6% estimate, arguing it was based on a very small sample (3,000 people, 8 questions).

India also rejected its Global Hunger Index ranking (111 out of 125), calling it methodologically flawed and biased.

Why Hunger is a Problem

Hunger is not just about lack of food but about lack of access to healthy and nutritious food.

It leads to stunting, wasting, and underweight children, weakening future generations.

It reduces productivity, worsens poverty, and increases inequality.

Types of Hunger

Acute Hunger: Severe food deprivation caused by sudden crises such as natural disasters, wars, or conflicts. Example: In 2024, WFP estimated that 12.9 million Syrians (over half the population) are suffering from hunger due to ongoing conflict.

Chronic Hunger: Long-term undernourishment, where a person continuously consumes less food than needed. Often linked with poverty and lack of access to nutritious diets.

Hidden Hunger: A condition where people eat enough calories but lack essential vitamins and minerals like iron, zinc, vitamin A, or vitamin D. This leads to poor health, low immunity, and stunted growth despite having enough food.

Causes of Hunger

Poverty: The main cause of hunger. People may not afford nutritious food even though India produces enough grain. Example: FAO estimates 194 million Indians go to bed hungry every day.

Social Cleavages and Gender Inequality: Women and girl children often eat last and least in families. Example: NFHS-4 reported that 53% of Indian women suffer from anaemia due to poor nutrition.

Leakages in Food Distribution: Corruption and inefficiencies in schemes like PDS mean food often gets siphoned away by middlemen before reaching the poor.

Food Wastage: Large amounts of food rot in storage or are wasted. Example: Between 2011–2017, about 62,000 tonnes of food grains were wasted in FCI warehouses.

Climate Change: Rising temperatures, droughts, and floods damage crops and reduce food availability. Example: In 2021, wheat crops in Madhya Pradesh were badly affected.

Inadequate Social Safety Nets: Weak welfare systems fail to protect the poor in times of crisis. Example: 65% of health expenses in India are 'out-of-pocket', pushing families deeper into poverty.

Poor Sanitation and Hygiene: Illnesses like diarrhoea from unsafe water and poor sanitation reduce the body's ability to absorb nutrients, worsening malnutrition. Example: Children in households with poor toilets often suffer from repeated illness and malnutrition.

Global Situation

According to the World Bank, the number of people facing acute food insecurity rose from 135 million in 2019 to 345 million across 82 countries by June 2022.

Main reasons: COVID-19 pandemic, Russia-Ukraine war, supply chain disruptions, and rising food prices.

Climate change acts as a 'threat multiplier', worsening food insecurity in all vulnerable regions.

Impacts of Climate Change on Food Security

Disrupted Food Production:

Extreme Weather Events: Droughts, floods, heatwaves destroy crops and livestock. Example: Indian farmers dependent on rainfall face crop failure due to erratic monsoons.

Sea Level Rise: Saltwater intrusion makes coastal farmlands infertile. Example: In Bangladesh, rising seas reduce rice production.

Reduced Nutritional Quality: Higher CO2 boosts growth but lowers protein and mineral content in wheat, rice, and other staples, reducing their nutritional value.

Water Scarcity: Changing rainfall patterns and glacier melt affect irrigation, cutting down agricultural yields.

Food Safety Threats: Warmer temperatures increase foodborne pathogens like Salmonella, leading to more cases of food poisoning.

Micronutrient Deficiencies: Decline in essential vitamins and minerals in food crops reduces diet quality, causing hidden hunger.

Child Stunting: Malnutrition caused by inadequate intake and poor quality food leads to stunted growth and weak immunity in children.

Types of Malnutrition

Calorific Deficiency: India produces enough foodgrains, but poor allocation, leakages in distribution, and underutilised budgets result in people not getting enough calories.

Protein Hunger: Pulses and eggs are key protein sources. However, budget allocation for pulses is low, and eggs are missing from Mid-Day Meal schemes in many states, reducing children's protein intake.

Micronutrient Deficiency (Hidden Hunger): Lack of vitamins and minerals such as iron, vitamin A, iodine, zinc, etc. This is common among women (especially during pregnancy) and children due to poor diet and disease.

Impacts of Malnutrition

On Individuals:

Mental and Physical Impact: Affects brain development, IQ, bones, muscles, and organs. Example: Ethiopian study showed stunted children had lower IQ in adulthood.

Weak Immunity: Malnourished children are more prone to infections and higher risk of death. WHO says malnutrition increases child deaths from preventable diseases.

On Society:

Multi-Generational Cycle: Malnourished mothers give birth to underweight babies, creating a cycle of malnutrition. UNICEF: Malnutrition causes 45% of global child deaths.

On Economy:

GDP Loss: India loses up to 4% of GDP and 8% of productivity due to child malnutrition.

Disease Burden: Malnutrition (child + maternal) accounts for 15% of India’s total disease burden. Example: A Bangladesh study linked stunting in childhood to higher diabetes risk in adulthood.

Micronutrient Deficiencies

Around 2 billion people globally suffer from lack of essential vitamins and minerals (iron, iodine, zinc, vitamin A, vitamin D, folate, B12).

Women’s Health: Long-term poor diet causes anaemia and hidden hunger, especially during pregnancy and lactation.

Children: Nutritional deficiencies contribute to child deaths. In India, nearly 50–60% of preschool children and women are anaemic.

Immune System Weakness: Deficiency reduces the body’s ability to fight diseases, increasing child and maternal mortality.

Soil Quality: Continuous farming without replenishment depletes soil nutrients like zinc, iron, and boron, worsening hidden hunger.

Measures to Address Micronutrient Deficiency

Micronutrient-enriched fertilizers (e.g., foliar application, agronomic biofortification).

Soil regeneration to restore natural fertility and nutrient bioavailability.

Projects like PRADAN’s Green Transformation Pathways improving iron in crops in MP and Jharkhand.

Bio-fertilizers enriched with iron (e.g., ICAR experiment using iron sulphate in rice increased iron levels in milled rice).

Best Practice: Brazil’s ‘Fome Zero’ (Zero Hunger, 2003) improved food security, access to services, and opportunities for the poor.

Zero-Food Children in India

State-wise Problem: Uttar Pradesh (28.4%), Bihar (14.2%), Maharashtra (7.1%), Rajasthan (6.5%), MP (6%) = 2/3rd of total zero-food children.

Stunting and Wasting: As of Dec 2023, among 89.1 million children under 6 years, 36% were stunted, 17% underweight, 6% wasted (Poshan Tracker).

Economic Loss: Malnourished children have reduced earning capacity as adults, impacting GDP and national productivity.

Intergenerational Cycle: Malnourished mothers → underweight babies → repeated cycle of poverty and hunger.

India’s Rank and Score

In 2024, India ranked 105th out of 127 countries with a score of 27.3 (serious category).

Key statistics for India:

Undernourishment: 13.7% of people do not get enough calories daily.

Child Stunting: 35.5% of children under 5 are too short for their age, showing chronic malnutrition.

Child Wasting: 18.7% of children under 5 are too thin for their height (highest in the world), showing acute malnutrition.

Child Mortality: 2.9% of children die before the age of 5, partly due to poor nutrition and unhealthy environment.

In 2023, India was ranked 111th out of 125 countries.

How GHI is Calculated?

GHI uses four equally important measures:

Undernourishment (1/3 weight): % of population with insufficient calorie intake.

Child Stunting (1/6 weight): % of children under 5 with low height for age.

Child Wasting (1/6 weight): % of children under 5 with low weight for height.

Child Mortality (1/3 weight): % of children dying before age 5.

Criticism by Indian Government

The government says GHI uses 'wrong measures of hunger'.

3 out of 4 indicators are related only to children, so they do not represent the entire population.

The undernourishment indicator is based on a very small sample survey of only 3000 people, which is not enough for a country of 1.4 billion people.

Hunger and SDG 2 (Zero Hunger)

India moved from 'Aspirant' category (poor performance) in 2020-21 to 'Performer' category in 2023-24 in the SDG India Index.

NFSA, 2013: 99.01% beneficiaries are now covered under the National Food Security Act, which provides subsidized food grains.

Agricultural Productivity: Rice and wheat yield improved from 2995 kg/ha in 2018-19 to 3052 kg/ha in 2021-22.

Farmers’ Income: Agriculture Gross Value Added (GVA) per worker increased from ₹0.71 lakh (2018-19) to ₹0.86 lakh (2022-23).

Publishers and indicators: GHI is published by Concern Worldwide and Welthungerhilfe (IFPRI was a co-publisher in earlier editions). It combines four indicators – undernourishment, child stunting, child wasting and under-five mortality.

Key Measures to Tackle Hunger

Social Welfare Programs: Investment in food subsidies and welfare schemes to support the poor (e.g., Public Distribution System).

Healthcare Access: Affordable healthcare reduces medical expenses, freeing more money for food (e.g., Ayushman Bharat, Matritva Sahyog Yojana).

Employment Opportunities: Skill training, literacy, and self-employment improve income and food security (e.g., PM-SVANidhi, Aajeevika Mission).

Civil Society Participation: NGOs like Akshaya Patra help in delivering mid-day meals to children.

Decentralisation: Empowering local governments for last-mile delivery (e.g., One Nation One Ration Card for migrants).

National Food Security Act (NFSA), 2013

Objective: Ensure food and nutritional security across the life cycle by providing subsidized foodgrains at affordable prices.

Coverage: 75% of rural and 50% of urban population, i.e., nearly two-thirds of India’s total population.

Entitlements: Each eligible person receives 5 kg foodgrains/month at Rs. 3 (rice), Rs. 2 (wheat), Rs. 1 (coarse grains).

Antyodaya Anna Yojana: Poorest households receive 35 kg foodgrains/month.

Beneficiaries: Identified by states, based on central government targets.

Special Provisions: Pregnant women, lactating mothers, and children (6 months–14 years) get free meals under ICDS & Mid-Day Meal schemes; maternity benefits of Rs. 6,000 are also provided.

World Food Programme (WFP)

Provides emergency food assistance, rehabilitation, and development aid.

Focuses mainly on conflict-affected countries (2/3 of its work).

Works with FAO (sustainable agriculture policies) and IFAD (rural financing).

Mission: Ensure access to food, improve nutrition, and support SDGs.

Recognition: Awarded Nobel Peace Prize 2020 for combating hunger and preventing its use as a weapon of war.

NITI Aayog’s Strategy for New India @75 (Nutrition)

State Flexibility: States should adapt nutrition schemes to local needs within the National Nutrition Mission (Poshan Abhiyaan).

Independent Audits: Annual independent audits of nutrition programmes.

Integrated Action Plans: District-level plans combining health, nutrition, and sanitation.

Local Accountability: Role of Panchayats, PDS, and health departments in implementation.

Programme Refinement: Focus on first 1000 days of a child’s life, ASHA visits, and home-based counselling.

Targeted Vaccinations: Rotavirus and Pneumococcal vaccines in high-risk districts.

Food Fortification: Mandatory fortification of staple foods, bio-fortification research to fight hidden hunger (micronutrient deficiency).

What is the Human Development Index (HDI)?

Who created it? Developed by Pakistani economist Mahbub ul Haq in 1990, with contributions from Indian economist Amartya Sen.

Who publishes it? It is published annually by the United Nations Development Programme (UNDP) as part of the Human Development Report (HDR).

What it does: It ranks countries into four tiers of human development (Very High, High, Medium, Low) based on a composite score.

The Score: The HDI is a number between 0 (lowest development) and 1 (highest development).

The Three Key Dimensions of HDI

The HDI combines three basic dimensions of human development:

1. A Long and Healthy Life (Health):

Indicator: Life expectancy at birth.

Why: A long life is a basic value and is indicative of good healthcare, nutrition, and public safety.

2. Knowledge (Education):

Indicators (two are used):

Expected years of schooling: The number of years a child starting school today is expected to complete.

Mean years of schooling: The average number of years of education adults (aged 25+) have actually completed.

Why: Education is key to having choices, getting a good job, and participating in society.

3. A Decent Standard of Living (Income):

Indicator: Gross National Income (GNI) per capita (at Purchasing Power Parity - PPP).

Why: Income is not an end in itself, but it is the means to acquire basic needs like food, shelter, and other choices.

India's Performance (HDI Report 2023-24)

Rank: India was ranked 134th out of 193 countries.

Score: 0.644 (placing it in the 'Medium' human development category).

Improvement: India's score has shown steady improvement over the decades (e.g., it was 0.434 in 1990).

Key Stats for India: Life expectancy (67.7 years), Expected schooling (12.6 years), Mean schooling (6.57 years), GNI per capita (6,951).

HDI vs. GDP

GDP per capita measures only a country's economic output per person.

HDI provides a broader picture by including health and education.

A country can have a high GDP per capita but a low HDI if it fails to invest its wealth in health and education for its people.

1. Evolution

1940s: Rationing during World War II and the Bengal famine (1943).

1960s: FCI (1965) and the Agricultural Prices Commission set up; PDS expanded with Green Revolution surpluses.

1992: Revamped PDS for backward and hilly areas.

1997: Targeted PDS—different prices for BPL and APL households.

2000: Antyodaya Anna Yojana for the poorest (35 kg per family per month).

2013: NFSA—up to 75% rural and 50% urban population covered; 5 kg per person per month.

2020: PMGKAY gave additional free grain during COVID-19; from 2023–24 NFSA grain itself became free (extended for five years from 1 January 2024).

2. How the System Works

Centre procures, stores and transports grain to state depots; states identify beneficiaries, issue ration cards and run Fair Price Shops.

3. Problems

Leakages: The Shanta Kumar Committee (2015) estimated leakage of about 46% (based on 2011-12 data); later surveys show it has fallen in many states.

Exclusion and inclusion errors: Deserving households left out; ineligible ones included; outdated beneficiary lists based on 2011 Census population.

Authentication failures with biometric ePoS.

Nutrition: Focus on rice and wheat; low protein and micronutrients.

Storage losses and high economic cost of FCI operations.

4. Reforms

End-to-end computerisation, digitised ration cards seeded with Aadhaar, ePoS at shops.

One Nation One Ration Card (ONORC): National portability, especially for migrants; operational across all states/UTs.

Fortified rice through PDS and other schemes.

DBT in lieu of grain: Piloted in Chandigarh, Puducherry and parts of Dadra & Nagar Haveli (2015).

Diversification: Some states add pulses, oil and millets (e.g. Chhattisgarh, Tamil Nadu, Kerala).

5. Cash vs Kind Debate

Cash: Lower leakage and cost, choice for households. Kind: Protects against inflation, ensures food reaches women and children, supports procurement. Evidence suggests choice and local context matter.