Poverty, Unemployment and Government Schemes

Poverty means that a person cannot afford the minimum food, clothing, shelter, health and education that a decent life needs. Economists separate two ideas. Absolute poverty fixes a minimum standard of living and counts everyone below it, whatever the rest of society earns. Relative poverty compares a person with the average or with the top: you can be above the absolute line and still be poor relative to others. India officially measures absolute poverty.

The poverty line is a cut-off expenditure. A person whose monthly per capita consumption expenditure (MPCE) is below it is counted as poor. Note carefully that India draws the line on consumption expenditure, not on income, because people hide or irregularly earn income but their spending on food and basic goods is easier to survey. The survey that supplies the data is run by the National Sample Survey Office (NSSO, now part of the National Statistics Office under MoSPI); the estimates were made by the Planning Commission until it was replaced by NITI Aayog on 1 January 2015.

Now the story of the committees, which is the favourite area of examiners. Dandekar and Rath (1971) were the first to measure poverty in a serious way, using a calorie norm. The Alagh Task Force (1979) set the calorie norms that stayed official for decades: 2,400 calories per person per day in rural areas and 2,100 in urban areas, because villagers do more physical work. The Lakdawala Expert Group (1993) kept those calorie norms but made state-specific poverty lines, updated with price indices for industrial workers (urban) and agricultural labourers (rural). The Tendulkar Committee (2009) dropped the calorie-only approach and counted spending on health and education as well, using a single national urban basket. The Rangarajan Expert Group (constituted 2012, report 2014) returned to a broader basket of food (calories, protein, fat) and non-food items such as education, clothing, rent and transport.

Why does the Rangarajan line come out higher? Because its basket is wider (more non-food spending is counted) and so the Rangarajan estimate of the poor is higher: 29.5 per cent against 21.9 per cent. The government did not formally adopt the Rangarajan figures, and India has had no fresh official poverty line since the 2011-12 data; the later household consumption surveys (2022-23 and 2023-24) are used for studies and for the new base of statistics.

Internationally, the World Bank uses an international poverty line to compare countries. In June 2025 it raised the line for extreme poverty from 2.15 dollars to 3.00 dollars per person per day (as of 2025), after updating to 2021 prices. Do not confuse this with India's own national lines, which are in rupees per month. The Millennium Development Goals (2000) aimed at halving extreme poverty by 2015, and Sustainable Development Goal 1 (2015) aims at ending poverty in all its forms by 2030.

A poverty line asks one question: is your spending above or below a rupee figure? But think of a family that earns enough to eat, yet its children cannot go to school, it has no toilet, no clean cooking fuel and no electricity. Money alone does not capture this. That is why the world moved to multidimensional poverty, which counts the many deprivations a person faces at the same time.

The global Multidimensional Poverty Index (MPI) is published by the UNDP and the Oxford Poverty and Human Development Initiative (OPHI), first in 2010. It uses three dimensions, health, education and standard of living, and 10 indicators. India's National MPI is published by NITI Aayog. It follows the same three dimensions but uses 12 indicators, because India adds maternal health and bank account. Each dimension carries equal weight, one-third. A person is called MPI-poor if deprived in at least one-third (33.33 per cent) of the weighted indicators.

MPI = H x A. H is the share of people who are poor (incidence); A is the average share of weighted deprivations those poor people face (intensity). A country can have a falling H but a stubborn A, which is why both are reported. The method is called the Alkire-Foster method.

What do the figures say? The first National MPI (November 2021, using NFHS-4 of 2015-16) found about 24.85 per cent of Indians multidimensionally poor. The second edition (July 2023, using NFHS-5 of 2019-21) brought this down to 14.96 per cent, and about 13.5 crore people escaped multidimensional poverty between 2015-16 and 2019-21. A later NITI Aayog discussion paper (January 2024) estimated that 24.82 crore people moved out between 2013-14 and 2022-23, with the headcount ratio falling from about 29.17 per cent to 11.28 per cent. On the state map, Bihar had the highest share of MPI-poor people and Kerala the lowest in the 2023 report.

As of 2025, India stood 130th in the UNDP Human Development Report 2025 with an HDI of 0.685, and 102nd in the Global Hunger Index 2025 (it was 105th in 2024). Both numbers change every year, so always read the year in the question.

A person is unemployed if she is able and willing to work at the going wage, looks for work, and still cannot find it. A student, a homemaker or a retired person who is not looking for a job is not unemployed; such people are outside the labour force. Labour force = employed + unemployed. Three simple ratios run through every exam question: LFPR (labour force as a share of population), WPR (workers as a share of population) and the unemployment rate, which is unemployed people divided by the labour force, not by the whole population.

Economists split unemployment into types, and each type has a different cause and a different cure. Learn the pairs: the type, its meaning, and one example you can picture.

Disguised unemployment is the typical Indian problem of agriculture, where land is small and families are large, so many hands work on the same field. Move the extra hands out and the harvest stays the same. The phrase 'marginal productivity is zero' is the examiner's favourite definition. Cyclical unemployment is explained by Keynes: when aggregate demand is too low, firms cut output and workers lose jobs even though they are willing to work.

Underemployment is different from unemployment: the person works, but for fewer hours than she would like (visible) or in a job that pays and uses far less than her ability (invisible). Stagflation is the unhappy mixture of high inflation and high unemployment together. The Phillips curve (A. W. Phillips, 1958) shows the short-run trade-off between the two: lower unemployment usually comes with higher inflation. Article 41 of the Constitution, a Directive Principle, asks the State to make effective provision for the right to work and for public assistance in cases of unemployment, old age and sickness.

How India measures it. For decades the NSSO ran large employment-unemployment surveys every five years, using different reference periods: Usual Principal Status (UPS), Usual Principal and Subsidiary Status (UPSS), Current Weekly Status (CWS) and Current Daily Status (CDS). Since April 2017 the Periodic Labour Force Survey (PLFS) of the National Statistics Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI), gives annual estimates for rural and urban India and quarterly estimates for urban areas. Since 2025 the NSO also releases monthly bulletins. PLFS reports on persons aged 15 years and above. The Labour Bureau of the Ministry of Labour and Employment, which ran earlier annual surveys, is a different body.

What do the PLFS figures show? The overall unemployment rate (usual status, 15 years and above) was about 6 per cent in 2017-18, a 45-year high at that time, and fell to 3.2 per cent in 2023-24, as the Economic Survey 2024-25 reported. The rural rate was 2.4 per cent in 2022-23, and the urban unemployment rate for 2018-19 was 7.7 per cent; urban areas have always shown a higher unemployment rate than villages. The female labour force participation rate rose from about 23.3 per cent in 2017-18 to 41.7 per cent in 2023-24, helped by a large rise in rural women's self-employment. These are 'as of 2023-24' figures; newer releases will change them.

India chose planning to fight poverty, and the story of poverty-alleviation programmes follows the Five-Year Plans. In the early plans the hope was that growth would 'trickle down'. By the late 1960s it was clear that it did not reach everyone, so from the Fifth Plan (1974-79) the State began direct programmes aimed at the poor. The slogan 'Garibi Hatao' (remove poverty) was given by Indira Gandhi in the 1971 election, and the Fifth Plan made 'removal of poverty and attainment of self-reliance' its twin objectives.

Now the flagship, MGNREGA. The Mahatma Gandhi National Rural Employment Guarantee Act is a law, enacted in 2005 as NREGA, started in 200 districts on 2 February 2006 (from Anantapur in Andhra Pradesh), extended to all rural districts in 2008 and renamed after Mahatma Gandhi on 2 October 2009. It is run by the Ministry of Rural Development. It is rights-based and demand-driven: every rural household whose adult members volunteer to do unskilled manual work is entitled to at least 100 days of wage employment in a financial year.

Latest position: in December 2025 Parliament passed a new law, the Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, popularly the VB-G RAM G Act, to take the place of MGNREGA with a guarantee of 125 days. Questions set before this change still treat MGNREGA as a 100-day law, so read the question's date and wording.

Other lasting schemes to know. DAY-NRLM (launched in June 2011 as the National Rural Livelihoods Mission, Aajeevika) organises rural poor women into Self Help Groups (SHGs) and links them with bank credit. PMEGP (2008) gives credit-linked subsidy to start micro enterprises, with the Khadi and Village Industries Commission as the nodal agency. DDU-GKY (Deen Dayal Upadhyaya Grameen Kaushalya Yojana, September 2014) trains rural youth aged 15 to 35 for jobs. PMGSY (December 2000) connects villages with all-weather roads. The Public Distribution System and the Antyodaya Anna Yojana (December 2000, for the poorest families) feed the poor, and the National Food Security Act 2013 made food a legal entitlement.

Government schemes are asked in four ways: what the scheme does, when it was launched, which ministry runs it, and whom it serves. Do not try to memorise names in isolation. Group schemes by sector, learn the one-line purpose, and then attach the year and the ministry. In this topic we take the money-related sectors: financial inclusion, insurance and pensions, agriculture, and enterprise, skills and jobs.

Financial inclusion means that every adult, rich or poor, has access to a bank account, credit, insurance and pension at an affordable cost. The Pradhan Mantri Jan Dhan Yojana is the base: once a person has a bank account, Direct Benefit Transfer (DBT) can send subsidies and wages straight into it, which reduces leakage. Insurance and pension schemes, the Jan Suraksha trio, are built on top of that account.

Agriculture. Farmers need income support, insurance, water, soil knowledge and a fair price. The central schemes line up exactly with these five needs.

PM-AASHA is about price, PM-KISAN about income support, PMFBY about risk. When a question gives one of these three words, the scheme follows: 'Aay Sanrakshan' means income protection through MSP, 'Samman Nidhi' means a cash honour, 'Fasal Bima' means insurance. Also, PM-KISAN is paid by DBT and not by cheque or cash, which is a favourite question.

Enterprise, skills and jobs. After the Jan Dhan accounts, the next step is credit and skills so that people can earn. MUDRA gives loans to tiny businesses, Stand-Up India reaches women and SC/ST entrepreneurs, Start-up India builds a start-up ecosystem, and the skilling missions train workers.

This topic covers the schemes that touch daily life: the house you live in, the water and fuel you use, the hospital and school you go to, and the village or district you belong to. The best way to learn them is by sector and by the problem each one solves. Ask three things of every scheme: what gap does it fill, who is the beneficiary, and which ministry runs it.

Housing, sanitation, water and cities.

Health and nutrition.

Education, women and child, energy and welfare.

Governance, special areas and connectivity.