Poverty And inequality .

Inequality
Distribution of Income Distribution of Wealth Distribution of any other Attributes

Poverty
Lack of Income How much? General condition of people who are badly off and encompasses many aspects of want and disadvantages (Chambers) What are these wants and disadvantages? A severe failure of basic capabilities (Sen)

Absolute or Relative?
Something Definitely Absolute
Adequate level of Food, Clothing and Shelter Minimum Level of Nutrition Whether Acceptable Level can be given Absolute Meaning independent of the Contours of the Society? Ownership of Television? Minimal Standards of Leisure? Access to Scientific Education? Private Means of Transportation? etc. etc.
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Two Reasons for Studying Distribution - Income, Wealth , Poverty

Philosophical & Ethical Functional

Philosophical & Ethical

Why Individuals should be treated differently in terms of their access to life time economic resource? Answer : Personal Decisions Good or bad They are poor because They had it coming to them In some cases it is true But in most cases it is not so.

Philosophical & Ethical

Unequal Treatment starts from Day1 Parental wealth, local environment, access to utilities, etc. To hold descendents responsible for the sins of their ancestors is unfair. At the same time it is unfair to deprive the parents of the right to bequeath their children No way to resolve the dilemma at philosophical level
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Functional aspects of Inequality

Functional and Personal Income Distribution Distribution and Production Pattern Relationship between past and future Distribution Distribution on Savings and Growth Motivations for savings Inequality over time Inverted U Inequality, Tolerance level and Impact on futureTunnel effect In an imperfect capital market if the distribution of productive ideas is loosely correlated with the distribution wealth or asset, ideas may not be implemented. Distribution and Incentive
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Functional aspects of Poverty

Low income leads to low nutrition ( Wage affects food consumption) Low nutrition creates low income ( Food consumption affects ability to work i.e. productivity) Another Vicious circle of poverty

Lack of access to credit because of lack of collateral Collateral - Insurance against the genuine failure of the project - Is a means to prevent intentional default on the part of the borrower - The possibility of lost collateral reduces the incentive to walk away without repaying

Poverty : Definitional Issues

Concern about Basic needs Food, Housing and Clothing A family may be deprived in one aspect, not in others A family may be deprived in several dimensions: Multiple deprivation

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Conflict In deciding parameters

Income or expenditure ? Temporary or Chronic ? Household or Individual ?

Nutrition Based Poverty Line

Nutrition Based Poverty Lines are not Uncommon Calorie Energy Input Resting ( Basic) Metabolism Energy required for Work Sedentary Work Moderate Activity Heavy Work Other Nutrients: Protein, Vitamin etc. Relationship Between Calorie and Other Nutrients Nutrition Requirement Nutrition Cost at Low Level Acceptable Expenditure
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Measurements
Inequality , Poverty and Human Development

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Inequality Indicators
Range Coefficient of Variation Kuznet ratio Lorenz Curve/ Lorenz Ratio/ Gini Coefficient 1) G1=Lorenz Ratio Pi the Cumulative Population Share Qi the cumulative Income Share Area Below the Lorenz Curve = {(Pi+1)-Pi))*(Qi+1)+(Q(i)} [ i= 0 to L-1] L is total number of Income Classes ( Class Intervals) G1= 1/(1/2)[(1/2)-Area Below the Lorenz Curve ] = 1{(Pi+1)-Pi))*(Qi+1)+(Q(i)} [ i= 0 to L-1]
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Poverty Indicators
1)Poverty Ratio = ( Number of People Below Poverty Line=HC)/Total No. of People(=n) = Head Count Ratio =HCR = PR 2) Consumption Gap = Difference Between the per capita consumption of the Poor and the Poverty Line = ( Z-yi) [i= 1,2,3----- to q ] [ yi< Z] = CG Where, Z is the poverty line and yi is the income of ith poor people = 1/q fi( Z-yi) [i=1,2,3----l] where l is number of classes below poverty line ( For Group data)

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 3) Income Gap Ratio = IGR= 1- ( Average Income of the Poor/ Poverty Line) = (p-yi )/p*HC 4) Poverty Gap Ratio = PGR=PR*IGR = n/N [1-(y pBar/y*) Y pBar = average income of poor Y*= Poverty line If n increases PGR increases If IGR increases PGR increases Sens Index ( For raw data) = SI Sens Index = PR*[ IGR+ (1-IGR)*LRP] Where, LRP is Lorenz Ratio of Poor Persons
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Alternative Development Indicator: PQLI

Physical Quality of Life Index 1-100 Scale Three Components Life Expectancy (X1) at age ONE 100 Best Performance : Sweden ( 77 years in1973) 1 Worst Performance: Guinea Beasue ( 28 years in 1950) Infant Mortality (X2) 100 Best Performance: Sweden ( 9 per 1000 in 1973) 1 Worst Performance: Gabion ( 229 per 1000 in 1950) Literacy Rate (X3) Percentage of Literacy 100---- 1 PQLI= (X1+X2+X3)/3 Major Criticism Fail to incorporate many other Social and Psychological Characteristics like Security, Justice, Human Rights and so on. Income is completely ignored
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Human Development Index

Longevity as measured by Life Expectancy at Birth Knowledge as measured by a weighted average of Adult Literacy ( w=2/3) Mean years of schooling (w=1/3) Standard of Living measured by real per capita income adjusted for the differing purchasing power parity (PPP) of each countrys currency to reflect cost of living

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Life Expectancy Index

UNDPs Lowest goal post with regard to Life Expectancy at Birth is 25 Years Maximum reasonable life expectancy for a country to try to achieve over the coming generation is 85 Years PLE=Present Life Expectancy ALE= Aspired Life Expectancy=85 MLE= Minimum Life Expectancy=25 Life Expectancy Index ={PLE-MLE}/{ALE-MLE}
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Income Index
Adjusted Income= Natural Log of Current Income(CI) Lowest Per Capita Income in last generation That Could Have been $100 Log(CI) log(100) = Amount by which the Country has exceeded this lowest goalpost Consider this in relation to the maximum that a country could reasonably aspire to over the coming generation. UNDP takes this at $40000PPP Income Index={log(CI)-log(100)}/{log(40000)-log(100)}

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HDI
It reveals that a Country can do much better than might be expected at a low level of income Substantial Income gains accomplish relatively little in Human Development. HDI= 1/3{Income Index}+1/3{LEI}+1/3{EI}

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HDI-GDP Comparison: Medium HDI

Country HDI HDI Rank GDP (PPP $) per capita 9902 8195 8090 13825 4101 5896 4390 2745 1935 3139 1027 GDP Rank GDP RankHDI Rank -6 5 -9 -21 32 9 13 12 32 -9 33

Russia Brazil Thailand Saudi Arabia Armenia China Sri Lanka Vietnam Kyrgyzstan India Mynamar

0.797 0.792 0.784 0.777 0.768 0.768 0.755 0.709 0.705 0.611 0.581

65 69 74 76 80 81 93 109 110 126 130

59 74 65 45 112 90 106 121 142 117 163

Pakistan

0.539

134

2225

128

-6
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Poverty alleviation programmes .

NATIONA RURAL EMPLOYMENT GUARANTEE PROGRAMME : The NREGA is an INDIAN job guarantee scheme , enacted
by legislation on august 25, 2005 The scheme provides a legal guarantee for 100 days of employment in every financial year to adult members of any rural household willing to do public work- related unskilled manual work at the statutory minimum wage of RS.100/day . The central government outlay for scheme is RS 39,100cr ($8billion) in FY 2009-10.

Work and activities..

The NREGA achieves twin objectives of rural development and employment. The NREGA stipulates that works must be targeted towards a set of specific

rural development activities such as: water

conservation and harvesting, afforestation, rural connectivity, flood control and protection such as construction and repair of embankments, etc.

Conclusion..
Job guarantee National Advisory Council RTI India Right To Information NREGS (India) NREGS (Kerala)

Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

Context for JNNURM

JNNURM, launched in Dec 2005, is the GOIs

response to the urban challenge

Urban System Second Largest System Globally Urban Population: 315 million Urban Decadal Growth: 25-30% GDP contribution 50% + Urban Challenge

 Inadequate urban infrastructure,

water, sanitation, 60+ million

slum population, weak institutional

and financial frameworks constraining adequate and

sustainable service delivery, and

more

 JNNURM Structure Two major components

1. Urban Infrastructure and Governance

(UIGMOUD)

2. Basic services for the Urban Poor (BSPMHPA)

Special Features..
First comprehensive and planned approach Cities are required to prepare City Development Plans (Vision Documents) as

participatory frameworks for

Infrastructure planning and prioritization, and Framing urban reform agendas

Opportunities for Further Partnering with JNNURM..

Funding for visible, big-ticket projects (e.g. MRTS) Technical Assistance to individual states for capacity building,project monitoring systems Technical Assistance for specific weak states and regions (e.g. NorthEast) Facilitating PPP and non-sovereign financing as a way of leveraging JNNURM funds Consider earmarking loan funds to meet the gap of JNNURM financing in selected states

 Financing the establishment and capacity development of urban institutions/research centres for sustainable capacity building.

THANK YOU
BY: SAIMA ARSHAD(19) TINGLE THOMAS(47) NEKETA ADHIKARI(48) LINCY KURIAN(50) DEEPSHIKHA YADAV(51)