Economics · Chapter 06

📉 Poverty & Unemployment

Types of unemployment, MNREGA, poverty line, schemes.

📉 The Twin Challenges

Despite rapid economic growth, India still faces significant poverty and unemployment. These are the biggest challenges for inclusive development.

Poverty Line in India: Defined by expenditure needed for basic needs. Currently based on Tendulkar Committee methodology: ₹816/month urban, ₹672/month rural (2011-12 prices).
As per NITI Aayog (2021): 25 crore people came out of multidimensional poverty in 9 years (2013-14 to 2022-23) — a major achievement.
MPI (Multidimensional Poverty Index) — measures poverty across health, education, and living standard dimensions (not just income).

Types of Unemployment:
• Frictional — between jobs (transitional, temporary)
• Structural — skill mismatch (IT boom displaces manual workers)
• Cyclical — due to economic recession
• Seasonal — during off-season (agricultural workers)
• Disguised — more workers than needed (common in Indian agriculture)
• Educated unemployment — graduates without jobs (India's growing problem)

🏗️ MNREGA — India's biggest anti-poverty program

MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) — passed 2005, implemented 2006.
• Guarantees 100 days of unskilled manual work per household per year
• Minimum wage paid (varies by state, ~₹200-350/day)
• Work must be provided within 15 days of demand — else unemployment allowance
• Creates durable rural assets: roads, ponds, canals
• World's largest public employment scheme
• Budget 2023-24: ₹60,000 crore allocated

MGNREGA workers — India's rural employment guarantee scheme
MGNREGA workers — India's rural employment guarantee schemeWikimedia Commons / CC BY-SA 3.0
Dharavi, Mumbai — urban poverty and informal economy
Dharavi, Mumbai — urban poverty and informal economyWikimedia Commons / CC BY-SA 3.0
📊 Key poverty and unemployment schemes

• PM-KISAN — ₹6,000/year direct cash to farmers
• PM Awas Yojana — housing for all
• Ujjwala Yojana — free LPG connections to BPL women
• PMJDY — Jan Dhan Yojana — zero-balance bank accounts (50 crore+ accounts)
• Skill India — train 40 crore people by 2022
• Startup India — support entrepreneurs
• NSSO (National Sample Survey Office) — measures unemployment in India. Latest: PLFS (Periodic Labour Force Survey).

🎬

Types of Unemployment — Visualized

Animation
TYPES OF UNEMPLOYMENT — CLICK EACH 🚶 Frictional Between jobs Temporary / natural 🔄 Structural Skills mismatch Economy changes 📉 Cyclical Recession-caused Demand falls 🌾 Seasonal Off-season joblessness Farm workers, tourism 👥 Disguised More workers than needed Indian farms mainly 🎓 Educated Unemployment Degree but no job India growing issue ⬇️ Under-employment Working below capacity Engineer driving auto CLICK A TYPE India has multiple types of unemployment — the most serious is disguised unemployment in agriculture.

India's unemployment rate (PLFS 2022-23) is ~3.2% — but underemployment and disguised unemployment are much higher.

💹

Anti-Poverty Schemes Explorer

Interactive
Full nameMahatma Gandhi NREGA
Launched2005 (Act), 2006 (implemented)
Guarantee100 days unskilled work per household per year
Budget (2023-24)Rs 60,000 crore
CoverageAll rural households — 15 crore+ active job cards
Practice (SSC): What is the poverty line in India? How is it measured?
The Poverty Line in India is the minimum income/expenditure level needed to fulfill basic needs (food, clothing, shelter).

Current methodology (Tendulkar Committee, 2009):
• Urban: Rs 816 per person per month (2011-12 prices)
• Rural: Rs 672 per person per month (2011-12 prices)
• This is equivalent to about Rs 27 per day (urban) — very low

Rangarajan Committee (2014) — higher estimate:
• Urban: Rs 1,407/month; Rural: Rs 972/month
• Based on calorie, protein intake plus non-food essentials

Multidimensional Poverty Index (MPI):
• NITI Aayog uses MPI — measures deprivation in health, education, living standards
• 2023 data: 11.28% of Indians are multidimensionally poor (down from 29.17% in 2013-14)
• India lifted 24.8 crore people out of poverty in 9 years — remarkable progress

World Bank poverty line: $2.15 per person per day (for extreme poverty).
Practice (Banking exam): What is financial inclusion? What role does PMJDY play?
Financial inclusion means ensuring all individuals and businesses have access to affordable financial services — bank accounts, insurance, credit, remittances.

India had massive financial exclusion — ~40% of adults had no bank account (2014).

PM Jan Dhan Yojana (PMJDY) — August 28, 2014:
• Zero-balance savings account (no minimum balance)
• RuPay debit card
• Rs 1 lakh accident insurance cover
• Rs 30,000 life insurance
• Overdraft facility up to Rs 10,000

Results:
• 50 crore+ accounts opened (world record)
• Rs 2 lakh crore+ deposits
• Enabled Direct Benefit Transfer (DBT) — government subsidies directly to bank accounts, eliminating middlemen
• Saved Rs 2.73 lakh crore in DBT leakages (2014-2022)
• Enabled UPI adoption — people needed bank accounts first

PMJDY is considered one of India's most successful financial inclusion programmes globally.
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