1

RESEARCH PROJECT OF ECONOMICS ON THE TOPIC

CAUSES OF POVERTY IN BIHAR

PRESENTED BY ---AASHANA MADHUP

B.A.LLB,

SECOND YEAR

ROLL NO.-1102
SUBJECT TEACHERMrs SHIVANI MOHAN

POVERTY IN BIHAR : A CRITICAL ANALYSIS

RESEARCH METHODOLOGY
The researcher will use Doctrinal Method. The researcher will refer various books, articles
various law journals regarding the causes of poverty and its dimension in bihar.

AIMS AND OBJECTIVES

The aims and objectives of researcher is to study about the causes and effect of poverty in bihar.

RESEARCH QUESTION
1. What are the dimension of poverty in india?
2. What is the problem in order to remove or lessen poverty in india?
3. What are the steps should government take?

HYPOTHESIS
The inadequate human capital of the labour force, which results in lower productivity and
inability to compete for employment in emerging sectors that pay adequate wages.
The persistence of racial and gender discrimination in employment, which prevents the
population from achieving its full potential in the labour market.

CHAPTERISATION
1. INTRODUTION
2. CAUSES OF POVERTY IN BIHAR
3. DIMENSION OF POVERTY IN BIHAR
4. DEVELOPMENT
PATHS
FOR

POVERTY

REDUCTION
5. SCHEMES AND PROGRAMS
6. PROBLEM BEHIND FAILURE OF SCHEME
7. CONCLUSION AND SUGGESTION
BIBLIOGRAPHY

INTRODUCTION

Since the dawn of human history, the problem of poverty has been an inherent and perpetual
characteristic of any type of class or society based on private ownership of the means of
production. Poverty is the chief target of socialism. 1 It can be defined as a social phenomenon in
which a section of society is unable to get even its basic necessities of life. When a substantial
segment of a society is deprived of the minimum level of living (to use the phrase of classical
economists, a bare subsistence level) that society is said to be plagued by mass poverty.
Poverty is sheer-want want of food for a growing family, want of clothes, and want of a shelter
and want of medical help. Poverty is still prevalent among millions of people in India. People
living in abject poverty constitute 40 to 50 per cent of the total population. Various estimates
have been made of the number of poor people. The existence of mass poverty on such a large
scale is incompatible with the vision of an advanced, prosperous democratic, egalitarian and just
society implied in the concept of socialistic pattern of development. Despite the implementation
of several plans and programs, poverty seems to have expanded2. The growth strategy adopted by
the planners left more than two-fifths of the population below the poverty line. Glaring
inequalities of wealth and income, both in urban and rural areas, industrial and agricultural
sectors, resulting in a vast difference in the standards of living of the people were quite
noticeable. The countries of the Third World exhibit invariably the existence of mass poverty,
although pockets of poverty exist even in the developed countries of Europe and America. 3
Attempts have been made in all societies to define poverty, but all of them are conditioned by the
vision of minimum or good life obtaining in society. The concept of poverty is relative and
subjective. No universal index of poverty has yet been evolved nor does this seem possible. The
poverty index for the USA, for instance, would be quite different from that for India, although
the poor in both countries would certainly be poor. It does not seem as if even a more widely
applicable index, such as standards of minimal good, clothing and shelter requirements, would
1Misra, P.P. and K.P. Sharma. (1980). Problems and Prospects of Rural Development inIndia.
New Delhi: Heritage Publications

"India - Integrated Child Development Services (ICDS)" . Retrieved 2015-09-22.

3 Government of India. (1994). Report of the Technical Committee on Drought

Prone Areas Programme and Desert Development Programme, Ministry of Rural
Development, April.

help us, for the luxuries of one societys poor may well be considered necessities by the poor of a
more affluent society4. Each societys poor would therefore have to be defined in relation to its
own rich. There can be no absolutes.

4 N.I.R.D. (1987). Rural Development in India, Some facets. Hyderabad: National Instituteof
Rural Develoipment

In India, the definition of the poverty line emphasizes a minimum level of living rather than a
reasonable level of living. This attitude is borne out of realization that it would not be possible to
provide millions of people even the minimum basic needs for some decades, therefore, to talk
about a reasonable level of living or good life may appear to be wishful thinking at the present
5https://www.google.co.in/search?
q=poverty+in+bihar&espv=2&biw=1366&bih=623&source=lnms&tbm=isch&sa=X
&ved=0CAcQ_AUoAmoVChMI__eNj5a7yAIVSj0-Ch0mLAaS#imgrc=EJ0cAg6YTv5N-M
%3A

stage6. Thus political considerations enter the definitions of poverty because programs of
alleviating poverty may become prohibitive as the vision of a good life widens. The deprivation
of a significant section of society of minimum basic needs in the face of a luxurious life for the
elite classes makes poverty more glaring. More than 65 years have passed since we attained
political independence; still most of the people lead a sub-human life, while a microscopic
minority lives in excessive luxury. The removal of nation wide poverty has consistently been one
of the main objectives of Indian policy. The Indian modern history contains several examples of
discussion on this topic as far back as 1901. India embarked on a series of Five Year Plans, each
containing some kind of poverty eradication or social justice component. The First Five Year
Plan was launched in 1951, since then, there have been ten additional plans, the most recent
being the Eleventh Five Year Plan launched in 2007. The consideration of economic policies visa-vis their impact on the poor highlights a continued emphasis by Indian policy makers on
poverty elimination. However, there have been serious shortcomings of government efforts in
alleviating poverty during the past few decades. Even after sixty five years of independence, one
- fourth of Indias Population still lives in poverty. Bihar is amongst the poorest states in India,
with poverty incidence of 42.6 per cent. Per capita net domestic product has been estimated to be
$ 446 for Bihar which is about onethird of the corresponding national average ($ 1220) and less
than one-fourth of Haryana ($ 2052), one of the richest states in India (Government of Bihar,
2011). The recent studies based on primary data dealing with economic and non- economic
aspects of poverty are not readily available which are needed to have deeper insights of different
dimensions of poverty in Bihar, India. The present study is designed to examine various socioeconomic dimensions of poor households in Bihar. the sample consisted of 160 households, 40
each from each sample villages. Data on various socio-economic aspects are being collected
through panel interview with the help of well structured schedules by Resident Investigators. In
the present study, data collected for the period 2010-2011 have been used for detailed analysis.
Data relating to social class, education level, asset, livestock, migration, employment pattern,
housing, and drinking water of poor households are considered for meaningful conclusions. This
study is based on the information collected from 65 Below Poverty Line (BPL) households of
four villages of Bihar. Bihar agriculture was stagnant in eighties and early nineties and observed
6 Rao, C.H. Hanumantha and Hans Linneman (eds), (1996). Economic Reforms andPoverty
Alleviation in India, New Delhi: Sage Publications.

10

poor growth up to tenth five year plan 7. In eleventh five year plan, there has been growth in
agriculture sector in Bihar. Bihar is the second poorest state in India. During last 20 years
poverty has declined by more than 14 percent but number of poor persons increased during the
period. On the basis of analysis of household level data of VDS villages, it may be inferred that
the education, land and asset poverty have been prevalent in Bihar villages. Landlessness and
low per capita land are also causing poverty in Bihar. The majority of poor persons are getting
employment in non-farm sector and migration is main strategy for maintaining livelihood of poor
households in Bihar, but majority of persons migrated out-side state and were engaged mainly in
non-farm sector. Their access to electricity, improved living condition and sanitation has been
very low which may be the cause of their poor health. Despite various programmes of improving
access to financial institutions, the majority of poor households of Bihar, particularly of less
developed area are still dependents on money lenders for credit facilities 8. Various poverty
alleviation programmes have not been effective in reduction of poverty up to desired level in
Bihar. Hence, there is an urgent need to have holistic approach for improving various social and
economic dimensions of state for faster reduction in poverty in Bihar9.
No programme for removal of poverty can succeed in an economy plagued by inflation and
plagued by inflation and spiraling prices. Inflation, by its very nature, accentuates inequalities,
eats into the income of the poor classes and thus leads to deterioration in their economic
condition. A poverty eradication programme, therefore, must mop up surpluses with the elite
classes (landlords, money-lenders and capitalists). Since the bulk of the surpluses exist in the
form of black money, it is necessary to adopt radical measures to unearth black money so that
resources are not diverted to luxurious consumption10. The problem is one of providing
employment and raising the productivity of low-level employment. In this connection, the basic
7Ibid 4
8 Joshi, P. D. (Department of Statistics, Ministry of Planning and Programme
Implementation, India). "Conceptualisation, Measurement and Dimensional Aspects
of Poverty in India, by P. D. Joshi, Department of Statistics, Ministry of Planning and
Programme Implementation, India"
9 www.eldis.org/go/topics/resource-guides/poverty/measuring-poverty/poverty-andsocialimpact-analysis, access date: 5th October 2015

11

issue is to make employment the focus of planning; the policies of production have to be woven
round this central objective. Indiscriminate mechanization will result in much smaller increases
of employment in comparison with the amount of investment undertaken. The factors proposed
by the countrys political leaders and by many academies to lead the country out of stark poverty
are: higher investment, improved health and spread of education. But these are in turn influenced
by poverty to a great extent and cannot be expected to eradicate it.11
The economy of Bihar is largely service-oriented, but it also has a significant agricultural base 12.
The state also has a small industrial sector. As of 2012, agriculture accounts for 22%, industry
5% and service 73% of the economy of the state Manufacturing has performed very poorly in the
state between 2002 and 2007, with an average growth rate of 0.38% compared to India's 7.8%.
Bihar has the lowest GDP per capita in India but there are pockets of higher per capita income
like the southern half of the state and its capital city, Patna, had per capita income greater than
that of Bangalore or Hyderabad in 2008. The GSDP stands at 368,337 Crores Rupees ($59.4
billion nominal GDP) as per 2013-2014. In actual terms, as of 2012-2013, Bihar state GDP is
ranked 13 out of 28 states 13. Corruption is an important hurdle for the government to overcome
according to Transparency International India, which the government has also acknowledged.
Since November 2005, a new government led by Nitish Kumar has implemented a number of
economic and social reforms. A consequence has been a positive improvement in the economy of
the state and also of Patna. For example, in June 2009, the World Bank reported that Patna was
the second best city in India to start a business, after Delhi. Between 1999 and 2008, state GDP
grew by 5.1% a year, which was below the Indian average of 7.3%. However, in January 2010,
the Indian government's Central Statistics Organisation reported that in the five-year period
between 20042005 and 200809, Bihar's GDP grew by 11.03%, which made Bihar the second
fastest growing economy in India during that 5-year period, just behind Gujarat's growth of
10 Ibid 1
11 www.ifpri.org/PUBS/fpr/pr20.asp, access date: 8 th October 2015
12 Thorner (1962), Deindustrialization in India, 18811931, In: D. Thorner, and A.
Thorner (Editors), Land and Labour in India, ISBN 978-8180280214
13 Ibid 5

12

11.05%. Another survey conducted by Central Statistical Organisation (CSO) and National
Sample Survey Organisation, under MOSPI, said that Bihar saw 14.80 percent growth in factory
output in 2007-08, which was slightly less than the Indian rate of 15.24 percent.14

CAUSE AND EFFECT OF POVERTY

The growing population inflates the problem of poor techniques used in Agriculture. Further,
there is unequal distribution of wealth. As a result, the poor people are often exploited by the
wealthy community. The most important causes of Poverty in India are poor agriculture, growing
Population, gap between rich and poor, corruption and black money15.
Poor agriculture: India is mainly an agricultural country. About 80% people of our country
depend on agriculture. But our agriculture is in a bad way. Farmers are poor and uneducated.
They do not know the modern methods of farming. They have no good facilities of irrigation.
They do not get seeds and fertilizers in time. Thus, the yield is poor. Agriculture is not profitable
today. We face the shortage of food. We have to import it. So, poor agriculture is one of the
causes of Indias poverty.
Growing population: Our population is growing rapidly. But our resources are limited. The
growth in population creates problems for us. Today, our population is 1.20 billion; tomorrow we
will be 1.21 billion and so on. We need more food, more houses, and more hospitals for them. So
we have no money to spend on development projects. The ever-growing rate of population must
be checked. If not, we may not be able to remove Indias poverty16.
14 Ruel and Alderman, Nutrition-sensitive interventions and programmes: how can
they help to accelerate progress in improving maternal and child nutrition?, The
Lancet, Volume 382, Issue 9891, Pages 536 - 551
15
Ray,
Amal
and
Vanitha
Venkata
Subbaiah
DevelopmentAdministration. Calcutta: World Press.

(1984).

Studies

in

Rural

16 Srivastava, A.K. (1998). Integrated Rural Development in India. New Delhi: Deep andDeep
Publications

13

Gap between the rich and the poor: The widening gap between the rich and the poor is also
responsible for Indias poverty. The rich are growing richer. The poor are growing poorer. This
economic gap between the two must be reduced. Our social system should be changed. The poor
people must get all help to reap the fruits of Independence17.

Corruption and black-money: There are corruptions in every walk of life. There is inefficiency
in offices. People have become selfish. They neglect the national interests. Black money causes
the problem of rising prices. Some people have all the privileges. But many others are suffering.
Black money affects our economy. It causes poverty.
OTHER FACTORS THAT CAUSES POVERTY
Causes of Poverty18 :
History. Many of the poorest nations in the world were former colonies, slave-exporting areas
and territories from which resources had been systematically extracted for the benefit of
colonizing countries. Although there are notable exceptions (Australia, Canada and the U.S.
being perhaps the most prominent), for most of these former colonies, colonialism and its
legacies have helped create the conditions that prevent many people from accessing land, capital,
education and other resources that allow people to support themselves adequately. In these
nations, poverty is one legacy of a troubled history involving conquest.
War & political instability. Both of these factors have often been tied to histories of
colonialism, but whatever the causes of war and political upheaval, it is clear that safety, stability
and security are essential for subsistence and, beyond that, economic prosperity and growth.
Without these basics, natural resources cannot be harnessed individually or collectively, and no
amount of education, talent or technological know-how will allow people to work and reap the
benefits of the fruits of their labor. Likewise, laws are needed to protect rights, property and
17 Ibid 9
18 Amarendra, (1998). Poverty, Rural Development and Public Policy, New Delhi, Deep and Deep
Publications

14

investments, and without legal protections, farmers, would-be entrepreneurs and business owners
cannot safely invest in a countrys economy. It is a telling sign that the poorest countries in the
world have all experienced civil war and serious political upheaval at some point in the 20th
century, and many of them have weak governments that cannot or do not protect people against
violence19.
National Debt. Many poor countries carry significant debt loads due to loans from wealthier
nations and international financial institutions. Poorer nations pay an average of $2.30 in debt
service for every $1 received in grant aid.20 In addition, structural adjustment policies by
organizations like the World Bank and the International Monetary Fund often require poorer
nations to open their markets to outside business and investors, thereby increasing competition
with local businesses and, many argue, undermining the potential development of local
economies. In recent years, calls for debt reduction and forgiveness have been increasing, as
activists see this too as a key means of reducing poverty. The United Nations has also made it a
priority to examine how economic structural adjustment policies can be designed to place less
pressure on vulnerable populations.
Discrimination and social inequality. Poverty and inequality are two different things, but
inequality can feed widespread poverty by barring groups with lower social status from
accessing the tools and resources to support themselves. According to the United Nations Social
Policy and Development Division, inequalities in income distribution and access to productive
resources, basic social services, opportunities, markets, and information have been on the rise
worldwide, often causing and exacerbating poverty. The U.N. and many aid groups also point
out that gender discrimination has been a significant factor in holding many women and children
around the world in poverty21.

19 Thakur (1993), Restoring India's economic health, Third World Quarterly, 14(1), 137-157
20 Ibid 7
21

Sarkar (1983), The colonial economy, In: S. Sarkar (Editor) Modern India: 18851947, Macmillan, ISBN 9780333904251

15

Vulnerability to natural disasters. In regions of the world that are already less wealthy,
recurrent or occasional catastrophic natural disasters can pose a significant obstacle to
eradicating poverty. The effects of flooding in Bangladesh, the drought in the Horn of Africa and
the 2005 earthquake in Haiti are all examples of the ways that vulnerability to natural disasters
can prove to be devastating to large portions of affected countries. In each of these cases, already
impoverished people became refugees within their own countries, losing whatever little they had,
being forced out of their living spaces and becoming almost completely dependent on others for
survival. According to the World Bank, two years after cyclone Nargis hit Myanmar in 2008, the
debt loads of local fishermen had doubled. The Solomon Islands experienced an earthquake and
tsunami in 2007 and the losses from that disaster equaled 95 percent of the national budget 22.
Without foreign aid assistance, governments in these countries would have been unable to meet
the needs of their people.
These are only five causes of poverty. They are both external and internal causes; both manmade and natural. Just as there is no single cause of poverty, there is no single solution.
Nevertheless, understanding the ways that complex forces like these interact to create and sustain
the conditions of widespread global poverty is an important first step in formulating
comprehensive and effective responses to combat poverty around the world.
Effects of poverty23

Illiteracy: Poor people constitutes greater share of illiterate population. Education becomes
extremely difficult when people are deprived of basic necessities of life.
Child Labor: In India, a large number of young boys and girls are engaged in child labour. Also
read, article on Poverty and Child labour in India.
22 Bandhyapadhyay, J. (1988). The Poverty of Nations. Madras: Allied Publishers
Private Limited.
23 Borain. (1992). M.P. Management of Rural Development Projects, Journal of
Rural Development, National Institute of Rural Development, Hyderabad, Vo.11,
No.3,May, P.299-308

16

Nutrition and diet: Poverty is the leading cause of insufficient diet and inadequate nutrition.
The resources of poor people are very limited, and its effect can be seen in their diet.
Poor living condition and Housing problems: The dont get proper living conditions. They
have to fight the hardship of poverty to secure food, clothes and shelter. A large number of poor
families live in houses with one room only.
Unemployment: Poor people move from villages to towns and form one town to another in
search of employment/work. Since, they are mostly illiterate and un-skilled, there are very few
employment opportunities open for them. Due to unemployment, many poor people are forced to
live an unfulfilled life.
Hygiene and sanitation: These people have little knowledge about hygiene and proper
sanitation system. They are not aware of the harmful consequences of not maintaining proper
hygiene. The government is taking initiatives to make available clean and safe water, and proper
sanitation system to them.
Feminization of poverty: Women are the worst victims of poverty. Poverty effects greater
number of women then men. The total of poor women outnumbers the total population of poor
men. The causes include low income, gender-inequality, etc. They are deprived of proper-diet,
medicines and health treatment.
Social tensions: Poverty is often characterized with income disparity and unequal distribution of
national wealth between the rich and the poor. Concentration of wealth in the hands of few rich
people lead to social disturbances and revolts. Fair or even distribution of wealth leads an overall
improvement in general standard of living of people24.
In rural Bihar, nearly two out of three people from the scheduled castes and scheduled tribes are
poor. According to Planning Commission data, poverty among casual labourers in urban areas of
Bihar is 86%25. Poverty has declined only marginally in Bihar, while according to data released
24 Chawdary, P. (1998). The Indian Economy: Poverty and Development. New Delhi, Vikas Publishers
25 Girripaa, Somu. (2005). Income, Saving and Investment pattern in Rural India. New Delhi: Ashish Publications
House

17

Monday by Indias Planning Commission, the number of people living in absolute poverty in
India decreased by 12.5% between 2004-2005 and 2009-2010.26
Bihar government under Nitish Kumar has earned or managed a good media reporting about the
significant developments in the state. Nitish Kumar also claims reduction in migration of Bihari
labour to other states. I couldnt appreciate Nitish asserting in a recent Delhis rally to celebrate
the centenary of Bihar: Delhi will come to halt if Biharis stop work. Every Bihari who lives
and works outside Bihar has an additional responsibility of not doing anything that undermines
the image of the state in any way. Nitish Kumar must help in making Biharis a little more
responsible. Why should the locals in metros look at Biharis the way the Britishers used to see
the immigrant Indians in UK27. It is unfortunate that Bihar and its government do neither educate
sufficiently nor train its youngsters to get an honourable job. They go out as raw human resource
to work as menial worker or for higher education to become employable. I dont know in such a
condition the government or its chief should take credit for those working outside.
The government has hardly taken any initiative to create productive jobs in the villages, when in
reality a large number of jobs have vanished because of the use of machines in farming such as
tractors and even harvesters. And interestingly, the operators of these machines come from
outside the village that owns them. Why are the young men and women not interested in taking
up the milk business in the villages of Bihar even with all types of assistance? The government
would have started vocational training for the boys and girls in every school or every panchayat
to make the rural human resources skilled and encourage grassroots entrepreneurs to become
vendors organizing the skilled women in working groups for the traders and marketers of the
state as well as for those of other states. Why wheat should is ground or paddy is dehusked only
in big mills in towns? Why should some village men not get trained in repairing of the
agricultural machinery or other appliances in used in plenty these days in the villages? Why
should not the pickles or fluffed rice be produced and sourced from rural regions? The state
ministry of rural development must work for creating work for all those able bodied men and

26 Ibid 13
27 Ibid 9

18

women in the villages instead of thinking about engaging some in only MNREGA projects. 28 The
state has neglected the higher education, both in quality and quality, which makes the educated
youth employable inside the state and outside. When all other states such as Andhra Pradesh and
very recently UP have created huge capacity with large number of professional colleges of
engineering, medicines, and law, Bihar has not made any attempt in that direction. And that was
the reason of the growth of IT industry in those states and today that is the reason that Bihar cant
employ the professionally educated youths even after their education. Bihar will remain poor and
the poverty will not reduce, if the government doesnt change it way of looking at the problem in
very innovative way. The migrated labour will keep on remitting money for the sustenance of
their family members, and the other members in family will keep on living at the mercy of
middle men and getting some government doles.

DIMENSION OF POVERTY
The removal of nation wide poverty has consistently been one of the main objectives of Indian
policy. The Indian modern history contains several examples of discussion on this topic as far
back as 190129. India embarked on a series of Five Year Plans, each containing some kind of
poverty eradication or social justice component. The First Five Year Plan was launched in 1951,
28

The Multidimensions of Urban Poverty in India, Centre de Sciences Humaines, New Delhi

29 The Multidimensions of Urban Poverty in India, Centre de Sciences Humaines,

New Delhi

19

since then, there have been ten additional plans, the most recent being the Eleventh Five Year
Plan launched in 200730. The consideration of economic policies vis-a-vis their impact on the
poor highlights a continued emphasis by Indian policy makers on poverty elimination. However,
there have been serious shortcomings of government efforts in alleviating poverty during the past
few decades. Even after sixty five years of independence, one - fourth of Indias Population still
lives in poverty. In India, poverty is conventionally defined in terms of income poverty, i.e.,
number of people living below the poverty line and it is measured in different ways,
predominantly in terms of inadequacy of income to procure a defined minimum level of calories.
It has to be noted that the so defined poor may be incurring expenditure, not just on food intake
to get minimum number of calories, but also on several other non food items. Hence, the
methodology of estimating poverty and identification of BPL (Below Poverty Line) households
has been a matter of debate in India. The Multi-dimensional Poverty Index (MPI) is also being
used to measure the incidence of poverty. MPI indicates the share of population that is multidimensionally poor adjusted by the intensity of deprivation in terms of living standards, health
and education. According to this parameter, India with a poverty index of 0.296 and poverty ratio
of 46.6 per cent is among 50 poor nations of the world (Government of India, 2011). Bihar is
amongst the poorest states in India, with poverty incidence of 42.6 per cent. 31 Per capita net
domestic product has been estimated to be $ 446 for Bihar which is about one third of the
corresponding national average ($ 1220) and less than onefourth of Haryana ($ 2052), one of the
richest states in India (Government of Bihar, 2011). 32 There has not been any significant
influence of the agricultural development and poverty alleviation programmes on reducing
poverty incidence. It reflects that strategies adopted under various rural development
programmes seem to be inappropriate in the Bihar context. The most of the programmes aimed at
improving the economic status of poor households, only a few attempted at improving their
human capital (i.e., education, health, housing, social participation, etc.). This might be the
30 Dasgupta, R., Ahuja, S., & Yumnam, V. (2014), Can nutrition rehabilitation
centers address severe malnutrition in India?, Indian pediatrics, 51(2), 95-99
31 Ibid 23
32 Haq, Mahabubul. (1979). The Poverty Curtain: Choices for the Third World. New
Delhi:Oxford University Press

20

reason for ineffectiveness of these programmes on alleviating poverty during the last three
decades. Several studies have been conducted on various aspects of poverty at the national level
but there is a dearth of studies on social aspects of poverty, particularly in the context of Bihar.
The measures of poverty involves a) the specification of the threshold income level below which
a person is considered poor (the poverty line) and b) construction of an index to measure the
intensity and severity of poverty suffered by those whose income is below the poverty line.
Sen(1976) has proposed several criteria that a poverty measure must satisfy to be able to assess
the changes in social welfare whereas Foster et al (1984) proposed a class of poverty measures
that are additively decomposable and that satisfy all the criteria for an ideal poverty measure. 33
For this study, we used a method known as FGT index to measure the incidence of poverty
(headcount ratio), intensity of poverty (poverty gap ratio) and severity of poverty (squared
poverty gap ratio). To find out the determinants of poverty, affecting the probability of an
individual being poor, we estimated a Probit model using poverty as a dependent factor-a binary
(poor-1 and non-poor-0) and a set of agricultural and socio-economic variables as explanatory
variables.34
Despite annual growth of more than 10 per cent in Bihars economy, poverty remained the same
during 2004-05-2009-10.35Incidence of poverty was double among agricultural labours than that
of farm households and the poverty gap between farm and agricultural labour households
increased during last two decades. The decline in poverty has been also higher among farm
households than the decline observed among agricultural labour households during last two
decades however the decline in poverty was comparatively high among agricultural households

33 Gary S. Fields, Poverty, Inequality, and Development at Google Books, ISBN 9780521298520, pp. 204-210
34 Joseph L. Plakkoottam, Mr. M. P. Madhusoodhanan Mr. Priti Ranjan Dash. (2003).
Priorities of the Poor and Appropriateness of Poverty Alleviation Programmes
Sponsored by Planning Commission of India (Socio-Economic research Unit)
Government of India Yojana Bhavan, Parliament Street New Delhi, October
35 Jain, L.C. (1985). Grass without roots: Rural Development Auspices. New Delhi:
Sage Publications.

21

than farm households during 2004-05-2009-10, mainly due to adverse weather at one hand and
increase in wages of agricultural labour at another during the period.36
The comparatively high poverty incidence, gap and severity are observed in less developed
village than developed villages in Bihar. Hence it may inferred that the level of development has
direct influence on poverty alleviation that is; higher the development, lower the level of poverty
in rural area. In villages, land is the main income generating asset hence the poverty incidence,
gap and severity level are comparatively low in case of large households but the observation does
not hold true in case of medium and small households because their land base is very low in
Bihar. The highest poverty incidence, gap and severity are not found among labour households. It
is only due to larger proportion of earning members and the majority of them are employed in
non-farm activities on comparatively high wage whereas family member of households with
even small piece of land do not prefer to work as labour, resulting less income flow and higher
level of poverty among them.
Various agro-economic and social factors are responsible for poverty. The three key
determinants that help the household in keeping away from poverty are education, number of
earning and family size. The education enhances the skill, chances of getting remunerative
employment and increasing labour productivity which lead to higher income and decline in
poverty. Larger proportion of earning members in the household also helps increasing income
flow whereas smaller size of family leads to comparatively less expenses and more income to the
household hence low level of poverty.37 These findings of poverty determinants call for
establishment of effective educational and training infrastructure and streamlining of their
functioning in rural area. The family welfare programme needs to be strengthened for population
control since smaller family is likely to be away from poverty. In Bihar, the labour force

36 Maheshwari, S.R. (1984). Rural Development in India. New Delhi: Sage

Publications.
37 Srivastava, S. K., C. B. S. Dutt1, R. Nagaraja, S. Bandyopadhayay, H. C. Meena Rani1, V. S. Hegde
and V. Jayaraman1.(2004). Strategies for Rural Poverty Alleviation in India: A perspective based on
Remote Sensing and GIS-based Nationwide Wasteland Mapping, Current Science, Vol. 87, No. 7, 10
October, p. 954-959

22

participation rate remains low, especially for women.38 In urban areas, there are shortfalls in
employment for both males and females. There has been no overall improvement in
employment.39 He explained that there has been a significant increase in the number of selfemployed persons and a decline in agricultural labourer households, all of which indicate a
negative trend. He also highlighted the decline in the share of manufacturing and trade in urban
areas and observed that there were several small to significant changes in labour market
dynamics in the state. He argued that it is obvious that agriculture is not able to accommodate all
the workers, which is why those who can move out of it do so, while those who cannot find other
forms of employment are expelled. the increase in the wage rate during the posteconomic
reforms period, there has been a worsening of the employment situation in the state in both
qualitative and quantitative terms. As regards the workforce transformation, he stated that there
was no evidence of any shift, though vulnerabilities have increased since the early 1990s. it also
observed that migration has had modest positive spin-offs, but that its gains must not be overstated.

38 Vyas, V.S. and Pradeep Bhargava. (1995). "Public Intervention for Poverty Alleviation: An
Overview, Economic and Political Weekly,
39 Ibid 32

23

DEVELOPMENT PATHS FOR POVERTY REDUCTION

Bihars turnaround under the leadership of Nitish Kumar from a badly governed, economically
backward state, to the fastest growing state in India has received widespread attention 40. This
turnaround story assumes greater significance because Bihars economic decline and divergence
from rest of the India had been an extremely long and continuous process, rarely reversed by
major economic and political changes that transformed many other states of India.
Farm workers BiharThe permanent settlement regime imposed by the colonial government
sowed the seeds of Bihars decline, and continues to hinder its development even now. Even after
the independence, the central government adopted several discriminatory policies such as freight
equalisation, which led to the further economic marginalisation of Bihar. Successive state
governments in Bihar also contributed to its economic decline by plundering public resources
and ignoring the states developmental needs. Bihars average economic growth since 2005,
when the current government came to power, has been more than 11 per cent, which is often
termed a miracle considering the extremely low level of economic growth under previous

40 NABARD. (1990). Financing Programmes for Poverty Alleviation: Problems and

Isssues, Journal of Rural Development, National Institute of Rural Development,
Hyderabad, Vol.9, No.1, January, P.145-152.

24

regimes.41 This spectacular economic progress has, however, recently been questioned for its
negligible impact on poverty reduction. According to National Sample Survey (NSS) data, the
percentage of people living below the poverty line (BPL) was 54.5 per cent in 2004-05, which
reduced only marginally to 53.5 per cent in 2009-10 42. This is surprising as many states with
lower economic growth saw much higher poverty reduction during this period. While many
commentators use this evidence to jump to the conclusion that Bihar has pursued a growth model
that benefitted only the rich, a closer look at the data suggest that it would be a mistake to take
the poverty figures of 2009-10 seriously. This is mainly because 2009 was not a normal year as
Bihar (and many other states) faced severe drought that resulted in 11 per cent reduction in
agricultural output, which in turn lowered the income level of around 76 per cent of households
that are dependent on agriculture and allied activities for their livelihood. Poverty estimates
based on the 2011-12 round of NSS data, recently released by the Planning Commission of India,
is consistent with this hypothesis. It shows that percentage of BPL population in Bihar is only
33.74 per cent, which means a massive 20 percentage point reduction within two years 43. This is
incredibly high and can be true only if 2009-10 was an outlier year. Lets therefore disregard the
estimates of 2009-10 and compare the estimates of 2004-5 with 2011-12 for further analysis.
How do we rate Bihars 20-percentage-point reduction in poverty over a period of seven years,
when Bihars average growth rate during that time was almost 10 per cent? On ranking 20 bigger
states of India in terms of total poverty reduction during this period, we find that Orissa tops the
list with 24 percentage points, followed by Maharashtra, Bihar, Andhra Pradesh and Rajasthan,
all of which report an approximately 20 percentage points reduction in the poverty ratio. The
good news is that Bihar is in the top three states in terms of total poverty reduction, which
dispels the myth that Bihars growth had little impact on poverty reduction. However, Bihars
performance is not as impressive as its growth rate: many other states with lower rates of
41 Shaban, Adbul and L.M.Bhole. (2000). Regional Disparities in Rural
Development in India, Journal of Rural Development, National Institute of Rural
Development, Hyderabad, Vo.19, No.1, January-March, P.103-118.
42 Ibid 34
43 Chauhan, S.P. (2009). Food Security and Rural Development in India, Journal of
Rural Development, National Institute of Rural Development, Hyderabad, Vo.18,
No.1, January-March, P.133-150.

25

economic growth managed similar reductions in the poverty level. Clearly, Bihar needs to make
its economic growth more pro-poor. Given the fact that two thirds of Bihars population is
dependent on agriculture, boosting agricultural growth is likely to be the most effective way of
enhancing the poverty-reducing effects of economic growth. The government of Bihar has
prepared a long-term roadmap for agriculture that attempts to address some of the challenges, but
it seems that the biggest constraint to agricultural growth in the state is the governments
inability to implement land reforms. West Bengal, Bihars neighbouring state, which was also
under the permanent settlement regime under the colonial government and faced similar
problems in the agriculture sector, managed to implement land reforms in late 1970s that have
had a major impact on agricultural growth for decades. 44 The Government of Bihar did set up a
land reforms commission in 2006 but has not been able to implement its recommendations due to
strong opposition from the upper castes who continue to wield immense political power.
Admittedly, it might not be politically feasible for the current government to take up radical land
reforms measures such as land redistribution. But it is possible to strategically implement some
of the less sensitive land reforms on a priority basis: updating land records, tenancy registration,
and better enforcement of tenants interests. Even these second best reforms, as Besley &
Burgess (1999)45 have shown, are associated with significant poverty reduction.
The tenancy reforms lead to poverty reduction through various channels46.
1. First, increased tenurial security leads to higher investment in land, which raises long-term
2.

productivity and the income level of the cultivators.

Second, tenancy registration allow the sharecroppers/tenants to avail benefits of several
government programmes that are generally available only for owner cultivators.

44 Jain, L.R., Sundaram, K. and Tendulkar, S.D. (2008). Dimensions of Rural

Poverty: and Inter -regional Profile, Economic and Political Weekly, November.
45 Adelman, Irma, K. Subbarao and Prem, Vashishtha (2005), Some Dynamic Aspects of Rural Poverty
in India, Economic and Political Weekly, September, p. A106-A116
46 Banerjee, Narayan. (1990). Poverty Alleviation Programmes and Soico Political Context of Poor
women, Journal of Rural Development, National Institute of Rural Development, Hyderabad, Vol.9,
No.1, P.49-68.

26

3.

Third, these reforms also result in higher agricultural wages, which improves the welfare of
landless households.

Bihars economic growth, which was more than 14 per cent in the last financial year, continues
to defy the recessionary forces that India is facing. However, the extent to which this spectacular
growth translates into poverty reduction depends on the governments ability to remove binding
constraints for agricultural growth. Bihar has the second highest incidence of stunting, is the
third highest in terms of underweight children and the fourth highest in wasting. Bihars
performance in reducing poverty and malnutrition has also been below par. He noted that
between the years 1998-99 and 2005-06, the incidence of underweight and wasting (0-3 years)
children increased, but that of stunting declined by 10 percentage points. Using NFHS 2005-06
data, he revealed that social group disparities continue to persist, and that while more than twothirds of the SC children and over half the Backward Caste (BC) children suffer from stunting
and are underweight47. He also discussed the status of maternal and childcare in Bihar on the
basis of using NFHS data, and expressed concern that Bihar has the highest incidence of chronic
energy deficiency (CED) among women. He concluded that a multi-pronged approach is needed
to address various issues in the health sector. Improvements in the standards of living in terms of
income, and access to housing, drinking water, sanitation and education and health facilities are
the crucial components of this approach. Specifically, maternal and child care deserve special
attention and strengthening ICDS would be important in this regard48.

47 Ibid 39
48 M.H. Suryanarayana. "Nutritional Norms for Poverty: Issues and Implications"
(PDF). Indira Gandhi Institute of Development Research.

27

SCHEME AND PROGRAMS

INTEGRATED development of rural areas is one of the abiding tasks before the Government of
India. The National Common Minimum Programme (NCMP) of the Central government
reiterates the cardinal importance of villages to the overall development of the country and
commits to work towards development of rural areas, which for various reasons could not keep
pace with urban areas in the past.
In conformity with this commitment of the Government, the Ministry of Rural Development
accords foremost priority to development in rural areas and eradication of poverty and hunger

28

from the face of rural India.49 A number of new initiatives have been taken in the recent years for
creation of social and economic infrastructure in rural areas to bridge the rural urban divide as
well as to provide food security and to fulfill other basic needs of the rural populace.
The renewed emphasis on rural development is also visible in the commensurate progressive
increase in the allocation of resources for implementation of poverty alleviation programmes.
For the Tenth Five Year Plan, the allocation of funds for rural development programmes has been
enhanced to Rs. 76,774 crore as against Rs. 42,874 crore in Ninth Plan. An allocation of Rs.
24480 crore was made for the Ministry during 2005-06. The budget estimate for the year 200607 is Rs. 31443.62 crore50.
Addressing the challenge of unemployment in the rural areas of the country is central to the
development of rural sector for ameliorating the economic condition of the people.
Wage employment is provided in rural areas under National Rural Employment Guarantee
Act (NREGA) Sampoorna Grameen Rozgar Yojana (SGRY)
Self-employment is provided under Swranjayanti Gram Swarozgar Yojana (SGSY).
Besides, generating employment these wage employment schemes also ensure creation of
durable assets in rural areas. Initiatives are also taken by the Ministry to build and upgrade the
basic rural infrastructure through various schemes. Under Pradhan Mantri Gram Sadak
Yojana (PMGSY) construction and upgradation of rural roads are taken up to ensure rural
connectivity. It is expected under the scheme that an expanded and renovated rural road network
will lead to an increase in rural employment opportunities, better access to regulated and fair
market, better access to health, education and other public services so as to accelerate the pace of
economic growth in rural areas.51
49

"India's Urban Poverty Agenda: Understanding the Poor in Cities and Formulating Appropriate Anti-Poverty
Actions" (PDF). Bihar, India. 921 January 2000

50 Ibid 42
51

rvind Panagariya, Does India Really Suffer from Worse Child Malnutrition Than Sub-Saharan Africa?, E&P Weekly, 4
May 2013, Vol 48, No 18, pp. 98-111

29

Similarly basic amenities for housing, drinking water and toilets, etc., are provided under Indira
Awaas Yojana (IAY), Accelerated Rural Water Supply Programme (ARWSP) and Total
Sanitation Campaign (TSC) to enhance the welfare and well being of the vulnerable sections of
rural population. Area Development is encouraged through Watershed Programmes to check the
diminishing productivity of wasteland and loss of natural resources.
The Ministry of Rural Development is also committed to fulfill the goals of Bharat Nirman- a
time bound action plan for development of rural infrastructure espoused by the President of India
Dr. A.P.J Abdul Kalam who described it as the platform on which my government will construct
its New Deal for Rural India. Prime Minister Dr. Manmohan Singh extolled that Bharat
Nirman will be time-bound business plan for action in rural infrastructure for the next four years.
Under Bharat Nirman, action is proposed in the areas of irrigation, roads, rural housing, rural
water supply, rural electrification and rural telecommunication connectivity. We have set specific
targets to be achieved under each of these goals so that there is accountability in the progress of
this initiative. Bharat Nirman is thus viewed as an effort to unlock rural Indias growth potential
and be a key for ushering a new era. It is expected that Bharat Nirman will lead to considerable
rural assets creation along with the National Rural Employment Guarantee Act.52
Alongside, the new initiatives some of the existing schemes have also been streamlined and
strengthened to make their implementation more speedy and effective.
The Content is categorized into the following:53
1.
2.
3.
4.
5.
6.
7.

National Rural Employment Guarantee Act

Sampoorna Grameen Rozgar Yojana
National Food For Work Programme
Pradhan Mantri Gram Sadak Yojana
Swarnajayanti Gram Swarozgar Yojana
National Social Assitance Programme and Annapurna
DRDA Administration

52 Ibid 45
53 Singh (2002), Population And Poverty, Mittal, ISBN 978-81-7099-848-8

30

Watershed Development Programmes

1.
2.
3.
4.
5.

Land Reforms
Computerisation Of Land Records
Strengthening Of Revenue Administration And Updating Of Land Records
Rural Drinking Water Supply Programme
Central Rural Sanitation Programme

CONCLUSION AND SUGGESTION

The state of Bihar has struggled immensely in the past. Looking forward and finding affective solutions is the best
way to improve this dismal states current standing. Many programs and projects have already taken action in
improving the states flood management systems. With 76% of Bihars population living under constant threat of
flood damage to their homes it is important to give early warnings to the people so they can be better prepared.
Many projects are working on improving their emergency response systems and better prepare them for the
possible disasters.
Besides flood management there are many other ways to provide solutions to the state of Bihars poverty. Because
of the States poor economy many people migrate to other states in search of jobs and means of providing for
themselves and their families. Most of the people populating Bihar are on the younger side which is why it is
important to properly educate them and improve their job skills that are necessary for finding work.
Providing better healthcare for the people of Bihar is also a crucial part in the economic success that they strive
for. The amount of patients being treated in healthcare centers has drastically increased in the past few years. In
2009, the average amount of patients being treated in healthcare centers per month was a discouraging 39 people.

31

By 2011 the numbers radically increased to 3000 patients per month. The numbers eventually evened out to 2200
patients per month. The percentage of people being vaccinated for disease has also increased in the past 3 years
from 11% of the population to 33%.
We have to solve these problem of BIHARs poverty.
o

Farmers must get all facilities for irrigation.

They should be trained and educated.

Agriculture must be made profitable.

The ever-rising population should be checked.

Family planning schemes should be introduced.

More and more industries should be set up to meet the needs of our country.

Corruption must end. Our offices should work efficiently.

These are some of the ways by which our poverty can be removed.
Immediately after Independence, the Government of India began in earnest the fight against
poverty, largely based on the Russian model, greatly admired by Jawaharlal Nehru, India's first
prime minister. Thus began a series of Five-Year Development Plans, formulated by a set of
handpicked planning experts - the 11th Plan is currently being followed. Successive governments
have come out with schemes, albeit populist, such as the Garibi Hatao (Eradicate Poverty) of
Indira Gandhi in the 1970s, followed by a Ten-Point programme, followed by numerous less
well-known ones. The main problem has always been implementation. Successive prime
ministers have deplored the fact that for every rupee released, hardly ten paise reaches the poor.
Basic agrarian reforms and land distribution, the crux of the problem, did not take place except in
Kerala and to some extent in West Bengal. Unless the problems of the vast numbers of landless,
exploited people are solved, band-aid solutions will not work. Additionally, India needs to
address the enormous exploitation of the poor that takes place aided by caste and class, which
keeps the poor in feudal bondage. In 1996, the United Front national government announced a
definite poverty goal for the country: poverty eradication by the year 2005. According to the then
prime minister, "Programmes for generation of employment, creation of assets, imparting of
productive skills and raising the incomes of the very poor people would all be strengthened and
provided with larger funds. At the same time, there is need to review these programmes, sharpen

32

their focus, improve their delivery system and involve the poor in their implementation. Effective
steps will be taken to ensure that the benefits reach the needy people."
Success in eradicating poverty was to be contingent upon three factors:
1. A GDP growth rate of at least 6 per cent per annum over the next 10 years.
2. Provisioning of at least seven basic minimum services -- universal access to safe drinking
water, 100 per cent coverage of primary healthcare centres, universalisation of primary
education, public housing assurance to all shelterless deserving families, extension of the
mid-day meal scheme throughout all primary schools, road connectivity to all villages
and habitations, and streamlining the public distribution system targeted to families
below the income poverty line.
3. Ensuring that the income poor and the socially disadvantaged groups receive special
attention and priority.
In addition, agricultural growth was to be stepped up by improving productivity in regions with a
high concentration of poverty which are also regions with the highest potential for growth.
Efforts were to be made to promote actively both rural farm as well as non-farm employment and
improve access to credit and other resources.
It is more than two years past the 2005 deadline and the changes are barely significant.
Agricultural distress has only grown and farmer suicides in many states have mounted to
proportions than can no longer be ignored. The governments most significant response was to
waive all debts of small and marginal farmers in the 2008-09 Union Budget, a step that is
universally acknowledged as being a short-term solution only.
India is a rural based country highly dependent on the agricultural sector. Yet successive
governments continue to neglect the rural sector while blindly wooing foreign investment and
the corporate sector as the only way forward.
The Government of India has taken various steps to reduce rural poverty in India. Some of the
most recent ones are:
1. Small Farmers Development Programme
2. Drought Area Development Programme
3. Food For Work Programme

33

4.
5.
6.
7.
8.

Minimum Needs Programme

Integrated Rural Development Programme
National Rural Employment Programme
Rural Labour Employment Guarantee Programme
Assurance on Employment

URBAN POVERTY
In India and in Bihar, the urban poor are theoretically entitled to certain social security
schemes. Pensions (for widows, physically-challenged citizens, students), trainings and even
infrastructural assistance are supposed to be provided by the government to answer the urgent
needs of these highly marginalized populations. However, despite a legal framework
apparently favourable to poorer citizens, a very broad information gap separates citizens
from the potential benefits they could draw. Even when citizens are aware of their rights,
they are frequently too poorly informed regarding the procedures to claim their entitlements.
A solution is urgently needed to find a way to inform the urban poor in a more efficient and
suitable way. A solution should also be found to improve the connections between the State
and poorer communities. PRIA (in collaboration with DVAS) organized a consultation with
this purpose of creating an interface through which slum dwellers and their representatives
could find a common ground to bridge the information gap.
The consultation took place at a time when Rajiv Awas Yojana (the national project of Slum
Free India) is about to reach Bihars slums. The impact of this programme could be
potentially massive; some slums will finally obtain legal recognition and infrastructural
development, while others will be forced to relocate. In this context, enhancing the
communication between state officials and concerned citizens is especially urgent. Citizens
should to be given the capacity to defend their rights, and the authorities should be made
capable to reach the masses. The state has a per capita income of 24000 a year against India's
average of 72650 and 30.6% of the state's population lives below the poverty line against
India's average of 22.15%. However, Bihar's GSDP grew by 18% over the period 2006-2007,
which was higher than in the past 10 years, Hajipur, near Patna, remains a major industrial
town in the state, linked to the capital city through the Ganges bridge and good road
infrastructure. The level of urbanisation (10.5%) is below the national average (27.78%).
Urban poverty in Bihar (32.91%) is above the national average of 23.62%. Also using per

34

capita water supply as a surrogate variable, Bihar (61 litres per day) is below the national
average (142 litres per day).

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