Complete Notes on “Poverty and Unemployment and Development for BPSC and Other Competitive Exams in 2025
Economics- 6
Poverty and Unemployment
These are interlinked socio-economic challenges that affect inclusive growth and social justice in India.
Types and Causes of Poverty and Unemployment
1. Poverty
Definition:
A condition in which a person is unable to fulfill basic necessities of life—food, clothing, shelter, health, and education.
Types of Poverty:
| Type | Explanation |
| Absolute Poverty | Income below a minimum level (poverty line); used by World Bank |
| Relative Poverty | Economic inequality; income gap between rich and poor |
| Chronic Poverty | Long-term and generational poverty |
| Urban/Rural Poverty | Based on geographic and occupational disparities |
| Multidimensional Poverty | Lack of access to health, education, standard of living (as per MPI) |
Causes of Poverty:
- Rapid population growth
- Low productivity in agriculture
- Lack of gainful employment
- Unequal wealth distribution
- Social exclusion and caste/class barriers
- Inflation and rising cost of living
2. Unemployment
Definition:
A condition where people willing to work at prevailing wage rates cannot find work.
Types of Unemployment:
| Type | Explanation |
| Structural | Due to mismatch of skills or economic structure |
| Frictional | Temporary unemployment while shifting jobs |
| Seasonal | Common in agriculture (e.g., post-harvest period) |
| Disguised | More people employed than actually required (seen in rural India) |
| Educated | Skilled or degree-holding persons not getting suitable jobs |
| Cyclical | Due to downturns in economic cycle |
| Open Unemployment | Clearly visible; persons actively seeking jobs but jobless |
Causes of Unemployment
- Population pressure
- Inadequate employment opportunities
- Slow industrial growth
- Lack of skill development
- Low investment in labour-intensive sectors
Government Schemes
1. MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act)
- Enacted: 2005
- Objective: Provide guaranteed wage employment of at least 100 days in a financial year to every rural household whose adult members volunteer for unskilled manual work.
- Legal right to work – first of its kind.
- Demand-driven scheme.
- Wages paid through DBT.
- Boosts rural consumption and infrastructure.
2. PMEGP (Prime Minister’s Employment Generation Programme)
- Launched by: Ministry of MSME
- Objective: Generate employment in rural and urban areas through self-employment via micro-enterprise creation.
- Implemented by: KVIC, DICs, Coir Board.
- Features:
- Bank-linked subsidy (15–35%)
- Financial assistance up to ₹25 lakh (manufacturing) / ₹10 lakh (services)
- Skill development training provided
HDI and SDG Indicators
1. HDI – Human Development Index
Published by UNDP (Human Development Report).
Components:
| Dimension | Indicator |
| Health | Life expectancy at birth |
| Education | Mean years + expected years of schooling |
| Standard of Living | GNI per capita (PPP $) |
- India’s HDI Rank (2023): ~132 out of 191
- Indicates quality of life, not just economic growth.
2. SDGs – Sustainable Development Goals
- Adopted by UN in 2015 under Agenda 2030
- 17 Goals and 169 targets
Key SDGs Related to Poverty & Unemployment
| Goal | Description |
| SDG 1 | No Poverty |
| SDG 2 | Zero Hunger |
| SDG 3 | Good Health and Well-being |
| SDG 4 | Quality Education |
| SDG 5 | Gender Equality |
| SDG 8 | Decent Work and Economic Growth |
| SDG 10 | Reduced Inequality |
Objective Questions (MCQs)
1. The poverty line in India is primarily based on:
A) Literacy level
B) Per capita income
C) Calorie intake and income
D) Asset ownership
Answer: C
2. Which type of unemployment is most prevalent in agriculture in India?
A) Structural
B) Frictional
C) Disguised
D) Cyclical
Answer: C
3. MGNREGA guarantees how many days of employment per rural household per year?
A) 180 days
B) 100 days
C) 150 days
D) 90 days
Answer: B
4. PMEGP is implemented by which body?
A) NABARD
B) NITI Aayog
C) KVIC and DICs
D) RBI
Answer: C
5. Which of the following is not a component of the Human Development Index (HDI)?
A) Life Expectancy
B) Gross Enrollment Ratio
C) GNI per capita
D) Mean years of schooling
Answer: B
6. SDG Goal 8 aims at:
A) No poverty
B) Gender equality
C) Quality education
D) Decent work and economic growth
Answer: D
External Sector