Daksh Kishore

XI-D

Economics
of poverty
and
inequality
Certificate
• This is to certify that Daksh Kishore of Class IX-D of Modern Convent School has completed
his project file under my guidance. He has taken proper care and shown utmost sincerity in
completing this project.
• I certify that this project is up to my expectations and as per the guidelines issued by CBSE.

Ms. Savita Singh

Acknowledgement

Daksh Kishore
Overview

• National governments and their development partners

are all working to reduce poverty. Although it is often
thought of as a lack of material resources, poverty is
correlated closely with all aspects of a person’s life: the
world’s poor are more likely to be malnourished, they have
less access to services like education, electricity,
sanitation and healthcare, and they are more vulnerable
to conflict and climate change. Understanding poverty is
thus fundamental to understanding how societies can
progress.
• Reducing poverty and inequality are central to the UN’s
Sustainable Development Goals (SDGs) and the World
Bank Group’s twin goals for 2030: ending extreme poverty
and promoting shared prosperity in every country in a
sustainable manner. National statistical systems,
household surveys and poverty measurement
methodologies are at the heart of tracking these global
goals.
What is economic
inequality?
• Economic inequality is the unequal
distribution of income and opportunity between
different groups in society. It is a concern in
almost all countries around the world and often
people are trapped in poverty with little chance
to climb up the social ladder. But, being born into
poverty does not automatically mean you stay
poor. Education, at all levels, enhancing skills,
and training policies can be used alongside
social assistance programs to help people out of
poverty and to reduce inequality. Several
countries are also now exploring whether a
universal basic income could be the answer.
• The global coronavirus pandemic is likely to
further inequalities as travel restrictions,
nationwide lockdowns, and the virus itself affect
people within and across nations in widely
varying ways.
 Income • Income inequality has been linked to poverty.
Although it is unclear as to how exactly the two
are correlated, research from LSE has found
some correlation between the widening income

inequality
inequality gap and poverty rates in the UK.
• How can this be the case? There may be
many explanations. However, some of them
include the fact that individuals with high
incomes belonging to elite groups may be able
to sway political interests in their favor. This

and poverty
means that households on low incomes are
disregarded when it comes to such decision-
making. Furthermore, early income earners may
be finding themselves in situations where they
cannot afford housing due to rising inflation and
low credit availability, which causes them to be
more entrenched into the lifestyle with very
limited disposable income.
• Inequality can be measured in two different
ways: income inequality and wealth inequality.
Causes of poverty and
income inequality

There are many causes of both poverty and income inequality. Some causes are:
• Wages. Unequal distribution of wages on grounds of higher educational
achievements or longer working hours causes a disparity among the higher
income earners and lower-income earners. A higher-income earner assures more
savings, which build up more wealth compared to a lower-income earner whose
basic needs take precedence.
• Wealth levels. A higher level of wealth eventually leads to more wealth. With
more wealth, people can undertake risky investments with a higher rate of return
and therefore increased interest and income rates.
• Chance. This is based on good decision making and luck of the people who
either choose the right sort of job that increases their income or they invest in
assets that increase their wealth.
• Age. The age group of working adults at the peak of their career have a higher
chance of increased incomes than the fresh starters, similar to the older ones
who have had their chance to accumulate wealth and assets in their prime.
• Socioeconomic status. This can explain the difference in how income and
wealth are distributed between countries. Developing countries may be
marginalized compared to developed countries that favor international trade and
negotiations that help them in economic development.
Programs and initiatives
Social protection
Social security is a human right. Everyone has the right to an existence worthy of human dignity supplemented by a means of social protection. Among Eastern
European and Central Asian countries all the other countries apart from Georgia and Bosnia and Herzegovina have directly stated in their constitutional law
that everyone has the right to social security. Social protection systems which are well-aligned to labor markets and employment policies can help address
inequalities and promote more inclusive growth. Comprehensive social inclusion policies can ensure that the principle of “leaving no-one behind” is put into
practice.

SMEs, Trade, and Value Chains

Trade and value chains underpin the economic dimension of sustainable development and have the capacity to steer a positive change towards more resilient,
inclusive, and sustainable economies. On the other hand, overlapping geopolitical instabilities and environmental risks jeopardize the potential of trade and
value chains and test the resilience of existing economic structures. Further exacerbated by the limits of economic structures and governance systems, trade
and value chains in the region have been disrupted significantly over the last few years

Jobs and Skills

Several different trends, both unfavorable and promising, shape the future of jobs and skills. UNDP sustains efforts for responding to global trends, most
emphasis being on the recovery in jobs from Covid-19 and on adaptation to accelerated change stemming from digitalization and green transition. In Europe
and Central Asia, these novel uncertainties overlap with ongoing macro trends. While out-migration, brain drain, low birth rates, youth unemployment, and
informal economy are leading contemporary issues in Eastern Europe, Central Asia countries remain over-reliant on extracted commodities (i.e. fossil fuels and
minerals) and the repercussions of anthropogenic climate change.

Development Planning
Most countries in Europe and Central Asia region experience interconnected socio-economic and environmental challenges. An integrated development
approach must also tackle these challenges in tandem, recognizing that accelerating economic growth must also address a range of social issues such as
education, health, social protection, and decent jobs, while adapting its effects on nature and anthropogenic climate change. The challenge is to encourage
inclusive economic growth while minimizing the economy's pressure on environmental resources and biodiversity
 Extreme inequality in India

The top 10% of the Indian population holds 77% of the total national wealth. 73% of the wealth
1% generated in 2017 went to the richest 1%, while 670 million Indians who comprise the poorest
half of the population saw only a 1% increase in their wealth.

There are 119 billionaires in India. Their number has increased from only 9 in 2000 to 101 in 2017.
70
Between 2018 and 2022, India is estimated to produce 70 new millionaires every day.

Billionaires' fortunes increased by almost 10 times over a decade and their total wealth is higher
10x
than the entire Union budget of India for the fiscal year 2018-19, which was at INR 24422 billion.

Many ordinary Indians are not able to access the health care they need. 63 million of them are
63 M
pushed into poverty because of healthcare costs every year - almost two people every second.

It would take 941 years for a minimum wage worker in rural India to earn what the top paid
941 yrs
executive at a leading Indian garment company earns in a year.
Causes
Impact
 Inclusive Growth:
• India has adopted various programs to foster inclusive
growth and provide employment opportunities to its poorer
citizens. Initiatives like the Deendayal Antyodaya Yojana

Measures taken focus on promoting livelihoods for the poor by organizing

rural households into self-help groups, providing skill
development, and creating job opportunities. Similarly, the
Mahatma Gandhi National Rural Employment Guarantee

by India
Act (MGNREGA) guarantees at least 100 days of wage
employment per year to rural households, ensuring a safety
net and contributing to rural development. These programs
aim to reduce poverty and economic disparity by enabling
marginalized groups to participate in and benefit from
economic activities.

Financial Inclusion:
• To bridge the financial gap and bring underserved
populations into the banking system, the Pradhan Mantri
Jan-Dhan Yojana (PMJDY) was introduced. It provides
access to basic banking services, including savings
accounts, credit, insurance, and pension schemes, for the
economically weaker sections. This initiative has
empowered millions by giving them financial stability and
the ability to save and invest, contributing to their
economic upliftment. It also promotes digital transactions
and financial literacy, making economic participation more
inclusive.

Social Security:
• Recognizing the vulnerabilities of workers in the
unorganized sector, the Atal Pension Yojana (APY) was
launched to provide income security after retirement. This
scheme encourages individuals, especially those from low-
income groups, to save for their future by offering a
guaranteed pension based on their contributions. It has
been instrumental in enhancing social security and
reducing the economic insecurities of a significant
segment of the population.
 Bibliography

• worldbank.org/world-development-
indicators/themes/poverty-and-
inequality
• www.sciencedirect.com
• wikipedia.org/wiki/Income_inequality
_in_India
• studysmarter.co.uk