Poverty: Meaning, Poverty Line, Causes & Zero

Updated on September 1, 2026Author:NEXT IAS Contributors

Poverty (निर्धनता ) is an economic state of inability to afford basic needs such as food, shelter, clothing and basic education. It is not just a lack of income but a multidimensional phenomenon which include hunger, poor health, limited education, and lack of access to sanitation. The main types of poverty include absolute poverty or extreme poverty which refers to a severe deprivation of basic human needs. Relative poverty is where the individuals or households lack the minimum amount of income needed to maintain the average standard of living.

How Poverty line estimated in India?

The official poverty line of India is estimated from Monthly per capita consumption expenditure (MPCE) and not from income. The latest official all-India estimates were based on the method of the Tendulkar Committee using the NSSO's 2011 to 2012 consumption-expenditure survey. In this method, the total consumption expenditure of a household is divided by its members to calculate MPCE. The poverty line shows the expenses needed for food and essential non-food items which includes health, education, clothing, fuel and housing-related needs. The method uses a broader consumption basket and adjusts poverty lines for rural-urban and state level price differences.
For 2011 to 2012, the all-India poverty line was Rs. 816 per person per month in rural areas and Rs. 1,000 per person per month in urban areas. The persons whose MPCE fell below the poverty line were counted as poor.
The Rangarajan Committee proposed a higher limit of Rs. 972 in rural and Rs. 1,407 in urban at 2011 to 2012 prices. However, these were not taken into account as the official threshold level.

Absolute Vs Relative Poverty

S.No.	Basis	Absolute Poverty	Relative Poverty
1	Meaning	The poverty in which a person lacks resources to meet minimum basic needs such as food, clothing, shelter, health care, and education.	The poverty in which a person's income or living standard is substantially below as compared to other people in the same society.
2	Poverty line	It is based on a fixed minimum consumption or income threshold which is usually adjusted only for inflation.	It is based on a relative threshold which is commonly a percentage of average household income.
3	Reference point	Basic needs and a minimum standard of living.	Income distribution and average living standards within a country.
4	Change over time	The real poverty line remains broadly constant across time and places, after price adjustments.	The poverty line rises or falls as median or average income changes.
5	Main focus	Severe material deprivation and inability to survive or meet basic needs.	Inequality, social exclusion, and inability to participate adequately in normal social life.
6	Typical use	Commonly used in developing countries and for global comparisons of extreme poverty.	Commonly used in high-income countries which include numerous OECD and European countries.
7	Example	A household cannot afford minimum food, shelter, clothing and essential services.	A household earns less than 60% of the country's median disposable income.
8	Advantage	Easy to compare basic deprivation across years and countries.	Reflects changing societal standards and captures relative disadvantages.
9	Limitation	It may overlook inequality and changing social expectations.	A person may be relatively poor even when basic needs are met.

Causes

The main causes of poverty include the economic, social, political and environmental factors. The unemployment, low wages, irregular work and lack of productive assets prevent families from earning sufficient for food, housing, health care and education.
The unequal ownership of land, wealth and opportunities broadens the gap between rich and poor. The limited access to quality education and skills reduces the employment opportunities and engages people in low wages work.
The illness, disability, high medical expenses and lack of social security can push households into poverty. The discrimination based on caste, gender, ethnicity or location restricts the access to resources and jobs.
The population pressure, indebtedness, inflation and rising living costs further worsen the condition. The conflict, displacement, natural disasters and climate change can destroy homes, crops, livelihoods and public services.
Weak governance and poor delivery of essential services deepen the poverty level. Therefore, poverty is lack of income and also involves lack of opportunities, security and dignity.

Zero Poverty

Zero poverty is sustainable development goal 1 which includes ending poverty in all its forms. It seeks to raise incomes and ensure access to food, healthcare, education, housing, clean water, sanitation, financial services and social security.
It requires a decent job, fair wages, equal access to land and resources and special support for vulnerable groups of people.
The government needs to reduce inequality, strengthen public services and protection from unemployment, disasters and climate related shocks. The goal focusses resilience so that families do not fall back into poverty after a crisis. The target year of the United Nations for achieving Sustainable Development Goal 1 or SDG-1 is 2030.

FAQs about Poverty

What is Poverty?

Poverty is a condition where people lack sufficient income and resources to meet their basic needs.

What do you understand by Human poverty?

Human poverty is the deprivation of essential capabilities which includes health, education, nutrition, security, opportunities and a decent standard of living.

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