Poverty & Unemployment
Subject: Economy | Unit: Economic Planning | Topic: Poverty & Unemployment
Exam: AP Group 2 (APPSC)
Introduction
Poverty and unemployment remain central themes in Indian economic policy and are among the most frequently tested topics in competitive exams. India has made remarkable progress in reducing multidimensional poverty, with 24.82 crore people escaping poverty between 2013-14 and 2022-23. However, structural unemployment, disguised unemployment in agriculture, and high youth unemployment continue to challenge policymakers. This chapter covers poverty measurement methodologies, latest data, types of unemployment, and government schemes addressing both issues.
Economic Context
At independence, over 80% of India's population lived in poverty. Decades of state-led development brought incremental improvement, but the most dramatic poverty reduction occurred after the 1991 reforms and accelerated further after 2014 through a combination of economic growth, direct benefit transfers (DBT), and targeted welfare programmes. India's multidimensional poverty rate declined from 29.17% (2013-14) to 11.28% (2022-23), and the country is projected to reach single-digit poverty levels. On the employment front, India's overall unemployment rate stands at 4.9% (February 2026), but youth unemployment and gender disparities remain concerns.
Core Content
Poverty Measurement in India
| Committee/Method | Year | Poverty Line (Rural) | Poverty Line (Urban) | Basis |
|---|
| Original calorie norm | — | 2,400 kcal/day | 2,100 kcal/day | Calorie intake |
| Tendulkar Committee | 2009 | Rs 816/month | Rs 1,000/month | At 2004-05 prices |
| Rangarajan Committee | 2014 | Rs 972/month | Rs 1,407/month | Per capita per month |
| Multidimensional Poverty Index (MPI) | Ongoing | 3 dimensions: health, education, standard of living (12 indicators) | NITI Aayog, based on NFHS data | |
Types of Poverty
| Type | Definition | Example |
|---|
| Absolute poverty | Inability to meet basic needs (food, shelter, clothing) | Starvation, homelessness |
| Relative poverty | Income below a certain percentage of national median | Low-income households in cities |
| Chronic poverty | Persistent poverty over long periods | Generational landless families |
| Transient poverty | Temporary poverty due to shocks | Drought, illness, job loss |
Poverty — Latest Data (2025-26)
| Indicator | Figure |
|---|
| Multidimensional poverty rate (2013-14) | 29.17% |
| Multidimensional poverty rate (2022-23) | 11.28% |
| People escaped poverty (2013-14 to 2022-23) | 24.82 crore (248 million) |
| Annual poverty decline rate (2005-16) | 7.69% |
| Annual poverty decline rate (2015-21) | 10.66% (accelerated) |
| Lowest state poverty rate | Kerala: 0.7% |
| SDG 2030 target | India on track to halve MPI before deadline |
Kerala is set to be the first state declared free from extreme poverty (November 2025).
Causes of Poverty
- Low economic growth rate (~4% "Hindu Rate of Growth" pre-1991)
- Rapid population growth reducing per capita income
- Unemployment and underemployment
- Unequal distribution of income and resources
- Low agricultural productivity and landlessness
- Social discrimination (caste, gender) limiting opportunities
- Inadequate access to education and healthcare
Types of Unemployment
| Type | Definition | Where Common |
|---|
| Structural | Skill mismatch between workers and available jobs | Economy-wide |
| Frictional | Temporary unemployment during job transitions | All sectors |
| Seasonal | Workers idle during off-season | Agriculture |
| Disguised | More people employed than needed; marginal productivity near zero | Rural family farms |
| Open | People actively seeking but not finding work | Urban areas |
| Educated | Graduates unable to find suitable jobs | Major urban issue |
| Cyclical | Due to economic downturns and reduced demand | During recessions |
Unemployment — Latest Data
| Indicator | Figure |
|---|
| Overall unemployment rate (Feb 2026) | 4.9% |
| Rural unemployment (2025) | 4.2% |
| Urban unemployment (2025) | ~6.7% |
| Female urban unemployment (Jan 2026) | 9.8% |
| Female rural unemployment (Jan 2026) | 4.3% |
| Youth unemployment (15-29) — Kerala | 29.9% |
| Youth unemployment — Lakshadweep | 36.2% |
| PLFS release frequency | Monthly (from May 2025) |
The Periodic Labour Force Survey (PLFS) by MoSPI is the primary source for unemployment data, now released monthly for timely labour market monitoring.
Major Anti-Poverty & Employment Schemes
| Scheme | Year | Key Feature | Budget/Scale |
|---|
| MGNREGA | 2005 | 100 days guaranteed rural employment; 1/3 for women | Largest employment guarantee globally |
| PM-KISAN | 2019 | Rs 6,000/year to farmer families in 3 installments | Direct income support |
| National Food Security Act | 2013 | Subsidized food grains to 75% rural, 50% urban | Food security coverage |
| PM Garib Kalyan Yojana | 2020 | Free food grain distribution (COVID relief) | Emergency response |
| Ayushman Bharat (PM-JAY) | 2018 | Rs 5 lakh health cover for 10 crore families | Health poverty prevention |
| PM Awas Yojana | 2015 | Housing for all — urban and rural | Shelter security |
| DAY-NRLM | 2011 | National Rural Livelihoods Mission | SHG-based livelihoods |
| PM MUDRA Yojana | 2015 | Micro-enterprise loans up to Rs 10 lakh | Shishu/Kishore/Tarun |
| Skill India Mission | 2015 | Vocational training for employability | Youth skilling |
| Start-up India | 2016 | Entrepreneurship promotion | Self-employment |
| Employment Linked Incentive | 2024-25 | Incentives for formal employment creation | Budget 2024-25 |
AP Connection
- AP implements MGNREGA extensively; the state is among the top states in person-days generated
- NTR Bharosa Pension: Rs 4,000-15,000/month to senior citizens, widows, disabled, weavers, fishermen; Rs 27,719 crore allocation in 2026-27 budget — single largest welfare expenditure
- Annadata Sukhibhava: Rs 20,000/year to eligible farmers (combined with PM-KISAN = Rs 26,000/year per farmer)
- Talliki Vandanam: Rs 15,000/year to mothers of school-going children; Rs 9,407 crore budget (2025-26); aims for zero school dropouts
- AP's per capita income reached Rs 2,98,058 (2024-25), which is 1.30 times the national average, indicating above-average poverty reduction
- AP literacy rate is approximately 67%, with education schemes targeting dropout prevention
- Super Six promises include Rs 3,000/month unemployment allowance for educated unemployed youth
Key Points Summary
- India's poverty line is based on calorie intake: 2,400 kcal/day (rural), 2,100 kcal/day (urban)
- Tendulkar Committee (2009): Rs 816/month (rural), Rs 1,000/month (urban) at 2004-05 prices
- Rangarajan Committee (2014) proposed higher line: Rs 972 (rural), Rs 1,407 (urban)
- Multidimensional Poverty Index (MPI) uses 3 dimensions and 12 indicators
- India's MPI poverty declined from 29.17% to 11.28% between 2013-14 and 2022-23
- 24.82 crore people escaped multidimensional poverty in this period
- Kerala has the lowest poverty rate (0.7%) and is set to be first state free from extreme poverty
- Disguised unemployment is most common in Indian agriculture (marginal productivity near zero)
- India's overall unemployment rate is 4.9% (February 2026)
- PLFS is now released monthly from May 2025 by MoSPI
- Youth unemployment (15-29 years) is significantly higher than overall rate
- MGNREGA guarantees 100 days of rural employment; 1/3 reserved for women
- PM-KISAN provides Rs 6,000/year in 3 installments to farmer families
- Ayushman Bharat covers Rs 5 lakh health insurance for 10 crore families
- PM MUDRA Yojana has 3 categories: Shishu (up to Rs 50K), Kishore (up to Rs 5L), Tarun (up to Rs 10L)
- National Food Security Act covers 75% rural and 50% urban population
- Employment Linked Incentive (ELI) Scheme was announced in Budget 2024-25
Exam Strategy
| Question Pattern | Frequency | Focus Area |
|---|
| Poverty committee recommendations | Very High | Tendulkar vs Rangarajan — amounts, years |
| MPI dimensions and data | High | 3 dimensions, decline from 29.17% to 11.28% |
| Types of unemployment | Very High | Disguised (agriculture), structural, seasonal — definitions |
| Match scheme with feature | High | MGNREGA-100 days, MUDRA-3 categories, PM-KISAN-Rs 6,000 |
| Latest unemployment rates | Medium | 4.9% overall, rural vs urban, gender gap |
| Calorie-based poverty line | High | 2,400 rural, 2,100 urban |
| PLFS and measurement | Medium | MoSPI, monthly release since May 2025 |
Key Terms Glossary
| Term | Meaning | Telugu |
|---|
| Poverty Line | Minimum income to meet basic needs | దారిద్ర్య రేఖ |
| Multidimensional Poverty Index | Composite index measuring health, education, living standards | బహుళ పరిమాణ దారిద్ర్య సూచిక |
| Disguised Unemployment | More workers than needed; zero marginal productivity | ప్రచ్ఛన్న నిరుద్యోగం |
| Structural Unemployment | Skill mismatch between workers and jobs | నిర్మాణాత్మక నిరుద్యోగం |
| Seasonal Unemployment | Joblessness during agricultural off-season | కాలానుగుణ నిరుద్యోగం |
| Labour Force Participation Rate | % of working-age population in/seeking work | శ్రామిక శక్తి భాగస్వామ్య రేటు |
| PLFS | Periodic Labour Force Survey by MoSPI | ఆవర్తన శ్రామిక శక్తి సర్వే |
| MGNREGA | 100-day rural employment guarantee | ఉపాధి హామీ పథకం |
| Direct Benefit Transfer | Cash transfers directly to bank accounts | ప్రత్యక్ష లబ్ధి బదిలీ |
| BPL | Below Poverty Line | దారిద్ర్య రేఖ దిగువన |
| Hindu Rate of Growth | India's slow 3.5-4% growth pre-1991 | హిందూ వృద్ధి రేటు |
| Food Security | Reliable access to sufficient nutritious food | ఆహార భద్రత |
| Self-Help Group | Community-based savings and lending group | స్వయం సహాయక సంఘం |
| Per Capita Income | National income divided by population | తలసరి ఆదాయం |
| Gini Coefficient | Measure of income inequality (0 = perfect equality) | జినీ గుణకం |