What is Poverty, Types of Poverty, Poverty Line Explained

There is no single definition of Poverty. It is multidimensional and has many faces which include:

  • lack of income and productive resources sufficient to ensure sustainable livelihoods;
  • hunger and malnutrition;
  • ill health;
  • limited or lack of access to education and other basic services;
  • increased morbidity and mortality from illness;
  • homelessness and inadequate housing;
  • unsafe environments;
  • social discrimination and exclusion;
  • characterized by lack of participation in decision-making and in civil, social and cultural rights


World Bank definition of Poverty

The World Bank defines poverty as “the inability to attain a minimal standard of living”. It defines poverty by saying:

  • It is hunger.
  • It is lack of shelter.
  • It is being sick and not being able to see a doctor.
  • It is not having access to school and not knowing how to read.
  • It is not having a job, is fear for the future, living one day at a time.
  • It is losing a child to illness brought about by unclean water.
  • It is powerlessness, lack of representation and freedom

Types of Poverty

  • Absolute Poverty: It is a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to social services. For example, a family is poor if it is not able to earn food, water or even a basic kutcha house to live.
  • Relative poverty: It is a level of household income which is considerably less than median income of the country. It is the lack of resources when compared to other members of the society. It is a relative concept therefore it differs across countries. For example, a family may be considered poor if it is not able to send their children in good school even though they have basic amenities like food, water, shelter etc.

Primary vs Secondary Poverty

  • Primary Poverty is a condition where income is insufficient to maintain mere physical existence even if money is spent wisely. For example, a family earns $1 per day but requires at least $4 to get food, water, medicine etc. Now even if they spend $1 on food still they may not be able to afford medicines or education requirement of their children.
  • Secondary Poverty is a condition where is sufficient to maintain the physical existence but it is not spent wisely. For example, a family earns $20 per day but requires at least $4 to get food, water, medicine etc. Suppose they spent $18 on family vacation to LA and left with only $2 to meet basic necessities of life which is not enough to get them food, water etc. if they had spent the money wisely; they could have been able to meet all their basic necessities.

What is Extreme Poverty?

The World Bank defines extreme poverty as living on less than $1.90 per person per day. According to bank, around 10% of world population lives in extreme poverty. It was 37% in 1990 and 44% in 1981.

Some other types of Poverty

  • Situational Poverty: It is temporary in nature and occurs due to some adverse situation like earthquakes, floods or some severe health problem. For example, a family earns decent income of $400 per month and is able to meet basic necessities of life. One day earthquake hits the city and destroys their house; earning member of family loses his job. So a well off family suddenly becomes poor overnight.
  • Generational or Chronic Poverty: This type of poverty is inherited by household. The two to three generation born into poverty and they do not have tools to come out of this situation.
  • Rural Poverty: It occurs in non-metro areas with population less than 50,000 inhabitants. Due to lesser population, the area lacks basic services and amenities which is the cause of their financial struggle.
  • Urban Poverty: It occurs in areas with population of more than 50,000 inhabitants. These families live in much stressed condition due to overcrowding. They lack basic necessities like affordable housing.

Poverty line

Poverty line is the level of income below which a person is not able to meet its basic needs. It different across countries and no two countries can have same line. World Bank has defined $1.90 per day as international poverty line. Some of its earlier poverty lines in the past were:

  • 1990 -> $1
  • 2008 -> $1.25
  • 2015 -> $1.90

Poverty Line in India

The erstwhile planning commission and now NITI aayog is the nodal agency for estimation of poverty line in India. It is calculated on the basis of data collected by NSSO. Some the famous committees appointed so far along with their recommendations are:

  • Suresh Tendulkar panel’s recommendations in 2011-12, the poverty line had been fixed at Rs 27 in rural areas and Rs 33 in urban areas. About 22% of the population lives below this line.
  • Rangarajan committee raised these limits to Rs.32 and Rs.47, respectively, and worked out this line at close to 30%



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