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Subjects /Indian Economy / Social Development

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05 Mar 2022

Social development is about improving the well-being of every individual in society so they can reach their full potential.

The success of society is linked to the well-being of each and every citizen. Social development means investing in people.

Under social development ‘Poverty’ is the main issue. Another issue of social development includes the presence of unemployment in the society. 



Relative Poverty

Absolute Poverty

Relative Poverty

It measures the degree of Inequality in a given society, and it is measured with the help of:

  • Lorenz Curve
  • Gini’s coefficient

Equality Line: it is also known as 450 line.

  • It reflects equal distribution of Income, in fact, which is not possible.
  • Therefore, it is an idle, imaginary or standard line which is tried to be achieved.

Lorenz Curve

  • This curve is based upon actual data of income distribution which is always zigzag or uneven.
  • The larger the area between lorenz’s curve and equality line, the greater is the inequality of income and vice-versa.

Gini – Coefficient

  • It is the ratio of the area between Equality line and Lorenz’s Curve divided by total area below equality line.
  • The value of Gini’s coefficient rise/varies between 0 and 1
  • 0 – perfect equality
  • 1 – perfect inequality
  • That means greater is the value of Gini’s coefficient greater is the inequality.


Since the measurement of Relative poverty does not provide the number of poor, therefore, the measurement of Absolute poverty is adopted and for this a standard parameter is decided, which is popularly known as Poverty Line and person below this are considered as ‘poor’.

Absolute poverty
  • Measurement of Absolute poverty is known as Head Count Method.
  • It is calculated by dividing the number of poor people by the total population.

Poverty Line in India

Poverty line in India

In India Poverty is measured after every 5 years, on the basis of ‘Consumer Expenditure’, on the basis of survey conducted by NSSO but was announced by Planning Commission.

Over the years Poverty has been measured in India, on the basis of ‘Calorie-intake’ under which, those people have per day less than 2400 calories in rural areas and 2100 in the urban areas were considered as ‘poor’.

It was based upon the formula provided by D.T. Lakadawala, and known as Lakadawala formula.

In 2007, Government set up a committee headed by Professor Suryesh Tendulkar popularly known as Tendulkar Committee.

Committee produce its report in 2009 with the following suggestions:

  1. The base of calorie intake should be abandoned.
  2. Under consumer expenditure, apart from food articles, other basic necessities of life like Education, Health should also be added to the list.
  3. Urban poverty line should be considered as National poverty line.
  4. The method of PPP should be adopted, even the difference of purchasing power between rural and urban areas.

These recommendations were accepted by the Government.

Data on Poverty in India

Some Data on Poverty

In 2004-05 (Data)

  • NSSO – 27.5 % (poor)
  • Traditional – 37.2% (Poor)

In 2009-10

  • 29.8% (Poor)
  • Highest Poverty – Bihar
  • Highest Population – Uttar Pradesh
  • Lowest Poverty – Goa
  • Lowest Population – Sikkim

In 2011-12 (Mid-Term)

  • C. Rangarajan committee was set up after this and in this report:
  • 29.6% Poverty.
  • According to UNDP report, more than 55% people in India are poor.

2021 - Current

The current poverty line is 1,059.42 Indian Rupees (62 PPP USD) per month in rural areas and 1,286 Indian rupees (75 PPP USD) per month in urban areas.

International Poverty Line

  • 1.25$ per person per day
  • On this fact, 1.2 Billion people across the world are poor.



Unemployment is a term referring to individuals who are employable and actively seeking a job but are unable to find a job. Included in this group are those people in the workforce who are working but do not have an appropriate job.

Different types of Unemployment in India

  • Structural Unemployment
  • Under-employment
  • Open Unemployment
  • Disguise Unemployment or Hidden Unemployment
  • Frictional Unemployment
  • Cyclical Unemployment
  • Seasonal Unemployment
  • Technological Unemployment

Measurement of Unemployment:

  • Unemployment is given in percentage.
  • Unemployment rate = (unemployed worker/labour force)*100

In India NSSO, uses 3 concepts of unemployment:

  1. Usual status of unemployment (1 years)
    • It gives the number of persons who may be said to be chronically unemployed.
    • It generally gives the lowest estimate of unemployment especially for a poor economy because only a few can afford to remain without work over a year/long period.
  2. Current weekly status of unemployment (1 day)
    • It reduces the reference period to 1 week.
    • According to this estimate – a person is said to be employed for the week even if he is employed only for a day during that week.
  3. Current daily status of unemployment (1 hour)
    • Reference period is 1 day.
    • It counts every half day’s activity status of the respondent over the week.

Okun’s Law of Unemployment

According to this law - There is inverse relationship between growth rate of GDP and the rate of unemployment.

If there is 3% increase in GDP rate, there might be 1% fall in the rate of unemployment, but it does not mean that, it will repeat further in the same manner.