poverty and income distribution in asian countries

Topics: Poverty, Economic inequality, Welfare economics Pages: 7 (1902 words) Published: April 26, 2014
Poverty and income distribution in Asian countries
Almost half of the world, that is, three billion people lives on less than $2.50 a day and at least half of the humanity lives in countries where income disparities are present.[Anup Shah, Poverty facts and stats] If we perceive things in a materialistic manner, then poverty is the lack of basic necessities such as food, clothing and shelter. However, in economic terms, many social scientists believe that poverty can be measured in terms of income and standard of living. A low level of income and standard of living indicates poverty. On the other hand, income inequality is the state of an economy, in which the shares of the total income earned by the various participants in the economy are distributed unequally. Poverty and income inequality is a global issue, and is discussed widely on platforms such as the social media, electronic media and print media. Significant measures have been taken to eradicate and alleviate these issues by various organizations and policy makers. However, the success of their acts is debatable. Most of the developing economies are facing these issues; however, I will be shedding light on Asian countries like India and Cambodia. There are several contributing factors to the high rate of poverty and income inequalities in these economies. India is a massive nation with immense resources. An interesting fact highlighted by Ejaz Ghani is that “if income in India was distributed completely equally, the entire nation would still be living on less than half the UK poverty line. (The UK poverty line is a relative line: you’re poor in the UK when your income after tax is below 60% of the national median)”. [Statistics on poverty in India] The government of India practices a rather different method for calculating the poverty rate. They believe that a person consumes food nutrition which varies from 2000-2500 calories per day to sustain their body. So, an individual who is not earning enough to meet this requirement is regarded as poor. However, this unorthodox method of calculating poverty was updated by the consumer price indices after the 1970s. In 2010, the World Bank reported that “32.7% of the total Indian population fall below the international poverty line of US$ 1.25 per day (PPP), while 68.7% live on less than US$ 2 per day”.[The world bank, “poverty and equity”]. Of India’s population of almost 1.2 billion, 300 million people live below the poverty line. The people suffering from poverty are dominated by the people living in rural areas of the country. There are several factors contributing to this issue. The most important of all, according to my beliefs is that the people stricken with poverty have a very low stock of human capital, such as education, training or skill development. In India, over 70 percent of heads of poor households are illiterate compared with about 30 percent in the general population and much less for those above the poverty line. They have a very small amount of physical capital, such as land or machinery. Those lacking education, minority groups, children, and the elderly are generally poorer. This is because there is limited access to land and irrigation facilities. Those without access to land, not necessarily owning it, had a much higher incidence of poverty. Apart from this, India as an economy is largely dependent on the agricultural sector and it is the largest source of employment for the population. Agriculture is highly dependent on the monsoon season. Due to uncertainty and irregularity of the weather, the agricultural sector suffers a lot. Hence, this affects the production process and results in a decrease in income. People with no other source of income suffer due to this, and the only option they are left with is to starve. Moreover, unemployment in the rural areas drives people to migrate to the urban areas, and migrants form the majority of the urban poor. Since most residents in the urban areas...

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