Transferring Grassroots Experiences into New Development Theories and Concepts


Chapter 1: Poverty

Poverty is a broad term, defined differently by different organizations. This chapter summarizes two presentations on poverty. The first presentation, Poverty Mobility1, addresses some of the more common definitions of poverty and also the dynamic aspect of poverty. It proposes that to understand poverty, one must be able to understand the upward and downward mobility which individuals may experience during their lifetime. The second presentation, Producer Groups: A Solution to Unequal Access and Low Returns from Livelihood Options2, considers the role of collective action in reducing poverty.

Poverty Mobility

In order to develop a program to reduce poverty, it is first important to be able to understand, define, and measure poverty. While there is no universally accepted definition of poverty, the two most commonly used definitions are income poverty and human poverty. Income poverty is the minimum income needed for survival; this measure is widely used in designing poverty reduction programs around the world. The UNDP uses two income poverty definitions: absolute poverty (households earning below $1 per day) and poverty (households earning below $2 per day). Human poverty treats poverty as multi-dimensional. Since income requirements for fulfilling basic needs vary from place to place, it can be argued that non-income indicators—for example, housing, literacy, and life expectancy—should also be considered as a poverty indicator3.

With these different definitions of poverty, the question of poverty measurement is often a lively debate. The most common way to measure poverty has typically used some form of the income poverty definition, including measuring the caloric mean, dollar-per-day equivalent, head-count ratio, or the poverty gap index. However, many of the countries using income poverty measurements while attempting to implement poverty reduction measures have not experienced considerable success. This is because the income poverty definition is most useful as a standardized indicator with which progress can be compared across different regions or different countries (Krishna, 2004); it is not useful for enhancing our understanding of the reality in a given context.

One way to better understand the reality of poverty, and consequently, a poverty reduction intervention, is to consider the perspective of the residents. Just as academics may subscribe to different definitions of poverty, it is likely that those who are poor have different definitions or measures of poverty. Thus, directly involving the poor in the process of designing a poverty reduction measure may result in a more successful program. The idea here is that households do not simply wait for a poverty reduction measure to help them out of their predicament, but rather, they adopt various strategies to cope with their situation—strategies which may be of great use to development experts.

By incorporating households in this way, poverty mobility—the ability for some households to escape poverty or non-poor households to fall into poverty—can also better be understood, providing meaningful insights into the “stages of progress” for a particular region4. This information can be learned from careful community based investigations. People who have lived together for reasonably long periods of time tend to know which households have progressed and which have declined; they are also often able to identify the events associated with these changes. This information, complemented with information collected independently from individual households, can help to reconstruct the frequency of events associated with these ascents from or descent into poverty, and subsequently offer insights into what kinds of results one can expect from a given intervention.

Producer Groups: A Solution to Unequal Access and Low Returns from Livelihood Options

Livelihood can be defined as the capabilities, activities, and assets—including material and social resources—required for a means of living. Understanding access to livelihood opportunities and market returns from livelihood options is crucial in designing and implementing policies related to livelihood which may help alleviate poverty.

In India, one example that can help illustrate how livelihood options can impact poverty can be seen in the sharecropping practices prevalent in Madhya Pradesh. In this situation, access to productive land is unequal—typically, the best land is shared by the backward castes while the poorest land is accessed by the scheduled castes. This leads naturally to opportunity disparities and simultaneously impairs chances to escape poverty.

Many livelihood opportunities for the poor also yield quite low returns. For example, when analysing the sharecropping practices in Madhya Pradesh, one also observes that the poor often either pays more for services or earn lower returns compared to the returns that higher classes get for similar inputs. This happens for various reasons. For example, the poor are often forced to market their produce at the least favourable time, thus they gain low returns and find it more difficult to increase earnings and wealth.

This difficulty to meet their economic needs in their given livelihood options leads to many of the poor borrowing from moneylenders. In doing so, they often become victims of unfavourable terms of contract. In some areas, for example, the moneylenders are paramount in setting the wage rate or managing land rentals. Thus, the poor borrowers may find themselves in a cyclical relationship with a lender who has considerable control over all aspects of their livelihood options. In such inter-locking markets it is easy to conceal low returns.

There are other examples of similar exploitative relationships in other markets. For example, a case study of Sanarpatty Vattara Kalanjiam in the Dindigul district studied agricultural labourers working at tamarind processing units to better understand their economic opportunities. The study showed that the labourers were trapped by a “hidden contract.” For the workers at the tamarind processing units, although there was some better paying seasonal agricultural work available to them, the threat of being denied work at the tamarind processing unit for the rest of the season binds them to their lower paying job.

What is interesting in this situation is that the value added by the lowly-paid labourers is much more significant than the cost of the raw materials. However, rather than paying the labourers wages that reflect the value added by their work, the owner—the supplier of the raw materials—pockets the amount as “surplus.” A similar relationship has been observed among kalanjiam members involved in cattle rearing. In both cases, the meagre wages were hardly enough to cover basic household expenses, they create a cycle of dependency between the client and the patron, and they negatively impact the poor’s livelihood options.

In such cases, what can be done? One solution might be the formation of “producer groups.” Since individuals or individual households do not wield enough bargaining power in the market, the formation of producer groups by people involved in similar activities might prove to be a powerful intervention technique. Such groups will help members bargain effectively with various markets including the credit market, commodity market, and wage-labour market. The groups will also help the labourers optimise market returns. Working as a member of a producer group will also help ensure that the “surplus” can now be appropriately distributed to the labourers, thus helping members on their path of progress and poverty-escape routes.

Discussion

As is evident from both presentations, poverty is a complex issue. One common reaction when one observes poverty is “Who can—or should—help?” A common initial response is “What about the government?” However, this solution has several problems. While government institutions should be involved in social security programs, government interventions do not always match people’s needs. Also, since most of the benefits are routed through powerful people, those benefits ultimately did not reach the poor. This does not indicate that government institutions do not play a role, but rather that there may be different roles that can be addressed by these institutions.

Another discussion topic was the role of migration in poverty reduction. There are times when labourers have opportunities to earn higher wages by migrating. Furthermore, the rich and the not-poor move out of the villages opening up spaces for the poor. Transportation facilities have increased labour mobility. In a sense, therefore, the boundaries of economic opportunity have widened. However, migration raises new difficulties. While the wages that can be earned at these jobs may be higher, migration also causes disruptions to productivity, they are expensive, and they often require separation from family members. The net value added by a choice to migrate for work needs to be studied further before any strong arguments in favour or against are made.

Migration may also negatively impact the potential for collective action. A community of migrants may not share the same affinity that may develop amongst people living in a common geographic region for some time. This is a significant consideration because it reduces the potential contribution of collective action on poverty alleviation.

There are several reasons that collective action is important. Despite poverty being an individual or household issue, it was generally agreed that poverty interventions should be a collective issue. For example, for an intervention to be effective, the community and external shareholders need to have a “shared understanding” of poverty. With such an understanding, the community itself helps increase the chance that its poor residents escape poverty. For example, the practice of intermarriages has been shown to increase the risk of congenital diseases; this results in increased health care expenses which can put households into debt traps5. One example of reducing human poverty—or rather, providing a safeguard against such poverty—can be to increase awareness of the ill effects of such traditional practices. This, in a sense, is increasing the “shared understanding” in that community.

Participants also shared specific examples of successes with collective action in India. Marketing products like milk, for example, have benefited from interventions that help achieve a “critical mass” for economically efficient collection and marketing of the product. Similar examples have been noted in the case of legumes and goat-cheese manufacturing.

But even successful interventions should be carefully reviewed. Even organising ten labourers in challenging the established order would go a long way in poverty reduction process, but that at the same time, one has to be wary of straying into the politics of the region while attempting to empower the labourers. If an intervention is successful in improving the economic position of poor households, how can we prevent the poor from frittering away their “surplus” hard earned income on wasteful consumption expenditures during ceremonies or in gambling? Poverty reduction interventions should include “social mobilization campaigns” to sensitize the community on social values and habits and to improve the rhetoric of the community to better enable them to deal with poverty and to more effectively pressure the exploiters in the community.

The participants generally agreed that the definition of poverty should certainly also be readdressed. The income poverty definition is not flexible enough, especially when poverty, to a certain extent, is a social construct. Some other indices that should be included in the definition of poverty are conflict, domestic violence, education, health care6, and the number of meals each family member has each day7. It should also be noted, however, that it is quite possible to find communities where several improvements have been made in these suggested areas and even though people may seem better off, they still may not be out of poverty.

Whatever approach is used, it is also important to understand the time dimension of poverty reduction. Poverty reduction interventions often take at least a decade for the process to come to fruition. In the Indian experience, for example, a landless labourer takes at least 20 years to acquire land and almost 40% of the land in some villages is owned by members of scheduled castes. In general, perhaps the focus of a development practitioner should not be on “How many people have come out of poverty?” until thorough studies and proper documentation have been completed. Instead, more time can be spent conceptualizing other interventions—based on current practices and observations—that may be more effective at preventing families’ descent into poverty.


  1. Presented by Mr. N. Karuppusamy, Team Leader, DHAN Foundation [back]
  2. Presented by Mr. Joshua Samson, Project Executive, DHAN Foundation [back]
  3. While the human poverty definition of poverty can sometimes be seen as a standard of living measure of poverty, another perspective from this definition is that poverty is the denial of human rights. In this view, political will is the strongest vehicle to reduce poverty. [back]
  4. Krishna, 2004. Details of this methodology can be found at www.pubpol.duke.edu/krishna/householdpoverty [back]
  5. One participant reported that AKRSP’s study on poverty revealed that ‘Health’ was a major factor that drove families into poverty. Meager savings were often spent on a single day’s treatment and the sick person was deprived of daily wages thus increasing the debt-burden for the families. [back]
  6. Panelist Mr. Vasimalai pointed out that around 80% of poor women were anemic and suffered from gynecological problems. He opined that microfinance could help reduce such problems. [back]
  7. AKRSP’s study on poverty used this measure as an indicator. They observed the number of meals each of 10 poorest families had per day. From their study, they observed that women and children sacrificed their food so that the men who worked could consume it. [back]

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