Poverty - Characteristics, Causes and Remedy

Subject: Economics

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This note contains a brief description of poverty. Poverty is a relationship between the essential needs of people to survive and their ability to satisfy them. There are two types of poverty: Absolute poverty and relative poverty. This note also contains the characteristics of poor, causes of poverty and remedial measures of poverty reduction.
Poverty - Characteristics, Causes and Remedy

Concept of Poverty

Poverty can be defined as the inability of the people to attain a minimum standard of living. In other words, poverty is a relationship between the essential needs of people to survive and their ability to satisfy them. Those people who are unable to satisfy some of the basic needs such as food, clothes, shelter, sanitation, etc. are called poor. Poor people live without fundamental freedom of choice which makes their life better. They face vulnerability to ill health, economic dislocation, and natural disaster. In words of Amartya Sen, a Nobel Laureate in economics, Poverty is a deprivation of basic capabilities rather than merely a lowness of income.

Types of Poverty

Types of proverty
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a. Absolute Poverty

Source: www.slideshare.net
Source: www.slideshare.net

Absolute poverty refers to a situation in which individuals are unable to attain even basic necessities of life such as food, clothes, shelter, drinking water, health facilities, etc. It is a situation in which the level of income of the people is so low that they cannot afford most of their basic needs. The minimum amount of income required to meet the basic necessities of life is known as the poverty line. Therefore, absolute poverty refers to a situation in which the level of income of the people is below the poverty line.

b. Relative Poverty

Source: thedailyblog.co.nz
Source: thedailyblog.co.nz

A number of differences can be made between absolute poverty and relative poverty on the basis of definition like a fulfillment of basic needs, income ceiling, its availability country, etc. The difference between absolute and relative poverty are: Relative poverty refers to an unequal distribution of income and economic resources of a country. It is defined as a relative deprivation or exclusion from participation in society of persons, families, a group of people whose material, cultural, social resources are so limited that it excludes them from a minimum respectable way of life in the state where they live. In this types of poverty, the income of an individual is more than US $1 per day.

Absolute Poverty

Relative Poverty

It refers to a situation in which individuals are unable to attain even basic needs.

It refers to an unequal distribution of income and economic resources of a country among the people.

People cannot even fulfill their basic needs of foods, clothes, shelter, etc.

People can fulfill their basic needs but not as much as other rich people.

The individual income is less than US $1 per day.

The individual income is more than US $1 per day.

It can be eradicated.

It cannot be eradicated.

It can be measured in quantitative terms.

It cannot be expressed in number but can be compared.

Characteristics of Poor

Some common characteristics, as well as difference between rural and urban poor of Nepal, have been discussed below:

1. Low level of income

Poor people usually look assets as well as in urban area. In rural areas, they own small area of low or unproductive land without irrigation and other physical facilities. They lack income and access to credit and unable to improve their land productivity.

2. Bad Housing Condition

The housing condition of a majority of the Nepalese people is very bad. Due to large family size, there is always overcrowded in households. All the family members have to live in a small mud hut with limited space, a single room house and without electricity and other physical facilities.

3. Literacy

The majority of poor people is generally illiterate, a high illiterate rate is either due to ignorance or poverty or both. The national literacy rate of Nepal is 65% while the literacy among the poor is far below than the national average.

4. Occupation

The occupation of the poor is generally agriculture in rural and physical labor in urban areas. Many poor people even do not have their own land and other employs them as agriculture labor.

5. High Expenditure Pattern

In Nepal, the majority of poor spend more than 70% of their income in consumption. They spend almost all of their income on food in order to survive. Sometimes, they consume more than what their income is.

6. Demographic Pattern

There exist large family sizes among both rural and urban poor area because of high population growth rate. Children are regarded as the source of earning. Poor people often lack access to modern family planning services.

7. High Gender Disparity

There is high gender disparity at the lowest level of income in both rural and urban areas. Women have very low chances of going school so, only a few areeducated and so they have fewer employment opportunities.

8. Lack of access to state facilities

A majority of poor people of Nepal are living in rural areas and government expenditure pattern is concentrated in favor of urban sectors or to the rich. Therefore, the rural people cannot enjoy the benefits from the facilities provided by the government.

Causes of Poverty

Source: slideplayer.com
Source: slideplayer.com

1. High growth rate of population and low economic growth rate

Various factors such as economic, historical, social, politician, etc are responsible for growing poverty in Nepal. In Nepal, the growth rate of population is very high as compared to the economic growth rate. This fails to bring about the required improvement in the living standard of the people.

2. Unemployment

The next important cause of poverty is unemployment. In developing countries like Nepal, there is no development of employment providing sectors. There is a lack of employment opportunities which is the great problem of poverty.

3. Low Industrial Development

The industry is the most important sector that provides employment to mass people. But, the growth of industrial development in developing country like Nepal is very low due to lack of capital, infrastructure, modern technology and appropriate industry policy.

4. Socio-cultural Factors

In Nepal, people are poor due to the prevalent socio-cultural institutions. In order to fulfill socio-obligations and their traditional religious ceremonies (from cradle to grave) people spend extravagantly.

5. Old Technology

Old technology is also one of the causes of growing poverty in Nepal. Not only the manufacturing sector is still employing old technology but also, the agricultural production techniques are far below the standards of developed economies.

6. Regional Disparity

The extent of poverty is also different in each region because of diversified geographical conditions of Nepal. The life pattern in mountains and hills are more difficult than in the Terai due to lack of infrastructure facilities, low productivity, etc.

7. Under utilization of resources

Another cause of poverty is under utilization of resources in an underdeveloped country like Nepal. Even thoughNepal is rich in various natural resources like water, forest and minerals due to under utilization of such resources Nepal is facing poverty line.

8. Inadequate socio-economic infrastructure

The social-economic infrastructures such as transport, communication, health, education, safe drinking water and energy are inadequate in rural areas. Availability of such social services not only determines the standard of living of people but also influences the income earning capacity of individuals.

Remedial Measure of Poverty Reduction

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The remedial measures for poverty reduction are as follows:

1. Increase in Economic Growth Rate

There should be high, sustainable and broad-based economic growth for the long-term reduction of poverty in a country like Nepal. Sustainable economic development refers to increased productivity of land and labor, empowerment of women, socially and an economically disadvantaged group of society and equality in rights and facilities provided by the government.

2. Investment in Human Capital

Adequate investment in human capital also plays a key role in long-term poverty reduction. Therefore, investment should be made in different sectors like clean drinking water, education, health, and sanitation for reducing poverty.

3. Development of Rural Infrastructure

The development of rural infrastructures increases the opportunities and productivity of the rural people. Adequate transport, communication, electricity, irrigation, technological progress, marketing facilities etc, increases the economic opportunities to people and helps to reduce poverty in a long run base.

4. Creation of Empowerment Opportunities

We all know that the main cause of poverty is a lack of income earning opportunities. As labor intensive industrial expansion creates more employment opportunities, emphasis should be given to the development of such industries which are more labor intensive.

5. Participatory Development Activities

Recently, a new modality of development has been used and it is participatory one. Poor people should be involved in various development projects in the local area so that they take care of the development infrastructures in their management and maintenance.

6. Food Pricing and Distribution Policy

Different programs in agriculture like food pricing in the season, subsidy for farmers to purchase inputs and in transport, government direct purchase of food from farmers in season and distributing such food in offseason should be adopted according to the need to decrease the incidence of poverty.

7. Targeted Programs for Poor

Different targeted programs in the field of irrigation, health, education, employment etc should be implemented for the marginalized classes of people and areas, which have not been able to enter into the mainstream of development.

8. Women Empowerment

It is said that women could play multiple roles in the society. So, special emphasis should be given to women in education, health and employment. This, in turn, helps to control population and increase productivity.


Adhikari, Ramesh Prasad, Economics-XI, Asmita Pustak Prakashan, Kathmandu

Kanel, Navaraj et.al., Principles of Economics-XI, Buddha Prakashan, Kathmandu

Kharel, Khom Raj et.al., Economics In English Medium-XI, Sukunda Pustak Bhawan, Kathmandu

Things to remember
  1.  Poverty is the inability of the people to attain a minimum standard of living.
  2. There are two types of poverty: Absolute Poverty and Relative Poverty
  3. Absolute poverty refers to a situation in which individuals are unable to attain even basic necessities of life such as food, shelter, clothes, drinking water, health facilities, etc.
  4. Relative poverty refers to an unequal distribution of income and economic resources of a country.
  5. There are many causes of poverty and it must be eradicated from the country in order to sustain the development of the country smoothly.
  • It includes every relationship which established among the people.
  • There can be more than one community in a society. Community smaller than society.
  • It is a network of social relationships which cannot see or touched.
  • common interests and common objectives are not necessary for society.

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