Poverty

Many underdeveloped countries around the world, are facing problems such as poverty, unemployment, inequality, etc. 

Due to widespread poverty and unemployment in the country, a large number of young people are forced to migrate abroad in search of work, which is a bitter reality of modern Nepal. 

On the other hand, the benefits of the country's economic development have not been equally accessible to all citizens. This has led to a widening gap between the rich and the poor. 

Addressing these prevalent problems in the country is the primary objective of economic policy. To solve such problems, the country needs to adopt various economic policies and programs in line with the changing global context. 

Definition of Poverty

Poverty is the condition of people being unable to fulfill their basic needs such as food, shelter, clothing, education, health, and security. In other words, poverty refers to the state of people leading a minimal life due to insufficient income. 

It is necessary to understand the concept of poverty in both a narrow and a broad sense. In a narrow sense, poverty refers to the condition of having low income. In a broad sense, poverty refers to being deprived of basic human capacities and the economic, political, and social facilities provided by the state, such as education, health, sanitation, political representation, etc.

Since poverty is a multi-dimensional concept, it is very difficult to provide a universally acceptable definition. It includes not only economic aspects but also social and political aspects such as education, health, sanitation, political representation, etc. The concept of poverty can be explained through the following definitions:

According to the World Development Report published by the World Bank in 2000/2001, "Poverty is more than inadequate income or human development, it is also a vulnerability and lack of voice, power and representation."

According to Amartya Sen, "Poverty is deprivation of basic capabilities rather than merely a lowness of income."

Therefore, poverty is not just low or insufficient income but also a life afflicted by illiteracy, malnutrition, disease, etc., and a lack of social and political representation and participation.

Types of Poverty

Poverty can be divided into the following two types:

(a) Absolute Poverty: 

Absolute poverty is defined as the condition where individuals are unable to meet their basic needs, including food, shelter, clothing, education, health, and security. In other words, it refers to the economic state of people who cannot attain the minimum requirements necessary for survival.​

According to the Nepal Living Standards Survey IV (NLSS-IV) conducted by the National Statistics Office in 2022/23, approximately 20.27% of Nepal's population lived below the national poverty line . This marks a decline from 25.16% in 2011, indicating progress in poverty reduction over the past decade.​

The NLSS-IV also revealed disparities between urban and rural areas. In rural regions, 24.66% of the population lived below the poverty line, compared to 18.34% in urban areas . This highlights the ongoing challenge of addressing rural poverty in Nepal.​

Furthermore, Nepal has achieved significant success in reducing extreme poverty. In 1995, an estimated 55% of Nepalis lived in extreme poverty, defined by the $2.15 per day threshold. By 2023, this figure had plummeted to just 0.37%, showcasing unparalleled progress in eliminating extreme poverty.​

(b) Relative Poverty: 

Relative poverty is the condition where people have sufficient income for survival but their income is low compared to the income and living standards of other communities and countries. In other words, relative poverty is the deprivation seen when comparing with other countries, individuals, or communities. It does not analyze whether minimum basic needs can be met. 

It is analyzed based on the inequality in income distribution. The main problem of underdeveloped countries like Nepal is absolute poverty, not relative poverty. Therefore, the main goal of development in these countries is to reduce absolute poverty.

Poverty Line

The income required to meet the minimum basic needs of a person is called the poverty line. It is also a method of measuring the minimum standard of living. To calculate the poverty line, the income required to purchase the minimum basic necessities is identified. 

In the context of Nepal, the poverty line is measured based on the minimum calorie requirement needed for a person's survival. A Nepali person needs to obtain an average of 2214 calories of energy per day from food for survival. 

In the context of Nepal, the income required to purchase food items to obtain 2214 calories of energy is the poverty line. Those individuals whose income is below the poverty line are considered absolutely poor, and their standard of living and economic condition reflect absolute poverty.