Maarg Manthan · Topic 10.4

Urban Poverty

Geography › Urbanization, Settlements and Migration · Topic 10.4

Urban poverty is the lack of adequate income, housing, services and security among city dwellers. It is closely linked to informal work, as the large majority of urban poor are street vendors, domestic workers, construction labourers, rag-pickers and small traders, with low and irregular earnings and no social security. Urban poverty is measured by consumption poverty lines and by multidimensional indices. The share of the urban poor in India has fallen over time and is lower than rural poverty, but the number of people affected is large, and many live in slums.

5 min read · UPSC Prelims · Geography · Urbanization, Settlements and Migration

At a Glance

Main features Informal work, poor housing, insecurity
Who Vendors, domestic workers, construction workers
Measure Poverty line; multidimensional index
Mission DAY-NULM (2013)
Credit scheme PM SVANidhi (2020)
Exam link UPSC Prelims, Geography: Urbanization, Settlements and Migration

Where Does It Fit?

This topic follows the topics on slums and urban services and describes the income and livelihood side of the same problem. It prepares for the topic on smart and inclusive cities, which are the policy response. Previous topic: Urban Infrastructure Challenges: Urban Transport, Waste Disposal, Water Supply, Drainage, Sanitation. Next topic: Inclusive and Smart Cities: Development and Government Initiatives.

What Are the Features and Causes of Urban Poverty?

Informal work: the majority of urban workers are in the informal sector, with irregular pay, no contracts and no pensions. Street vending, domestic work, rickshaw pulling, construction and waste picking are typical.
Housing and services: poor people live in slums or on pavements, and pay a high price for water, transport and health care.
Insecurity: evictions, harassment of vendors and no protection against illness or loss of work.
Vulnerability of women and children: women work in low-paid domestic jobs, and children may drop out of school to work.
Causes: migration of unskilled labour, shortage of formal jobs, high cost of land and housing, low skills, and weak access to credit and services.
Spatial pattern: poverty is found in big cities as well as in small towns; small towns often have a higher incidence of poverty but get less attention.

How Large Is Urban Poverty?

Official poverty lines are based on consumption. By the Tendulkar method, about 13.7 per cent of the urban population was below the poverty line in 2011-12, compared with about 25.7 per cent in rural areas. The NITI Aayog’s national multidimensional poverty index, which looks at health, education and living standards, found that the share of multidimensionally poor was much lower in urban areas, at about 5 per cent, than in rural areas at about 19 per cent, in 2019-21. The poverty line itself has not been officially revised in recent years, and survey results of household consumption have been used by researchers to estimate falling poverty, so the latest data should be checked. Urban poverty also takes the form of deprivation in housing, water and sanitation, which an income line does not capture. Income poverty and deprivation in basic services do not always overlap: a household can be above the poverty line and still live without a toilet or safe water.

Which Programmes Address Urban Poverty?

Programme	Content
Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM, 2013)	Skill training, self-employment loans, support to self-help groups, shelters for the urban homeless, and support for street vendors
PM SVANidhi (2020)	Collateral-free working capital loans to street vendors, with incentives for digital payments
Street Vendors Act, 2014	Protects the livelihood of vendors and regulates vending zones
Pradhan Mantri Awas Yojana (Urban)	Housing for the economically weaker sections
Ayushman Bharat and PM Poshan	Health insurance and nutrition, which also reach the urban poor
e-Shram (2021)	National database of unorganised workers for welfare benefits

The gender and age dimension is important: women make up a small share of the urban workforce, but are concentrated in domestic work and home-based production, such as garment piece work and beedi rolling, with very low pay; child labour persists in small workshops and eateries. The elderly poor have no pension, and the homeless, estimated at well over a million persons in 2011, sleep on pavements, under flyovers and in night shelters that are few. Climate hazards such as heat waves and floods hit the poor hardest, since they live in tin-roofed homes and low-lying areas. As an analytical point, urban poverty can be reduced only by creating decent jobs, giving legal rights to the informal economy, and giving access to housing and services, because the poor are an essential part of the city economy, as discussed in Urbanization Challenges: Rural-Urban Migration, Emergence of Slums, Informal Settlements. The planning responses are in Inclusive and Smart Cities: Development and Government Initiatives.

Why Is This Topic Important?

Schemes Names and years
Link Informal economy
Data Poverty measurement

What Came Next?

The next topic describes inclusive and smart cities and the government initiatives for urban development. Next topic: Inclusive and Smart Cities: Development and Government Initiatives.

Key People and Terms

Informal sector Work without contracts or protection
Poverty line Minimum income or spending level
MPI Multidimensional Poverty Index
DAY-NULM Urban livelihoods mission
SVANidhi Loans for street vendors
Street vendor Seller of goods in public spaces

Exam Corner

Points to Remember

DAY-NULM started in 2013.
PM SVANidhi started in 2020.
Street Vendors Act: 2014.
Urban poverty (2011-12): about 13.7 per cent.
Most poor urban workers are in the informal sector.

Do Not Confuse With

Income poverty and multidimensional poverty Consumption line versus health, education, living standards
DAY-NULM and PMAY Livelihoods versus housing
Urban and rural poverty Lower share but concentrated in cities versus higher share

Memory Hook

Informal work, uncertain pay; vendors, helpers, loans and a livelihood mission to stay.

Mains Angle

Questions ask for features of urban poverty and the policy response. These points add depth.

Nature Informality and insecurity
Measures Lines and indices
Response Jobs, housing, rights

A Question You May Face

An original practice question, not a past paper question.

“Explain the nature and causes of urban poverty in India and evaluate the government’s initiatives to reduce it.”

How to Answer

Features Informality, housing, insecurity.
Causes Migration, jobs, costs.
Data Poverty line and MPI.
Policy DAY-NULM, SVANidhi.

GS Relevance

Prelims: features of urban poverty, schemes such as DAY-NULM, PM SVANidhi. GS Paper 1 and 2: poverty, urbanisation and welfare.

Frequently Asked Questions

What are the main features of urban poverty?

Urban poverty is marked by informal and irregular work with low pay and no social security, poor housing in slums or on the streets, lack of water and sanitation, high living costs, and insecurity from eviction and job loss. Women and children are particularly vulnerable, and poverty is often hidden in small towns.

Who are the urban poor?

The urban poor are mostly informal workers such as street vendors, domestic workers, construction labourers, rickshaw pullers, rag-pickers and small traders. Many are migrants from villages who live in slums. They work in the informal economy that supports the city but receive low wages and few legal protections.

What is the DAY-NULM?

The Deendayal Antyodaya Yojana - National Urban Livelihoods Mission, started in 2013, aims to reduce urban poverty by providing skill training, loans for self-employment, support to self-help groups, shelters for the urban homeless and support for street vendors. It was a renamed and extended form of the earlier Swarna Jayanti Shahari Rozgar Yojana.

What is the PM SVANidhi scheme?

The PM Street Vendor's AtmaNirbhar Nidhi, begun in 2020 after the COVID-19 lockdown, gives collateral-free working capital loans to street vendors, with higher loans on timely repayment, and rewards for using digital payments. It aims to help vendors restart and formalise their business.

How is poverty measured in urban India?

Poverty is measured by consumption-based poverty lines, which are based on spending needed for a minimum standard of living, and by multidimensional indices that include health, education and living standards. By the Tendulkar line, urban poverty was about 13.7 per cent in 2011-12, and later multidimensional indices show a lower urban rate.

PYQ Practice — Statement Analysis

1 Most of the urban poor work in the informal sector.

True

They have low pay and no protection.

2 PM SVANidhi gives loans to farmers.

False

It gives loans to street vendors.

3 The Street Vendors Act was passed in 2014.