Urban poverty

Urban poverty is a form of poverty quite visible in mega cities characterized by substandard living conditions and income along with deficient provisions of basic amenities and low quality of life. As per NSSO survey reports, there are over 80 million urban poor. It is different from Rural poverty in its characteristics and causes.

The situation of Urban Poverty

  • Urban poverty in India is unique. Although the proportion of urban poor has declined over the last decades, there is a steady increase in the number which has a direct impact on the slum areas of the metros.
  • In India, “Gareebi Hatao” was made a major objective of the Fifth Five Year Plan (1974-79) when the urban poor got an identity. According to the report of the Ministry of Housing and Urban Poverty Alleviation (2001), about 23.5% of urban households live in slums.
  • Although the percentage of slum dwellers had declined to 17% by 2011, the total number of slum households had increased from 10 million in 2001 to 13 million in 2011. The majority of urban poverty occurs in megacities.
    • The 2011 Census found that around 12 per cent of the urban population in “Class I” cities lived in slums, with higher rates in the larger cities.

Causes of urban poverty

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1] Increasing migration: due to the decrease in opportunities in the rural sector and the continuously decreasing benefits of agriculture.

2] Lack of investment: Lack of investment in basic requirements like skills, education, and health in rural areas of India

3] Loss of income: A person migrating from a rural area does not get a proper salary in cities. Due to this they are forced to work in the unorganized economy and are exploited by the capitalists.

4] Affordable Housing Shortage: The congestion in slum areas increases continuously due to a reduction in affordable housing. This further leads to a lack of facilities like light, water, and sanitation.

5] COVID-19 and Urban Poor: The Indian city was affected the most due to epidemic-induced disruptions during COVID-19. The impact of Corona resulted in a lockdown which reduced the working opportunities for these sections of the urban population, bringing a livelihood crisis to the urban poor.


Key Highlight by Oxfam Report

➔ Globally, extreme poverty rates are 4% higher for women than men.

➔ India’s richest 1% of the population holds 42.5% of national wealth while the bottom 50%, the

majority of the population, owns a mere 2.8%.

Consequences of Inequality

  • Extreme inequality inhibits social mobility which means that children of poor parents will stay poor.
  • Urban Exclusion:- People who are living in slums are excluded from basic needs.

World Inequality Report 2022

  • Distribution of Wealth
    • The top 1% of the population holds more than one-fifth of the total national income in 2021 and the bottom half is just 13%.
    • The economic reforms and liberalization adopted by India have mostly benefited the top 1%.
  • Gender Inequalities
    • The female labour income share is equal to 18% which is significantly lower than the average in Asia [21%, excluding China] and this value is one of the lowest in the world.

Feminization of poverty

It is a change in the levels of poverty biased against women. The Causes of the Feminization of Poverty:

  • Inequality in the access to public services or in their quality: Barriers to the education of girls, educational segregation by sex, lack of women-specific health attention.
  • Inequality in social protection: Contributory pensions systems reproducing previous labour market inequalities, lower access to pensions and social assistance by women, inequality in benefit concession or in benefit values in targeted policies
  • Labour market inequalities: Occupational segregation, intra-career mobility, differential levels of employment in paid work, wage discrimination, duration of work shifts.

State Response to Urban Poor

One Nation One Ration Card

Department of Food and Public Distribution has launched the ‘Integrated Management of Public Distribution System (IM-PDS)’ for implementation in all States/UT.


  • Introduce nationwide portability of ration card holders under NFSA, 2013 enabling them to lift their entitlement to food grains from any Fair Price Shop of their choice in India with their same ration card.
  • The remaining family members who migrate to another location can claim their share of the PDS ration.
  • National-level de-duplication of all ration cards/beneficiary data
  • Integration of States/UT PDS systems/applications with Central PDS systems/applications.
  • Use of data analytics techniques to bring improvements in PDS operations.
  • National Portability Platform: Public Distribution System Network will be developed to provide inter-state portability to the ration card holder under NFSA. Keeping in view the physical progress under the End-to-End Computerization scheme and readiness for implementation of Inter-State/National Portability, the same shall be started on a pilot basis in a few States/UTs each shortly. Telangana and Andhra Pradesh were the first States to introduce inter-State portability.

Deendayal Antyodaya Yojana – National Urban Livelihood Mission (DAY-NULM)

  • NULM was launched by the Government in 2013 by restructuring the Swarna Jayanti Shahari Rozgar Yojana (SJSRY).
  • Coverage: All district’s headquarter towns (irrespective of population) and all other towns with a population of 1 lakh or more as per Census 2011.
  • Target Population: The primary target of NULM is the urban poor, including the urban homeless.
  • Funding: Funding will be shared between the Centre and the States in the ratio of 75:25. For North-eastern and Special Category States, this ratio will be 90:10.
  • Aim: Reducing the poverty and vulnerability of urban poor households.

components of NULM

(i)     Social Mobilisation and Industrial Development (SM&ID)

(ii)    Capacity Building and Training (CBT)

(iii)   Employment through Skill Training and Placement (EST&P)

(iv)  Self Employment Programs (SEP)

(v)   Support to Urban Street Vendors (SUSV)

(vi)  Shelter for Urban Homeless (SUH)

(vii)  Innovative and Special Projects (I&SP)

New Initiatives

  • Portal for Affordable Credit and Interest Subvention Access (PAiSA) for processing interest subvention on bank loans to beneficiaries’ accounts on a monthly basis.
  • Ease of Living Assessment Framework aims to assess the ease of living of citizens across three pillars; Quality of Life, Economic Ability and Sustainability which are further divided into 14 categories across 50 indicators that are strongly linked to Sustainable Development Goals (SDGs).
  • Municipal Performance Index aims to examine the sectoral performance of Municipalities across a set of 5 verticals namely Service, Finance, Planning, Technology and Governance.


  • It is a Central Sector Scheme (100% funded by MoHUA). The scheme will be implemented by MoHUA. SIDBI will be the implementation partner of the scheme.


The scheme will help formalise the street vendors and will open new opportunities to this sector to move up the economic ladder.

  • Facilitate working capital loans up to Rs 10,000
  • Incentivise regular payment
  • Reward digital transactions

Eligibility of States/UT

The scheme is available for beneficiaries belonging to those States/UT which have notified rules and schemes under the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014. Beneficiaries from Meghalaya which has its own Street Vendors Act may, however, participate.

Eligibility Criteria for Beneficiaries

  • All street vendors engaged in vending in urban areas before March 24, 2020. Street Vendors are to be identified as per the following criteria: Possession of a Certificate of Vending/Identity card issued by Urban Local Bodies (ULBs)Vendors who have been identified in the
    • survey but have not been issued Vending/Identity CardsStreet vendors vending in peri-urban areas and surrounding rural areas
    • ULBs to adopt alternative ways to identify vendors ensuring that all eligible vendors are positively covered.

Salient Features

  • Urban street vendors will be eligible for a Working Capital loan of up to Rs 10,000 with a tenure of 1 year and repaid in monthly instalments.
  • No collateral is to be taken by lending institutions.
  • On timely or early repayment, vendors will be eligible for the next cycle of working capital loans with an enhanced limit.
  • Interest Subsidy
    • Vendors are eligible to get an interest subsidy of 7%. The interest subsidy will be credited into the borrower’s account quarterly. The subsidy will only be available to those accounts which are Standard (non-NPA) on respective claim dates.
  • Promotion of Digital Transactions:
    • Digital transactions by street vendors will be incentivised through a
    cashback facility. Transaction trail so created will build vendors’ credit scores to enhance their future credit needs. Street Vendors onboarded on digital payment aggregators would be incentivised with a monthly cashback in the range of Rs 50-100 as per the
    • following criteria:
      • On executing 50 eligible transactions in a month: Rs 50On executing 100 eligible transactions: Rs 75One executing 200 eligible transactions: Rs 100
    • Eligible transactions mean a digital payout or receipt with a minimum value of Rs 25.
  • All Scheduled Commercial Banks, RRBs, Small Finance Banks, NBFCs, Micro Finance Institutions, SHG Banks etc are eligible to lend under the scheme. Lending institutions will be encouraged to use their network of Business Correspondents/Agents extensively to ensure maximum coverage of the scheme.
  • Credit Guarantee
  • Graded Guarantee Cover for the loans to be administered by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTSME) which will be operated on a portfolio basis.
    • All loans given by each lending institution will be considered for coverage under the guarantee.
  • Formation of Collectives of Vendors will be encouraged under the scheme. Some States have formed Common Interest Groups (CIG) of street vendors which can be converted to Joint Liability Groups of eligible vendors.
  • States/UT to prepare a roadmap for building capacities of street vendors to conduct e-Commerce.

Measures to be Taken to Tackle Urban Poverty

  • Formalization of jobs and extending social security benefits to urban poor
  • Making government schemes inclusive of the migrant population in urban areas such as the One Nation One Ration Card Scheme.
  • Urban job guarantee scheme on the lines of MGNREGA
  • Designating the urban poor as a Priority sector lending group

Data aggregation

Data of the urban poor needs to match up with their skills to provide them with opportunities for livelihood.

The national migrant database, announced by the National Disaster Management Authority, is a step in this direction.

Urban Management

Urban bodies have to manage all their resources – Physical, Financial, and Human. The establishment of a poverty cell within a municipal corporation provides an opportunity to do this.

Urban governance

It requires engagement at different levels – the macro (states and markets), the meso (local government and local markets), and the micro (communities and households). Policymakers and planners to distinguish between those actions which will help the poor to develop and those which will protect them against a reversal of fortunes, namely development and social protection.

Urban Development

 Improved infrastructure is a prerequisite for increased economic growth in India. Poverty can be reduced quickly with rapid urban development.

Urban Employment Guarantee Programme

 It can generate a new set of ‘green jobs’ that can strengthen the capacity of ULBs as well as promote sustainable urban development.

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