Concept of poverty:

Poverty is a state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that's considered acceptable in society.Poverty is associated with the undermining of a range of key human attributes, including health. The poor are exposed to greater personal and environmental health risks, are less well nourished, have less information and are less able to access health care; they thus have a higher risk of illness and disability. Conversely, illness can reduce household savings, lower learning ability, reduce productivity, and lead to a diminished quality of life, thereby perpetuating or even increasing poverty.

Poverty is often defined in absolute terms of low income – less than US$ 2 a day, for example. But in reality, the consequences of poverty exist on a relative scale.

According to the World Bank, “Poverty is pronounced deprivation in well-being, and comprises many dimensions.”

Share of Population Below the National Poverty Line (%)



People below the poverty line (%)











Sri Lanka






Source: Basic Statistics 2021

Poverty can be classified into the following two types:

a) Absolute poverty:

Extreme poverty, absolute poverty, destitution, or penury, was originally defined by the United Nations in 1995 as "a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information. It depends not only on income but also on access to services."

Originally, the international poverty line was set at earning a $1 a day when the Millennium Development Goals were first published. However, now the World Bank pushed the line to $2 to recognize higher price levels in several developing countries than previously estimated. The persons below this income line are called absolute poor.

b) Relative poverty:

Relative poverty is the condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live. Relative poverty is considered the easiest way to measure the level of poverty in an individual country. Relative poverty is defined relative to the members of a society and, therefore, differs across countries. People are said to be impoverished if they cannot keep up with the standard of living as determined by society.

Relative poverty also changes over time. As the wealth of a society increases, so does the amount of income and resources that the society deems necessary for proper conditions of living. Eg; A has a monthly salary of Rs. 25,000. He is able to fulfill his basic needs. But he is relatively poor as compared to B, who has a monthly income of Rs. 30,000.

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