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RSTV: THE BIG PICTURE- ERADICATING POVERTY


RSTV: THE BIG PICTURE- ERADICATING POVERTY


Introduction:

            India may have reduced extreme poverty far more effectively than most of us are aware of. The last official data is eight years old. In 2011, 268 million people were surviving on less than $1.90 a day, the World Bank measure for extreme poverty. According to the World Data Lab — which monitors global poverty using advanced statistical models — less than 50 million Indians may be living on less than $1.90 a day now. Economists said rapid economic growth and the use of technology for social sector programs have helped make a significant dent in extreme poverty in the country. The BJP cited global think tank reports to say that India is moving fast towards a poverty-free situation and gave credit to policies of the Narendra Modi-led government for it.

 

            Poverty is the general scarcity of a certain amount of material possessions or money (< $1.25/day) and includes social, economic, and political concepts. Absolute poverty (as defined by UN) is “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.”

            Every successive government, since 1947, has tried to reduce poverty by making various policies. But, it is still far from satisfactory, for about half of the labor force working in agricultural sector and a majority of the population still living in rural areas.

 

Poverty alleviation programs in India since Independence:

  • Integrated Rural Development Programme (IRDP): It was introduced in 1978-79 and universalized from 2nd October, 1980, aimed at providing assistance to the rural poor in the form of subsidy and bank credit for productive employment opportunities through successive plan periods.
  • Jawahar Rozgar Yojana/Jawahar Gram Samriddhi Yojana: The JRY was meant to generate meaningful employment opportunities for the unemployed and underemployed in rural areas through the creation of economic infrastructure and community and social assets.
  • Rural Housing – Indira Awaas Yojana: The Indira Awaas Yojana (LAY) programme aims at providing free housing to Below Poverty Line (BPL) families in rural areas and main targets would be the households of SC/STs.
  • Food for Work Programme: It aims at enhancing food security through wage employment. Food grains are supplied to states free of cost, however, the supply of food grains from the Food Corporation of India (FCI) godowns has been slow.
  • National Old Age Pension Scheme (NOAPS): This pension is given by the central government. The job of implementation of this scheme in states and union territories is given to panchayats and municipalities. The states contribution may vary depending on the state. The amount of old age pension is ₹200 per month for applicants aged 60–79. For applicants aged above 80 years, the amount has been revised to ₹500 a month according to the 2011–2012 Budget. It is a successful venture.
  • Annapurna: This scheme was started by the government in 1999–2000 to provide food to senior citizens who cannot take care of themselves and are not under the National Old Age Pension Scheme (NOAPS), and who have no one to take care of them in their village. This scheme would provide 10 kg of free food grains a month for the eligible senior citizens. They mostly target groups of ‘poorest of the poor’ and ‘indigent senior citizens’.
  • Sampoorna Gramin Rozgar Yojana (SGRY): The main objective of the scheme continues to be the generation of wage employment, creation of durable economic infrastructure in rural areas and provision of food and nutrition security for the poor.
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005: The Act provides 100 days assured employment every year to every rural household. One-third of the proposed jobs would be reserved for women.  The central government will also establish National Employment Guarantee Funds. Similarly, state governments will establish State Employment Guarantee Funds for implementation of the scheme. Under the programme, if an applicant is not provided employment within 15 days s/he will be entitled to a daily unemployment allowance.
  • National Rural Livelihood Mission: Ajeevika (2011): It evolves out the need to diversify the needs of the rural poor and provide them jobs with regular income on monthly basis. Self Help groups are formed at the village level to help the needy.
  • National Urban Livelihood Mission: The NULM focuses on organizing urban poor in Self Help Groups, creating opportunities for skill development leading to market-based employment and helping them to set up self-employment ventures by ensuring easy access to credit.
  • Pradhan Mantri Kaushal Vikas Yojana: It will focus on fresh entrant to the labour market, especially labour market and class X and XII dropouts.
  • Pradhan Mantri Jan Dhan Yojana: It aimed at direct benefit transfer of subsidy, pension, insurance etc. and attained the target of opening 1.5 crore bank accounts. The scheme particularly targets the unbanked poor.

 

Challenges:

  • India is still far from achieving SDG 1.
  • Incidence of extreme poverty continues to be much higher in rural areas than in urban areas.
  • Despite rapid growth and development, an unacceptably high proportion of our population continues to suffer from severe and multidimensional deprivation. 
  • While a large number of poverty alleviation programmes have been initiated, they function in silos. There is no systematic attempt to identify people who are in poverty, determine their needs, address them and enable them to move above the poverty line.
  • The resources allocated to anti-poverty programmes are inadequate and there is a tacit understanding that targets will be curtailed according to fund availability. For instance, Mahatma Gandhi National Rural Employment Guarantee Act (mgnrega) does not provide the guaranteed 100 days of work in many states. 
  • There is no method to ensure that programmes reach everybody they are meant for
  • Lack of proper implementation and right targeting
  • There has been a lot of overlapping of schemes.
  • Every year a huge number is added to the population pool of the country. This renders the scheme ineffective.

 

Way Forward:

  • Accelerating rural poverty reduction:
    • It’s not just about agricultural growth, which has long been considered the key driver of poverty reduction. In fact, rural India is not predominantly agricultural and shares many of the economic conditions of smaller urban areas.
    • Capitalizing on growing connectivity between rural and urban areas, and between the agriculture, industry and services sectors, has been effective in the past two decades and holds promise for the future.
  • Creating more and better jobs:
    • The road out of poverty in India has been built on the performance of the labor market, but also benefited from rising transfers and remittances, and favorable demographics among other factors.
    • Future efforts will need to address job creation in more productive sectors, which has until now been lukewarm and has yielded few salaried jobs that offer stability and security.
  • Focusing on women and Scheduled Tribes:-
    • The most worrying trends are the low participation of women in the labor market and the slow progress among scheduled tribes.
    • India’s women have been withdrawing from the labor force since 2005 and less than one-third of working age women are now in the labor force. As a result, India today ranks last among BRICS countries, and close to the bottom in South Asia in female labor force participation.
    • Scheduled Tribes started with the highest poverty rates of all of India’s social groups, and have progressed more slowly than the rest.
    • Women and Scheduled Tribes are at risk of being locked out of India’s growth and prosperity.
  • Creating more good locations:-
    • Where people live largely shapes their prospects in life. India’s states continue to see large and growing differences in poverty levels and basic opportunities.
    • More and more of India’s poor are concentrated in the poorest states, and even within relatively prosperous states, certain pockets of deprivation persist where people are unable to share in the state’s successes.
  • Improving human development outcomes for the poor:
    • This is central to improving their quality of life and income earning opportunities.
    • The recent past shows that some problems, such as undernutrition and open defecation, are endemic and not only confined to the poor but others too, and have not improved with economic growth.
    • Better health, sanitation and education will not only help raise the productivity of millions, they will also empower the people to meet their aspirations, and provide the country with new drivers of economic growth.
  • Banking and credit sector reforms.
  • We need to start taxing wealth and not only income.

 

Would a Universal Basic Income (UBI) have been better?

 It would probably have been easier to implement, but would have come with a bigger financial tab even if the top two income deciles are excluded.

Remember, however, that developed economies have experimented with UBI, but have not been persuaded of its efficacy.

Even Arvind Subramanian, who commended the UBI when he was Chief Economic Adviser and wrote a whole chapter on it in Economy Survey 2016-17, appears to have retraced his steps, and is now pitching for a ‘Quasi-Universal Basic Rural Income’ (QUBRI).

It is difficult to begrudge a welfare measure targeted at the poorest people in a country that even to this day.

Government offers subsidies to the middle-class and the rich on everything from cooking gas to power to gold to aviation turbine fuel to the tax breaks on small savings instruments (which are a form of implicit subsidy) — to the tune of ₹1 lakh crore a year.

For Instance, in Agricultural sector, As per a report published by the State Bank of India, the central government’s most recent budgetary allocation to subsidy and farmer support schemes totalled around ₹981 billion – which is roughly 2.9% of India’s GDP.

 

Conclusion:

Poverty eradication should not be the goal of the government but goal of the government policies should be to create prosperity.

The indicator is based on the health and education status of a population apart from per capita income, bringing us back to the relevance of income generation to poverty.

As the Central government is common across regions, differences in the human development index must arise from policies implemented at the State level.

This further implies that a nationwide income support scheme that channels funds from a common pool to households in the poorer States would be tantamount to rewarding lower effort by their governments.

There is a crucial role for services, of both producer and consumer variety, in eliminating the capability deprivation that is poverty.

At a minimum these services would involve the supply of water, sanitation and housing apart from health and education.

It has been estimated that if the absence of such services is accounted for, poverty in India would be found to be far higher than recorded at present.

The budgetary implication of the scale at which public services would have to be provided if we are to eliminate multi-dimensional poverty may now be imagined.

This allows us to appraise the challenge of ending effective poverty and to assess the potential of the income-support schemes proposed by the main political parties.

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