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Need to strategize poverty elimination in India

  • Category
    Economy
  • Published
    21st Jul, 2023

Context

India has ranked 149 out of 194 countries in per capita Income terms for the year 2022. There is a need to take steps to achieve its targets of eliminating poverty; and focus on raising incomes of individuals.

  • Let us identify the challenges that the country will face in reaching this goal and the actions it needs to take to overcome them.

Poverty in India:

  • The poverty rate in India has increased to 7% in 2020.
  • From 2011 to 2019, the number of poor in India was estimated to have decreased to 78 million from 340 million.

How poverty is measured?

  • In India, the official consumption-based poverty line is still the Tendulkar Line, which is close to the World Bank $1.9 a day line.
  • The Tendulkar Expert Group chaired by economist Suresh Tendulkar in 2009 was formed to review the methodology for poverty estimation.
  • The committee finalised per person per day consumption figure of Rs 32 a day for urban areas and Rs 26 a day for rural areas.
  • The national poverty line for 2011-12 was estimated at Rs 816 per capita per month for rural areas and Rs 1,000 per capita per month for urban areas.

India’s plan for poverty alleviation:

The strategy for poverty alleviation is essentially two fold;

  • Firstly, an effort is underway to provide greater opportunity for the poor to participate in the growth process by focusing on specific sectors, which offer such opportunities.
  • Secondly, poverty alleviation and social sector programmes have been strengthened and restructured with special programmes for the weaker sections of society.

Multidimensional Poverty Index (MDP):

  • To tackle the drawbacks associated with the poverty line, UNDP, in association with Oxford Poverty and Human Development Initiative (OPHI), has developed the Multidimensional Poverty Index (MDP) for the 107 developing countries.
  • MDP uses Health, Education and Standard of Living indicators to determine the incidence and intensity of Poverty experienced by a population.
  • Dimensions (Indicators):
    • Health (Child Mortality, Nutrition)
    • Education (Years of Schooling, School Attendance)
    • Standard of living (Cooking Fuel Sanitation, Drinking Water, Electricity, Housing Assets)

What else is required to be done?

  • More Employment Opportunities: Poverty can be eliminated by providing more employment opportunities so that people may be able to meet their basic needs. For this purpose, labour intensive rather than capital intensive techniques can help to solve the problem to a greater extent
  • Establishment of Small Scale Industries: The policy of encouraging cottage and small industries can help to create employment in rural areas especially in backward regions. Moreover, this will transfer resources from surplus areas to deficit without creating much problem of urbanisation.
  • Focus to boost rural economy: As more than half of the country resides in rural India, there is an acute need to focus on increasing rural income opportunities.

Challenges:

  • Large population: India continues to have a large population, which is certainly, not able to afford basic things, whichever poverty line, either based on calorific value or on income.

According to the last released official data, in 2011, 268 million people were surviving on less than $1.90 a day.

  • High Out-of-Pocket expenditure: More people are investing their disposable income in Utilities’ like on electricity, transport, health etc.
  • High Income and Wealth Inequality: According to latest Oxfam Study, India’s top 1 percent holds 51.53 percent of the national wealth whereas the bottom 60 percent, the majority of the population, own merely 8 percent of the national wealth, indicating a huge difference in the income level of people.

Measurement of Income Inequality:

  • Gini coefficient is a typical measure of income inequality. The coefficient varies between 0 and 1, with 0 representing perfect equality and 1 perfect inequality.
  • Most of the analysis is centered on the concept of income inequality as captured by the Gini coefficient, which is available for a large number of countries and relatively long periods.

Factors responsible:

  • For a country, the factors those related to economic developments and economic stability as well as to domestic policies — include financial integration, redistributive fiscal policies, and liberalization and deregulation of labour and product markets —which plays an important role in explaining inequality trends within countries.

Steps taken to eliminate poverty (based on Income):

  • National Food for Work Programme: The National Food for Work Programme was launched on November 14, 2004 in 150 most backward districts of the country with the objective to intensify the generation of supplementary wage employment.
  • Swaranjayanti Gram Swarozgar Yojana (SGSY): SGSY, launched in April 1999, aims at bringing the assisted poor families (Swarozgaris) above the poverty line by organizing them into Self Help Groups (SHGs) through a mix of Bank credit and Government subsidy.
  • Sampoorna Grameen Rozgar Yojana (SGRY): SGRY, launched in 2001, aims at providing additional wage employment in all rural areas and thereby food security and improve nutritional levels. The SGRY is open to all rural poor who are in need of wage employment and desire to do manual and unskilled work around the village/habitat. The programme is implemented through the Panchayati Raj Institutions (PRIs).
  • Pradhan Mantri Gramodaya Yojana (PMGY): PMGY launched in 2000-01 envisages allocation of Additional Central Assistance (ACA) to the States and UTs for selected basic services such as primary health, primary education, rural shelter, rural drinking water, nutrition and rural electrification.
  • Rural Employment Generation Programme (REGP): REGP was launched with the objective of creating self-employment opportunities in the rural areas and small towns, is being implemented by the Khadi and Village Industries Commission (KVIC).
  • Prime Minister’s Rozgar Yojana (PMRY): the objective of making available self-employment opportunities to the educated unemployed youth by assisting them in setting up any economically viable activity.

Suggestive Measures:

  • Realistic Assessment of the present situation of poverty in the country in need of the hour.
  • Direct income transfer to needy is an immediate solution.
  • Taxing wealth of rich people to fund amelioration of poor in the country.
  • By improving social infrastructure and job opportunities in rural areas, migration to urban areas can be decreased, and thus urban poverty can also be decreased.

Verifying, please be patient.

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