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A Roadmap to Eliminate Poverty

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July 21, 2023

Why in news?

India must raise the per capita income, estimated in 2022-23 at 2,379 USD, by almost six times and grow at 7 % over the next 25 years to have a higher standard of living and eliminate poverty.

 What is poverty?

  • Poverty is a condition wherein an individual lacks the financial resources & essential conditions for meeting the minimum standard of living.
  • It refers to the condition wherein the economic condition of a person is so low that even the most basic needs are not met.

Types of poverty

  • Absolute Poverty - It refers to the condition wherein an individual is deprived of even the basic necessities, including food, shelter, and clothing to meet the basic living standards.
    • According to the World Bank, those who are unable to earn 2.15 dollar per day are living in extreme poverty.
  • Relative Poverty- It refers to the condition in which people lack the minimum amount of income needed to maintain the average standard of living in their respective society.
    •  Hence, it is a measure of income inequality within a country.

What are the global challenges?

  • Ukraine- Russia War- This detoriated the climate for peace which is necessary for growth in the economy.
  • Supply disruptions of critical imports like oil can cause a severe setback to both developing and developed countries.
  • Global trade- The World Trade Organisation (WTO) was set up to create an environment of low tariffs and restrictions.
  • But rich countries that earlier preached to the developing countries to adopt a free trade model, are backing out for one reason or another and putting restrictions on imports.

What about the status of poverty in India?

  • Global MPI- It was first launched in 2010 by UNDP and Oxford Poverty and Human Development Initiative (OPHI).
  • According to Global MPI 2021, India's rank is 66 out of 109 countries.
  • The country’s poverty rate decreased from 55.1% in 2005-06 to 16.4% in 2019-21.
  • The reduction in poverty in South Asia has been largely attributed to improvements in India’s MPI.
  • National MPI- Niti Aayog is the nodal agency to release MDP report for states and Union Territories.
  • As per 2023 report there has been steep decline in the poverty, India has achieved a remarkable reduction in its MPI value and headcount ratio between 2015-16 and 2019-21.
  • It registered a decline in the number of “multidimensionally poor” individuals, from 24.85 % in 2015-16 to 14.96 % in 2019-2021.

How Poverty is defined in India?

  • Poverty is measured based on Consumption Expenditure Surveys (CES) of the National Sample Survey Organisation (NSSO) that are conducted every 5 years.
  • The conventional approach to measuring poverty is to specify a minimum expenditure required to purchase a basket of goods and services necessary to satisfy basic human needs.This expenditure is called the poverty line.
  • Poverty line estimation in India is based on the consumption expenditure and not on the income levels.
  • The survey was last conducted in 2017-18 but the government junked its results citing “quality” concerns.
  • As a result, data from the 2011-12 CES is the only available consumption tool to calculate official poverty estimates.

COMMITEES ON POVERTY ESTIMATION

  • Alagh Committee (1979) - Poverty line is based on a minimum daily requirement of 2400 and 2100 calories for an adult in Rural and Urban area respectively.
  • Lakdawala Committee (1993) - It recommended that
    • Consumption expenditure should be calculated based on calorie consumption as earlier
    • State specific poverty lines should be constructed and should be updated using the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas and Consumer Price Index of Agricultural Labour (CPI-AL) in rural areas
  • Tendulkar Committee (2009) – It recommended
    • A shift away from calorie consumption based poverty estimation
    • To have a uniform poverty line basket for rural and urban India
  • The Committee recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates that were used in earlier methods for estimating poverty.
  •  Rangarajan committee (2012) - It estimated a monthly per capita expenditure of Rs. 1407 in urban areas and Rs. 972 in rural areas.

What are the initiatives taken by India to eliminate poverty?

Poverty alleviation

  • Sansad Adarsh Gram Yojana (SAGY)- It was implemented in 2014 for the social and cultural development of villages, to develop model villages providing basic amenities.
  • National Rural Livelihood Mission (NRLM)- It was launched in 2011 to provide the impoverished with stable monthly income.
  • Deendayal Antyodaya Yojana- National Urban Livelihood Mission (DAY-NULM)- It was launched in 2013 to reduce poverty and vulnerability by providing access to self-employment and skilled wage employment opportunities.
  • Pradhan Mantri Jan Dhan Yojana- It was launched in 2014 with the aim of financial inclusion and affordable financial services.

Employment generation

  • MGNREGA- The Mahatma Gandhi National Rural Employment Guarantee Act was launched in 2005 to provide 100 days of guaranteed wage employment.
  • Atmanirbhar Bharat Rojgar Yojana- It was launched in 2020 to to incentivize employers for the creation of new employment along with social security benefits.
  • PM- SVANidhi Scheme-(Street Vendor’s AtmaNirbhar Nidhi) It was launched in 2020 to provide affordable working capital loans to street vendors.
  • It is provided to resume their livelihoods that have been adversely affected due to the Covid-19 lockdown.
  • Prime Minister’s Employment Generation Program – It was launched to establish micro enterprise in both rural and urban areas.

What India can do to eliminate poverty?

  • Multi-dimensional strategy- With strong foothold in services sector, India must adopt a holistic approach by focusing on agriculture and allied activities, manufacturing and exports.
  • Absorb new technologies- New technologies like AI may lead to automation and increase in unemployment.
  • Skill development - The need of the hour is to reorient our educational system to enable students to acquire the required skills.
  • Employment generation- There is a need to create employment by identifying labour-intensive economic activities.
  • Environment sustainability- The burden of pollution reduction must be borne by developed economies that have exploited natural resources significantly in the last century and a half.
  • Provision for basic income- This can be done by cut in the subsidies other than those on food.

References

  1. Indian Express| Opinion on the roadmap to eliminate poverty
  2. World Bank| Adjustment to global poverty line
  3. PIB| Schemes for poverty by India
  4. Rural Ministry| Working paper on poverty
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