Poverty in India is on the rise again

04 Aug Poverty in India is on the rise again

(The Hindu, GS-3, Poverty)

Context:-

The Union Government has not released its Consumption Expenditure Survey (CES) data since 2011-­12 which is conducted by the National Sample Survey Office (NSO) every five years. But the CES of 2017­-18 was already conducted a year late and not made public and at the same time, the government is planning to conduct another in 2021-­22 which will be available by the end­ of 2022. 

What is Poverty:-

• Poverty is a state of deprivation. This deprivation includes social, political, economic etc. Deprivation further manifests into hunger, unemployment, illiteracy, loss of human capital etc. 

Examples of poverty:- 

• Economic poverty, social poverty etc.

Types of poverty:-

Two types.

• Absolute Poverty: When a household or a person’s income is below a particular level which is needed to maintain basic living standards. Because it is absolute so it helps in comparing between different countries and also over time.
  • It was first introduced in 1990 by the World Bank .
• Relative Poverty: It is defined from the social perspective which compares living standards to the economic standards of the population living in surroundings. It is one of the measures of income inequality.
• Generally relative poverty is measured as the percentage of the population with income less than some fixed proportion of median income. It measures head counts ratio.

Measure of poverty estimation in india:-

• The Planning Commission constituted a working group for the first time in 1962 to estimate poverty nationally.This group was given a task about separate poverty lines for rural and urban areas. It has made Rs 20 and Rs 25 per capita per year respectively for rural and urban areas.
• VM Dandekar and N Rath committee made the the systematic assessment of poverty in India in 1971 and this was based on National Sample Survey (NSS) data from 1960-61.
  • This committee fixed the poverty line based on expenditure that was adequate to provide 2250 calories per day in both rural and urban areas.
  • After this committee’s recommendation a debate on minimum calorie consumption norms was generated..
• In 1979 Alagh Committee (1979)  constructed a poverty line for rural and urban areas on the basis of nutritional requirements. This was the first committee which made a separate poverty line for Urban and rural areas.
  • This committee formulates the line by adjusting the price level for inflation.
• In 2009 the Tendulkar Committee was formed to review methodology for poverty estimation and to address the following shortcomings of the previous methods. This committee changed the poverty line baskets (PLBs) Consumption patterns which were linked to the 1973-74 consumption patterns of the poor .
• According to the Tendulkar committee 21.9 percent people in India are poor.
  •  ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India
• Rangrajan committee was formed:- This committee formed a poverty line based on estimated Monthly Per Capita Expenditure of Rs. 1407 in urban areas and Rs. 972 in rural areas.

Causes of Poverty in India:-

• Historical Causes:-

• • • Colonial Exploitation: The British ruled over India for about two centuries. This led to de-industrialisation and ruralisation of India ruining its traditional handicrafts and textile industries. Colonial Policies transformed India to a mere raw-material producer for european industries.
    • Population Explosion: India’s population has increased rapidly in the past 45 years.The rate of 2.2% per year, This also increases the demand for consumption goods tremendously.

• Economic causes:-

• • Inefficient Resource utilisation: This inefficient resource allocation led to underemployment and disguised unemployment in the country especially in the farming sector. 
  • Low Agricultural Productivity: Almost 50 percent people are working in the agricultural sector. One of the important reason for poverty in the low productivity in the agriculture sector. Productivity issues are related to fragmented and subdivided land holdings, lack of capital, illiteracy about new technologies in farming, the use of traditional methods of cultivation, wastage during storage, etc.
  • Price Rise: A general price rise increased the burden the poor and the middle class. 
  • Unemployment: A continuous increase in unemployment is one of another factor causing poverty in India. The ever-increasing population and increase in education with low skill development led to a higher number of job-seekers. 
  • Lack of Capital and Entrepreneurship: The shortage of capital and entrepreneurship results in low level of investment and job creation in the economy.

• Social Factors:-

  • Laws of inheritance, caste system, certain traditions, prejudice against women led to deprivation of marginalised and pushed these sections into a clutch of poverty.
• Most of india’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, odisha, Jharkhand, etc.
• Lack of skilled labour:Lack of human capital formation assets became liabilities..
• Corruption: Many measures have been taken by the government to eliminate poverty. However, there is still a lack of political will. The corruption by those in power also contributes to poverty.

Effect of Pandemic on poverty situation in India:-

• There is a fall in the monthly per capita consumption expenditure of 2017­-18 for the first time since 1972-­73.
•  fall of India in the Global Hunger Index to ‘serious hunger’ category
• NFHS­5 survey depicts a worrying picture of increased malnutrition, infant mortality and maternal health.
• According to World Bank data:- The number of poor in India has more than doubled to 134 million from 60 million in just a year which is based on income of $2 per day or less in purchasing power parity.
• Only India contributed 57.3% of the growth of the global poor In 2020.
• India is again depicted as a country of mass poverty after 45 years.
• According to the Multi poverty Index:- India lifted 271 million citizens out of poverty between 2006 and 2016 but the pandemic has reversed it again.
• The poverty rate in India may increase to 9.7% in 2020, up sharply from the January 2020 forecast of 4.3%.
• Middle Class: One of the estimates said the middle class in India has shrunk by 3.2 crores in 2020.

Why Poverty has increased in recent times:-

• A Demonetisation completely devastated the informal economy along with hurriedly introduced Goods and Services Tax.
• The economic slowdown led to the devastation of Jobs, decrease in pay, and obsoletion of manual labor jobs.
• Private investment fell from 31% inherited by the new government, to 28% of GDP by 2019­-20. 
• Public expenditure was constrained due to the fiscal crisis at center (Mainly because of huge expenditure and less earning).
• Exports have fallen in absolute dollar terms to below the 2013-­14 level ($315 billion). 
• Consumption stagnated and household savings rates fell. 
• Joblessness increased to a 45 ­year high by 2017­18 (by the usual status), and youth (15-­29 years of age) saw unemployment triple from 6% to 18% between 2012 and 2018. 
• Real wages did not increase for regular or casual workers over the same period.
• Job seekers are increasing but jobs are not anywhere close to the rate at which it is needed. 
• Poverty is expected to rise more in upcoming times during the COVID­19 pandemic after the economy has contracted. 

Way forward:-

• Skill development supported by industrial development
• Creation of a robust manufacturing sector.
• Increase the penetration of Loan or capital to the needed section.
• Social exclusion needs to be evaluated so that marginalised section gets their due share.
• Agriculture mechanisation with taking people out from agriculture towards the manufacturing sector.

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Swarn Singh

Plutus IAS Current Affair Team Member