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GS Paper: GS3-02.Inclusive growth and issues therein

  • [4 April 2024] The Hindu Op-ed: Turning the spotlight on the urban poor

    [4 April 2024] The Hindu Op-ed: Turning the spotlight on the urban poor

    PYQ Relevance:

    Mains: 
    Q. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC CSE 2023)

    Prelims:

    Q. Disguised unemployment generally means (UPSC CSE 2013)

    (a) large number of people remain unemployed
    (b) alternative employment is not available
    (c) marginal productivity of labour is zero
    (d) productivity of workers is low

    Note4Students: 

    Mains: Social Issues; Population; Unemployment;

    Mentor comments: Unemployment/Underemployment is the most contentious issue that continues to be a challenge for the Socioeconomic landscape of India. As one of the world’s most populous nations with a diverse workforce, fluctuations in the unemployment rate have far-reaching implications for the country’s growth and development. So, we need to analyze the current status of India’s Dynamic Population. The recently published, India Employment Report 2024 is the third in a series of regular publications by the ILO on labor and employment issues. This report on Youth Employment, Education, and Skills examines the challenge of youth employment in the context of the emerging economic, labor market, educational, and skills scenario in India and changes over the past two decades.

    Let’s learn. 

    —

    Why in the News?

    The recent India Employment Report (IER) 2024 Report by the Institute for Human Development and International Labour Organization (ILO) poses questions on the trickle-down effect of employment.

    Key highlights of the IER 2024 Report:

    • Poor Employment Conditions:
      • The overall labor force participation and employment rates are reflecting issues such as stagnant or declining wages, increased self-employment among women, and a higher proportion of unpaid family work among youth.
      • The share of the young population with secondary or higher education in the total unemployed has almost doubled from 35.2% in 2000 to 65.7% in 2022.
    • Youth Employment Challenges:
      • Youth employment and underemployment surged between 2000 and 2019, with educated youths experiencing significantly higher levels of joblessness.
      • The Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and the Unemployment Rate (UR) showed a long-term deterioration between 2000 and 2018 but witnessed an improvement after 2019.
    • Widening Regional Gaps: Significant states consistently rank lower in employment indicators. For example, states like Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Jharkhand, and Chhattisgarh have struggled with poor employment outcomes over the years, reflecting the influence of regional policies.
    Case Study from Kolkata:

    A study conducted in 37 slums across Kolkata in 2012 and revisited in 2022-23 found that the major occupations in slums have remained the same over the decade, with a significant proportion of the working population engaged in unskilled labor. The share of employment in skilled and semi-skilled labor and private organizations decreased between 2012-19, while employment in petty businesses or small shops increased by 9%. The study also found that employment in truck driving and cleaning, and construction and related work gained momentum in the last 10 years.
    • Widening Gender Gaps:
      • India is facing low rates of female labor force participation.
      • Although educational attainment has improved across all groups, social inequalities persist despite affirmative action and targeted policies, with Scheduled Castes and Scheduled Tribes facing barriers to accessing better job opportunities.
    • Informal Employment challenges: Although non-farm employment growing faster than farm employment before 2018, it has not grown sufficiently to absorb workers from agriculture. Around 90% are engaged in informal work, especially after 2018 it is increased.
    • Lack of necessary skills: 75% of workers are unable to send emails with attachments, 60% are unable to copy and paste files, and 90% are unable to perform basic spreadsheet tasks like putting a mathematical formula.
    • Declining Wages of Casual Workers:
      • While wages of skilled laborers maintained a modest upward trend during 2012–22, wages have remained low for unskilled workers. 
      • As much as 62% of the unskilled casual agricultural workers and 70% of such workers in the construction sector at the all-India level did not receive the prescribed daily minimum wages in 2022.
    • No Security to Industrial Workers: Recently, online platforms and gig workers have been expanding, but it is, to a large extent, the extension of informal work, with hardly any social security provisions.
    • Trends in Regional Migration:
      • India is expected to have a migration rate of around 40% in 2030 and will have an urban population of around 607 million.
      • The present pattern of migration also shows regional imbalance in the labor markets.
      • Usually, migration in India is seen from the eastern, north-eastern, and central regions to southern, western, and northern regions.

    What are the suggestive measures given by ILO?

    • To address labour market disparities:
      • Enhance women’s participation.
      • Integrate high-quality skills training to uplift economically disadvantaged groups.
      • Promote a fair labour market.
    • To enhance our focus on enhancing Employment:
      • Working on macroeconomic policies especially manufacturing sector.
      • Supporting MSMEs through a decentralized approach.
      • Increase agricultural productivity.
      • Building a sustainable economy.
    • To enhance job quality and build strategies:
      • Building robust labor Policy.
      • Promote Digital economy.
      • Focusing on sustained urban culture and migration policy.

    https://www.thehindu.com/opinion/lead/turning-the-spotlight-on-the-urban-poor/article68025389.ece

    https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—sro-new_delhi/documents/publication/wcms_921154.pdf

  • UNEP Food Waste Index Report, 2024

    Why in the news?

    The Food Waste Index Report, 2024 was recently released by the United Nations Environment Programme (UNEP) and Waste & Resources Action Programme (WRAP), a UK based non-profit organization.

    Food Waste Index Report:

    • It tracks the global and national generation of food and inedible parts wasted at the retail and consumer (household and food service) levels.
    • It was first launched in 2011.
    • It was conceived as a tool to monitor progress towards international targets, such as those outlined in the SDG 12.3, which calls for halving food waste by 2030.

     

    Key Findings of the 2024 Report

    1. Total Food Waste Generation in 2022:
      • Globally, 1.05 billion tonnes of food waste were generated in 2022.
    2. Distribution of Food Waste by Sector:
      • Households accounted for 60% of the total food waste.
      • Food services were responsible for 28% of the total food waste.
      • Retail accounted for 12% of the total food waste.
    3. Per Capita Food Waste:
      • The average per capita food waste was 132 kilograms in 2022.
    4. Economic Cost of Food Waste:
      • The economic toll of food loss and waste is estimated at $1 trillion.
    5. Contribution to Greenhouse Gas Emissions:
      • Food loss and waste contribute significantly to greenhouse gas emissions, accounting for 8-10% of annual global emissions.
    6. Regional Trends:
      • Food waste levels vary minimally across income groups.
      • Hotter climates tend to generate more household food waste due to consumption patterns and infrastructure limitations.
      • Rural areas generally exhibit lower levels of food waste compared to urban areas.
    7. Policy Integration:
      • Only 21 countries, including Australia, Japan, the United Kingdom, the United States, and the European Union, have included food loss and waste reduction in their climate plans or Nationally Determined Contributions (NDCs).

    PYQ:

    2019: In India, ‘extended producer responsibility’ was introduced as an important feature in which of the following?

    (a) The Bio-medical Waste (Management and Handling) Rules, 1998

    (b) The Recycled Plastic (Manufacturing and Usage) Rules, 1999

    (c) The e-Waste (Management and Handling) Rules, 2011

    (d) The Food Safety and Standard Regulations, 2011

     

    Practice MCQ:

    Which of the following statements is correct about the Food Waste Index Report?

    (a) It tracks only the global generation of food waste at the retail level.

    (b) It was first launched in 2011 to monitor progress towards reducing food waste in households and food service sectors.

    (c) It is a tool aimed at monitoring progress towards international targets outlined in SDG 12.3 to halve food waste by 2030.

    (d) It primarily focuses on tracking inedible parts wasted at the industrial level.

     

  • India ranks 134th in global human development index, says UNDP report

    Why in the news? 

    Recently, India’s progress in the global Human Development Index (HDI), as reported by the United Nations Development Programme (UNDP)

    Context-

    • India’s ranking on the United Nations Human Development Index (HDI) improved by one position in 2022 to 134 out of 193 countries compared to 135 out of 191 countries in 2021. Switzerland has been ranked number one.

    The Human Development Index (HDI)-

    About 

    The Human Development Index (HDI), initially introduced by the UNDP in 1990, is a statistical composite index. It measures a country’s average achievement across three fundamental dimensions:

    • Health: This dimension is represented by life expectancy at birth. It reflects the overall health and well-being of the population and their access to healthcare services.
    • Education: This dimension includes indicators such as expected years of schooling for children entering school and mean years of schooling for adults. It assesses the level of educational attainment and the availability of educational opportunities within a country.
    • Standard of Living: This dimension is measured by Gross National Income (GNI) per capita, adjusted for purchasing power parity (PPP). It reflects the economic prosperity and living standards of the population, including income levels and access to basic necessities.

    Background

    • The Human Development Index (HDI) was developed by Pakistani economist Mahbub ul Haq and Indian economist Amartya Sen. It is used by the United Nations Development Programme (UNDP) to assess a country’s development as part of the Human Development Report.
    • Alongside the Human Development Index (HDI), the United Nations Development Programme (UNDP) also presents the Human Development Report (HDR) which present-
    1. Multidimensional Poverty Index (MPI),
    2. Inequality-adjusted Human Development Index (IHDI),
    3. Gender Inequality Index(GII) since 2010 and
    4. Gender Development Index (GDI) since 2014

    Key Points as per Report- 

    • India’s Rank on the HDI: India moved up one rank on the Human Development Index (HDI) from 135 in 2021 to 134 in 2022, with slight improvements in life expectancy and Gross National Income (GNI) per capita.
    • Comparison with Neighbors: India ranks below its southern neighbour Sri Lanka (ranked 78) and China (ranked 75) in the High Human Development category, and below Bhutan (ranked 125) and Bangladesh (ranked 129) in the Medium Human Development category.
    • Reducing inequalities: The report highlights a reverse trend in reducing inequalities between wealthy and poor nations. Despite interconnected global societies, collective action on climate change, digitalization, poverty, and inequality is lacking, leading to a widening human development gap.
    • Challenges in Democracy: While nine in 10 people worldwide endorse democracy, over half express support for leaders who may undermine it. Political polarization and limited control over government decisions are prevalent, leading to protectionist or inward-turning policy approaches.

    Action Plans as per report-

    • Multilateral Cooperation: Strengthen international cooperation and collaboration among governments, NGOs, businesses, and other stakeholders to address global challenges collectively. This could involve fostering dialogue, partnerships, and agreements that promote shared goals and responsibilities.
    • Policy Coordination: Enhance coordination and coherence in policymaking at national and international levels to ensure that policies address interconnected challenges comprehensively. This may involve integrating diverse perspectives, aligning strategies across sectors, and leveraging resources efficiently.
    • Investment in Sustainable Development: Increase investments in sustainable development initiatives that prioritize environmental conservation, social equity, and economic prosperity. This could include funding for renewable energy, education, healthcare, infrastructure, and poverty alleviation programs.
    • Empowering Communities: Empower local communities and grassroots organizations to participate in decision-making processes and contribute to problem-solving efforts. This could involve providing resources, capacity-building support, and platforms for civic engagement.
    • Promotion of Dialogue and Understanding: Foster dialogue, empathy, and mutual understanding among diverse communities to mitigate polarization and build social cohesion. This could involve promoting education, cultural exchange programs, media literacy, and initiatives that promote tolerance and respect for human rights.
    • Transparency and Accountability: Enhance transparency, accountability, and integrity in governance structures and institutions to rebuild trust and confidence among citizens. This could involve strengthening anti-corruption measures, promoting open government initiatives, and ensuring inclusive and participatory decision-making processes.
    • Investment in Education and Awareness: Invest in education, public awareness campaigns, and media literacy programs to increase awareness of global challenges, their interconnections, and the importance of collective action. This could help foster a sense of shared responsibility and mobilize public support for collaborative solutions.
    • Promotion of Inclusive Economic Growth: Promote inclusive economic growth that benefits all segments of society, reduces inequality, and creates opportunities for marginalized populations. This could involve implementing policies that support job creation, entrepreneurship, social protection, and access to essential services.
    • Resilience Building: Build resilience to global challenges such as climate change, pandemics, and economic crises by investing in preparedness, adaptation, and mitigation strategies. This could involve strengthening healthcare systems, disaster risk reduction measures, and social safety nets.
    • Advocacy and Leadership: Advocate for political leadership and commitment at all levels to prioritize collective action and address shared challenges effectively. This could involve mobilizing political will, engaging with policymakers, and holding leaders accountable for their actions.

    Conclusion-

    Strengthening multilateral cooperation, policy coordination, sustainable development investment, empowering communities, promoting dialogue, transparency, education, inclusive economic growth, resilience building, and advocating for leadership are vital for addressing global challenges collectively and fostering a sustainable future.

    Mains PYQ-

     Q- Despite the consistent experience of high growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive.(UPSC IAS/2019)

  • Has poverty really dropped to 5% in India?

    Why in the news? 

    • NITI Aayog’s B.V.R. Subrahmanyam stated that less than 5% of Indians live below the poverty line based on HCES(Household Consumption Expenditure Survey) 2022-23 findings.

    Context:

    • According to the World Bank, in India, 21.9% of the population lives below the national poverty line in 2011.
    • In 2018, almost 8% of the world’s workers and their families lived on less than US$1.90 per person per day (international poverty line).
    • About HCES (Household Consumption Expenditure Survey): The HCES is usually conducted by the National Statistical Office (NSO) every 5 years. It is designed to collect information on the consumption of goods and services by households

    What does the  HCES Survey say?

    • The survey indicates 2.5 times increase in consumption expenditure since 2011-12, but critics question income rise parity on basis of the following conditions:
      • Nominal vs. Real Terms: Consumption has increased about 40% per capita in real terms over the past 11 years, despite nominal terms showing a 2.5 times increase.
      • Wage Growth: Data from the Periodic Labour Force Survey (PLFS) reveals a 3.2% annual increase in wages for agricultural workers since 2011, indicating real wage growth.
      • Tax Data: Tax records demonstrate robust growth in the wages of salaried workers since 2011, further supporting the claim of increased incomes lead to higher consumption.

     

    How the Poverty line is defined in India? Does the poverty line need to be raised?

    • The poverty line in India: Historically based on the Tendulkar Committee observation, the poverty line, currently approximates ₹1,500 in rural and ₹1,800 in urban areas. However, it lacks a clear conceptual basis, diverging from traditional calorie-based metrics. Additionally, there’s no officially declared poverty line presently.
    • Poverty Line Calculation: NITI Aayog’s task force calculates the poverty line in India using data from the National Sample Survey Office, which is part of the Ministry of Statistics and Programme Implementation.
    • Need for raising the Poverty line: In 2011-12, India’s poverty rate was 12.5%, but it has decreased to 5% by 2022-23. Using the Tendulkar poverty line, poverty levels are around 2%, indicating the need to increase the poverty line. Extreme poverty has been reduced, but raising the poverty line is necessary, as indicated by different calculations.

    What is the Criticism faced along the lines of income rise parity?

    • Real Wage Growth: Contrary to claims of wage growth, numerous studies indicate that real wages have grown by less than 1% annually since 2017, and have even declined for construction workers.
    • Employment Data: The celebrated increase in employment shown in the latest PLFS survey for 2022-23 is misleading, as it primarily stems from a rise in unpaid family helpers rather than genuine job creation.
    • Unpaid Workers: The prevalence of unpaid family helpers, particularly among women, has increased significantly, with 37.5% of women workers now being unpaid, up from 32% in previous years.
    • Paid Employment Rates: When considering only paid employment (those receiving compensation for work), the rates are notably low, with only 48% for men and 13% for women, indicating a lack of genuine employment opportunities and wage growth for most working families.
    • Stagnant Demand for Mass Consumption Goods: Despite overall consumption growth, demand for mass-consumption goods and fast-moving consumer goods (FMCGs) remains stagnant, suggesting limited improvement in the purchasing power of the majority of the population.
    • Two-Wheeler Sales: Sales of two-wheelers, a key indicator of consumer demand, have not recovered to pre-demonetization levels (pre-November 2016), indicating persistent challenges in the broader economy affecting consumer spending habits.

    The Other side of the coin- 

    • Concerns with Private Sector Data: There is skepticism regarding the quality of data provided by private sector entities like CMIE, particularly regarding indicators such as female labor force participation rates.
    • Female Labor Force Participation Rate: CMIE data suggests a significantly low female labor force participation rate in India, with only 9% of women reportedly working, raising questions about the accuracy and reliability of these statistics.
    • Comparison with Other Countries: The data implies that India’s female labor force participation rate is lower than that of countries like Yemen and Iraq, highlighting the severity of the issue and prompting concerns about the credibility of the data.

    Way Forward: Measures to improve the data and poverty line – 

    • Revising Poverty Line Definition: Develop a clear conceptual basis for defining the poverty line, moving away from historical metrics like the Tendulkar poverty line towards more comprehensive and inclusive criteria, such as calorie-based metrics or multidimensional poverty indicators.
    • Official Declaration of Poverty Line: Establish an officially declared poverty line, supported by rigorous research and consultation with experts, to provide clarity and consistency in poverty estimation efforts.
    • Enhanced Monitoring and Evaluation: Strengthen monitoring and evaluation mechanisms to regularly review and update the poverty line based on evolving socio-economic conditions, ensuring its relevance and accuracy over time.

    Conclusion:

    The poverty line in India, historically based on the Tendulkar poverty line, needs revision due to its lack of conceptual basis and the absence of an official declaration. Despite reductions in extreme poverty, concerns persist over stagnant wage growth, misleading employment data, and the need for improved poverty measurement methodologies.

  • Key Insights: All India Household Consumption Expenditure Survey

    Why in the News?

    • Recently, the government has disclosed the broad findings of the All India Household Consumption Expenditure Survey conducted between August 2022 and July 2023.

    About All India Household Consumption Expenditure Survey (CES):

    • The CES is a quinquennial (recurring every five years) survey conducted by the National Statistical Office (NSO).
    • It is designed to collect information on the consumption spending patterns of households across the country, both urban and rural.
    • The data gathered in this exercise reveals the average expenditure on goods (food and non-food) and services.
    • It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.

    Key Findings of the recent Survey:

    • Rise in Monthly Per Capita Consumption Expenditure:
      • Urban: Witnessed a 33.5% increase to ₹3,510.
      • Rural: Marked a 40.42% surge to ₹2,008 since 2011-12.
    • Shift in Spending Pattern:
      • Food Expenditure: Decreased from 52.9% to 46.4% in rural households and from 42.6% to 39.2% in urban households since 2011-12.
      • Implications: Potential impact on retail inflation calculations due to reduced weightage of food prices.
    • Inclusion of Social Welfare Benefits:
      • Separate calculation for items received through schemes like PM Garib Kalyan Ann Yojana.
      • Items Included: Computers, mobile phones, bicycles, and clothing.
    • Adjusted Monthly Per Capita Expenditure:
      • Rural: ₹2,054;
      • Urban: ₹3,544 (excluding free education and healthcare sops).
    • Socio-Economic Disparities:
      • Bottom 5%: Rural – ₹1,373; Urban – ₹2,001.
      • Top 5%: Rural – ₹10,501; Urban – ₹20,824.
    • State-wise analysis:
      • Sikkim: Highest MPCE – Rural: ₹7,731; Urban: ₹12,105.
      • Chhattisgarh: Lowest MPCE – Rural: ₹2,466; Urban: ₹4,483.

    Major Shifts Includes:

    • Broad-based Growth:
      • Rural-Urban Dynamics: B.V.R. Subrahmanyam, CEO of Niti Aayog, highlights that India’s growth story is “broad-based,” with rural incomes and expenditures outpacing those in urban areas.
      • Narrowing Divide: The urban-rural consumption gap has decreased from 91% in 2004-05 to 71% in 2022-23, indicating diminishing inequality.
    • Shifts in Consumption Patterns:
      • Food Expenditure: Rural households’ spending on food has fallen below 50% of their total expenditure for the first time. Lower spending on staples like pulses and cereals is accompanied by increased expenditure on consumer durables and services.
      • Income Growth: Rising expenditures on items such as TVs, fridges, and mobile phones suggest improved incomes and evolving lifestyles.
    • Changing Poverty Metrics:
      • Poverty Estimates: Based on MPCE averages, poverty levels are projected to be below 5%, according to Mr. Subrahmanyam. Informal estimates indicate a decline in poverty, with destitution nearly eradicated due to various welfare schemes.
      • Inclusive Growth: Government initiatives such as Ayushman Bharat and free education have contributed to lifting millions out of poverty, reflecting a multi-dimensional approach to poverty alleviation.

  • Changing the growth paradigm

    The Global Sustainable Development Report 2023 | United Nations in Ghana

    Central Idea:

    The central idea of the article is that traditional measures of economic growth, like GDP, are inadequate indicators of a nation’s well-being and development. Instead, the focus should shift towards inclusive and sustainable growth that prioritizes the welfare of citizens, particularly in countries like India where economic progress has not translated into improved living standards for all.

    Key Highlights:

    • Critique of GDP-centric approach: The article highlights the limitations of relying solely on GDP growth as a measure of economic health, pointing out that it doesn’t necessarily lead to increased income or well-being for citizens.
    • Inequality and inequitable growth: Despite impressive GDP growth, India remains one of the most unequal countries in the world, indicating that the benefits of growth are not evenly distributed among its citizens.
    • Need for a new paradigm: The article argues for a shift towards inclusive and environmentally sustainable development models, especially in the face of global challenges like climate change.
    • Dependency on fossil fuels: The reliance on fossil fuels for essential materials like steel, concrete, plastics, and food production is highlighted, along with the challenges of transitioning away from them.
    • Importance of local solutions: Emphasizing the significance of community-driven, local solutions, the article suggests that India should leverage its unique strengths rather than blindly following Western development models.

    Key Challenges:

    • Overcoming entrenched economic paradigms: Shifting away from GDP-centric models towards more inclusive and sustainable development approaches requires challenging existing economic frameworks and ideologies.
    • Addressing inequality: Tackling the deep-rooted inequalities in India’s economy presents a significant challenge, especially given the historical focus on GDP growth.
    • Transitioning from fossil fuels: Moving away from fossil fuel dependency poses technological, economic, and social challenges, particularly in sectors like agriculture and transportation.
    • Balancing urbanization and rural development: Reconciling the push for urbanization with the need for rural development and sustainable agriculture presents complex policy dilemmas.
    • Overcoming resistance to change: Convincing policymakers and society at large to embrace alternative development paradigms may face resistance from entrenched interests and ideologies.

    Main Terms:

    • GDP: Gross Domestic Product, a measure of the total value of goods and services produced within a country’s borders.
    • Inclusive growth: Economic growth that benefits all segments of society, particularly the marginalized and vulnerable.
    • Sustainable development: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
    • Fossil fuels: Non-renewable energy sources such as coal, oil, and natural gas, formed from the remains of prehistoric plants and animals.
    • Urbanization: The process of population concentration in urban areas, often accompanied by industrialization and economic development.

    Important Phrases:

    • “Increase the size of the pie before its redistribution”: Reflects the emphasis on GDP growth over equitable distribution of wealth.
    • “One path for all”: Criticizes the uniform approach to development that privileges industrialization and urbanization over other forms of progress.
    • “Gandhian solution”: Refers to community-driven, localized approaches to development advocated by Mahatma Gandhi.
    • “Rural Bharat”: Signifies the rural heartland of India, highlighting the importance of rural communities in the country’s development.

    Quotes:

    • “More GDP does not improve the well-being of citizens if it does not put more income in their pockets.”
    • “India must find a new paradigm of progress, for itself and for the world, for more inclusive and environmentally sustainable growth.”
    • “The time has come to go back to old solutions to go to the future.”

    Useful Statements:

    • “Critics argue that GDP growth alone does not necessarily lead to improved living standards for citizens, particularly in countries like India where inequality persists.”
    • “Transitioning away from fossil fuels presents significant challenges, but it is essential for addressing climate change and ensuring long-term sustainability.”
    • “Local, community-driven solutions have the potential to address global challenges like climate change and inequitable economic growth.”

    Examples and References:

    • The article cites India’s experience of impressive GDP growth alongside persistent inequality as evidence of the limitations of traditional development models.
    • Reference is made to the work of Vaclav Smil on the role of fossil fuels in modern economies, providing a scientific basis for understanding the challenges of transitioning to renewable energy sources.

    Facts and Data:

    • India’s GDP grew at 7.2% per year during both the United Progressive Alliance and National Democratic Alliance governments, yet structural conditions leading to inequitable growth remained unchanged.
    • Sixty-four per cent of Indian citizens live in rural areas, highlighting the importance of rural development in India’s economic and social progress.

    Critical Analysis:

    The article provides a compelling critique of the prevailing GDP-centric approach to economic development, highlighting its failure to address inequality and environmental concerns. By advocating for inclusive and sustainable growth models, the article offers a nuanced perspective on the challenges facing countries like India in the 21st century. However, it could benefit from further exploration of specific policy recommendations and case studies demonstrating successful alternative development strategies.

    Way Forward:

    • Embrace inclusive and sustainable development models that prioritize the well-being of all citizens.
    • Invest in renewable energy sources and sustainable agriculture to reduce dependency on fossil fuels and mitigate climate change.
    • Empower local communities to drive development initiatives tailored to their unique needs and challenges.
    • Reform economic policies to prioritize equitable distribution of wealth and opportunities.
    • Foster international cooperation to address global challenges like climate change and inequality.

  • Multidimensional Poverty in India: A Decade of Progress

    Multidimensional Poverty

    Introduction

    • Finance Minister Nirmala Sitharaman announced in her Interim Budget speech that 25 crore Indians were lifted out of poverty over the past decade.
    • This remarkable achievement reflects the government’s commitment to inclusivity.

    Data from NITI Aayog’s Discussion Paper

    • NITI Aayog’s Insight: The data comes from a discussion paper titled “Multidimensional Poverty in India Since 2005-06,” authored by Ramesh Chand and Yogesh Suri from NITI Aayog, with inputs from the UNDP and OPHI.
    • Decline in Multidimensional Poverty: The paper reveals that multidimensional poverty in India reduced from 29.17% in 2013-14 to 11.28% in 2022-23, with around 24.82 crore individuals escaping poverty during this period.
    • State-Level Impact: Uttar Pradesh topped the list with 5.94 crore individuals escaping poverty, followed by Bihar at 3.77 crore and Madhya Pradesh at 2.30 crore.

    Understanding the Multidimensional Poverty Index (MPI)

    • A Novel Approach: MPI differs from traditional poverty measures, incorporating health, education, and living standards. These three dimensions each hold one-third weight in the index.
    • Indicators: MPI uses 10 indicators, including nutrition, child mortality, education, housing, and access to basic amenities, offering a comprehensive view of poverty.
    • India’s Unique MPI: India’s MPI includes additional indicators focusing on maternal health and access to bank accounts, aligning it with national priorities.

    Calculating MPI

    • Identifying “MPI Poor”: If an individual is deprived in at least one-third of the 10 weighted indicators, they are considered “MPI poor.”
    • Three Key Calculations: MPI requires three calculations:
      1. Incidence of Multidimensional Poverty (H): The proportion of MPI poor individuals in the population.
      2. Intensity of Poverty (A): The average proportion of deprivation experienced by MPI poor individuals.
      3. MPI Value: Obtained by multiplying H and A, revealing the share of weighted deprivations faced by MPI poor individuals.

    Data Sources and Estimations

    • Health Metrics: Data for health indicators relies on the National Family Health Survey (NFHS), conducted every five years. The last round covered the 2019-21 period.
    • Calculating MPI for 2012-13 and 2022-23: The paper used interpolation for 2013-14 estimates and extrapolation for 2022-23, enabling a comparison of poverty and deprivation trends.

    Conclusion

    • The reduction in multidimensional poverty over the last decade signifies the government’s dedication to inclusive development, improving the lives of millions of Indians.

  • Indian women are working more. Here’s why

    Female Labour Force Participation - Current Affairs

    Central Idea:

    The rise in the Female Labor Force Participation Rate (FLFPR) in rural India, particularly over the last six years, can be attributed to strategic interventions like the Deendayal Antyodaya Yojana National Rural Livelihood Mission (DAY-NRLM) and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). These programs, focusing on skilling support, credit access, and diversified livelihoods for women, have significantly contributed to the economic empowerment of women in rural areas.

     

    Key Highlights:

    • The FLFPR in rural areas increased from 24.6% (2017-18) to 41.5% (2022-23).
    • DAY-NRLM, with over 90 lakh Women’s Self-Help Groups (SHGs), has played a crucial role in transforming the lives of over 9.96 crore women.
    • MGNREGS, providing 260 crore person-days of work annually, has emphasized individual beneficiary schemes, raising incomes for women.
    • Initiatives like MKSP and SVEP under DAY-NRLM have empowered women in agriculture and entrepreneurship, respectively.
    • Social capital of women’s collectives, supported by elected Panchayat leaders, has been instrumental in the success of these programs.

     

    Key Challenges:

    • Despite progress, there’s a need for a more comprehensive understanding of the factors contributing to the increased FLFPR.
    • Low wages under MGNREGS pose a challenge, with men often opting for higher-paying jobs in the market.
    • The article hints at the need for a more detailed analysis of the impact of these programs on the overall socio-economic landscape.

     

    Key Terms:

    • FLFPR: Female Labor Force Participation Rate.
    • DAY-NRLM: Deendayal Antyodaya Yojana National Rural Livelihood Mission.
    • MGNREGS: Mahatma Gandhi National Rural Employment Guarantee Scheme.
    • SHGs: Self-Help Groups.
    • MKSP: Mahila Kisan Sashaktikaran Pariyojana.
    • SVEP: Start-Up Village Entrepreneurship Programme.

     

    Key Phrases:

    • “Skilling support and credit access for diversified livelihoods.”
    • “Low NPAs and the success of social capital.”
    • “Person-days of work generated annually under MGNREGS.”

     

    Key Quotes:

    • “The rise in rural female FLFPR has been accompanied by a rise in the share of self-employment and agriculture among working women.”
    • “The social capital of women’s collectives has transformed the rural scenario.”

     

    Key Statements:

    • “The DAY-NRLM and MGNREGS play a crucial role in improving the female labor force participation rate.”
    • “Raising MGNREGS wage rates, along with increased productivity, is crucial for securing lives of dignity for the poor.”

     

    Key Examples and References:

    • Evaluation studies by the Institute of Rural Management, Anand and Stanford University team.
    • Banking correspondents from DAY-NRLM making digital payments possible.
    • Quality Council of India’s evaluation of SVEP.

     

    Key Facts and Data:

    • FLFPR in rural areas increased from 24.6% (2017-18) to 41.5% (2022-23).
    • DAY-NRLM covers 9.96 crore women, with over 90 lakh SHGs accessing Rs 38,892 crore.
    • MGNREGS generates over 260 crore person-days of work annually.

     

    Critical Analysis:

    • The article provides a detailed account of the initiatives and their impact but lacks a comprehensive analysis of the challenges and potential drawbacks of these programs.
    • The need for a more nuanced understanding of the interplay of factors contributing to increased FLFPR is highlighted but not thoroughly explored.

     

    Way Forward:

    • The government should continue and possibly expand successful initiatives like DAY-NRLM and MGNREGS.
    • Address the challenge of low wages under MGNREGS to attract more workers.
    • Conduct further research to understand the broader socio-economic implications of these programs and refine them accordingly.

  • Did 250 million Indians exit Poverty?  

    poverty

    Introduction

    • The recent paper by Niti Aayog has highlighted a significant reduction in ‘multidimensional poverty’ among Indians between 2013-14 and 2022-23, an achievement acknowledged by PM Modi.
    • To comprehend this data accurately, it is essential to grasp the concept of multidimensional poverty and evaluate the methodology used.

    Understanding Multidimensional Poverty

    • Traditional Poverty Metrics: Poverty is commonly measured monetarily, based on income or expenditure thresholds.
    • Multidimensional Poverty Index (MPI): India employs a global MPI that assesses poverty by considering 12 life aspects beyond income. These aspects fall under categories like education, health, and living standards.
    • Deprivation Assessment: Households are evaluated for deprivation across each of the 12 indicators. If they are deprived in several areas, they are labelled ‘multidimensionally poor’ (MDP).

    Data Sources

    • National Family Health Surveys (NFHS): Household-level data from NFHS serves as the raw material. Niti Aayog further processes this data to calculate MDP figures.
    • NFHS Rounds: NFHS data is available for three rounds: 2005-06 (NFHS-3), 2015-16 (NFHS-4), and 2019-21 (NFHS-5).
    • Share of MDP Indians: In 2005-06, it was 55%, which decreased to 25% in 2015-16. Assuming a consistent pace, the paper suggests it may have been 29% in 2013-14. Further extrapolation estimates it to be 11% by 2022-23.

    Assessing the Assumptions

    • Vague Starting Point: The choice of 2013-14 as a starting point may be open to interpretation and serves as a defining factor for evaluating nine years of Modi’s leadership.
    • Uniform Pace Assumption: Assuming a uniform pace over such a long period can be challenging, as it may not account for variations in progress over different years.
    • Neglecting Pandemic Impact: Extrapolating progress without considering the pandemic’s effects on data collection and welfare reversals may lead to inaccuracies.

    Interpreting the Data

    • Value of Indices: While indices like MPI offer a combined view of multiple indicators, they should not overshadow the importance of monetary poverty data.
    • Not Equivalent to Poverty: Multidimensional poverty should not be equated with poverty itself, as they represent different aspects. It is essential to differentiate between the two.
    • Selective Maths: The exercise of interpolation and extrapolation to align with a government’s tenure should be viewed critically and with consideration of potential limitations.

    Conclusion

    • The reduction in multidimensional poverty in India is a noteworthy achievement, as evidenced by NFHS data.
    • However, it is crucial to approach such data with a nuanced understanding of the methodology, assumptions, and its implications.
    • While multidimensional poverty indices provide valuable insights, they should complement, not replace, comprehensive poverty assessment methods.

  • Arvind Panagariya appointed as Sixteenth Finance Commission chief

    Central Idea

    • The Centre has appointed Arvind Panagariya, a renowned trade economist and former Niti Aayog vice chairman, as the chairman of the Sixteenth Finance Commission.

    Who is Arvind Panagariya?

    • Panagariya is a professor at Columbia University.
    • He served as the first vice chairman of the Niti Aayog from 2015 to 2017, succeeding the Planning Commission.

    About Finance Commission

    • Establishment: The Finance Commission (FC) of India was established by the President in 1951 under Article 280 of the Indian Constitution.
    • Purpose: Its primary role is to define and regulate the financial relations between the central government and the individual state governments.
    • Legislative Framework: The Finance Commission (Miscellaneous Provisions) Act, 1951, further outlines the qualifications, appointment, disqualification, term, eligibility, and powers of the Finance Commission.
    • Composition: Appointed every five years, the FC comprises a chairman and four other members.
    • Evolution: Since the First FC, changes in India’s macroeconomic landscape have significantly influenced the Commission’s recommendations.

    Constitutional Provisions

    • Article 268: Facilitates the levy of duties by the Centre, with collection and retention by the States.
    • Article 280: Outlines the FC’s composition, qualifications for members, and its terms of reference. It mandates the FC to recommend the distribution of net tax proceeds between the Union and States and the allocation among States. It also addresses the financial relations between the Union and States and the devolution of unplanned revenue resources.

    Key Functions of the Finance Commission

    • Tax Devolution: Recommends how net tax proceeds should be distributed between the Center and States.
    • Grants-in-Aid: Determines the principles governing these grants to States.
    • Augmenting State Funds: Advises on measures to enhance the States’ Consolidated Funds to support local bodies and panchayats, based on State Finance Commissions’ recommendations.
    • Other Financial Functions: Addresses any other financial matters referred by the President.

    Members of the Finance Commission

    • Structure and Standards: The Finance Commission (Miscellaneous Provisions) Act, 1951, provides a structured format and global standards for the FC.
    • Qualifications and Powers: Specifies rules for members’ qualifications, disqualification, appointment, term, eligibility, and powers.
    • Composition: The Chairman is chosen for their experience in public affairs. The other members are selected based on their judicial experience, knowledge of government finances, administrative and financial expertise, or special economic knowledge.

    Challenges for the 16th Finance Commission

    • Overlap with GST Council: The coexistence with the GST Council, a permanent constitutional body, presents a new challenge.
    • Conflict of Interest: Decisions by the GST Council on tax rates could impact the FC’s revenue-sharing calculations.
    • Feasibility of Recommendations: While the Centre often adopts the FC’s suggestions on tax devolution and fiscal targets, other recommendations may be overlooked.

    Major Outstanding Recommendations

    • Fiscal Council Creation: The 15th FC proposed a Fiscal Council for collective macro-fiscal management, but the government has shown reluctance.
    • Non-Lapsable Fund for Internal Security: Though the Centre agreed ‘in principle’ to establish this fund, its implementation details are pending.