The Indian political, policy and administrative systems have to adjust to the new realities of the transition to a middle- income country, in which poverty does not mean living at the edge of hunger but, rather, lack of income to take advantage of the opportunities thrown up by a growing economy. Discuss? (200 W)

Mentor’s Comment:

Introduction should define poverty in the line of World Bank and link it to the existing poverty in India and its recent future prospects.

Further the main body should discuss about the changing dynamics of Indian poverty in recent years. Points like, changing income level, rapid economic growth, increasing capabilities to invest and overall the changing mindset of people towards economic opportunities etc. will be helpful.

Next, talk about why do poors in India fail to take advantage of the opportunities. Points like weak empowerment institutions, short term measures like freebies to attract voters, lack of will among politicians, divide and rule policy of politicians on cast and religion, huge presence of inequality, lack of understanding about the nature of poverty etc.

Next, mention what should we do and bring the conclusion based on the points of main part.

Model Answer:

The World Bank defines a person as extremely poor if she is living on less than 1.90 dollars a day, which are adjusted for inflation as well as price differences between countries. India is perhaps no longer home to the highest number of people living  in  extreme  poverty.  Researchers  at  Brookings  Institution  predict  that  the  Indian  number  is  expected  to  drop  to around 20 million over the next four years. But with the changing character of Indian economy and society, its imperative to vision a new approach for poverty reduction in India.

Changing dynamics of Indian poverty:

  • China began  to  score  massive  wins  against  extreme  poverty  at  the  turn  of  the  century,  when  its  per  capita income in terms of purchasing power parity (PPP) was around $4,000.
  • It was thus very likely that India would see a similar result after it reached a similar average income level at the end of the previous decade.
  • Scholars who  have  studied  the  Chinese  success  have  no  doubt  that  rapid  economic  growth  has  been  the  main reason why extreme poverty could be rolled back.
  • But the centrality of economic expansion is often lost in the heated ideological debates in India.
  • Indeed, a  lack  of  income  is  a  condition  for  an  impoverished  life,  but  income  is  instrumentally    The capability approach concentrates on capabilities that are intrinsically important.
  • In India,  people  are  poor  because  they  lack  choices  both  economic  and  social,  to  take  advantage  of  the opportunities in the new economy.
  • They lack choices because they do not have basic freedoms and capabilities.
  • Freedoms and capabilities are the basics for any fight against poverty.
  • The freedoms through which people can empower themselves, the capabilities through which poor can take their decisions are: Freedom of Choice; Freedom of Justice etc.

Why do the poors in India fail to take advantage of the opportunities:

  • The institutions of empowerment are weak.
  • Ours is an entitlement based system, in which the political parties and the government prefer to take short-term measures of the distribution of freebies to attract voters.
  • The political  system  does  not  believe  in  empowering  people  through  long-term  measures  of  Education, awareness, Justice, Health and Productivity.
  • Huge presence of inequality.
  • Lack of understanding of the nature of poverty.

What should we do?

  • It is time to close the tired debate about whether the economic reforms of 1991 have only helped the rich
  • India will once again have to redefine what it means by poverty.
  • Poverty lines have to be recalibrated depending on changes in income, consumption patterns and prices.
  • The usual poverty line used in narratives is 1.90 international dollars a day, but the World Bank has two others—$3.20 per day for middle-income countries and $5.50 per day for rich countries.
  • India is  now  a  middle-income  country,  with  an  estimated  per  capita  income  of  around  $9,000  in  purchasing power    Economists  suggest  that  a  poverty  line  of  $3.20  translates  into  75  Rs  a  day,  or  68%  higher  than the Tendulkar poverty line.
  • The Indian political, policy and administrative systems have to adjust to the new realities of Indian economy.
  • The focus of government spending should be on the provision of public goods rather than subsidies.
  • The rate  at  which  economic  growth  translates  into  poverty  reduction  depends  on  how  the  growth  dividend  is distributed. Therefore, income inequality should be the priority of government.
  • One of the strategies has been to target specific services.
  • Another related  strategy  is  the  identification  of  the  concentration  of  deficiencies  among  certain  socio-economic groups, geographic groupings, gender, and demographic classes.
  • Since convergence  of  interventions  also  improves  the  effectiveness  of  each  intervention,  government  has  gone about a multi-pronged intervention strategy.
  • Such as offering access to health as well as education together with laying down critical infrastructure addresses multiple deficiencies concurrently.
  • Other strategy of government is to make better institutional arrangements and espousal of innovative technology solutions for effective and efficient service delivery. For instance, e-governance, DBT, PPP mode, partnering with NGOs.
  • Establishing collaboration between public and private sector providers of social services.

Empowerment  of  people  through  social  development  and  education  is  the  need  of  the  hour. Providing  to  the  poor  all sorts  of  choices,  from which  he can choose  the best, should be  the  mantra.  In short,  we  need  to make  the  poor of  the country  capable.  More  efforts  need  to  be  made  by  governments,  making  them  more  inclusive  and  efficient  and  provide more  opportunities  of  employment,  better  infrastructure,  etc  and  make  them  trickle  down  to  the  poor  and  vulnerable sections of the society, to get rid of poverty in coming years.

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