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Education in India

Role of Education in Promoting Economic Growth and Development

Positive Externalities from Education

1. More educated individuals are usually more productive workers.
2. Educated citizens are more informed and usually translates into more active voters.
3. It is been observed that Educated Families have access to financial assistance through education grants and loans.
4. Public education helps in redistribution of Income. All Child in households, no matter what their parents income level are, must be provided with education. This will ensure fair income distribution in the future.
5. The well governed Government public schools that provide free education, gives every child (rich or poor) the chance to learn and develop his/her skills.
6. “A stable and democratic society is impossible without a minimum degree of literacy and knowledge on the part of most citizens and without widespread acceptance of some common set of values. Education can contribute to both. In consequence, the gain from the education of a child accrues not only to the child but also to other members of the society”

How Education Promote Economic Growth

Channel One: Economic Channel

Channel 2: Technological Channel

Channel 3: Societal and Institutional Channel

Addressing Poverty in India/Poverty Eradication Schemes

Mahatma Gandhi Rural Guarantee Employment Act (MGNREGA)

• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with its legal framework and rights-based approach was notified on September 5, 2005, and came into force with effect from 2nd February 2006.
• It aims at enhancing livelihood security by providing at least one hundred days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.
• The Act covered 200 districts in its first phase and was extended to all the rural districts of the country in phases.
• MGNREGA is the first ever law, internationally, that guarantees wage employment at an unprecedented scale.
• The primary objective of the Act is meeting demand for wage employment in rural areas. The works permitted under the Act address causes of chronic poverty like drought, deforestation and soil erosion so that the employment generation is sustainable.
• The women workforce participation under the Scheme has surpassed the statutory minimum requirement of 33 percent, since inception, every year women participation has been around 48%.

The major goals of MGNREGA are to:

• Enhance livelihood security of the rural poor by generating wage employment opportunities in works that develop the infrastructure base of the area concerned.
• Rejuvenate the natural resource base of the area concerned.
• Create a productive rural asset base.
• Stimulate the local economy by providing a safety net to rural poor.
• Ensure empowerment to women.
• Strengthen grass-roots democratic institutions.

Key Achievements of MGNREGA

• Since its inception in 2006, around Rs.1,63,754.41 crores have been disbursed directly as wage payments to rural worker households.
• 1,657.45 crore person-days of wage employment has been generated. On an average, five crore rural households have been provided with wage employment each year since 2008.
• Scheduled Castes and Scheduled Tribes participation has been 48 percent till 31st March 2014.
• Women have accounted for 48 percent of the total person-days generated. This is well above the mandatory 33 percent as required under the Act.
• Since the beginning of the programme, 260 lakh works have been taken up under the Act.
• Average wage per person-day has gone up by 81 percent since the inception of the programme. The notified wage today varies from a minimum of Rs.153 in Meghalaya to Rs.236 in Haryana.

National Rural Livelihood Mission

• The NRLM is one of the important programs of the government of India, in terms of allocation and coverage, and it seeks to reach out to 8–10 crore rural poor households and organize them into SHGs and federations at the village and at higher levels by 2021-22.
• While doing so, NRLM ensures adequate coverage of poor and vulnerable sections of the society identified through Participatory processes and approved by Gram Sabha.
• A strong convergence with Panchayati Raj Institutions (P.R.I) is an important feature of the programme.
• During the year 2013-14, Aajeevika-NRLM has focused on supporting the State Missions in transiting to NRLM by fulfilling all the requirements, setting up implementation architecture, strengthening them by providing comprehensive induction training and capacity building support.
• As of March 2014, 27 States and the Union Territory of Puducherry have transited to NRLM.
• The Resource blocks initiated during the year 2012-13 have shown impressive results in terms of quality of community institutions and generation of social capital.
• NRLM has focused on creating special strategies and initiating pilots to reach out to the most marginalized and vulnerable communities – Persons with Disabilities (PwDs), the elderly, Particularly Vulnerable Tribal Groups (PVTGs), bonded labour, manual scavengers, victims of human trafficking, etc.
• During the year emphasis was also placed on strengthening the institutional systems in terms of adopting Human Resource Manual, Financial Management manual and roll out of interest subvention programme.
• Around 1.58 lakh youths have set up their own enterprises with the help of Aajeevika. 24.5 lakh Mahila Kisans have also been provided support.

Pradhan Mantri Gram Sadak Yojana

• Rural roads constitute about 80% of the country’s road network and are a lifeline for the vast majority of the population that lives in the villages.
• Roads form a critical link for rural communities to access markets, education, health and other facilities.
• They also enhance opportunities for employment in the non-farm sector and facilitate setting up of shops and small businesses.
• The government of India, as part of poverty reduction strategy, launched the Pradhan Mantri Gram Sadak Yojana (PMGSY) on 25th December 2000 as a Centrally Sponsored Scheme to assist States.
• The primary objective of the programme is to provide good all-weather connectivity to all eligible unconnected habitations in the core network with a population of 500 (Census-2001) and above.
• In respect of the Hill States (North-East, Sikkim, Himachal Pradesh, Jammu & Kashmir and Uttarakhand), Desert areas (as identified in the Desert Development Programme), and Tribal (Schedule V) Areas and Selected Tribal and Backward Districts (as identified by the Ministry of Home Affairs and Planning Commission), the objective is to connect habitations with a population of 250 (Census-2001) and above.
• The programme envisages single all-weather connectivity.
• The country has now a network of about 3,99,979 km of such roads. With a view to ensuring full farm-to-market connectivity, the programme also provides for the up gradation of the existing ‘Through Routes’ and Major Rural Links to prescribed standards, though it is not central to the programme. Under PMGSY-II, 10,725 projects have been cleared out of eligible 50,000 projects. As on March 31, 2014, 97,838 habitations have been connected. New connectivity of 2,48,919 km has been achieved.

Indira Awaas Yojana

• As part of a larger strategy of the Ministry’s poverty eradication effort, Indira Awaas Yojana (IAY), a flagship scheme of the Ministry of Rural Development, has since inception been providing assistance to the BPL families who are either houseless or having inadequate housing facilities, for constructing a safe and durable shelter.
• The Government has been implementing IAY as part of the enabling approach to ‘shelter for all’, taking cognizance of the fact that rural housing is one of the major anti-poverty measures for the marginalized.
• The house is recognized not merely as a shelter and a dwelling place but also as an asset which supports the livelihood, symbolizes social position and is also a cultural expression.
• A good home would be in harmony with the natural environment protecting the household from extreme weather conditions, and it would have the required connectivity for mobility and facilities for economic activities.
• In the year 2013-14, 13.73 lakh houses have been constructed.

Pradhan Mantri Awaas Yojana

• PMAY was launched in June 2015. The Government envisages building affordable pucca houses with water facility, sanitation and electricity supply round-the-clock.
• The scheme originally was meant to cover people in the EWS (annual income not exceeding ₹3 lakh) and LIG (annual income not exceeding ₹6 lakh) sections, but now covers the mid-income group (MIG) as well.
• PMAY scheme comprises of four key aspects.
• One, it aims to transform slum areas by building homes for slum dwellers in collaboration with private developers.
• Two, it plans to give a credit-linked subsidy to weaker and mid-income sections on loans taken for new construction or renovation of existing homes.
• An interest subsidy of 3 percent to 6.5 per cent has been announced for loans ranging between ₹6 lakh and ₹12 lakh. For those in the EWS and LIG category who wish to take a loan of up to ₹6 lakh, there is an interest subsidy (concession) of 6.5 percent for the tenure of 15 years.
• So far around 20,000 people have availed of loans under this scheme. The Government increased the loan amount to ₹12 lakh, targeting the mid-income category. The interest subsidy on loans up to ₹12 lakh will be 3 percent. In rural areas, interest subvention of 3 percent is offered on loans up to ₹2 lakh for constructing new homes or extension of old homes.
• Three, the Government will chip in with financial assistance for affordable housing projects done in partnership with States/ Union Territories for the EWS.
• Four, it will extend direct financial assistance of ₹1.5 lakh to EWS.
• Today, while developers in India’s metropolitan cities are sitting on lakhs of unsold residences costing upwards of ₹50 lakh, the country is estimated to have a shortage of nearly 20 million housing units needed by the rural and urban poor, at far lower price points of ₹5-15 lakh.
• The PMAY aims to address this shortfall. With the increase in subsidised loan amount to ₹12 lakh, the scheme is expected to cover a higher proportion of the urban poor.
• The PMAY will hopefully incentivise India’s construction and realty sector to reduce its traditional obsession with affluent home buyers in the cities.

National Urban Livelihoods Mission

• Ministry of Housing & Urban Poverty Alleviation has launched “National Urban Livelihoods Mission (NULM)” in the 12th Five-Year Plan w.e.f. 24th September 2013 replacing the existing Swarna Jayanti Shahari Rozgar Yojana (SJSRY).
• The NULM focuses on organizing urban poor in Self Help Groups, creating opportunities for skill development leading to market-based employment and helping them to set up self-employment ventures by ensuring easy access to credit.
• The Mission aims at providing shelter equipped with essential services to the urban homeless in a phased manner. In addition, the Mission will also address livelihood concerns of the urban street vendors.

The primary target of NULM is the urban poor, including the urban homeless. The NULM has six major components:

I. Social Mobilizations and Institution Development (SM&ID): NULM envisages mobilisation of urban poor households into thrift and credit-based Self-Help Groups (SHGs) and their federations/ collectives.

II. Capacity Building and Training (CB&T): A multi-pronged approach is planned under NULM for continuous capacity building of SHGs and their federations/collectives, government functionaries at Central, State and City/Town levels, bankers, NGOs, CBOs and other stakeholders. NULM will also create national and state-level mission management units to support the implementation of the programme for the poor.

III. Employment through Skills Training and Placement (EST&P): NULM will focus on providing assistance for skill development / upgrading of the urban poor to enhance their capacity for self-employment or better-salaried employment.

IV. Self-Employment Programme (SEP): Self-Employment Programme (SEP): This component will focus on financial assistance to individuals/groups of urban poor for setting up gainful self-employment ventures/ micro-enterprises, suited to their skills, training, aptitude and local conditions.

V. Support for Urban Street Vendors: This component will cover the development of vendors market, credit enablement of vendors, a socio-economic survey of street vendors, skill development and micro enterprises development and convergence with social assistance under various schemes of the Government.

VI. Shelter for Urban Homeless (SUH): Under this component, the construction of permanent shelters for the urban homeless equipped with essential services will be supported.

National Food Security Mission

• The Government of India in 2007 adopted a resolution to launch a Food Security Mission comprising rice, wheat and pulses to increase the production of rice by 10 million tons, wheat by 8 million tons and pulses by 2 million tons by the end of the Eleventh Plan (2011-12).
• Accordingly, a Centrally Sponsored Scheme, ‘National Food Security Mission’ (NFSM), was launched in October 2007.
• The Mission is being continued during 12th Five Year Plan with new targets of additional production of food grains of 25 million tons of food grains comprising of 10 million tons rice, 8 million tons of wheat, 4 million tons of pulses and 3 million tons of coarse cereals by the end of 12th Five Year Plan.
• The National Food Security Mission (NFSM) during the 12th Five Year Plan is having five components (i) NFSM- Rice; (ii) NFSM-Wheat; (iii) NFSM-Pulses, (iv) NFSM-Coarse cereals and (v) NFSM Commercial Crops.

The objectives of NFSM are

• Increasing production of rice, wheat, pulses and coarse cereals through area expansion and productivity enhancement in a sustainable manner in the identified districts of the country
• Restoring soil fertility and productivity at the individual farm level; and
• Enhancing farm level economy (i.e. farm profits) to restore confidence amongst the farmers

The Mission is adopting the following strategies:

1. Focus on low productivity and high potential districts including cultivation of food grain crops in rainfed areas.
2. Implementation of cropping system-centric interventions in a Mission mode approach through active engagement of all the stakeholders at various levels.
3. Agro-climatic zone wise planning and cluster approach for crop productivity enhancement.
4. Focus on pulse production through utilization of rice fallow, rice bunds and intercropping of pulses with coarse cereals, oilseeds and commercial crops (sugarcane, cotton, jute).
5. Promotion and extension of improved technologies, i.e., seed, integrated nutrient management (INM) including micronutrients, soil amendments, integrated pest management (IPM), input use efficiency and resource conservation technologies along with capacity building of the farmers/ extension functionaries.
6. Close monitoring of the flow of funds to ensure the timely reach of interventions to the target beneficiaries.
7. Integration of various proposed interventions and targets with the district plan of each identified district.
8. Constant monitoring and concurrent evaluation by the implementing agencies for assessing the impact of the interventions for a result oriented approach.

Integrated Child Development Services

• The ICDS Scheme implemented by Government of India is one of the world’s largest and unique programmes for early childhood care and development.
• It is the foremost symbol of the Country’s commitment to its children and nursing mothers, as a response to the challenge of providing pre-school nonformal education on the one hand and breaking the vicious cycle of malnutrition, morbidity, reduced learning capacity and mortality on the other.
• The beneficiaries under this scheme are children in the age group of 0-6 years, pregnant women and lactating mothers.
• To improve the nutritional and health status of children in the age group 0-6 years, reduce the incidence of mortality, morbidity and malnutrition of children, and nutritional supplements to pregnant women and lactating mothers are some important objectives of ICDS.
• The ICDS Scheme is universal for all categories of beneficiaries.
• The ICDS Scheme was launched in 1975 in 33 Blocks (Projects) with 4891 Anganwadi Centres (AWC).
• As on 31/12/2013, under ICDS, 7067 projects 13.41 lakhs AWCs are operational covering 1026.03 lakh beneficiaries under supplementary nutrition.

Trickle Down Approach to Poverty

Back to Basics: The Theory

It is often said that a rising tide lifts all boats. Experience tells us that the same is not necessarily true of a growing economy. In both developed and developing economies, the benefits of growth are seldom evenly distributed.

The proponents of trickle-down economics, argues that rising incomes at the top end of the spectrum would lead to more jobs, more output, more income and less poverty as the growth and higher incomes at the top end will move at the lower end and to the poor. According to this thesis, as long as an economy is growing, the benefits will eventually reach the poor and make their way through the system that will make everyone better off.

The theory of Trickle Down represents an unhealthy obsession with GDP and Growth as the most reliable measure of economic success. The theory believes in the saying ‘One size fits all’. The theory argues that to eradicate poverty, the only thing that matters is growth. A growing economy will take care of everything. As growth happens, the fruits of growth will eventually flow to the poorest and the lower section of the society and ultimately lifting them up.

The Critique of Trickle Down Economics

• The IMF and the World Bank in their various reports debunked the idea of trickle-down economics. They found out that the benefits of growth within an economy are rarely spread evenly, but also that an unequal rise in incomes can actually slow the rate of economic growth altogether.
• According to the report, a 1% rise in income for the wealthiest 20% of a society alone is likely to shrink annual growth by 0.1% within five years. By contrast, raising the income of the poorest 20% by a single percentage point increases annual growth by 0.4% over the same time frame.
• When it comes to eliminating poverty, the degree to which the benefits of growth are shared can have a significant impact on outcomes.
• According to Martin Ravallion, the former head of research at the World Bank, as cited in The Economist, a 1% increase in incomes in the most unequal countries produces a mere 0.6% reduction in poverty; however, in the most equal countries, it yields a 4.3% cut. In other words, societies can get much more ‘bang from a boom’ if they ensure benefits are more widely shared.
• This brings us to the point at which trickle-down theory ends and inclusive growth begins.

According to the Organisation for Economic Cooperation and Development (OECD), Inclusive growth is “a new approach to economic growth that aims to improve living standards and share the benefits of increased prosperity more evenly across social groups”.

Inclusive Growth in India

Note for Students: Inclusive growth refers to both the pace and pattern of growth, which are considered interlinked and therefore need to be addressed together. Inclusiveness represents equality of opportunity in terms of access to markets, resources and an unbiased regulatory environment for businesses and individuals. In a nutshell, it is not just about the quantity of growth within our economies and societies, but also about its quality.

Inclusive Growth matters because widening inequality have been shown to lead to a range of social and economic challenges for societies over time. These include both social and political instability, not to mention the sheer waste of potential that occurs when large swathes of populations do not have the opportunity to improve their situation.

Features of Inclusive Growth

The Multi-Dimensional Poverty Index

• The Multidimensional Poverty Index (MPI), published for the first time in the 2010 Report, complements monetary measures of poverty by considering overlapping deprivations suffered by individuals at the same time.
• The index identifies deprivations across the same three dimensions as the HDI and shows the number of people who are multidimensionally poor (suffering deprivations in 33% or more of the weighted indicators) and the number of weighted deprivations with which poor households typically contend with.
• It can be deconstructed by region, ethnicity and other groupings as well as by dimension and indicator, making it a useful tool for policymakers.
• The MPI can help the effective allocation of resources by making possible the targeting of those with the greatest intensity of poverty; it can help address some SDGs strategically and monitor impacts of policy intervention.
• The MPI can be adapted to the national level using indicators and weights that make sense for the region or the country, it can also be adopted for national poverty eradication programs, and it can be used to study changes over time.
• About 1.5 billion people in the 102 developing countries currently covered by the MPI—about 29 percent of their population — live in multidimensional poverty — that is, with at least 33 percent of the indicators reflecting acute deprivation in health, education and standard of living. And close to 900 million people are at risk (vulnerable) to fall into poverty if setbacks occur – financial, natural or otherwise.

Poverty Lines in India

• The poverty line defines a threshold income. Households earning below this threshold are considered poor. Different countries have different methods of defining the threshold income depending on local socio-economic needs.
• Poverty is measured based on consumer expenditure surveys of the National Sample Survey Organisation. A poor household is defined as one with an expenditure level below a specific poverty line.
• The erstwhile Planning Commission was the nodal agency in the Government of India for estimation of poverty. It estimates the incidence of poverty at the national and state level separately in rural and urban areas.
• The incidence of poverty is measured by the poverty ratio, which is the ratio of number of poor to the total population expressed as a percentage. It is also known as head-count ratio.

Time Line of Poverty Estimation in India

The first Poverty line was created in India by the Erstwhile Planning Commission in the mid 1970s. It was based on a minimum daily requirement of 2400 and 2100 calories for an adult in Rural and Urban area respectively.

YK Alagh Committee (1979):

• In 1979, a task force constituted by the Planning Commission for the purpose of poverty estimation, chaired by YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements.
• Table 3 shows the nutritional requirements and related consumption expenditure based on 1973-74 price levels recommended by the task force.  Poverty estimates for subsequent years were to be calculated by adjusting the price level for inflation.

Poverty Estimation Committees in India

Poverty in India

People living in poverty are often socially excluded and marginalized. Their right to effectively participate in public affairs is frequently ignored, and thus elimination of poverty is much more than a humanitarian issue, as it is more of a human rights issue. Thus, eradication of poverty and hunger is the basis of all development process.

During the last two decades, India has lifted more than 100 million of its citizens from extreme poverty; still, it is home to a very large number of people living in abject poverty.

Common Cited Causes of Poverty in India

The above-mentioned reasons are at best half-truths. In reality causes of poverty are much more complex.

The True causes of poverty in India are:

Poverty as Lack of Freedom and Capabilities.

Note for Students:

• Why are People Poor?

People are poor because they lack choices both economic and social.

• Why do they lack Choices?

They lack choices because they do not have basic freedoms and capabilities.

• What are basic Freedoms and capabilities?

The freedoms through which people can empower themselves, the capabilities through which poor can take their decisions. The broad freedoms that poor lacks are: Freedom of Choice; Freedom of Justice etc.

• Why do the poor lack Freedoms and Capabilities?

They lack it because of the following reasons:

• The government is not willing to provide them.
• 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 are the solutions?

Empowerment of people through social development and education.

Providing to the poor all sorts of Choices, from which he can choose the best. In short making the poor of the country capable.

The Vicious Circle of Poverty.

The Vicious Circle of Poverty

Poverty Head Count Ratio versus Poverty Gap Ratio

Absolute versus Relative Poverty

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

1. Monetary Economics: Barter System, Definition, Function and Evolution of Money
2. Central Banking in India: Functions of RBI
3. Monetary Policy in India: Inflation, deflation, Recessionary and Inflationary Scenarios
4. Monetary Policy tools and Money Supply in India
5. Monetary Policy Agreement in India

1. India’s Balance of Payments: Current Account, Capital Account, Goods and Services Account
2. India’s BOP Performance: Balance of Payment versus Balance of Trade, Current Account versus Capital Account
3. FDI and FPI in India, External Commercial Borrowings, Foreign Exchange Reserves in India
4. Foreign Exchange Rate Determination in India and Types of Exchange Rate
5. Capital and Current Account Convertibility in India