Poverty Eradication – Definition, Debates, etc.

Poverty Eradication – Definition, Debates, etc.

Social sector: the post-Covid priority

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Social sector expenditure as percentage of GDP

Mains level : Paper 2- Need to invest more in the social sector in the post pandemic world

The article highlights the need for more focus on the social sector in the post-Covid society and suggest ways to do the same.

Why focus on social sector

  • No country has progressed without investing in the social sector.
  • India is committed to achieving the Sustainable Development Goals (SDGs) by 2030, and social sector development is important in reaching them.
  • Progress in this sector has intrinsic (for its own sake) and instrumental (for higher growth) value.
  • It is needed even to build a $5 trillion economy faster.

India’s social sector expenditure

  • India’s progress in the social sector has been much slower compared to its GDP growth.
  • In the social sector expenditure, the share of education as a percentage of GDP has been stagnant around 2.8-3 per cent during 2014-15 to 2019-20.
  • In the case of health, the expenditure as a percentage of GDP increased from 1.2 per cent to 1.5 per cent.
  • This is lower than the required 2-3 per cent of GDP.
  • An increase in health expenditure is also important to take care of the present and future pandemics.
  • There are supply side problems regarding the health infrastructure.
  • It is essential to have a huge increase in public expenditure on health and provide accessible, affordable and quality health coverage to all.

Following are some key issues in the social sector India needs to focus on.

1) The problem of undernutrition

  • The NFHS-5 report shows that malnutrition level has reduced marginally in a few states and has worsened in some other states between 2015-16 and 2019-20.
  • We can’t have a society with 35 per cent of our children suffering from malnutrition.
  • Apart from undernutrition, obesity seems to be increasing in both rural and urban areas.
  • There is a need to raise allocations for ICDS and other nutrition programmes.
  • The determinants of nutrition are agriculture, health, women’s empowerment, including maternal and child practices, social protection, nutrition education, sanitation and drinking water.
  • The Poshan Abhiyan is a good programme, but has to cover all these determinants with a multi-pronged approach to reduce undernutrition.

2) Quality education

  • Quality education is key for raising human development.
  • The pandemic has enhanced inequalities in education and has revealed the widening digital gap.
  • Equality of opportunity in terms of quality education is the key for raising human development and for reducing inequalities in the labour market.
  • Several committees have recommended that public expenditure on education should be at 6 per cent of GDP.

3) Social safety nets

  •  It is known that migrant workers were the most affected during the pandemic and that they do not have any safety nets.
  • There is a need to have safety nets like an employment guarantee scheme for the urban poor and facilities for migrants.
  • Similarly in rural areas, allocations to MGNREGA have to be increased because of the reverse migration.

4) Programs for vulnerable section need to be continued

  • The government has done well in providing cooking gas through Ujjwala Yojana and electricity through Saubhagya Yojana, introducing programmes such as Swachh Bharat Abhiyan and initiatives for housing, financial inclusion and providing loans to the self-employed.
  • These programmes have helped the vulnerable sections, particularly women.
  • Another initiative of the government was to facilitate direct benefit transfers (DBT) for welfare schemes.
  • These initiatives have to be continued.

Way forward

  • The government should give more focus to the social sector with better policies and implementation.
  • It has to work closely with the states in revitalising the social sector as major expenditures particularly on health and education are met by them.
  • The 15th Finance Commission also seems to have mentioned that health expenditure should be increased to 2.1 per cent of GDP.
  • The Commission may also suggest some incentives for states to increase health expenditure.
  • Both Centre and states should have a five-year vision on the social sector.

Consider the question “No country has progressed without investing in the social sector. In the post pandemic world India needs to chart the plan to invest more in the sector. In light of this, examine the challenges in the social sector and suggest the ways to deal with them.

Conclusion

India, aspiring to be a global power, should have a harmonious and inclusive social sector development. This is also important for achieving the SDGs, reducing inequalities and building a $5 trillion economy faster.

Poverty Eradication – Definition, Debates, etc.

[pib] Global Indices to Drive Reforms and Growth (GIRG) Exercise

Note4Students

From UPSC perspective, the following things are important :

Prelims level : MPI and various other dimensions of poverty

Mains level : Not Much

NITI Aayog as the nodal agency has been assigned the responsibility of leveraging the monitoring mechanism of the Global Multidimensional Poverty Index (MPI) to drive reforms.

Try this PYQ:

Q.In a given year in India, official poverty lines are higher in some states than in others because (CSP 2019):

(a) Poverty rates vary from State to State

(b) Price levels vary from State to State

(c) Gross State Product varies from State to State

(d) Quality of public distribution varies from State to State

GIRG Exercise

  • Global MPI is part of GoI’s decision to monitor the performance of the country in 29 select Global Indices.
  • The objective of the exercise is to fulfil the need to measure and monitor India’s performance on various important social and economic parameters.
  • It would enable the utilization of these Indices as tools for self-improvement; bring about reforms in policies, while improving last-mile implementation of government schemes.
  • As the Nodal agency for the MPI, NITI Aayog has constituted a Multidimensional Poverty Index Coordination Committee (MPICC).

About Global MPI

  • Global MPI is an international measure of multidimensional poverty covering 107 developing countries.
  • It was first developed in 2010 by Oxford Poverty and Human Development Initiative (OPHI) and the UN Development Programme (UNDP) for UNDP’s Human Development Reports.
  • It is computed by scoring each surveyed household on 10 parameters based on -nutrition, child mortality, and years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing and household assets.
  • It utilizes the National Family Health Survey (NFHS) which is conducted under the aegis of the Ministry of Health and Family Welfare (MoHFW) and International Institute for Population Sciences (IIPS).

Poverty Eradication – Definition, Debates, etc.

Technical Platform on the Measurement and Reduction of Food Loss and Waste

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UNFAO

Mains level : Assurance of Food Security

The Food and Agriculture Organization (FAO) has unveiled a new platform to help accelerate the global reduction in food loss and waste.

Try this PYQ from CSP 2016:

Q. The FAO accords the status of ‘Globally Important Agricultural Heritage System (GIAHS)’ to traditional agricultural systems. What is the overall goal of this initiative?

  1. To provide modern technology, training in modern farming methods and financial support to local communities of identified GIAHS so as to greatly enhance their agricultural productivity.
  2. To identify and safeguard eco-friendly traditional farm practices and their associated landscapers, agricultural biodiversity and knowledge systems of the local communities.
  3. To provide Geographical Indication status to all the varieties of agricultural produce in such identified GIAHS.

Select the correct answer using the code given below.

(a) 1 and 3 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

About the Platform

  • The Technical Platform on the Measurement and Reduction of Food Loss and Waste brings together information on measurement, reduction, policies, alliances, actions and examples of successful models applied to reduce food loss and waste across the globe.
  • The platform will contain information on measurement, reduction policies, alliances, actions and examples of successful models applied to reduce food loss and waste.
  • The platform will be officially launched on the first International Day of Awareness of Food Loss and Waste on 29 September 2020.

How will it work?

  • The platform is as a gateway to information on food loss and waste from various resources, including the largest online collection of data on what food is lost and wasted.
  • Links to related portals from development partners are also provided.

Why need such a portal?

  • Food loss and waste is a sign of food systems in distress. Nutritious foods are the most perishable, and hence, the most vulnerable to lose.
  • Not only food is being lost, but food safety and nutrition are being compromised as well.
  • At least 14 per cent of food is lost (food wastage and food loss together), valued at $400 billion annually.
  • In terms of greenhouse gas emissions, the food that is lost is associated with around 1.5 gigatonnes of carbon dioxide equivalent.
  • Major losses are seen in roots tubers and oil-bearing crops (25 per cent), fruits and vegetables (22 per cent), and meat and animal products (12 per cent).
  • Reducing food loss and waste can bring about many benefits: more food available for the most vulnerable; a reduction in greenhouse gas emissions; less pressure on land and water resources; and increased productivity and economic growth.

Food loss vs food wastage

  • There is a difference between food wastage and food losses.
  • Food is wasted when it is discarded by consumers or is disposed of in retail due to its inability to meet quality standards.
  • Food loss, on the other hand, occurs when it is spoilt or spilt before reaching the final product or retail stage.
  • For example, dairy, meat, and fish can go bad in transit because of inadequate refrigerated transport and cold storage facilities.

Back2Basics: Food and Agriculture Organisation (FAO)

Objective: Lead international efforts to defeat hunger

Members: FAO has 194 Member Nations, two associate members and one member organization, the European Union

Headquarters: Rome, Italy

Year Founded: Established in 1945

Poverty Eradication – Definition, Debates, etc.

Poverty and its measurement

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Poverty measurement, MPI , Various committees

Mains level : Poverty measurement

US President recently praised India for having lifted “over 270 million people out of poverty” in “a single decade”, and said that “12 Indian citizens are lifted out of extreme poverty every single minute of every single day”.

What is poverty?

  • Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.
  • Economists and policymakers estimate “absolute” poverty as the shortfall in consumption expenditure from a threshold called the “poverty line”.
  • The “depth” of poverty indicates how far the poor are below the poverty line.

Defining the poverty line

  • The official poverty line is the expenditure incurred to obtain the goods in a “poverty line basket” (PLB).
  • Poverty can be measured in terms of the number of people living below this line (with the incidence of poverty expressed as the head count ratio).

Committees for poverty estimates

  • Six official committees have so far estimated the number of people living in poverty in India — the working group of 1962; V N Dandekar and N Rath in 1971; Y K Alagh in 1979; D T Lakdawala in 1993; Suresh Tendulkar in 2009; and C Rangarajan in 2014.
  • The government did not take a call on the report of the Rangarajan Committee; therefore, poverty is measured using the Tendulkar poverty line.
  • As per this, 21.9% of people in India live below the poverty line.

Poverty Line Basket (PLB)

  • The PLB comprises goods and services considered essential to a basic minimum standard of living — food, clothing, rent, conveyance, and entertainment.
  • The price of the food component can be estimated using calorie norms or nutrition targets.
  • Until the 1990s, the calorie norms method was used — it was based on the minimum number of calories recommended by the Indian Council of Medical Research (ICMR) for a household of five members.
  • However, this method does not consider the different food groups that are essential for health — this is why the Tendulkar Committee targeted nutritional outcomes.
  • The Lakdawala Committee assumed that health and education is provided by the state — therefore, expenditure on these items was excluded from the consumption basket it proposed.
  • Since expenditure on health and education rose significantly in the 1990s, the Tendulkar Committee included them in the basket.
  • As a result of revisions to the basket and other changes in the method of estimation, the percentage of people living below the poverty line in 1993-94 rose from 35.97% to 45.3%.

Issues with PLB

  • The PLB has been the subject of much debate. The 1962 group did not consider age and gender-specific calorie requirements.
  • Expenditure on health and education were not considered until the Tendulkar Committee — which was criticized for setting the poverty line at just Rs 32 per capita per day in urban India (and at Rs 27 in rural India).
  • And the Rangarajan Commission was criticized for selecting the food component arbitrarily — the emphasis on food as a source of nutrition overlooks the contribution of sanitation, healthcare, access to clean water, and prevalence of pollutants.

Why are poverty numbers important?

  • Poverty numbers matter because central welfare schemes like Antyodaya Anna and Rashtriya Swasthya Bima Yojana use the definition of poverty given by the NITI Aayog or the erstwhile Planning Commission.
  • The Centre allocates funds for these schemes to states based on the numbers of their poor.
  • Errors of exclusion can deprive eligible households of benefits.

Alternate measures of poverty: The MPI

  • In 2011, Oxford University researchers Sabina Alkire and James Foster devised the multidimensional poverty index (MPI) to capture poverty using 10 indicators.
  • These indicators include nutrition, child mortality, years of schooling, school attendance, ownership of assets, and access to proper house, electricity, drinking water, sanitation, and clean cooking fuel.
  • Poverty is measured in terms of deprivation in at least a third of these indicators.
  • The MPI is a more comprehensive measure of poverty because it includes components that capture the standard of living more effectively.
  • However, uses “outcomes” rather than expenditure — the presence of an undernourished person in the household will result in it being classified as “poor”, regardless of the expenditure on nutritious food.

MPI measures of India

  • In 2015-16, 369.546 million (nearly 37 crore) Indians were estimated to meet the deprivation cut-off for three or more of the 10 indicators.
  • While the overall headcount multidimensional poverty ratio in 2015-16 was 27.9%, the number was 36.8% for rural and 9.2% for urban India.
  • There were wide variations across states — poverty was the highest for Bihar (52.5%), followed by Jharkhand (46.5%), Madhya Pradesh (41.1%), and Uttar Pradesh (40.8%).
  • It was the lowest for Kerala (1.1%), Delhi (4.2%), Punjab (6.1%), Tamil Nadu (7.3%) and Himachal Pradesh (8.1%).

So what is the current “level” of poverty in India?

  • The National Statistical Office (NSO) Report on Household Consumer Expenditure for 2017-18 was junked in 2019 — so there are no data to update India’s poverty figures.
  • Even the MPI report published by Oxford Poverty and Human Development Initiative used data from the fourth round of the National Family Health Survey, figures for which are available only until 2015-16.
  • Social scientists used data from a leaked version of the consumer expenditure data to conclude that the incidence of poverty in India increased from 31.15% to 35.1% between 2011-12 and 2017-18.
  • The absolute number of poor people also increased from 270 million to 322.22 million over the same period, which translates to 52 million more poor people in six years.

Poverty Eradication – Definition, Debates, etc.

‘Time to Care’ Report

Note4Students

From UPSC perspective, the following things are important :

Prelims level : 'Time to Care' Report

Mains level : Income inequality in India

 

The report ‘Time to Care’  was recently released ahead of the 50th Annual Meeting of the World Economic Forum (WEF).

‘Time to Care’ Report

  • It is published by Oxfam International.
  • Its calculations are based on the latest data sources available, including from the Credit Suisse Research Institute’s Global Wealth Databook 2019 and Forbes’ 2019 Billionaires List.

Findings of the report

  • Although global inequality has declined over the past three decades, domestic income inequality has risen in many countries, particularly in advanced economies and reached historic highs.
  • The report said that the world’s 2,153 billionaires have more wealth than the 4.6 billion people who make up 60 per cent of the planet’s population.
  • The report flagged that global inequality is shockingly entrenched and vast and the number of billionaires has doubled in the last decade, despite their combined wealth having declined in the last year.
  • The Oxfam report further said “sexist” economies are fuelling the inequality crisis by enabling a wealthy elite to accumulate vast fortunes at the expense of ordinary people and particularly poor women and girls.

Income inequality in India

  • India’s richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 per cent of the country’s population.
  • The total wealth of all Indian billionaires is more than its full-year budget.
  • Regarding India, Oxfam said the combined total wealth of 63 Indian billionaires is higher than the total Union Budget of India for the fiscal year 2018-19 which was at Rs 24,42,200 crore.
  • It further said women and girls put in 3.26 billion hours of unpaid care work each and every day — a contribution to the Indian economy of at least Rs 19 lakh crore a year, which is 20 times the entire education budget of India in 2019 (Rs 93,000 crore).
  • He said women and girls are among those who benefit the least from today’s economic system.
  • They spend billions of hours cooking, cleaning and caring for children and the elderly. Unpaid care work is the ‘hidden engine’ that keeps the wheels of our economies, businesses and societies moving.

Data on earnings

  • Oxfam said governments are massively under-taxing the wealthiest individuals and corporations and failing to collect revenues that could help lift the responsibility of care and tackle poverty and inequality.
  • As per the report, it would take a female domestic worker 22,277 years to earn what a top CEO of a technology company makes in one year.
  • With earnings pegged at Rs 106 per second, a tech CEO would make more in 10 minutes than what a domestic worker would make in one year.
  • Besides, direct public investments in the care economy of 2 per cent of GDP would potentially create 11 million new jobs and make up for the 11 million jobs lost in 2018, the report said.

Poverty Eradication – Definition, Debates, etc.

Global Social Mobility Report 2020

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Global Social Mobility Report 2020 and its highlights

Mains level : Social Mobility

 

The Global Social Mobility Report was recently released at the ongoing World Economic Forum at Davos, Switzerland.

Global Social Mobility Report

  • The World Economic Forum organizes the well-known annual gathering of the world’s most influential business and political decision-makers at Davos.
  • It has come out with its first-ever Global Social Mobility Report, which has ranked India a lowly 72 out of the 82 countries profiled.
  • According to the report, the Nordic economies such as Denmark and Finland top the social mobility rankings while countries like India, Pakistan, Bangladesh and South Africa languish at the bottom (see Table 1).

Table 1: WEF’s Global Social Mobility Rankings

Country Rank (out of 82)
Denmark 1
Germany 11
United Kingdom 21
United States 27
Russia 39
China 45
Saudi Arabia 52
Brazil 60
India 76
Pakistan 79

 

What is the context for this report?

  • Notwithstanding fast global growth, inequalities have been growing across the world.
  • The rise of inequality has not only created massive social unrest but also adversely affected the global consensus on the kind of economic policies that countries follow.
  • A good example of this is the rise of trade protectionism across the world over the past few years.
  • Be it US or the UK several countries have started looking inwards in the hope that greater trade protectionism will help allay the fears and apprehensions of domestic workers.

What is Social Mobility?

  • Typically, inequalities are measured in income terms. And this measure has been found inadequate.
  • As the report states, “many situations exist where, despite high levels of absolute income mobility, relative social mobility remains low.
  • For example, in economies such as China and India, economic growth can lift entire populations upward in terms of absolute income, but an individual’s status in society relative to others remains the same”.
  • The report states: “The notion of relative social mobility is more closely related to the social and economic status of an individual relative to their parents. I
  • n a country with a society with perfect relative mobility, a child born in a low-income family would have as much chance to earn a high income as a child born to parents who earn a high income”.

Thus, the concept of social mobility is much broader than just looking at income inequality. It encompasses several concerns such as:

  • Intragenerational mobility: The ability for an individual to move between socio-economic classes within their own lifetime.
  • Intergenerational mobility: The ability for a family group to move up or down the socio-economic ladder across the span of one or more generations.
  • Absolute income mobility: The ability for an individual to earn, in real terms, as much as or more than their parents at the same age.
  • Absolute educational mobility: The ability for an individual to attain higher education levels than their parents.
  • Relative income mobility: How much of an individual’s income is determined by their parents’ income.
  • Relative educational mobility: How much of an individual’s educational attainment is determined by their parents’ educational attainment.

Why does social mobility matter?

  • How far an individual can move up in the society determines a lot whether one is closer to the income “floor” (or poor) or “ceiling” (or rich).
  • Social mobility levels, then, can help us understand both the speed – that is, how long it takes for individuals at the bottom of the scale to catch up with those at the top – and the intensity – that is, how many steps it takes for an individual to move up the ladder in a given period – of social mobility.
  • Research also shows that countries with high levels of relative social mobility—such as Finland, Norway or Denmark— exhibit lower levels of income inequality.
  • Conversely, countries with low relative social mobility—such as India, South Africa or Brazil—also exhibit high levels of economic inequality.
  • That’s why it matters for countries like India to increase social mobility.

 

As shown in Table 2, it would take a whopping 7 generations for someone born in a low-income family in India to approach mean income level; in Denmark, it would only take 2 generations.

 

Table 2: Income Mobility across Generations

Country Number of generations required by a poor family member to achieve mean income level
Denmark 2
United States/ United Kingdom 5
Germany/ France 6
India/China 7
Brazil/South Africa 9

 

So, how is social mobility calculated?

The WEF’s Global Social Mobility Index assesses the 82 economies on “10 pillars” spread across the following five key dimensions of social mobility:

  1. Health;
  2. Education (access, quality and equity, lifelong learning);
  3. Technology;
  4. Work (opportunities, wages, conditions);
  5. Protection and Institutions (social protection and inclusive institutions).

How did India perform on each of the 10 pillars of social mobility?

India’s overall ranking is a poor 76 out of the 82 countries considered. Thus it should not come as any surprise that India ranks lowly in individual parameters as well.

Table 3 below provides the detailed breakup.

Table 3: Where India ranks on the 10 Pillars of Social Mobility

Parameter Rank (out of 82 countries)
Health 73
Access to Education 66
Quality and Equity in Education 77
Lifelong learning 41
Access to Technology 73
Work Opportunities 75
Fair Wage Distribution 79
Working Conditions 53
Social Protection 76
Inclusive Institutions 67

 


Back2Basics

World Economic Forum (WEF)

  • The WEF based in Cologny-Geneva, Switzerland, is an NGO founded in 1971.
  • The WEF’s mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas”.
  • It is a membership-based organization, and membership is made up of the world’s largest corporations.
  • The WEF hosts an annual meeting at the end of January in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland.

Various reports published by WEF:

[Tikdam: Most (Not all) reports titled with ‘Global’ are released by WEF.]

  1. Global Competitiveness Report
  2. Global Information Technology Report
  3. Global Gender Gap Report
  4. Global Travel and Tourism Report
  5. Global Enabling Trade Report etc.

Poverty Eradication – Definition, Debates, etc.

[oped of the day] The new gold standard in development economics?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : RCT application

Context

Development economics has changed a lot during the last two decades mostly due to the extensive use of ‘randomised control trials’ (RCT). 

RCTs

    • Used in developing economies – RCTs are used to assess long-run economic productivity and living standards in poor countries.
    • Evolution of RCT – The concept of RCT is quite old; instances of RCTs can be traced back in the 16th century. 
    • The statistical foundation of RCT was developed by British statistician Sir Ronald Fisher, about 100 years ago, mostly in the context of the design of experiments.

Quotes

    • Prof. Banerjee thinks RCTs “are the simplest and best way of assessing the impact of a program”.
    • Prof. Duflo refers to RCTs as the “tool of choice”.

Use in clinical trials

    • Evaluation of performance – For an unbiased evaluation of the treatment, its performance needs to be compared with some ‘control’, which may be ‘no treatment’ at all or an ‘existing treatment’ other than the treatment under study.
    • Allocating patients – The next task is to allocate the patients among two treatments/interventions at hand. Patients might prefer some treatment to the other. 
    • No prior knowledge – Prior knowledge of the treatments to be applied to them might induce a ‘selection bias’ due to unequal proportions of patients opting-out from the study. 
    • ‘Randomisation’ – it is a procedure used to prevent this by allocating patients using a random mechanism — neither the patient nor the doctor would know the allocation.
    • ‘Control’ and ‘randomisation’ together constitute an RCT. 

Application in early trials: ART

    • In 1995, statisticians Marvin Zelen and Lee-Jen Wei illustrated a clinical trial to evaluate the hypothesis that the antiretroviral therapy AZT reduces the risk of maternal-to-infant HIV transmission. 
    • A standard randomisation scheme was used resulting in 238 pregnant women receiving AZT and 238 receiving standard therapy (placebo). 
    • It is observed that 60 newborns were HIV-positive in the placebo-group and 20 newborns were HIV-positive in the AZT-group. 
    • Thus, the failure rate of the placebo was 60/238, whereas that of AZT was only 20/238, indicating that AZT was much more effective than the placebo.

Benefits of RCT

    • Overcoming heterogeneity – Drawing such an inference, despite heterogeneity among the patients, was possible only due to randomisation.
    • Easy comparability – Randomisation makes different treatment groups comparable and also helps to estimate the error associated with the inference.
    • Anonymity – It ensures that allocation to any particular treatment remains unknown to both patient and doctor. Such ‘blinding’ is central to the philosophy of clinical trials and it helps to reduce certain kinds of bias in the trial.

Applications of RCT

    • Agriculture – The early applications of RCTs were mostly within the agricultural field. 
    • RCT got its importance in clinical trials since the 1960s. Almost any clinical trials nowadays without RCT were being considered almost useless.

Use for social causes

    • Social scientists slowly found RCT to be interesting, doable, and effective. 
    • Social policies – Numerous interesting applications of RCTs took place in social policy-making during the 1960-90s. Eventually, RCTs took control of development economics since the mid-1990s. 
    • About 1,000 RCTs were conducted by the three Nobel Laureates in 83 countries such as India, Kenya, and Indonesia to study various dimensions of poverty, including microfinance, access to credit, behavior, health care, immunisation programs, and gender inequality. 

Success stories

    • Finland’s Basic Income experiment (2017-18) – 2000 unemployed Finns between ages 25-58 were randomly selected across the country and were paid €560 a month instead of basic unemployment benefits. 
    • Results from the first year data didn’t have any significant effect on the subjects’ employment in comparison with individuals who were not selected for the experimental group. 

Criticism of RCT

    • Chances of dilution – In order to conduct RCTs, the broader problem is being sliced into smaller ones. Any dilution of the scientific method leaves the conclusions questionable. 
    • Economists such as Martin Ravallion, Dani Rodrik, William Easterly, and Angus Deaton are very critical of using RCTs in economic experiments.
    • Limitations of blinding – such kind of ‘blinding’ are almost impossible to implement in economic experiments as participants would definitely know if they get any financial aid or training. Thus, randomisation must have much less impact there.

Importance of randomisation

    • Unless randomisation is done, most of the standard statistical analyses and inference procedures become meaningless.
    • Earlier social experiments lacked randomisation and that might be one reason that statisticians such as Sir Ronald Fisher were unwilling to employ statistics in social experiments. 
    • “RCT or no RCT” may not be just a policy decision to economics; it is the question of shifting the paradigm. 
    • As randomisation dominates development economics, economic experiments are becoming more and more statistical.

Conclusion

Harvard economist Lant Pritchett criticises RCTs on a number of counts but still agrees that it “is superior to other evaluation methods”.

Poverty Eradication – Definition, Debates, etc.

Explained: Randomized Controlled Trial (RCT)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Randomized Controlled Trial (RCT)

Mains level : Applications of RCT in poverty alleviation

  • The 2019 Nobel Prize in Economic Sciences was awarded to three economists for their pioneering research into the use of experimental approaches to fight global poverty.
  • The new Nobel laureates are considered to be instrumental in using randomized controlled trials to test the effectiveness of various policy interventions to alleviate poverty.

Randomized Controlled Trial

  • A RCT is an experiment that is designed to isolate the influence that a certain intervention or variable has on an outcome or event.
  • A social science researcher who wants to find the effect that employing more teachers in schools has on children’s learning outcomes, for instance, can conduct a randomized controlled trial to find the answer.
  • The use of randomized controlled trials as a research tool was largely limited to fields such as biomedical sciences where the effectiveness of various drugs was gauged using this technique.
  • The Nobel laureates’ trio applied RCT to the field of economics beginning in the 1990s.
  • Kremer first used the technique to study the impact that free meals and books had on learning in Kenyan schools.
  • Banerjee and Ms. Duflo later conducted similar experiments in India and further popularised RCTs through their book Poor Economics, published in 2011.

Why is RCT so popular?

  • At any point in time, there are multiple factors that work in tandem to influence various social events.
  • RCTs allow economists and other social science researchers to isolate the individual impact that a certain factor alone has on the overall event.
  • For instance, to measure the impact that hiring more teachers can have on children’s learning, researchers must control for the effect that other factor such as intelligence, nutrition, climate, economic and social status etc.
  • RCTs promise to overcome this problem through the use of randomly picked samples.
  • Using these random samples, they believe, researchers can then conduct experiments by carefully varying appropriate variables to find out the impact of these individual variables on the final event.

Criticisms of RCT

  • A popular critic of randomized controlled trials is economist Angus Deaton, who won the economics Nobel Prize in 2015.
  • He has contended in his works that simply choosing samples for an RCT experiment in a random manner does not really make these samples identical in their many characteristics.
  • While two randomly chosen samples might turn out to be similar in some cases, he argued, there are greater chances that most samples are not really similar to each other.
  • RCTs are more suited for research in the physical sciences where it may be easier to carry out controlled experiments.

Poverty Eradication – Definition, Debates, etc.

Economics Nobel Prize 2019

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nobel Prize

Mains level : Poverty eradication strategies and its success


  • The 2019 Nobel Prize in Economics has been awarded jointly to Indian origin Abhijit Banerjee, Esther Duflo and Michael Kremer for their experimental approach to alleviating global poverty.

Why Nobel?

  • As a direct result of one of their studies, more than five million Indian children have benefitted from effective programmes of remedial tutoring in schools.
  • It was also successfully implemented in introducing heavy subsidies for preventive healthcare in many countries.

About the theory

  • Both Banerjee and Duflo have written a noted book titled “Poor Economics”, are associated with the MIT while Kremer is with the Harvard University.
  • The laureates applied themselves to problems of development economics, especially poverty alleviation.
  • The approach, which transformed the development economics field, involves dividing the issue into smaller, more manageable, questions.
  • They chose to break down some of the most intractable issues into smaller parts and tried to understand what policy worked and what did not.

Ex. School-going children aren’t learning enough

  • What Banerjee did was to break this issue down to understanding whether providing more inputs, such as textbooks, helps matters.
  • They found, merely giving more books doesn’t help unless the schools were also provided with complimentary reforms.
  • The approach thus was to conduct field experiments and understand whether a small policy initiative works or doesn’t and if it doesn’t and why doesn’t it.
  • Tackling the problem this way helped researchers across the world better understand why some policies have worked and what policies need to be discarded.

Poverty Eradication – Definition, Debates, etc.

Lifting 271 mn out of poverty in 10 yrs, India fastest, Jharkhand No. 1 area: UN

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UN report

CONTEXT

India has registered the fastest absolute reduction in the Multidimensional Poverty Index (MPI) value among ten countries, spanning every developing region, whose combined population is two billion people. And Jharkhand is among the poorest regions in the world improving the fastest.

  • According to the global MPI 2019 report released Thursday, between 2005-06 and 2015-16, India, lifted 271 million out of poverty, significantly reducing deprivations in many of the ten indicators, particularly in “assets, cooking fuel, sanitation and nutrition”.
  • The MPI captures both the incidence and intensity of poverty.
  • The global MPI tracks 101 countries on deprivations across ten indicators in health, education, and standard of living.
  • Developed in 2010 by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP), it looks beyond income poverty and tracks poverty in terms of the deprivation faced by people in their daily lives.
  • The report stated: “Among selected countries with a significant reduction in MPI value, India demonstrates the clearest pro-poor pattern at the subnational level: the poorest regions reduced multidimensional poverty the fastest in absolute terms”.

Case Study of Jharkhand

  • It cites Jharkhand, which reduced multidimensional poverty from 74.9 per cent to 46.5 per cent in the ten years since 2005-06, as an example of the poorest region improving the fastest followed by Rattanak Kiri in Cambodia.
  • Among the four Indian states with the most acute MPI — Bihar, Jharkhand, Uttar Pradesh and Madhya Pradesh — Jharkhand has made the most progress.
  • Overall, India was among three countries where poverty reduction in rural areas outpaced that in urban areas, which as per the report, is an indicator of pro-poor development.

Other findings

  • The National Family Health Survey round three and four (NHFS 2005-06 & 2015-16) is the source for the comparative data on the indicators.
  • In this period, the report stated,  the incidence of multidimensional poverty in India has almost halved, to 27.9 per cent from 55.1 per cent, lifting 271 million out of poverty — from 640 million to around 369 million.
  • With regards to intensity, the reduction is negligible — from 51.1 per cent to 43.9 per cent — which goes to show that the experience of the poor person, how they face deprivation, hasn’t changed all that dramatically.
  • “Traditionally disadvantaged subgroups such as those living in rural India, Muslims, the Scheduled Castes and Tribes, and young children are still the poorest in India,” said a UNDP official.
  •  The MPI captures the huge progress India has made in reducing multidimensional poverty across the country, while also providing a more complete picture of who is deprived, how they are deprived, and where they live.
  • That the poorest parts of the country are more quickly lifting people out of poverty demonstrates India’s commitment to ensuring no one is left behind, in line with the Sustainable Development Goals and the government’s own priorities.

Conclusion

  • The ten developing nations for which the comparison is made include countries across income categories: upper middle (Peru), lower middle (Bangladesh, Cambodia, India, Nigeria, Pakistan, Vietnam) and low (Democratic Republic of the Congo, Ethiopia, Haiti).
  • Across the 101 countries, 23.1 per cent of the people are multidimensionally poor. Fifty per cent of multidimensionally poor people are children, and a third are children under age 10 with over 85 per cent of poor children living in South Asia and Sub-Saharan Africa.

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] Rethink poverty — and policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Poverty line

Mains level : There is a need to rethink our approach to handle poverty.

CONTEXT

There should be seismic changes in the way Indians (including the Union government) think about absolute poverty and its alleviation, macro-growth policies and micro policies, especially those on agriculture.

First rethink: We are not a poor country any more, not with just 4.5 per cent of the population classified as poor .

Second rethink: We have always considered food consumption as the ultimate criterion of poverty. Time has come to dismantle this ecosystem — an ecosystem that is biased against the poor farmer, against climate change mitigation and also against efficient use of water and energy.

Third rethink: 4.5 per cent of the population as poor is not right, does not sound right, and isn’t right. The rethink has to be about defining poverty in relative, not absolute terms.

Fifth rethink: We should recognise that that the country has a messed up and archaic agricultural policy, one that was not even fit for the earlier poor economy times.

1.Basic income programme

  • The new approach towards poverty alleviation should involve targeted income transfers.
  • Under a targeted basic income programme, which is a top-up scheme, the government transfers the poverty gap (difference between per capita consumption of the household and the poverty line faced by the household) into the bank account of the poor.
  • The cost of such a programme is likely to be between Rs 2.5 and 3 trillion and it will ensure nobody has a consumption below the poverty line.
  • India’s current expense on poverty alleviation programmes is approximately Rs 3.4 trillion and the cost to make one person non-poor through the PDS in 2011-12 was Rs 24,000.
  • The same for MGNREGA was Rs 40,500.
  • Therefore, assuming perfect targeting, a basic income programme is likely to cost substantially less that the current policies and it will ensure that the poverty rate is reduced to zero based on the higher poverty line.

Benefits of direct benefit transfer

  • The direct benefit transfer mechanism of the government has been able to resolve targeting problems for a bulk of the 430 government schemes and subsidies.
  • The current PM-Kisan programme that provides income support to approximately 14 crore farmers is an example of how, through DBT, the government can provide direct income support as its focal policy towards poverty alleviation.
  • Such a policy is likely to help the government in rationalising and consolidating its poverty reduction programmes, thereby freeing up resources for other sectors in the economy.
  •  The government should focus on bringing more people under the tax net at the higher income brackets.
  • Our recommendation towards achieving the same would be to reduce both corporate income tax rate and the highest personal income tax rate to a flat 25 per cent.
  • Therefore, to improve revenue realisation from direct taxes, the government should focus on improving compliance by reducing the highest slabs of the tax rate. 

3. Investment Reforms

  • The Indian economy requires adequate investments in critical areas such as road, railways and water.
  • Therefore, the government needs to rationalise its expenditure and tax rates to ensure reallocation of resources.

Conclusion

Our pace of poverty reduction has improved over the last five years. We can augment this through a targeted basic income policy and free up resources for other sectors of the economy. Times have changed and so should our policies towards poverty alleviation.

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] A stable plane

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Increasing population requires upgradation in services.

CONTEXT

The key message from the UN’s World Population Prospects 2019 report is that national leaders must redouble their efforts to raise education, health and living standards for people everywhere.

Background

  • India is projected to become the most populous country by 2027 surpassing China, and host 1.64 billion people by 2050; the world as a whole could be home to 8.5 billion people in just over a decade from now, and the number could go up to 9.7 billion by mid-century.
  • The projections should be viewed in perspective, considering that alarmist Malthusian fears of inability to provide for more than a billion people on earth did not come true.
  • Yet, there are strong arguments in favour of stabilising population numbers by raising the quality of life of people and achieving sustainable development that will not destroy the environment.

Situation worldwide

  • The UN report shows migration to countries with a falling ratio of working-age people to those above 65 will be steady, as those economies open up to workers to sustain economic production.
  • Japan has the lowest such ratio, followed by Europe and the Caribbean; in over three decades, North America, Eastern and Southeastern Asia will join this group.
  • India meanwhile will have a vast number of young people and insufficient natural resources left for exploitation.
  • Preparing for the changes and opportunities migration offers will depend on a skills revolution.

National Situation

  • At the national level, achieving a reduction in fertility rates in States such as Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, Jharkhand and Chhattisgarh — which are high as per Sample Registration System data — is a challenge for India as it seeks to stabilise population growth.
  • This is possible if the State governments set their minds to it.
  • They must singularly focus on improving education and health access for women, both of which will help them be gainfully employed.

Catering to  Old population

  • On the other hand, a rise in life expectancy has brought with it a policy imperative that is bound to become even more important in the coming decades.
  • A growing population of older adults is a certainty, and it opens up prospects for employment in many new services catering to them.
  • Urban facilities have to be reimagined, with an emphasis on access to good, affordable housing and mobility.

Other Initiatives

  • The Sustainable Development Goals framework provides a roadmap to this new era.
  • But progress in poverty reduction, greater equality, better nutrition, universal education and health care, needs state support and strong civil society institutions.
  • Making agriculture remunerative and keeping food prices stable is crucial to ensure nutrition for all.
  • India is set to become the most populous nation. For its leaders, improving the quality of life for its people will be a test of political will.

Poverty Eradication – Definition, Debates, etc.

Global Multidimensional Poverty Report 2018

Note4students

Mains Paper 1: Social Issues | Poverty & development issues

From UPSC perspective, the following things are important:

Prelims level: Global MPI report 2108

Mains level: India’s efforts in reducing poverty and their outcomes


News

  • The Global MPI 2018 Report was recently published by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative.

What is global MPI?

  • The global Multidimensional Poverty Index (MPI) is an international measure of acute poverty covering over 100 developing countries.
  • It complements traditional income-based poverty measures by capturing the severe deprivations that each person faces at the same time with respect to education, health and living standards.
  • The global MPI was developed by OPHI with the UN Development Programme (UNDP) for inclusion in UNDP’s flagship Human Development Report in 2010. It has been published in the HDR ever since.

Global MPI 2018 Report

  • The report measures MPI, or multidimensional poverty index, which it says can be broken down to show “who is poor” and “how they are poor”.
  • This factor in two measures, poverty rate as a percentage of the population, and intensity as the average share of deprivations that poor people experience.
  • The product of these two is MPI. If someone is deprived in a third or more of 10 weighted indicators, the global index identifies them as “MPI poor”.

India’s progress

  • India has reduced its poverty rate drastically from 55% to 28% in 10 years, with 271 million people moving out of poverty between 2005-06 and 2015-16.
  • The report, covering 105 countries, dedicates a chapter to India because of this remarkable progress.
  • However, India still had 364 million poor in 2015-16, the largest for any country, although it is down from 635 million in 2005-06.
  • Of the 364 million people who were MPI poor in 2015-16, 156 million (34.6%) were children.
  • In India, poverty reduction among children, the poorest states, Scheduled Tribes, and Muslims was fastest, the report says.

Statewise Report

  • Bihar was the poorest state in 2015-16, with more than half its population in poverty.
  • The four poorest states —Bihar, Jharkhand, Uttar Pradesh, and Madhya Pradesh — were still home to 196 million MPI poor people, which was over half of all the MPI poor people in India.
  • Jharkhand had the greatest improvement, followed by Arunachal Pradesh, Bihar, Chhattisgarh, and Nagaland.
  • At the other end, Kerala, one of the least poor regions in 2006, reduced its MPI by around 92%.

Global Highlights

  • 3 billion people live in multidimensional poverty.
  • 83% of all multidimensionally poor people in the world live in Sub-Saharan Africa and South Asia.
  • Two-thirds of all MPI poor people live in middle-income countries.
  • Half of the multidimensionally poor are children aged 0-17.
  • 85% of MPI poor people live in rural areas.
  • 46% of those who are multidimensionally poor live in severe poverty.
  • In 2015/16, more than 364 million people are still MPI poor in India.
  • In India, 271 million people moved out of poverty in ten years.
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