Poverty Eradication – Definition, Debates, etc.

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.

Poverty Eradication – Definition, Debates, etc.

Odisha’s KALIA to attack poverty

Note4students

Mains Paper 3: Agriculture | Issues related to direct & indirect farm subsidies & minimum support prices

From UPSC perspective, the following things are important:

Prelims level: KALIA Scheme

Mains level: Various support schemes for farmers , labourers and their effectiveness


News

  • Instead of announcing farm loan waiver like other States, the Odisha govt has approved KALIA scheme amounting to ₹10,000 crore to accelerate agricultural prosperity in the State and to reduce poverty.

Krushak Assistance for Livelihood and Income Augmentation

  1. KALIA aims to make a direct attack on poverty by way of massive investment in the agriculture sector and making benefits reach the most needy through DBT.
  2. Under KALIA an amount of ₹10,180 crore will be spent over a period of three years till 2020-211.
  3. Crop loans up to ₹50,000 will henceforth be interest free, and the scheme will be reviewed in 2020-21 for further modifications.
  4. KALIA scheme covers the cultivators, loanee, as well as non-loanee farmers, share croppers and landless agricultural labourers.
  5. It also specifically takes care of vulnerable agricultural families identified through gram panchayats and crop loans are made available at 0% interest.

Other assistance

  1. All the small and marginal farmers of the State (92% cultivators) will be covered under the scheme.
  2. An amount of ₹10,000 per family at the rate of ₹5,000 for Kharif and Rabi shall be provided as financial assistance for taking up cultivation.
  3. This component is not linked to extent of land owned and will greatly benefit share croppers and actual cultivators most of whom own very small extent of land.
  4. Under this initiative, 10 lakh landless households will be supported to take up activities like small goat rearing units, mini layer units, duck units, fishery kits for fishermen and women, mushroom cultivation and bee keeping.
  5. As regards financial assistance to vulnerable agriculture households and landless labourers, an annual financial assistance of ₹10,000 per household will be provided.
  6. Deserving families will be identified and selected by gram panchayats.
  7. Further, life insurance cover of ₹2 lakh and additional personal accident cover of ₹2 lakh will be provided to both cultivators and agricultural labourers covering about 57 lakh households.

Poverty Eradication – Definition, Debates, etc.

World Bank endorses new Country Partnership Framework for India

Note4students

Mains Paper 2: IR | Important International institutions, agencies and fora, their structure, mandate

From UPSC perspective, the following things are important:

Prelims level: CPF

Mains level: Measures taken to alleviate poverty and generate employment.


News

Context

  1. The World Bank Group (WBG) Board of Executive Directors endorsed a new Country Partnership Framework (CPF) for India.
  2. The CPF aims to support India’s transition to a higher middle-income country by addressing some of its key development priorities — resource efficient and inclusive growth, job creation and building its human capital.

About Country Partnership Framework (CPF)

  1. The World Bank Group’s CPF aims to make a country-driven model more systematic, evidence-based, selective, and focused on the Bank’s twin goals of ending extreme poverty and increasing shared prosperity in a sustainable manner.
  2. Used in conjunction with a Systematic Country Diagnostic (SCD), the CPF guides the World Bank Group’s (WBG) support to a member country.
  3. A Systematic Country Diagnostic (SCD) informs each new CPF.
  4. The aim of the SCD is to identify the most important challenges and opportunities a country faces in advancing towards the twin goals.
  5. This is derived from a thorough analysis, and informed by consultations with a range of stakeholders.

Why such framework for India?

  1. The India CPF represents the largest country programme of the WBG, reflecting the strong collaboration between India and the Group’s institutions.
  2. These institutions include International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA).
  3. With a fast growing economy, global stature, and its unique experience of lifting the highest number of poor out of poverty in the past decades, India is well-positioned to become a high middle-income country by 2030.
  4. This CPF charts a path for how the World Bank, IFC and MIGA, will leverage their relative strengths to deliver stronger development outcomes for India, whose half of population is under the age of 25.

Areas of focus

  1. An important focus of the CPF will be to deepen engagement with India’s States and invest in the institutions and capabilities of the states and local governments to address their development priorities.
  2. The WBG will focus on three broad areas under the new CPF:
  • Promoting a resource efficient growth path, particularly in the use of land and water, to remain sustainable;
  • Enhancing competitiveness and enabling job creation and
  • Investing in human capital — in health, education, skills — to improve quality and efficiency of service delivery.
  1. Within these, other engagement will include addressing the challenge of air pollution, facilitating jobs for women, increasing the resilience of the financial sector and investing in early years of children’s development.

Poverty Eradication – Definition, Debates, etc.

UNDP report lauds India’s strides in reducing poverty in past decade

Note4students

Mains Paper 1: Social issues | Poverty & development issues

From UPSC perspective, the following things are important:

Prelims level: Multidimensional Poverty Index

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


Context

Multidimensional Poverty Index 2018

  1. In the decade between 2005-06 and 2015-16, India has halved its Multidimensional Poverty Index (MPI) from 54.7 per cent to 27.5 per cent
  2. According to MPI 2018 released by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative, there are 271 million fewer poor people in India in this period

Findings of the report

  1. 364 million Indians continue to experience acute deprivations in health, nutrition, schooling and sanitation
  2. About 196 million MPI poor people in India, accounting for more than half of all multidimensionally poor in India, live in the four states of Bihar, Jharkhand, Uttar Pradesh and Madhya Pradesh
  3. Just over one in four multidimensionally poor people in India are under ten years of age
  4. Traditionally disadvantaged groups, in terms of castes, religions etc, continue to be the poorest though they have experienced the biggest decadal reduction in MPI

About Multidimensional Poverty Index

  1. The MPI measures multiple deprivations in the same households in education, health and living standards and 10 indicators, namely nutrition, child mortality, years of schooling, school attendance, sanitation, cooking fuel, drinking water, electricity, housing and assets
  2. Those found to face deprivations in at least a third of the MPI’s components are multidimensionally poor

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] Is India winning the battle against extreme poverty?

Note4students

Mains Paper 3: Economy | Development and employment

From UPSC perspective, the following things are important:

Prelims level: Definitions of Poverty

Mains level: The news card talks about the dynamic nature of poverty and deprivation. Old definitions will dramatically reduce persons below the poverty line. It is outdated to see it in terms of income levels or extreme forms such as hunger. Poverty has now to be equated with inequality to address the present problem.


Context

India out of extreme poverty cycle

  1. India is perhaps no longer home to the highest number of people living in extreme poverty.
  2. Researchers at Brookings Institution say Nigeria had 87 million people living in extreme poverty in May 2018, compared to 73 million in India.
  3. They predict that the Indian number is expected to drop to around 20 million over the next four years.

Poverty – a disguise in India?

  1. The World Bank defines a person as extremely poor if she is living on less than 1.90 international dollars a day, which are adjusted for inflation as well as price differences between countries.
  2. The results of the recently concluded consumer expenditure survey conducted by the National Sample Survey Organisation are used to generate estimates of absolute poverty.
  3. It will show that there are only 50 million Indians now living below the poverty line defined by the Suresh Tendulkar committee, or one in 25.
  4. Poverty numbers have always been a source of heated debate in India and the claims that India is on the verge of winning the battle against extreme poverty sit uneasily with the current concerns about job creation or rural distress.

Comparing with China

  1. 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.
  2. 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.
  3. PPP incomes average around $7,000 right now, compared to around $2,500 in the year 2000.
  4. Chinese success has no doubt that rapid economic growth as the main reason why extreme poverty could be rolled back.

What pulled China out of extreme poverty?

  1. The centrality of economic expansion is often lost in the heated ideological debates in India.
  2. But there were also other factors at play—the shift of people to jobs in formal enterprises, investments in human capital, relatively equal land ownership in rural areas, and targeted interventions to help the extremely poor.
  3. These allowed China to pull most of its citizens out of extreme poverty despite rising inequality.

Indian Scenario of Poverty Reduction

  • Poverty Reduction isn’t the only Indicator
  1. It is time to close the tired debate about whether the economic reforms of 1991 have only helped the rich, though empirical proof will not come in the way of grand claims that poverty is actually increasing in India.
  2. Other indicators of well-being such as infant mortality and nutrition have also been improving.
  • Outdated poverty definition in India
  1. 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.
  2. 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.
  3. India is now a middle-income country, with an estimated per capita income of around $9,000 in purchasing power parity.
  4. Economists suggest that a poverty line of $3.20 translates into ₹75 a day, or 68% higher than the Tendulkar poverty line.
  • Poverty not to be assumed as Hunger only
  1. Third, the Indian political, policy and administrative systems have to adjust to the new realities of the transition to a middle- income country.
  2. Here 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.

Way Forward

  1. The focus of government spending should be on the provision of public goods rather than subsidies.
  2. Also, the rate at which economic growth translates into poverty reduction depends on what happens to inequality.
  3. India was battling the threat of widespread famine some five decades ago when even its ability to feed a growing population was questioned. There has been a lot of progress since then.
  4. Even the very possibility of a final victory against the sort of extreme poverty that was common not so long ago is no mean achievement.
  5. Inequality along with poverty needs to be targeted.

Back2Basics

Definitions of Poverty

Read more about the Poverty Line in India in this blog

Poverty Lines in India: Estimations and Committees

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] Prosperity in the 21st century:

Note4students

Mains Paper 1: Social issues | Poverty and development issues

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Importance of agricultural growth for poverty reduction.


News

Indian experience of inequality(reduction) and poverty(elimination)

  1. Essentially, inequality can be reduced by taxing the rich, a form of ‘levelling down’
  2. but poverty can be permanently eliminated only by raising the incomes of the poor, a form of ‘levelling up’
  3. Public policy in India has paid far too little attention to the latter but also some of the measures adopted to tackle inequality may have exacerbated(worsen) poverty here

Long and short term solution

  1. The long-term strategy should be to tackle these two jointly through the equalisation of capabilities
  2. However, in the short-term, public policy must address livelihood opportunities for the poor

Is poverty in India declining?(after economic reforms of 1991)

  1. It is only the estimate for 2009-10 that shows a decline in the number of poor in India once again
  2. This is followed by a quite spectacular decline over the next two years
  3. To get an idea of the magnitude of the decline, the numbers for 2004-05, 2009-10 and 2011-12 are 407 million, 355 million and 270 million, respectively
  4. So while it is correct say that poverty had declined rapidly since the reforms, it actually declines only after about one and a half decades from 1991

Contribution of agricultural growth in poverty reduction

  1. The reduction took place when agricultural growth was at its fastest ever
  2. Experts have estimated average annual agricultural growth at 4% during 2005-06 to 2013-14 compared to 2.5% for the decade prior to this
  3. A 60% increase in the rate of growth of agriculture sustained for a reasonably long stretch is likely to have impacted poverty significantly
  4. Similarly, the 1980s, when poverty reduction first accelerated, had also been a period of accelerated agricultural growth

Agricultural growth has also contributed in reduction of urban poverty

  1. The economic reforms had mainly focussed on trade, industry and financial sector reforms
  2. Activity in these sectors is mostly based in urban areas
  3. For well over a decade after 1991 it had not succeeded in reducing the number of urban poor
  4. It is only after the agricultural sector began to grow faster from around the middle of the next one that the number of urban poor begins to decline
  5. It is only after 2004-05 that we see for the first time ever a reduction in the number of the urban poor
  6. Till that date this figure(urban poverty rate) has steadily risen while rural poverty had resumed its downward trend after 1993-94 itself

Why is agricultural growth important?: Contribution in reduction of urban poverty

  1. Two processes are likely to have been at play in this
  2. Rural prosperity could have fuelled demand for urban products and, following the significant decline in rural poverty, migration from the villages, swelling the numbers of the urban poor, may have slowed
  3. The role of agricultural growth in reducing poverty is apparent in the fact that between 2004-05 and 2009-10 the number of rural poor declined by 15% while the number of urban poor declined only by 5%
  4. This points to the possibility that economic reforms without a robust agricultural growth may not have made much of a difference to urban poverty

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] Countering growing inequality

Image source

Note4students

Mains Paper 1: Social issues | Social empowerment

From UPSC perspective, the following things are important:

Prelims level: World Inequality Report 2018, World Development Indicators data

Mains level: Inequality prevailing in India and ways to reduce it


Context

World Inequality Report 2018

  1. It has brought into focus an aspect of economic progress in India
  2. There is a continuous growth in inequality here since the mid-1980s
  3. The top 1% of income earners received 6% of the total income in the early 1980s, close to 15% of it in 2000, and receives 22% today

Comparison of economic progress made in India and China

  1. Since 1980, the Chinese economy has grown 800% and India’s a far lower 200%
  2. Inequality in China today is considerably lower than in India
  3. The share of the top 1% of the Chinese population is 14% as opposed to the 22% reported for India
  4. They had both been large agrarian economies at similar levels of per capita income when they had started out in the early 1950s

Growing inequality a sign of progress?

  1. Growing inequality need not necessarily accompany faster growth as inequality actually declined in China from the early 21st century
  2. By then China had grown faster for longer than most countries of the world ever did

Other indices also prove China’s success

  1. The World Development Indicators data released by the World Bank show that per capita income in China was five times that of India in 2016
  2. The percentage of the population living on less than $1.90 a day was about 10 times less at the beginning of this decade

What is it that China did better than India?

  1. Its leadership combined the drive for growth with the spreading of human capital
  2. Human capital may be understood as a person’s endowment derived from education and robust health
  3. China had by the early 1970s achieved the level of schooling India did only by the early 21st century
  4. The spread of health and education in that country enabled the Chinese economy to grow faster than India by exporting manufactures to the rest of the world
  5. These goods may not have been the byword for quality but they were globally competitive, which made their domestic production viable
  6. The resulting growth lifted vast multitudes out of poverty
  7. An ingredient of this is also the greater participation of women in the workforce of China

Is democracy pulling India behind?

  1. India has lower per capita income, persistent poverty and by all accounts rising inequality
  2. Democracy per se cannot be held responsible for this
  3. There are States in India with superior social indicators than China
  4. This shows that democracy not a barrier to development
  5. It also shows that similar political institution across India have not resulted in same development outcomes across its regions

Way forward

  1. There is need to spread health and education far more widely amidst the population
  2. We now need to reorient public policy so that the government is more enabling of private entrepreneurship
  3. This has to be done while being directly engaged in the equalization of opportunity through a social policy that raises health and education levels at the bottom of the pyramid

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] Rural vs Urban: the better poverty alleviator

  1. Current pattern of Urbanisation: Taking place on the fringe of cities- unplanned and outside the purview of city codes and bylaws, imposes high costs
  2. Urban population growth effects on poverty: Consumption linkages, rural non-agricultural employment, remittances, rural land/labour ratios, rural land prices and consumer prices
  3. Rural transformation effects on poverty reduction: Modernisation of agriculture reduces rural poverty and overall poverty
  4. This is possible through greater demand for chemical fertilisers, pesticides, machine services, processed seeds or fuels, which promote non-agricultural production
  5. Higher incomes in rural areas promote demand for processed foods produced mainly in urban areas and generate employment
  6. Decrease in food prices results in better food security and overall poverty reduction
  7. Reduction of food prices lowers the real product wage in the non-agricultural sector, raising profitability and investment
  8. As a country grows and shifts from the low income to the middle income category, the nature of agriculture typically changes from subsistence-oriented farming to more commercialised and market farming
  9. It then has a closer linkage with the non-agricultural sector
  10. Rural transformation possible through easier access to new technology, credit and market
  11. Strengthening of extension services, rural infrastructure and skill formation will not only raise productivity and living standards but also curb rural-urban migration

Poverty Eradication – Definition, Debates, etc.

Task force moots new panel on BPL

  1. Context: A task force headed by NITI Aayog Vice-Chairman Arvind Panagariya to prepare a road map for elimination of poverty has submitted its report to PMO
  2. It suggested setting up of a committee to identify people below the poverty line (BPL) & has also suggested participation from the States in defining the BPL population
  3. Background: Official measures are based on the Tendulkar poverty line
  4. But the line is not without its share of controversies, with many terming it being too low
  5. This had prompted the previous government to appoint the Rangarajan Committee, which has recommended higher rural and urban poverty lines
  6. Discuss: Present poverty line level in India is too low to capture real poverty. In this context, discuss the need for a new poverty line. What factors should be considered to make it real representative of poverty in India?

Poverty Eradication – Definition, Debates, etc.

Earlier poverty lines

  1. Suresh Tendulkar panel: Those spending at least Rs 27 in rural and Rs 33 in urban areas daily in 2011-12 were identified as being above the poverty line
  2. Led to a public outcry as these numbers were considered unrealistic and too low
  3. C Rangarajan panel: Set up to review the line, raised the limit to Rs 32 and Rs 47 for rural and urban areas, respectively
  4. However, the report, submitted in 2014, wasn’t accepted by the Modi government

Poverty Eradication – Definition, Debates, etc.

New poverty line

  1. News: The government may soon come out with a new definition of poverty, with the Niti Aayog likely to set up a panel of experts to formulate a new poverty line
  2. The new line, which will be different from the existing Tendulkar line and Rangarajan line, will also be based on the latest consumption expenditure survey
  3. Reasons: To set a target for poverty reduction while preparing its first 15-year vision document and 7-year strategy paper, which have replaced the 5-year plan
  4. Also, to measure the impact of the government’s anti-poverty schemes and other welfare initiatives

Poverty Eradication – Definition, Debates, etc.

Niti Aayog task force backs ‘Tendulkar poverty line’

  1. News: A panel tasked with devising ways to reduce poverty has backed the controversial Tendulkar poverty line
  2. Context: Tendulkar poverty line, computed for 2004-05 at a level that was equivalent, in PPP terms to Rs 33 per day
  3. Tendulkar Committee: Computed poverty lines for 2004-05 at a level that was equivalent, in purchasing power parity (PPP) terms, to 1 U.S. dollar per person per day
  4. PPP model: Refers to a method used to work out the money that would be needed to purchase the same goods and services in 2 places
  5. Niti Aayog’s Task Force Report: Argues that the poverty line is not the basis of identification of poor in India
  6. It is the BPL Census on the basis of which state govts identify the poor. Latest of these is the Socio-Economic Caste Census 2011
  1. News: A panel tasked with devising ways to reduce poverty has backed the controversial Tendulkar poverty line
  2. Context: Tendulkar poverty line, computed for 2004-05 at a level that was equivalent, in PPP terms to Rs 33 per day
  3. Tendulkar Committee: Computed poverty lines for 2004-05 at a level that was equivalent, in purchasing power parity (PPP) terms, to 1 U.S. dollar per person per day
  4. PPP model: Refers to a method used to work out the money that would be needed to purchase the same goods and services in 2 places
  5. Niti Aayog’s Task Force Report: Argues that the poverty line is not the basis of identification of poor in India
  6. It is the BPL Census on the basis of which state govts identify the poor. Latest of these is the Socio-Economic Caste Census 2011

Poverty Eradication – Definition, Debates, etc.

MDG report: India on track in reducing poverty

  1. India has halved its incidence of extreme poverty – people living below $1.25 per day, from 49.4 per cent in 1994 to 24.7 per cent in 2011.
  2. Still the nation remains home to one-quarter of the world’s undernourished population, over a third of the world’s underweight children, and nearly a third of the world’s food-insecure people.
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