Poverty Eradication – Definition, Debates, etc.

Poverty Eradication – Definition, Debates, etc.

Declining Poverty Ratio: A Continuing Trend

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Data related to inequality and poverty

Mains level: Measurement issues regarding poverty lines and consumption expenditure

Why in the News? 

The National Sample Survey Organization’s and Household Consumption Expenditure Survey (2022-23) prompted researchers to estimate Poverty and Inequality trends, highlighting data comparability and measurement issues.

Present trends of Poverty and Inequality in Indian Society: 

1. Poverty Declined:

  • Poverty ratios declined from 29.5% in 2011-12 to 10% in 2022-23 (1.77% points per year) based on the Rangarajan Committee’s poverty lines.
  • Poverty ratios declined from 21.9% in 2011-12 to 3% in 2022-23 (1.72% points per year) based on the Tendulkar Committee’s poverty lines. Earlier period estimates showed a decline from 37.2% in 2004-05 to 21.9% in 2011-12 (2.18 percentage points per year).

2. Inequality Declined :

  • Subramanian’s estimates indicate the Gini coefficient declined from 0.278 to 0.269 for rural areas and from 0.358 to 0.318 for urban areas between 2011-12 and 2022-23.
    • The Gini coefficient measures the inequality among the values of a frequency distribution, such as levels of income.
  • Bansal et al show similar trends: Gini coefficient for rural areas declined from 0.284 to 0.266, and for urban areas from 0.363 to 0.315 over the same period. (significant decline in urban inequality compared to rural areas between 2011-12 and 2022-23)

Back2Basics:

Lakdawala Committee (1993):

  • It disaggregated poverty lines into state-specific poverty lines.
  • Poverty lines: same as Alagh’s committee of 1979. (2400 kcal per capita per day for rural areas and 2100 kcal per capita per day in urban areas.)
  • Poverty lines were updated using the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas and the Consumer Price Index of Agricultural Labour (CPI-AL) in rural areas rather than using National Accounts Statistics.
  • Estimates of poverty: 54.9% (All India)

Tendulkar Committee (2009):

  • Constituted: In 2005
  • Submitted report: 2009.
  • Recommendations:
    • Firstly, the incorporation of private expenditure on health and education while estimating poverty.
    • Secondly, to shift away from two separate poverty line baskets (PLBs) (for rural and Urban) towards a uniform all-India PLB.
    • Thirdly, to shift away from Uniform Reference Period (URP) based estimates towards Mixed Reference Period (MRP) based estimates.
    • Fourthly, A change in the price adjustment procedure to correct spatial (across regions) and temporal (across time) issues with price adjustment.
  • It concluded that India’s poverty line was Rs. 446.68 per capita per month in rural areas and Rs. 578.80 per capita per month in urban areas in 2004-05.
  • Estimates of poverty: 37.2 % (All India)

C. Rangarajan Committee (2014):

  • Constituted: 2012
  • Submitted report: 2014.
  • Used a method of calculating urban and rural poverty separately (similar to the Lakdawala committee).
  • Took into account both food and non-food items of expenditure.
  • Used the MMRP method instead of MRP.
  • Poverty was estimated on monthly expenditure of a family of five (and not individual as in case of the Tendulkar committee). All three, i.e., Calorie + protein + Fat intake values were taken into account to estimate poverty.
  • Estimates of poverty: 29.5%
  • Poverty lines: Rural- Rs. 32; Urban- Rs.47

 

Methods to Estimate Absolute Poverty by NSSO:

Poverty estimation in India is now carried out by NITI Aayog’s task force through the calculation of poverty line based on the data captured by the NSSO under the Ministry of Statistics and Programme Implementation (MOSPI). It uses the following 3 methods:

  • Uniform Recall (reference) Period (URP): Under URP, consumption data for all items are collected for a 30-day recall period. When URP is applied, the households are surveyed about their consumption in the last 30 days preceding the date of the survey.
    • Until 1993-94, the poverty line estimated by NSSO was based on URP.
  • Mixed Recall (reference) Period (MRP): MRP takes into account consumption expenditure for five non-food items (clothing, footwear, durable goods, education, and institutional medical expenses) for a 365-day recall period, and consumption data for the remaining items are collected for a 30-day recall period.
  • Modified mixed reference period (MMRP): The Rangarajan Committee in its 2014 report recommended MMRP as a more suitable method to measure poverty as compared to URP and MRP methods. The World Bank in 2015 also supported the idea of shifting from MRP to MMRP. Under MMRP there are 3 reference periods as follows:
    • The 365-day recall period is used for clothing, footwear, education, institutional medical care, and durable goods.
    • The 7-day recall period for edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, paan, tobacco and intoxicants and
    • The 30-day recall period for the remaining food items, fuel, and light, miscellaneous
      good and services including non-institutional medical, rents, and taxes.

Measurement issues regarding Poverty Lines and Consumption Expenditure:

  • Shift Away from Calorie Norm-based Poverty Line: The Tendulkar Committee recognized the inadequacy of a calorie norm-based poverty line. Instead, the Tendulkar Committee indirectly utilized calorie norms by adopting the urban poverty line based on the Lakdawala Committee’s methodology, which included calorie norms.
  • Need for new Consumption Basket: The Rangarajan Group emphasized the need for a new consumption basket that addresses both adequate nourishment and essential non-food items, alongside behaviorally determined non-food expenditure.
    • Estimating this new poverty basket required a fresh approach rather than simply updating an old basket with new prices.
  • Incomplete Capture of Public Expenditure: Despite efforts to impute values for public expenditure items, the imputation process captured only a fraction of the total public expenditure on subsidized or free items.
  • Complexity in Poverty Measurement: There is no universally agreed-upon method for measuring poverty, leading to variability in estimates.

Constitutional provisions related to eliminating inequalities:

i. [Article 38 (2) ]: Obligation of the State ‘to endeavour to eliminate inequalities in status, facilities and opportunities’ amongst individuals and groups of people residing in different areas or engaged in different vocations.
ii. [Article 46]: Obligation of State ‘to promote with special care’ the educational and economic interests of ‘the weaker sections of the people’ (besides Scheduled Castes and Scheduled Tribes).

Conclusion: Given the inadequacy of calorie norm-based poverty lines, as recognized by the Tendulkar Committee, there is a need to adopt more effective and real-time approaches that will consider evolving consumption patterns.

Mains PYQ:

Q “The incidence and intensity of poverty are more important in determining poverty based on income alone”. In this context analyse the latest United Nations Multidimensional Poverty Index Report.(UPSC IAS/2020)

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Poverty Eradication – Definition, Debates, etc.

Make the poor richer without making the rich poorer

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Right to Equality;

Mains level: Poverty Gap; Issues due to inequality;

Why in the News? 

Since the Congress Party released its Election Manifesto ’Nyay Patra’, the word ‘redistribution’ has dominated the election discourse.

Arguments against the redistribution of wealth:

  • Against the fair mean: Wealth redistribution stems from a ‘zero-sum’ thought to reduce economic disparity. However, this approach conflates the process of acquiring wealth with the outcome, potentially penalizing even those who acquired their wealth through fair means.
  • Hindrance to Economic Growth: Implementing confrontational policies to make the rich poorer can hinder investments and trigger capital flight, which is essential for economic growth. Economic growth is necessary for increasing the overall economic pie and improving prosperity for all.

Measures needed to reduce Inequality:

  • On Wealth and Inheritance Taxes: Wealth and inheritance taxes are seen as potentially punitive measures that may not effectively address economic inequality. The government needs to focus on fixing systemic issues rather than penalizing the wealthy.
  • On Policies: Economic growth is emphasized as crucial for addressing inequality. Policies should prioritize investment and avoid hindrances that might deter capital flow.
  • Job Creation and Labour Market Policies: Jobless growth and imbalance in capital-labour relations contribute to inequality. Labor market-focused policy incentives, such as employment-linked schemes and promoting labor-intensive activities, are proposed to rebalance this skew.
  • Overhaul of the taxation structure: The taxation system is criticized for burdening the poor and middle class disproportionately compared to corporations. There’s a call for an overhaul of the taxation structure to ensure fairness and simplicity, with a focus on lowering the tax burden for the common person.
  • Social Welfare Programs: Social welfare programs are deemed essential to provide a safety net for the poor until they can benefit from economic growth. Funding for such programs can come from a combination of faster growth, efficient tax collection, and welfare delivery mechanisms.

Steps taken by the Government:

  • For addressing Social Inequality
      • Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) and Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY-NULM): These schemes aim to create additional employment opportunities in both rural and urban areas.
      • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): This scheme provides a legal guarantee for 100 days of employment per year to rural households
      • Pradhan Mantri Awas Yojana: This scheme provides affordable housing to the urban and rural poor
  • For improving Financial Inclusion
      • Atal Pension Yojana: This pension scheme targets the unorganized sector and private sector employees without pension benefits
      • Pradhan Mantri Jan Dhan Yojana: This scheme aims to provide universal access to banking facilities for all households
  • For enhancing Access to Basic Necessities
    • Pradhan Mantri Ujjwala Yojana: This scheme provides LPG connections to women from Below Poverty Line (BPL) households
    • Swachh Bharat Mission: This program focuses on providing toilets for every household and cleaning India’s cities and villages

Conclusion: The Indian government implements schemes to reduce inequality. For example targeting financial inclusion, health protection, and economic development to reduce inequality. Beneficiaries include rural and urban poor, low-income families, and women from Below Poverty Line households.

Mains PYQ:

Q Can the vicious cycle of gender inequality, poverty, and malnutrition be broken through the microfinancing of women SHGs? Explain with examples. (UPSC IAS/2021)

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Poverty Eradication – Definition, Debates, etc.

Has poverty really dropped to 5% in India?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Tendulkar Committee; Important reports and surveys;

Mains level: Poverty in India; Tendulkar Committee; Important reports and surveys;

Why in the news? 

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

Context:

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

What does the  HCES Survey say?

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

 

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

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

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

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

The Other side of the coin- 

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

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

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

Conclusion:

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

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Poverty Eradication – Definition, Debates, etc.

Charting a path for the population committee

Note4Students

From UPSC perspective, the following things are important :

Mains level: Introduction of a high-powered committee to address challenges arising from rapid population growth

News18 on X: "Take a look at India's demographic dividend #population #india #worldpopulation https://t.co/h2oZM74V1n" / X

Central Idea:

The article emphasizes the importance of addressing the challenges and harnessing the opportunities presented by India’s rapidly changing demographic landscape through strategic policies and investments in health, education, employment, and data infrastructure.

Key Highlights:

  • Introduction of a high-powered committee to address challenges arising from rapid population growth.
  • Need for interdisciplinary approach involving experts from various fields.
  • Importance of data analysis and monitoring demographic trends.
  • Emphasis on collaboration with stakeholders for effective policy implementation.
  • Highlighting demographic shifts and their implications for economic growth.
  • Focus on maximizing the demographic dividend through investments in human capital.
  • Challenges in healthcare, education, and employment sectors.
  • Importance of evidence-based decision making and data infrastructure.
  • Collaboration with international organizations for best practices and funding opportunities.

Key Challenges:

  • Limited public spending on healthcare and education.
  • Persistent challenges in nutritional deprivation and access to quality education.
  • Disruptions caused by the COVID-19 pandemic.
  • Lack of accurate and timely demographic data.
  • Need for modernization of data infrastructure and capacity building.
  • Ensuring reliability and accuracy of population data.
  • Bridging the gap between skill development initiatives and industry requirements.

Key Terms and Phrases:

  • Demographic transition
  • Population committee
  • Interdisciplinary approach
  • Demographic dividend
  • Evidence-based policy
  • Data infrastructure
  • Human capital
  • Skill development
  • Stakeholder collaboration
  • Economic growth

Case Studies and Best Practices:

  • The successful implementation of the National Rural Health Mission in improving primary healthcare in rural areas.
  • The Mid-Day Meal Scheme ensuring access to nutritious meals for school children, contributing to improved health and educational outcomes.
  • The Aadhaar initiative in India, which has streamlined government services and facilitated targeted interventions in various sectors, including healthcare and education.
  • The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), a skill development initiative aimed at providing industry-relevant training to youth, enhancing their employability.
  • The ASER (Annual Status of Education Report) survey providing valuable insights into the quality of education in rural India and informing policy decisions for improvement.

Key Quotes and Anecdotes:

  • “India’s demographic landscape presents both opportunities and challenges for the country’s socio-economic development.”
  • “Investments in health, education, and skill development are crucial to realizing India’s demographic dividend.”
  • “Collaboration with international organizations can provide access to global best practices and technical expertise.”

Key Statements and Examples:

  • India’s population committee aims to formulate policies addressing challenges like family planning and socio-economic development.
  • The demographic dividend offers an opportunity for accelerated economic growth but requires investments in human capital.
  • Limited public spending on healthcare and education underscores the need for policy prioritization in these sectors.

Key Facts and Data:

  • India’s population is projected to reach 1.46 billion by 2030.
  • Public spending on health has remained around 1% of GDP.
  • Nearly 47% of Indian youth may lack necessary education and skills for employment by 2030.
  • Over 250 million children were forced out of school due to the COVID-19 pandemic.

Critical Analysis:

  • The article effectively highlights the interconnectedness of demographic factors with economic and social development.
  • It underscores the importance of evidence-based policymaking and the challenges in data availability and reliability.
  • The emphasis on collaboration with stakeholders and international organizations reflects a comprehensive approach to addressing demographic challenges.

Way Forward:

  • Prioritize investments in health, education, and skill development.
  • Modernize data infrastructure and improve data collection methodologies.
  • Strengthen collaboration with stakeholders and international organizations.
  • Implement policies that promote transparency, accountability, and inclusivity.
  • Focus on bridging the gap between existing initiatives and industry requirements to enhance employment opportunities.

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Poverty Eradication – Definition, Debates, etc.

Population growth committee: Move beyond Emergency-era fears

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Fertility rates

Mains level: India's demographic challenges

 

 

India's population has overtaken China, but historic problems continue to  plague the nation - BusinessToday - Issue Date: May 28, 2023

Central Idea:

The article discusses India’s demographic transformation and the need for proactive policies to address opportunities and challenges arising from changing population dynamics.

Key Highlights:

  • India’s population growth trends are being studied to align policies with the Viksit Bharat goal by 2047.
  • Fertility rates have decreased, and family planning is becoming more prevalent.
  • The workforce is changing, with an increase in middle-aged workers projected by 2047.
  • Dependency burdens vary between states, requiring tailored policy interventions.
  • There is an opportunity to enhance women’s workforce participation by providing better childcare support.
  • Lessons from China’s one-child policy caution against drastic measures.

Key Challenges:

  • Varying demographic trends between states pose challenges for policy formulation.
  • Ensuring equitable workforce development and gender-inclusive policies.
  • Addressing the needs of the growing elderly population while maintaining economic sustainability.
  • Avoiding the negative consequences of drastic population control measures.

Key Terms:

  • Demographic transformation
  • Fertility rates
  • Family planning
  • Workforce dynamics
  • Dependency burdens
  • Women’s workforce participation
  • One-child policy

Key Phrases:

  • Changing population dynamics
  • Tailored policy interventions
  • Workforce inclusivity
  • Sustainable economic development
  • Lessons learned

Key Quotes:

  • “Today, we are studying India’s population growth to align policies with the Viksit Bharat goal by 2047.”
  • “There’s an opportunity to enhance women’s workforce participation by providing better childcare support.”
  • “Lessons from China’s one-child policy caution against drastic measures.”

Anecdotes/Case Studies:

  • The comparison with China’s one-child policy illustrates the importance of cautious policy measures in managing population dynamics.

Key Statements:

  • “India’s population growth trends are being studied to align policies with the Viksit Bharat goal by 2047.”
  • “There’s an opportunity to enhance women’s workforce participation by providing better childcare support.”

Key Examples and References:

  • Comparative data on workforce demographics and dependency burdens between states provide concrete examples of demographic variations.
  • The reference to China’s one-child policy serves as a cautionary example.

Key Facts/Data:

  • India’s fertility rates have decreased significantly in recent years.
  • Dependency burdens vary significantly between states.
  • Women’s workforce participation rates could be improved with better childcare support.

Critical Analysis:

The article provides a balanced assessment of India’s demographic challenges and opportunities, cautioning against drastic measures while advocating for proactive policies.

Way Forward:

  • Tailored policy interventions should address varying demographic trends between states.
  • Gender-inclusive policies and better childcare support can enhance women’s workforce participation.
  • Lessons from global best practices should inform India’s approach to demographic management.
  • Caution should be exercised to avoid the negative consequences of drastic population control measures.

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Poverty Eradication – Definition, Debates, etc.

Multidimensional Poverty in India: A Decade of Progress

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Multidimensional Poverty

Mains level: Read the attached story

Multidimensional Poverty

Introduction

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

Data from NITI Aayog’s Discussion Paper

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

Understanding the Multidimensional Poverty Index (MPI)

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

Calculating MPI

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

Data Sources and Estimations

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

Conclusion

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

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Poverty Eradication – Definition, Debates, etc.

Did 250 million Indians exit Poverty?  

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Multidimensional Poverty

Mains level: Poverty stats of India

poverty

Introduction

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

Understanding Multidimensional Poverty

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

Data Sources

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

Assessing the Assumptions

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

Interpreting the Data

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

Conclusion

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

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Poverty Eradication – Definition, Debates, etc.

Mapping India’s poor

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Multidimensional Poverty Report

Mains level: Poverty status, report, findings, challenges and way forward

What’s the news?

  • The recent release of the NITI Aayog’s Multidimensional Poverty Report for the period 2019-21 marks a significant milestone in India’s pursuit of poverty alleviation.

Central idea

  • The NITI Aayog’s Multidimensional Poverty Report’s unveiling of a noteworthy decline in the poverty headcount, from 24.85 percent in 2015-16 to 14.96 percent in 2019–2021, presents a promising trajectory of progress. These revelations, rooted in data sourced from standardized National Health Status Reports, underscore the government’s commitment to transparency and evidence-based policymaking.

Complexity of poverty management

  • Challenging Task: Poverty management is more complex now compared to the era of global expansion (1980 to 2007).
  • Economic Factors: Economies like India, characterized by large populations and lower middle-level per capita incomes, face difficulties in allocating resources to further reduce poverty ratios.
  • Technological Advancements: Technological progress, automation, Artificial Intelligence (AI), and bionics add complexity to poverty management.
  • Job Creation Risk: Technological advances can freeze the addition of productive global jobs, which in turn jeopardizes household incomes.
  • Population Increase: India’s anticipated population rise of about 250 million by 2050 introduces additional complexity.
  • Youth Demographic: While a youthful population could be beneficial, ensuring appropriate employment for this growing workforce remains uncertain.
  • Future of Work: The impact of technological advances such as automation, AI, and bionics on job creation and household income stability is unclear.
  • Need for Innovation: Overcoming the complexity of poverty management requires innovative strategies and adaptable approaches.

Significance of the Report

  • In-Depth Analysis: The NITI Aayog’s Multidimensional Poverty Report provides a detailed analysis of poverty at the state level, offering insights into the status of poverty in different regions.
  • Flexible Tool for Poverty Identification: The report introduces a flexible tool with 12 indicators to identify the poor and assess the intensity of deprivation. This approach offers a nuanced understanding of poverty beyond income-based measurements.
  • Inclusivity: The methodology prioritizes inclusivity over rigid statistical precision. This acknowledges the practical necessity of balancing misidentification while ensuring poverty reduction.
  • Contextual Barriers to Poverty Reduction: The Alkire-Foster methodology recognizes that barriers to ending poverty can vary across jurisdictions, enabling contextual priorities to be factored into poverty reduction efforts.
  • The Changing Nature of Poverty: The report acknowledges that poverty’s face evolves over time and across states. This underscores the importance of flexible monitoring systems to map, assess, and address poverty.
  • Policy Implications: The report’s findings have significant policy implications as they highlight disparities in education, health, and quality of life among the poor. This can guide targeted interventions and policy decisions.
  • Methodological Comparison: The report introduces a methodological approach distinct from traditional methods, which can lead to more accurate and comprehensive poverty assessments.

Effectiveness of the Poverty Reduction Strategy

  • Education and Health Impact: The poor constitute a significant portion of those requiring higher levels of assistance in education and health. They make up 62% of households not meeting schooling norms and 43% not receiving minimum health support.
  • Quality of Life Disparities: The poor are particularly disadvantaged in terms of quality of life. Around 56% of poor households lack access to electricity, raising concerns about the effectiveness of ground-level electrification efforts. Additionally, 47% of poor households don’t possess assets like a telephone or TV.
  • MDPI as a Tracking Tool: The Multidimensional Poverty Index (MDPI) serves as a valuable tool to assess the results of government programs aimed at poverty reduction. It offers a comprehensive framework to monitor and evaluate poverty initiatives.

Way forward

  • Contextual Grassroot Initiatives: Given the complexity of poverty management, it’s a necessity to promote and implement context-specific initiatives at the grassroot level. These initiatives should address the unique challenges and needs of different regions.
  • Adapt to Changing Dynamics: With the potential freezing of job creation due to technological advances, there’s a need to formulate strategies that adapt to the changing nature of work. This includes preparing the workforce for emerging job sectors and bolstering social safety nets.
  • Employment Generation: Considering the projected population increase, efforts to generate meaningful employment opportunities must be a priority. Ensuring employment for the growing workforce is crucial for poverty reduction.
  • Innovative Monitoring Systems: The changing face of poverty demands flexible monitoring systems that can accurately map, assess, and respond to evolving poverty patterns across states and over time.
  • Inclusive Approaches: The inclusive nature of poverty reduction efforts, as demonstrated by the methodology in the report, should be maintained. Balancing misidentification while ensuring inclusivity is essential.
  • Quality Education and Healthcare: Effective interventions should be designed to address gaps in education and healthcare for the poor. These areas play a significant role in breaking the cycle of poverty.
  • Digital Inclusion: Disparities in access to electricity and digital connectivity need to be addressed. Expanding access to these services can improve the quality of life and open economic opportunities.
  • Dignified Assistance: While providing merit goods for free is important, policymakers must ensure that such assistance doesn’t undermine the dignity of the poor. Balancing charity with preserving self-respect is crucial.

Conclusion

  • The NITI Aayog’s report signifies a significant step toward comprehending and addressing multidimensional poverty in India. As India’s per capita incomes rise, the country must internalize the lesson that poverty’s face evolves asymmetrically across states. This realization underscores the need for adaptable monitoring and targeted strategies.

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Poverty Eradication – Definition, Debates, etc.

India’s Remarkable fight against Poverty

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: India's remarkable poverty alleviation journey, factors behind, persisting challenges and way forward

What’s the news?

  • On the 77th Independence Day of our nation, Prime Minister Narendra Modi addressed the nation from the historic Red Fort in Delhi, heralding a remarkable achievement in the fight against poverty.

Central idea

  • The Prime Minister’s announcement highlighted the lifting of 135 million people from poverty in five years, as confirmed by the MDPI from NITI Aayog. This aligns with UNDP’s estimate of 415 million lifted out of poverty between 2005–06 to 2019–21, a commendable milestone in India’s history.

Remarkable Achievements in the Fight Against Poverty

  • 135 Million Uplifted: Between 2015-16 and 2019-21, 135 million people were lifted out of poverty.
  • 415 Million Escaped Poverty: From 2005–06 to 2019–21, India lifted 415 million people out of poverty (MDPI).
  • Extreme Poverty Reduced: Extreme poverty decreased from over 80% to around 15% based on the MDPI.
  • Leading Rice Exporter: Successful policies resulted in India becoming the largest exporter of rice.
  • Top Producer of Milk and Cotton: India emerged as the largest producer of milk (222 MT) and cotton (39 million bales).
  • Infant Mortality Decreased: Infant mortality decreased significantly from 57% in 2005–06 to 35% in 2019–21.

Factors Behind This Achievement

  • Economic Policy Transition (1991): The shift to a market-oriented economy in 1991 generated substantial resources for poverty reduction.
  • Strategic Government Initiatives: Targeted policies like the PM Garib Kalyan Yojana directly impact poverty reduction by providing essential commodities.
  • Education and Skill Development: Prioritizing education and skill enhancement empowers individuals, grants access to improved livelihood opportunities, and contributes to child nutrition.
  • Agricultural Reforms (Green Revolution): Innovations like the Green Revolution augmented rural incomes, lifting communities out of poverty by enhancing agricultural productivity.
  • Women’s Empowerment: Focusing on women’s education and participation correlates with positive effects on family welfare and economic growth, as exemplified by proposals to train women in self-help groups for drone operation.
  • Technological Advancements: Technological breakthroughs have streamlined service delivery, as seen in the provision of commodities through the PM Garib Kalyan Yojana and enhanced agricultural productivity via the gene revolution in cotton.
  • Global Integration: Embracing globalization and trade expanded economic horizons, fostering growth, job creation, and effective poverty reduction.
  • Resilience and Adaptability: Society’s adaptability to changing economic conditions bolstered resilience against poverty, preventing further economic deterioration.
  • Public-Private Partnerships: Collaborations between the government and the private sector magnified poverty reduction efforts, as evident from Punjab Agricultural University’s role in the Green Revolution.
  • Civil Society Participation: Non-governmental organizations and civil society groups complemented government initiatives, actively contributing to poverty alleviation and service delivery.
  • Data-Driven Decision Making: Utilizing data to identify poverty pockets and target interventions precisely enhances the efficacy of poverty reduction strategies.
  • Foreign Exchange Reserves: India’s growth in foreign exchange reserves from $1.4 billion in July 1991 to approximately $600 billion bolstered the economy against external shocks, enhancing its ability to sustain poverty alleviation efforts.

Challenges and Concerns

  • Child malnutrition: Despite progress, 32% of children are underweight and 35% are stunted, according to the NFHS-5.
  • Climate Change Impact: Increasing extreme weather events due to climate change pose a threat to food security and poverty alleviation.
  • Gender Gap in the Labor Force: Women’s participation rate in the labor force remains low at around 30% (2021–22).
  • Quality Education Gap: Ensuring quality education and skill formation for women beyond the 12th grade is a challenge.
  • Access to Nutritious Food: Ensuring equitable access to nutritious food, especially for vulnerable populations, is a challenge.

Way Forward: A Blueprint for Transformation

  • Education Empowerment: Strengthen education programs beyond the 12th grade, providing quality education and skill formation for women to enhance their contribution to poverty reduction.
  • Enhanced Gender Participation: Implement measures to boost women’s participation in the labor force, aiming to bridge the gender gap and empower women economically.
  • Climate-Resilient Agriculture: Prioritize sustainable agricultural practices that address climate change challenges, ensuring food security and rural income stability.
  • Nutrition Interventions: Develop targeted interventions to address child malnutrition, focusing on reducing underweight and stunting rates among children under five.
  • Data-Driven Approach: Continuously utilize accurate and comprehensive data to inform policy decisions, ensuring effective poverty alleviation strategies.

Conclusion

  • India’s remarkable poverty alleviation journey reflects recent unparalleled progress. Leveraging inclusive growth, women’s education, and agricultural innovation can drive lasting transformation. Safeguarding against climate change and enhancing food systems can pave the way for a prosperous and equitable future.

 

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Poverty Eradication – Definition, Debates, etc.

Multidimensional Poverty Reduction in India: A Closer Look

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Multidimensional Poverty Index (MPI

Mains level: Read the attached story

poverty

Central Idea

  • PM highlighted a significant milestone achieved during his government’s first 5-year term – the liberation of 13.5 crore Indians from the clutches of multidimensional poverty.
  • This achievement, as substantiated by the National Multidimensional Poverty Index (MPI) report, reflects the government’s commitment to improving the lives of millions across various dimensions of well-being.

Understanding Multidimensional Poverty Index (MPI)

  • Holistic Evaluation: The MPI gauges deprivations across health and nutrition, education, and standard of living, offering a comprehensive assessment of poverty that extends beyond traditional monetary measures.
  • Three Dimensions: Health is evaluated through nutrition, child and adolescent mortality, and maternal health. Education encompasses years of schooling and school attendance. The standard of living is assessed through variables like sanitation, drinking water, and access to financial services.
  • Technical Collaborators: The methodology behind India’s MPI draws inspiration from the Oxford Poverty and Human Development Initiative (OPHI) and the UN Development Programme (UNDP), with OPHI and UNDP collaborating to formulate the national index.

Notable Achievements and Data

  • Decline in Poverty: The poverty headcount ratio – the proportion of multidimensionally poor individuals – witnessed a remarkable drop from around 25% to under 15% between the periods of National Family Health Survey (NFHS)-4 (2015-16) and NFHS-5 (2019-21).
  • Significant Impact: This reduction signifies that a staggering 13.5 crore Indians liberated themselves from multidimensional poverty during this period.

poverty

Comparison with Historical Records

  • Historical Context: The MPI’s multidimensional nature makes direct comparisons with India’s traditional poverty estimations challenging. However, the Global MPI 2023 report underscores that 415 million Indians emerged from poverty between 2005-06 and 2019-21.
  • Distribution over Time: Economists elucidate that out of the 415 million, 270 million transitioned out of poverty from 2005-06 to 2015-16, with the remaining following thereafter.
  • Discrepancies in Ratio: The Global MPI cites India’s poverty ratio as 16.4%, while Niti Aayog’s MPI places it at 14.96%, due to variations in metrics and definitions.

Traditional Poverty Measurement

  • Historical Monetary Measure: Since 1901, poverty in India has been estimated using monetary measures that ascertain the income needed for subsistence or a minimum standard of living.
  • Creation of Poverty Line: Expert committees headed by D T Lakdawala (1993), Suresh Tendulkar (2009), and C Rangarajan (2014) established a poverty line based on consumption expenditure data.
  • Unresolved Data Issues: The absence of updated consumption data since 2011 has led to economists using alternative sources like NFHS data and CMIE data to estimate poverty, which has introduced uncertainty.

Conundrum of Middle-Class Definition

  • Ambiguity in Classification: India lacks an official middle-class definition, making it challenging to ascertain whether those emerging from poverty automatically join the middle class.
  • Income Disparity: Private research by PRICE categorizes the middle class based on annual income between ₹5 lakh and ₹30 lakh, a considerable jump from the income levels of individuals transitioning from poverty.
  • Survey Insights: As per PRICE’s survey, out of India’s population of 1,416 million, 432 million fall under the “Middle Class” category, while 732 million are classified as “Aspirers.”

Conclusion

  • The reduction of 13.5 crore individuals from multidimensional poverty is a testament to India’s commitment to holistic development.
  • While multidimensional poverty indices gauge well-being across dimensions, traditional poverty estimation methods use monetary measures.
  • India’s achievements reflect its focus on inclusive growth, emphasizing improvements in health, education, and living standards.
  • As the nation continues its journey, these achievements illuminate the path towards building a more prosperous, equitable, and resilient society.

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Poverty Eradication – Definition, Debates, etc.

[pib] National Multidimensional Poverty Index, 2023

Note4Students

From UPSC perspective, the following things are important :

Prelims level: National Multidimensional Poverty Index, 2023

Mains level: Not Much

Central Idea

  • NITI Aayog released the report ‘National Multidimensional Poverty Index: A Progress Review 2023’.
  • The report highlighted a record 13.5 crore people have moved out of multidimensional poverty in India between 2015-16 and 2019-21.

What is National Multidimensional Poverty Index (NMPI)?

  • NITI Aayog serves as the nodal ministry for the MPI.
  • It engages with publishing agencies such as Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).
  • It uses the Alkire-Foster (AF) methodology.
  • The Baseline Report of MPI is based on the National Family Health Survey (NFHS) 4 conducted during 2015-16.

Indicators used

  • The MPI considers three dimensions: health, education, and standard of living.
  • It includes indicators such as nutrition, child and adolescent mortality, maternal care, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, bank accounts, and assets.

Key findings of the report

  • Decline in Poverty: India has witnessed a substantial decline in multidimensional poverty, with a decrease of 9.89 percentage points from 24.85% in 2015-16 to 14.96% in 2019-21.
  • Progressiveness in rural areas: Rural areas experienced the fastest decline, from 32.59% to 19.28%, while urban areas saw a reduction from 8.65% to 5.27%.
  • Regional Progress: UP recorded the largest decline in the number of poor, with 3.43 crore people escaping multidimensional poverty. The states of UP, Bihar, Madhya Pradesh, Odisha, and Rajasthan showed the fastest reduction in the proportion of multidimensional poor.
  • Path towards SDG Targets: The report indicates that India is on track to achieve SDG Target 1.2, which aims to reduce multidimensional poverty by at least half by 2030.

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Poverty Eradication – Definition, Debates, etc.

Poverty’s Impact on Brain Development

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: Poverty and cognitive development

poverty brain

Introduction

  • In 1844, Frederich Engels observed that poor living conditions had physical effects on the poor, manifesting in various health issues.
  • Neuroscientists in the 1960s discovered that growing up in poverty could hinder brain development in rats.
  • Recent studies have shown a correlation between low-income families and lower cortical volume, poor academic performance, and smaller hippocampus in human children.

The Link between Poverty and Brain Development

  • Poverty’s Effect on the Brain: Poverty has been found to affect brain development in children and young adults.
  • Cortex and Academic Performance: Studies in 2015 revealed that children from low-income families had lower cortical volume and performed poorly in academic tests.
  • Importance of the Hippocampus: Another study in 2015 highlighted the correlation between family socioeconomic status and the volume of the hippocampus, a key region for learning and memory.

New Study on Anti-Poverty Policies and Hippocampus Size

  • The Study: Researchers from Harvard University and Washington University conducted a study published in May 2023 in the journal Nature Communication.
  • Data: The study analyzed brain scans of over 10,000 children aged 9-11 from 17 U.S. states with varying costs of living and anti-poverty programs.
  • Findings: Children from low-income families had a smaller hippocampus, but generous anti-poverty policies significantly reduced this risk.
  • State-Level Public Policies: The study highlights the potential of state-level public policies to address the correlation between brain development and low income.

Implications for Children’s Health and Well-being

  • Psychological Impact: Impaired hippocampal development is associated with a higher risk of mental health issues such as major depressive disorder and post-traumatic stress disorder.
  • Internalizing and Externalizing Psychopathologies: The study found a negative association between family income and the incidence of internalizing and externalizing psychopathologies in children.
  • Impact of Anti-Poverty Policies: Generous cash benefits were associated with larger hippocampal volumes and reduced internalizing problems in low-income households.

Considerations and Limitations

  • Systemic Discrimination: Poverty is often a result of systematic discrimination, such as racial disparities.
  • Alternative Explanations: The study aimed to rule out alternative explanations, including racial and ethnic factors, but acknowledges the need for further investigation.
  • Applicability to Other Contexts: The study’s findings may not directly apply to other countries like India, given different macroeconomic conditions.

Role of Welfare and Policy

  • Financial Resources and Stressors: Access to more financial resources can help shield families from chronic stressors associated with low income, potentially influencing hippocampal development.
  • Generous Anti-Poverty Policies: Such policies not only increase family income but also enable families to make decisions that reduce stress, such as working fewer hours.
  • Investing in Social Safety Net Programs: Investments in social safety net programs can mitigate socioeconomic disparities in neurodevelopment, addressing mental health, education, and economic challenges.

Conclusion

  • Longitudinal Study: The researchers will continue studying the mental health and brain development trajectories of the study’s participants to examine the influence of policy changes.
  • Importance of Social Safety Net Programs: The study underscores the significance of investing in social safety net programs to address the consequences of socioeconomic disparities in brain development.

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India sees significant reduction in Multidimensional Poverty

Note4Students

From UPSC perspective, the following things are important :

Prelims level: MPI

Mains level: Not Much

Central Idea

What is MPI?

  • The global Multidimensional Poverty Index (MPI) is an international measure of acute multidimensional poverty covering over 100 developing countries.
  • It complements traditional monetary poverty measures by capturing the acute deprivations in health, education, and living standards that a person faces simultaneously.
  • The global MPI was developed by Oxford Poverty and Human Development Initiative (OPHI) with the UN Development Programme (UNDP) for inclusion in UNDP’s flagship Human Development Report in 2010.
  • It has been published annually by OPHI and in the HDRs ever since.

Components of MPI

poverty, mpi

Rapid Progress and Halving MPI Values

  • Achieving rapid progress: The report showcases that 25 countries, including India, successfully halved their global MPI values within 15 years, indicating that substantial progress is attainable.
  • Countries with notable progress: Besides India, other countries that achieved this feat include Cambodia, China, Congo, Honduras, Indonesia, Morocco, Serbia, and Vietnam.
  • Significance of halving MPI values: Halving the MPI values demonstrates a substantial reduction in multidimensional poverty, reflecting improvements across multiple indicators of well-being.

Poverty Reduction: Key Stats

  • Decline in multidimensional poverty: In India, the number of people in multidimensional poverty decreased from approximately 645 million in 2005-06 to about 370 million in 2015-16 and further to 230 million in 2019-21.
  • Improvements across indicators: Deprivation in various indicators, such as nutrition, child mortality, cooking fuel, sanitation, drinking water, electricity, and housing, witnessed significant declines in India.
  • Fastest progress among the poorest: The report highlights that the poorest states and disadvantaged groups, including children and individuals from marginalized castes, experienced the fastest progress in reducing poverty.

Factors Contributing to Multidimensional Poverty

  • Multiple disadvantages: Poverty encompasses various factors such as poor health, lack of basic amenities, limited livelihood options, limited education, disempowerment, and vulnerability to climate change.
  • Holistic approach: Focusing solely on income as an indicator of poverty is insufficient. Multidimensional poverty measures offer a more comprehensive understanding of poverty by considering a range of disadvantages individuals face.
  • Targeting and priority setting: Multidimensional poverty measures provide valuable insights into different areas and sub-groups affected by poverty, aiding in the identification of national priorities and targeted interventions.

Government Interventions for Poverty Alleviation

  • Food Security: The National Food Security Act of 2013 aims to provide subsidized food grains to two-thirds of India’s population.
  • Employment and Skilling: Initiatives such as the National Rural Livelihood Mission and the Mahatma Gandhi National Rural Employment Guarantee Act provide employment opportunities and regular income for the rural poor.
  • Income Support: Schemes like the Pradhan Mantri Jan Dhan Yojana and the Pradhan Mantri Kisan Samman Nidhi aim to provide direct benefit transfers and minimum income support to the poor and farmers.

Challenges Ahead

  • Pauperization and migrant workers: The COVID-19 pandemic has exacerbated poverty, leading to increased pauperization of migrant workers.
  • Regional disparities: Rural areas continue to face a higher incidence of extreme poverty compared to urban areas.
  • Jobless growth: Despite economic development, a significant proportion of the population still suffers from multidimensional deprivation.
  • Resource limitations: Adequate allocation of resources for anti-poverty programs remains a challenge, and the availability of funds often dictates target curtailment.
  • Implementation bottlenecks: Proper implementation and targeting of poverty alleviation schemes have been persistent issues in India, with overlapping programs leading to inefficiencies.

Conclusion

  • India’s progress in reducing multidimensional poverty is commendable, with substantial improvements across indicators.
  • However, the challenges of pauperization, regional disparities, job creation, resource allocation, and implementation bottlenecks must be addressed to achieve sustained poverty reduction and inclusive development.

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Issues with our national surveys

Note4Students

From UPSC perspective, the following things are important :

Prelims level: India's major surveys and its findings

Mains level: Issues in India's major surveys, faulty sampling and its consequences for policy making

Central Idea

  • In India, the accuracy and reliability of data related to poverty, growth, employment, and unemployment are crucial for effective policy formulation. To ensure the well-being of its vast population, it is essential that surveys generating these estimates are conducted regularly, adhering to predetermined schedules, and maintain the highest standards of quality.

*Relevance of the topic*

There is significant gap in the data quality of India’s major surveys such as NSS, NFHS, and PLFS

For Instance, Major surveys conducted post-2011, which utilized the Census 2011 as the sampling frame, have consistently overestimated the proportion of the rural population.

There is need for a comprehensive sampling overhaul to accurately reflect India’s real economy.

The Significance of Sample Surveys

  • Data for Policy Formulation: Sample surveys, such as the NSS, NFHS, and PLFS, are vital sources of data that policymakers rely on to evaluate the effectiveness of past policies and design new ones.
  • Identifying Socio-Economic Indicators: Sample surveys provide estimates related to household consumption expenditure, health outcomes, education, employment status, asset ownership, poverty levels, and more. These indicators help policymakers identify areas that require attention and allocate resources accordingly.
  • Representative Data: Sample surveys through carefully selected samples, they aim to capture the diversity and heterogeneity of different regions, communities, and socio-economic groups.
  • Monitoring Progress and Development: By conducting surveys at regular intervals, sample surveys facilitate the monitoring of progress and development over time. It helps to identify areas where progress is lagging or where interventions are needed.
  • Evidence-based Decision-making: Sample surveys provide policymakers with empirical evidence that supports evidence-based decision-making. Instead of relying solely on anecdotal evidence or assumptions, policymakers can access reliable data to understand the impact of policies and make informed choices that are backed by robust statistical analysis.
  • Transparency and Accountability: Sample surveys promote transparency and accountability in policy-making. The availability of detailed survey methodologies and data allows for scrutiny and peer review, ensuring that the processes and findings are subject to rigorous analysis.

Issues in India’s major surveys

  • Outdated Sampling Frames: The surveys utilize outdated sampling frames, which means they do not accurately reflect the current population distribution in India. As a result, the surveys may underestimate the proportion of the urban population and overestimate the rural population, leading to biased estimates.
  • Inadequate Representation: The surveys’ sampling mechanisms are not adapted to rapid changes in India’s population and economy.
  • Data Quality: While there is a general consensus on the robustness and representativeness of the survey methodology, there is a lack of attention and scrutiny regarding the data quality of these surveys.
  • Non-Sampling Errors: The response rate in these surveys is not consistent across different wealth levels. This issue can introduce biases in the survey estimates, particularly with regards to the representation of wealthier households.
  • Underestimation of India’s Progress: In a dynamic economy like India, where there have been significant policy reforms and rapid urbanization, relying on outdated surveys can impede effective policy-making by creating a gap between ground realities and survey estimates.

Consequences of faulty sampling

  • Biased Estimates: Faulty sampling can introduce biases into survey estimates, leading to inaccurate representations of the target population. Biases can result in misleading findings and hinder effective policy decision-making.
  • Underrepresentation and Exclusion: Faulty sampling may lead to underrepresentation or exclusion of specific population groups. This can result in neglecting their needs and perspectives, leading to inadequate policy interventions for those marginalized or underrepresented groups.
  • Lack of Generalizability: Inaccurate or non-representative sampling hampers the generalizability of survey results. When the sample does not accurately reflect the population, it becomes challenging to make valid inferences about the broader population based on the survey findings.
  • Compromised Data Quality: Faulty sampling undermines the overall quality of the collected data. Sampling errors introduce uncertainty and reduce the precision of estimates, impacting the reliability and trustworthiness of the data.
  • Misguided Resource Allocation: Biased estimates resulting from faulty sampling can lead to misallocation of resources. If policy decisions are based on inaccurate information, resources may be allocated inefficiently, missing opportunities to address the actual needs of the population.
  • Erosion of Confidence: Faulty sampling erodes confidence in the survey process and the credibility of the data collected. Stakeholders may question the reliability and integrity of the surveys, leading to decreased trust and potentially hindering the utilization of the data for decision-making.

Way forward: Need for Reforms in Major surveys

  • Updating Sampling Frames: There is a need for a major sampling overhaul to address outdated sampling frames. Reforms should focus on ensuring that the sampling frames used in surveys like the NSS, NFHS, and PLFS accurately reflect the current population distribution in India.
  • Improved Survey Mechanisms: There is a necessity of adapting survey mechanisms to rapid changes in the population and economy. Reforms should be aimed at modernizing and streamlining the survey methodologies to better capture the true status of India’s real economy.
  • Addressing Data Quality Concerns: There is a lack of attention and scrutiny regarding the data quality of the major surveys. Reforms should prioritize enhancing data quality assurance measures throughout the survey process, including data collection, processing, and analysis.
  • Mitigating Non-Sampling Errors: Non-sampling errors, particularly related to low response rates correlated with wealth levels, need to be addressed. Reforms should focus on understanding and correcting for these errors to ensure more accurate and representative survey estimates.
  • Accurate Population Projections: Given the rapid pace of change, reforms should aim to improve population projections to align with ground realities. This would involve refining projections based on past trends and incorporating the current pace of urbanization and other demographic shifts.

Conclusion

  • To ensure effective policy-making and accurate assessments of India’s socioeconomic landscape, it is imperative to address the existing data quality gap. By prioritizing data quality alongside data availability and size, India can better inform policies and bridge the gap between statistical estimates and ground realities, facilitating holistic and inclusive development.

Also read:

Poverty Estimates: Issues With PLFS Data

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Bhopal’s Voluntary Local Review: A Step towards Localizing SDG’s in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Bhopal's Voluntary Local Review and other such examples around the world

Mains level: Importance of Localizing SDG's in India, Bhopal's case study

Localizing

Central Idea

  • Bhopal, the capital city of Madhya Pradesh, has achieved a significant milestone by becoming the first city in India to join the global movement on localizing the Sustainable Development Goals (SDGs). The city’s Voluntary Local Review (VLR), released recently, highlights Bhopal’s commitment to implementing the SDGs at the local level. This move demonstrates India’s commendable efforts in adopting and localizing the SDGs, with various states and union territories already taking steps in this direction

What is Bhopal’s Voluntary Local Review (VLR)?

  • Bhopal’s Voluntary Local Review (VLR) is a comprehensive report released by the city of Bhopal, India, to showcase its progress and initiatives in implementing the Sustainable Development Goals (SDGs) at the local level.
  • It provides a detailed analysis of Bhopal’s development projects and their alignment with the SDGs across the three pillars of ‘people,’ ‘planet,’ and ‘prosperity.’
  • The report maps these projects to specific SDGs and presents an assessment of the city’s progress, achievements, and challenges in each area.

Features of Bhopal’s VLR

  • Collaboration: The VLR is a result of collaboration between the Bhopal Municipal Corporation, UN-Habitat, and a collective of over 23 local stakeholders. This collaborative approach ensures a comprehensive and inclusive representation of Bhopal’s sustainable development efforts.
  • Mapping of Developmental Projects: Bhopal’s VLR maps 56 developmental projects to the SDGs across the three pillars of ‘people,’ ‘planet,’ and ‘prosperity.’ This mapping provides a clear understanding of how the city’s initiatives align with the specific goals and targets of the SDGs.
  • Focus on Priority Areas: The VLR identifies priority areas for Bhopal, with a particular emphasis on building basic infrastructure and resilience. This highlights the city’s strategic approach in addressing crucial issues and directing efforts towards areas that require immediate attention.
  • Quantitative Assessment: Bhopal’s VLR includes an in-depth quantitative assessment of city-level indicators under SDG 11 (Sustainable cities and communities). This assessment evaluates the city’s performance in areas such as solid waste management practices, public transportation, and per capita availability of open spaces.
  • Identification of Challenges: The VLR acknowledges the challenges faced by Bhopal in achieving certain SDG targets. It highlights areas where the city needs to work harder, such as adequate shelter provision, air pollution control, city planning capacity, and equitable distribution and accessibility of open spaces. This identification of challenges allows for targeted efforts to address these specific issues.
  • Leadership and Stakeholder Engagement: The VLR emphasizes the leadership role of Mayor and efforts in engaging the city’s residents throughout the VLR process. This demonstrates the importance of stakeholder participation and inclusivity in driving sustainable development initiatives.
  • Localized Approach: Bhopal’s VLR recognizes the unique local context and capacity constraints faced by Indian cities. It acknowledges that a comprehensive VLR covering all SDGs may be challenging for cities with limited resources and data availability. Therefore, the VLR allows for flexibility, enabling cities to choose specific SDGs for a detailed review and adapt national indicators to reflect the city’s local realities.

The Importance of Localizing Sustainable Development Goals (SDGs)

  • Contextualization: Localizing the SDGs allows cities, regions, and communities to adapt the global goals to their specific local contexts. Each locality has unique challenges, priorities, and resources. By localizing the SDGs, governments, organizations, and stakeholders can tailor strategies and interventions to address the specific needs of their communities, making them more relevant and effective.
  • Proximity to the People: Local governments and communities are closest to the people they serve. They have a better understanding of the local needs, aspirations, and realities of their residents. By localizing the SDGs, decision-making processes become more participatory and inclusive, ensuring that the voices and perspectives of the local population are taken into account.
  • Holistic Approach: The SDGs address a broad range of interconnected social, economic, and environmental challenges. Localizing the goals allows for a holistic approach to sustainable development, considering the interdependencies and synergies between different sectors and issues. It encourages integrated and comprehensive strategies that tackle multiple challenges simultaneously, leading to more sustainable and equitable outcomes.
  • Collaboration and Partnership: Localizing the SDGs fosters collaboration and partnership among various stakeholders at the local level. Governments, civil society organizations, businesses, academia, and citizens can come together to work towards common goals, leveraging their respective strengths, expertise, and resources. This multi-stakeholder approach promotes collective action, knowledge-sharing, and innovation, leading to more effective and sustainable solutions.
  • Innovation and Experimentation: Localizing the SDGs encourages innovation and experimentation. Local governments and communities can explore new approaches, policies, and practices to address complex challenges. They can pilot innovative solutions, learn from successes and failures, and share their experiences with other localities, contributing to a global knowledge exchange and learning process.
  • Monitoring and Accountability: Localizing the SDGs facilitates monitoring and accountability mechanisms at the local level. By setting local targets, indicators, and progress tracking systems, governments and stakeholders can monitor the implementation of the goals and measure their impact on the ground. This localized monitoring promotes transparency, accountability, and data-driven decision-making, ensuring that progress towards sustainable development is effectively measured and evaluated.
  • Global Impact: While the SDGs are a global agenda, their achievement ultimately depends on action at the local level. Localizing the goals is essential for aggregating local actions and initiatives to create significant impact at the global scale. When cities, regions, and communities across the world localize the SDGs, they contribute to the collective effort of achieving sustainable development globally.

Facts for prelims

India’s progress towards achieving SDGs so far

  • SDG 1 (No Poverty): India has made significant progress in reducing poverty, with the poverty rate declining from 21.9% in 2011-12 to 4.4% in 2020. The government’s efforts to provide financial inclusion and social protection schemes have contributed to this progress.
  • SDG 2 (Zero Hunger): India has made progress in reducing hunger, with the prevalence of undernourishment declining from 17.3% in 2004-06 to 14% in 2017-19.
  • SDG 3 (Good Health and Well-being): India has made progress in improving maternal and child health, with maternal mortality ratio declining from 167 per 100,000 live births in 2011-13 to 113 in 2016-18.
  • SDG 4 (Quality Education): India has made progress in improving access to education, with the gross enrolment ratio for primary education increasing from 93.4% in 2014-15 to 94.3% in 2019-20.
  • SDG 5 (Gender Equality): India has made progress in improving gender equality, with the sex ratio at birth increasing from 918 in 2011 to 934 in 2020.

Notable examples where cities and local governments have successfully localized the SDGs

  • New York City, United States: New York City developed an SDG framework called “OneNYC” to align its local goals and initiatives with the SDGs. The framework focuses on various areas, including reducing poverty, promoting sustainability, addressing climate change, and improving quality of life.
  • Bristol, United Kingdom: Bristol was one of the first cities to create a localized SDG plan known as the “Bristol One City Plan.” The plan integrates the SDGs into the city’s strategic priorities, such as reducing inequality, promoting sustainable economic growth, and addressing climate change.
  • Kitakyushu, Japan: Kitakyushu, a city in Japan, has implemented the “Kitakyushu SDGs City Vision” to align its local strategies with the SDGs. The vision focuses on areas such as resource efficiency, waste management, renewable energy, and sustainable urban development. Kitakyushu’s successful experience in environmental sustainability has made it a global leader in eco-industrial development.
  • Medellín, Colombia: Medellín has embraced the SDGs through its “Medellín Sustainable Development Goals 2030” strategy. The city has aligned its policies, programs, and projects with the SDGs, focusing on social inclusion, education, public transportation, urban development, and reducing violence. Medellín’s approach highlights the importance of social innovation and participatory governance in achieving sustainable development.
  • Barcelona, Spain: Barcelona has integrated the SDGs into its urban development strategy known as “Barcelona City Council 2030 Agenda.” The city’s approach emphasizes social justice, gender equality, environmental sustainability, and inclusive economic growth.

Opportunities for Indian cities in localizing the SDGs

  • Tailoring to Local Context: Localizing the SDGs allows Indian cities to adapt the global goals to their specific needs and realities. By identifying local priorities and strategies, cities can address issues such as poverty, education, healthcare, infrastructure, environmental sustainability, and urban planning in a manner that is most relevant to their local populations.
  • Leveraging Local Innovation: Localizing the SDGs provides an opportunity for cities to leverage their local innovation ecosystems to develop creative solutions to sustainable development challenges. By fostering collaboration between local businesses, startups, research institutions, and communities, cities can drive innovation and implement sustainable practices that can have a transformative impact.
  • Enhancing Local Governance and Participation: Localizing the SDGs empowers local governments to strengthen their governance systems and promote participatory decision-making. It encourages local authorities to engage citizens, civil society organizations, and other stakeholders in the planning, implementation, and monitoring of sustainable development initiatives. This participatory approach can lead to more inclusive and effective governance, as well as increased accountability and transparency.
  • Sharing Best Practices and Learning: By sharing successful initiatives, innovative approaches, and lessons learned, cities can create a knowledge-sharing network, fostering collaboration and replication of effective strategies. This knowledge exchange can lead to improved policy-making, enhanced capacity-building, and accelerated progress towards the SDGs.
  • Attracting Investments and Partnerships: Localizing the SDGs can help Indian cities attract investments, forge partnerships, and access funding opportunities. By demonstrating their commitment to sustainable development and showcasing their achievements, cities can attract investors, businesses, and development organizations that are aligned with the SDGs. Collaborative partnerships can bring in resources, expertise, and technical assistance to support the implementation of sustainable projects and initiatives.
  • Global Recognition and Collaboration: Localizing the SDGs positions Indian cities as active participants in the global sustainable development agenda. It offers an opportunity to gain global recognition for their efforts and innovations. By actively engaging with international platforms, networks, and initiatives focused on sustainable urban development, Indian cities can collaborate with other cities, share experiences, and contribute to global efforts in achieving the SDGs

Conclusion

  • Bhopal’s pioneering VLR sets an inspiring precedent for other Indian cities to embrace localisation and actively contribute to the SDGs. Localizing the SDGs provides Indian cities with an invaluable opportunity to address local challenges, tailor strategies to their specific contexts, and engage stakeholders in decision-making processes. By following Bhopal’s lead Indian cities can create a more inclusive, resilient, and prosperous future for their residents and leave a lasting impact on the global map of sustainable development.

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Sustainable Development Goals (SDGs): India’s Progress Analysis

 

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Poverty Eradication – Definition, Debates, etc.

Sustainable Development Goals (SDGs): India’s Progress Analysis

Note4Students

From UPSC perspective, the following things are important :

Prelims level: SDG's target and associated developments

Mains level: India's progress on SDG's and challenges

SDGs

Central Idea

  • India’s Prime Minister Narendra Modi, while addressing the first meeting of Finance Ministers and Central Bank Governors under India’s G20 Presidency, expressed concern about the slowing down of Sustainable Development Goals (SDGs). Given India’s large population, the success of achieving these goals is crucial for global progress. While India has made progress towards achieving some SDG targets, there are concerns regarding others.

SDGs

India’s progress on SDG’s

  • Neonatal and under-five mortality: India is on target to meet the SDG indicators for neonatal and under-five mortality. Both indicators have substantially improved in the last five years.
  • Full vaccination: India is on target to meet the SDG indicator for full vaccination.
  • Improved sanitation: India is on target to meet the SDG indicator for improved sanitation. The country has made significant progress in this area in the last five years.
  • Electricity access: India is on target to meet the SDG indicator for electricity access.
  • Access to banking: The number of women having bank accounts has improved across a vast majority of the districts between the years 2016 and 2021.
  • Adolescent pregnancy: The SDG indicator for eliminating adolescent pregnancy has improved across a vast majority of the districts between the years 2016 and 2021.
  • Multidimensional poverty: The SDG indicator for reducing multidimensional poverty has improved across a vast majority of the districts between the years 2016 and 2021.
  • Women’s well-being and gender equality: India has made progress in increasing mobile phone access, with 93% of households having access to mobile phones. However, only 56% of women report owning a mobile phone.

Facts for prelims

Recent findings by National Family Health Survey

  • Multidimensional poverty declined: At a compounded annual average rate of 4.8 per cent per year in 2005-2011 and more than double that pace at 10.3 per cent a year during 2011-2021.
  • Declining child mortality: There are some issues with the 2011 child-mortality data, but for each of the 10 components of the MPI index, the rate of decline in 2011-2021 is considerably faster than in 2005-2011.
  • Average decline in overall indicators: The average equally weighted decline for nine indicators was 1.9 per cent per annum in 2005-2011 and a rate of 16.6 per cent per annum, more than eight times higher in 2011-2021.
  • Consumption inequality decline: Every single household survey or analysis has shown that consumption inequality declined during 2011-2021. This is consistent with the above finding of highly inclusive growth during 2011-2021.

Lessons from COVID-19 Approach

  • Leadership: Strong political leadership and responsive administrative structure are critical to success, and India’s COVID-19 response demonstrated that a mission-oriented ethos that provides adequate support for accomplishing district-level SDGs is urgently needed.
  • Infrastructure and Coordination: India’s success with COVID-19 was largely possible both because of the existing digital infrastructure, as well as new, indigenous initiatives such as the Co-WIN data platform and the Aarogya Setu application. Following these examples, India must put in place a coordinated, public data platform for population health management.
  • Targeted delivery: A targeted SDG strategy delivered at scale must be executed with the same timeliness of India’s COVID-19 relief package. Key to this relief programme was a mix of spending to provide direct in-kind and economic support, as well as measures aimed at revitalising the economy, small businesses, and agriculture.

Concerns regarding India’s progress towards achieving SDGs

  • Unequal progress across districts: While India is on target to meet 14 out of 33 SDG indicators, the progress is not uniform across all districts.
  • For example: neonatal and under-five mortality rates are on target for the country as a whole, but many districts are not on track to meet these indicators.
  • Pace of improvement: The current pace of improvement is not sufficient to meet the SDG targets for 19 out of 33 indicators.
  • For instance: despite a national policy push for clean fuel for cooking, more than two-thirds of districts remain off-target for this indicator.
  • Gender inequality: India is facing significant challenges in achieving gender-related SDG targets.
  • For example: no district in India has yet succeeded in eliminating the practice of girl child marriage before the legal age of 18 years. Also, despite the overall expansion of mobile phone access in India, only 56% of women report owning a mobile phone, with many districts remaining off-target for this indicator.
  • Multidimensional poverty: Although India has made progress in reducing multidimensional poverty, many districts are still off-track to meet this SDG indicator.
  • Environmental sustainability: India has made progress in some areas related to environmental sustainability, such as improved sanitation and access to electricity. However, the country is still off-target for indicators related to clean cooking fuel, water and handwashing facilities, and reducing greenhouse gas emissions.

Way ahead

  • Implement targeted policies and programs that are aligned with the SDG goals, particularly for areas where progress has been slow or lacking.
  • Improve the digital infrastructure, and create a coordinated public data platform for population health management.
  • Ensure strong and sustained political leadership that is supported by a responsive administrative structure at all levels.
  • Prioritize and accelerate efforts to address gender inequality and women’s well-being.
  • Strengthen implementation and monitoring mechanisms to ensure timely and effective delivery of SDG policies and programs.
  • Foster partnerships between government, civil society, and the private sector to mobilize resources and expertise to achieve SDG targets.
  • Develop a decadal plan that outlines concrete steps and targets for achieving SDG goals in the next ten years.

SDGs

Conclusion

  • India needs to innovate a new policy path to achieve its SDG targets, especially those related to population health and well-being, basic quality infrastructure, and gender equality. India’s successful COVID-19 response has shown that it is possible to deliver at scale in such an ambitious and comprehensive manner. To achieve SDG targets, India needs a similar concerted, pioneering, and nationwide effort.

Mains Question

Q. India’s progress towards SDGs id often described as mixed progress. While there have been positive improvements, there are still concerns that needs to be addressed. Discuss along with a way ahead.

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A recent analysis published in The Lancet has concluded that India is not on-target to achieve 19 of the 33 Sustainable Development Goals (SDGs) indicators.

 

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Poverty Eradication – Definition, Debates, etc.

Poverty Estimates: Issues With PLFS Data

Note4Students

From UPSC perspective, the following things are important :

Prelims level: PLFS and NSO data

Mains level: Poverty trends and estimates and issues

Central Idea

  • The claim of poverty reduction in India during the pandemic year of 2020-21 is contested due to discrepancies in data and survey design. The PLFS data is used to make this claim, and there are recent papers that have come up with divergent claims on trends in poverty, showing both a rapid decline in poverty as well as a sharp increase.

Use of Comparable Estimates

  • Poverty estimates in India have always been based on consumption estimates from the NSO, particularly based on the consumption expenditure surveys (CES).
  • The last official poverty estimates were for 2011-12, even though a comparable consumption survey was conducted in 2017-18.

What is Periodic Labour Force Survey (PLFS)?

  • PLFS is a large-scale household survey conducted by the National Statistical Office (NSO) of India.
  • It collects data on various aspects of the labour force in India, including employment, unemployment, and labour force participation rates. In addition to these labour force indicators, the PLFS also collects data on consumption expenditure, which can be used to estimate poverty levels.

Issue with PLFS Data

  • Estimates are not comparable: The PLFS estimates of poverty are not comparable with those from the CES, as the PLFS estimates are based on a single question.
  • Consumption estimates: The issue of sensitivity of consumption estimates to survey design, the level of aggregation and details has been extensively written about and was at the heart of the Great Indian Poverty Debate of the early 2000s.
  • Details about consumption expenditure is not just relevant: The sensitivity to the details of questions asked to collect consumption expenditure is not just relevant across different surveys but also across different rounds of the PLFS.

Poverty Trends

  • The first set of conclusions can be drawn for the period between 2011-12 and 2017-18.
  • Using the CES based full schedule and the leaked report for 2017-18, a rise in poverty can be seen.
  • For a similar time period, the single question asked in the earlier rounds of PLFS can be compared with the 2014-15 (72nd round) NSO survey on services and durable goods expenditure which had exactly the same question in the same block with the same instructions making them comparable to estimates from the PLFS from 2017-18 to 2019-20.
  • These suggest that the poverty headcount ratio was 27 per cent in 2014-15 and rose to 36 per cent in 2017-18, declining to 32 per cent in 2018-19 and remaining at that level in 2019-20.
  • Unfortunately, for the period during the pandemic (2019-20 to 2020-21) that the PM paper tries to address, it is difficult to say what happened based on available consumption data because of the questionnaire changes mentioned above.

Impact on Policy

  • The absence of official estimates on poverty is also a reflection of the lack of political priority of the government on such a crucial indicator.
  • Currently, a survey on consumption expenditure is being canvassed by the NSO which again follows a completely new methodology and schedule. While it may provide another set of estimates of consumption expenditure, it is unlikely to help resolve the poverty debate.

Conclusion

  • The issue of what happened to poverty after 2011-12 is crucial for policy. However, frequent interference in the statistical system through changes in survey and questionnaire design, suppression of data, and delaying the release of crucial data are making it difficult to have a correct assessment of reality. The absence of official estimates on poverty is a reflection of the lack of political priority of the government on such a crucial indicator.

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Poverty Eradication – Definition, Debates, etc.

SDGs: India’s Progress Analysis

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Sustainable Development Goals

Mains level: India's progress in achieving SDG targets

SDG

Central Idea

  • A recent analysis published in The Lancet has concluded that India is not on-target to achieve 19 of the 33 Sustainable Development Goals (SDGs) indicators. The critical off-target indicators include access to basic services, wasting and overweight children, anaemia, child marriage, partner violence, tobacco use, and modern contraceptive use.

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Analysis

  • On-Target: Districts that have not met the SDG target by 2021 and have observed a magnitude of improvement between 2016 and 2021 sufficient to meet the target by 2030.
  • Off-Target: Districts that have not met the SDG target by 2021 and either observed worsening between 2016 and 2021 or observed an insufficient magnitude of improvement between 2016 and 2021. If these districts continue with either of these trends, they will not meet their targets by 2030.
  • Progress in: Indicators shows the progress in reducing adolescent pregnancy, tobacco use in women, multidimensional poverty, teenage sexual violence, and improving electricity access.
  • Areas where more efforts are needed: More efforts are needed for reducing anaemia in women, improving access to basic services, providing health insurance for women, and reducing anaemia in pregnant women.

Sustainable Development Goals (SDGs)

  • The SDGs, otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.
  • The SDGs were adopted by the United Nations in 2015 with a vision to achieve a better and more sustainable future for all. The 17 SDGs came into force with effect from 1st January 2016 as a part of 2030 Agenda for Sustainable Development.
  • India is one of the signatory countries that has committed to achieving these goals by 2030.
  • Though not legally binding, the SDGs have become de facto international obligations and have the potential to reorient domestic spending priorities of the countries during the next fifteen years.
  • Countries are expected to take ownership and establish a national framework for achieving these goals.

SDG

Targets set for each of the SDGs

  • No Poverty: By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day.
  • Zero Hunger: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round.
  • Quality Education: By 2030, ensure that all girls and boys complete free, equitable and quality primary and secondary education leading to relevant and effective learning outcomes.
  • Gender Equality: End all forms of discrimination, violence, harmful practices against all women and girls everywhere. Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life.

SDG

India’s progress towards achieving SDGs so far

  • SDG 1 (No Poverty): India has made significant progress in reducing poverty, with the poverty rate declining from 21.9% in 2011-12 to 4.4% in 2020. The government’s efforts to provide financial inclusion and social protection schemes have contributed to this progress.
  • SDG 2 (Zero Hunger): India has made progress in reducing hunger, with the prevalence of undernourishment declining from 17.3% in 2004-06 to 14% in 2017-19. The government’s initiatives such as the National Food Security Act and the Pradhan Mantri Garib Kalyan Anna Yojana have contributed to this progress.
  • SDG 3 (Good Health and Well-being): India has made progress in improving maternal and child health, with maternal mortality ratio declining from 167 per 100,000 live births in 2011-13 to 113 in 2016-18. The government’s efforts to strengthen health systems and increase access to healthcare services have contributed to this progress.
  • SDG 4 (Quality Education): India has made progress in improving access to education, with the gross enrolment ratio for primary education increasing from 93.4% in 2014-15 to 94.3% in 2019-20. The government’s initiatives such as the Sarva Shiksha Abhiyan and the Right to Education Act have contributed to this progress.
  • SDG 5 (Gender Equality): India has made progress in improving gender equality, with the sex ratio at birth increasing from 918 in 2011 to 934 in 2020. The government’s initiatives such as the Beti Bachao Beti Padhao and the Maternity Benefit Programme have contributed to this progress.

Recent findings by National Family Health Survey

  • Multidimensional poverty declined: At a compounded annual average rate of 4.8 per cent per year in 2005-2011 and more than double that pace at 10.3 per cent a year during 2011-2021.
  • Declining child mortality: There are some issues with the 2011 child-mortality data, but for each of the 10 components of the MPI index, the rate of decline in 2011-2021 is considerably faster than in 2005-2011.
  • Average decline in overall indicators: The average equally weighted decline for nine indicators was 1.9 per cent per annum in 2005-2011 and a rate of 16.6 per cent per annum, more than eight times higher in 2011-2021.
  • Consumption inequality decline: Every single household survey or analysis has shown that consumption inequality declined during 2011-2021. This is consistent with the above finding of highly inclusive growth during 2011-2021.

Conclusion

  • The analysis provides a valuable tool for policymakers to address the gaps and focus on the indicators that require more attention, thereby improving the well-being of its citizens and creating a sustainable future for all.

Mains question

Q. What are Sustainable Development Goals (SDGs)? Discuss India’s progress made so far in achieving these targets

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Poverty Eradication – Definition, Debates, etc.

Multi-Dimensional Poverty (MPI) Estimation

Note4Students

From UPSC perspective, the following things are important :

Prelims level: MPI

Mains level: MPI estimation and the concerned debate

MPI

Context

  • There is debate going on over Multi-dimensional Poverty (MPI) estimation and Covid impact on poverty. Various experts are arguing that poverty decline faster during NDA years than UPA years.

How MPI is estimated as per oxford poverty and human development initiative (OPHD)?

  • Two set of estimates: There are two sets of poverty estimates provided by the Oxford Poverty and Human Development Initiative (OPHI) that compile these data across countries, primarily from Demographic and Health Surveys (DHS).
  • Uncensored estimate: The first are uncensored estimates for individual indicators, which correspond to a simple question regarding whether a household is deprived (poor) in a given indicator for example, nutrition.
  • Censored estimate: Alternatively, one can obtain an indicator-specific censored poverty estimate via a two-stage process. Censored data helps shift the focus onto those who have been (multidimensionally) identified as poor. A higher MPI suggests greater intensity of deprivation while a higher censored poverty rate is an important signal to policymakers to redirect policy focus.

Poverty

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Two stage process under censored estimates?

  • Multidimensionally poor: The first stage estimates the population that is multidimensionally poor.
  • Poor on each indicator: The second stage estimates the population that is poor in each indicator for the multi-dimensionally (MP) poor. For example, in 2005-06, the MP poor were 55.1 per cent; uncensored nutritionally poor were 57.3 per cent; and 44.3 per cent were censored nutritionally poor.
  • Poor in both categories: In other words, close to 80 per cent of the nutritionally deprived are also multidimensionally poor. For the DHS India survey years, censored estimates are used.

Advantage of using censored estimates

  • No mismatch in absolute and indicator specific poor: For some individual indicators such as assets, some households may be considered as deprived (poor) even as they are relatively better off in other areas such as nutrition, sanitation, etc.
  • Interlinkages between poverty indicators: Other advantage of a censored approach is that it allows the capture of interlinkages between several poverty indicators. For example, environmental enteropathy is known to have a key role in nutrition absorption in children. Therefore, investments made towards providing sanitation facilities and piped water connections will have an impact on nutritional absorption.

MPI

What latest data on MPI says?

  • Annual improvement in health and education: Annual pace of improvement in the health, education and living standards indicators during 2005-15: 7.3, 10.0 and 9.6 per cent respectively. In the NDA years: 11, 8.4 and an outsized 17.2 per cent annual gain in living standards.
  • Efficient redistribution of resources: An efficient redistribution combined with direct fiscal resources targeted specifically to reduce deprivation across individual indicators.
  • Inclusive growth: The inclusive growth belief was that period I would show a greater improvement because the dominant component of poverty decline, growth in per capita consumption, was about 0.8 percentage point higher in period I (annual 3.8 per cent increase vs. 3 per cent in period II).
  • Faster poverty decline: The pace of MPI index decline was almost twice the pace in period II relative to period I! This result is strongly indicative of considerably more inclusive (and more efficient and less corrupt) growth in period II compared to period I.
  • Poor performance on some indicators: For only four indicators is the rate of uncensored poverty decline lower in period II. Assets and school attendance are lower in period II for both uncensored and censored poverty. Incidentally, school attendance improvement is expected to be lower as one approaches 100 per cent enrolment, the pace of change from 20 to 25 per cent enrolment is 25 per cent versus a pace of only 1 per cent when enrolment increases from 95 to 96 per cent.

MPI

Conclusion

  • Poverty estimation debate will continue among the experts. Government should solely focus on poverty reduction policies. Present priority should be reducing the Covid induced poverty.

Mains Question

Q. What is the censored and uncensored poverty estimates? Analyse the recent data on multi-dimensional poverty index (MPI) in India?

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Poverty Eradication – Definition, Debates, etc.

Poverty Estimate using National Family Health Survey

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NFHS report findings

Mains level: NFHS, Estimating poverty in India

Poverty

Context

  • The recent release of the National family health survey (NFHS) data for 2019-21 allows for a detailed analysis of the progress in the reduction of absolute poverty and related determinants like nutrition.

Poverty estimation in India

  • Planning Commission Expert Group (1962): It formulated the separate poverty lines for rural and urban areas at ₹20 and ₹25 per capita per year respectively.
  • VM Dandekar and N Rath (1971): They made the first systematic assessment, based on National Sample Survey (NSS) data. They suggested providing 2250 calories per day in both rural and urban areas.
  • YK Alagh Committee (1979): It constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
  • Lakdawala Committee (1993): It suggested that consumption expenditure should be calculated based on calorie consumption as earlier. State specific poverty lines should be constructed. It asked for discontinuation of scaling of poverty estimates based on National Accounts Statistics.
  • Tendulkar Committee (2009): The current official measures of poverty are based on the Tendulkar poverty line, fixed at daily expenditure of ₹27.2 in rural areas and ₹33.3 in urban areas is criticized by many for being too low.

Poverty

How poverty is estimated under NFHS?

  • Multidimensional poverty index: The NFHS surveys are part of a multinational attempt to provide estimates of a multidimensional poverty index. Its computation rests on estimates of poverty according to 10 different indicators:
  1. Nutrition
  2. Child mortality
  3. Years of schooling
  4. School attendance
  5. Cooking fuel
  6. Sanitation
  7. Drinking water
  8. Electricity
  9. Housing
  10. Assets
  • The deprivation index: the deprivation index for each indicator is the per cent poor (deprived) according to that indicator. The aggregation of the 10 indicators into one index involves legitimate issues of weighting, but individual components do not suffer from this drawback.

Poverty

What are the findings of NFHS?

  • Multidimensional poverty declined: at a compounded annual average rate of 4.8 per cent per year in 2005-2011 and more than double that pace at 10.3 per cent a year during 2011-2021.
  • Declining child mortality: There are some issues with the 2011 child-mortality data, but for each of the 10 components of the MPI index, the rate of decline in 2011-2021 is considerably faster than in 2005-2011.
  • Average decline in overall indicators: The average equally weighted decline for nine indicators was 1.9 per cent per annum in 2005-2011 and a rate of 16.6 per cent per annum, more than eight times higher in 2011-2021.
  • Consumption inequality decline: Every single household survey or analysis has shown that consumption inequality declined during 2011-2021. This is consistent with the above finding of highly inclusive growth during 2011-2021.

Poverty

What are the efforts behind inclusive growth and reduced poverty?

  • A major factor behind the inclusive nature of growth during 2011-2021 is the focus of government policies on each of the individual indicator’s indicative of a dignified standard of living. A direct impact of this dedicated fiscal push is that slow-moving variables such as housing, access to cooking fuel, sanitation, etc, have witnessed a remarkable increase.
  • Swachh Bharat Mission: The government’s Swachh Bharat mission in 2014-2021 constructed over 110 million toilets even if some were without easy access to water, many were.
  • Saubhagya Yojana: Similarly, close to one-third of Indians were deprived of electricity till as recently as 2014. It was only after a dedicated push (Saubhagya Yojana) that India managed to electrify every village, and eventually households. Electricity deprivation declined by a 28.2 per cent rate post-2014; between 2005 and 2011, the rate of decline was close to zero.
  • Jan Dhan Yojana: Another example is the Jan Dhan Yojana which made financial inclusion a reality in India, especially for women.
  • Ujjwala Yojana: On access to modern cooking fuel (through the Ujjwala Yojana), deprivation was nearly halved from 26 per cent to 14 per cent in just five years. The previous halving (2005/6 to 2015/16) took 10 years.
  • Awas Yojana: The affordable housing scheme (Awas Yojana) has meant that less than 14 per cent are now deprived, compared to thrice that number in 2011/12.
  • Jal Jeevan Mission: More recently, government has embarked on an ambitious project of ensuring universal access to piped water under the Jal Jeevan Mission. Rural piped water coverage was a little less than 17 per cent in 2019, but is now well above 54 per cent and expected to at least be near, if not meet, the 100 per cent target by 2024.

Conclusion

  • Extreme poverty in India is surely on decline but pandemic have pushed people again back to the poverty. Pandemic have put the break on inclusive growth of people. Government must realize these and plan accordingly.

Mains Question

Q. Analyze the data of NFHS for poverty estimation in India? How government policies have helped to reduce the extreme poverty in India?

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Poverty Eradication – Definition, Debates, etc.

Impact of the Covid-19 pandemic on global poverty

Note4Students

From UPSC perspective, the following things are important :

Prelims level: World bank reports theme

Mains level: Impact of COVID-19 Pandemic, Poverty eradictaion and inclusive growth.

poverty

Context

  • A recent World Bank report, titled “Correcting Course”, captures the impact of the COVID-19 pandemic on global poverty. The economic mismanagement we were witness to in India resulted in 5.6 crore people slipping into extreme poverty in 2020.

Do You Know?

  • 17 October is observed as International Day for the Eradication of Poverty
  • The theme for International Day for the Eradication of Poverty 2022-2023 is “Dignity For All in Practice: The commitments we make together for social justice, peace, and the planet”

What is the Impact of COVID-19?

  • Rapid rise in extreme poverty: The number of people living in extreme poverty rose by seven crores million in 2020, as the global poverty rate rose from 8.4% in 2019 to 9.3%in 2020.
  • Increased Inequality: This is the first time in two decades that the poverty rate has gone up. Global inequalities have widened, evident in the relative impacts felt on incomes in the richest countries as opposed to the poorest; and, unsurprisingly, economic recovery has been similarly uneven.

poverty

What the World Bank report says on fiscal policy of developing Nations?

  • The report focuses on fiscal policy as an instrument for governments in dealing with crises such as the pandemic.
  • Poorer countries were unable to use fiscal policy as effectively and thus unable to offset the impact of the pandemic to a much lesser degree than richer countries.

What is the status of India’s Fiscal Policy and Poverty?

  • Sluggish state of Indian Economy: India’s economy continues to be sluggish in 2022, and one should look back at the policy choices that were made back in 2020.
  • Absence of official poverty data: The World Bank report relies on the Consumer Pyramids Household Survey (CPHS) by the Centre for Monitoring Indian Economy (CMIE), in the absence of official poverty data since 2011.
  • Poverty and fall in GDP: By the estimate, 5.6 crore people are likely to have slipped into poverty as India’s GDP fell by7.5% in FY2020-21.
  • India’s Population below poverty line: The population below poverty line in India stood at 10% in 2020.
  • Marginal Incremental spending: Refusal to provide a fiscal stimulus to consumption the Government announced a fiscal stimulus worth Rs.2 lakh crore, or 1% of GDP. However, only a small fraction therein reflected incremental spending.
  • Inadequate increase in MGNREGA wage: The minor increase to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) wage by Rs.20 per day was a long-pending correction and quite inadequate to say the least.
  • No money in the hands of households: The majority of India’s stimulus package took the form of credit lines and refinancing schemes to private enterprises, which are an inefficient mechanism to realise the goal of putting money in the hands of people to boost household-level consumption.

poverty

The relationship between India’s Tax policies and Poverty

  • Reduced corporate tax: Through the pandemic and beyond, India persisted with the reduced corporate tax rate that had been announced in September 2019. The reduction of corporate tax from 30% to 22% cost the exchequer Rs.1.84 lakh crore over the last two fiscal years, according to the Parliamentary Committee on Estimates.
  • Rise in corporate profit: India has refused to reintroduce wealth tax, or indeed, an inheritance tax. At the same time, corporate profits soared, as reported by the CMIE.
  • Rise in inequality: Through all of this, and in spite of the World Inequality Report terming India as a ‘poor and very unequal country’.
  • GST as regressive tax regime: India has repeatedly increased the rates on a wide range of products covered by the Goods and Services Tax as well as increased the prices of cooking and transport fuels. While indirect taxes may help prop up public finances, they place a disproportionate burden on the poor.

Food aid through PMGKAY and the problem associated with it

  • Pradhan Mantri Garib Kalyan Ann Yojana: The announcement of 80-crore people in India would get food aid through the Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY), a scheme that continues mainly because of the undeniable household-level distress. PMGKAY is currently estimated to cost about Rs.3.90 lakh crore. Started in April 2020, it has been extended till the upcoming Assembly elections are over.
  • PMGKAY is not a long-term solution: food aid is not a long-term solution, and certainly does not solve the problem of chronic malnutrition.

World Bank Suggested priorities for Post pandemic recovery

  • The World Bank report identifies three priorities for fiscal policy for governments to aid with post-pandemic recovery:

1. Targeted subsidies that benefit the poor

2. Public investment to build resilience in the long term;

3. Revenue mobilisation that should rely on progressive direct taxation rather than indirect taxes

poverty

Conclusion

  • India’s fiscally prudent policies had ensured the wealthy state but poor people. However, we must not see India’s story in isolation. Despite the good fiscal packages developed country like UK, USA are heading towards recession. Though sluggish, India has done well to maintain positive growth trajectory but this positive growth must include the growth of the poor as well.

Mains Question

Q.How fiscal policy can impact the poverty? What are the government initiatives to uplift the poor?

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Poverty Eradication – Definition, Debates, etc.

About 41.5 crore Indians out of multi-dimensional poverty since 2005-06

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Multi-Dimensional Poverty Index

Mains level: Persistence of acute poverty in India

poverty

About 41.5 crore people exited poverty in India during the 15-year period between 2005-06 and 2019-21, out of which two-thirds exited in the first 10 years, and one-third in the next five years, according to the global Multidimensional Poverty Index (MPI).

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.

poverty

Multidimensional poverty in India: Major improvements

poverty

  • The report shows that the incidence of poverty fell from 55.1% in 2005-06 to 16.4% in 2019-21 in India.
  • Deprivations in all 10 MPI indicators saw significant reductions as a result of which the MPI value and incidence of poverty more than halved.
  • Improvement in MPI for India has significantly contributed to the decline in poverty in South Asia.
  • It is for the first time that it is not the region with the highest number of poor people, at 38.5 crore, compared with 57.9 crore in Sub-Saharan Africa.
  • Bihar, the poorest State in 2015-2016, saw the fastest reduction in MPI value in absolute terms.

Long way towards alleviation

  • Despite the strides made, the report notes that the ongoing task of ending poverty remains daunting.
  • India has by far the largest number of poor people worldwide at 22.8 crore, followed by Nigeria at 9.6 crore.
  • Two-third of these people live in a household in which at least one person is deprived in nutrition.
  • There were also 9.7 crore poor children in India in 2019-2021 — more than the total number of poor people, children and adults combined, in any other country covered by the global MPI.

Why multi-dimensional poverty does persist in India?

Poverty is not just the absence of income, money and/or money-like resources required to meet needs.

  • Multiple disadvantages: A person who is poor can suffer multiple disadvantages at the same time – for example they may simultaneously have:
  1. Poor health or malnutrition
  2. Lack of clean water or electricity
  3. Poor quality of livelihood options
  4. Little/No schooling
  5. Disempowerment
  6. Threats of violence
  7. Climate change vulnerability etc.

Other factors include:

  1. Limited financial resources
  2. Material deprivation
  3. Social isolation
  4. Exclusion and powerlessness
  5. Physical and psychological ill-being
  • Multiple dimensions: Focusing on one factor alone, such as income, is not enough to capture the true reality of poverty. National MPI ensures a holistic approach towards defining poverty at the national level.
  • More comprehensive: MP measures can be used to create a more comprehensive picture. They reveal who is poor and how they are poor – the range of different disadvantages they experience.
  • Better targeting: As well as providing a headline measure of poverty, multidimensional measures can be broken down to reveal the poverty level in different areas of a country and among different sub-groups of people.
  • Priority definition for target groups: It offers statistics that determine the national priorities by using a set of dimensions, indicators with respect to the urban and rural areas of India along with an indicator-wise deconstruction and breakdown.

Various govt. interventions to for poverty alleviation

(I) Food Security

  • National Food Security Act 2013 (also ‘Right to Food Act’): It aims to provide subsidized food grains to approximately two thirds of the country’s 1.2 billion people.

(II) Employment and Skilling

  • National Rural Livelihood Mission (NRLM)Ministry of Rural Development started NRLM 2011 to evolve out the need to diversify the needs of the rural poor and provide them jobs with regular income on a monthly basis.
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – In 2005 Ministry of Rural Development initiated MGNEREGA to provide 100 days of assured employment every year to every rural household. One-third of the proposed jobs would be reserved for women.

(III) Income Support

  • PM Jan Dhan Yojana (PMJDY): The Ministry of Finance in 2014 initiated PMJDY that aimed at direct benefit transfer of subsidy, pension, insurance, etc., and attained the target of opening 1.5 crore bank accounts. The scheme particularly targets the unbanked poor.
  • PM Kisan Samman Nidhi (PM KISAN): PM KISAN is an initiative by the government of India in which all farmers will get up to ₹6,000 per year as minimum income support.

Various challenges

  • Pauperization: Every year a huge number is added to the population pool of the country. To exemplify, this pandemic has led to severe pauperization of migrant workers.
  • Regional divide: Incidence of extreme poverty continues to be much higher in rural areas than in urban areas.
  • Jobless growth: Despite rapid growth and development, an unacceptably high proportion of our population continues to suffer from severe and multidimensional deprivation.
  • Inadequate resources: The resources allocated to anti-poverty programmes are inadequate and there is a tacit understanding that targets will be curtailed according to fund availability.
  • Implementation bottlenecks: Lack of proper implementation and right targeting has been legacy issues in India. There has been a lot of overlapping of schemes.

 

 

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Poverty Eradication – Definition, Debates, etc.

SMILE-75 scheme to rehabilitate Beggars

Note4Students

From UPSC perspective, the following things are important :

Prelims level: SMILE Scheme

Mains level: Read the attached story

The Social Justice and Empowerment Ministry has launched the ‘SMILE-75’ initiative for comprehensive rehabilitation of persons engaged in begging in 75 identified municipalities as a part of the celebrations of 75 years of Independence.

SMILE Scheme

  • SMILE is an acronym for Support for Marginalised Individuals for Livelihood and Enterprise.
  • This scheme is a sub-scheme under the ‘Central Sector Scheme for Comprehensive Rehabilitation of persons engaged in the act of Begging’.
  • It also focuses on rehabilitation, provision of medical facilities and intervention, counselling, education, skill development, economic linkages to transgender persons.
  • It covers several comprehensive measures including welfare measures for persons who are engaged in the act of begging.
  • The focus of the scheme is extensively on rehabilitation, provision of medical facilities, counselling, basic documentation, education, skill development, economic linkages and so on.

Its implementation

  • The scheme would be implemented with the support of State/UT Governments/Local Urban Bodies, Voluntary Organizations, Community Based Organizations (CBOs), institutions and others.
  • The scheme provides for the use of the existing shelter homes available with the State/UT Governments and Urban local bodies for rehabilitation of the persons engaged in the act of Begging.
  • In case of the non-availability of existing shelter homes, new dedicated shelter homes are to be set up by the implementing agencies.

 

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Poverty Eradication – Definition, Debates, etc.

Poverty reduction lessons from China

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Agri-GDP

Context

The United Nations latest report, “Population Prospects” forecasts that India will surpass China’s population by 2023, reaching 1.5 billion by 2030 and 1.66 billion by 2050.

Poverty eradication: Lessons from China

  • China’s story since 1978 is unique – the country has achieved the fastest decline in poverty.
  • Its experiences hold some important lessons for India, especially because in 1978, when China embarked on its economic reforms, its per capita income at $156.4 was way below that of India at $205.7.
  • Today, China is more than six times ahead of India in terms of per capita income – China’s per capita income in 2021 was $12,556, while that of India was $1,933 in 2020.
  • China started its economic reforms in 1978 with a primary focus on agriculture.
  • Contribution of agriculture: It broke away from the commune system and liberated agri-markets from myriad controls.
  • Increase in agri-GDP: As a result, during 1978-84, China’s agri-GDP grew by 7.1 per cent per annum and farmers’ real incomes grew by 14 per cent per annum with the liberalisation of agri-prices.
  • Creation of demand: Enhanced incomes of rural people created a huge demand for industrial products, and also gave political legitimacy for pushing further the reform agenda.
  • The aim of China’s manufacturing through Town and Village Enterprises (TVEs) was basically to meet the surging demand from the hinterlands.
  • Population factor: China introduced the one-child per family policy in September 1980, which lasted till early 2016.
  • It is this strict control on population growth, coupled with booming growth in overall GDP over these years, that led to a rapid increase in per capita incomes.
  • Chinese population growth today is just 0.1 per cent per annum compared to India’s 1.1 per cent per annum.

Growth story of Indian agriculture

  • Over a 40-year period, 1978-2018, China’s agriculture has grown at 4.5 per cent per annum while India’s agri-GDP growth ever since reforms began in 1991 has hovered at around 3 per cent per annum.
  • Market and price liberalisation in agriculture still remains a major issue, and at the drop of any hint of food price rise, the government clamps down exports, imposes stock limits on traders, suspends futures markets, and pushes other measures that strangle markets.
  • Implicit taxation of farmers: The net result of all this is reflected in the “implicit taxation” of farmers to favour the vocal lobby of consumers, especially the urban middle class.

Way forward

  •  Population control: The only way is through effective education, especially that of the girl child, open discussion and dialogue about family planning methods and conversations about the benefits of small family size in society.
  • Effective education: As per the National Family Health Survey-5 (2019-21), of all the girls and women above the age of 6 years, only 16.6 per cent were educated for 12 years or more.
  • Based on unit-level data of NFHS5 (2019-21), it is found that women’s education is the most critical determinant of the status of malnutrition amongst children below the age of five.
  • Unless a focused and aggressive campaign is launched to educate the girl child and provide her with more than 12 years of good quality education, India’s performance in terms of the prosperity of its masses, and the human development index may not improve significantly for many more years to come
  • If  government can take up this cause in sync with state governments, this will significantly boost the labour participation rate of women, which is currently at a meagre 25 per cent, and lead to “double engine” growth.
  • Nutrition interventions: The NFHS-5 data shows that more than 35 per cent of our children below the age of five are stunted, which means their earning capacity will remain hampered throughout life. They will remain stuck in a low-level income trap.

Conclusion

From a policy perspective, if there is any subsidy that deserves priority, it should be for the education of the girl child. This policy focus can surely bring a rich harvest, politically and economically, for many years to come.

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Poverty Eradication – Definition, Debates, etc.

The extent of poverty

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Poverty line

Mains level: Paper 3- Estimating poverty in India

Context

There has been an uproar about the working papers of the IMF and World Bank, reporting no or low poverty for India in the pandemic year or just before that.

About the IMF paper

  • The paper by Roy and Weide (2022) for the World Bank explores the possibility of using CMIE (unemployment data) in poverty calculations after correcting for the unrepresentative character of its panel data by modifying the weightages of households for aggregation.
  • These adjustments carried out to remove the non-convergence of the CMIE data with other macro statistics have resulted in a poverty figure of 12 per cent.

What does the poverty index measure or attempt to capture?

  • Its construction involves complex calculations — to identify a poverty basket of consumption, working out price indices for updation of the poverty line and then applying it to the income or consumption of households for determining their poverty status.
  • Absence of consumption expenditure: The computation becomes far more challenging in the absence of data on consumption expenditure as is the case in India and several developing countries.
  • Intending to provide inputs for policy making, researchers have evolved ingenious methods of estimating the data, using past datasets and those that have not been designed to get robust expenditure estimates.

Background of poverty line in India

  • A nine-member working group set up by the Planning Commission proposed the poverty line at Rs 20 per capita per month in the early Sixties, loosely ensuring the adequacy of minimum requirements.
  • Poverty line based on calorie needs: Dandekar and Rath (1970) went into detail about minimum calorie needs, based on the average consumption pattern.
  • Issues with calorie based poverty line: During the Eighties and Nineties, it was realised that this linkage is getting blurred due to changes in the consumption pattern, microenvironment for living, etc.
  • Sukhatme argued that the emphasis on calories and nutrition is misplaced as the absorption of nutrients depends on physical health, particularly the presence or absence of gastrointestinal diseases.
  • Water and sanitation facilities were noted as important in determining the poverty line.
  •  It was accepted that the state, through poverty interventions, cannot and should not try to guarantee adequate nutrition to people.
  • Delinking the nutritional norms: The Tendulkar Committee formally announced delinking of nutritional norms from poverty in 2010.

Extrapolating the consumption expenditure on NSS 2011-12

  • Bhalla, Virmani and Bhasin (2022) in their IMF Working Paper have developed a method of interpolation and extrapolation of the consumption expenditure of the NSS 2011-12 and building a series up to 2019-20.
  • They use the growth rate of private final consumption expenditure (PFCE) but bring in the distributional changes by allowing household consumption to grow as per the nominal per capita income in each state.
  • Takes into account rural-urban price difference: Rural-urban price differences are also introduced through separate poverty lines.
  • The method is reasonable except that it assumes the distributions to remain unchanged both within the rural and urban segments in each state over 2014-20.
  • Also, the growth rates of different commodities in the PFCE are significantly different and hence commodity-wise adjustments can be done to give higher weights to the items of consumption by the poor.
  • Taking into account the role of state: The most significant contribution of the study is its bringing in the differential engagement of the state in the provisioning of the essentials to the poor into poverty calculations.
  • This opens up the possibility of changes in the level of state engagement in poverty estimation, including free gas cylinders, etc.

Conclusion

People find the World Bank paper figures pegged at 12% more acceptable not because of the methodology but the magnitude. One does not know whether the poverty estimate would be a bit higher had the adjustments been carried out for a few other parameters and also at the state level.

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Poverty Eradication – Definition, Debates, etc.

The uneven toll of inflation

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Long term capital gain

Mains level: Paper 3- Rising inequality in India

Context

This upsurge of inflation is affecting the poor more than any other social group because some of the commodities whose prices are increasing the most (like petrol and certain food items) represent a larger fraction of the budget of the most vulnerable sections of society.

Factors fueling inflation in India

  • The Wholesale Price Index (WPI) and the Consumer Price Index (CPI) show an upward rising trend, annually, at 13.11 per cent and 6.07 per cent respectively.
  • Falling rupee: Inflation is here to stay because it has much to do with the decline in value of the rupee that has fallen to its lowest, which makes imports of oil and gas more expensive.
  • Ukraine crisis: The war in Ukraine has the same effect and pushes the price of some food items upward.

Rising inequality

  • Impact on the poor: This upsurge of inflation is affecting the poor more because some of the commodities whose prices are increasing the most represent a larger fraction of the budget of the most vulnerable sections of society.
  • Rising inequality: As a result, inequalities — which were already on the rise — are increasing further.
  • Recently, the State of Inequality in India report showed that an Indian making Rs 3 lakh a year belonged to the top 10 per cent of the country’s wage earners. 
  •  Inequalities are also increasing among salaried people, who are privileged compared to those of the informal sector: The bottom 50 per cent account for only 22 per cent of the total salary income.
  • The situation of the lower-middle class and poor is deteriorating.
  • The Reserve Bank of India shows slow farm wage growth in nominal terms: From an average of 6.6 per cent in fiscal 2021 to 5.7 per cent in fiscal 2022 (April-November average). This is below the inflation rate.

Inequality in healthcare

  • India’s spending on healthcare is among the lowest in the world.
  • A decent level of healthcare is available only to the ones who can afford it because of increasing out-of-pocket expenditure — the payment made directly by individuals for the health service, not covered under any financial protection scheme.
  •  Overall, these out-of-pocket expenses on healthcare are 60 per cent of the total expenditure on public health in India, which is one of the highest in the world.

How policies are contributing to the increasing inequality?

  • High indirect taxes: The share of indirect taxes in the state’s fiscal resources has increased from 2014 to 2019 to reach 50 per cent of the total taxes in 2019.
  • Higher indirect taxes are the most unfair as it affects everyone, irrespective of their income.
  • Taxes on alcohol and petroleum products are cases in point.
  • In contrast, the big companies are flourishing, again, partly because of certain fiscal policies. 
  • Low corporate taxes: The government’s budget in 2015 substantially lowered the corporate tax.
  • Withdrawal of enhanced surcharge: In addition to these tax cuts, the government withdrew the enhanced surcharge on long- and short-term capital gains for foreign portfolio investors (FPIs) as well as domestic portfolio investors.
  • These government policies are clearly promoting the supply side at the expense of demand.
  • The central bank has raised interest rates and CRR in an attempt to curb demand, but demand in the country is already choking.

Way forward

  • Higher allocation for MGNREGA: A higher allocation of funds for MGNREGS in rural areas, as well as the introduction of similar employment generation schemes in urban areas, should, therefore, be a priority.
  • Municipal bonds at state level: At the state level, the development of municipal bond markets could be a plausible alternative.
  • Reduction on excise duty on fuel: A reduction in the excise duty on fuel prices and easing the fuel tax burden could also supplement the disposable income and reduce the input cost burden for producers.

Conclusion

Though the government is opting for market-based economics, currently, India needs a mixed solution that comprises price stability via government channels and subsidies.

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Back2Basics: Long and short-term capital gain

  • When you buy and sell assets, the profit that you earn is called a Capital Gain.
  • Long Term Capital Gains are those that you earn when you sell an asset after 36 months (3 years) from the date on which you acquired the asset.
  • Short Term Capital Gains are those that you earn when you sell an asset in under 36 months (3 years) from the date on which you acquired the asset.

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Poverty Eradication – Definition, Debates, etc.

Extreme Poverty down in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Poverty in India

Mains level: Paper 2- Poverty reduction in India

Context

A recent World Bank Report has shown that extreme poverty in India more than halved between 2011 and 2019 – from 22.5 per cent to 10.2 per cent.  The reduction was higher in rural areas, from 26.3 per cent to 11.6 per cent.

What explains the reduction in poverty?

  • Poverty has reduced significantly because of the government’s thrust on improving the ease of living of ordinary Indians through schemes.
  • These schemes include the Ujjwala Yojana, PM Awas Yojana, Swachh Bharat Mission, Jan Dhan and Mission Indradhanush in addition to the Deendayal Antyodaya Yojana-National Rural Livelihood Mission and improved coverage under the National Food Security Act.
  • It is important to understand how poverty in rural areas was reduced at a faster pace.
  • Much of the success can be credited to all government departments, especially their janbhagidari-based thrust on pro-poor public welfare.

Contributing factors

1] Identification of beneficiaries through SECC 2011

  • The identification of deprived households on the basis of the Socioeconomic and Caste Census (SECC) 2011 across welfare programmes helped in creating a constituency for the well-being of the poor, irrespective of caste, creed or religion.
  • Deprivation criterion: Since deprivation was the key criterion in identifying beneficiaries, SC and ST communities got higher coverage and the erstwhile backward regions in Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh, Jharkhand, Odisha, Chhattisgarh, Assam, Rajasthan and rural Maharashtra got a larger share of the benefits.
  • Gram Sabha Validation: Social groups that often used to be left out of government programmes were included and gram sabha validation was taken to ensure that the project reached these groups.

2] Widened coverage of women

  • The coverage of women under the Deendayal Antyodaya Yojana and Self Help Groups (SHG) increased from 2.5 crore in 2014 to over 8 crore in 2018 as a result of more than 75 lakh SHGs working closely with over 31 lakh elected panchayati raj representatives, 40 per cent of whom are women.
  • This provided a robust framework to connect with communities and created a social capital that helped every programme.
  • The PRI-SHG partnership catalysed changes that increased the pace of poverty reduction and the use of Aadhaar cleaned up corruption at several levels and ensured that the funds reached those whom it was meant for.

3] Creation of basic infrastructure

  • Finance Commission transfers were made directly to gram panchayats leading to the creation of basic infrastructure like pucca village roads and drains at a much faster pace in rural areas.
  • The high speed of road construction under the Pradhan Mantri Gram Sadhak Yojana created greater opportunities for employment in nearby larger villages/census towns/kasbas by improving connectivity and enhancing mobility.

4] Availability of credit through SHGs

  • The social capital of SHGs ensured the availability of credit through banks, micro-finance institutions and MUDRA loans.
  • Livelihood diversification: The NRLM prioritised livelihood diversification and implemented detailed plans for credit disbursement.

5]  Implementation of social sector schemes

  • In the two phases of the Gram Swaraj Abhiyan in 2018, benefits such as gas and electricity connections, LED bulbs, accident insurance, life insurance, bank accounts and immunisation were provided to 63974 villages that were selected because of their high SC and ST populations.
  • The performance of line departments went up manifold due to community-led action.
  • The gains are reflected in the findings of the National Family Health Survey V, 2019-2021.

6] Universal coverage schemes

  • The thrust on universal coverage for individual household latrines, LPG connections and pucca houses for those who lived in kuccha houses ensured that no one was left behind. This created the Labarthi Varg.

7] Increase in fund transfer to rural area

  • Seventh, this was also a period in which a high amount of public funds were transferred to rural areas, including from the share of states and, in some programmes, through extra-budgetary resources.

8] Community participation

  • The thrust on a people’s plan campaign, “Sabki Yojana Sabka Vikas” for preparing the Gram Panchayat Development Plans and for ranking villages and panchayats on human development, economic activity and infrastructure, from 2017-18 onwards, laid the foundation for robust community participation involving panchayats and SHGs, especially in ensuring accountability.

9] Social and concurrent audit

  • Through processes like social and concurrent audits, efforts were made to ensure that resources were fully utilised.
  • Several changes were brought about in programmes like the MGNREGS to create durable and productive assets.

10] Focus of states on improving livelihood diversification

  • The competition among states to improve performance on rural development helped.
  • Irrespective of the party in power, nearly all states and UTs focussed on improving livelihood diversification in rural areas and on improving infrastructure significantly.

Conclusion

All these factors contributed to improved ease of living of deprived households and improving their asset base. A lot has been achieved, much remains to be done.

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Poverty Eradication – Definition, Debates, etc.

‘Mission Antyodaya’ can help transform rural India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Importance of Mission Antyodaya

Context

This article argues that given the right momentum, the ‘Mission Antyodaya’ project bears great promise to eradicate poverty in its multiple dimensions among rural households.

Background of Mission Antyodaya

  • The ‘Mission Antyodaya’ project was launched by the Government of India in 2017-18.
  • The Ministry of Panchayati Raj and the Ministry of Rural Development act as the nodal agents to take the mission forward.
  • Key goals: The main objective of ‘Mission Antyodaya’ is to ensure optimum use of resources through the convergence of various schemes that address multiple deprivations of poverty, making gram panchayat the hub of a development plan.
  • Annual survey: This planning process is supported by an annual survey that helps to assess the various development gaps at the gram panchayat level, by collecting data regarding the 29 subjects assigned to panchayats by the Eleventh Schedule of the Constitution.
  • Also, data regarding health and nutrition, social security, good governance, water management and so on are also collected.
  • The idea of the Ministry of Panchayati Raj to identify the gaps in basic needs at the local level, and integrating resources of various schemes, self-help groups, voluntary organisations and so on to finance them needs coordination and capacity-building of a high order.
  • If pursued in a genuine manner, this can foster economic development and inter-jurisdictional equity.

Infrastructural gaps as pointed out by the Mission Antyodaya Survey

  • The ‘Mission Antyodaya’ survey in 2019-20 for the first time collected data that shed light on the infrastructural gaps from 2.67 lakh gram panchayats, comprising 6.48 lakh villages with 1.03 billion population.
  • The maximum score values assigned will add up to 100 and are presented in class intervals of 10.
  • While no State in India falls in the top score bracket of 90 to 100, 1,484 gram panchayats fall in the bottom bracket.
  • Even in the score range of 80 to 90, 10 States and all Union Territories do not appear.
  • The total number of gram panchayats for all the 18 States that have reported adds up only to 260, constituting only 0.10% of the total 2,67,466 gram panchayats in the country.
  •  If we consider a score range of 70-80 as a respectable attainment level, Kerala tops but accounts for only 34.69% of gram panchayats of the State, the corresponding all-India average is as low as 1.09%.
  • The composite index data, a sort of surrogate for human development, are also not encouraging.
  • Although only 15 gram panchayats in the country fall in the bottom range below 10 scores, more than a fifth of gram panchayats in India are below the 40 range.
  • The gap report and the composite index show in unmistakable terms that building ‘economic development and social justice’ remains a distant goal even after 30 years of the decentralisation reforms and nearly 75 years into Independence.

Way forward

  • Converge resources: Given the ‘saturation approach’ (100% targets on select items) of the Ministry of Panchayati Raj, the possibilities of realising universal primary health care, literacy, drinking water supply and the like are also immense.
  • But there is no serious effort to converge resources (the Mahatma Gandhi National Rural Employment Guarantee Act, the National Rural Livelihood Mission, National Social Assistance Programme, Pradhan Mantri Awas Yojana, etc.) and save administrative expenses.
  • Deploy the data to India’s fiscal federalism: Another lapse is the failure to deploy the data to India’s fiscal federalism, particularly to improve the transfer system and horizontal equity in the delivery of public goods in India at the sub-State level.
  • The constitutional goal of planning and implementing economic development and social justice can be achieved only through strong policy interventions.

Conclusion

The policy history of India has been witness to the phenomenon of announcing big projects and failing to take them to their logical consequence. ‘Mission Antyodaya’ is a striking case in recent times.

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Poverty Eradication – Definition, Debates, etc.

World Inequality Report, 2022

Note4Students

From UPSC perspective, the following things are important :

Prelims level: World Inequality Report

Mains level: Rich vr Poor divide in India

As per the ‘World Inequality Report 2022’, India is among the most unequal countries in the world, with rising poverty and an ‘affluent elite.’

World Inequality Report

  • This report is published by Mr. Lucas Chancel, the co-director of the World Inequality Lab of the Paris School of Economics.
  • It was coordinated by famed French economist Thomas Piketty.

Key highlights of the report

(1) Income divide

  • The report highlights that the top 10% and top 1% in India hold 57% and 22% of the total national income respectively while the bottom 50% share has gone down to 13%.
  • The average national income of the Indian adult population is Rs 2,04,200.
  • The bottom 50% earns 20 times more than the top 10%.

 (2) Decline in public wealth

  • The report notes that the share of public wealth across countries has been on a decline for decades now.
  • Public assets typically include public buildings housing administrations, schools, universities, hospitals, and other public services.

(3) Inequality during Colonial India

  • Going back in time, the report shows that the income inequality in India under the British colonial rule (1858-1947) was very high, with a top 10% income share around 50%.
  • After independence, due to socialist-inspired five-year plans, this share was reduced to 35-40%.
  • Owing to poor post-Independence economic conditions, India embarked upon deregulation and loosening controls in the form of liberalization policies.

(4) Wealth inequality

  • The average household wealth in India is around Rs 9,83,010.
  • The bottom 50% of the nation can be seen to own almost nothing, with an average wealth of Rs 66,280 or 6% of the total pie.
  • The middle class is relatively poor with an average wealth of Rs 7,23,930 or 29.5% of the total.
  • The top 10% owns 65% of the total wealth, averaging Rs 63,54,070 and the top 1% owns 33%, averaging Rs 3,24,49,360.

(5) Gender Inequality

  • Gender inequality in India is also considered on the higher end of the spectrum.
  • The share of female labor income share in India is equal to 18% which is significantly lower than the average in Asia (21%, excluding China) & is among the lowest in the world.
  • Although, the number is slightly higher than the average share in the Middle East (15%).
  • However, a significant increase has been observed since 1990 (+8 p.p.) but it has been insufficient to lift women’s labor income share to the regional average.

(6) Poor States, wealthy population

  • Countries across the world have become richer over the past 40 years, but their governments have become significantly poorer.
  • The report shows that the share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands.
  • Following the pandemic, governments borrowed the equivalent of 10-20% of GDP, essentially from the private sector.

(7) Issue over data availability

  • The report goes on to say that over the past three years, the quality of inequality data released by the government has seriously deteriorated.
  • This has made it particularly difficult to assess recent inequality changes.

Conclusions from the report

(1) Wealth is mostly inherited and has a snowball effect

  • People accumulate wealth across generations through inheritance.
  • It has a snowball effect, wherein successive generations will gain more, but in their concentrated section.
  • More capital incentivizes banks to lend. This is why the rich section’s wealth grows faster.

(2) Wealth management is necessary

  • Public wealth has been declining for two reasons:
  1. First, governments have been privatizing assets and natural resources at low costs.
  2. Second, governments contract debt to the private sector, making it richer.
  • Without assets, governments have low resources to invest and to mitigate climate change impacts, particularly in the energy sector.
  • Currently, governments have more debts than assets. This calls for strategic management of the economy.

 

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Poverty Eradication – Definition, Debates, etc.

What the NFHS data reveals about inequality in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Gini

Mains level: Paper 2- Analysing NHFS-5 data

Context

The release of the NFHS data (and the Niti Aayog’s study on developing a multi-dimensional index of poverty — MPI) has led to a considerable amount of discussion, and justifiably so.

Understanding the progress and development: MPI

  • The MPI is an Oxford-based initiative that develops an exclusive broadly non-monetary living standard index of poverty.
  • MPI indices are the third in the series of global studies on poverty.
  • Global studies on poverty: Global studies started with the World Bank’s income/consumption-based measure of absolute poverty.
  • The UN expanded the monetary index adding health and education indicators via the Human Development Index (HDI).

Evolution of poverty over time

  • Like with the other poverty indices (World Bank and HDI), most information and useful policy analysis comes via a study of the inter-temporal evolution of poverty. 
  • Regional inequality: Ajit Ranade acknowledges that regional inequality has existed for some time, but he argues that poverty incidence across Indian states even as per the MPI is astoundingly unequal.
  • T N Ninan talks about the simultaneous existence of Africa’s Sahel region and the Philippines in India.
  • He finds that the two Indias are not getting any closer.
  • Indeed, India’s development trajectory has not been uniform, but the regional imbalance of development cannot be viewed at a fixed point in time.

Analysing the NHFS data

  • A detailed examination of the summary statistics reported in the NFHS data (large and small states of India for the two years 2015-16 and 2019-21), reveals the opposite result.
  • Convergence: The analysis reveals remarkable convergence in living standards, a convergence possibly unparalleled in Indian history and in the space of just five years.
  • NFHS reports the averages for all states, and for 131 variables, for two years 2015-16 and 2020-21.
  • Seventeen of these 131 welfare indicators are used to construct indices under four classifications.
  • Improvement in lives of girls/women: The first classification concerns itself with the improvement in the lives of girls/women (five indicators, for example, sex ratio, fertility, female education).
  • Housing conditions: The second bucket consists of housing conditions (three indicators, for example, improved sanitation, clean fuel).
  • Children’s welfare: The third list consists of children’s welfare (four indicators such as adequate diet, stunting)
  • Women’s welfare: The fourth classification includes women’s empowerment (five indicators, for example, owning a house, less spousal violence).
  • Given that Niti Aayog’s report primarily relies on the NFHS-4, these findings can be used as the baseline scenario to evaluate the delta — that is, the per cent change in indicators between NFHS-4 and NFHS-5.
  • The table reports the results for several states.

  • Seventeen indicators imply a maximum possible score of 1,700.
  • Kerala performs the best with an aggregate index of 1,300 in NFHS-5 — a very small 1.5 per cent increase from its 2015-16 value.
  • In contrast, Bihar increases its index by 56 per cent.
  • Punjab does better than Tamil Nadu and today has a higher index – 1,240 versus 1,178 in 2020-21.
  • UP (along with Rajasthan and MP) performs the best — a 60 plus per cent increase in the welfare index, more than five times the increase in the rich states.

Major findings from the NHFS data

  • Convergence: Higher improvement by less developed states is evidence in support of catch-up, which suggests that regional imbalances are reducing, and in some indicators, rapidly so.
  • States such as UP, Bihar and Jharkhand are fast approaching similar standards for select indicators as some of the “developed” states.
  • Result of targeted intervention: This acceleration in catch up is no coincidence, but rather an outcome of an approach that involves targeted interventions to improve developmental outcomes.
  • The approach was not just limited to sanitation, proper fuel or electricity — interventions that are targeted to an individual household — but also to the holistic development of an entire region.

Consider the question “What does NHFS-5 data reveal about the inequality in India?”

Conclusion

India has been, and was, not one but several Indias. What is remarkable about its recent history is the rapid process of uneven change — where progress is considerably higher for the poorer states — the convergent, and inclusive pattern of development. That is the real story behind the NFHS-4 and NFHS-5 numbers.

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Poverty Eradication – Definition, Debates, etc.

NITI Aayog’s Multidimensional Poverty Index (MPI)

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NMPI

Mains level: Multidimensional Poverty in India

The Government think-tank NITI Aayog has released the National Multidimensional Poverty Index (MPI).

Multidimensional Poverty Index (MPI)

  • This baseline report of India’s first-ever national MPI measure is based on the reference period of 2015-16 of the National Family Health Survey (NFHS)- 4.
  • It uses the globally accepted and robust methodology developed by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).
  • It captures multiple and simultaneous deprivations faced by households.

Parameters used

  • The NMPI is calculated using 12 indicators — nutrition, child and adolescent mortality, antenatal care, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets and bank account,
  • They have been grouped under three dimensions namely, health, education and standard of living.

Why NFHS-4?

  • Data collected during the NFHS-4 (2015-2016) corresponds to the period before the full roll out of new governments’ flagship schemes.
  • Hence it serves as a useful source for measuring the situation at baseline i.e. before large-scale rollout of nationally important schemes.

How is the data used?

  • The national MPI 2021 is calculated using the household microdata collected at the unit-level for the NFHS-4 that is used to derive the baseline multidimensional poverty.
  • Further, the country’s progress would be measured using this baseline in the NFHS-5, for which the data was collected between 2019 and 2020.
  • The progress of the country with respect to this baseline will be measured using the NFHS-5 data collected in 2019-20.

Key highlights NMPI

  • As per the index, 51.91% of the population in Bihar is poor, followed by Jharkhand (42.16%), Uttar Pradesh (37.79%), Madhya Pradesh (36.65%) and Meghalaya (32.67%).
  • On the other hand, Kerala registered lowest population poverty levels (0.71%), followed by Puducherry (1.72%), Lakshadweep (1.82%), Goa (3.76%) and Sikkim (3.82%).
  • Other States and UTs where less than 10% of the population are poor include Tamil Nadu (4.89%), Andaman & Nicobar Islands (4.30%), Delhi (4.79%), Punjab (5.59%), Himachal Pradesh (7.62%) and Mizoram (9.8%).

 

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Poverty Eradication – Definition, Debates, etc.

A brief history of India’s Poverty Levels

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Poverty estimates in India

Mains level: Poverty in India

Poverty in India had increased between 2012 and 2020.

What is Poverty?

  • Fundamentally, the concept of poverty is associated with socially perceived deprivation with respect to basic human needs (Tendulkar, 2009).
  • This is a crucial definition to consider since the Tendulkar committee’s estimation method is the last officially recognized method for arriving at poverty numbers in India.

A relative term

  • If you think about it for a moment, poverty is a “relative” concept.
  • Poverty is essentially about how you are “relative” to those in your surroundings.
  • For example, with Rs 1,000 in your pocket, you may be “rich” if those around you have no more than Rs 100 with them.
  • But, in another setting, say around those who have no less than Rs 10,000 with them, you will come across as “poor”.
  • As such, as long as there are variations in the income and/or wealth levels in a society, there will be “poverty”.

What is abject poverty?

  • Apart from the relative nature of poverty, there is such a thing as abject poverty.
  • It typically refers to a state where a person is unable to meet its most basic needs such as eating the minimum amount of food to stay alive.

What is a Poverty Line?

  • From the point of view of policymaking, poverty levels typically refer to some level of income or expenditure below which one can reasonably argue that someone is poorer than the rest of the society.
  • The whole point of the bulk of policymaking is to improve the living standards of the poorest in the country.
  • But to design policies, one must first know what the target group is, how much does it earn (or spend, since robust data on income is not easily available).
  • This is done by choosing a “poverty line” — or a level of income or consumption expenditure that divides the population between the poor and non-poor.

Why define a Poverty Line?

The purpose behind choosing a poverty line is two-fold.

(A) To accurately design policies for the poor

  • Doing so allows you to target your policies towards the two poorest people in the country.
  • Often such policies are redistributive in nature — such as giving subsidised food grains or providing some kind of social security like MGNREGA.
  • In an ideal world a government would have the resources to help everyone in the economy but in reality, even the government’s works within some financial or budgetary constraints.

(B) To assess the success or failure of government policies over time

  • Over time the overall GDP doubles but the income of the general public falls.
  • Hence the government would know that its policies are not bearing fruit.

Poverty Estimation in India

  • Planning Commission Expert Group (1962): It formulated the separate poverty lines for rural and urban areas at ₹20 and ₹25 per capita per year respectively.
  • VM Dandekar and N Rath (1971): They made the first systematic assessment, based on National Sample Survey (NSS) data. They suggested providing 2250 calories per day in both rural and urban areas.
  • YK Alagh Committee (1979): It constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
  • Lakdawala Committee (1993): It suggested that consumption expenditure should be calculated based on calorie consumption as earlier. State specific poverty lines should be constructed. It asked for discontinuation of scaling of poverty estimates based on National Accounts Statistics.
  • Tendulkar Committee (2009): The current official measures of poverty are based on the Tendulkar poverty line, fixed at daily expenditure of ₹27.2 in rural areas and ₹33.3 in urban areas is criticised by many for being too low.

What has happened in India’s fight against poverty?

  • There are two ways to assess India’s performance.
  1. One is to look at the headcount ratio of poverty which is the percentage of India’s population that was designated to be below the poverty line
  2. The other variable to look at is the absolute number of poor people in the country
  • If one looks at the headcount ratio then India made rapid strides since 1973.
  • Even though India is home to possibly the largest number of poor people in the world, there has been no official update on India’s poverty levels since.

Who oversees the Poverty Level?

  • Poverty levels are updated by using the Consumer Expenditure Survey, which is conducted by the National Statistical Office (NSO) once every five years.
  • The last such survey was conducted in 2017-18.
  • That survey reportedly showed that for the first time in four decades consumer expenditure in India had fallen.

What are the latest findings?

  • Poverty levels, as well as the absolute number of poor, had risen between 2011-12 and 2017-18.
  • The government claimed that the survey suffered from “data quality” issues.
  • The next round of the Consumer Expenditure Survey (CES) was supposed to be conducted in 2021.

Causes of rise in Poverty

  • GDP growth decline: It is a fact that India’s GDP growth rate had registered a secular deceleration between the start of 2017 and 2020.
  • Jobless growth: The second and related factor is the unprecedented rise in joblessness.
  • Wages decline: Millions were pulled out of poverty between 2004 and 2011 due to sharp rise in non-farm employment and associated wages. But for many of those workers, real wages have either fallen or stagnated.
  • Pandemic impact: Covid induced lockdown sent millions of workers back to villages, seeking MGNREGA work at minimum wages.

 

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Poverty Eradication – Definition, Debates, etc.

Why counting of poor matters?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Poverty line

Mains level: Paper 3- Counting the number of the poor

Counting the number of the poor

  • If the state of the Indian economy is to be repaired, we need to meticulously count the number of the poor and to prioritise them.
  • The World Bank $2-a-day poverty line might be inadequate but it would be a start and higher than the last line proposed by the C. Rangarajan committee.
  • A survey in 2013 had said India stood at 99 among 131 countries, and with a median income of $616 per annum, it was the lowest among BRICS and fell in the lower-middle-income country bracket.
  • Since 2013 three important data points have made it clear that the state of India’s poor needs to be acknowledged if India is to be lifted.
  • The first being, the fall in the monthly per capita consumption expenditure of 2017-18 for the first time since 1972-73.
  • Second is the fall of India in the Global Hunger Index to ‘serious hunger’ category.
  • Third,  health census data or the recently concluded National Family Health Survey or NFHS-5, which had worrying markers of increased malnutrition, infant mortality and maternal health.
  • A fourth statistic, Bangladesh bettering India’s average income statistics, must also be a reason for Indians to introspect.

Increase in number of poor in India

  •  In 2019, the global Multidimensional Poverty Index reported that India lifted 271 million citizens out of poverty between 2006 and 2016. 
  • Since then, the International Monetary Fund, Hunger Watch, SWAN and several other surveys show a decided slide.
  • In March, the Pew Research Center with the World Bank data estimated that ‘the number of poor in India, on the basis of an income of $2 per day or less in purchasing power parity, has more than doubled to 134 million from 60 million in just a year due to the pandemic-induced recession’.
  • In 2020, India contributed 57.3% of the growth of the global poor.
  • This has thrown a spanner in the so far uninterrupted battle against poverty since the 1970s.
  • Urgent solutions are needed within, and the starting point of that would be only when we know how many are poor.

Debate on the poverty line

  • In 2011, the Suresh Tendulkar Committee report at a ‘line’ of ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India, calculated the poor at 25.7% of the population.
  • The anger over the 2011 conclusions, led to the setting up of the C. Rangarajan Committee.
  • In 2014, C. Rangarajan Committee estimated that the number of poor were 29.6%, based on persons spending below ₹47 a day in cities and ₹32 in villages.
  • The National Commission for Enterprises in the Unorganised Sector in 2004, had concluded that 836 million Indians still remained marginalised.
  • The Commission’s conclusion was ignored — that 77% of India was marginalised — emphasising that it was a problem of a much bigger magnitude, than the figure of 25.7% conveyed.

Why counting the poor matters?

1) Helps in forming public opinion

  • Knowing the numbers and making them public makes it possible to get public opinion to support massive and urgent cash transfers.
  • The world outside India has moved onto propose high fiscal support, as economic rationale and not charity.
  •  In India too, a dramatic reorientation would get support only once numbers are honestly laid out.

2) It helps in evaluating success of policies

  •  Recording the data helps to evaluate all policies on the basis of whether they meet the needs of the majority.
  • Is a policy such as bank write-offs of loans amounting to ₹1.53-lakh crore last year, which helped corporates overwhelmingly, beneficial to the vast majority?
  • This would be possible to transparently evaluate only when the numbers of the poor are known and established.

3) Helps in addressing the concerns of real majority

  • If government data were to honestly account for the exact numbers of the poor, it may be more realistic to expect the public debate to be conducted on the concerns of the real majority.
  • Such data would also help in creating a climate that demands accountability from public representatives.

4) To gauge the rising inequality

  • India has clocked a massive rise in the market capitalisation and the fortunes of the richest Indian corporates, even as millions of Indians have experienced a massive tumble into poverty.
  • To say that the stock market and the Indian economy are ‘not related’ is ingenuous.
  • Indians must have the right to question whether there is a connection and if the massive rise in riches is not coincidental, but at the back of the misery of millions of the poor.
  • If billionaire lists are evaluated in detail and reported upon, the country cannot shy away from counting its poor.

Conclusion

The massive slide into poverty in India that is clear in domestic and international surveys and anecdotal evidence must meet with an institutional response.

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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.

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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).

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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

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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.

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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.

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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.

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