Deconstructing India’s Poverty (Part 2)

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In part one of this two-part series, we’d talked about the causes and consequences of India’s poverty. Colonial exploitation, the rapidly rising population, the poverty trap of low income and low productivity, underperformance of the agricultural sector, and the chronic under-utilization of resources were some of the causes we’d talked about.

Now, it is important for us to address specific poverty alleviation programmes, and the way forward. It is important to remember that as social, technological, political, and environmental needs and demands change, poverty alleviation methods must evolve to keep up with the times.

Poverty Alleviation In India

Between 1994 and 2012, 133 million people were lifted out of poverty. For context, that’s more than the population of Japan, and more than the populations of France and Britain combined. Clearly, something has been done right.

One part of it has simply been the stratospheric rise in the overall GDP, and the consequent increase in the government’s resources to invest in poverty alleviation. The GDP has risen from $32,290 crore in 1994 to $1.83 lakh crore in 2012. As John F. Kennedy said, a rising tide lifts all boats.

India’s GDP growth has rapidly picked up over the last two decades.

The National Food Security Act, 2013, which guarantees basic food grains at greatly reduced prices, has gone hand in hand with the Public Distribution System, which helps stabilize food prices, and with the Minimum Support Price offered to farmers for their goods. While there exist major flaws, leakages, and distortions in these schemes, they’ve gone a long way towards ensuring food security for India’s antyodaya (poorest of the poor.

The Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS) under the National Rural Employment Generation Act, 2005, has aided poverty alleviation through the reduction of unemployment. Offering a rights-based, demand-driven approach, the MGNREGS also promotes financial inclusion, gender equality, and allows for decentralized planning (the Gram Sabha recommends public works, and the Panchayati Raj Institution is actively involved in the planning, monitoring, and implementation). The MGNREGS created 2 billion person-days of employment in 2016-17 alone, and is generally considered one of India’s most potent weapons of poverty alleviation.

In 2015, the World Bank called the MGNREGS the ‘largest public works scheme in the world’

The JAM Trinity is a new initiative, combining the digital trifecta of Jan Dhan accounts, the Aadhaar card, and the concept of mobile payments. The JAM trinity has also helped ease the major burden of leakages in transfer of benefits, by allowing for Direct Benefit Transfer of subsidies (such as the kerosene subsidy). While the universalization of Aadhaar has run into significant glitches, there remains hope that the JAM trinity, coupled with the concept of Direct Benefit Transfers, will allow for more efficient allocation of resources and subsidies.

The JAM Trinity

There are various other poverty alleviation schemes such as the Antyodaya Anna Yojana, the Pradhan Mantri Surakha Bima Yojana, and the Pradhan Mantri Awaas Yojana, but the ones mentioned above have shown positive results and hold significant potential.

The Way Forward For Poverty Alleviation 

Depending on the index you use, anywhere from 19% to 23% of India’s population can be classified as poor. There’s clearly a long way to go in terms of poverty alleviation in India, and the process calls for a unified vision held by all the stakeholders. A few suggestions are

  • Active involvement of local communities in Self-Help Groups and Micro-credit schemes, to enhance credit facilities to poor, unserved areas
  • Strengthening of the Panchayati Raj Institution through the provision of greater financial flexibility, to allow for the decentralization of poverty alleviation programmes
  • Emphasis on financial inclusion, by leveraging the JAM trinity for Direct Benefit Transfer, and a more proactive approach by the banking sector
  • Greater coordination of myriad poverty alleviation programmes of the Central and State Governments to allow for effective and efficient utilization of resources, and more effective transfer of funds.

The idea of a targeted basic income has been mooted recently at a global level, and indeed was tried out as a pilot project in Madhya Pradesh in 2014, but requires deeper financial feasibility analysis.