Poverty And India

Poverty in India – Poverty Line

• Poverty line correspond to a total household per capita expenditure sufficient to provide, in addition to basic non-food items like clothing, transport and daily intake of 2400 calories per person in rural areas and 2100 in urban areas. Individuals who do not meet these calorie norms fall below the poverty line.
• In India, poverty is officially linked to a nutritional baseline measured in calories (food-energy method). Recently, Rangarajan committee set PL limits to Rs. 32 and Rs. 47 in rural ad urban areas, respectively.
• With estimates of Rangarajan committee, Poverty stood at around 30% in 2011-12.
• The number of poor in India was estimated at 36.3 crore in 2011-12.

India’s achievement in eliminating poverty since Independence

In the half century since its independence, India has accomplished many notable social and economic achievements. While it has managed to reduce poverty in earlier decades of 1960-70, only since 1975, when growth accelerated, has the decline been fairly steady. The pace, moreover, remains both slow and uneven — faster in the southern states than the northern ones, and more likely to empower men than women.
As of 1993-94, India's poverty continues to be predominantly rural although rural poverty declined faster than urban poverty over 1951-88. Moreover, the decline in national poverty seems to have been driven mostly by the decline in rural poverty — not surprising given that 74 percent of India's population lives in rural areas.

Progress in last decade
The magnitude of decline in poverty of the last two decades is significant but not dramatic. Many studies suggest that the poor perceive themselves to be better off now than in previous decades. However, these studies also point to pockets of increasing impoverishment.

Poverty Related Committees

1. National Planning Committee

• In 1938, National Planning Committee (NPC) was set up with Jawaharlal Nehru as chairman for the purpose of drawing up an economic plan with the fundamental aim to ensure an adequate standard of living for the masses.
• The Committee regarded the irreducible minimum income between Rs. 15 to Rs. 25 per capita per month at Pre-war prices. However, this was also not tagged something as a poverty line of the country.

2. First Planning Commission working group

• The concept of the poverty line was first introduced by a working group of the Planning Commission in 1962 and subsequently expanded in 1979 by a task force.
• The 1962 working group recommended that the national minimum for each household of five persons should be not less than Rs 100 per month for rural and Rs. 125 for urban at 1960-61 prices. These estimates excluded the expenditure on health and education, which both were expected to be provided by the state.

3. Y K Alagh Committee

• Till 1979, the approach to estimate poverty was traditional i.e. lack of income. It was later decided to measure poverty precisely as starvation i.e. in terms of how much people eat. This approach was first of all adopted by the YK Alagh Committee’s recommendation in 1979 whereby, the people consuming less than 2100 calories in the urban areas or less than 2400 calories in the rural areas are poor.
• The logic behind the discrimination between rural and urban areas was that the rural people do more physical work. Moreover, an implicit assumption was that the states would take care of the health and education of the people.
• Thus, YK Alagh eventually defined the first poverty line in India.

4. Lakdawala Formula

• Till as recently as 2011, the official poverty lines were based entirely on the recommendations of the Lakdawala Committee of 1993. This poverty line was set such that anyone above them would be able to afford 2400 and 2100 calories worth of consumption in rural and urban areas respectively in addition to clothing and shelter.
• These calorie consumptions were derived from YK Alagh committee only.
• Lakdawala formula was different in the following respects in comparison to the previous models: In the earlier estimates, both health and education were excluded because they were expected to be provided by the states. This committee defined poverty line on the basis of household per capita consumption expenditure. The committee used CPI-IL (Consumer Price Index for Industrial Laborers) and CPI- AL (Consumer Price Index for Agricultural Laborers) for estimation of the poverty line.
• The fallout of the Lakdawala formula was that number of people below the poverty line got almost double. The number of people below the poverty line was 16 per cent of the population in 1993-94. Under the Lakdawala calculation, it became 36.3 per cent.

5. Suresh Tendulkar Committee

• In 2005, Suresh Tendulkar committee was constituted by the Planning Commission. The current estimations of poverty are based upon the recommendations of this committee. This committee recommended to shift away from the calorie based model and made the poverty line somewhat broad based by considering monthly spending on education, health, electricity and transport also. It strongly recommended target nutritional outcomes i.e. instead of calories; intake nutrition support should be counted.
• The Tendulkar panel stipulated a benchmark daily per capita expenditure of Rs. 27 and Rs. 33 in rural and urban areas, respectively, and arrived at a cut-off of about 22% of the population below poverty line. However, this amount was such low that it immediately faced a backlash from all section of media and society.

6. C. Rangarajan Committee

• Government appointed another committee under Prime Minister’s Economic Advisory Council Chairman C. Rangarajan to review the poverty estimation methodology.
• Rangarajan committee set PL limits to Rs. 32 and Rs. 47 in rural ad urban areas, respectively. However, this PL also did not assuage the critics.
• The new NDA Government turned down this report also. The NDA Government has now constituted a 14-member task force under NITI Aayog’s vice-chairman Arvind Panagariya to come out with recommendations for a realistic poverty line. Currently, this task force is heading towards defining a sensible poverty line

Analysis

Achievements

The poverty alleviation programmes in India can be categorized based on whether it is targeted for rural areas or urban areas. Most of the programmes are designed to target rural poverty as the prevalence of the poverty is high in rural areas.
The programmes have been broadly classified into self-employment programmes, wage employment programmes, food safety programme and social security programmes.
Self Employment Programmes like Integrated Rural Development Programme (IRDP) to increase the source of income of small farmers and landless labourers. The beneficiaries were given subsidized credit, training, and infrastructure, so that they could find new sources of earning.
During the last two decades, India has lifted more than 100 million of its citizens from extreme poverty; still, it is home to a very large number of people living in abject poverty.
Micro Finance
To facilitate credit facility to poors as their credit demand is often less and they have no collateral.
Microfinance is the provision of a broad range of services such as deposits, loans, payment services, money transfers, and insurance to poor and low-income households and their micro-enterprises. Talking about micro-finance, the Grameen Bank (Bangladesh) concept is applied to the existing commercial banking system in India. The Reserve Bank of India issued a policy circular in 1991 to all the commercial banks to participate actively and extend finance to SHGs.
MDG Target
The MDG target 1 stipulates that, the percentage of people below national poverty line be brought down to half of its 1990 level. The all India PHCR estimate (total) was 47.8% in 1990. In order to meet the requirement of indicator 1A, the PHCR level has to be 23.9% by 2015. The poverty estimate show that total PHCR at all India level is 21.9% in 2011-12, which shows that, India has already achieved the target well ahead of time.
Wage Employment Programmes
The main purpose of the wage employment programmes is to provide a livelihood during the lean agricultural season as well as during drought and floods. Under these programmes, villagers worked to improve the village infrastructure such as deepening the village ponds, constructing village schools and improving the rural roads. Thus the programmes not only provided employment to the villagers but also improved village infrastructure and created village public assets.It created higher demand for village labour, thereby pushing up the wage of the labourer in the villages .

Agriculture Development
As majority of poor are rural poor who are directly or indirectly linked to agriculture. Government is focusing on capacity building in agriculture by focusing on areas like Irrigation expansion, water and electricity needs of farmer quality seeds, lab to land contact for good soil health ad institutionalized source of credit. Encouraging diversified agriculture is way to widen income of farmers.

Loopholes

Benefiting Non poor
Many recipients of their benefits are widely recognized as amongst the poor. At the same time, many of the poorest people do not use these programs while many of the non-poor benefit from them.

Priority for human capital.(Education and Health).
Neighboring countries in Asia that have made a point of combining pro-growth development policies with investments in the health and education of their people have seen economic growth and poverty reduction follow. India, however, has not accorded sufficiently high priority to the education of the poor. These youngsters are not offered the opportunity to develop the skills needed for upward mobility. India's health system needs to put a new emphasis on basic care. It will improve not only the life span and well-being of poors but it will also contribute to the economic health of their families, and consequently of India's society.

Gender Disparity
Gender discrimination condemns a much greater proportion of girls and women to illiteracy and to ill-health. Since poverty is one of source of India's gender disparities, a determined government effort to eradicate such disparities is urgently needed.

Low Agriculture Productivity
Agricultural development can significantly contribute to poverty reduction. One of the reasons for the high incidence of poverty in India is its backward agriculture, whose productivity per hectare and per capita is amongst the lowest.
There is vast untapped potential in Indian agriculture, if utilized neither Indian agriculture should remain backward, nor our people should remain almost the poorest in the world. Quite often, low productivity of Indian agriculture is attributed to small size of landholdings. In Japan, Korea and Taiwan the average size of holding is nearly the same as in India, but their incomes per hectare and per worker are several times more than ours.

Large proportion of rural poor are small and marginal farmers
Income from farming does not depend only on the size of the farm, but on the capital invested on it, both in monetary terms and in technological know-how which is difficult for poor farmers unless they get government support.
Many small farmers in developed countries are earning many times more than what most land holders of 18 acres are earning in India.

Less Diversified agriculture
Farmer must b encouraged to look beyond conventional agriculture i.e horticulture, flouricultutre, animal husbandry etc. Fortunately, the Government does not intervene in
marketing of fruits, vegetables and animal products. Hence their prices have risen to about the same level, as the prices of all commodities But for success in these specialized lines of agriculture, lot more capital, expertise and infrastructural facilities are required.

Poor Capacity of Rural Areas.

Rural India will remain poor so long as (1) new techniques of farm production are not adopted more widely, (2) adequate capital in the form of loans for adoption of new techniques is not provided and (3) efficient marketing arrangements for the produce are not made which reduce the cost of distribution. All these will have to be provided simultaneously in a package and not in a haphazard manner.
Poor Data collection ad Analysis
High-quality and timely data and analysis are needed.

CONCLUSION
As India moves ahead with the economic liberalization that has yielded a higher platform for growth and therefore the potential for a higher level of welfare, it has an opportunity to reexamine its approach to reduce poverty.India therefore urgently needs to formulate an anti-poverty strategy that is fiscally sustainable and more finely targeted to those who truly cannot benefit from the opportunities offered by growth.

By: Vishal