Poverty & Development Issues - 2 | Indian Society for UPSC CSE PDF Download

Various strategies to alleviate poverty

Accelerating Economic Growth

• According to this view, benefits of economic growth will “trickle down” to the poor in the form of more employment opportunities, greater productivity and higher wages.
• The use of capital-intensive technologies imported from the Western Countries should be avoided.
• In fact, we should pursuer labor-intensive path of economic growth.
• Such monetary and fiscal policies should be adopted that provide incentives for using labour-intensive techniques.

Agricultural Growth and Poverty Alleviation

• Agricultural growth has been recognized as an important factor that contributes to marked reduction in poverty
• The growth in agricultural output in states like Punjab and Haryana propelled by the adoption of new-high yielding technology caused a marked reduction in poverty.
• To ensure marked decline in rural poverty through agricultural growth, rate of agricultural growth should be accelerated by increasing public investment in irrigation and other infrastructure.
• Besides, higher agricultural growth can be achieved in semi-arid and rain-fed areas by increasing public investment in infrastructure and ensuring adequate access to credit to the small farmers. 

Rural road connectivity

• Transport plays a very important role in economic development of the country. The Pradhan Mantri Gram Sadak Yojana (PMGSY) was launched by the GOI to provide connectivity to unconnected habitations as part of a poverty-reduction strategy.
• GOI is endeavouring to set high and uniform technical and management standards and facilitating policy development and planning at State level in order to ensure sustainable management of the rural roads network.
• This programme covers all villages with population more than 1,000 and villages in hilly and tribal areas with population more than 500.

Accelerating Human Resource Development

• Human resource development requires greater investment in educational facilities such as schools to promote literacy, technical training institutes and vocational colleges to import skills to the people.
• Further, human resource development requires health care by public investment in Primary Health Centres (PHCs), dispensaries and hospitals.

Access to Institutional Credit

• Availability of credit to the poor on easy terms can create the conditions for small farmers gaining access to productive resources such as HYV seeds fertilizers, construction of minor irrigation such as wells and tube wells.
• This will enable the small farmers to adopt high- yielding technology to raise their productivity.
• Important changes have been introduced in the credit delivery system in India.
• Expansion of network of rural branches of commercial banks after nationalization and fixation of limits for compulsory lending to the priority sectors (which include agriculture, small-scale industries) and fixation of lower interest rates to be charged from the poor farmers and artisans some progress has been made in this regard.

Public Distribution System (PDS)

• A properly functioning public distribution system which is targeted to the poor households is an important element of the strategy for poverty reduction.
• Therefore, an effective way of raising rural incomes and ensuring food security to the poor households is an assured supply of adequate quantity of food-grains and other essential commodities at subsidised prices, that is, at prices which are lower than the market prices.

Irrigation

• In order to reduce the poverty in rural areas, agricultural inputs should be well-organized.
• The most important of such input is irrigation. Hence, Pradhan Mantri Krishi Sinchai Yojana was introduced by GOI with the vision of extending the coverage of irrigation.
• The basic theme of the PMKSY is ‘More Crop Per Drop’.

Housing

1. In order to build house for poor in India, under Housing for All by 2022, two new schemes were introduced.
   • Pradhan Mantri Awas Yojana (Urban)
   • Pradhan Mantri Gramin Awas Yojana (Rural).
2. The Mission will be implemented during 2015-2022 and will provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for:
   • In situ rehabilitation of existing slum dwellers using land as a resource through private participation
   • Credit-linked subsidy
   • Affordable housing in partnership
   • Subsidy for beneficiary-led individual house construction/enhancement

Rural electrification

• GOI has launched the scheme ‘Deendayal Upadhyaya Gram Jyoti Yojana’ for rural electrification. Under DDUGJY-RE, Ministry of Power has sanctioned 921 projects to electrify 1,21,225 un-electrified villages, intensive electrification of 5,92,979 partially electrified villages and provide free electricity connections to 397.45 lakh BPL rural households.

Self-employment schemes

• Primarily through Swaran Jayanti Grameen Sah-rozgar Yogana (SGSY) in the rural areas and through Swaran Jayanti Shahri Rozgar Yogana (SJSRY) in the urban areas.

Skill Development

• Deen Dayal Upadhyaya Grameen Kaushalya Yojna was introduced by the GOI to engage rural youth specially BPL and SC/ ST segment of population in gainful employment through skill training programmes.

Poverty Removal and SDGs

SDG Goal 1 aims to end poverty in all its forms everywhere. While it defines extreme poverty at $1.25 but nations are allowed to use their ‘national poverty line’ methods.

Role of self-Help groups in poverty alleviation

What are SHG?

• The National Bank for Agriculture and Rural Development (NABARD) defines Self Help Groups as a small homogeneous group of poor households consisting of 20 or less people from a homogenous class who are willing to come together for addressing their common problems.
• They make regular savings and use the pooled savings to give interest-bearing loans to their members.
• The process helps them imbibe the essentials of financial intermediation including prioritization of needs, setting self-determined terms for repayment

Self-help groups and poverty alleviation
They help in poverty reduction in following ways:

• With financial inclusion credit facility to poor is increased. It also saves them from moneylenders.
• Opportunities for self-employment through setting of micro-enterprise.
• Skill development program undertaken by SHGs improves employability of members involved.
• As a result of increased jobs there is rise in income which enhances access to food, health services and overall rise in living standards.
• And with more women participation and their enhanced status address issues such as nutrition poverty and low literacy rate
• It is also observed that the percentage of BPL population is less in the states where there is large number of SHG

 Problems faced by self-help groups

• Ignorance of members.
• Inadequate Training Facilities in the specific areas of product selection, quality of products, production techniques, managerial ability, packing, other technical knowledge ate are not adequate to compete with that of strong units.
• Problems of Marketing.
• Lack of stability and unity especially among women SHGs.
• Exploitation by Strong Members.
• Weak Financial Management, poor record keeping.

MGNREGA And Poverty Alleviation

• Mahatma Gandhi Employment Guarantee Act 2005, is an Indian labour law and social security measure that aims to guarantee the ‘right to work’. 
• 2006: launched in 200 districts → 2008: launched in the whole country as MGNREGS Scheme
• Ministry of Rural Development → Centrally Sponsored Scheme (not 100% funded by the Union). Union bears 100% wage cost and 75% of material cost
• It promises to give minimum 100 days of unskilled manual labour to rural household whose adult members volunteer for it. Households are eligible for unemployment allowances if employment not been provided within 15 days of demand.
• MNREGA labourers are used for creating durable assets as per local needs, ponds, wells, cattle sheds, granary, Vermi-compost plants, crematorium; renovation of Anganwadi centres, school buildings
• No contractors / machinery
• In any project, 60% of amount should go towards wages and 40% towards material.
• Social audit by the gram sabha at least once in every 6 months.
  

Role of Financial Inclusion in Poverty Reduction

Meaning – Financial inclusion is where individuals and businesses have access to useful and affordable financial products and services that meet their needs that are delivered in a responsible and sustainable way. Financial inclusion is defined as the availability and equality of opportunities to access financial services.

One of its aims is to get the unbanked and underbanked to have better access to financial services. The availability of financial services that meet the specific needs of users without discrimination is a key objective of financial inclusion

Poverty and Human Development

The HDI is the composite measure of every country’s attainment in three basic dimensions:

According to the World Data Lab — which monitors global poverty using advanced statistical models – less than 50 million Indians may be living on less than $1.90 a day now.

• Standard of living
  • measured by the gross national income (GNI) per capita
• Health
  • measured by the life expectancy at birth
• Education levels
  • Calculated by mean years of education among the adult population and the expected years of schooling for children

How poverty impacts Human development?

• Poor cannot live life or get employed as per their choice as must work even in life threatening conditions to sustain their family e.g. death of miners in Talcher coal mine, who were working because of no alternative.
• Poverty reduces the time to gain knowledge and thus impacts the awareness and decision making like voting on rational basis.
• It reduces access to education, healthcare facilities etc.
• Lack of nutrition and healthcare results in high mortality among poor.

Various schemes of GoI for poverty alleviation

Deen Dayal Antyyodaya Yojana: National Urban Livelihoods Mission (DAY-NULM)

• Ministry of Housing and Urban Affairs
• Give urban poor’s skill training and loan for self-employment → Government pays its interest subvention via PAISA Portal. This portal is coordinated by Allahabad Bank
• Develop vendor markets for urban vendors.
• Shelters for homeless people.

Deen Dayal Antyyodaya Yojana: National Rural Livelihoods Mission (DAY-NRLM)

• Ministry of Rural Development
• Bring minimum 1 woman from each poor household to Self Help Group → give them training and loans for candle/soap/handicraft etc. biz.
• Give training to rural men.
• They’ll do self-employment or skilled wage employment = More income than working as farm labourers.

National Rural Livelihoods Mission (DAY- NRLM) – SUBSCHEME

• Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY-2014):
  • Rural Youth given FREE skill training to aged 15-35. Higher age limit for SC/ST/Women/PH.
  • Guaranteed Placement for at least 75% trained candidates.
  • Covers Youth of Jammu and Kashmir (HIMAYAT scheme)
  • Cover Youth of North Eastern States & Left- Wing Extremist (LWE) districts (ROSHNI Scheme)
• Startup Village Entrepreneurship Programme (SVEP-2015): self-explanatory training, loan, marketing assistance etc.
• PM’s Employment Generation Scheme where person / SHG given credit linked subsidy to start non-farm micro- enterprise]
• Aajeevika Grameen Express Yojana (AGEY-2017): Interest-free loans given to SHG / Community Based Organisations (CBOs) to buy public transport vehicle so they can earn by transporting passengers.

Disha Committees (2016)

• Ministry of Rural Development
• District Development Coordination and Monitoring Committee (DISHA) = elected members of (Parliament + State legislature + Local Governments: PRI,ULB) for efficient and time-bound development of districts.
• They will meet once every quarter and assess the schemes implementation.
• DISHA Committee’s chairman will be the senior most MP (Lok Sabha) from the given district. DM/Collector(IAS) will act as member Secretary to implement the Committee’s directives.

Mission Antyyodaya (2017)

• Ministry of Rural Development
• It’s similar to ‘Adarsh Gram Yojanas
• Here Government will implement the other ongoing schemes with more vigilance and accountability with the help of Gram Panchayat, NGOs, SHGs, ASHA workers etc.
• At least 50,000 Gram Panchayats become poverty free by 2020.

Some of the reasons why the scheme is not 100% productive

• The resources allocated to anti-poverty programmes are inadequate and there is a tacit understanding that targets will be curtailed according to fund availability. For instance, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) does not provide the guaranteed 100 days of work in many states.
• There is no method to ensure that programmes reach everybody they are meant for.
• Lack of awareness of these schemes amongst the masses given their illiteracy and ignorance.
• It may possibly be better to implement these programmes through NGOs and Civil Society Organisations after a strict screening process.
• Need to bring in an independent ‘social audit’ of these schemes not for fixing accountability but for plugging leakages, improving delivery.
• Absence of any monitoring mechanism for the efficacy of such schemes or to know the end result.
• There is no systematic attempt to identify people who are in poverty, determine their needs, address them and enable them to move above the poverty line.

What needs to be done?

• Improving human development outcomes for the poor by improving their quality of life and income earning opportunities.
• Creating more good locations as more and more of India’s poor are concentrated in the poorest states.
• Future efforts will need to address job creation in more productive sectors, which has until now been lukewarm and has yielded few salaried jobs that offer stability and security.
• Capitalizing on growing connectivity between rural and urban areas, and between the agriculture, industry and services sectors is also a viable solution in this regard.

Universal Basic Income

What is UBI?

• UBI is a fixed income every adult – rich or poor, working or idle – receives from government.
• It is a periodic, unconditional cash transfer to every citizen in the country.
• Universal Basic Income means government depositing a specific sum of money in a beneficiary’s bank account each year to augment his/her purchasing power in the open market. The term ‘universal’ is ‘de-jure’ , in reality, UBI is not meant for rich & middle class families, they will be excluded.
• Interim-Budget-2019 à Spending about ₹ 12 lakh crores in schemes. Out of that ₹3.3 lakh crores in subsidies. Yet, schemes/subsidies suffer from two problems.
  • Inclusion Error: Non-poor (well to do families) receive benefits, “free rider” About 40% of Food subsidies wasted in this manner.
  • Exclusion Error: Real Poor not receiving benefit, about 40-60% of real needy
• Families don’t receive scheme benefit.
• Leakage : 20-36% money allotted in PDS/MNREGA is gone in corruption by the middleman / bureaucrats.

Universal Basic Income and Poverty
Despite making remarkable progress in poverty reduction, nearly 22 percent of the population lives below poverty line (Tendulkar committee report, 2011-12):

• One of the major criticisms of poverty alleviation programmes is significant leakages. UBI is seen as a more efficient alternative.
• UBI strengthens economic liberty at an individual level. This would help them to choose the kind of work they want to do, rather than forcing them to do unproductive work to meet their daily requirements.
• As a form of social security UBI will help in reducing inequality and eliminating poverty. Thus it ensures security and dignity for all individuals.
• UBI could promote greater productivity. For example, agriculture labourers who own small patch of land and earlier used to work in others’ farm for low wages, can now undertake farming on their own land. In long term, this will reduce the percentage of unused land and helps in increasing agriculture productivity.
• Transferring basic income directly into bank accounts will increase the demand for financial services. This would help banks to invest in the expansion of their service network, which is very important for financial inclusion.

UBI: Pro-Arguments By Eco Survey

Safety Net à Protects people from deprivation, destitution PDS= leakage, diversion. Better give ₹ ₹ to needy to buy from open market.

MNREGA à Not good because it’s creating shortage of farm labourers. Scheme is rife with corruption & mismanagement.

Some people face accident of birth (SC/ST/Rural/Poor). Some people face accident of life (e.g. drought, disaster, husband dead, caught in debt trap by informal money lender). UBI will help them overcome these accidents, boost their psychological aspirations.

PAN cards already linked with Bank accounts so possible to exclude rich / middle class easily. So, implementation of Universal Basic Income should not prove difficult.

UBI: Anti-Arguments By Eco Survey

• Able bodied men given ‘charity’. It will turn them lazy. Gandhi will not approve it.
• 1st world nations can afford UBI because their tax to GDP is high. If we give ₹ 12000 per year to poor people (without shutting down existing schemes) then Fiscal deficit = about 12% of GDP = new variety of problems (Counter arguments: if we stop all schemes/subsidies and give only ₹ 2500 / per year as UBI to only poor people, then Fiscal deficit will stay at 3% while poverty will decline from 21.9% → just 9%)
• Extra money in the hands of poor without proportional increase in the supply of goods → demand side inflation. So, poor person’s real purchasing power will not increase, they will remain poor only.
• Providing Universal basic income without crossing the fiscal deficit target will require stopping the schemes like NFSA, MDM, MNREGA à but that will not be ‘politically feasible’.
• Many families hid their assets during SECC-2011 survey, so it’s not a reliable data. So if UBI given to people based on SECC data→ Inclusion Error, with non-poor’s getting benefit.
• Men of the house may misuse ₹  on alcohol, gambling & other social ills. Better to give entitlements in the form of ‘kind’. Example: free food under mid-day meal, subsidized grains at PDS shop.

 Challenges in UBI

• Replacing existing schemes with cash transfer will adversely impact the development goals of India. UBI can’t be at the cost of expenditure on health, education or rural infrastructure
• A guaranteed minimum income might make people lazy and it breeds dependency. They may opt out of labour market and can refuse to work
• It will also face the problem of ‘exclusion error’ in the identification of beneficiaries. Efficiency will be reduced. Corruption will creep  More importantly, UBI will not remain ‘universal’.
• If the UBI is funded by higher taxes, especially by indirect taxes, it will result in inflation. This, in turn, will reduce the purchasing power of the people and lowers the value of the amount transferred.

Suggestions

• Movement in the HDI is driven by changes in health, education and income. The schemes for these are meant for long-term improvement in human development, rural infrastructure, employment etc. and can’t be substituted by cash transfer. Thus, a complementary and aiding income can be a balanced solution.
• A transparent and safe financial architecture that is accessible to all is important for the success of the UBI. In other words, the success of UBI depends on the success of an efficient mode of delivery like JAM Trinity.
• Study the efficiency of similar schemes in other countries (Finland, Kenya, and Spain etc.) and work out the best implementation suitable for India.

Conclusion

• The main objective of all our development policies had been aimed at promoting rapid and balanced economic development with equity and social justice.
• But the benefits of all our policies and initiatives have not reached to all the sections of people.
• The promise of the constitution and dreams of our forefathers of an egalitarian society remains unfulfilled.
• Time has come to think out of box solution to eliminate poverty as some sectors of the economy, some regions of the country has developed to an extent where it can compete with developed countries in terms of social and economic development, yet there are many others who have not been able to come out of the vicious circle of poverty.
• While India’s GDP and national income is rising every year, not everyone has benefited equally from this prosperity.
• Poverty acts as a barrier against gender development & human development.
• Therefore, SDG Goal 1 aims to end poverty in all its forms everywhere.

Economic Survey 2017 gave both the pro and anti-arguments. Its intent was only to ‘generate a debate’ around the topic (without suggesting UBI for immediate implementation). However eventually, Interim-Budget 2019: PM-KISAN ₹ 6k / per year to small and marginal farmers.