ECONOMICS PART-3

CURRENT CHALLENGES FACING THE INDIAN ECONOMY

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. ---Adam Smith

-------India is poor(effect) because it is poor(cause)-------


What is Poverty?
Two scholars, Shaheen Rafi Khan and Damian Killen, put the conditions of the poor in a nutshell: Poverty is hunger. Poverty is being sick and not being able to see a doctor. Poverty is not being able to go to school and not knowing how to read. Poverty is not having a job. Poverty is fear for the future, having food once in a day. Poverty is losing a child to illness, brought about by unclear water. Poverty is powerlessness, lack of representation and freedom.

Parameters: Food, education, health, water supply, sanitation, Unemployment or under employment, nature of employment, ownership of land etc

The rural poor work mainly as landless agricultural labourers, cultivators with very small landholdings, landless labourers who are engaged in a variety of non-agricultural jobs and tenant cultivators with small land holdings. The urban poor are largely the overflow of the rural poor who had migrated to urban areas in search of alternative employment.

HOW ARE POOR PEOPLE IDENTIFIED?

In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of a Poverty Line. He used the menu for a prisoner and used appropriate prevailing prices to arrive at what may be called ‘jail cost of living’. This is how he arrived at the factor of three-fourths; (1/6)(Nil) + (1/6)(Half) + (2/3)(Full) = (3/4) (Full). The weighted average of consumption of the three segments gives the average poverty line, which comes out to be three-fourth of the adult jail cost of living.

Post independence in 1962, the Planning Commission formed a Study Group. In 1979, another body called the ‘Task Force on Projections of Minimum Needs and Effective Consumption Demand’ was formed. In 1989, an ‘Expert Group’ was constituted for the same purpose.

Categorising Poverty: There are many ways to categorise poverty. In one such way people who are always poor and those who are usually poor but who may sometimes have a little more money (example: casual workers) are grouped together as the chronic poor. Another group are the churning poor who regularly move in and out of poverty (example: small farmers and seasonal workers) and the occasionally poor who are rich most of the time but may sometimes have a patch of bad luck. They are called the transient poor. And then there are those who are never poor and they are the non-poor.

Determining the poverty line: One way is to determine it by the monetary value (per capita expenditure) of the minimum calorie intake that was estimated at 2,400 calories for a rural person and 2,100 for a person in the urban area.
Amartya Sen, noted Nobel Laureate, has developed an index known as Sen Index. There are other tools such as Poverty Gap Index and Squared Poverty Gap.

When the number of poor is estimated as the proportion of people below the poverty line, it is known as ‘Head Count Ratio’.

The state level trends reveals that five states — Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa — account for about 70 per cent of India’s poor. You will also notice that during 1973-74, about half the population in most of these
large states was living below the poverty line. In 1999-2000, only two states — Bihar and Orissa — were left near that same level. Though they also reduced their share of poor, compared to other states, their success is marginal. If we look at Gujarat, it reduced its people below the poverty line from 48 per cent to 15 per cent
during 1973-2000. During this period, West Bengal has been just as successful; from nearly two-third, i.e. 63 per cent of the population below the poverty line the same was reduced to about 27 per cent.

Examples of selfemployment programmes are Rural Employment Generation Programme
(REGP), Prime Minister’s Rozgar Yojana (PMRY) and Swarna Jayanti Shahari Rozgar Yojana (SJSRY). The first programme aims at creating selfemployment opportunities in rural areas and small towns. The Khadi and Village Industries Commission is implementing it. Later, through banks, the government provides partial financial assistance to SHGs which then decide whom the loan is to be given to for selfemployment activities. Swarnajayanti Gram Swarozgar Yojana (SGSY) is one
such programme.
Three major programmes that aim at improving the food and nutritional status of the poor are Public Distribution System, Integrated Child Development Scheme and Midday Meal Scheme.
Pradhan
In August 2005, the Parliament has passed a new Act to provide guaranteed wage employment to every household whose adult volunteer is to do unskilled manual
work for a minimum of 100 days in a year. This Act is known as National Rural Employment Guarantee Act–2005.National Food for Work Programme (NFWP) and Sampoorna Grameen Rozgar Yojana (SGRY), Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Gramodaya Yojana, Valmiki Ambedkar Awas Yojana are also attempts in the same direction.