Today's Editorial

Today's Editorial - 08 January 2024

India’s stubborn income poverty problem

Relevance: GS I and III (Social Issues and Economy)

  • Mains: Social issues - Poverty; Income Poverty;

Why in the News?

Although Multidimensional poverty has declined, yet income poverty, which has remained defiantly high for the last five years, needs to be fixed.

Need for playing a critical role in designing policies: 

  • The RBI Governor along with the Ministry of Finance, deserve credit for having worked in tandem to spur growth, contain inflation and provide financial stability
  • The RBI Governor also has flagged increasing risks in unsecured loans in the banking industry. Many bankers keep cribbing about stifling regulation. 
  • There are also issues associated with high unemployment, high inflation.

Where India is headed economically? 

GDP growth and inflation are only two major macro-variables to gauge economic performance:

  • GDP growth:
    • Looking at the GDP growth, we find that the average annual growth during the period 2004-05 to 2013-14 was a notch higher at 6.8% than during the 2014-15 to 2023-24 at 5.8%. This is as per the latest revised series data with the 2011-12 bases. 
    • The GDP growth stood at 7.7% during the 2004-05 to 2013-14 periods. 
    • This was revised downwards to 6.8% in 2018 when the older series was replaced with the new one with a 2011-12 base at market prices. 
    • Agricultural performance is critical for the well-being of the masses as it still engages about 45% of the workforce, and provides basic food security to the country.
  • Inflation in India:
    • Average annual inflation (measured by the Consumer Price Index, CPI) was 8.1% during the 2004-05 to 2013-14 period compared to 5.1% during post 2014 period.
      • Food Inflation: In terms of food inflation, it was worse earlier at 9.2 % compared to 4.9% at present.
  • Income Poverty is when a person doesn't make enough money from their job to meet their basic needs. People and families who are poor may not have a good place to live, clean water, healthy food, or medical care. 
  • Each country can use its own set of rules to figure out how many people are poor.

What are the major challenges?

  • Stunted Decline and Farm Wages: The stunted decline in headcount poverty is not only puzzling but also concerning. It is also corroborated by the decline in the rate of growth in real farm wages for men. 
    • Previously, the real farm wages grew by 4.1% compared to just 1.3% at present. 
  • Effects of COVID-19 Emergencies: COVID-19 seems to have given a big shock and even in 2023, India had the highest number of people (160 million) in extreme poverty, marginally up from 152 million in 2018.
  • Unequal Distribution: The absolute population living in extreme poverty increased from 411 million to 453 million due to rapid population growth and unequal distribution of growth at grassroots levels.

Way Forward:

  • It is crucial to address income poverty which is still very high and has remained defiant over the last five years. For that, policy needs to focus on spurring employment-intensive growth. 
  • Skill formation in rural areas to enable people to move out of agriculture to higher productivity jobs in urban areas, coupled with direct income transfers to the most vulnerable (antyodaya) can help.


Mains PYQs

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 CSE 2020)

Q. Despite implementation of various programmes for eradication of poverty by the government in India, poverty is still existing’. Explain by giving reasons. (UPSC CSE 2018)

Q. Critically examine whether growing population is the cause of poverty OR poverty is the mains cause of population increase in India.(UPSC CSE 2015)

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