Initiatives and Policies to Reduce Poverty

INITIATIVES AND POLICIES TO REDUCE POVERTY

The fundamental goal of the government’s development strategies is social justice, as stated in the Indian Constitution and five-year plans.

All policy documents place emphasis on reducing poverty and state that the government must employ a variety of strategies to achieve this goal.

There were three facets to the government’s strategy for reducing poverty.

• First approach: Focus on Growth: It is predicated on the idea that the swift rise in the gross domestic product and per capita income that characterises economic growth will have a knock-on effect on all facets of society, including the impoverished.

In the 1950s and the early 1960s, planning was primarily focused less developed areas and the more disadvantaged segments of the community would gain from the quick industrial development and the green revolution-style agricultural transformation of a few areas.

However, according to economists, the poor have not benefited from economic growth.

• Second approach: Poverty Reduction Programmes:

Policymakers began to consider the possibility of increasing the incomes and employment of the poor to directly address the issue of poverty. Certain programmes aimed at reducing poverty could help achieve this. This second approach has been initiated from the Third Five Year Plan (1961-66) and progressively enlarged since then.

Food for Work was a prominent initiative launched in the 1970s.

Increasing the number of programmes for wage employment and self-employment is thought to be one of the most effective ways to combat poverty.

The Prime Minister’s Rozgar Yojana (PMRY): educated jobless individuals from low-income rural and urban households can receive financial assistance to launch any type of business venture that creates jobs.

Rural Employment Generation Programme (REGP): It aims to provide urban areas with opportunities for self-employment. It is being carried out by the Khadi and Village Industries Commission. Bank loans are one way that this programme provides financial support for starting small businesses.

Swarna Jayanti Shahari Rozgar Yojana (SJSRY): The primary goal of SJSRY is to increase employment opportunities in urban areas, including waged and self-employment jobs.

Self Help Groups: Previously, families or individuals received financial assistance under programmes for self-employment. This strategy has evolved since the 1990s. Self-help groups are now encouraged to be formed by those who want to benefit from these programmes. They are initially urged to save some cash and make small loans to one another. Subsequently, the government offers SHGs partial financial support through banks; the SHGs then choose who gets the loan for self-employment activities. One such initiative is the Swarnajayanti Gramme Swarozgar Yojana (SGSY). The National Rural Livelihoods Mission (NRLM) is the new name for this. For the urban poor, a comparable initiative known as the National Urban Livelihoods Mission has also been implemented.

The government offers numerous programmes aimed at creating wage jobs for low-income, unskilled individuals residing in rural regions.

Mahatma Gandhi National Rural Employment Guarantee Act: Passed by the Parliament in August 2005, permits every rural household with an adult volunteer to perform unskilled manual labour for at least 100 days a year in exchange for a guaranteed wage.

• Third approach: Welfare Measures:

• The provision of bare minimum necessities for people is the third strategy for combating poverty.

• India was one of the first countries in the world to realise that the standard of living could be raised by public spending on social consumption needs, such as the supply of food grains at discounted prices, health care, education, water supply, and sanitation.

• Programmes implemented under this strategy are anticipated to increase the poor’s consumption, generate jobs, and enhance health and education.

This strategy can be traced back to the Fifth Five Year Plan. The Integrated Child Development Scheme, the Public Distribution System, and the Midday Meal Scheme are three significant initiatives that work to improve the food and nutritional status of the underprivileged.

In the same direction are also the Pradhan Mantri Gramme Sadak Yojana, Pradhan Mantri Gramodaya Yojana, and Valmiki Ambedkar Awas Yojana.

To assist a few particular groups, the government also runs a number of other social security programmes.

One such federally-initiated programme is the National Social Assistance Programme. Pensions are provided under this programme to elderly individuals, widows and impoverished women who have no one to care for them.

Poverty Alleviation Programmes — A Critical Assessment

The number of absolute poor in several states is now significantly lower than the national average for the first time since independence, a testament to the success of efforts to reduce poverty.

Over the past 55 years, the approach to reducing poverty has changed gradually, but there hasn’t been a significant shift in it.

This is because the non-poor have appropriated the benefits of direct programmes aimed at reducing poverty due to the unequal distribution of land and other assets.

There are not enough resources available for these programmes in relation to the severity of poverty.

Furthermore, the execution of these programmes is mostly dependent on bank and government officials. Resources are wasted and used inefficiently because these officials lack motivation, are poorly trained, are prone to corruption and are susceptible to pressure from a range of local elites.

Institutions operating at the local level do not participate in the execution of programmes either.

The great majority of vulnerable people who live at or near the poverty line have not been adequately served by government policies.

It also shows that poverty cannot be eradicated by rapid growth alone. Any programme cannot be implemented successfully without the poor’s active participation.

Amartya Sen’s capability approach

The Indian economist and philosopher Amartya Sen is primarily credited with coining the capability approach, which he did so in the 1980s. The United Nations Development Programme, for instance, has made extensive use of it in the context of human development as a deeper and more comprehensive measure than GDP per capita growth or other purely economic indicators. Here, “development” is defined as the expansion of capability, and “poverty” is defined as the lack of the ability to live a decent life.

Randomised Controlled Trial- Abhijit Banerjee

An experiment intended to determine the impact of a particular variable or intervention on a particular outcome or event is called a randomised controlled trial (RCT).

Starting in the 1990s, Mr. Banerjee, Ms. Duflo, and Mr. Kremer applied RCT to the study of economics. Economists and other social science researchers can isolate the unique effect that a particular factor by itself has on the entire event through the use of RCTs. For example, in order to assess the potential effects of hiring more teachers on children’s learning, researchers need to account for the influence of other variables on the final event, such as intelligence, nutrition, climate, economic and social status, etc., all of which may also have varying degrees of influence on learning outcomes.

UNIVERSAL BASIC INCOME

Universal basic income (UBI) defined as a transfer that is provided universally and unconditionally. Under this kind of programme, the government pays a set amount of money to each and every citizen of the nation on a regular basis to cover a person’s basic needs, such as clothing, food, and housing.

The Economic Survey identifies three essential elements of universal basic income (UBI)

Every citizen is paid in cash.

These payments are made without conditions and

These funds are available for any individual to use however they please.

The idea of UBI in India

A May 2019 report commissioned by the Economic Advisory Council to PM (EAC-PM) in India recommended that the government implement a Universal Basic Income (UBI) programme in order to lessen glaring income disparities.

According to the Economic Survey 2016–17, a thorough analysis of the UBI is warranted. According to the Survey, the initiative, which aims to eradicate poverty in the nation, will reduce it to 0.5% of the population but will cost 4-5% of GDP.

The argument in Favor of UBI

• Poverty and vulnerability reduction: It will reduce income inequality thereby it will help in the eradication of poverty.

• Inclusive: since everyone is being targeted, there is no exclusion error (the impoverished are not left out).

• Insurance: The income floor will act as a safety net against unforeseen events such as the Covid-19 Pandemic that could affect one’s health or finances.

• Financial Inclusion: Payment transfers will promote increased bank account usage, which will increase bank correspondents’ earnings and result in an endogenous increase in financial inclusion.

• Psychological Benefits: The stress of making ends meet every day will be lessened with a guaranteed income.

• Administrative Efficiency: The state’s administrative burden will be lessened if a universal basic income is implemented in lieu of numerous distinct government programmes.

Argument Against UBI

• Wasteful Spending: Families, particularly those headed by men, might use this extra money for extravagant expenses.

• Moral Hazard (Decrease in Workforce): A minimum guaranteed income could encourage laziness and discourage people from entering the workforce. It lessens the motivation to work.

• Market risk exposure (cash vs. food): A cash transfer’s purchasing power could be significantly reduced by market fluctuations, in contrast to food subsidies, which are not impacted by shifting market dynamics.

• Universality-based political economy: The transfer to wealthy individuals may cause opposition because it appears to take precedence over the concepts of equity and public assistance for the underprivileged.

• Fiscal Burden of the Government: The social security and tax systems would need to be completely redesigned.

Conclusion

Only when the poor begin actively participating in the process of growth will poverty be effectively eradicated. This is made possible by a social mobilisation process that empowers and encourages the participation of the poor. Additionally, this will support the creation of job opportunities, which could raise income, skill levels, health, and literacy rates. Additionally, it’s important to pinpoint areas that are impoverished and build infrastructure there, including roads, schools, electricity, telecom, IT services, training facilities, etc.