Saturday, December 21, 2013

On Poverty Line and Some Related Aspects of Growth

On Poverty Line and Some Related Aspects of Growth

8:51 AM
Chakresh Singh

Determining the poverty line has always been a contentious issue. The need of poverty line is more for the academic purpose and analyses of the performance of public schemes more so in the era of social welfare schemes shifting from targeted focus to universal coverage. The parameters considered during determination of poverty line cannot be changed again and again as that affects the comparative analyses of development in two different periods as the data of the past becomes irrelevant or incomparable with the new one. Therefore, while determining poverty line, care is taken that so that the comparability of data is maintained.

Tendulakar Committee's poverty line is more close to the internationally accepted poverty line of in PPP terms (PPP refers to a method used to work out the money that would be needed to purchase the same goods and services in two places). The 2004-05 Tendulkar poverty line was Rs.16, which in PPP terms, is equivalent to one U.S. dollar per person per day. The new poverty estimates of Rs. 29 per person per day recently released by the Planning Commission are equivalent, in PPP terms, to the new internationally accepted poverty line of $1.25. The figure was reached by considering the consumption data available with the NSSO, which is an apolitical and credible institution.

There has been decline in poverty in the past decade. It has fallen from 407 million people living below poverty line in 2004-05 to 269 million in 2012-13. MGNREGA is being seen as the major reason behind such changes amongst other schemes. Though no one denies the huge leakages in these schemes but MGNREGA has helped in increasing the wage rates, thereby increasing the consumption, which in turn increases demand and thus employment. There is complimentary in such a growth. Better wages, create more demand, more demand create more jobs. 

The caste census will help make more informed policy making. But at the same time, it throws up new challenges. The grounded elites can collude with data collecting authorities and provide doctored data and thereby defeating the idea of inclusive growth. The is a need of social audit in any such data collection.

The last decade also saw more and more mechanization in agriculture. With improved wages and more construction works, major work force of agriculture shifted to other sectors. Agriculture contributes only 15% to the GDP and uses around 50% of the work force, therefore such a shift is a welcome sign. 

Manufacturing sector remains a concern area and there is a need of sharper policies. We heavily import intermediate and capital goods. There is a need of improvement of infrastructure so that more investment can take place in manufacturing sector.

No growth can be sustained if the Human Capital is not trained as we move ahead. India is 1.2 billion strong and we can a strengthen our demographic dividend by introducing vocational training course in schools and colleges. Also, there is a need of setting up more ITIs and such intitutions.

India is also facing the challenge of making herself energy independent. The high oil prices, directly affects inflation and price rise. Also, the instability in middle east region, calls for proactive role in this direction so as to make India safe in the case of another 1973 crisis like situation in future. We can use our long coast lines to tap wind energy. Also, we are the 7th largest country, we have huge potential of tapping solar energy. Cost effective technologies can make such option more viable. Nuclear Energy mission can also be revised.

Meanwhile, it should not be forgotten that 40% of of our children are malnourished and more that 50% female population is anaemic. There is a need of increasing the GDP share for health and education sector. The empowerment of women can help improve the condition of women and children. 33% reservation for women in Parliament will be good starting point.

Financial inclusion of the poor the next step. The direct cash transfer scheme can help bring down the leakages, but for successful implmentation bank penetration in rural areas is crucial.

The project implementation has always been a point of concern. eGovernance, stringent laws against corrupt practices and strengthening investigative agencies can bring down corruption o considerable levels. Which is exactly what needs to be done today and safe the huge loss of public money.

As Indians are growing into a more aware population, the shift in politics from caste and communal focus to developmental goals is already being felt. One can hope that, in the coming fifteen years, India would be able to cross the above mentioned hurdles to inclusive growth.

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