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The NYAY scheme and the idea of poverty in India - Politicians need to provide structural solutions to address India’s inequality

Post by Admin,Mar 28,2019.

For one, the idea by itself is a good one. Only that it may have come too late in the day. Absolute levels of poverty have fallen in the country, particularly over the last two decades; from about two in five people living in poverty, it is now down to one in five. Also, the concern has now shifted to inequality—not just of incomes, but of opportunities—though it is yet to echo in public policy action.

Second, as several commentators have already pointed out, it is an indictment of the growth process, pursued in particular over the last four decades. The version of neoliberalism ideology influenced growth—which entails lowering of tariffs among other things to enable globalization—has clearly failed to trickle down. Exactly why an economy which transformed from around $400 billion at the turn of the millennium to about $2.7 trillion two decades later, has improved the lot of large tracts of the populace, but denied the same benefits of trading-up to the poor. And this, after poverty alleviation has been part of explicit public policy for the last seven decades.

Third, the way the scheme has been proposed, it will inevitably entail the politically vexing decision of choosing among the poor—NYAY is to be targeted at those at the bottom of the poverty pyramid. Identifying the poor may be easy on paper, but extremely difficult in practice. Stacking the poor on the order of poverty is simply impossible in a complex country like India as the causes of deprivation vary—exactly why a one-size-fits-all strategy will not work. The best solution is to make the scheme universal and employ automatic exclusion criteria, like it has been done for ensuring food security.

Fourth, as stated earlier, the primary challenge today is addressing growing inequality. The rapid technological changes (dubbed rather benignly as disruption) are acerbating new kinds of inequalities defined around access to fundamental needs (say to primary education or healthcare). These trends will only perpetuate the growing gap between the rich and poor in newer ways with consequences for an entire lifetime.

Take for example the data thrown up by the Socio Economic Caste Census of 2011—the first official study to take a multi-dimensional view of poverty—which identified, among other things, that 107.3 million of the total 179.7 million rural households were considered deprived. And within this group of deprived households, 42.2 million (or nearly 40%) were seeing the first generation of literates emerge in the family; and this, six decades after independence. Clearly, unless this imbalance is addressed, these households may graduate in nominal terms out of poverty, but still have little chance of bridging the gap with the top 1%.

In conclusion, it is clear that Indian politicians, presuming that they will still have an appetite after 23 May and are willing to walk the talk on their empathy for the not-so privileged of India, will come clean on their prescriptions to address the problem of growing inequality in India. This requires structural solutions, including redistribution, and not mere tall talk of populism on election eve.

  • India reduced its poverty rate sharply from 55% to 28% in ten years between 2005-06 and 2015-16, according to the global Multidimensional Poverty Index (MPI). In absolute terms, a total of 271 million (27.10 crores) people moved out of poverty during these ten years.
  • The traditionally disadvantaged sub-groups such as rural dwellers, lower castes and tribes, Muslims and young children are still the poorest in 2015-16.
  • However, these groups had the biggest reductions between 2005-06 and 2015-16, showing that they have been “catching up”.
  • Significantly, this trend marks a reversal from that observed from 1998-99 to 2005-06. During 1998-99 to 2005-06, these groups had the slowest progress and were left behind.