Date: 12/11/2022

Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Relevance: GS-2: Issues relating to poverty and hunger.

Key Phrases: emerging economies, multidimensional poverty

Context:

• Around 4.2 per cent of India’s population experiences severe poverty, says UNDP report.
• More than 230 million people in India still experience poverty. This is the highest number among all emerging economies, according to a recent report by the UNDP.

What is Multi-dimensional Poverty Index (MDPI)?

• MPI is based on the idea that poverty is not unidimensional (not just depends on income and one individual may lack several basic needs like education, health etc.), rather it is multidimensional.
• The Global Multidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP)
• MPI uses three dimensions and ten indicators which are:
  • Education: Years of schooling and child enrollment (1/6 weightage each, total 2/6);
  • Health: Child mortality and nutrition (1/6 weightage each, total 2/6);
  • Standard of living: Electricity, flooring, drinking water, sanitation, cooking fuel and assets (1/18 weightage each, total 2/6).

Key Highlights:

• The United Nations Development Project’s Multidimensional Poverty Index (MPI) is an annual report that measures acute multidimensional poverty across more than 100 developing countries.
• It identifies multiple deprivations at the household and individual levels in health, education and standard of living.
• The index uses the most recent data available for each country.
• Among 16 emerging economies, India’s population headcount in poverty stood at 230.73 million, followed by Pakistan (84.2 million), China (53.8 million), and Bangladesh (40.7 million). Other notable countries include Afghanistan (19.3 million), Brazil (7.8 million), and South Africa (3.5 million).
• Thailand (412,000), Bhutan (26,300) and Maldives (4,000) were at the bottom of the list.
• Considering India’s population, however, this puts the country only in the middle of the list regarding the percentage of the population experiencing poverty.
• With 16.4 per cent, India has seen some stellar improvement over the years.
• Among BRICS countries, India had the highest population percentage in poverty, followed by South Africa (6.3 per cent), China (3.9 per cent) and Brazil (3.8 per cent).

How poverty is measured?

• Poverty is usually measured through headcount ratios, the percentage of the population below a determined poverty line.
• That poverty line is typically defined as a minimum basket of goods and services required for subsistence, converted into a nominal consumption expenditure figure, using appropriate prices.
• That has been the approach in India since poverty began to be measured in the 1950s and was further refined in the 1970s.
• In other words, one uses monthly per capita consumption expenditure to define the poverty line.
• The official poverty line is still the Tendulkar poverty line, available for 2011-12, state-wise, and separately for rural and urban areas.
• We have used the Consumer Price Index (CPI) for price changes since 2011-12.

Reasons behind poverty in India:

1. Population Explosion: India’s population has steadily increased through the years. During the past 45 years, it has risen at a rate of 2.2% per year, which means, on average, about 17 million people are added to the country’s population each year.
2. Low Agricultural Productivity: A major reason for poverty is the low productivity in the agriculture sector. The reason for low productivity is manifold. Chiefly, it is because of fragmented and subdivided land holdings,
3. Inefficient Resource utilisation: There is underemployment and disguised unemployment in the country, particularly in the farming sector. This has resulted in low agricultural output and also led to a dip in the standard of living.
4. Low Rate of Economic Development: Economic development has been low in India especially in the first 40 years of independence before the LPG reforms in 1991.
5. Social Factors: Apart from economic factors, there are also social factors hindering the eradication of poverty in India. Some of the hindrances in this regard are the laws of inheritance, caste system, certain traditions, etc.
6. Climatic Factors: Most of India’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, Odisha, Jharkhand, etc. Natural calamities such as frequent floods, disasters, earthquake and cyclone cause heavy damage to agriculture in these states.
7. No systematic attempt to identify people who are in poverty : While a large number of poverty alleviation programmes have been initiated, they function in silos. There is no systematic attempt to identify people who are in poverty, determine their needs, address them.

Current status of poverty:

• From 2011 to 2019, the number of poor in India was estimated to have decreased to 78 million from 340 million.
• In 2020, the number increased by 75 million due to lockdown.
• The middle class in India is estimated to have shrunk by 3.2 crores in 2020.
• The richer population also fell almost 30% to 1.8 crore people.

Conclusion:

• The government must provide transparency and accountability to various organizations that are responsible for the implementation of the Welfare Schemes.
• The problem of the inability to determine the poverty line must be resolved to help the target population.
• Investment in Agriculture by the government is necessary to decrease rural poverty. Subsidies address only short-term issues. Also, there is a need to develop technologies, with the help of which farmers can practice all weather agriculture.
• Rural poverty needs to be eliminated not only due to a moral imperative or to ensure citizenship and rights to rural people, but because it is at the core of several interlinked processes affecting opportunities for development and peace in rural and urban areas.

Source: The Hindu BL

Mains Question:

Q. How poverty is measured? Discuss the reasons behind poverty in India. (250 Words).