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Insights into Editorial: Necessary steps to ending poverty

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Insights into Editorial: Necessary steps to ending poverty


                     

 

Introduction:

It is by now close to 50 years since Indira Gandhi brought the idea of eradicating poverty into the electoral arena in India. ‘Garibi Hatao’ had been her slogan.

The role that income generation actually played in lowering poverty in India may be gauged from the facts that economic growth had surged in the 1980s, and the late 1960s was when agricultural production quickened as the Green Revolution progressed.

While the last attribute motivated her to improve the condition of her people, the first left her aware of the centrality of income generation in poverty eradication.

 

Would a Universal Basic Income (UBI) have been better?

 

It would probably have been easier to implement, but would have come with a bigger financial tab even if the top two income deciles are excluded.

Remember, however, that developed economies have experimented with UBI, but have not been persuaded of its efficacy.

Even Arvind Subramanian, who commended the UBI when he was Chief Economic Adviser and wrote a whole chapter on it in Economy Survey 2016-17, appears to have retraced his steps, and is now pitching for a ‘Quasi-Universal Basic Rural Income’ (QUBRI).

It is difficult to begrudge a welfare measure targeted at the poorest people in a country that even to this day.

Government offers subsidies to the middle-class and the rich on everything from cooking gas to power to gold to aviation turbine fuel to the tax breaks on small savings instruments (which are a form of implicit subsidy) — to the tune of ₹1 lakh crore a year.

For Instance, in Agricultural sector, As per a report published by the State Bank of India, the central government’s most recent budgetary allocation to subsidy and farmer support schemes totalled around ₹981 billion – which is roughly 2.9% of India’s GDP.

 

Capability deprivation is the main reason for Indian Poverty:

Health, education and physical infrastructure are central to the capabilities of individuals, and the extent of their presence in a society determine whether the poor will remain so or exit poverty permanently.

The scale at which these inputs would be required to endow all Indians with the requisite capabilities makes it more than likely that we would have to rely on public provision.

As the services of Health, Education, Public services cannot always be purchased in the market, income support alone cannot be sufficient to eliminate poverty.

It is in recognition of the role of services in enabling people to lead a productive and dignified life that the idea of multi-dimensionality has taken hold in the thinking on poverty globally.

 

What is needed: Universal Basic Services:

Universal Basic Services from public sources is the need of the hour. The idea of universal basic income emanated from Europe. But Europe has saturated with publicly provided UBS.

In light of a pitch that has been made for the implementation in India of a publicly-funded universal basic income (UBI) scheme, we can say that from the perspective of eliminating poverty, universal basic services (UBS) from public sources are needed.

So, if a part of the public revenues is paid out as basic income, the project of providing public services there will not be affected.

This is not the case in India, where the task of creating the wherewithal for providing public services has not even been seriously initiated.

There are no short cuts to ending poverty. There is indirect evidence that the provision of health, education and public services matters more for poverty than the Central government’s poverty alleviation schemes in place for almost half a century.

Per capita income levels and poverty vary across India’s States. A discernible pattern is that the southern and western regions of India have lower poverty than the northern, central and eastern ones.

 

Conclusion:

The indicator is based on the health and education status of a population apart from per capita income, bringing us back to the relevance of income generation to poverty.

As the Central government is common across regions, differences in the human development index must arise from policies implemented at the State level.

This further implies that a nationwide income support scheme that channels funds from a common pool to households in the poorer States would be tantamount to rewarding lower effort by their governments.

There is a crucial role for services, of both producer and consumer variety, in eliminating the capability deprivation that is poverty.

At a minimum these services would involve the supply of water, sanitation and housing apart from health and education.

It has been estimated that if the absence of such services is accounted for, poverty in India would be found to be far higher than recorded at present.

The budgetary implication of the scale at which public services would have to be provided if we are to eliminate multi-dimensional poverty may now be imagined.

This allows us to appraise the challenge of ending effective poverty and to assess the potential of the income-support schemes proposed by the main political parties.