GS Paper 3
Syllabus: Issues relating to Poverty and Hunger/ Growth and development
Context: India’s current per capita income is $2,379 in 2022-23. The goal is to raise it by almost six times in the next 25 years, leading to a higher standard of living and poverty eradication. To achieve this vision, understanding the challenges and taking appropriate actions are essential.
Current achievements of India in poverty reduction:
- 415 million poor people moved out of poverty from 2005/2006 to 2019/2021 (from 645 to 230 million). (Global MPI)
- India has registered a decline in the number of multidimensionally poor from 24.85% in 2015-16 to 14.96% in 2019-2021. (National MPI)
Challenges that the country will face in economic development and subsequent poverty reduction:
On the global front:
- Ukraine-Russia conflict: The overall climate for peace, which is necessary for growth, has deteriorated after the conflict.
- Supply disruptions of critical imports like oil can cause a severe setback not only to developing countries but also to developed countries.
- The attitude of some countries towards global trade: Rich countries that earlier preached to the developing countries to adopt a free trade model, are putting restrictions on imports.
- This is happening when developing countries like India are reaching the stage of being able to compete in the world market.
At the domestic:
- State of Indian economy:
- In the past 75 years, India has built a reasonably strong and diversified economy.
- Though India is today the 5th largest economy, it is ranked (2022) 149 out of 194 countries in per capita terms.
- Export-led growth strategy: Several countries (South Korea, China, etc) achieved high growth over several decades by focusing on exports.
- This export-led growth strategy may not work for India, particularly in the context of a changed global trade situation.
- Adoption of new technologies: India’s ability to absorb new technologies like Artificial Intelligence (AI) will have ramifications for the industrial structure and employment.
- AI can result in increasing productivity and output but not necessarily jobs.
- Impact on output because of environmental considerations: Bringing down pollution can have an output effect. In this context, a high annual growth rate of 8% may have to be ruled out.
- Provision for basic income:
- In an uncertain world, the need for the provision of basic income becomes even more urgent.
- However, there are many issues connected with basic income (level and coverage) which need to be resolved.
Actions India needs to overcome these challenges:
- A multi-dimensional strategy:
- The emphasis should be on agriculture and related activities, manufacturing and exports.
- India needs to preserve its achievements and move forward in the services area.
- Raising the per capita income: By almost six times from $2,379 in 2022-23 over the next 25 years.
- Reorienting the educational system: This will enable students to acquire the required skills.
- Identify labour-intensive economic activities.
- For implementing the provision of basic income, beneficiaries have to be determined taking into account certain normative considerations.
Potential implications of the above actions: These will enable people to have a higher standard of living, reduce inequality and eliminate poverty.
Conclusion: Despite challenges, a 6 to 7% sustained growth and better job prospects are still possible if the growth strategy is correct and if an appropriate investment climate can be created.