CHALLENGES OF INDIAN ECONOMY

Wednesday, June 19, 2013 9:33 AM

1)TACKLING POVERTY WHO ARE THEPOOR?In pre-independent India, Dadabhai Naoroji, put concept of jail cost of living. the average poverty line is three-fourth of the adult jail cost of living. In post-independent India Categorising Poverty: 1)chronic poor-people who are always poor and those who are usually poor but who may sometimes have a little more money (example: casual workers) are grouped together as the chronic poor. 2)churning poor- who regularly move in and out of poverty (example: small farmers and seasonal workers) 3)transient poor-the occasionally poor who are rich most of the time but may sometimes have bad luck. 4) non-poor-are never poor Poverty Line: According to planning commission, the monetary value (per capita expenditure) of the minimum calorie intake that was estimated at 2,400 kcalories for a rural person and 2,100 kcal for a person in the urban area. Though the government uses Monthly Per Capita Expenditure (MPCE) as proxy for income of households major problem 1)is helpful in identifying the poor as a group to be taken care of by the government, but it would be difficult to identify who among the poor need help the most. 2)Though this mechanism takes consumption expenditure on food and a few select items as proxy for income, economists question its basis. There are many factors, other than income and assets, which are associated with poverty; for instance, the accessibility to basic education, health care, drinking water and sanitation. 3)does not take into consideration social factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and political freedoms. The aim of poverty alleviation schemes should be to improve human lives by expanding the range of things that a person could be and could do. From this point of view, development is about removing the obstacles to the things that a person can do in life, such as illiteracy, ill health, lack of access to resources, or lack of civil and political freedoms. 4)The poverty line is estimated periodically (normally every five years) by conducting sample surveys. These surveys are carried out by the National Sample Survey Organisation (NSSO). The way the data are collected, items that are included in the consumption basket, methodology followed to estimate the poverty line and the number of poor are manipulated to arrive at the reduced figures of the number of poor in India. alternative methods. 1)Amartya Sen, noted Nobel Laureate, has developed an index known as Sen Index 2)Poverty Gap Index 3)Squared Poverty Gap

World Bank use a uniform standard for the poverty line: minimum availability of the equivalent of $1 per person per day. The Millennium Development Goals of the United Nations calls for reducing the proportion of people living on less than $1 a day to half the 1990 level by 2015. When the number of poor is estimated as the proportion of people below the poverty line, it is known as Head Count Ratio. The official data on poverty is made available to the public by the Planning Commission. more than three-fourth of the poor in India reside in villages. five states Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa account for about 70 per cent of Indias poor. CAUSES OF POVERTY? individual circumstances (i)low levels of education and skills, (ii) infirmity, ill health, sickness (iii) discrimination.- social, economic and political inequality, social exclusion, unemployment (iv) indebtedness. (v)economy-wide problems- low capital formation ,lack of infrastructure, lack of demand,pressure of population, lack of social/welfare nets. (Vi)British rule in India-Our natural resources were plundered, our food grains were exported. (vii)The urban poor in India are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood. (viii)A steep rise in the price of food grains and other essential goods, at a rate higher than the price of luxury goods, further intensifies the hardship and deprivation of lower income groups. (ix)The unequal distribution of income and assets-those who posses the means of production and earn good incomes and those who have only their labour to trade for survival. Approach to poverty reductionhas three dimensions1) growth oriented approach-the effects of economic growth rapid increase in gross domestic product and per capita income would spread to all sections of society and will trickle down to the poor sections also.was the major focus of planning in the 1950s and early 1960s. rapid industrial development and transformation of agriculture through green revolution in select regions would benefit the underdeveloped regions. The gap between poor and rich has actually widened. The Green Revolution exacerbated the disparities regionally and between large and small farmers. There was unwillingness and inability to redistribute land. 2)creation of incremental assets and by means of work generationpoverty alleviation programmes- discussed below. 3) provide minimum basic amenities to the peopleIndia was among the pioneers in the world to envisage that through public expenditure on social consumption needs provision of food grains at subsidised rates, education, health, water supply and sanitation peoples living standard could be improved. 2) UNEMPLOYMENT- Slow growth of industries, education and training are main reasons for unemployment in India.. agriculture is already over burdened with population . employment is seasonal there..population of labour force was more than 43 crores by the year 2010

EMPLOYMENT GENERATION OR POVERTY ALLEVIATION PROGRAMMESThe current anti-poverty strategy of the government is based broadly on two planks (1) promotion of economic growth (2) targeted anti-poverty programmes. 1. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)one hundred days of guaranteed wage employment in a year to rural population. nature of work is unskilled manual work. launched in 2006.In 2010-11 the government had allocated Rs. 40,100 crores. 2. Swarnjayanti Gram Swarozgar Yojana (SGSY)in April 1999, to help the rural poor to increase their income generating capacity through self employment., primary focus of this scheme is the SC and ST population, as well as women, given training, bank loans and other facilities so that they can build up their capabilities to overcome poverty, government has set up rural self employment training institute (RSETI) in each district under this scheme . About 77000 rural youths have got training from RSETI by December 2010. 3. Swarna Jayanti Sahari Rozgar Yojna (SJSRY)employment to poor families living in urban areas of the country, launched in 1997. (i) Programmes to generate self employment (ii) Programmes for urban women (iii) Training for urban poor (iv) Community development programme (v) Wage employment programme Rs.590 crores for SJSRY for the year 2010-11. POVERTYALLEVIATION PROGRAMMES A CRITICAL ASSESSMENT 1)Has shown some success -the percentage of absolute poor in some states is now well below the national average but hunger, malnourishment, illiteracy and lack of basic amenities continue to be a common feature in many parts of India. 2)none resulted in any radical change in the ownership of assets, process of production and improvement of basic amenities to the needy. 3)the benefits from direct poverty alleviation programmes have been appropriated by the non-poor. these programmes depend mainly on government and bank officials for their implementation. Since such officials are ill motivated, inadequately trained, corruption prone and vulnerable to pressure from a variety of local elites, the resources are inefficiently used and wasted. 4)non-participation of local level institutions in programme implementation. 5)failed to address the vast majority of people who are living on or just above the poverty line 6)Without the active participation of the poor, successful implementation of any programme is not possible. Poverty can effectively be eradicated only when the poor start contributing to growth by their active involvement in the growth process. This is possible through a process of social mobilisation, encouraging poor people to participate and get them empowered. 3)PROVIDING EDUCATION According to census 2011, the literacy rates - 82.14 %- males, 65.46 %- females and 74.04 % all adults. 1. Right of children to free and compulsory education Act 2009. between 6 to 14 years of age a fundamental right, effective from April 2010. 2. Schemes for elementary and secondary education (i) Sarva Siksha Abhiyan (SSA)- to children in the age group 6-14 years

The goals of this scheme are -(a) enrolment of all children in school (b) Retention of children in the school up to upper primary level (c) Hosting back to school camps (d) Building education guarantee centers (e) Closing the gap arising due to caste, gender etc. in giving education To provide education to girl child , SSA has an important component called national programme for education for girls at elementary level (NPEGEL), model schools are being set up in every cluster to impart education to girls, Uniforms and study materials etc. are provided freely to girls. residential schools for girls -Kasturba Gandhi Balika Vidyalayas (KGBVs) under SSA 75 percent belong to SC, ST, OBC and minority communities. (ii) National programme of Mid-day meals in Schools (iii) Rashtriya Madhyamik Shiksha Abhiyan (RMSA) RMSA was launched in 2009, increase the enrolment ratio in the secondary stage Centre:state-75:25, north east- 90 : 10. (iv) Inclusive education for the disabled at secondary stage (IEDSS) from 2009-10, to provide 100 percent central assistance for education of disabled children studying class IX-XII stage (v) Saakshar Bharat adults above 15 years of age,, recast its national literacy mission as Saakshar Bharat special focus women. (3) Programme for Higher and Technical Education- In the eleventh plan , 8 new universities, 10 new engineering colleges . New model colleges at educationally backwards districts. To promote IT education 20 more Indian institutes of information technology (IIT). More engineering colleges in the form of national institutes of technologies (NITs), and Indian Institutes of Technology (IITS), will be built and become operational in 2011-12 in different parts of India. To promote research in science five Indian Institutes of Science Education and Research (IISER) in various parts of the country. Finally five new Indian Institute of Management (IIMS) have become operational in the Eleventh plan and two more will become operational in 2011-12. 4) PROVIDING HEALTH CAREmaternal mortality rate (MMR)-254 /100,000 die while giving birth infant mortality rate (IMR)- 50 /1000 children die child mortality rate (CMR)-15 /1000 die before completing 4 years of age In 2010-11,spent only about 5 percent of total expenditure, only 1.27 percent of our national income. (i) National Rural Health Mission (NRHM)In 2005,affordable and qualitative health service to rural population,removing diseases such as malaria, kala azar, blindness, iodine deficiency, T.B. filaria, leprosy etc. Revitalizing the existing primary and community health centres. around 8 lac health workers- given training , 9 thousand doctors and 26 thousand nurses - give health services to rural population. (iii) Pradhan Mantri Swasthya Suraksha Yojana (PMSSY)six new AIIMS like institutions will be constructed in different parts of the country., upgrading 12 existing government medical colleges in different states (iv) National AIDS Control-24 lakh people in India were affected by HIV in 2009,

5) CONTROLLING PRICE RISE(i) By helping farmers so that food grain output does not suffer. (ii) By building store houses and cold storages (iii) By keeping a strict vigil on hoarding of essential commodities 6) ACHIEVING HIGHER ECONOMIC GROWTH 1. encouraging establishment of small scale, large scale and heavy industries since the second plan onwards i.e from 1956. 2. encouraging the use of better inputs in the form of better seeds, fertilizers etc. to improve food grain production 3. Because of better infrastructure in the form of roads, railway lines, Airports, communication towers, power etc. Indias service sector is growing fast.