IMPACT OF THE PANDEMIC ON POVERTY
1. Context
A recent World bank report, titled "Correcting course", captures the impact of the covid-19 pandemic on global poverty.
2. Introduction
Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Poverty means that the income level from employment is so low that basic human needs cant be met.
According to World Bank, Poverty is defined as deprivation in well-being and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity.
3. Types of Poverty
There are two main classifications of poverty
3.1 Absolute poverty: A condition where household income is below a necessary level to maintain basic living standards ( food, shelter, housing). This condition makes it possible to compare different countries and also over time.
3.2 Relative Poverty: It is defined from the social perspective that is the living standard compared to the economic standards of the population living in surroundings. Hence it is a measure of income inequality. Usually, relative poverty is measured as the percentage of the population with income less than some fixed proportion of median income.
4. How India faces this Pandemic Situation
- The number of people living in extreme poverty rose by seven crore million in 2020, as the global poverty rate rose from 8.4% in 2019 to 9.3% in 2020. This is the first time in two decades that the poverty rate has gone up.
- The World Bank report relies on the Consumer pyramids household survey (CPHS) by the Center for Monitoring Indian Economy (CIME), in the absence of official poverty data since 2011. By their estimate, 5.6 crore people are likely to have slipped into poverty as India's GDP fell by 7.5% in FY2020-21. The population below poverty lies in India stood at 10% in 2020.
- The government announced a fiscal stimulus worth 2 lakh crore, or 1% of GDP. The minor increase to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) wage by 20 rupees per day was a long-pending correction and quite inadequate, to say the least. The majority of India's stimulus package took the form of credit lines and refinancing schemes for private enterprises, which are inefficient mechanisms to realize the goal of putting money in the hands of people to boost household-level consumption.
- The only saving grace was the announcement that 80 crore people in India would get food aid through the Pradhan Mantri Garib Kalyan ANN Yojana (PMGKAY), a scheme that continues mainly because of the undeniable household-level distress.
- Poverty estimation in India is carried out by the NITI Aayogs task force through the calculation of the poverty line based on the data captured by the National Sample survey office under the Ministry of statistics and program Implementation (MOSPI). Poverty line estimation in India is based on consumption expenditure and not on income levels.
5. Obtuse tax policies
- India persisted with the reduced corporate tax rate that had been announced in September 2019. The reduction of corporate tax from 30% to 22% cost the exchequer 1.84 lakh crore over the last two fiscal years, according to the parliamentary committee on Estimates.
- At the same time, corporate profits soared, as reported by the CMIE. Through all of this, and despite the World Inequality Report terming India as a 'poor and very unequal country ', India has refused to reintroduce wealth tax, or indeed, an inheritance tax.
- India has repeatedly increased the rates on a wide range of products covered by the Goods and Services Tax as well as increased the prices of cooking and transport fuels. While indirect taxes may help prop up public finances, they place a disproportionate burden on the poor.
6. Poverty Alleviations programs in India
6.1 Integrated Rural Development Programme (IRDP)
It was introduced in 1978-79 and universalized from 2nd October 1980, aimed at assisting the rural poor in the form of subsidy and bank credit for productive employment opportunities through successive plan periods.
6.2 Jawahar Rozgar Yojana: The JRY was meant to generate meaningful employment opportunities for the unemployed and underemployed in rural areas through the creation of economic infrastructure and community and social assets.
6.3 Food for Work Programme: It aims at enhancing food security through wage employment. food grains are supplied to states free of cost, however, the supply of food grains from the Food Corporation of India(FCI) godowns has been slow.
6.4 Rural Housing-Indira Awaas Yojana: The Indira Awaas Yojana program aims at proving free housing to Below Poverty Line (BPL) families in rural areas and the main targets would be the households of SAC/STs.
6.5 Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005:
The act provides 100 days of assured employment every year to every rural household. One-third of the proposed bond would be reserved for women. The central government will also establish National Employment Guarantee Funds. Similarly, state governments will establish state Employment Guarantee Funds for the implementation of the scheme. Under the program, if an applicant is not employed within 15 days he will be entitled to daily unemployment allowances.
7. Conclusion:
Finally, poverty is a problem that affects the whole nation, not just one person. It should also be dealt with as soon as possible by putting in place appropriate solutions. Furthermore, poverty eradication is now a must for people's society country, and economy's long-term and inclusive development.
For Prelims & Mains
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For Prelims: World bank, CPHS, CIME, NITI Aayog, PMGKAY, MGNREGA, IRDP, Jawahar Rozgar Yojna, Food for Work program.Indira Awas Yojna.
For Mains: 1. What are the impacts of poverty on developing countries and suggest the applicable measures to reduce the poverty? (250 Words)
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Source: The Hindu
