Poverty Alleviation In India

India is a land of paradox! On the one hand we have a thriving economy labeled as the fastest growing in the world and on the other hand still 21.2% of total India population reside below poverty line. India has done a tremendous job in pulling out a substantial population out of poverty in last decade. Yet the challenge remains big. But the monumental efforts envisaged by the Government are poised to provide good living standards to a large population in coming times.

Dr. Shashi Tharoor who gave the famous Oxford speech said, “The fact is that, before 200 years, the British came to one of the richest countries in the world- a country which had 23 per cent of global GDP… a country where poverty was unknown.”  He further adds “A country that was the world leader in at least three industries- textiles, steel and ship building. A country that had everything. And after 200 years of exploitation, expropriation and clean outright looting, this country was reduced to one of the poorest countries in the world by 1947.” More than half the population was below poverty line practicing subsistence agriculture.

The challenge before the Nehru Government was monumental and they started with Soviet style socialist planning which failed to provide the necessary trickle down effect. Hence post 1970s, the Government led by Mrs. Indira Gandhi with Twenty Point Programme tried to reduce poverty. The Governments thereafter targeted both poverty alleviation and employment generation under one umbrella and started with initiatives like Integrated Rural Development, Swarna Jayanti Rojgar Yojna, Indira Awas Yojana, etc. But the important and successful schemes were Pradhan Mantri Grameen Sadak Yojana and MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) which proved to be very effective and efficient. PMGSY provided the necessary connectivity for the development of rural areas and pulled a substantial population out of poverty due to employment generation via roads. Whereas the path- breaking MGNREGS provided rural masses with minimum 100 days of guaranteed job with no pre required skill sets. After 10 successful years of MGNREGS, it is established that this single scheme has proved to be panacea to reduce poverty at high rates. The transmission effect of MGNREGS on poverty is appreciated by the present Government too which has made whooping Rs. 48,000 crore allocations in this year’s budget to this scheme.

Although we have miles to go to eliminate poverty as India has the highest number of people residing below poverty line but the efforts of Government in past decades must be applauded. Even the rural population today is well connected with telephone and internet and their nutritional habits are also changing keeping in view the refining trends of consumption due to increased power of purchasing. This paints a bright picture for the coming times of rural India where they can also use digital modes not only to transact but to get information and sell their produce at reasonable rates. The India of today is changing at rapid scale with the given level of technological penetration coupled with globalization effects. India has in the past leapfrogged adoption of landline phones and gone directly to usage to mobile phones. With the rapidly reducing poverty in rural India, history is poised to repeat itself, this time in the financial sector. We will delve deeper into the subject in a subsequent blog post.

As the Tendulkar Committee on Poverty found out that we still have a large population below poverty line, the present efforts by the Government to skill the rural masses will go a long way to reduce poverty line below 10%. Even the policies to boost agriculture and bring food processing industries into limelight can fetch good earning to rural poor. If the loopholes and leakages of poverty alleviation and employment generation programmes are reduced and made effective, then in near future Poverty will be truly just a state of mind!

Abhishek Ranjan is a Research and Policy Analyst to Members of Parliament (MPs) Mr. Ninong Ering and Mr. Dilip Tirkey. He is also working as a Consultant to DTSRDF and University of Chicago’s Delhi Center for Anubhav Lecture Series, and is a Policy Consultant for FinTech startup Credy. Earlier, he was a LAMP Fellow and graduated in Engineering from Manipal Institute of Technology.


A budget for Digital Economy

When the Union Budget was announced by the Finance Minister Shri Arun Jaitley on 1st February 2017, the key take away was the willingness of the Government to push India towards Digital Economy. A few important measures were announced in the budget which will help India in advancing towards an economy based on the digital payments, digital services, etc. The idea of Digital economy itself has gained importance in the public discourse post Demonetization where the thrust was upon going cashless. Going digital will create an environment of speedy, transparent and accountable governance and helps in fighting the problems of corruption, black money and terror funding.

The important announcements made in the regard of creating a digital economy were:-

  • 125 lakh people have adopted the BHIM App so far. The Government will launch two new schemes to promote the usage of BHIM; these are Referral Bonus scheme for individuals and a Cashback scheme for merchants. This step will help in more and more adopting the BHIM way to go for digital payments and also motivate people to use wallets and other Apps. It will overall promote the development scenario for digital payments.
  • Aadhaar Pay, a merchant version of AEPS (Aadhaar Enabled Payments System) will be launched shortly and definitely provide the much needed momentum in the digital payments and FinTech sector.
  • A mission will be set up with a target of 2500 crore digital transactions for 2017-18 through UPI, USSD, Aadhaar Pay, IMPS and Debit Cards. The mission can bring in the required behavioral changes in the way customer pays up for buying a product.
  • A proposal to bring mandate all the Government receipts through digital means, beyond a prescribed limit is under consideration. When the Government itself leads by example then citizenry can be expected to follow the new scheme of things.
  • Banks have targeted to introduce additional 10 lakh new POS terminals by March 2017. They will be encouraged to introduce 20 lakh new Aadhar based POS by September 2017. It will provide the rural India with digital connectivity and enable them to be part of financial and digital inclusion.
  • The Government has proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for regulation and supervision of Payments and Settlements system. A newly energized Board with a embedded vision of spearheading Digital Economy can turn the tides in favor of Digital payments.

All the above steps and the additional focus of the Government on Digital India along with Startup India, Skill India and Make in India will help in accelerating the process of creating a Digital economy very soon. We should be ready to embrace the change and see our country going digital in Indianized way!

Abhishek Ranjan is a Research and Policy Analyst to Members of Parliament (MPs) Mr. Ninong Ering and Mr. Dilip Tirkey. He is also working as a Consultant to University of Chicago’s Delhi Center for Anubhav Lecture Series, and is a Policy Consultant for FinTech startup Credy. Earlier, he was a LAMP Fellow and graduated in Engineering from Manipal Institute of Technology.