Economic Highlights

New Delhi,  13 August 2010

Fighting Poverty

UNIVERSALISED APPROACH NEEDED

By Shivaji Sarkar

Disparity is increasing. Poverty has not been eradicated. Different statistics only suggest that it has only gone up. Despite a plethora of schemes targeted towards the poor they have failed to work. Thus, a universalised approach should be evolved.

The country needs a solution. True, this seems difficult though it should not be. A look at the method is required to remove it. While the poor need special care, the programmes targeted for them rarely reach them. In fact, the approach has empowered the already empowered and led to compartmentalization. Also, the intricate processes have benefitted those who have control over the system, namely, influential people from villages to district headquarters and wherever it matters.

Right from the food-for-work-programme or the Indira Awas Yojana, whatever protection was attempted to be given had to be repeatedly modified during the last over 60 years. The process of liberalisation also saw a thaw in that procedure. The National Rural Employment Guarantee Scheme (NREGS) and public distribution system (PDS) for below the poverty line people (BPL) were expected to do wonders. It has not. The NREGS has brought some changes, at least the migrant labour has gone back. But the benefit is still limited.

Like most previous programmes, the NREGS is also being used like a dole. As in the food-for-work-programme it too has its fault lines. The work that is being generated has little long-term value and has led to siphoning of funds, as noted by the Comptroller and Auditor General (CAG).

Besides, the targeted PDS also has its problems. The fair price shops function at a low percentage of margins. Consequently they work in a way where the records show delivery but in many cases the stocks end up helping people who are not covered by the schemes. Bluntly, it is siphoned off.

The mismanagement at the Food Corporation of India warehouses is a continuous phenomenon. Food-grain has been rotting since we started the process of procurement. At the same time millions of people go hungry.

Worse, as per official statistics the availability of food-grain per person has reduced. During 1955-58 it was 440 grams and in 2005-08 it has come to down to 436 grams. Consumption of pulses, an important source of protein, has come down to 35 grams against 70 grams 50 years ago.

This is a grim indicator. On an average people are unable to access food. The official claim by all Governments’ has been of record food-grain production along-with a high growth chart during the last over 15 years. Indeed, Europe too suffered a similar malaise in its initial phases of growth. But as the level of affluence increased their consumption increased.

This has not happened in India. There can be only two reasons. Either Indians do not want to consume more or despite growth they do not have the capacity to consume more. The second one seems more plausible.

This could be explained with the high rise in the cost of living. Prices, house rent, medical, transport and all other expenses have phenomenally risen along with the tax rates. The very concept of robbing the “rich” by imposition of high taxes has mostly impoverished the marginally empowered – largely salaried – class.

In calculating affluence, individual income and not the family income was taken as the benchmark. Forgetting that families are not nucleus in most cases in the countryside. So while it may appear an individual is having high income, the way it is distributed in his large extended family where not every employable person has job, leaves the individual with little of spare fund even for his tax.

Sadly, our planners and policy makers have not included this in their calculation. So the tax rates do not take care of medical, education and many other expenses. High prices also do not get reflected in tax rates. These factors reduce one’s capability to consume more.

Further, schemes like the NREGS were supposed to help the extreme poor. However, it has not stopped migration from remote areas in Orissa or Andhra Pradesh. Moreover, such States have also become centres of human trafficking, largely women and children. These issues should not be dumped as sociological problems. Therefore, corruption apart, the NREG-type schemes ensure limited benefits.

Not only that. The NREGS legally ensures not more than 100 days of employment. For the remaining 265 days the people need to fend for themselves for availability of food.  Taken at a minimum of 750 grams of food grain per person this works out to almost 3kg per family. If the needy are unable to get this, they go hungry, which is mostly the case. In many cases, BPL families could not lift 25 kg or 35 kg food grains at Rs 3 per kg as they didn’t have that much of money.

What is termed as above-poverty-level (APL) is again a misnomer. These people may be marginally better than the BPL but in many cases are not. They are in the APL category either for calculation purposes, have no access or clout to get themselves declared BPL or in many cases it is the issue of social stigma that prevents them from getting tagged as BPL. Needless to say a complex issue further complicated by the State’s limitation to extend such doles to a larger population.

The experimentation during the last 60 years has found that percentages apart, the number of poor in absolute terms has gone up. Their numbers at 26 or 41 crore is much more than the total population at the time of Independence. This needs correction.

Importantly, the nation needs to look at the problem in a holistic manner. As the targeted programmes have not been of much help. We need to universalise such welfare programmes starting right from reviewing or should one say doing away totally with the concept of income tax or taxing the people on the basis of the size of their families.

Clearly, the nation has not evolved schemes for extending benefits like the food security to all, be it the absolute poor or the rich. It needs to be remembered that segmented approaches have not helped any country. It only increases unethical practices. Europe also did not grow till they had such a segmented approach. The European nations started growing only when everybody was made a beneficiary of welfare schemes. Leading to stoppage of many unethical practices. India needs to adopt the same and needs a policy reorientation. –INFA

(Copyright, India News and Feature Alliance)