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Poverty and Inequality in India

Poverty and inequality remain central challenges for India, affecting millions of people and posing significant barriers to inclusive economic growth and development. Despite notable progress in reducing poverty, a substantial portion of the population continues to live in deprivation. Inequality, both in income and wealth, further complicates the situation, creating disparities across different regions, communities, and social groups. This document provides an overview of poverty and inequality in India, key indicators, causes, and government initiatives aimed at addressing these issues.

Understanding Poverty in India​

Definition and Measurement of Poverty​

  • Poverty refers to a state where individuals or groups lack the financial resources to meet basic needs such as food, clothing, and shelter.
  • In India, poverty is measured based on consumption expenditure and income levels. The official poverty line is determined by the Tendulkar Committee (2009), which calculates the minimum expenditure required to meet basic needs.

Current Poverty Levels​

  • According to the World Bank data (2022), around 10% of India's population lives below the international poverty line of $2.15 per day (PPP).
  • Multidimensional Poverty Index (MPI): According to the Global Multidimensional Poverty Index (2022), about 16.4% of India's population is considered multidimensionally poor, considering various deprivations in health, education, and living standards.

Regional and Social Disparities​

  • Regional Disparities: Poverty is more pronounced in certain regions. States like Bihar, Uttar Pradesh, Jharkhand, Madhya Pradesh, and Odisha have higher poverty rates compared to states like Kerala, Goa, Punjab, and Himachal Pradesh.
  • Social Disparities: Marginalized communities, such as Scheduled Castes (SCs), Scheduled Tribes (STs), and Other Backward Classes (OBCs), experience higher poverty rates than the general population. Additionally, women, children, and the elderly are more vulnerable to poverty.

Understanding Inequality in India​

Types of Inequality​

  • Income Inequality: Refers to the uneven distribution of income across different individuals or groups in society.
    • According to the World Inequality Report 2022, the top 1% of earners in India account for around 21.7% of the total national income, while the bottom 50% share only 13%.
  • Wealth Inequality: Refers to the unequal distribution of assets (land, property, stocks, etc.). Wealth inequality is more pronounced in India than income inequality.
    • The Oxfam Inequality Report 2023 reveals that the top 10% of the population holds over 77% of the total national wealth, while the bottom 50% holds only 13%.
  • Social Inequality: Based on caste, gender, religion, and ethnicity, this form of inequality affects access to education, healthcare, employment, and political participation.

Causes of Poverty and Inequality​

  1. Historical Factors

    • Colonial Exploitation: Colonial rule led to the exploitation of resources and wealth, creating structural poverty and inequality that persisted post-independence.
    • Caste System: Traditional social hierarchies like the caste system have led to systemic discrimination, restricting social and economic mobility for marginalized groups.

  2. Economic Factors

    • Unemployment and Underemployment: High rates of unemployment and underemployment, especially in rural areas, contribute significantly to poverty.
    • Agricultural Dependence: A large portion of the population depends on agriculture, which is often characterized by low productivity, lack of infrastructure, and vulnerability to climate change.
    • Unequal Access to Resources: Uneven access to land, credit, and other productive resources perpetuates income and wealth inequality.

  3. Social and Political Factors

    • Gender Discrimination: Women often face barriers to education, employment, and political participation, leading to higher poverty rates among women.
    • Lack of Social Mobility: Limited access to quality education and healthcare for marginalized groups restricts upward social mobility.

  4. Policy Failures

    • Inefficient Public Distribution System (PDS): Although the PDS aims to provide subsidized food grains to the poor, it suffers from inefficiencies, corruption, and leakage.
    • Inadequate Social Security: Insufficient coverage of social security schemes leaves many vulnerable groups without adequate support.

Government Initiatives to Alleviate Poverty and Inequality​

Major Poverty Alleviation Programs​

  1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) (2005)

    • Provides at least 100 days of wage employment per year to rural households, ensuring livelihood security and reducing poverty.
    • Focuses on creating durable assets such as roads, water bodies, and irrigation facilities.

  2. Pradhan Mantri Awas Yojana (PMAY) (2015)

    • Aims to provide affordable housing for all by 2022. The scheme targets both rural and urban areas to reduce homelessness and improve living standards.

  3. Pradhan Mantri Garib Kalyan Yojana (PMGKY) (2020)

    • A comprehensive relief package introduced during the COVID-19 pandemic to support the poor through direct cash transfers, free food grains, and employment schemes.

  4. National Food Security Act (NFSA) (2013)

    • Provides subsidized food grains to approximately 75% of the rural population and 50% of the urban population, ensuring food security and reducing hunger.

  5. Deen Dayal Upadhyaya Antyodaya Yojana (DAY) (2016)

    • Focuses on skill development and livelihood promotion for the poor in both urban and rural areas, aiming to enhance employability and reduce poverty.

Initiatives to Address Inequality​

  1. Reservation Policies

    • Provide affirmative action in education, employment, and politics for marginalized groups like SCs, STs, and OBCs to reduce social and economic disparities.

  2. Beti Bachao Beti Padhao (2015)

    • Aims to promote gender equality by addressing issues like female infanticide, improving girl-child education, and empowering women.

  3. Direct Benefit Transfer (DBT) (2013)

    • Ensures direct transfer of subsidies and welfare benefits to beneficiaries' bank accounts to reduce leakages and improve the efficiency of welfare programs.

  4. Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) (2018)

    • Provides health insurance coverage of up to ₹5 lakh per family per year for secondary and tertiary care hospitalization, aimed at reducing health inequality.

  5. Skill India Mission (2015)

    • Focuses on vocational training and skill development to improve employment opportunities and reduce income disparities.

Challenges in Addressing Poverty and Inequality​

  1. Persistent Poverty Pockets

    • Certain regions, especially in rural and tribal areas, remain poverty-stricken despite government efforts.

  2. Implementation Gaps

    • Poor implementation of welfare schemes, corruption, and lack of accountability reduce their effectiveness.

  3. Income Inequality

    • Rising income inequality, particularly in urban areas, remains a significant challenge despite growth.

  4. Gender and Social Inequalities

    • Gender-based discrimination and social exclusion continue to limit access to opportunities and resources for marginalized groups.

  5. Lack of Social Safety Nets

    • Inadequate social security coverage for informal workers, who constitute a large part of the workforce, leaves them vulnerable to poverty and shocks.

Conclusion​

Poverty and inequality are critical challenges that require a multi-faceted approach, combining economic growth with social justice. While India has made progress in poverty reduction, persistent inequalities necessitate sustained policy efforts, improved governance, and targeted interventions to ensure inclusive and equitable development for all.

Key Terms: Poverty Line, Multidimensional Poverty Index, Income Inequality, Wealth Inequality, Social Mobility, Public Distribution System.

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