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6 Things to Know About Poverty Reduction in India

Poverty Reduction in IndiaPoverty remains a significant challenge in India, a country with a population of more than 1.4 billion people. However, efforts to alleviate poverty have shown progress over the years. Here are six things to know about poverty reduction in India.

6 Things to Know About Poverty Reduction in India

  1. Significant decrease in poverty rates – From 1993 to 2011, according to the World Bank, the national poverty rate declined from 45% to 22%. This notable achievement could be due to a combination of factors, including economic growth, targeted government programs and increased access to education and health care. This reduction has lifted millions of people out of poverty and improved their living conditions.
  2. Rural-urban divide persists – Poverty rates in India are still higher in rural areas compared to urban areas. Approximately 65% of India’s population resides in rural regions, where access to basic services and economic opportunities can be difficult. Addressing rural poverty remains a crucial focus for poverty reduction efforts. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) guarantees 100 days of employment per year to rural households, providing a safety net and enhancing livelihoods.
  3. Social welfare programs – The Indian government has implemented various social welfare programs to combat poverty. One significant initiative is the Sarva Shiksha Abhiyan (SSA), launched in 2001, which aims to provide free and compulsory education for all children between the ages of 6 and 14. The Mid-Day Meal Scheme started in 1995 and is another crucial program that ensures free lunch meals at schools for underprivileged children. These programs have contributed to increased school attendance and improved educational outcomes among disadvantaged communities.
  4. Affirmative action policies – To promote social equity and equal opportunities, the Indian government has implemented affirmative action policies. These policies include reservations for Scheduled Castes, Scheduled Tribes and Other Classes in educational institutions, government jobs and political representation. These efforts aim to address historical marginalization and create a more inclusive society.
  5. Targeting marginalized communities – In addition to affirmative action, the government has launched development initiatives specifically targeting marginalized groups. For example, the National Rural Livelihood Mission (NRLM) focuses on empowering women and the rural poor through self-help groups and skill development programs. Similarly, the National Urban Livelihoods Mission (NULM) aims to enhance livelihood opportunities and improve living conditions for urban poor communities. These programs have reached millions of individuals, providing them with training, access to credit and support for entrepreneurial ventures.
  6. Progress toward universal access to education and health care – The Indian government has taken significant steps toward ensuring universal access to education and health care services. Efforts like the Pradhan Mantri Jan Dhan Yojana, launched in 2014, have aimed to provide access to financial services for the unbanked population, enabling them to save money, access credit and benefit from government welfare schemes. Another program is the Ayushman Bharat program which aims to provide health insurance coverage to millions of vulnerable households, reducing the financial burden.

Looking Ahead

While progress is visible, challenges persist in India’s fight against poverty. Income inequality, regional disparities and limited access to basic services remain key issues. It appears that there is a need for continued efforts to enhance social protection systems, promote inclusive economic growth and ensure equal opportunities for all in a bid to reduce poverty in India.

India’s commitment to poverty reduction, coupled with its growing economy, cultural diversity and vast human resources, provides a foundation for continued progress. By addressing the multifaceted nature of poverty and implementing targeted interventions, there is hope that India can strive toward establishing a more equitable and prosperous society for all its citizens.

– Pranav Ramanathan
Photo: Flickr

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5 Poverty Reduction Initiatives in India

Poverty Reduction in India
Since the 2000s, India has made great strides towards decreasing poverty. Between 2011 and 2019, some 262 million people rose above the poverty level. While the COVID-19 outbreak reversed this trend, India expects to make a comeback thanks to its government initiatives addressing poverty. Here are five poverty reduction initiatives in India.

  1. Saansad Aadarsh Gram Yojana (SAGY): Prime Minister Narendra Modi started Saansad Aadarsh Gram Yojana (SAGY) after considering the increasing poverty rates in October 2014. SAGY is a government program that focuses on the social and cultural development of villages. A central goal of SAGY’s is for each Member of Parliament to develop three villages by 2019. These villages serve as model villages providing basic amenities and livelihood opportunities. The overall purpose of the program is to improve the living conditions and overall quality of life for all residents. This occurs by increasing educational opportunities, raising literacy rates and updating social norms and customs. In an effort to improve the development of communities, SAGY converts schools into “smart schools.” The smart schools are equipped with IT-enabled classrooms, e-libraries and web-based teaching in an effort to make all students e-literate. If students are e-literate, they are more likely to receive a quality education. Between SAGY’s initiation in 2014 and a June 2017 referendum, it implemented 2,649 social development projects, completed 1,239 projects and had another 539 still in progress. In addition to social development, SAGY also has thousands of projects devoted to health, economic development, infrastructure and more.
  2. National Rural Livelihood Mission (NRLM): The Ministry of Rural Development started National Rural Livelihood Mission (NRLM) in June 2011 to provide the impoverished with a stable monthly income. Unemployment serves as one of the many reasons for poverty in India. In 2019, more than 75% of households in India did not have a stable source of income. NRLM provides households with the means to self-employment and skilled wage employment opportunities to improve their livelihoods. The program emerged upon the belief in the hidden skills and capabilities of those in poverty. All it takes is guidance and resources to create a sustainable life. Such resources include institutional platforms that the World Bank partially funds, entitlements, access to rights and public services. NRLM’s strategy allows the economy of the country to build from within and flourish. NRLM increases household revenue and savings by increasing finance accessibility and jobs, and decreasing loan dependency. Both men and women also experienced increased participation in the labor force. After evaluation, researchers found that the program impacted the households in the treatment villages more than in the controlled villages. Treatment households experienced a 19% increase in income over 2.5 years.
  3. Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM): The Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) similarly works to reduce poverty and vulnerability by providing access to self-employment and skilled wage employment opportunities. The Ministry of Housing and Urban Affairs began the NULM in September 2013. The poor in India’s urbanized areas have low education rates, harsh living conditions and minimal work opportunities. DAY-NULM motivates the urban poor, trains them, provides shelter and establishes rights-based linkages with other programs. The Employment through Skills Training & Placement (EST&P) Component constitutes one of DAY-NULM’s programs that showcases great results. This initiative provides three types of programs. Firstly, it trains fresh entrants to the job market. Second, it offers skill up-gradation of those employed. Thirdly, it extends formal recognition and certification of those with both informal and non-formal skills training in any vocational trade or craft.
  4. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) passed in August 2005 and launched the following February. MGNREGA’s mission is to provide 100 days of guaranteed wage employment to inexperienced workers. It also seeks to increase economic security and decrease labor migration from rural to urban areas. A portion of the jobs is specifically for women. Since its launch, job opportunities increased by 240% in large part thanks to MGNREGA’s role. The equality and quality of labor also improved in rural India, including diminished wage fluctuation and the gender pay gap. MNREGA also provides minimum wages to employees, making basic amenities accessible and helping increase income and purchasing power. Since 2006, MNREGA gave jobs cards to nearly 900 million households. Of the nearly 315 million who demanded jobs, 98% received employment. From 2006 until 2015, an average of 45 million households received employment annually, constituting 30% of India’s entire rural household population.
  5. Pradhan Mantri Jan Dhan Yojana (PMJDY): In August 2014, Modi launched Pradhan Mantri Jan Dhan Yojana (PMJDY). Driven by financial inclusion, PMJDY endeavors to secure communities with affordable financial services. These financial services include pension, insurance, savings and deposit accounts, remittance, credit and insurance. PMJDY opened 12.54 billion accounts by January 2015, with deposits surpassing Rs 10,000 crores ($133 billion). In total, PMJDY achieved opening 17.9 billion accounts during the first year of implementation. As a result, deposits doubled between 2015 to 2020.

How Poverty Reduction Initiatives in India Have Helped

The government’s investment in these five poverty reduction initiatives in India, among others, helped decrease India’s poverty rate tremendously. Each individual initiative provides the impoverished with effective ways and resources to escape poverty. Like the NRLM states, the impoverished have strong desires to overcome poverty and have the capabilities to do so. All it takes is initiative.

– Destiny Jackson
Photo: Flickr

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The Past and Future of Poverty Reduction in India

Poverty Reduction in India
Just this May, India was reported to have stepped down in the ranking of the largest number of poor people in one country when Nigeria took its previous place. India has increasingly been acknowledged for its poverty reduction efforts and results in the last 10 years. According to The World Bank, poverty in India has dropped from 38.9 percent to 21.2 percent in less than a decade since 2004.

However, despite the fact that there has been a lot of success in poverty reduction in India, there are still quite a few challenges ahead. This article will first discuss the driving force for success in the past and future strategies for further improvements.

Lessons from the Past—the Urban v. Rural Lens

Poverty reduction in India has been largely consistent with its patterns of economic growth since the 1980s. In other words, as India’s economy picked up its per capita income growth rate from 1.8 percent to 4.3 percent per year in around three decades, the rate of people climbing out of poverty has increased as well.

Before economic reforms of the 1990s, economic growth in rural areas was especially conducive for poverty reduction in India. Compared to growth in the manufacturing sector, growth in the agricultural and service sectors have shown better outcomes in alleviating poverty overall. Urban growth and manufacturing growth did not necessarily benefit the rural poor and its benefits in the urban population were far from consistent.

After the 1990s reforms, the patterns of poverty reduction shifted significantly. Urban growth came to be the key driver of poverty reduction in both urban and rural areas. The agricultural, service, as well as the manufacturing factors all accelerated poverty decline. Ultimately, urban growth is less favorable than rural growth in terms of distributional effects when trying to decrease poverty.

Uneven Growth

Poverty reduction advances at very different paces in different geographical areas in India. States including Kerala are decreasing poverty at a much faster rate than states like Bihar and Rajasthan. More strikingly, one’s gender, social status, and ethnicity are important factors when it comes to getting rid of poverty. Gaps of economic improvement across such identities are significantly wider.

The economic elites are also taking a larger share of economic advancement. Every year, the top 10 percent get more than half of the national income, which has increased significantly from the 1980s when the number was closer to a third. At the same time, the bottom 50 percent take a mere 15 percent.

To be Addressed

While the rate of extreme poverty has dropped, many are still living in “poverty” in India when factors like education and healthcare are considered. Therefore, stronger and more capable state services are in need in order for people’s living standards to continue to improve.

Specific social groups, including women and scheduled tribes, need to have to better access to participation in the country’s economic growth. As historically disadvantaged groups, their advancement will be beneficial to not only themselves but society at large. Participation among these groups needs to be encoraged and facilitated.

Like many countries in East and Southeast Asia, India is also facing an aging population—the workforce will likely shrink, the demand for elderly care will be overwhelming for the nation’s current welfare services, and there will be increasing concerns for poverty among the elderly.

Seemingly, India’s economy will continue to grow at its current rate. In order for India’s economic growth to have a significant impact on reducing poverty, a restructuring and rethinking of economic distribution need to happen. As some studies have shown, what works in urban areas doesn’t necessarily work in rural areas. The nation still has a lot to do to secure the lives of those who only recently struggled out of poverty and to work to bring the rest of its population out of poverty for good.

– Feng Ye
Photo: Flickr

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Economic Growth in India Helping to Fight Poverty

economic growth in India
India, one of the most populous countries on Earth (around 1.2 billion people), witnessed rapid growth of its GDP over the last two decades, experiencing a surge in economic growth. In fact, income per capita has doubled in 12 years and triggered a solid overall reduction of the poverty rate.

The Central Statistics Organization Findings

According to the Central Statistics Organization (CSO), India’s gross domestic product grew by 6.3 percent, for a yearly rate of 7.1 percent between July and September of 2017; however, corporate earnings are expected to grow by over 20 percent in the financial year of 2017-18.

However, in the prospects of India’s GDP growth, the CSO has also included a slight decrease in the annual rate, which will fall to 6.5 percent in 2017-18. This result is an overall improvement considering that the Indian economy experienced a three-year low rate of 5.7 percent probably due to the implementation of a goods and services tax (GST). 

Positive Outcomes

The general picture, nevertheless, yields incredibly positive outcomes: income tax returns rose 21 percent to 42.1 million in 2016-17, and India gained a position as the third largest startup base in the world with over 4,750 technology startups, 1,400 of which were founded in 2016.

Moreover, the tax collection figures between April-June 2017 show an increase in Net Indirect taxes by 30.8 percent and an increase in Net Direct Taxes by 24.79 percent year-to-year — indicators of steady economic growth in India.

Among the factors that have and continue to contribute to the country’s development, it’s worth noting a few crucial ones i.e. fast-growing population of working age, wage costs and the structure of the legal system.

The presence of 700 million Indians under the age of 35 and steadily growing demographics for the next twenty years demonstrates the increase of the working-age population from 58 percent to 64 percent over the last two decades. Furthermore, many of these people are English speakers which creates a strong legal system and facilitates the attraction of foreign investments, especially from companies specializing in IT outsourcing.

Past and Future Progress

Wage costs are also quite low and the productivity gap between India and other countries has been massively reduced over the last few years. As a result, India’s economy has successfully increased the presence of businesses in the field of technology, an upturn that has created Bangalore as a hub for global software businesses.

This economic growth in India has lent a massive hand towards the reduction of poverty in the country and to the development of living standards of its citizens. While there’s still ongoing debates on what living in poverty means and what threshold we employ to provide an accurate definition of poverty, the number of poor people did in fact drop from more than 400 million in 2005 to 270 million by 2012 — a wonderful omen for today and the future.

While the World Bank still counts many people below the line of global poverty, India’s poverty rate is the lowest among countries with large poor populationS. Overall, the future is bright for this South Asian country! 

– Luca Di Fabio

Photo: Unsplash