THE INDIAN POLITY AND GOVERNANCE

1. NITI AAYOG’S INDIA INNOVATION INDEX, 2022

THE CONTEXT: According to Niti Aayog’s India Innovation Index Karnataka has bagged the top rank in NITI Aayog’s India Innovation Index, 2022, which determines innovation capacities and ecosystems at the sub-national level.
THE EXPLANATION:
HIGHLIGHTS OF THE REPORT:
• Karnataka was followed by Telangana, Haryana, Maharashtra and Tamil Nadu. Chhattisgarh, Odisha, Bihar and Gujarat were at the bottom of the index.
• Manipur secured the lead in the Northeast and Hill States category, while Chandigarh was the top performer in the Union Territories and City States category.
• Pointing out that India’s average innovation score is arguably insufficient, given the country’s ambitious targets to be named among the top 25 nations in the Global Innovation Index, the report by the government think tank has recommended measures, such as increasing Gross Domestic Expenditure on R&D (GDERD), promoting private sector participation in R&D and closing the gap between industry demand and what the country produces through its education systems.
• The report went on to state that countries that spend less on GDERD fail to retain their human capital in the long run and the ability to innovate is dependent on the quality of human capital; India’s GDERD as a percentage of GDP stood at about 0.7%.
• “Therefore, GDERD needs considerable improvement and should touch at least 2%, which would play an instrumental role in India achieving the goal of a 5 trillion economy and further influence its innovative footprint across the globe,” it suggested.
• It added that the private sector needs to pick up pace in R&D. Taking the evidence from countries like South Korea, USA, and Germany, where the presence of private players is quite evident, the report noted that public expenditure is productive up to some extent; once the growth follows a trajectory, it is desirable to shift to R&D mostly drive by the private sector. “Therefore, it is important for India to find that inflexion point after which private sector takes over the government sector”.
• The report also noted that the country has not performed well in the knowledge worker pillar, as much as it has in the human capital pillar. “…the expenditure on human capital has been unable to create that knowledge base in the country…Moreover, it was also observed that innovation is skewed against the manufacturing sector due to the problems pertaining to and the missing middle. This requires inexorable efforts to overcome challenges and make the best use possible.
VALUE ADDITION:
The Gross domestic expenditure on R&D (GERD) as the percentage of gross domestic product (GDP) is around 0.7%. The percentage expenditure for the last couple of years has shown a downward trend.
1. Low Cost Indigenous solutions: R&D is desired in order to create tailor made solutions for the Indian population; such solutions that are cost effective and easily accessible to the poor sections like the Jaipur Foot.
2. Improve Learning Outcomes: The best teaching and learning process at the higher education level occurs in environments where there is a strong culture of research and knowledge creation. This is testified from the experience of the world’s best universities like the Harvard, Stanford, Oxford etc.
3. Reducing Imports: India spends considerable money for importing high end technologies from countries like the U.S, South Korea etc. which raises the import bill and increases fiscal deficit.
4. National Security: Relying on foreign countries for domestic R&D needs increases vulnerability of modern digital economies to cyber attacks and espionage. Experts have raised caution against the use of semiconductor chips imported from China. Further India is still one of the largest defense importers of the world as per data of Stockholm International Peace Research Institute.
5. Climate Change: The Sixth Report of IPCC has cautioned the world towards the approaching climate change. This warrants creating eco friendly technologies to reduce GHG emissions like building low cost solar panels, EVs, lithium batteries etc.

THE INTERNATIONAL RELATIONS

2. EXPLAINED: CAN EUROPE LIVE WITHOUT RUSSIAN NATURAL GAS?

THE CONTEXT:Europe faced an energy crisis even before drama emerged about the Nord Stream 1 pipeline reopening from Russia to Germany.
THE EXPLANATION:
• There are growing concerns in European countries that Russia would extend the temporary suspension of gas supplies in retaliation against the current sanctions levelled against Moscow.
• While there have been attempts to reduce the dependence on Russian gas, Germany, which is Europe’s biggest economy, continues to heavily rely on it. The Nord Stream 2 pipeline, which was completed in September 2021 and would double the flow of direct Russian gas to Germany, was suspended in February, (2022) in response to the invasion of Ukraine.
• The Nord Stream 1, however, continued to be used, whose flow of gas was slashed by 60% in mid-June by Moscow. Russia had blamed the reduction of supplies on the delayed return of a turbine, which was being serviced by Germany’s Siemens Energy in Canada.
What is Nord Stream 1?
• Nord Stream 1 is a 1,224 km underwater gas pipeline that runs from Vyborg in northwest Russia to Lubmin in northeastern Germany via the Baltic Sea. Majority owned by the Russian energy giant Gazprom, the pipeline is the primary route through which its gas enters Germany, as reported by Reuters.
• It transports 55 billion cubic metres of gas a year, of which most goes directly to Germany, while the rest travels west and southwards through onshore links to other countries and into storage caverns.

Germany is Russia’s biggest European gas consumer, and most of it comes through the Nord Stream Pipeline. Its share of Russian gas supplies was 55% in 2021, and currently lies at 35%.
What are Europe’s alternative sources of energy?
There have been growing concerns that there could be further restrictions to European gas supplies, well beyond the scheduled maintenance that has been imposed. European countries rely on Russian energy for their cold winters, but now believe that Russia could weaponize their dependency as a response to their sanction due to the conflict in Ukraine. If Nord Stream 1 does not resume its supply to Europe, it will not have adequate gas supply by the end of the year.
How has Canada stepped in to help Germany?
• To assist Berlin’s energy crisis, the Canadian government announced it would circumvent its own sanctions and return a repaired Russian gas turbine to Germany that is required for the Nord Stream 1 gas pipeline.
• While the Canadian government announced that it would introduce fresh sanctions on Russia’s industrial manufacturing sector, that it was introducing a “time-limited and revocable permit” to allow the return of the key component.

THE ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

3. REVISION SERIES: OBJECTIVES OF PM-KUSUM

THE CONTEXT: According to the Ministry of New and Renewable Energy,the provisions of PM-KUSUM Scheme to increase country’s solar water pump manufacturing capacity.
THE EXPLANATION:
The objectives of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) include de-dieselisation of the farm sector, providing water and energy security to farmers, increasing the income of farmers and curbing environmental pollution. To achieve these objectives, following targets have been kept under the Scheme:
• Component-A: 10,000 MW of Decentralized Ground Mounted Grid Connected Solar Power Plants.
• Component-B: Installation of 20 lakh standalone Solar Powered Agriculture Pumps.
• Component-C: Solarisation of 15 Lakh Grid-connected Agriculture Pumps including through Feeder Level Solarisation.
Following provisions of the PM-KUSUM Scheme aim to increase country’s solar water pump manufacturing capacity:
• Target of installation or solarisation of 35 lakh pumps through central financial support under the Scheme provides visibility of demand in the coming years.
• Condition of domestic content requirement for participation in Component-B and Component-C.
• Direct participation of manufacturers of solar pumps/ solar photovoltaic modules/ solar pump controller either as sole bidder or member of a Joint Venture, in bidding under Component-B and Component-C.
To avoid disruption of the groundwater table, particularly in the districts with depleted levels of ground water, installation of new solar pumps is not allowed under the Scheme in the dark zones/ areas notified by Central Ground Water Board (CGWB), which monitors and regulates groundwater development and extraction.
Only the existing diesel pumps can be replaced with solar pumps under Component-B and existing electric pumps can be solarized under Component-C in these areas provided they use micro-irrigation techniques to save water.
Additionally, to conserve groundwater, the following provisions are included in the PM-KUSUM Scheme:
• Preference for installation of standalone solar pumps and solarisation of existing agriculture pumps is given to the farmers using micro irrigation systems or covered under micro irrigation schemes or those who opt for micro irrigation systems.
• The size of the standalone solar pump is to be selected on the basis of the water table in the area, land covered and quantity of water required for irrigation.
• Farmers have the option to monetize the surplus power generated under individual grid-connected pump solarisation by selling it to the DISCOM. Further, under feeder level solarisation, farmers are incentivised for electricity consumption below the benchmark consumption.
The steps taken/being taken by the Ministry of New and Renewable Energy for decentralised solar power production include the following:
• Installation of grid-connected solar power plants up to 2 MW capacity under Component A of PM-KUSUM Scheme
• Installation of standalone solar pumps under Component-B and solarisation of grid-connected agriculture pumps including through feeder level solarisation under Component-C of PM-KUSUM Scheme by providing Central Financial Assistance (CFA).
• Promotion of rooftop solar under Solar Rooftop Phase II Programme by providing CFA in the residential sector and incentives to DISCOMs.
• Off-Grid & Decentralised Solar PV Applications Programme implemented during the years 2018-21 provided financial support for the installation of Solar Street Lights, Off-Grid Solar Power Plants and distribution of Solar Study Lamps.

4. STEPS BY GOVERNMENT OF INDIA TO PROMOTE RENEWABLE ENERGY IN THE COUNTRY

THE CONTEXT: According to the Ministry of New and Renewable Energy, the Government has taken several steps to promote renewable energy, including wind energy, in the country.
THE EXPLANATION:
India is anticipated to be the biggest contributor to the renewables boom in 2021, with the country’s annual growth in renewables doubling from 2020. Prime Minister of India mentioned about having huge renewable energy deployment plans for India for the next 10 years which are likely to create business opportunities of around $20 billion a year.
What is renewable energy?
• It is an energy that is generated from the renewable sources – the ones that can be replenished quickly on par with human demand.
• The examples of renewable energy sources include solar energy, wind energy, tidal energy, etc.
• These sources, if used to produce energy, can reduce the amount of carbon emitted into the atmosphere.
Renewable energy is often used in the following areas:
• Electricity generation
• Heating/cooling of air and water
• Transportation
• Stand-alone power system or Remote Area Power Supply (RAPS) for rural areas.
Measures taken to Promote Renewable Energy:
• Permitting Foreign Direct Investment (FDI) up to 100 percent under the automatic route,
• Waiver of Inter State Transmission System (ISTS) charges for inter-state sale of solar and wind power for projects to be commissioned by 30th June 2025,
• Declaration of trajectory for Renewable Purchase Obligation (RPO) up to the year 2022,
• Setting up of Ultra Mega Renewable Energy Parks to provide land and transmission to RE developers on a plug and play basis,
• Laying of new transmission lines and creating new sub-station capacity for evacuation of renewable power,
• Setting up of Project Development Cell for attracting and facilitating investments,
• Standard Bidding Guidelines for tariff based competitive bidding process for procurement of Power from Grid Connected Solar PV and Wind Projects.
• Government has issued orders that power shall be dispatched against Letter of Credit (LC) or advance payment to ensure timely payment by distribution licensees to RE generators.
• Conducting skill development programmes to create a pool of skilled manpower for implementation, operation and maintenance of RE projects.
In addition to the above, the following steps have been taken specifically for promoting wind energy:
• Concessional custom duty exemption on certain components required for manufacturing of wind electric generators.
• Generation Based Incentive (GBI) is being provided to the wind projects commissioned on or before 31 March 2017.
• Technical support including wind resource assessment and identification of potential sites through the National Institute of Wind Energy, Chennai.

THE SCIENCE AND TECHNOLOGY

5. NEW STUDY THAT SUGGESTS DEPRESSION IS NOT CAUSED BY SEROTONIN IMBALANCE IN BRAIN

THE CONTEXT: Researchers from University College London who carried out a “comprehensive review of the major strands of research on serotonin” have now reported that “there is no convincing evidence that depression is associated with, or caused by, lower serotonin concentrations or activity”.
THE EXPLANATION:
• Researchers from University College London who carried out a “comprehensive review of the major strands of research on serotonin” have now reported that “there is no convincing evidence that depression is associated with, or caused by, lower serotonin concentrations or activity”.
• For decades, a “chemical imbalance” in the brain, especially that of a chemical called serotonin, has been widely seen to be responsible for depression — a view that has promoted the use of antidepressants as part of the treatment for the condition.
What exactly is serotonin?
• Serotonin is a chemical that carries messages between nerve cells in the brain and throughout your body. Serotonin plays a key role in such body functions as mood, sleep, digestion, nausea, wound healing, bone health, blood clotting and sexual desire

What is the serotonin theory of depression?
• “The idea that depression is the result of abnormalities in brain chemicals, particularly serotonin (5-hydroxytryptamine or 5-HT), has been influential for decades, and provides an important justification for the use of antidepressants,” the authors write in the paper.
• Depression was first linked to lowered serotonin levels in the 1960s, according to researchers theory gained wide acceptance in the 1990s with the advent of Selective Serotonin Reuptake Inhibitor (SSRI) antidepressants, which temporarily increase the availability of serotonin in the brain.
What is the conclusion of the new research?
• Over the years, several studies have questioned the serotonin theory. The new study conducted an “umbrella review”, collating existing overviews of the principal areas of relevant research on serotonin and depression. The intention was to establish “whether the current evidence supports a role for serotonin in the aetiology of depression, and specifically whether depression is associated with indications of lowered serotonin concentrations or activity”.
• The conclusion of the study: “The serotonin theory of depression has been one of the most influential and extensively researched biological theories of the origins of depression. Our study shows that this view is not supported by scientific evidence. It also calls into question the basis for the use of antidepressants.”
• According to the researchers, there are other explanations for the effect that antidepressants have on a person. Drug trials show they are “barely distinguishable from a placebo (dummy pill) when it comes to treating depression,” and antidepressants appear to have more of a generalised emotion-numbing effect on people’s moods.
What causes depression, then?
• Several experts have said that the findings of the study should not lead anyone to immediately stop taking prescribed antidepressants. This ‘study of studies’ does make some important points, such as depression being a result of multiple factors, but more research is needed to confirm some of its big claims.
• The authors have concluded that it “is impossible to say that taking SSRI antidepressants is worthwhile, or even completely safe”, and that this study is “critical” for making informed decisions about whether or not to take antidepressants.

THE PRELIMS PERSPECTIVE

6. ONE WORD A DAY – MARBURG

THE CONTEXT:The first two cases of the Marburg virus disease, a highly infectious Ebola-like disease, have been confirmed officially by Ghana after test results were verified by a Senegal laboratory.
THE EXPLANATION:
• This outbreak is only the second time that the disease has been detected in West Africa.
• It was first detected in 1967 after simultaneous outbreaks in Marburg and Frankfurt in Germany; and in Belgrade, Serbia.
• Due to its detection in Marburg, it got its name.
What is the Marburg virus disease?
• According to WHO, Marburg virus disease (MVD), is a severe, often fatal hemorrhagic fever.
• It was earlier known as Marburg haemorrhagic fever.
• Marburg, like Ebola, is a filovirus; and both diseases are clinically similar.
What are the hosts for the Marburg virus?
• Rousettus fruit bats are considered the natural hosts for the Marburg virus.
• According to WHO, African green monkeys imported from Uganda were the source of the first human infection.
• It was first detected in 1967 after simultaneous outbreaks in Marburg and Frankfurt in Germany; and in Belgrade, Serbia.
• The disease has an average fatality rate of around 50%.
• However, it can be as low as 24% or as high as 88% depending on virus strain and case management, says the WHO.
What are the challenges with Marburg virus disease?
• It is difficult to clinically distinguish MVD from diseases such as malaria, typhoid fever and other viral haemorrhagic fevers.
• However, it is confirmed by lab testing of samples, which like Coronavirus and Ebola are extreme biohazard risks.
• There is no approved antiviral treatment or vaccine for MVD as of now.
• It can be managed with supportive care.
• According to the WHO, rehydration with oral or intravenous fluids, and treatment of specific symptoms can help prevent death.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY

Q.Consider the following statements with respect to Marburg viral disease:

1. This outbreak is only the second time that the disease has been detected in South America.
2. Rousettus fruit bats are considered the natural hosts for the Marburg virus.
Which of the following the above statements is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

ANSWER FOR 21TH JULY 2022

ANSWER: A
EXPLANATION:

• The government of India sets the MSP twice a year.
• The Commission for Agricultural Costs and Prices (CACP) which advises the minimum price, and the recommendations are not binding on the government.

[WpProQuiz 294]

THE CONTEXT: The discontentment with growth not being beneficial to all became a highly debated topic in the past few years and the arena of policy making also focused on reforms in a situation where India achieved higher economic growth but sluggish poverty reduction. Realising the importance of this debate, the government of India also envisioned “inclusive growth” as a strategy to ensure that economic progress is pro-poor and inclusive. This article explains various reasons for poverty in India and how can economic growth be of help in reducing the poverty.

WHAT IS ECONOMIC GROWTH?

Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.

Economic growth refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.

 INDIA’S GROWTH STORY

India’s economic journey since 1947 has seen its share of ups and downs. Once branded a “third world country”, a term for poor developing nation-states which has now fallen into disuse, India is now among the biggest economies of the world. In 1991, India was a leader of the G-77 (a group of poor countries constantly demanding more concessions to develop). Today India is in the T-20, the top 20 economies that lead the world.

FOOD PRODUCTION

• Achieving “self-sufficiency” in food grains has been Independent India’s biggest achievement. From receiving food aid in the 1950s and 1960s to becoming a net exporter, India has seen a turnaround in food production. The total food production, which stood at 54.92 million tonnes in 1950, rose to 305.44 million tonnes in 2020-21.

GROSS DOMESTIC PRODUCT (GDP)

• India’s GDP stood at ₹ 2.7 lakh crore at Independence. 74 years on, it has reached ₹ 135.13 lakh crore. India is now the 6th largest economy in the world and is on its way to becoming the third-largest by 2031, as per Bank of America. An unmissable fact is that there has been a 10- fold increase in the GDP (at constant prices) since the reform process began in 1991.

FOREX 

• India’s forex reserves (In foreign currencies and other assets like gold) stood at a meagre ₹ 1,029 crores in 1950-51. In fact, India’s low forex reserves played a catalytical role in kick starting the economic reforms. With just $1.2 billion worth of forex reserves in 1991, India just had enough reserves to finance 3 weeks of imports. Three decades since the reform process began, India’s forex reserves now stand at ₹ 46.17 lakh crore – the world’s fifth-largest.

START-UP ECOSYSTEM

• India has emerged as the third-largest startup ecosystem in the world after the US and China and the pace of growth is not showing any signs of slowing down.

POVERTY

• 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 can’t be met.
• According to World Bank, Poverty is pronounced 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. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life.
• In India, 21.9% of the population lives below the national poverty line in 2011, however, this estimate of numbers might have increased in the aftermath of the Covid pandemic bringing many into the poverty net and still many poor were pushed deeper into poverty.
• Also, the Periodic Labour Force Survey for the years 2017-18, 2018-19 and 2019-20 shows that the Top 10% earn approximately equal to the bottom 64%. The top 10 accounts for one-third of the incomes earned. While income disparity is not the only trigger to descent into poverty, it boldly outlines the everyday experiences of inequality and inequities.

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. It was first introduced in 1990, the “dollar a day” poverty line measured absolute poverty by the standards of the world’s poorest countries. In October 2015, the World Bank reset it to $1.90 a day.

RELATIVE POVERTY

• It is defined from the social perspective that is living standard compared to the economic standards of the population living in its 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.

CAUSES OF POVERTY IN INDIA

GROWTH FACTOR 

• As development proceeds, the earnings of different groups rise differently.
• The incomes of the upper-income and middle-income groups rise more rapidly than those of the poor. This happens in the early stages of growth which India is passing at present.
• The explanation lies in the shift of population from agriculture which is a slow-growing sector to the modern large industrial sector which grows more rapidly.
• The capital-intensive type of growth leads to the concentration of income in those few hands who supply capital.

PRIVATE OWNERSHIP OF PROPERTY

• India being a mixed economy, has guaranteed the right to private property to its people Accordingly, tangible wealth like land, buildings, automobiles, white goods etc. are owned by a private individual.
• Inequalities of income have resulted from the ownership of private property in the following manner:

Ø  Inequalities Arising Out of Concentrated Land Ownership and Concentration of Tangible Wealth in the Rural Sector.

Ø  Private Ownership of Industries, Trade and Real Estates.

Ø  Inequalities in Professional Knowledge and Training

PREVALENCE OF THE LAW OF INHERITANCE

• The prevalence of the law of inheritance perpetuates income inequalities to a significant level.
• As per this law, the property of the father is usually inherited by his sons and daughters and thus children of the richer class automatically become richer and the children of the poorer class remain poor.

CLASS-BASED DEVELOPMENTS

• The upper classes were the main beneficiary of the nation’s surging economic development and poverty rates are also significantly lower among the upper caste Hindus rather than in the others classes
• One-third of Muslim and Hindu scheduled castes and tribes are in poverty compared to 10% of the upper castes Hindu. Altogether, 28% or around 360 million Indians are living in conditions of severe poverty.

OTHER FACTORS

Ø  SOCIAL FACTORS: Apart from economic factors, there are also social factors hindering the eradication of poverty in India. Some of the hindrances in this regard are the laws of inheritance, caste system, certain traditions, etc.

Ø  CLIMATIC FACTORS: Most of India’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, Odisha, Jharkhand, etc. Natural calamities such as frequent floods, disasters, earthquakes and cyclones cause heavy damage to agriculture in these states.

Ø  POVERTY TRAP:

CONSEQUENCES OF POVERTY

SOCIO-ECONOMIC IMPACTS

• It is estimated that 300 million Indians live in abject poverty. This is the largest number in the world.
• India has the highest number of homeless people.
• Gender inequality leading to violence against women, the burden of unpaid care work, fiscal injustice for women and other marginalised groups. Inequality leads to increased crime and workplace accidents.
• It stems from class, caste and gender inequalities.

INADEQUATE DEVELOPMENT

• The gap between the rich and the poor has created “Club States” with Gujarat, Punjab and other rich states forming the richest clubs.
• Madhya Pradesh, Orissa, Bihar and other such states being left behind in terms of development.

INEQUALITY MAKES THE FIGHT TO END POVERTY MUCH HARDER

• Higher income inequality impedes class formation and poverty reduction.
• Unless growth benefits the poorest people more between now and 2030, the World Bank forecasts that the first Sustainable Development Goal (SDG) to eliminate extreme poverty will be missed.
• Access to social amenities such as decent shelter, clean water, nutrition and food as well as healthcare and education has become difficult for the poor.

Case study

The growth of the middle class plays a significant role in strengthening democratic structures and cultures. But rising income inequality in India is hampering the formation and growth of the middle class. If one were to take an income of $10-$20 per day in 2011 purchasing power parity as an indicator of the middle class, then India has not done as well as Malaysia, Indonesia and China in growing its middle class.

DISPARITIES IN SOCIAL SERVICE

• The highest-quality medical care is only available to those who have the money to pay for it.
• The country is a top destination for medical tourism. At the same time, levels of public spending on health are some of the lowest in the world.
• The poorest Indian states have infant mortality rates higher than those in Sub-Saharan Africa.
• The shortage of health specialists in rural areas, the report compares India’s 0.7 doctors per 1,000 people to the UK’s 2.8.
• The dropping enrolment ratio in government schools, particularly for girls, while private schools see an uptick in admission.

THE ANALYSIS: THE GROWTH – POVERTY PARADOX 

• The surging economic growth has improved the living conditions of its citizens, but these improvements were not uniformly distributed among India’s diverse population. Despite being among the richest countries in the world, India has attracted negative attention in recent years and ranked 66 out of 109 countries in Multidimensional Poverty Index 2021.
• On the surface, India’s story of growth and its triumph over poverty is enviable. India’s income per capita has increased fourfold in the last two decades, and its absolute poverty – measured on the international poverty line – reduced sharply from 40 per cent in 2000 to 13.4 per cent in 2015 but while India is no longer chronically poor, its growth has not been inclusive. The segment of the population that ‘graduated’ from poverty is largely still vulnerable, with consumption levels very close to the poverty line, and far from becoming a ‘middle class.’
• Poverty is concentrated more and more in urban areas, as now one-in-three poor is living in urban areas, which was about one-in-eight in the early 1950s. In the post-liberalisation period, urban growth and non-agricultural growth has emerged as major driver of national poverty reduction including rural poverty.
• Unlike in advanced economies, economic growth and inequality converge in terms of their effects on socio-economic indicators in India i.e. with economic growth the inequality in income and asset distribution also increases; however economic growth helps in reducing the poverty.
• Manifestation of unequal growth is also growing inequalities:
• Growing Rich: During the pandemic, the wealth of Indian billionaires increased from Rs 23.14 lakh crore to Rs 53.16 lakh crore.

ü  India has the third-highest number of billionaires in the world, just behind China and the United States.

ü  There is a 39% increase in the number of billionaires in India in 2021.

• Growing Poor: More than 4.6 crore Indians are estimated to have fallen into extreme poverty in 2020. This is nearly half of the global new poor according to the United Nations.

ü  Also, in the same year, the share of the bottom 50% of the population in national wealth was a mere 6%.

• Unemployment in India has also increased.

CASE STUDY OF TWO GOVERNMENT PROGRAMS AIMED AT POVERTY REDUCTION

PRADHAN MANTRI GRAM SADAK YOJANA (PMGSY)

• PMGSY, state-wise allocations are fixed based on pre-determined gaps in road infrastructure. That automatically ensures more money is released and roads get built.
• PMGSY is less prone to leakage because it is a specific asset-focused programme.

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGA)

• MGNREGA is supposed to be demand or need-driven, the reality is that it is being successfully implemented only in better-governed states even with lower levels of poverty.
• MGNREGA is general dole-based and not amenable to monitoring beyond a point.

MGNREGA may have a role in mitigating immediate rural distress on account of drought and other unforeseen calamities. But programmes like PMGSY provide more effective long-term poverty alleviation solutions, through raising overall productivity and expansion of non-farm employment opportunities.

BHAGWATI – SEN DEBATE

Bhagwati Model:The idea in the book ” Why Growth Matters: How Economic growth in India reduced Poverty and lessons for other developing countries” is in consonance with Adam Smith’s theory of the invisible hand of the market. It believes that increasing the pie of growth can ultimately lead to an increase in income and consequent development. In other words, it believes in the trickle-down effect.

Amartya’s Sen Model:The idea is propounded in his book ” An uncertain glory: India and its contradiction”. It proposes an increase in the capacity and capability of people as the prime mover of development. Thus Government needs to invest in public health, infrastructure, education and democratic participation. It fosters the idea of a bottom-up approach. The ability of each individual as a change agent. It is about empowerment.

THE WAY FORWARD: ELIMINATING POVERTY IN INDIA

FIXING MINIMUM WAGE 

• Guarantee each citizen a minimum wage consistent with a minimum standard of living.
• In India in 1948, the Minimum Wages Act was passed in pursuance of which minimum wages are being fixed for agricultural labour and labour in what is called the ‘sweated trades’. This is a step which will level up the incomes from below.

SOCIAL SECURITY 

• Introduction of a comprehensive social security scheme guaranteeing to each individual a minimum standard of economic welfare.
• The government includes progressively making school education free; ensuring reduced out-of-pocket expenses on health, and meeting global benchmarks of 6% and 3.5% of GDP on education and public health respectively.
• Strengthening quality public healthcare, strict enforcement of the Right to Education norms, stopping the commercialisation of education and health, and an increased focus on gender budgeting.

PROMOTION OF LABOUR-INTENSIVE MANUFACTURING

• The proportion of the labour force in agriculture has come down, but the workers who have left farms have not got jobs in modern factories or offices. Most are stuck in tiny informal enterprises with abysmal productivity levels.
• If India could somehow reverse this trend and promote labour-intensive manufacturing then inequality could fall.

MORE INCLUSIVE GROWTH

• The promotion and adoption of an Inclusive Growth Agenda is the only solution to the rising inequality problem. Economic growth which is not inclusive will only exacerbate inequality

SKILL DEVELOPMENT

• The development of advanced skills among the youth is a prerequisite if India wants to make use of its demographic dividend. The skilling of youth by increasing investment in education is the only way we can reduce inequality. India needs to become a Skill-led economy

PROGRESSIVE TAXATION

• Higher taxes on the Rich and the luxuries will help reduce income inequalities.
• Getting the richest one per cent in India to pay just 0.5 per cent extra tax on their wealth could raise enough money enough to increase government spending on the heath by 50 per cent

EQUAL OPPORTUNITY FOR ALL

• The Government may devise and set up some sort of machinery which may provide equal opportunities to all rich and poor in getting employment or getting a start in trade and industry.
• In other words, something may be done to eliminate the family influence in the matter of choice of a profession. For example, the government may institute a system of liberal stipends and scholarships, so that even the poorest in the land can acquire the highest education and technical skill.

LEARN FROM OTHER COUNTRIES

China’s case study

• Meta’s narrative for China’s economic development is that its leadership combined the drive for growth with the spreading of human capital.
• As the human capital endowment was relatively equal, most people could share in this growth, which accounts for the relative equality of outcomes in China when compared to India.
• The greater participation of women in the workforce of China

THE CONCLUSION:

India’s dominant economic growth over the last 30 years continued to pull millions of people out of poverty. Due to the unexpected impact of COVID-19, India experienced a spike in its poverty rate. Moving forward, the elimination of poverty in India over the next decade is within reach in spite of the challenges ahead.Rapid economic growth and the use of technology for social sector programs can help make a significant dent in extreme poverty in the country.

MAINS PRACTICE QUESTION:

1. Given India’s stage of development, India must continue to focus on economic growth to lift the poor out of poverty by expanding the overall pie. Comment.
2. Poverty in India is an ever-present problem throughout the country’s history, and unfortunately, it seems that it will continue to be a problem as long as income inequality continues to exist. Suggest measures to reduce income inequality in light of COVID-induced increased inequalities.