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POVERTY AND SOCIAL SECTOR
WHAT IS MEANT BY POVERTY IN INDIA?
Poverty is defined as the minimum basic consumption level, essential for survival.
It has been defined by the Planning Commission of India in terms of calorie intake.
Absolute poverty is a condition, where the calorie intake is less than 2400 kcal per
person per day in rural areas and 2100 kcal per person per day in urban areas.
The World Bank has coined its own universal definition of poverty levels as per
person consumption of less than US $1 per day.
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Relative poverty, is across difference in income levels of the rich and the relative
poor.
Even by this crude definition of Planning Commission of absolute poverty it is
estimated that over 230 million people are living below poverty line (BPL).
India is said to have the largest number of people living BPL
The number of people BPL is even more higher than the entire population of the US.
Poverty is largely concentrated in states such as UP, Bihar, Orissa, MP, West
Bengal and they account for over 50 per cent of the total poverty in India.
Despite over six decades of independence, why poverty continues to exist? It can
be attributed to the large economic dependence on the agricultural sector,
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subsistence, traditional and stagnating, which are not able to provide enough for the
dependent population in terms of employment opportunities, high levels of adult
illiteracy, large number of landless, small and marginal farmers with no income
support. There is absence of employment opportunities in the manufacturing sector.
Social sector and poverty are interrelated as it largely comprises of those BPL and
that segment of the population which is outside the mainstream of development,
which consists of the under-privileged, always at the receiving end, poor, backward
classes and scheduled castes/tribes.
It will also have landless, small and marginal farmers who are engaged in
casual work in the informal sector, living virtually on a daily basis. They are
the most vulnerable section prone to exploitation and domination
One has already seen earlier, why this has happened. But what has the
Government done about this? It has adopted a three-pronged strategy to
address the social sectors which are as follows:
(1) Broad Targeting
(2) Narrow Targeting
(3) Social Security
Broad Targeting
Under broad targeting the Government has two ambitious programmes. First is the Bharat
Nirman (20052010) which has six sub-programmes:
(1) Irrigationto bring an additional 1 crore hectare under irrigation facilities.
(2) Rural road connectivitycovering all villages with population more than 1000 and
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villages in hilly and tribal areas with population more than 500.
Indira Awas Yojana-building 6 million houses for the poor.
Potable waterproviding with drinking water in 55,065 new habitations.
Rural electrificationelectricity to 1,25,000 villages benefiting 223 million households.
Rural telephonyproviding telephone connection to 66,822 villages.
Second is the programme of the UPA Government, which has eight ambitious flagship
schemes:
(3)
(4)
(5)
(6)
(|1| Sarva Siksha Abhiyanall children in the age group of 614 years to be enrolled in school
(2) Mid-day Meal schemeprovision of one wholesome full meal to the children in school.
This is to meet both the objective of malnutrition amongst children and also to give a
boost to the enrolment ratio in schools.
(3)
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA)
(4)
Total Sanitation Campaign
(5)
Jawaharlal Nehru National Urban Renewal Mission (JnNURM)
(6)
Integrated Child Development and Services (ICDS)
(7)
National Rural Health Mission (NRHM)
(8)
Rajiv Gandhi Drinking Water Scheme
Of all the above, the Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGA) is the most ambitious project of the government which is implemented at
the national level and of magnitude not seen anywhere in the world the brain child of Jean
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Dreze, a Belgian economist. This scheme has now been enact guarantees unskilled wage
employment of 100 days to one person in every rural house
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The 100 days employment under this scheme is visualized in the lean season of
agricultural activities.
This scheme is being implemented in all the districts of the country and is
seen as a major step in creating the employment opportunities and also for
poverty alleviation in the country.
Women are given preference for employment under this scheme, which has
no middlemen or contractor and directly being implemented by the Gram
Panchayats and the wages are paid in the bank account of those who are
provided with the employment.
The state governments are required to give unemployment allowance of
one-third of the wages if not able to provide employment within 15 days of
their, registration. This scheme has been globally lauded as one of the most
well intended schemes for the social sector anywhere in the world
Critics of the scheme, however, feel that such a scheme could be damaging in
the long run by pushing up the minimum wages and increase cost in the
agricultural as well/ as urban areas, adversely affect productivity and also
prevent migration of labour, besides fuelling inflation.
Narrow Targeting
The government is attempting narrow targeting which are :
(1) Wage Employment Schemeprimarily through Mahatma Gandhi NREGA.
(2) Self-Employment Schemesprimarily through Swaran Jayanti Grameen Sah-
rozgar Yogana (SGSY) in the rural areas and through Swaran Jayanti Shahri
Rozgar Yogana (SJSRY) in the urban areas.
(3) Food securityprimarily through TPDS, AAY, Annapurna Scheme for senior
citizens.
Social Security
The government is providing social security under its various programmes such as:
Aam Admi Bima Yojana: This scheme is targeted at the rural landless
households where one earning member within the age group of 18-59 years is
insured by the central government and the remaining 50 per cent to be borne by
the state governments. The coverage is Rs. 30,000 for natural death and Rs.75,000
in case of accidental death. As an additional incentive, children of the insured
studying of the class 912 would get scholarship of Rs.300 per quarter
Universal Health Insurance Scheme (UHIS): This scheme of the Government is
being implemented by the Oriental Insurance Company aimed at BPL families.
This scheme provides coverage of hospitalization expenses upto Rs.30,000 per
year, per person insured under the scheme.
Janashree Bima Yogana (JBY): This scheme is being implemented by the Life
Insurance Corporation of India (LIC) aimed at BPL families, providing insurance
and 50 % by the social security fund.
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Swavalamban Scheme: This scheme has been launched by LIC, on behalf of the government in 2010, as a pension scheme for
the unorganized sector.
A few reasons for not a delivering are as follows:
The Government has well-designed schemes. The question is not about intention but that of implementation of these
schemes, proper identification of the targeted beneficiaries.
(2) There is also a lack of awareness of these schemes amongst the masses given their illiteracy and ignorance.
(3) There is also absence of any monitoring mechanism for the efficacy of such schemes or to know die end result. The focus is
on new schemes but there is no mechanism of tracking down the outcome.
(4) It may be better to implement these programmes through NGOs after a strict screening process and also with proper
checks and balances in place.
(5) There is a need to bring in an independent social audit of these schemes not for fixing accountability but for plugging
leakages, improving delivery so as to make the schemes effective and true to their intention for the overall benefit of the
social sector.
(6) Today, there is availability of modern technology which can be deployed for capturing information and creating a
database which will enable a tracking mechanism for the target group and their reach and will be useful in refining the
schemes in future.
(7) Finally, the focus of the government has been on schemes, so many that they overlap with diffused focus and
accountability at different levels.
(1)
MICRO FINANCE
Given that social sector do not have access to organize sources of finance say through banks and also given their
extensive paper work, cumbersome procedures, documentation requirement, the micro credit institutions are today
seen as offering a solution both for the social sector as well as addressing the issues of poverty.
These institutions, as a concept have their genesis in Bangladesh, pioneered by Mohammed Yunus, for which he was
awarded the Nobel Prize, as successful institutions for reaching out to the last unit of any economy not possible
through banks and directly contributing to the uplift of the poor especially rural women.
In India, the SHG movement started in 1992 under NABARD and with involvement of banks.
Under the SHG scheme credit is linked to savings by focusing on capacity building, with low interest rates usually 810 per cent with monthly repayment but responsibility of the group and not individuals.
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SHGs in India cover 90 million poor households and have extended credit of over Rs.25,000 crore.
Micro Finance Institutions (MFIs) are institutions which provide credit to the poor but at a high interest rate but
lower than that charged by the money lenders.
MFIs in India have engaged the attention of the government only since 2003 and in the last 7 years, have seen an
exponential expansion to reach 30 million and credit of over Rs.30,000 crore.
These have been seen as partnering SHGs in micro finance in India and also a major way through which the country
could provide financial inclusion, that is, to provide accessibility to organized sources of finance to the poor people
and reduce their dependence on the money lenders for their income generating activities enabling them to have
source of income, employment and also get out of poverty.
In recent times, MFIs especially in Andhra Pradesh, have given a new dimension and raised the following
fundamental issues:
(1) Their prime motive is to earn profits through high profit margins by charging high interest rates but slightly lower than
that charged by the money lenders
(2) MFIs have reached out to those ignored by the banks and also the fact they are not complementing the efforts of the banks.
There is sizeable concentration of MFIs in areas where there is banking penetration.
(3) MFIs are finding softer options of lending like SHGs, which leads to multiple financing, debt burden on the borrowers.
MFI are aggressive and are more consuming oriented loans, less productive-oriented, similar like a private bank selling
consumer loans or the US banks lending to subprime borrowers
These developments have forced the government to rethink on this model of financial inclusion and adding in place regulations
for the MFI.
At a broader level and to provide greater inclusivity the nationalized banks are better placed than the MFIs through
innovative means such as the correspondent banking route, which will keep costs low of reaching out without the
need for more branches. Micro finance through MFIs would thus require a redesign but their greater complementary
and compatibility role with the banks would have to be explored to make them as effective institutions of micro
finance in India.
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Social sector is one of the key sectors of the economy and reaching out to them and drawing them into mainstream
of development is the biggest responsibility of the government, as only then the biggest transformation of the
economy would happen by bringing all round prosperity.
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