Prosperity in the 21st century {Economic Policy}

Context

Economic reforms without a robust agricultural growth may not have reduced urban poverty

Issues

Reduction of inequality may not result in the elimination of poverty.

The experience of poverty for an individual is not necessarily the same as that of inequality, and poverty reduction often requires particular attention.

Solution

Inequality can be reduced by taxing the rich, a form of ‘levelling down’, but poverty can be permanently eliminated only by raising the incomes of the poor, a form of ‘levelling up’.

The scale of poverty in India remains massive. The Planning Commission had estimated it at 363 million in 2011-12 ( Report of the Expert Group to Review the Methodology for Measurement of Poverty

Factoring in fluctuations

It is important though to see the recorded fluctuations in poverty in perspective. Poverty estimates appear at intervals that are not always uniform, and are influenced by the prevailing prices as consumption expenditure is adjusted for price movements.

The relative roles of the reforms and agricultural growth in driving poverty-reduction after 1991 are clear from the differential trends of rural and urban poverty. It is only after 2004-05 that we see for the first time ever a reduction in the number of the urban poor.

Till that date this figure has steadily risen while rural poverty had resumed its downward trend after 1993-94 itself. This places the role of the reforms in perspective. The economic reforms had mainly focussed on trade, industry and financial sector reforms. Activity in these sectors is mostly based in urban areas.

For well over a decade after 1991 it had not succeeded in reducing the number of urban poor. It is only after the agricultural sector began to grow faster from around the middle of the next one that the number of urban poor begins to decline.

Social inequality

It occurs when resources in a given society are distributed unevenly, typically through norms of allocation, that engender specific patterns along lines of socially defined categories of persons. It is the differentiation preference of access of social goods in the society brought about by power, religion, kinship, prestige, race, ethnicity, gender, age, sexual orientation, and class. The social rights include labor market, the source of income, health care, and freedom of speech, education, political representation, and participation.

Social inequality linked to Economic inequality, usually described on the basis of the unequal distribution of income or wealth, is a frequently studied type of social inequality. Though the disciplines of economics and sociology generally use different theoretical approaches to examine and explain economic inequality, both fields are actively involved in researching this inequality. However, social and natural resources other than purely economic resources are also unevenly distributed in most societies and may contribute to social status. Norms of allocation can also affect the distribution of rights and privileges, social power, access to public goods such as education or the judicial system, adequate housing, transportation, credit and financial services such as banking and other social goods and services.

Poverty is about not having enough money to meet basic needs including food, clothing and shelter.  However, poverty is more, much more than just not having enough money.

The World Bank Organization describes poverty in this way

“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time.

Poverty has many faces, changing from place to place and across time, and has been described in many ways.  Most often, poverty is a situation people want to escape. So poverty is a call to action — for the poor and the wealthy alike — a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.”

In addition to a lack of money, poverty is about not being able to participate in recreational activities; not being able to send children on a day trip with their schoolmates or to a birthday party; not being able to pay for medications for an illness.  These are all costs of being poor. Those people who are barely able to pay for food and shelter simply can’t consider these other expenses.  When people are excluded within a society, when they are not well educated and when they have a higher incidence of illness, there are negative consequences for society.  We all pay the price for poverty.  The increased cost on the health system, the justice system and other systems that provide supports to those living in poverty has an impact on our economy.

 

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