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Counting India’s poor: Numbers suggest the need for a welfare state

Madan Sabnavis writes: In such a situation, it is but natural that the government has to assume the role of a welfare state. But the focus has to be on job creation. A joint effort between the Centre and states is needed to push this agenda forward.

The government has been aggressive in reaching out to the vulnerable during the pandemic, providing them free food as well as income through cash transfers. (Express Photo/File)
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The Global Hunger Report has caused a lot of controversy with questions being raised as to what exactly we are talking about. India is definitely the fastest growing economy and has received praise when it comes to reaching out to the needy during Covid or in technology-led innovations like UPI. We are an attractive market for foreign investment and can be reasonably confident of taking up where China has left. Can such a country be so low down the hunger index?

There is a need to introspect on who exactly is poor in India. The concept is nebulous. There was a time when calorie intake was the yardstick. But converting only 2,400 calories a day into a monetary value was always challenging. Besides, people cannot live with just calories. They need access to other amenities like housing, clothing, education and so on. Hence the calorie concept, though a possible criteria, is not really workable today. We need a broader concept.

The World Bank uses the concept of income per day, which is now taken at $1.90. Roughly, this translates to Rs 160 a day in India, and for a family of four would mean Rs 640 a day. On a monthly basis, this will come to around Rs 19,200 or Rs 2.3 lakh for a year. Such an approach runs the risk of using a universal yardstick across the world which is not right. While a weak currency can give a high value in India, this amount may be too low for a developed country (in the US a burger costs more than $1.90). Besides, using either the calorie or income approach runs the risk of extrapolation as it is not possible to get these numbers for the entire population.

Income tax data, while useful in indicating who pays tax, captures only a small segment as it leaves out the big universe of rural people. Hence one cannot even use the Rs 2.5 lakh per annum criterion as a cutoff for measuring the poor.

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If, however, the concept of poor is broadened to represent the needy or the vulnerable section of society, there can be some ideas from government action. The government has been aggressive in reaching out to the vulnerable during the pandemic, providing them free food as well as income through cash transfers. This can be a good starting point to assess the population that requires support to maintain their minimum needs. But, here the support has been limited to cash transfers or free food. It does not cover education or health, which are supported through other schemes.

According to IBEF, the PMGKY covered 800 million people. Intuitively, this means that nearly 60 per cent of the 1,350 million population required support from the government and would have found it hard to survive without that. That this has been extended till December 2022 means that the vulnerable population is still very high. This number also includes the 136 million families that were covered under MGNREGA.

In fact, the National Portal of India in September 2020 had put out a statistic that 42 crore poor people benefited from PMGKY which means that around 30 per cent of the population was declared poor by this yardstick.

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The PM Kisan Scheme involves outlays of between Rs 60,000-70,000 crore. Considering that all the retired urban population does not make a claim by becoming farmers, the cut-off for the pension was put at Rs 10,000 per month. One can assume that the same yardstick was followed for cherry picking the farmers for delivering this benefit.

Here it has been highlighted that 110 million farmers were registered and drew the benefit of Rs 6,000 per annum. Using this policy as a measure to figure out the vulnerable class, which would be restricted only to the farming community, would yield a number of close to a third of the population, assuming that families comprise four members. This will not cover the vulnerable non-farming class, especially in urban areas where there is little information available as there are few urban support programmes run by even the states.

The government programmes are structured well and the use of technology has ensured that there is targeted delivery of benefits. Leakages can be ruled out. Putting all these numbers together, the proportion of vulnerable people in the economy would range between 30 per cent to 60 per cent. The higher end would be more time specific and the revelation of the number of beneficiaries of free food in the last quarter would give a more nuanced number of the vulnerable.

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It can, hence, be said the size of the needy population is close to 60 per cent of the total with at least 30 per cent or half of this amount being most vulnerable. In such a situation, it is but natural that the government has to assume the role of a welfare state. But the focus has to be on job creation. Agriculture in particular should be commercialised — the farm laws sought to do so. State governments have a big role to play here. Also, manufacturing has to be revived to create meaningful jobs. A joint effort between the Centre and states is needed to push this agenda forward.

Sabnavis is author of Lockdown or Economic Destruction? and chief economist, Bank of Baroda. Views are personal

First published on: 06-12-2022 at 07:46 IST
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