Question

What are the challenges faced in india to remove the poverty?

Answer 1

1. Unemployment

Despite rapid economic growth, unemployment is still an issue in both rural and urban areas. The fast rate of economic growth has left unskilled workers behind, and they have struggled to find work in growing industries. In 2017, the official unemployment rate was just below 5%. However, a report by the OECD found over 30% of people aged 15-29 in India are not in employment, education or training (NEETs). Livemint reported on March 6, 2017. WIth, little if any government welfare support for the unemployed, it leads to dire poverty.

2. Poor educational standards

Although India has benefited from a high % of English speakers, (important for call centre industry) there is still high levels of illiteracy amongst the population. It is worse in rural areas and amongst women. Over 50% of Indian women are illiterate. This limits economic development and a more skilled workforce.

3. Poor Infrastructure

Many Indians lack basic amenities lack access to running water. Indian public services are creaking under the strain of bureaucracy and inefficiency. Over 40% of Indian fruit rots before it reaches the market; this is one example of the supply constraints and inefficiency’s facing the Indian economy.

4. Balance of Payments deterioration.

Although India has built up large amounts of foreign currency reserves, the high rates of economic growth have been at the cost of a persistent current account deficit. In late 2012, the current account reached a peak of 6% of GDP. Since then there has been an improvement in the current account. But, the Indian economy has seen imports growth faster than exports. This means India needs to attract capital flows to finance the deficit. Also, the large deficit caused the depreciation in the Rupee between 2012 and 2014. Whilst the deficit remains, there is always the fear of a further devaluation in the Rupee. There is a need to rebalance the economy and improve the competitiveness of exports.

5. High levels of private debt

Buoyed by a property boom the amount of lending in India has grown by 30% in the past year. However, there are concerns about the risk of such loans. If they are dependent on rising property prices it could be problematic. Furthermore, if inflation increases further it may force the RBI to increase interest rates. If interest rates rise substantially it will leave those indebted facing rising interest payments and potentially reducing consumer spending in the future

6. Inequality has risen rather than decreased.

It is hoped that economic growth would help drag the Indian poor above the poverty line. However, so far economic growth has been highly uneven benefiting the skilled and wealthy disproportionately. Many of India’s rural poor are yet to receive any tangible benefit from the India’s economic growth. More than 78 million homes do not have electricity. 33% (268million) of the population live on less than $1 per day. Furthermore with the spread of television in Indian villages the poor are increasingly aware of the disparity between rich and poor. (3)

7. Large Budget Deficit

India has one of the largest budget deficits in the developing world. Excluding subsidies, it amounts to nearly 8% of GDP. Although it is fallen a little in the past year. It still allows little scope for increasing investment in public services like health and education.

8. Rigid labour Laws

As an example Firms employing more than 100 people cannot fire workers without government permission. The effect of this is to discourage firms from expanding to over 100 people. It also discourages foreign investment. Trades Unions have an important political power base and governments often shy away from tackling potentially politically sensitive labour laws.

9. Inefficient agriculture

Agriculture produces 17.4% of economic output but, over 51% of the work force are employed in agriculture. This is the most inefficient sector of the economy and reform has proved slow.

10. Poor tax collection rates.

According to the Economist, India has one of the poorest tax to GDP rates in the whole world. India’s tax revenue as a % of GDP is just 12%. Compared to an EU average of 45%. This poor tax collection rate reflects widespread corruption, tax avoidance and complicated tax rates. In 2017, Narendra Modi has sought to improve tax collection rates and reduce complications through the introduction of a general sales tax (GST) which involves a single tax rate – rather than tax rates applied multiple times at different stages of production. (Modi’s tax gamble at Economist)

Answer 2

1. A majority of the population of India does not have access to adequate healthcare.
2. Of the many facts about poverty in India today, healthcare is perhaps the most important. India ranks 145th out of 195 countries regarding quality and accessibility of healthcare, based on the Global Burden of Disease study published in 2018. There are huge disparities within states and income groups in the country, and India lags behind other BRICS countries. In 2018, the government launched a National Health Protection Scheme called Ayushman Bharat, which aims to assist approximately 100 million people residing in underprivileged communities.
3. Inequalities persist in access to education.The literacy rate in India has risen from 68.2 percent in 2001 to 74 percent in 2011. However, there is a wide gender disparity; 82.14 percent of men and 65.46 percent of women are literate. The quality and availability of classrooms and teachers help explain the low literacy rates. Social barriers prevent the expansion of education among women. A deeply entrenched patriarchy restricts women from achieving higher education, especially in rural parts of the country.
4. There is high unemployment in the country.Unemployment rates have been increasing gradually, leaving nearly 31 million Indians out of work. As of August 2018, the unemployment rate in India is 5.7 percent; this rate fluctuates widely from month to month. The social security network that was traditionally provided by the joint family system is now being eroded.
5. There is pervasive homelessness across the country.As of 2011, there were 1.77 million homeless people in India. There is a wide disparity between urban and rural areas; urban areas saw a growth of 36.78 percent in homelessness, whereas rural areas saw negative growth. Most government assistance is targeted towards rural areas. According to Mohammed Tarique, coordinator of Koshish, a TISS Field Action Project on Homelessness and Destitution, economic migration from rural to urban areas may be a contributing factor to this, as rural areas continue to lack basic infrastructure and employment opportunities, particularly in the secondary and tertiary sector.
6. Sanitation conditions are getting better.According to the Economic Survey, the number of people who engage in open defecation has declined to 250 million in 2018 from 550 million in 2014. The decrease has been credited to the Swachch Bharat Mission, a sanitation program introduced by Prime Minister Narendra Modi. However, huge sections of the population are still denied access to basic sanitation, especially vulnerable groups.
7. Hunger rates are still high.India’s hunger problem is driven by a high rate of child malnutrition. India ranks 100th out of 119 countries on the Global Hunger Index, which measures undernourishment, child wasting, child stunting and child mortality. The lack of access to nutritious food leads to susceptibility to disease. Increasing numbers of farmer suicides occur due to the burden of rural indebtedness.
8. India lacks sound infrastructure.According to the Asian Development Bank, India’s poor infrastructure contributes to slower growth and development. Investing in infrastructure, such as creating better facilities for transportation, communication and agriculture will lead to further employment and productivity. Financing of rural infrastructure projects depends on a sound banking system, which at present is heavily compromised by bad loans.
9. There is widespread corruption.India ranked 81st on the 2017 Global Corruption Index released by Transparency International. Bribery, money laundering and tax evasion stall the growth of the country and negatively impact social welfare programs. The government has distributed identification cards with biometric information in order to reduce this problem, but endemic corruption still pervades the system.
10. Poverty in India is declining.Despite the above, studies show that the population of India is slowly escaping extreme poverty. In fact, the World Poverty Clock predicts that less than 3 percent of the population in India will live in extreme poverty by 2021. Participatory development due to well-established governance systems, an independent judiciary and a proactive media provide hope for India’s poor.