This week has been euphoric in more ways than one. The soaring Sensex and the India@60 celebrations in New York, so soon after the cricket Twenty:20 victory, have enhanced the country?s sense of achievement and pride. To dampen these high spirits in seeking to transit from a feeling of prosperity to the realities of poverty may not be popular. In fact, according to this week?s data released by the ministry of labour and employment, there is improvement in poverty numbers ? the percentage of poor people has come down from 26.1% in 1999-2000 to 21.8% in 2004-2005, based on the Household Consumer Expenditure Survey (NSS 61st Round). It also says that, ?Employment grew at a faster rate than population during this period. This is because the rate of growth of employment per annum was 2.95% whereas the growth in population was 1.71% during the same period.? Yet, the recent report on ?Conditions of Work and Promotion of Livelihoods in the Unorganised Sector? presented to the government earlier in August this year gives us an unnerving picture. Notwithstanding conceptional issues and the questionable rationale of classifying population into six segments, it appears that the number of India?s ?extremely poor?, with a monthly per capita consumer expenditure of up to three-fourths of the official poverty line (that is, Rs 8.90 a day), has come down from 31% to 21%.
These numbers are also reflected in the labour ministry?s new release. However, the number of those who are ?marginally poor? and ?vulnerable? has gone up significantly, constituting 77% of the population, and the Commission argues that ?a total of 836 million people have an income of roughly below $2 in PPP terms, constituting the poor and vulnerable segment of India?s population.?
The high income group has, however, also increased and totals 254 million, compared to 163 million in the early ?90s along with the middle income group. This reflects the new and growing consumers who spend less on cereals and essential non-food items and more on non-essential non-food and food items, and durable goods.
In short, this new prosperous India that?s receiving global attention is less than 300 million, and while extreme poverty may have come down, the number of people who remain marginally poor and vulnerable is a staggering proportion of our population. What is worse is that a high percentage of this population is otherwise socially disadvantaged ? comprising Scheduled Tribe, Scheduled Caste, OBCs and Muslims. The Commission believes that public intervention is the answer, and suggested two legislative actions, namely an ?Agricultural Workers Conditions of Work and Social Security Bill and a similar Bill for Non-Agricultural Workers in the Unorganised Sector. These bills define the rights and entitlements of workers in terms of working conditions, minimum wage, access to health and insurance, skill upgradation and other needs. The financing of these entitlements is to come from a proposed National Social Security and Welfare Fund. The outlay of the scheme in the agricultural sector was estimated at Rs 19,400 crore for full coverage over stages, of which 75% was to be borne by the Centre, while the unorganised non-agricultural plan needs Rs 12,950 crore more. Those below the poverty line cannot make any contribution. For others, it would be a contributory scheme.
The Commission?s recommendations deserve wide attention, especially since they have received such cavalier treatment by the nodal ministry. The two Bills introduced in Parliament are emasculated versions of the proposed draft in terms of eligibility and entitlements, and leave out the creation of a fund.
Second, India does not have a social safety net for the unorganised sector. Do we need one with universal coverage? Is there a broad national consensus on its features, given the implicit burden-sharing as well as fiscal choices involved? Third, while there is no substitute to sustained high economic growth for poverty elimination, growth alone may not ensure the desired outcomes. This makes well-targeted public intervention inescapable. There is, however, need to integrate and optimise our multiple and often overlapping efforts. Many entitlement-driven proposals on social security must take into account these ongoing efforts.
Fourth, while reduction in extreme poverty is an index of our success, revisiting conceptional and methodological issues on the definition of poverty cannot be avoided. The Commission has recognised that ?revisiting of the official poverty line as the first step towards the recognition of the multi-dimensional nature of poverty is perhaps overdue.? It has, however, done little to dwell on the issue further and invigorate a national debate on the definition of poverty and a workable amelioration strategy.
Finally, as the National Development Council (NDC) meets to approve the Eleventh Five Year Plan, we trust this would frontally address the many complex issues connected with poverty, including the need for a broad-based National Social Security System. We can ill-afford to overlook the compelling needs of the 800 million people who remain poor and vulnerable even while we celebrate our new prosperity. Poverty redressal remains a daunting challenge.
?NK Singh is a former top bureaucrat. These are his personal views