NYAY Scheme: Significance of Cash Transfer Schemes
Synopsis: Congress has promised the revival of the NYAY scheme in its Kerala manifesto. This cash transfer scheme could have been beneficial during the lockdown.
The NYAY Scheme has become more relevant in today’s age and time of the Pandemic crisis.
- This scheme offers a monthly transfer of ₹6,000 to homes living below the poverty line. This unconditional cash transfer to the poor is a good idea.
- Cash transfers lead to important short-term effects such as better nutrition, less food insecurity, higher consumption.
- Other benefits of cash transfer according to research are it can totally transform people’s futures, unlock blocked entrepreneurship, investment etc. It could lead to a bearable exit from poverty. Cash transfers are a powerful tool for sustainable poverty reduction.
Why a scheme like NYAY is important in the present times?
The need for NYAY has only become stronger after the COVID-19 pandemic. Also, rural-urban migrants faced hardships during the lockdown, followed by the economic slowdown.
- Firstly, if an NYAY-like scheme during the lockdown, could have helped migrant workers to remain where they were, after losing their job. Further, it could have helped companies to restart activity easily once lockdown was lifted.
- Secondly, Ideas42 is non-profit behavioural science research and design firm. It experimented with the benefits of cash transfers on 2 types of people in Africa:
- The one’s who just received cash transfers.
- Others, who along with the cash transfers, also were trained with some (Nudge tools) behavioural methods. These methods were directed towards setting long-term goals, saving more and making productive investments.
- After the pandemic, ideas42 interviewed both the recipients. Everyone stated a loss of income and also told that the cash they had received helped them cope. However, the people that received the “nudge” tools did better because they saved more.
- Even during a pandemic, cash transfers helped people feel in control, and adding behavioural tools increased the cash’s impact on people’s well-being.
- Thirdly, a state-level implementation of a scheme like NYAY helps the necessary fixing out of logistical challenges.
- Fourthly, it also allows for strategically including ‘nudges’ and other proven involvements that can help increase the effect of cash transfers.
- Such involvements can help ensure that people receiving cash are able to meet their immediate needs. Also, they are able to set some money aside for emergencies, such as the pandemic or natural disasters.
Source: click here
Nyuntam Aay Yojana(NYAY)
What is the News?
The Congress Party has promised to implement the Nyuntam Aay Yojana (NYAY) in Kerala if voted to power.
About Nyuntam Aay Yojana(NYAY):
- NYAY is a proposed minimum income guarantee scheme. It was first proposed during the 2019 Lok Sabha elections.
Key Features of NYAY Scheme:
- Beneficiaries: The target population of the Scheme will be 5 crore families. This constitutes the poorest 20% of all families.
- Benefits: Each family will get a guaranteed cash transfer of Rs. 72,000 a year.
- Bank Account: The money will transfer to the account of a woman of the family who has a bank account. If she doesn’t have the account, they will be urged to open a bank account.
- Economic Cost: The estimated cost will be <1% of GDP in Year 1 and <2% of GDP in Year 2 and thereafter. As the nominal GDP grows and families move out of poverty, the cost will decline as a proportion of GDP.
- Implementation: The NYAY Scheme will become a joint scheme of the Central and State Governments.
- Funding: New revenues and rationalisation of expenditure will fund the new scheme. Current merit subsidy schemes that are intended to achieve specific objectives will be continued along with the NYAY scheme.
Source: Indian Express
Issue of food wastage in India – Explained, pointwise
India witnessed an enormous increase in food production especially after the green revolution of the 1960s. Based on the success, the government introduced other revolutions like white, blue, pink, etc. All of these ensured enough food for everyone. However, still many in India are devoid of quality food due to a significant amount of food wastage in India.
Recently, the UNEP’s Food Waste Index Report 2021 highlights the magnitude of wastage. Although the government has taken robust steps towards wastage prevention. To sensitize the masses towards food wastage India needs to do much more.
Key Findings of Food Waste Index Report 2021
- Approximately, 17% (931 million tonnes) of total global food production was wasted in 2019.
- Among them, 61% of the global waste came from households, 26% from food service and 13% from retail.
- Household per capita food waste generation is broadly similar across country income groups.
- In 2019 alone hunger impacted some 690 million people. Another three billion were unable to afford a healthy diet.
Status of food wastage in India
There are various reports that pointed out some important observations about food wastage in India. These are,
- Per person from Indian homes are throwing away 50KG of food as wastage every year.
- On the other hand, the FAO’s (Food and Agricultural Organisation) mention that nearly 40 percent of the food produced in India is wasted every year.
- All this food wastage was present throughout the supply chain. This starts from initial agricultural production to final household consumption.
Impacts of food wastage
- Prevalence of Hunger: If more food is wasted, then the remaining food is available at higher prices. This excludes many people from accessing quality food owing to poor socio-economic conditions. In the 2020 Global Hunger Index, India ranks 94th out of the 107 countries.
- Environment Impact: Around 8-10% of global greenhouse gas emissions are associated with food that is not consumed. Food waste can reach landfills and emit potent greenhouse gases which have terrible environmental implications.
- Economic Impact: Food loss and waste cause about $940 billion per year in economic losses to the world. So, India wasting 40% of food can save the economic cost associated with food.
- Wastage of resources: If the food is wasted, then the cost of factors of production such as land, water, energy, and inputs used to produce food goes in vain.
Steps taken by Government to reduce Food Wastage
The government has taken various steps to reduce food wastage in India. This includes steps such as,
- SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) scheme was launched in 2016.
- One of the core components of the scheme involves developing an integrated cold chain and value addition infrastructure.
- Similarly, Mega Food Parks also getting developed in India. They will provide adequate and appropriate storage facilities as well as process food. This will improve food preservation and elongate its shelf-life.
- The National Food Security Act, 2013 places an obligation on the government to deliver quality food at affordable prices to the poor. This places an indirect obligation on the government to reduce food wastage in order to achieve the mission’s objectives.
- Linking of the Aadhaar card with the Ration card ensured better identification of beneficiaries under the Public distribution system. This reduced the demand for excess food.
Challenges in reducing food wastage in India
- Inefficient Supply chains: In India, farmers don’t have easy access to efficient transportation, storage, and marketing of agricultural products. This hinders the prudent collection and distribution of food. This is leading to wastage and distress sales. Few examples,
- Essential commodities get exemptions from movement restrictions. However, farmers across the country struggled to access markets. This results in tonnes of food waste in India.
- Similarly, surplus stocks of grain (65 lakh tonnes) in the first four months of 2020 continued to rot in godowns across India.
- Gaps in Public Distribution System: The PDS in India has a better supply chain system than farmers. But maintenance of warehouses and poor utilization of buffer stocks leads to a lot of food wastage in India.
- Lack of Data: There is a shortage of credible data on food waste in India. For example, there is no data available at the national, state, and district level. This hampers policy formulation and subsequent assessment of government programs.
- Awareness Deficit: This leads to a greater stocking of food than the desired amount. This will lead to greater wastage and non-judicious usage. For example,
- During the COVID-19 pandemic, huge amounts of food wasted as the affluent class stocked huge food quantities than their required amount.
- Similarly, Food wastage in India is a common phenomenon in Indian weddings.
- Attracting Marketing practices: Big supermarkets offer discounts on bulk buying and large portion sizes. This boosts consumption and sales but certainly augments food wastage.
- India should include Food wastage as a core component of its Nationally Determined Contributions (NDCs) under the Paris Summit. This will place great accountability and motivate the country to take more concrete and innovative steps.
- Currently, only 11 countries mention Food waste as part of their NDCs.
- Multilateral platforms like the UN Food Systems Summit can be used to improve cooperation and collaboration among countries.
- India can utilise the knowledge and practice of UNEP’s Regional Food Waste Working Groups. Especially to share and learn good practices with peer countries.
- Sufficient support in the form of incentives and other rebates should be given to innovative food conservation models.
- For instance, Adrish is India’s first chain of zero-waste concept stores. They aim to shift people from harmful, artificial consumption to an eco-friendly, zero-waste lifestyle.
- Similarly, India Food Banking Network (IFBN) is bringing the government, private sector and NGOs together to fight hunger and malnutrition in India. It aspires to create one food bank in every district of India by 2030.
- The government has to conduct Awareness and Sensitisation drives to inculcate a behavioural change in food usage. For example, changes like,
- Ordering consciously from restaurants
- Feed someone with extra food or make a compost out of it.
- Focus on traditional nose-to-tail cooking when it comes to meat and seafood. There are certain regional Indian recipes that encourage this practice. The government has to encourage this. For example, Surnoli, a Mangalorean dosa or gobhi danthal sabzi made with cauliflower stalks and leaves in Punjab.
Nose-to-tail cooking: It is the method of including as much as of an animal/vegetable in cooking.
- At the community level – People can associate with organisations like No Food Waste. It is a Coimbatore-based organisation that aims to redistribute excess food to feed the needy and hungry.
India needs a more proactive approach towards Food wastage that should involve a blend of incentives, penalties and behaviour changing measures. This will ensure judicious food utilisation and would also help in achieving SDG 12.3 that aims to halve global food waste by 2030.
Measures to address Inequality in India
Synopsis: Inequality in India is increasing. It needs an immediate solution to enable sustainable economic growth.
- According to a recent Pew Research Report, one-third of India’s middle-class has become poor due to the Pandemic. Whereas, poor people earning less than ₹150 per day have doubled.
- International organizations like the World Bank, the International Monetary Fund, and the International Labour Organization have also warned about rising inequalities in India due to the pandemic.
- Also, many economists suggest India is witnessing a k-shaped recovery with rising inequalities.
Why India is said to be witnessing a K-shaped recovery?
K-shaped recovery happens when, following a recession, different sections of an economy recover at starkly different rates or magnitudes. Some sections benefit from it and some bear a loss.
While the economy was slowing down even before the Pandemic, the impact of COVID-19 has further increased the inequality gap.
- First, the Covid-19 intensified the problems of unemployment, low incomes, rural distress, malnutrition, and inequality.
- For example, the share of wages declined as compared to that of profits. The quarterly net profit of the BSE200 companies reached a record high of ₹1.67 trillion in the third quarter of FY21.
- Whereas the informal sector and workers suffered the loss of incomes and employment in the last year. Women lost more jobs and many are out of the workforce. Inequalities also increased in health care and education.
- Second, the impact of the Pandemic is more on India’s large informal sector than any other sector.
Steps to reduce Inequality in India
To reduce inequalities, we need to concentrate on three basic parameters,
- Focus on increasing employment and wages,
- Focus on human development,
- Also, providing social security net through quasi-universal basic income
- First, increasing employment and wages is central to the inclusive growth approach. Investment in infrastructure including construction can create employment. Further, we need to take measures to address the following seven challenges in employment,
- Creating 7 to 8 million productive jobs per year.
- Correcting the mismatch between demand and supply of labor. For example, only 2.3% of India’s workforce has formal skill training as compared to 96% in South Korea.
- Need to make manufacturing the growth engine to facilitate labour-intensive exports.
- Also, Focus on micro, small & medium enterprises and informal sectors including rights of migrants.
- Furthermore, Preparedness for automation and technology revolution
- Social security and decent working conditions for all.
- Raising real wages of rural and urban workers and guaranteeing minimum wages.
- Second, improving human development by fixing the gap in health and education. Increasing public expenditure on health and education should be the way forward. Need to Prioritise universal health care and increase spending on health to 2%-3% of GDP.
- Third, providing social safety nets to absorb shocks in the economy. It can be done by providing a combination of cash transfers and an expanded guarantee scheme. For example,
- Cash transfers to all women above the age of 20 years.
- Expanding the number of days provided under the Mahatma Gandhi National Rural Employment Guarantee Act and a national employment guarantee scheme for urban areas.
- Fourth, increase the income of small and marginal farmers. For that, Farmer producer organizations should be strengthened. States should have a bigger role in agri-marketing reforms.
- Fifth, the tax/GDP ratio has to be raised, with a wider tax base to increase governments’ revenue. It can be used for spending for the above programs.
- Sixth, resorting to fiscal federalism by reducing the inequalities between the Centre and States in finances. There must be strengthening of State budgets to improve capital expenditures on physical infrastructure and spending on health, education, and social safety nets.
- Seventh, deepening democracy and decentralization can reduce inequalities. Unequal distribution of development is rooted in the inequalities of political, social, and economic power.
Reducing income inequalities is also important for improving demand that can raise private investment, consumption, and exports for higher and sustainable economic growth.
Source: The Hindu
Suggestions for Inclusive growth in India
Synopsis: India lags behind many Human development indicators. India’s economic growth is not benefitting the poor. There is a need to create a new framework for measuring the inclusiveness of growth.
Why India’s Economic growth is not inclusive?
- One, Rising hunger: According to the Global Hunger Index 2020 India ranks 94th amongst 107 countries.
- Two, Indian citizens are amongst the least happy in the world. According to the World Happiness Report of the UN Sustainable Development Solutions Network, India ranks 144th amongst 153 countries.
- Three, the Pandemic has increased the inequality gap further by pushing many poor people into poverty. According to a World Bank report, during the pandemic the very rich became even richer. Whereas the number of poor people in India (with incomes of $2 or less a day) is estimated to have increased by 75 million.
- Four, unsustainable economic growth. According to global assessments, India ranks 120 out of 122 countries in water quality, and 179 out of 180 in air quality.
Suggestions for more inclusive growth
- First, India needs a new strategy for growth, founded on new pillars. Because the older economic growth strategy of relying on Foreign capital has made “ease of living” difficult, while the “ease of doing business” improved. The new economic strategy should be based on the following two pillars,
- One, Economic growth must no longer be at the cost of the environment.
- Two, the benefits of Economic growth should be made equitable. Thus creating more incomes for its billion-plus citizens
- Second, there is a need for local solutions to measure the wellbeing of people, rather than relying on universal, standard progress measure frameworks.
- While GDP does not account for vital environmental and social conditions that contribute to human well-being.
- Many countries are developing universally acceptable frameworks.
- They are trying to incorporate the health of the environment, public services, equal access to opportunities, etc. to make it universal, more scientific, and objective.
- However, experiences have shown that this ‘scientific’ approach does enable objective rankings of countries. For example, World Happiness Report misses the point that happiness and well-being are always ‘subjective’.
- Standard global solutions will neither make their conditions better nor make them happier. So, local communities need to find their own solutions within their countries, and in their villages and towns to measure their well-being.
- Third, we need to start recognizing the role of societal conditions that are responsible for the difficulties of the poor. For example, Caste system, Patriarchy, indifferent attitude towards the disabled, transgender, etc.,
- This way of looking at things also equally contributes to the increasing Inequality.
- Four, move away from the centralised Governance model towards a decentralized form of governance. Because Governance of the many by a few politically and economically powerful persons may work for a few.
- Whereas, decentralized system of governance will allow communities to find their own solutions to complex problems.
India’s growth should be measured on its sustainability and the improvements made in the lives of hundreds of millions of its citizens. It should be based on the size of GDP, the numbers of billionaires, the numbers of Indian multinationals.
Source: The Hindu
Government Criticises “Oxfam Inequality index”
What is the news?
The Oxfam’s Commitment to Reducing Inequality (CRI) Index, 2020 ranked India at 129 overall out of 158 countries. However, the Minister of Labour and Employment has said that the index lacked clarity. Further, he also mentions that the report did not take into account various initiatives taken by the government.
About Oxfam inequality index or Commitment to Reducing Inequality (CRI) Index
- Released by: Oxfam International.
- Parameters: The index ranks 158 countries. The Index measures the policies and actions in three areas directly related to reducing inequality. The three areas are:
- Public services(health, education and social protection)
- Taxation and
- Worker’s rights
Commitment to Reducing Inequality Index Findings Related to India:
- Overall: India has been ranked 129 overall in the index out of 158 countries.
- Ranking based on Parameters:
- Public Services: India has ranked 141 in terms of its public services such as health, education and social protection.
- Taxation: India has ranked 19th in the index, in terms of taxation.
- Workers Rights: India has fared poorly in protecting labour rights and has slipped to rank 151.
Other Key Findings of Commitment to Reducing Inequality Index:
- Topped by: Norway followed by Denmark and Germany has topped the index.
What were the objections raised by the Indian Government?
- Firstly, the rank assigned to India and the methodology adopted is not clear. The index does not take into account the provisions of the four new labour codes which protects labour rights.
- Secondly, India is not a signatory to two International Labour Organisation (ILO) conventions. But the principles of the conventions were available to Indian workers. The Index does not take account of this. The two conventions are,
- Freedom of association and protection of the right to organise convention(C87).
- The right to organise and collective bargaining(C98).
Source: The Hindu
Pew Research study on Poverty in India
Synopsis: A recent Pew research study report reveals increasing poverty in India. Further, the report also points out some serious flaws in the government policy during pandemic times.
A recent Pew research study report reveals increasing poverty in India and China in 2020. As per the report, the pandemic has pushed approximately 7.5 crore people into poverty levels(earn less than $2 a day). In contrast, the pandemic pushed only 10 lakh people into poverty in China.
Intensity of the Pew Research study on Poverty:
On one hand, in India, the pandemic reversed the gains made in the preceding nine years in poverty reduction programmes. On the other hand, China pushed back only one year, matching the 2019 level.
Is the Pew research study reliable?
The Pew research study is based on the analysis of the World Bank’s database. However, the research itself mentions that there are multiple assumptions in the report. This includes the assumption on-base years for income/consumption also. In India, the base year was 2011 and for China, the base year is 2016.
This might be the reason for the large difference between the poverty data in India and China. But still, there are few significant highlights of the report.
Highlights of the report:
- Widening inequality in India: The pandemic increased the inequality level in India. As the lower-income populations have borne the job and income losses due to the multiple lockdowns.
- The fiscal policy response of India is uncertain. India introduced many policy initiatives to revive the economy. Especially the pre-pandemic tax cuts provided to the corporates to revive private investment and revive growth.
The Pew research report data reveals that the benefits of fiscal policy measures did not reach the desired persons. So the Fiscal policy has to be assessed.
- The National Rural Employment Guarantee scheme’s record level of demand is proof of increasing Poverty in India.
With the COVID-19 cases increasing once again. If the data on the report is not assessed properly then India might face two critical challenges.
- The economic recovery might not be feasible to the desired level
- The poverty level in India might increase dramatically.
So the government policy responses will test the government’s policy on ‘lives versus livelihoods’.
Source: The Hindu
“Pew Research study” Reports increasing Poverty in India
What is the News?
A recent Pew research study report reveals increasing poverty in India. As per the report, the pandemic has pushed approximately 3.2 crore Indians out of the middle class.
Who has released the report?
- Released by: The US-based Pew Research Center.
- It uses World Bank projections of economic growth to estimate the impact of COVID-19 on incomes.
- The report divides the population of a country into five groups, on the basis of the daily earning of an individual:
- Poor: $2 or less daily
- Low income: $2.01-$10
- Middle income: $10.01-$20
- Upper middle income: $20.01-$50 and
- High income: more than $50.
Key findings of the report related to India:
- Middle Income Group: The number of Indians in the middle-income group has reduced by 3.2 crores due to the 2020s pandemic-driven recession.
- Poor People: The number of Poor people in India increased by 7.5 crores. This accounts for nearly 60% of the global increase in poverty.
- Hence, the number of poor in India is projected to have reached 134 million (13.4 crores). It is more than double the 59 million (5.9 crores) expected prior to the recession.
- Richer Population: The richer population who earn more than ₹1,500 a day also fell almost 30% to 1.8 crore people.
Other key Findings:
- Firstly, the number of ‘global poor’ is estimated to have increased to 803 million in 2020. It is a significant increase from 672 million, the pre-pandemic prediction.
- Secondly, South Asia saw the greatest reduction in the middle class and the largest ‘expansion’ in poverty in 2020. This could be attributed to South Asia experiencing a sharp decrease in economic growth during the pandemic.
- However, China managed to avoid a contraction although growth slowed. Further, the Chinese incomes remained relatively stable with just a 2% drop in the middle-class population.
Source: The Hindu
Government launches “Mera Ration Mobile App”
What is the News?
The Ministry of Consumer Affairs, Food, and Public Distribution launched the ‘Mera Ration’ mobile app.
About Mera Ration Mobile app:
- Mera Ration Mobile app will facilitate the ‘One Nation-One Ration Card’ system. It aims to help those ration cardholders who move to new areas for livelihoods.
- Developed by: Government of India in association with National Informatics Center(NIC).
- Key Features of the app: The application allows beneficiaries to:
- Find out the nearest fair price shop available according to the location.
- Users can check details of a) Recent transactions b) Status of the Aadhaar seeding and c) entitlement of the amount of rations available to them.
- Migrant beneficiaries can also register their migration details through the application. There is also an option for beneficiaries to enter suggestions/feedback.
- Languages: Presently users get English and Hindi as preferred languages for operating the app. However, the government plans to make the app available to users in 14 different languages.
About One Nation-One Ration Card(ONORC) System:
- Ministry: Department of Food & Public Distribution under the Ministry of Consumer Affairs.
- Objective: The system envisages inter-state portability of ration cards under National Food Security Act, 2013(NFSA).
- Features: Under this, NFSA beneficiaries particularly migrant beneficiaries can claim food-grains from any Fair Price Shop(FPS) in the country through existing ration cards with biometric/Aadhaar authentication in a seamless manner.
- The system also allows their family members back home to claim the balance of food-grains on the same ration card.
- States covered under this system: At present 32 States/UTs are covered under ONORC and integration of the remaining 4 States/UTs is expected to be completed in the next few months.
‘Weakness of Indian state’ in elimination of poverty
Synopsis: The pandemic has exposed the weakness of the Indian state in fulfilling the needs of the poor. This calls for a change in the current approach to eradicate the miseries faced by the poor.
- Two books have tried to explain the shortcomings of the Indian state in meeting the aspirations of the poor.
- The books are Locking Down the Poor: The Pandemic and India’s Moral Centre by Harsh Mander and Despite the State: Why India Lets Its People Down and How They Cope by M. Rajshekhar.
- They throw light on the problems faced by the poor during the pandemic including loss of jobs, shortage of food, etc.
- As per them, the failure is based on the systematic weakness of the Indian state which is devoid of the key pillars of a strong state.
What are the key pillars of a strong state:
- It is built with strong support from people
- It has robust administrative machinery for the delivery of services and maintenance of stability.
- Furthermore, it has managerial abilities to shape and implement change.
Issues with Indian state:
- First, it is very difficult to develop a shared identity among Indians due to the high degree of diversity. Shared identity is essential for obtaining the support of people as seen in the case of strong states like Japan and China. They used Japanese and Han Chinese identities for unification.
- Second, apart from the diversity, the Indian state is also suffering from caste division. It is often used by leaders to divide the Indian masses.
- Third, the Indian bureaucracy performs poorly in the domain of shaping changes. This is mainly due to the colonial mindset which focuses more on stability and compliance.
- Fourth, governance is more focused on capitalist ideology. It induces the bureaucracy to function as corporate managers. This eventually neglects the spirit of socialism which is necessary to uplift the poor people.
- Fifth, the approach of looking at politics as not more than an extension of economics has led to privatisation of necessary services such as health and education.
- Sixth, the approach of strengthening the top of the pyramid and expectation of improving the bottom through trickle-down effect has not delivered desired results.
- The focus should be on uniting the masses around a modern and inclusive identity as taught by our constitution-makers.
- The bureaucrats must be given due training in order to simultaneously balance stability and change. As too much change can create chaos and no change can solidify the inefficiencies of the current setup.
- Public servants should not function as corporate managers. Rather they must be willing to devote their lives for the welfare of the masses in order to strengthen the process of nation-building.
- The state must realize that it can’t function like a private corporation that can easily fire its employees. It must ensure everyone is given due opportunities to grow and prosper.
- The state must now focus on parameters like economic justice, environmental sustainability, etc. rather than solely on Gross Domestic Product (GDP) numbers.
In a nutshell, India today desires political leaders who can unite the masses, administrators who can deliver good governance, and business leaders who are wealth creators as well as distributors.
Growth with inequality in economic survey
Source: The Hindu
Syllabus: GS – 2 ; Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes
Synopsis: It looks like the Economic Survey focuses on wealth creation instead of reduction of income disparity.
The Economic Survey for 2020-21 reviews the developments in the Indian economy during the current financial year. The important highlights from the economic survey were:
- The economic survey highlighted the policy achievements of the government in handling the economy throughout the pandemic in over 700 pages.
- The survey declares that India established a globally unique model of strategic policy-making in controlling the COVID-19 pandemic. According to the survey, this helped the economy to recover quickly from its harmful impact.
- The approach used: India used graded public health measures to transform the short-term trade-off between lives and livelihoods. This would save both lives and livelihoods over the longer term.
- India has successfully flattened the curve. Not only that India also managed to avoid the second wave of infections so far. (The second wave of infections can be seen in Europe and the US).
What are the problems in the predictions of the economic survey?
The survey claims that India turned the crisis into an opportunity to strengthen its long-term growth. This is not true because the ongoing farmers’ protest, struggles in small and medium-scale industries and informal sectors portray the impact of the crisis.
- First, the survey is predicting that the economy is presently experiencing a V-shaped recovery. It would allow GDP to grow estimated nominally at 15.4% in 2021-22.
- In order to achieve this level of growth, retail inflation must be moderated significantly to an average of 4.4% or less over the 12-month period through March 2022.
- Second, the survey predicted the growth considering other factors such as a rapid roll-out of the COVID-19 vaccines and a recovery in demand in the services sector.
- But the economic survey is not able to provide a true calculation of the on-ground economic situation. The survey ignores important factors such as the extent of unemployment (the level of joblessness in rural areas).
- Massive unemployment resulted in the return of millions of urban casual workers last year during the lockdown.
- Third, growth was prioritised in the survey. Not the inequality in tackling poverty. It is important to tackle poverty because the pandemic has worsened the gap between the rich and the poor.
Causes of Rising Inequality
Source- The Hindu
Syllabus- GS 2 – Social Issues
Synopsis – The COVID-19 pandemic has sharply increased the economic inequality in all countries.
- The Inequality Virus report released on the opening day of the World Economic Forum’s Davos Agenda.
- The report states that the COVID pandemic has increased economic inequality in almost every country.
Read More – inequality in India Oxfam report |ForumIAS Blog
Pandemic impacts on Rich vis-à-vis Poor –
The economic impacts of COVID pandemic are not the same for the rich and poor. The following facts of the Oxfam report provide a glimpse of sharp difference:
- 1000 richest people in the world regain their COVID-19 losses within just nine months. But it could take more than a decade for the world’s poorest to recover from the economic impacts of the pandemic.
- The increase in income of the top 100 billionaires since the March lockdown is enough to give each of the 138 million poorest Indians a cheque of Rs.94045.
- It will take up to 3 years for unskilled labor in India to earn what the richest earned in one second last year.
Some sections are disproportionately affected by the increasing disparities in income and opportunities due to discrimination based on gender, caste, and other variables.
What are the causes behind rising inequality?
Policymakers have accepted inequality as one of the impacts of economic growth. While they are happy with the reduction in absolute poverty, inequality kept on rising.
The criticism of capitalism has never been taken seriously. Moreover, capitalism has been linked with the existence of democracies.
While the debates ‘the Great Reset’ are ongoing on WEF, states are continuously implementing discriminatory labour policies.
Now, economists are agreed that the divide of new wealth between capital and labour is one-sided. While the wealthy are getting wealthier, workers are continually being forced into poverty.
The government needs to take specific and concrete action to build a better, more equal future.
Oxfam Report Findings – Rising inequality in India
Recently Oxfam International has released a report titled “The Inequality Virus”. The report highlighted the increasing inequalities in India during the time of Covid pandemic. The report found out the existing inequalities in the world have increased to new heights. In this regard, there is a larger question on how to reduce inequality in India?
Facts from the report:
General aspects of the report:
First, COVID pandemic has increased the economic inequality in almost every country. This is the first time this has happened ever since records began.
Second, there is a huge increase in the wealth of the 10 richest billionaires since the crisis began. This increase in wealth is sufficient to prevent anyone on Earth from falling into poverty because of the virus. The top 10 richest can also pay for a COVID-19 vaccine for everyone in the world.
Findings of Report about India:
First, the impact of the pandemic on Rich and poor: The wealth earned by the top 11 Indian billionaires during the pandemic alone is sufficient to sustain the MGNREGS or the Health Ministry’s budget for the next 10 years.
Second, the Impact of Pandemic on Informal sector: India’s earliest and stringent lockdown made the Informal sector, the worst affected sector due to Pandemic.
Third, Digital divide worsened as education shifted online. Girl students were most vulnerable as there is a higher chance of forced marriage, domestic violence, and early pregnancies.
Fourth, The report also mentions poor, marginalized, and vulnerable communities have higher rates of Covid-19 prevalence in India.
Reasons for rising inequality during pandemic:
First, the pandemic’s impact on labour-intensive manufacturing: the lockdown also affected the consumer-based economy of India. Apart from that, the social distancing norms made it impossible to work with social distance.
This created a domino effect on the transportation sector, loss of GST revenues in states, unemployment, etc. Overall 40-50 million seasonal migrant workers faced distress.
Second, crowded agricultural sector: The migrant workers who lost a job in the manufacturing moved to the rural areas and demanded jobs at very low wages. This made the agriculture sector more crowded and also created Stagnation in agricultural wages.
Third, 14 days mandatory home or institutional quarantine/ person infected with Covid-19 impacted the lower-income group the most. In many cases, the person who underwent the home quarantine/infected with the disease was also the sole breadwinner of the family. This created inequality as the whole family lost the income for at least 14 days
Fourth, the cause of lockdown: During the pandemic, white-collar workers (person performs professional, managerial, desk, or administrative work) isolated themselves and worked from home. It led to the closure of many small income avenues like roadside vendors, smaller shops, restaurants, etc.,
Impacts of inequality during Pandemic:
First, Inequalities will create Social unrest: The income inequality during the pandemic is one of the reasons for the sufferings of migrant workers and the recent farmer’s protest also.
Second, Inequalities increased government budget and the burden of subsidies: the government unveiled many stimulus packages to get the economy on track and to provide relief to economically weaker sections (EWS). The government introduced the Atma Nirbar Bharat package and schemes like Pradhan Mantri Garib Kalyan Yojana.
Third, Impact on Informal sector: The Pandemic impacted the informal sector more than the formal sector. During the pandemic, 75% of the total (122 million) job loss belongs to the Informal sector.
Fourth, the Pandemic is detrimental to public healthcare and education: the closure of schools has directly affected 32 crores of students. Among that 84% of students belong to rural areas and 70% of them attended government schools.
Fifth, the Impact of Pandemic on gender disparity: The report mentioned the unemployment rate among women increased to 18% from 15% in pre-covid time. Also, women are 23.5% less likely to re-employed compared to men.
- The report also predicts 2.95 million unintended pregnancies, 2,165 maternal deaths, and 1.80 million abortions (including 1.04 million unsafe abortions) among women due to the closure of family planning services.
- The report also mentions domestic violence increased by almost 60% over the past 12 months of the pandemic.
Sixth, the Impact of Pandemic on health and sanitation: The report mentions only 6% of the poorest 20% have access to non-shared sources of improved sanitation.
Apart from that, there is an increase in hunger and malnutrition levels among the economically weaker sections of society. The issue of hunger and malnutrition is highlighted by the recent NFHS report.
First, the report itself suggests a few important measures to bridge the inequality. Such as;
- Re-introduction of wealth tax and one-time COVID-19 cess of 4% on taxable income of above 10 lakhs. According to the report’s estimate, a wealth tax on 954 richest families can raise 1% of India’s GDP.
- The report mentions India has to grow first then only it can distribute the wealth. Focusing on distribution now can lead India into a low-income equilibrium trap.
Second, the government needs to focus on the Promotion of Labour Intensive Manufacturing post-covid phase like Textile, Construction, Footwear, Clothing, etc.
Third, the Government also has to utilize the time to trains persons in skill development: A skill-led economy is the need of the hour to completely utilize India’s demographic dividend towards equality.
Fourth, the State has to be the dominant provider of merit goods such as health, education, nutrition, etc. This can be achieved by increasing the budgetary spending on health, education to the desired 6% of GDP.
The World Bank has calculated that if countries act now to reduce inequality then poverty could return to pre-crisis levels in just three years. So it is high time for India to act on inequality reduction activities.
COVID deepened inequality in India: Oxfam Report
Why in News?
Oxfam has released a report titled “Inequality Virus Report”. The report has highlighted the increasing inequalities in India.
- About the report: It is a part of its international report released on the opening day of the World Economic Forum’s ‘Davos Dialogues.’
- The report states that COVID-19 has the potential to increase economic inequality in almost every country at once.
- Impact of the Pandemic: The wealth of Indian billionaires increased by 35% during the lockdown and by 90% since 2009 to USD 422.9 billion. It ranks India sixth in the world after the USA, China, Germany, Russia, and France.
- The Income rise of the top 100 billionaires since the lockdown in March is enough to give a cheque of ₹94,045 to each of 138 million poorest Indian people.
- The wealth earned by top 11 billionaires during the pandemic, can sustain the MGNREGS or the Health Ministry for the next 10 years.
- Informal Sector: Out of the total 12.2 crore people who lost their jobs in India, 75% of jobs were lost in the informal sector.
- Education: As Education shifted online, the digital divide worsened inequalities in India. Only 4% of rural households had a computer and less than 15% of rural households had an internet connection.
- Sanitation: Out of the poorest 20%, only 6% have access to non-shared sources of improved sanitation. It is 93.4% among the top 20%. It added that 59.6% of India’s population lives in a room or less.
- Women: The unemployment for women rose by 15% from a pre-lockdown level. This increase in unemployment of women can result in a loss to India’s Gross Domestic Product (GDP) of about 8% or USD 218 billion.
- Wealth Tax: It recommends re-introducing wealth tax and a one-time COVID-19 cess of 4% on taxable income of over ₹10 lakh. It will help the economy to recover from the lockdown. According to its estimate, a wealth tax on the nation’s 954 richest families could raise the equivalent of 1% of India’s GDP.
- Concrete Actions: The government of India should take specific and concrete actions that will build a better future, more equal, and just a future for everyone.
Source: The Hindu
Impact of the COVID-19 Pandemic on Trade and Development Report: UNCTAD
Source: Click here
News: United Nations Conference on Trade and Development(UNCTAD) has released a report titled “Impact of the COVID-19 Pandemic on Trade and Development: Transitioning to a New Normal”.
- Aim: The report provides a comprehensive assessment of the impact of COVID-19 Pandemic on Trade and Development.
- The global economy would contract 4.3% this year due to the pandemic. This could send an additional 130 million people into extreme poverty.
- The United Nations’ Sustainable Development Agenda 2030 will be derailed unless immediate policy actions are taken especially in favour of the poorest.
- Global poverty is also on the rise for the first time since the 1998 Asian financial crisis.In 1990, the global poverty rate was 35.9%.By 2018 it had been curtailed to 8.6% but has already inched up to 8.8% this year and will likely rise throughout 2021.
- Increase the international assistance which would include offering debt relief to many poorer nations so they have the fiscal space needed to address the pandemic’s economic impacts on their populations.
- To reshape global production networks to be more green, inclusive, and sustainable while simultaneously resetting the multilateral system to support the most vulnerable and deliver on climate action.
Social registry, for better targeting of welfare schemes
Context: A social registry linking Aadhaar to residence info can target aid to the vulnerable during a pandemic.
What is the need for Social registry?
- Recent estimates from the World Bank suggest that 88 to 115 million people could slide into poverty in 2020, which presents a tough challenge for targeting welfare beneficiaries.
- It also emphasises the need for post-disaster revalidation of any existing social registration database.
Case study: challenge of targeting welfare beneficiaries.: Examples from India and US welfare programs
The case of US:
- Few months back, the US government enacted the Coronavirus Aid, Relief and Economic Security (CARES) Act that sends $1,200 to each individual below the income threshold of $75,000 to provide relief on account of the COVID-19 to poor and middle-class individuals and to stimulate the economy.
- However, according to The Washington Post millions of households were yet to receive their stimulus payments.
- The reason is, account information was available only for taxpayers who received their refunds in their bank accounts whereas, for the poor, whose incomes were below the income threshold, the authorities find difficulty in reaching them leading to exclusion from safety nets.
- Under Pradhan Mantri Garib Kalyan Yojana (PMGKY), an ex-gratia payment of Rs 500 was credited to women Jan Dhan account holders.
- Similarly, Farmers registered for PM-KISAN also received Rs 2,000 in their accounts immediately.
- However, the money did not reach the most vulnerable households. For example, recipients of PM-KISAN were not amongst the poorest households. Data from round-3 of the NCAER Delhi Coronavirus Telephonic Survey (DCVTS-3), suggests that 21 per cent of farm households received transfers through PM-KISAN. However, 42 per cent of such households belonged to the wealthiest.
- Similarly, for the PMJDY payment, BPL and non-BPL households record similar receipt transfers. For example, nearly half of poor women are unlikely to receive PMJDY transfers.
What can we learn from these observations?
- Authorities need a registry containing data about individuals and the individual must have a functioning bank accounts for money to be transferred expeditiously.
- However, registries based on specific criteria (for example, identified BPL households) may not identify individuals most vulnerable to crises.
- The reason for this is, factors that contribute towards alleviating poverty may differ from the ones that push people into it that pose a challenge of targeting welfare beneficiaries.
- For example, about 40 per cent of the poor in 2012 were pushed into poverty by special circumstances and would not have been classified as being poor based on their 2005 conditions.
Can, the Universal social protection schemes can solve the problem of exclusion errors in welfare targeting?
- It will lead to serious fiscal impacts if expanded nationwide because most disasters are geographically clustered.
- For example, Floods or earthquakes often devastate a few districts not all, similarly pandemics may affect densely-populated cities more than villages.
- Hence Universal social protection schemes can benefit the well off more than the needy.
What is the way forward?
- Need to set up social registries that identify individuals, their place of residence, and their bank accounts, these linkages can be used to transfer funds to everyone living in the affected area quickly.
- Aadhaar linkages of individuals and bank accounts already exist. If residential information in the Aadhaar database can be efficiently structured, this would allow for geographic targeting.
Any social registry that can serve as a potential beneficiary platform for safety nets inherently runs the risk of violating individual privacy. To avoid privacy issues, such social registries can be allowed to store only basic information such as location, instead of more sensitive identifiers.