Eliminating poverty in India requires a comprehensive and multifaceted roadmap that addresses the complex interplay of economic, social, and institutional factors. Firstly, there is a need for targeted economic reforms that promote inclusive growth, job creation, and entrepreneurship. This involves streamlining bureaucratic processes, reducing regulatory hurdles, and incentivizing investments in sectors that have the potential to generate employment on a large scale. Concurrently, social welfare programs must be strengthened to provide a robust safety net for vulnerable populations, ensuring access to education, healthcare, and basic amenities. Moreover, empowering women through education and employment opportunities is crucial, as it not only enhances their economic status but also contributes to breaking the cycle of intergenerational poverty. Additionally, enhancing agricultural productivity and supporting rural development can uplift a significant portion of the population dependent on agriculture. Collaborative efforts between the government, private sector, and civil society are essential for the successful implementation of these measures. Finally, a focus on building effective governance structures, reducing corruption, and promoting transparency will be pivotal in ensuring that resources are efficiently allocated and reach those who need them the most.
Tag: GS Paper-3: Indian Economy.
India’s economic goals; The challenges for India.
Though India is today the fifth largest economy, in per capita terms, it is ranked (2022) 149 out of 194 countries. India needs to grow at 7 percent for the next 25 years to raise incomes.
Decoding the editorial: India’s economic goals
Raising the per capita income
- It should be raised by almost six times over the next 25 years from the estimated $2,379 in 2022-23.
- That will enable people to have a higher standard of living and eliminate poverty.
An incremental capital-output ratio (ICOR)
- An ICOR of 4 will require a Gross Fixed Capital Formation rate of 28 percent.
- However, the ratio of 4, which is often assumed, is on the basis of improved efficiency in the use of capital.
- During the high-growth period in the early years of this century, the ratio was low. It has subsequently increased.
- Excluding two outlier years namely, 2019-20 and 2020-21, the average ICOR over five years from 2016-17 to 2022-23 is estimated to be 4.65.
- ICOR is the result of many factors, including technology.
- The required investment rate in the next 25 years may be in the range of 30-32 percent of GDP.
- While recognising that public investment has picked up, it is necessary to emphasise that the investments by the business sector, both corporate and non-corporate, must increase.
The composition of investment
- Investment must flow into sectors and segments which are crucial to promote growth and employment generation.
- While foreign direct investment must be welcomed, particularly in the newly emerging technological sectors, bulk of the investment must come from within.
A provision for basic income
- The level of basic income and the coverage of beneficiaries have to be determined taking into account certain normative considerations.
- With basic income, India should be prepared to cut down most subsidies other than those on food.
The challenges for India
The overall climate for peace
- It is necessary for growth. It has deteriorated after the Ukraine-Russia conflict.
- If this tension continues, it will be a strong negative factor for growth.
- Supply disruptions of critical imports like oil can cause a severe setback not only to developing countries but also to developed countries.
The attitude towards global trade
- WTO was set up to create an environment of low tariffs and restrictions.
- But rich countries that earlier preached to the developing countries to adopt a free trade model, are backing out for one reason or another and putting restrictions on imports.
The strategy of development
- Several countries like South Korea earlier and China achieved high growth over several decades by focusing on exports.
- This export-led growth strategy may not work for India, particularly in the context of changed global trade situation.
- A multi-dimensional strategy with emphasis on agriculture and related activities, manufacturing and exports is the need of the hour.
- India needs to preserve its growth in services sector.
Ability to absorb new technologies
- Unlike the earlier ones, it is suspected that AI can result in increasing productivity and output but not necessarily jobs.
- That is bad news for populous countries like India.
- India’s educational system must be reoriented to enable students to acquire the requiredskills.
- Equally important is to identify labour-intensive economic activities.
- India has to reckon with a lower employment elasticity with respect to output.
- The burden of pollution reduction must be borne primarily by developed economies that have exploited natural resources significantly in the last century and a half.
- Bringing down pollution, including the level of carbon, can have an output effect.
- In this context, a high annual growth rate of 8 percent may have to be ruled out for India.
A 6 to 7 percent growth continuously is still possible if the strategy is correct and if we can create an appropriate investment climate.
Source: Indian Express
Frequently Asked Questions (FAQs)
Q: What are the key economic reforms outlined in the roadmap to eliminate poverty in India?
Answer: The roadmap includes measures such as streamlining bureaucratic processes, reducing regulatory hurdles, and incentivizing investments in sectors that can generate widespread employment, fostering inclusive economic growth.
Q: How does the roadmap address the social aspects of poverty in India?
Answer: Social welfare programs play a crucial role in the roadmap by providing a robust safety net, ensuring access to education, healthcare, and basic amenities. Empowering women through education and employment opportunities is also emphasized to break the cycle of intergenerational poverty.
Q: What role does the agricultural sector play in the roadmap to eliminate poverty?
Answer: The roadmap highlights the importance of enhancing agricultural productivity and supporting rural development as a means to uplift a significant portion of the population dependent on agriculture. Agricultural reforms are essential for reducing poverty in rural areas.
Q: How does the roadmap address the issue of gender inequality in the context of poverty reduction?
Answer: Empowering women is a key focus of the roadmap, emphasizing education and employment opportunities. Recognizing the role of women in poverty alleviation not only enhances their economic status but also contributes to breaking the cycle of poverty within families.
Q: What collaborative efforts are envisioned in the roadmap to ensure its successful implementation?
Answer: The roadmap emphasizes collaboration between the government, private sector, and civil society. It recognizes that a joint effort is essential for the successful implementation of measures outlined in the roadmap, ensuring that resources are efficiently allocated and reach those who need them the most.
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