Rolling back the induced livelihood shock

GOVERNANCE / ECONOMY/ SOCIETY

Topic: General Studies 2:

• Government policies and interventions for development in various sectors
• Indian Economy and issues relating to planning, mobilization, of resources 

Rolling back the induced livelihood shock

Context: During the lockdown, India’s less-privileged workforce have witnessed falling incomes and loss of means of livelihood.

Pre-Pandemic Issues with Poverty

• Poverty Line: India’s poverty line has been a matter of debate due to its unrealistically low thresholds leading to low poverty numbers.

• Irregular Updation: There has also been ambiguity around poverty estimation due to irregular updating of official poverty lines and unavailability of data on consumption expenditure from National Sample Surveys in recent years 

What can be the possible extent of Poverty in India?

• According to the household consumption expenditure reported in the PLFS, 2017-18 (which replaces the employment-unemployment surveys of the NSSO) and applying State-specific poverty lines (used by the erstwhile Planning Commission in 2011 based on the Tendulkar Committee recommendations, adjusted with current price indices), about 42% or around 56 crore people can be considered as poor before the lockdown was announced.
• Another 20 crore people were within a narrow band 20% above the poverty line given the people towards the lower half of the consumption expenditure distribution

Poverty Deepening due to Pandemic

• Certain estimates from the PLFS data extrapolated for the year 2020 suggest that about an additional 40 crore people were pushed below the poverty line due to the lockdown
• Around 12 crore of this lockdown-induced newly poor are in urban areas and another 28 crore people in rural areas.
• Those who were already poor are going to suffer a further worsening in their quality of life, a phenomenon known as poverty deepening.
• Before the lockdown, around 16% of the population had per capita consumption expenditure of about a third of the poverty line, managing their daily expenses with ₹30 per day or less. 
• After the lockdown this could swell to more than 62 crore (47%) people pushed to such extreme poverty.

What should be the State response to prevent poverty deepening?

1. Revamped and expanded NREGA needs to be made the fulcrum of the rural recharge. 

• • The demand for work is anticipated to increase by 25% with reverse migration-fuelled increase in rural labour supply.
  • The revamped scheme would require providing 90 million workers guaranteed employment of 20 days of work/month for at least the next six months. 
  • This means an additional financial stimulus of ₹1.6-lakh crore.

2. Universalisation of the Public Distribution System 

• • Recent experience of expanding food coupons to non-ration card holders in Delhi suggests that such measures are likely to exclude marginalised communities
  • Thus, food distribution through PDS needs better equity focus in implementation. 

3. Stabilising urban economy

• • Pandemic induced reverse migration from Urban areas to rural areas can bring instability to urban economy
  • Urban employment guarantee programme becomes a dire necessity to stabilise the urban economy.
  • A direct employment programme implemented through municipal corporations could be introduced to guarantee 20 days of work per month.
  • This can be used to develop key social infrastructure in urban areas including slum development, drinking water supply, toilet construction, parks and common areas, urban afforestation and social forestry.
  • The wages could be fixed with 30% premium over prevalent MNREGA benchmark average wage in the State.
  • Subsidies like cash transfer can be provided to employers in MSMEs so as to revive their business

Conclusion

If the course of economic progress and development programmes are not reoriented, the implications could be severe with increasing hunger-related deaths and destitution, leading to social unrest and crime

Connecting the dots:

• Food Coupons Vs Subsidised Food provision
• Direct Benefit Transfer
• Periodic Labour Force Survey (PLFS)