India’s record of reducing poverty is not very encouraging in comparison to many developing countries.
This calls for a reassessment of the approach to poverty reduction efforts.
How has India's record been?
India extricated 120 million people from extreme poverty between 1990 and 2013; however the process was relatively slow.
Over the same period, China reduced the number of people living in extreme poverty from 756 million to 25 million.
Growth elasticity of poverty reduction i.e. the impact of economic growth on poverty reduction is also very weak in comparison to many high growth countries.
Despite many initiatives in this regard, the results are being diluted by the conditions of rising inequalities.
What should be done?
An essential element in any poverty alleviation strategy is the prevention of large declines in household incomes.
State-sponsored anti-poverty and social protection schemes should come with the right understanding.
Conditional Cash Transfers (CCTs) have been proposed as an effective instrument in alleviating poverty in many countries.
Above addressing poverty, CCTs have longer term results through behavioural changes in households.
Importantly, encouraging investment in the human capital of poor children can only break the inter-generational transmission of poverty.
This translates to quality and equal educational opportunities, accessible and affordable health infrastructure
The idea of Universal Basic Income in the latest Economic Survey is positive, but focusses more on reducing poverty.
However, there is a need to build the social infrastructure capable of providing quality education, health, and nutrition to reap full benefits.
A well-functioning social infrastructure is thus a prerequisite for CCTs and other such measures in reducing poverty.
