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Wednesday, November 29, 2023

Money cannot eradicate poverty, only education can

This quote by M.F Moonzajer leads us to think about the lives of the underserved today. The pandemic has forced around 176 million Bharatiyas into poverty zone (from $2 to $5 a day) with 75 million into extreme Poverty (less than $2 a day), says a research by World Bank and Pew Research Center [1] respectively.

Bharat’s economy is undergoing a sentimental unwinding gains made from lifting millions out of poverty in the last ten to fifteen years. According to a report by International Growth Centre on “Poverty Eradication in India”[2], NITI Aayog estimated that the annual average decline in poverty was 2.2% between 2004-05 and 2011-12 – from a poverty headcount ratio of 37.2% to 21.9% (Planning Commission 2013).

As per the UNDP Global Multidimensional Poverty Index 2020, since 2005-06, over 640 million people across Bharat were in multidimensional poverty. With the successful implementation of social protection policies, 273 million people moved out of multidimensional poverty over a 10-year-period (Oxford Poverty and Human Development Initiative 2020).

We can hear the same implore from our folks to rescue their lives from this virus led recession, but has the government heard it? Let us gain some insight on key poverty alleviation measures taken by the government over the last two decades.

Pradhan Mantri Garib Kalyan Yojana (PMGKY); coverage – 58.4%

This scheme has an outlay of Rs. 1.7 lakh crores specifically designed relief measure on account of covid-19 pandemic, covering a population of 80 crore. Under this scheme, five kgs of free rice or wheat along with one kg of pulses was distributed for the months of April to June 2020. The scheme also gave direct benefit transfers to certain sections of the society. The details of the package are given as under;

  1. Pay-out was given to 8.69 crore farmers under PM-KISAN.
  2. Wages under MGNREGA were hiked to Rs 202 from Rs 182, meaning an additional Rs 2,000 to every worker. Consequently, the outlay of MGNREGA is increased to Rs.73000 crore in FY2021-22 as compared to Rs.61500 crore in FY2020-21.
  3. Three crore poor senior citizens, widows, disabled got one-time ex-gratia amount of Rs 1,000 in two instalments.
  4. 20 crore women Jan Dhan account holders got an ex-gratia amount of Rs 500 per month for three months.
  5. Women in 8.3 crore below-poverty-line families covered under Ujjwala scheme were given free cylinders for three months.
  6. Doubled collateral-free loan amount to Rs 20 lakh for women in self-help groups. Seven crore households were benefitted through 63 lakh self-help groups.
  7. The government paid provident fund contribution for both employer and employee for three months covering certain establishments, benefiting 80 lakh workers.
  8. Provident fund scheme regulations were amended to allow non-refundable advance of 75 percent of amount in account or three months of wages, whichever is lower benefitting 4.8 crore workers.
  9. State government utilised Rs 31,000 crore under the Building and Other Construction Workers Fund to support 3.5 crore construction sector workers.
  10. The government also provided medical insurance cover of Rs 50 lakh per person to those at front-lines of fighting the virus covering doctors, nurses, paramedical staff, sanitation and ancillary workers.

Public Distribution System (PDS); coverage – 67%:

Public Distribution System came into force in 1992 and is one of the oldest running schemes. Its aims to manage food scarcity and distributing essential food commodities at affordable prices. The Targeted Public Distribution System (TPDS) launched in June 1997, to allocate food resources to the poor.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA); coverage -100% (except districts with complete urban population):

MGNREGA was enacted in 2005 and is one of the most critical and effective measure for poverty alleviation. It was set in motion with an aim to ensure the security and livelihood of people in rural areas, this act guarantees a minimum of 100 days of wage employment. These measures apply to households whose adult members volunteer to do unskilled, manual work.

If the state is unable to provide a job within 15 days of application, then the worker receives an entitlement to a daily unemployment allowance. To ensure social inclusion, women gain priority and 33% of the beneficiaries under this scheme are women.

National Rural Livelihood Mission (NRLM); coverage – 25%:

NRLM was launched in 2011 by the Ministry of Rural Development and aided by World Bank. NRLM aims to create an efficient and effective system for the rural poor to access financial services. In addition to income-generated assets to the poor — they would also be facilitated to achieve increased access to rights, entitlements and public services, diversified risk and better social indicators of empowerment.

Pradhan Mantri Jan Dhan Yojana (PMJDY); coverage -23.4%:

This scheme, launched in 2014, focuses on rural financial inclusion. It has an objective of covering all households in the country with banking facilities and having a bank account for each rural household. With a bank account, every household would gain access to banking and credit facilities. It is an enabler for rural households to come out of the grip of moneylenders. Additionally, the intent is to offer other financial products such as insurance schemes as well.

Pradhan Mantri MUDRA (Micro Units Development & Refinance Agency) Yojana (PMMY);

Yet another scheme for financial services brought in 2015 for providing loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises. The loans are classified as MUDRA loans under PMMY and sanctioned by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.

Under the aegis of PMMY, three products namely ‘Shishu’ (up to Rs.50,000), ‘Kishore’ (Rs.50,000-5,00,000) and ‘Tarun’ (Rs.5,00,000-10,00,000) are designed to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth. As of date over 28.68 crore beneficiaries have availed loans worth Rs.14.96 crores.

Pradhan Mantri Gramin Awas Yojana (PMGAY); coverage – 6.5%

This scheme came into force in 2016 intending to provide housing for rural and urban poor not owning a pucca house. Through this scheme, the government commits to ensure housing for all. The aim is to provide solid and permanent housing with all the basic amenities including toilet, LPG connection, electricity connection and drinking water.

Deen Dayal Upadhaya Antyodaya Yojana (DAY); coverage – 20%:

A scheme launched in 2016, which aims to uplift the urban and rural poor through skill development and enhancing the sustainable livelihood opportunities. One of the objectives of ‘Make in India’ is skill development, which helps in the socio-economic betterment of the country. This scheme is the integration of –National Urban Livelihoods Mission (NULM) & National Rural Livelihoods Mission (NRLM).

(*coverage includes targeted numbers calculated as a percentage of total population.)

From the above-mentioned measures, we can see that the government through these programs have intricately addressed the most elemental issues relating to food security, rural unemployment, housing, skilling and financial inclusion in an optimum manner.

From the governance perspective, Modi government has been successful in establishing a robust one identification system through UIDAI. These systems have paved the way for a more efficient and transparent mechanism for implementing policy measures such as Direct Benefit Transfers, food distribution and other measures in the right spirit.

Unlike erstwhile policy makers where the leakages and corruption scandals have paralysed policy measures more often than not, this government recognises the need to be fair and transparent.

Undoubtedly, these achievements called for brouhaha. Now looking at economics on the country, the government has something more critical at hand- recouping the losses arising out of the plunge of numbers under the radar of poverty erstwhile contributing to growth.

As we are aware that the rural economy lives on  agriculture and the MSME sector, the government needs to focus on newer demand side opportunities for these sectors to flourish in addition to new and upgraded employment opportunities from other sectors, which are usually open to urban Bharat, such as IT, Agritech , e-commerce, hospitality and personal services.

External employment opportunities would not be coming sooner in the wake of this contagion. In my opinion, at this crisis juncture, the government should lay down a framework for imparting basic and technical education along with digital skills to promote self-employment in an uncomplicated way.

Moving forward, technology is going to play a vital role, as it is the only tool available for a fast moving recourse to earn lost livelihoods and gain the mojo back.

Reference links:


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Samiksha Punamiya
Samiksha Punamiya
An ardent researcher, deeply inclined toward understanding economics and policy making. Rich in experience of writing on economic research on various platforms. I am a CA by qualification having about five years of experience in financial services space.


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