Neither the prime-goal of the modern democratic State nor the core-principle of the free-market society, justifies the presence and perpetuation of a large section of society, who fail to earn the necessary “purchasing power” in the economic system to meet their basic needs.
The rightist national Governments and global apex institutions are often criticized by the left, the social democrats and the labour parties, for paying lip service to poverty eradication, by not creating an ‘appropriate poverty line’ to capture the actual number of the poor people as well as by not re-engineering the economic system for poverty mitigation. Poverty has become an unabated global phenomenon.
Successive Governments in the world loved the eternal presence of the poor and the lower middle class to run populist welfare schemes for electoral gains. The citizens, who often fail to understand the macro-economic-system, the relation between trade and aid, the global consumerism market, the politics of global black economy and so on, believe that they are poor due to their own weaknesses such as lack of entrepreneurship ability, disadvantaged race or ill fate. The poor’s inability to see the failure of the State in preventing impoverishment, fails to put pressure on the political system.
The World Bank has revised the international poverty line at 1.90 dollar per capita per day on 2011 PPP, which calculated 767 million poor in 2013 out of 7,118 million global population. Some nations, like India, have their own poverty lines though their credibility is often questioned. The C Rangarajan panel report to the Government of India in 2014 stated that there were 363 million poor people in India in 2011-12, assuming the poverty line at Rs 32 per capita per day for rural and Rs 47 for urban areas, which was earlier enumerated at 270 million by Tendulkar formula, calculated at a ridiculous lower level of Rs 27 for rural and Rs 33 for urban. Even Rangarajan’s formula is a low poverty line that keeps the number of poor small.
The economic division of the citizens of a nation on the basis of Below Poverty line (BPl) and Above Poverty line (APl) is not a sound class division. Should a person just above the poverty line be treated as better-offIJ There is a need for defining the upper-poor- class (or APl), the middle class, the rich and the ultra-rich class by the Government of each nation. The annual income tax structure, which uses different taxation slabs, can be taken as the basis for separating the rich (consisting of ultra-rich, the rich), the middle class from the poor (consisting of the BPl, the upper poor class and the lower middle class).
Some experts consider the population between the poverty line and the rich, as the middle class. Ravallion, an International expert, defines the developing world’s middle class as those who have an income range between the World Bank’s poverty line of 1.90 dollars a day and the USA’s poverty line of 13 dollar per day. He further defines a “Western world middle class” as those between the US poverty line and the US rich. According to his study, between 1990 and 2005, the middle class changed from 331.5 million to 1,117.1 million in east Asia and Pacific which included China, from 355.3 to 347.8 in Eastern Europe and Central Asia, from 276.7 to 362.1 in latin America and Carribean, from 170.2 to 240.1 in Middle East and North America, 192.7 to 380.2 in South Asia and from 117.7 to 197.1 in sub-Saharan Africa.
India might keep the present poverty line to define the poor who are in reality the “ultra-poor”. It should define the group between the poverty line and the unskilled-national minimum wage line” as the “upper-poor- class” and should term those earning between the “Unskilled-National Minimum Wage” and its “double”, as the “lower Middle Class”. These three groups of “ poor”, “upper-poor” and “lower middle class” should be treated as the poor people of India. They should obviously get the exemption from income taxation. The income criteria should replace the expenditure and the asset criteria in enumerating the poor and the family should be used as a “poverty unit”, instead of “individual”. Different criteria used for different welfare schemes is creating problem in identifying the poor people as it was noticed during NFSA or MNREGA beneficiary selection.
Once the poor families are identified in rural and urban areas, their number should be frozen for three years for intervention and re-assessment. These families should be linked to AADHAR system and banks. Today, there is no clarity on number of poor families as different welfare schemes use different criteria.
Poverty politics has been displaced by caste-reservation politics in India since Independence. later, the pro-poor welfare programmes helped in vote-bank politics, instead of poverty-mitigation. Today, the political parties are competing with one another to declare populist welfare measures to woo the poor voters, instead of focusing on mitigation of poverty. Therefore, neither the erstwhile Planning
Commission nor the present Niti-Ayog nor the State Governments has yet defined the poor in their actual form. There is no point in hiding the number of the poor or manipulate the poverty line to take the political credit for poverty eradication. There is also no prudence in doing populist reservation politics to get rid of the discomfort question of poverty perpetuation. What is needed is a real engagement with the issue through a combined approach of welfare, capacity building and rural-structural economics re-designing.
India cannot ensure steady economic growth with the presence of a large section of poor. The Governments have to tax more the rich, the ultra-rich and the corporate, to raise money for anti-poverty capacity building and welfare schemes and simultaneously modify the secondary and tertiary sector for
poverty inclusion. A right strategy can break the poverty cycle in 5 to 10 years depending on State-Centre-corporate partnership capacity.