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India Unveiled | Poor need more state aid to climb earnings tree

India Unveiled | Poor need more state aid to climb earnings tree
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First Published: Tue, Jul 08 2008. 01 39 AM IST

Updated: Tue, Jul 08 2008. 01 39 AM IST
New Delhi: India’s low-income earners, including subsistence farmers, wage labourers and own-account workers, need greater levels of government aid to pull themselves up from the “bottom of the earnings tree,” according to a report by research firm IIMS Dataworks.
The country’s economy is resilient enough to bear the cost of following such a prescription, but what is needed is political will, said the analytical report, a follow-up to the 2007 Invest India Incomes and Savings Survey by the firm.
India is home to 319 million of the so-called poorest of the poor, or those living below the dollar-a-day poverty line, according to a report authored by five economists at the International Food Policy Research Institute in Washington, DC, and released last year.
India has failed to match the decline in poverty that some other countries were able to achieve, said that report.
IIMS Dataworks said some 76.6 million people across the country are low-income earners, with 57.4 million of them living in the villages and 19.2 million in the cities and towns.
“Given the unlikelihood of many of the current generation of these workers escaping their low-income situation, greater levels of government assistance by way of employment programmes, skills training and social assistance appear to be indicated to lift living standards to an acceptable level,” said IIMS Dataworks.
It also called for the provision of free, quality education to the children of low-income workers and, if needed, cash incentives to the parents, to “avert succeeding generations of these workers finding themselves in this same situation in the future.”
After they complete their education, the children should also be helped to relocate to locations where there are sufficient job opportunities, it said.
Economists such as Y.K. Alagh, chairman of the Institute of Rural Management, Anand, near Ahmedabad, say India risks squandering the promise of a “demographic dividend” offered by its youthful population if the young among the poor aren’t provided skills that could earn them a reasonable livelihood.
“The same young people could become a liability instead of being a demographic dividend,” Alagh says. “You don’t require to give them a very high level of skills—it could even be something like training them to repair a mobile phone.”
Bihar, Orissa, West Bengal and Assam were identified by the survey as the states most burdened with a low-income problem endemic to both rural and urban areas.
In the rural area, the same states also were hit by long periods of alternate droughts and floods, driving 40% of the paid workforce into the low-income category.
And in urban India, Tamil Nadu and Chhattisgarh joined the four states in having the highest proportion of workers from low-income households within their workforce.
An upper limit of Rs39,600 in annual household income was used by the survey as the benchmark for identifying vulnerable segments within the urban population, based on the figure specified by the ministry of urban development and poverty alleviation for classifying economically weaker sections.
It used a figure of Rs25,400 as the threshold below which a rural family was considered to be a below-poverty household, based on Planning Commission estimates for 2004-05.
The IIMS Dataworks report said India can afford to underwrite a policy programme aimed at improving the lives of low-income earners and their children.
“In India’s case, unlike so many emerging and developing economies, the country’s economic prospects are sufficiently bright for this to be seriously contemplated as a practical course if there is political will to proceed along these lines,” the report said.
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First Published: Tue, Jul 08 2008. 01 39 AM IST