6 Ways the Government can act to reduce poverty in India

Depending on which statistic you believe, between 22% and 30% of Indians live in poverty. Whether you consider the lower limit or the upper one, given India’s population, it translates to well over 250 million people living below the level at which they can sustain themselves. To put that in context, that is more than the entire population of the United Kingdom, Germany, France and Italy combined. Moreover, the ‘poverty line’ as defined in the Indian context is a very low bar, barely enough to provide for a meal a day.

In such abject circumstances, it goes without saying that poverty reduction should be one of the most important areas of focus for a Government. Going beyond grandiose rhetoric and proposals, let us look at six different ways that concrete steps can be taken for poverty alleviation:

Short Term solutions

a. Minimum Wage fixation and Universal Basic Income

Most countries have legislation fixing a minimum wage for labour. India has the Minimum Wage Act, 1948, passed at a time when the labour movement was rather more aggressive than it is now. It is an act that is mostly remarkable for how little it is followed. Quite apart from the fact that most Indians still work in an unorganised sector where the Act is barely implemented is the fact that successive governments have failed to work out a level of minimum wage that is truly sufficient to alleviate poverty. Another solution proposed along similar lines is for the Government to provide for a Universal Basic Income to all, circumventing the need for a separate Minimum Wage. Either of these, if properly implemented, would potentially reduce abject poverty.

b. Provision of Social Security
Apart from availability of a minimum wage / income, it is also important that poor families are able to control their expenditure in order to lift themselves out of poverty. In this context, it becomes important to remember that expenditure on medicine and education are important components of a family’s monthly outgo. It becomes incumbent on a Government then to provide Universal basic healthcare and education to all its citizens. In India, while the legal principle underlying both of these are in place, the infrastructure is woefully inadequate. Investment in creating a much stronger framework for providing free healthcare and primary education would go a long way towards reducing expenditure and uplifting the poor.

c. Provision of non-cash benefits
Another way to reduce poverty is to develop an efficient system for provision of non-cash benefits to the poor. Such schemes are already in place in some states in the form of food distribution and even distribution of bicycles, clothes, laptops and other things. However there is no nation-wide effort to ensure provision of food to all, with the ration-card based Public Distribution System long since having gone moribund. A revival of this scheme with a sharp focus on implementation without corruption would be able to go a long way towards reducing the distress of the poor.

Long-term plans

d. Education

Which brings us to the long-term investment in education. Apart from primary education, the more India can spend on making secondary and higher education available to the broadest section of its populace the more likely the problems of poverty will be solved. Apart from the obvious fact that an educated workforce can expect to make more money, higher levels of education are also proportional to arresting the rising birth rates, which are another cause of poverty.

e. Sustained economic growth

As any economist would tell you, the best way to ensure national prosperity is to focus on sustained economic growth. While this is not enough by itself, despite the fallacies propounded by believers of ‘trickle-down economics’, it is nonetheless true that in order for the Government itself to have sufficient money to carry out poverty reduction measures, it needs to be able to generate income, which cannot be done unless the economy is growing. Besides, a healthy economy ensures decent wages and availability of goods, which are essential for poverty reduction.

f. Unemployment reduction

Perhaps the biggest cause of poverty at an individual level is lack of gainful employment. Keynesian economics firmly establishes that provision of employment, even if it consists of menial labour and increased Government expenditure, is preferable to allowing the economy to contract. The Government must follow up on and improve schemes like MNREGA to provide a credible long-term employment alternative to the poor while keeping in mind the country’s development goals.


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