Factors Related to Growth of a Economy/ Country
Below Poverty Line
(BPL), the three words of a hell. We rarely spare a thought for those living
Below the Poverty Line and what life means to them. Government claims that
number of such people and families is decreasing slowly, and yes it is, BUT
very slowly. These are the people who just get below that a dollar a day, sleep
empty stomach and get lost in the over a billion crowd of India.
India has made notable
progress in terms of income and human poverty reduction over the decades,
particularly in the 1990s. In spite of this, one third of the population is
still below the poverty line. In addition, a fifth of the population with
income above the poverty line is vulnerable to receding back into poverty due
to unexpected income loss and other shocks. The challenges of reducing income
poverty for this huge mass of population and creating employment opportunities
for them are enormous. There are also big challenges in reducing human poverty
and enhancing capability. There are a number of factors related to growth of a country. Poverty affects and effect growth in a major way.
Labor being
the main asset and income source of the poor, there is a need for creating
enabling environment for the poor to get more remunerative employment. Policies
need to be adopted to raise productivity and returns to labor in both
agriculture and non-agriculture sectors. Conditions need to be created through
upgrading the skill levels of the unskilled labor to facilitate their
participation in the dynamic non-farm activities and increasing their access to
non-agricultural employment.
Joseph
Stiglitz in Globalization and its Discontents, page 5:
“despite repeated promises of poverty eradication made is the last decade of
the 20th century; the number of people living in poverty has
actually increased by almost a hundred million. This has happened
simultaneously as the world income actually increased by an average of 2.5 %
annually”.
Checking the
government’s Data, India has roughly 50 Million Tons of food grains laying
unused, the cost of storing which is about Rs 11,000 crore per annum, which is
about Rs 2200 per ton. This is ignoring the wastage and pilferage costs. To
feed 200Million BPL population on an average of 8 KGs per month per person, we
have enough stock for TWO and HALF Years and still there are millions who die
every year due to hunger and destitution.
To realize
the country’s growth potentials, there is a need for increasing investment
through raising domestic public and private savings and generating more
external resources. Also in particular, there is also a need for upgrading the
stock of infrastructure to support diversification of production, raise
productivity, expand trade, provide basic services and reduce poverty. There
are many parameters on which poverty depends such as education, agriculture,
employment level, dependence on agriculture, etc. These have been discussed as
below:
Poverty Index
When people
like Lakshmi Mittal, Azim Premji, Anil and Mukesh Ambani have successfully
placed themselves within the 100 richest billionaires of the World in the
Forbes listing, India has also placed herself as the 48th poorest nation with
31.4 percent value in the Human Poverty Index (HPI). Barbados tops the rank in
the HPI among the developing countries with a value 2.5 percent. According to
the report 16 percent of the population still remains and live with out having
sustainable access to improved water resources and there is a probability at
birth for 15.3 percent of the population of not surviving to the age of forty. Hence poverty index is important for the growth.
Education
Level:
Education happens to be
the least a government can provide to its citizens, else the cost of not
providing education will me much more dearer to a government and the nation’s
future. Education level has a direct impact on the
economic progress of the country and thus there are many reasons to find a link
between education and economic growth. Few of the most basic reasons are:
1.
Intelligent
electorate choice: The first this an educated man would
do is to stop voting for uncommitted, uneducated goons behind the grab of
statesmen.
India,
which is plagued by the mafiya and the gunda raj and who have direct linkages
with the politics makes sure that light of education doesn’t fall upon these
masses so as to keep them in dark. This enables them to muster votes of the
uneducated by alcohol, money or power. There is a growing distress in the
educated population of the country who form the minor part as compared to the
large pool of uneducated vote bank. The feeling that their vote won’t make any
difference in making an intelligent electorate choice deters them from the
pooling booths, thus making matters worse.
Standard of Living: Rise in Standard of living has been directly linked
to the level of education. High growth and rapid progress is not possible
in a society whole population is not
literate. If
people with education earn more than those without, shouldn’t the same be true
of countries? If not the rate of change of output per hour worked, at least the
level of output per hour worked in a country, ought to depend on the
educational attainment of the population. If spending on education delivers
returns of some sort, in much the same way as spending on fixed capital, then
it is sensible to talk of investing in human capital, as the counterpart to
investing in fixed capital. The process of education can be analysed as an
investment decision.
Health
and Poverty
"The
biggest enemy of health in the developing world is poverty." Kofi Annan
Health issues
are directly related to poverty. Poverty creates ill-health because it forces
people to live in environments that make them sick, without decent shelter,
clean water or adequate sanitation. As per the data provided in the human
development report, the total infant mortality rate for India is 67
deaths/1,000 live births and the maternal mortality ratio is 540 per 100,000
live births. Due to various causes also 93-children/ 1000 live births die
before they reach the age of five.
Malnutrition And Relationship With Poverty
Malnutrition has long been recognized
as a consequence of poverty. It is widely accepted that higher rates of
malnutrition will be found in areas with widespread poverty. Malnutrition is
the result of marginal dietary intake compounded by infection.
It is estimated that nearly 30% of infants,
children, adolescents, adults and elderly in the developing world are suffering
from one or more of the multiple forms of malnutrition, 49% of the 10 million
deaths among children less than 5 years old each year in the developing world
are associated with malnutrition, another 51% of them associated with
infections and other causes.
Poverty declined during the 90s to below 30 per
cent, especially in the country’s rural areas. But this impressive record hides
the uncomfortable fact that 193 million people are still poor and await a
change in their fortunes. Poverty has declined mainly because of better
economic growth, improvement in real wages and the spread of poverty
alleviation programmes.
Per
Capita Income, Poverty and Growth
It is a fact that richer the people, lesser will be
the poverty, and higher will be per capita income. This fast is bolstered by
the fact that within India, states which have higher per capita income have
lover poverty as compared to states whose per capita incomes are lower.
According to the Indiastat.com, per capita income of Punjab is highest with
about $6000 while that of Bihar is at about $3000. Correspondingly the poverty
in Punjab is about 5 percent of its population while that of Bihar, it is at 40
percent. At the same time growth rates of these states depict the same story.
Poverty ridden state has a growth rate of only about 1 percent while growth
rate of Punjab stands at about 3.2 percent. This shows a clear picture of
Poverty: i.e. lesser the poverty, higher is the growth and higher is the per
capita income. Higher per capita income means better standard of living.
Poverty
and Savings
Savings are very
important in a nations economic growth and development. Higher savings leads to
higher investment and thus higher circulation of money into the economy. This
leads to a higher multiplier effect thereby nudging the growth up. However, if
the population is living in destitution, they won’t have enough money to
sustain their basis needs leave apart the savings.
If we look at the past
trend of India, as and when poverty has decreased, savings have increased. In
1991, we had 45 percent of our population below poverty line and our savings
were meager 20 percent with the country growing at the Hindu Growth Rate of 3
percent. With the decrease in poverty to
26 percent below poverty line and stress on savings by the government our
savings rates have risen to 37 percent in 2007 in simultaneous with the growth
of 8 to 9 percent.
The above were the factors that affect growth centered at poverty.
Poverty is relevant to growth big time.
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