Niti Aayog member Arvind Virmani sees Government proactiveness resonating in financial inclusion. The public sector was told that they must connect to everybody.
The global jury may still be out on India’s achievement in poverty reduction and unyielding on factoring in critical yardsticks of measuring decline in India’s poverty but the 24.82 crore people who escaped multidimensional poverty in the last nine years, were lifted out through due to significant initiatives of the Government to address all dimensions of the poverty between 2013-14 to 2022-23. These interestingly, include initiatives which have facilitated better maternal health and financial inclusion, that global commentaries on multi-dimensional poverty remain shy of acknowledging.
There was a steep decline in poverty headcount ratio from 29.17% in 2013-14 to 11.28% in 2022-23 with all 12 MPI indicators show significant signs of improvement and the achievement is crowned by poorer states recording faster decline in poverty—indicating reduction in disparities led by Uttar Pradesh, Bihar and Madhya Pradesh recording largest decline in the number of MPI poor between 2013-14 and 2022-23, according to the second edition of the National Multidimensional Poverty Index (MPI) representing India’s progress in reducing poverty.
Arvind Virmani, noted economist and full time member of NITI Aayog decodes what sometimes appears to be a dichotomy between India’s emergence as the 5th largest economy in world’s GDP rankings in 2024 driven by diversity and swift growth and studies by multilateral institutions that suggest India is among the most unequal countries in the world, with the top 10% and top 1% of the population holding 57% and 22% of the total national income respectively.
“Fundamentally, from the point of view of an economist, there are two parts to this question. The first is per capita income which is important. We have grown faster over the last decade or two which means poverty has started going down,” Virmani told The Sunday Guardian. “So that is one big driver. You can look at every social indicator with respect to per capita income. You find that 50 to 70% of improvement in these indicators is linked to per capita GDP. If you plot these indicators for all the available countries, for per capita GDP there is a regression equation. For instance for life expectancy, 70% is explained by per capita GDP. This 30% is the extra, in some cases it is sometimes it is 50%. This 30-50% depends on Government actions,” adds Virmani.
And that, has been significant with even areas like electricity benefiting from Government programmes aimed atensuring everyone has access to electricity. “Whatever was left—in terms of lack of reach 80% or 90%—is being covered and moving towards 100% access. “So partly it is per capita GDP increase and partly it is the Government programmes,” says Virmani.
The Niti Aayog member also sees Government proactiveness resonating in financial inclusion. “The public sector was told that they must connect to everybody. It is interesting that the market economies—the American type would have said this is wrong use of the public sector. But why did it become good? I was just looking at the data today which shows that public sector performance has improved on the market,” notes Virmani. What comes indeed as a surprise, he points out,is that while on one hand, public sector is being told to do social work, their private performance on the market has improved. “That means they are not being used for personal, private corrupt purposes. Their performance was bad because they were not being run like commercial enterprises. That has stopped,” observes Virmani. The result of the push to “act efficiently, not being told to do shady things” and do these social programmes has saved money which they could use to perform better to boost connectivity. “The PSUs have done that without becoming less profitable,” emphasises Virmani.
While the performance of states varies, some which were traditionally having high poverty have made remarkable progress in helping people escape poverty, thus reducing inter-state disparities in multidimensional poverty. With this, the fundamental problems in accessing basic services are getting resolved fast so that the country can look towards becoming a developed nation i.e. Viksit Bharat @2047. Virmani is of the view that the states—in an ambience of improved cooperative federalism—need to take ownership of delivery in areas like health which is a state subject and is responsibility of the states. While the Centre can incentivise as insurance is in the financial sector and under the Union Government, to tap the insurance scheme, there will need to be hospitals.
“That is where the schemes come in. The Ayushman hospitals are private but are allowing both private and public services. There are districts where there were no hospitals. The Centre can come in to offer 40% if the state provides the 60% to support the development of higher level of hospitals. These are directed schemes focusing on solving the problem within the constitutional limits. That is important to understand because the Centre cannot take responsibility for work that has to be achieved, for instance, at the primary health centre,” reasons Virmani.
Similarly the lower level of education is completely under the states and now the states have their own universities and policies with big budgets etc. The Niti Aayog member feels stakeholders at the local level, academicians, think tanks etc should be driving questions on the outcome of big budgets and large number of teachers being employed etc. “We have a situation where 50% of the primary completion children cannot read. Why aren’t people asking instead of putting onus on the Central Government,” asks Virmani.
An ICRIER study on major Central subsidies in the agri-food sector, acknowledges their role in achieving food self-sufficiency and poverty reduction. The Government of India has made remarkable progress in improving the lives of people, aiming to reduce poverty in all dimensions. Noteworthy initiatives like Poshan Abhiyan and Anemia Mukt Bharat have significantly enhanced access to healthcare facilities, leading to a substantial decrease in deprivation. Operating one of the world’s largest food security programmesthe Targeted Public Distribution System under the National Food Security Act covers 81.35 crore beneficiaries, providing food grains to rural and urban populations.
Recent decisions, such as extending free food grain distribution under Pradhan Mantri Garib Kalyan Anna Yojana for another five years, exemplify Government’s commitment. Various programs addressing maternal health, clean cooking fuel distribution through Ujjwala Yojana, improved electricity coverage via Saubhagya, and transformative campaigns like Swachh Bharat Mission and Jal Jeevan Mission have collectively elevated living conditions and overall well-being of people. Additionally, flagship programs like Pradhan Mantri Jan Dhan Yojana and PM Awas Yojana have played pivotal roles in financial inclusion and providing safe housing for the underprivileged.
The ICRIER report also credits Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), implemented to enhance livelihood security in rural areas as significantly impacting the income and wage levels of the rural populace, has seen notable achievements under the Modi administration. As of December 26, 2023, the government has generated a total of 268 crore person-days of employment through this program. This exceeds the 208-crore person-days generated during the UPA era.