What matters is not the number, but the safety net

Opinion: Sonalde Desai.

[The Hindutan Times, July 3, 2024]

India’s growing economy is lifting families out of poverty but often onto a precarious perch. A single disaster can push them right back. Policy, obsessed with counting the poor, ignores the question of helping ‘newly poor’

Two decades ago, controversies around the measurement of in National Sample Surveys set off what became known as the Great Indian Poverty Debate. We seem to have come full circle with new controversies about poverty measurement, leading to the Great Indian Poverty Debate 2. But is counting the exact number of individuals whose incomes fall below the poverty line, located around ₹1,900, as important as understanding the nature of poverty decline and its implications for social policy?

Some estimates based on Household Consumption Expenditure Survey (HCES) place poverty under 5%. Newly collected Wave 3 of India Human Development Survey (IHDS) places it at about 8.5%. HCES probably underestimates poverty due to a change in methodology, while IHDS probably overestimates poverty due to its reliance on an older sampling frame that omits newly growing peri-urban areas. However, both suggest that poverty is declining. The multidimensional poverty index released by Niti Aayog also documents improvements in the conditions under which households live.

But due to an obsession with estimating the exact number of individuals in poverty, implications of this change for the provision of social safety nets are ignored.

India’s approach to social protection was developed when most of its population was impoverished. Unequal access to productive resources such as infra, land and education led to endemic poverty among some sections of the society (such as SCs and STs) and some areas (such as poorest districts like Dahod, Gadchiroli, and Dhubri). Hence, the primary focus was on designating the poorest sections of society as BPL and providing them various benefits, including food grains.

As the economy grows, it presents both opportunities and challenges. rural residents find work as skilled masons, and urban slum-dwellers become drivers for delivery services. While this is a step out of abject poverty, it also places them on a precarious perch where a single accident, natural disaster, or epidemic could push them back into poverty.

IHDS, organised by National Council of Applied Economic Research and University of Maryland, followed more than 40,000 households between 2004 and 2024. Its results suggest that poverty decline is closely coupled with increasing vulnerability. Between 2004-05 and 2011-12, of the total 22.4% who were poor, 8.5% were newly poor.

That is, if BPL cards were given based on poverty in 2004-05, they would miss out on nearly 40% of the individuals who were poor in 2012. This proportion grew between 2011-12 and 2022-24, although overall poverty declined. Of the 8.5% poor in 2022-24, 5.3% are newly poor, reflecting a decline in chronic poverty and growth in transient poverty.

Whereas accidents of birth largely shaped the fortunes of Indian citizens in the 20th century, the 21st century has seen a rising importance of accidents of life. The challenge is that we cannot easily predict this descent into disaster. While the death of a wage earner brings debt and misery to one widow, the other may be able to get a loan from a bank to set up a small shed for raising pigs and support herself, yet another may have a son who is grown up and can help his mother.

Our public discourse must acknowledge and celebrate movement out of poverty, but it must also recognise the precarity of this achievement and work towards building safety nets that protect against unforeseen disasters. This involves developing social policies that provide risk insurance and strengthening institutions that can be mobilised to deliver assistance when needed.

Illness and death pose tremendous risks for vulnerable households. Hence, strengthening public health services and building an efficient health insurance programme are critical. Present programmes such as Ayushman Bharat cover only hospital expenditures, which can easily lead to escalating public expenditures as individuals who can be treated in outpatient clinics resort to hospitalisation because they lack the funds to pay OPD fees.

Dealing with emergencies also requires building sustainable institutions. During the pandemic, PDS ensured that grains could be distributed despite price rises and transportation challenges. This helped avert hunger and starvation while highlighting the exclusion of migrants who did not have proof of residence, giving impetus to setting up the One Nation, One Ration Card programme. Similarly, immediate cash needs during flooding or other disasters can be met through an infusion of funds if we have access to registries that link people’s current residential locations with their bank accounts.

We must move past the futile debate about estimating the exact number of poor individuals and accept that poverty is declining, requiring re-envisioning of our social protection programmes to ensure we don’t fail those who need help the most. 

The writer is Professor at National Council of Applied Economic Research & University of Maryland. Views are personal.

IHD Silver Jubilee Lecture by Professor Sonalde Desai, Professor and Director, NCAER-NDIC

Professor Sonalde Desai delivered a lecture on “Gloom or Boom? The Puzzling Trends in Indian Women’s Labor Force Participation” at 10th Institute for Human Development (IHD) Silver Jubilee Lecture Series on 17 March 2024 at 11.30 am (IST) at the Shri Krishna Institute of Public Administration (SKIPA), Ranchi. Professor Alakh N. Sharma, Professor and Director, IHD moderated this discussion.

Link: https://www.youtube.com/live/2CSRTr3lF1E?si=TWv_Ly14_ZlTeGR3

Population growth committee: Move beyond Emergency-era fears

Opinion: Sonalde Desai.

The population dialogue in India has been dominated by concerns about population explosion. However, it is time for us to move these fears and learn from the experiences of other countries.

In her speech, while presenting the 2024 budget, Finance Minister Nirmala Sitharaman promised a committee to study India’s population growth to ensure that the nation is on target to meet the Viksit Bharat goal by 2047. Coming nearly 50 years after the brutal implementation of the population control programme in 1976, I hope this move reflects a shift in public discourse regarding the course of India’s demographic transformation.

India is and will remain the world’s most populous nation for the foreseeable future. Nonetheless, it does not appear to be the fearsome prospect it once appeared to be. Fertility has steadily declined to a level where two parents are being replaced by two children and all segments of the society have begun to adopt family planning.

Moreover, India has learned not to let the burden of a growing population pose an obstacle to its continued economic growth. However, we have yet to adapt to the changes that population transformation brings. I hope this committee will focus on reshaping the policy agenda that rides the inevitable demographic wave and not be mired in the old discourse of population bomb. This will require focusing on several priorities.

First, we must recognise that India’s demographic destiny for 2047 has already been written. The workforce of 2047 has already been born and will look very different from the workforce of 2024. Today 33 per cent of the population is aged 20-29, while 23 per cent of the population is aged 40-59. But in 2047, the proportion of the younger population will decrease, and the proportion of older working ages will increase, with each forming about 28 per cent of the population. To ensure that this growing proportion of middle-aged workers can keep up with the changing demands of an increasingly technologically driven economy, we must invest in continued skill upgradation and on-the-job training above and beyond formal education.

Second, all of India will not undergo demographic changes at the same pace. Just as fertility decline first emerged in southern, more developed states, population aging will also be most visible in these states. Dependency burden, defined as the number of individuals ages 15-59 supporting children under 15 and older population above 60, will vary dramatically between states. For example, demographer P.M. Kulkarni estimates that in 2021, in Bihar, 151 working-age adults supported 100 dependents, while in Tamil Nadu, 189 adults supported the same population; this will flip with the worker-to-dependent ratio changing to 201 in Bihar and 132 in Tamil Nadu by 2051.

In short, the future of India’s elderly and children will rest on workers’ productivity in states we have historically considered demographic laggards, such as Bihar, Uttar Pradesh, Madhya Pradesh, and Chhattisgarh. How can we invest in the workers in these states to ensure the future welfare of all Indians? This will be the challenge that the newly formed 16th Finance Commission will face as it decides on inter-state allocations.

Third, as fertility declines, the burden of child care for women drops. My analysis of National Family Health Survey data, undertaken with sociologist Sojin Yu, shows that in 1993, an average woman spent about 14 years caring for children under age five, while that number dropped to eight years in 2021. However, time freed up from childcare has not been utilised in increased participation in the workforce.

Unless we find ways of creating a welcoming labour market for women, we will waste the opportunity of turning a demographic dividend into a gender dividend. One of the best ways of expanding women’s ability to participate in the job market may be to improve the availability of childcare, possibly through creative combinations of Anganwadi and the Mahatma Gandhi National Rural Employment Guarantee Scheme. There is no reason why permissible MGNREGA works cannot include rotational provision of childcare under the supervision of a trained early childhood educator.

Fourth, a combination of rising numbers of elderly and a declining number of children to care for them means we must increase the ability of this older population to be self-sustaining. A combination of policies will be needed, including rising retirement age, enhanced old age pension schemes, and increased ability to sell land or homes, assets in which most of the wealth of the Indian elderly resides.

Historically, the population dialogue in India has been dominated by concerns about population explosion. However, it is time for us to move beyond the Emergency era fears and learn from the experiences of other countries. In its quest for rapid population control, China implemented a strict one-child policy, bringing it to a demographic cliff where the needs of its aging population have begun to drag down its economic growth. Relaxing the one-child limitation has been unsuccessful in increasing fertility. This suggests that India should refrain from a similar panicked reaction and let fertility decline continue at a natural pace. If demography is destiny, let us adapt to it with grace.

These complex challenges require multifaceted attention from demographers, economists, sociologists, and public policy experts. The move to set up a high-powered committee to evaluate the challenges posed by demographic transformation in conjunction with the 16th Finance Commission will allow its recommendations to flow into government spending priorities, creating a virtuous cycle.

The writer is professor at the University of Maryland and the National Council of Applied Economic Research. Views are personal.

Workshop series on “Leveraging State Data Ecosystems for State and District-Level Policy and Planning”

Pallavi Choudhuri, Senior Fellow at the NCAER-NDIC, was invited to participate in a panel discussion at the Niti-State Workshop series on “Leveraging State Data Ecosystems for State and District-Level Policy and Planning” hosted by the Niti Aayog and the World Bank at The Centrum in Lucknow on November 17, 2023.

Dr Choudhuri spoke on the need for data harmonization & integration of survey & non-survey data. Successful policy interventions require harmonization across data sources & within various rounds of each source.

NDIC Project Heads Are Panellists for Book Discussion on ‘SCs in the Indian Labour Market’

Professor Sonalde Desai and Professor Amaresh Dubey were invited to participate in a Panel Discussion organised by Indian Institute of Dalit Studies, New Delhi, and Rosa Luxemburg Stiftung, South Asia, on 8 November 2023.

The Indian Institute of Dalit Studies (IIDS), New Delhi, and Rosa Luxemburg Stiftung, South Asia, invited Professor Sonalde Desai and Professor Amaresh Dubey as panellists in a discussion on the book, “Scheduled Castes in the Indian Labour Market: Employment Discrimination and its Impact on Poverty”, by S. Thorat, S. Madheswaran, and B P Vani. The book has been published by Oxford University Press in 2023. The panel discussion was held on 8 November 2023 at India International Centre (IIC), New Delhi.