Boost Economic Growth to Put an End to Poverty

Published: 10th July 2014 06:00 AM  |   Last Updated: 10th July 2014 12:27 AM   |  A+A-

Any attempt to define poverty is bound to be controversial. The latest such effort by the C Rangarajan committee has, as expected, evoked adverse comments from leaders of various political parties. The committee says that those who spend more than Rs 47 per day in urban areas and Rs 33 per day in rural areas are not poor. The new benchmark is an improvement on the figures announced by the Planning Commission about a year ago forcing many to challenge its members to show how they could survive on Rs 32 a day in a city like New Delhi. If the new figures are accepted, about 30 per cent of the population, i.e., about 36.3 crore people, are poor.

The figure of the poor would be higher if the international norm of US $1.25 is accepted as the criterion. In other words, the number of the poor varies depending upon the formulae adopted by various expert committees. Those committees were all headed by eminent economists like Suresh Tendulkar, the late Arjun Sengupta and Rangarajan. The imaginary lines of poverty do not make much difference to the people who are poor, except in availing of certain government benefits. For instance, only those who are below the poverty line are eligible for food grains at a negligible price. Since most political parties supposedly espouse the cause of the poor, they want more and more people to be included in the category of the poorest of the poor. That is one way to increase their vote bank.

Alas, the government has been spending huge resources by way of subsidies for the poor, though much of the benefits are cornered by the rich and the resourceful. Thanks to the public distribution system, there is certainty of supply of food grain to the poor at affordable rates. Studies have found economic liberalisation and growth in investment that followed it have together lifted more people from poverty than the government’s poverty alleviation programmes. There is thus a strong case for reducing subsidies, particularly non-merit ones, and boosting growth through investment to end poverty.

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