Question

How adequate is the "poverty line" in India as a measure of economic poverty and what conclusions can be drawn from it about India's progress in eradicating poverty? In this context, comparatively, evaluate targeting versus universalism with self-selection as a principle of effective social policy. Discuss the pros and cons of the conditional cash transfer and cash incentives system in this regard. ANSWER EACH PART IN DETAILS AND IN ABOUT 2000 WORDS.

Answer 1

Poverty Line in India :-

Poverty line is the level of income to meet the minimum living conditions . It is defined as the money value of the goods and services needed to provide basic welfare to an individual.

Relative poverty :-

It is a condition where household income is a certain percentage below median incomes .

This criteria will change according to economic growth

Absolute poverty :-

Conditions where household income is insufficient to afford basic necessities of life like food , shelter and clothing .

This criteria is not changed by economic growth.

Connection between poverty and measures to eradicate poverty :-

1) Poverty rate is related to overall health of the economy .

2) With an increase in employment opportunities , the outcome is stronger labour markets and higher income levels which directly help the people to come above the poverty line threshold .

3) Setting median wages helps to eradicate income and regional inequalities.

4) Provision of basic primary education helps to eradicate poverty as it is evident from the statistics that higher percentage of population with a College degree is associated with lower rate of poverty.

Poverty measurement mechanism in India :-

The Planning Commission was the nodal agency for estimation of poverty . For setting the poverty line and the methodology of construction ,an Expect is appointed by the Planning Commission.

Methodology for constructing the poverty line :-

1) For measuring the poverty ,a poverty line is set .

2) The poverty line is the level of income needed to meet the minimum standard of living.

3) People who have income below the line are considered poor .

Targeting vs Universalism -Principle of effective social policy :-

Under Universalism , entire population is the beneficiary of social benefits as a basic rights.

Universal policies helps to maintain a sense of equality amongst all .

On the other hand targeting involves eligibility to social benefits involves some kind of means testing to determine the truly deserving .

Targeting poverty eradication helps to remove social disparity and income inequality.

Cash transfer :-

These include aids by the government in order to provide basic facilities to the poor at nominal rates .

Example - health insurance, education subsidies etc

Pros :-

1) Helps to increase consumption and food security.

2) Helps to raise standard of living

Cons :-

1) It creates a major burden on government budget .

2) The chances of achieving the exact purpose for which the transfer is provided are very unpredictable.

Cash Incentives :-

Cash incentives can be defined as direct cash rewards to the targeted group in order to motivate them to perform a specific task .

Example of cash incentive in india , is when a person is given direct cash rewards for educating girl child.

Pros :-

1) Easy and straightforward way to reach target section .

2) Direct benefit to the recipient.

3) Facilitates better participation

Cons :-

1)Other incentive may seem entitlement.

2) It creates a sense if inequality

3) It involves a lot of time to structure fair monetary plan