An Essay on Poverty with reference to

India
By Amit Bhushan

Poverty is the state of human subsistence where one finds him unable to fully
participate in the process of production and fair trade, to earn suitable wages,
enough to cover the cost of a healthy & hygienic living in a dignified way. A person in
poverty in not only denied a healthy & productive living standard in present, but he is
also unable to make good use of any evolving opportunity due to lack of adequate
resources. Thus even the future generation of a person in poverty is condemned to
live in subsistence. Poverty not only gives an undignified present state of living but
also makes a person bereft of any hope to improve his lot without an external
support.

Poverty can be attributed to many factors, each of which may have its own degree of
distress. Chief causes of poverty are normally cited as lack of education &
marketable skills, high growth rate of population, lack of natural resources of
production like agricultural land and mines, fiscal imprudence of the government,
lack of entrepreneurship or ideas in a society, low rate of capital formation,
casteism/racism, lack of infrastructure, inadequate investment or foreign investment,
security environment etc. etc. However the most astonishing thing about such
debates on poverty is that the debate usually shifts to identification of a chief
cause/s & ways to tackle the same. This is basically trivialization of the whole
debate. It may also be pointed out that given the choice to people/policy makers to
root out poverty & say casteism, education or health, a lot of people would like to
give much more priority to eliminate poverty. However, the truth is most of them are
unable to structure & focus attention on poverty alone & digress to one of the
contributory causes with the result that poverty gets lesser attention. The basic
requirement is the need to understand the theorem or principle of poverty before
such a discussion can be conducted & led to its normal conclusion.

Poverty is the result of inability of a society or any particular cross- section of a

society to participate in or share the means of production and engage in a fair
exchange process on a sustainable basis. In simple words, this translates into either
hindrance or a lack of empowerment of a cross-section of society to produce
marketable goods & seek a suitable price in a free & fair manner. The term ‘free &
fair’ in the previous sentence may be interpreted as something similar to “Pure
Competition” as in economics where there is availability of a large number of sellers
(or producers) & buyers, they have easy access to information & business can
proceed in unhindered way i.e. transaction cost is low. In context of producers, this
also means availability of a large number of producers with easy & unfettered access
to factors of production such as land, capital, manpower & other resources. The
important point is the emphasis on distribution of the means of production to ensure
participation of a larger population & a fair trading process to ensure adequate
remuneration. If a society embarks on such mission, the inequalities are bound to
reduce, resulting in improvement in quality of living for a larger number of people,
enhanced productivity & greater harmony. The contrast between USA & Japan may
not out of place to be quoted here. USA with much greater land, mineral & other
resources, houses a much higher proportion of people in poverty than Japan which is
low on resource but has achieved a better distribution of resources (lower
inequality).

Looking at the above, it is clear that the intention of the essay is to explore poverty
as mainly an economic phenomenon, though the causes that contribute to poverty
may be identified as social, political, regulatory or economic in nature. It is being
done intentionally to keep the evolving discussion focused solely on poverty & not to
digress to any one or more of the contributory cause & dilute the debate. This sound
logical as well because, though poverty of any cross-section of society of a particular
geography may be a result of a socio-political cause say casteism/racism; however
the cause essentially results in establishment of a regime of denial of the means of
production & fair trade price. Such a regime of denial may be exercised by outright
restriction, by lack of empowerment (no information or knowledge sharing) or by
increasing the cost of resource for that particular cross-section of the society. It also
needs to be understood that eliminating some of the causes of poverty might be
much more cumbersome, politically risky to get support besides putting pressure on
already meager resources. Also, eliminating poverty might itself lead to a number of
problem waning away of at least their impact might wane for the society.

Then there is also the human problem of motivation, where a human being has an
opportunity to exploit the means of production & get a fair market price, but does
not feel tempted to do so. This could be a result of lack of ideas & information, a
general state of gloominess, fear of exploitation & other similar factors. It may
sometimes happen when the human subject has comfort of accumulated assets e.g.
a doctor or an educationist may be unemployed or inadequately employed (low
wages) in an urban area, however does not feel tempted to explore a rural or a sub-
urban area offering higher wages for employment. Also, poverty itself is a big
detriment for the poverty struck person as it blocks many of his attempt to rise
above poverty due to inability to provide for the financial resources to do so e.g. a
person good at computers may not able to afford himself of proper training & seek
better wages.

A novice actor, which could be anyone including a state, a national or even a

multilateral agency, can easily be tempted to start seeking solutions to one of the
causes of poverty while making an attempt to root out poverty from a region
(because of the confusion around the poverty debate). It is easy to spot examples
where such agencies have put up or are putting up large infrastructure projects like
roads, dams etc., and setting up large number of primary schools & health care
centers or even distributing food & medicines, seeking investment /foreign
investment, all in an attempt to defeat the menace of poverty. So far our experience
in India goes, it shows us that such attempts have either gone in vain or met with
limited success at best. No attempt is being made to undermine the need to
eliminate causes like casteism, infrastructure, foreign investments bottlenecks etc.
However it needs to be reemphasized that as far as the need to eliminate poverty is
concerned, a more focused attempt would yield much better results & improve well
being and harmony in the society. What is essentially required, is the need to create
more options for production, a better distribution of those options to seek
participation of local population, ensure a fairer trading regime and motivate the
poverty-struck to take advantage of such production process more vigorously.

Any concentrated attempt to root out poverty from any part of the geography should
clearly plan & provide answers to the following three questions. What measures
should be adopted to create and deliver a larger number of resources to reach out to
a larger number of people in the region? How to ensure unhindered access of the
produce of the region to its markets & ensure a fair price? And finally, what can be
done to ensure that a larger number of people feel motivated to participate in the
production process?

The above might sound Gandhian thinking laced in etymologically modern economic
lexicon, however as the discussion evolves, the differences shall become more
pronounced. Primary among them is the insistence on ensuring easy access to
markets including international markets as opposed to self-sufficiency of villages and
all things there under viz. adoption of new technology instead of traditional
production methods, encouragement to innovation & non-opposition to large projects
etc. The only point that is stated is that any project, rolled out in the name of
poverty must be assessed based upon the answers to the questions in the previous
paragraph. It should be looked if the project is helping in development of ecology
where a larger number of people of the region can participate in the production
process during the construction as well as the operating phase of the project & it is
an opportunity for them to get better pricing for their produce on a sustainable basis.
Also, the project should be able to create a “Feel Good” factor where a larger number
of people in the region feel motivated to participate or contribute to the process. Let
there also be no doubt that the essay draws inspiration from the Gandhian
philosophy of “Production by masses” as core theme for the management of poverty.

An economist might be tempted to argue that nearly all projects and policies would
have participation of people as well as would have to produce in order to qualify
funding of the project by the government & sustain it. Also, a large project might
have some displacement of people along with a clutch of production machinery of the
local society; it may also have some adverse impact on small players in the same
industry e.g. Textiles sector India. Also international phenomenon like globalization
would have impact on local industry and employment. A large project might also
change the way business is conducted to the detriment of players who are unable to
change their business practices. Should such projects & policies be necessary be
qualified as detrimental to the economy & banished or can they be avoided at all.
The idea of this essay is to highlight the flux in contemporary business environment
and co-opt the same along with the need to involve masses in the production
process. Now this might sound like utopia, quite preposterous for implementation.
However, the idea of judging projects on the basis of three core questions along with
other funding related requirements is politically palatable, humanly possible,
measurable & monitorable. What essentially such a scheme does is it transfers the
role of generating ideas from a central to a local level. Hereunder, a locality or local
government generates/selects local ideas (and is also responsible for implementing
it), it is then evolves further through help from central or other agencies, the
authorities at center qualify or disqualify funding on such ideas and develops
program for monitoring the same. If the selected idea is successful, the center may
share & implement the idea at other regions where possible. Though planning,
selection & funding of such ideas may become more time consuming (monitoring,
more cumbersome), the implementation & impact of such scheme given the
ownership & stake of local players is likely to be much better then our present
situation where a plethora of projects/policies are failing in the implementation
phase.

Now let’s venture to examine the role of Indian government & various agencies
working to alleviate poverty in India. The center has enacted job guarantees
schemes, has sponsored various Rojgar Yojnas, has implemented irrigation
development project, legislated minimum wages act, banished casteism/gender bias
in the books of law etc. It is has taken primary education & healthcare initiatives,
developed alternative agri industry like milk, honey etc., has schemes for weavers
among other things. Now it is venturing to increase the rate of capital formation &
investment, freeing up foreign investment, investing on large infrastructure projects
with gusto besides other initiatives. A cursory evaluation of results would tell us that
in absolute numbers, the population of people in poverty has increased. Though, it
may be acknowledged for the comfort & solace to some that in percentage terms,
the percentage of people below poverty has come down over the years.

A born pessimist is eager to volunteer that the usual suspects like corruption,
nepotism, political & administrative lethargy have played havoc with these initiatives
just as they have done with everything else in the country. Such a conclusion is naïve
besides it also fails to explain the reason for the fall of poverty in percentage terms.
The explanation seems more a result of frustration, helplessness, lack of involvement
& pessimism. What is important is to understand the chemistry or the theorem of
poverty (which has been explained above) to devise methods of a more successful
poverty alleviation program. Most of the existing government initiatives are botched
up at the central level with support from multilateral agencies & international
experiences (for which funding is more easily available) and then, handed over to
local magistrates for implementation. The local administration is more concerned
about paper formalities around the program then seeking out involvement of local
population leaving the petty task for the agencies involves (with political connections
or otherwise) in implementation of such a program. The agencies then invent the
right numbers to the satisfaction of the local as well state & central authorities. The
lack of information of such programs to the person in poverty, the fear of
exploitation, low motivation, confidence level & fighting spirit; all are an
encouragement to creative spirits of the agencies (which go unnoticed more often
then getting caught) reporting invented numbers to the satisfaction of authorities
involved (and the authorities are even opposed to Right to Information/file noting,
sic.). The poverty-struck at best receives a trickle down effect of such program if at
all they prove to be lucky enough. The net impact is that though we get full effect in
terms of economic growth rate on papers, the actual numbers of people in poverty
have steadfastly refused to come down. With liberalization, we have at best added
some more projects or some more sources from which this trickledown may happen
viz. private & multinational companies.

Any concentrated effort to alleviate poverty levels with active participation of local
population in the production process has largely eluded us. However we do have
some successful examples to be cited e.g. the land reforms in West Bengal, which
involved redistribution of land (a production resource) to tillers, the irrigation
projects & green revolution in Punjab which enhanced productivity of numerous small
farmers, the cooperative dairy farming in Gujarat, enhancement of education in
Kerala & Tamil Nadu leading better empowerment of people & hence alleviation of
poverty etc. In each of these projects, active participation of the local population in
the process was achieved (whether through natural inclination, charismatic
leadership, incentives or otherwise), the production resource was widely distributed
& shared with population, Fair trading price of the produce was ensured either
through Minimum support Price in Punjab, through fairer procurement policies in
Gujarat and political empowerment in other states. Most important but least
remembered fact is that the leadership was able to reach out to motivate people to
participate in these programs.

Given the above, it might be concluded that we have neither learnt from our failures
nor from our successes. We have mostly encouraged megalomaniacal ideas of our
political bosses & sarkari babus and succumbed to their fetish for control in their own
hands (They can even systematically scuttle a successful idea, if it fails to put it as
first among the beneficiary, read political benefits for them). There is also little
understanding or the motivation to understand the theorem or the reason of poverty
among the Administrators. The chief failure in all these fifty-two years of planning
growth to alleviate poverty is that the planning process itself could not be distributed
to empower countryside people to plan for themselves. The result is a plethora of
grandiose plans in the name of poverty alleviation, but very little actual
improvement. The moot point is, How long will it continue?