In India, around 260 million people are still living below the poverty line. In the northeast region including Sikkim, about 13 million people live below the poverty line (according to the National Sample Survey’s Organisation’s 55th Round Survey. In the state of Assam, 9.2 million are below the poverty line, followed by Tripura (1.2 million), Meghalaya (0.7 million), Manipur (0.6 million), Nagaland (0.5million), Arunachal Pradesh (0.3 million) and Mizoram (0.1 million).
Poverty is a real cause of concern. It is associated with deprivation, illiteracy, malnutrition, crime and discrimination. Many poor persons are vulnerable to social and technological change. According to the World Development Report (2005), a relatively modest increase in inequality would produce an average increase in robberies of 30 to 45%, while a 5% drop in GDP would produce an immediate 50% jump in the robbery rate.
The report points out that the decision to commit a crime depends on whether the return, discounted by the likelihood of apprehension and punishment, exceeds the gain from working. The more unequal the distribution of income and wealth in a society, the larger the potential gains from crime for those at the bottom of the scale. The report suggests reducing poverty and inequality, not only for reasons of social justice, but also for the practical reason that it is a sure way to cut crime rates.
Any long-term strategy of economic development involves the eradication of poverty. The Millennium Development Goals (MDGs) of the United Nations (UN) are a set of targets to reduce global poverty and improve living standards by 2015 - to halve the number of people living on less than $1 per day between 1990 and 2015. The UN Summit held in New York stressed three main issues: poverty, terrorism and UN reforms. The MDGs were one of the focus points of the UN Summit, as it reviewed the progress of the MDGs in the poorest countries.
India’s Five Year Plan also has the objective to eliminate poverty. In view of this, different types of poverty-alleviation programs have been created. But the poverty schemes have achieved success to a limited extent. Poverty rates have fallen in India, but the ‘absolute’ poverty number more or less remains the same. Thus, the schemes have not been able to push the large number of poor persons above the poverty line.
Poverty and employment are causative factors. Generating employment can reduce the number of poor people. However, in this liberalization period, there are many problems which stand in the way of the employment generation process. According to economist M. Iboton Singh, a retired Professor of Manipur University: “Even if employment were generated in the low-income yielding occupation, the people getting this type of employment cannot cross the poverty line.” He suggested that various schemes for employment should be made productive and viable, and the size of loans given to business units should be increased to yield a minimum standard of life.
Lessons can be drawn from other countries’ experience. The World Development Report of 2005 pointed out that investment climate improvement in China drove the most dramatic poverty reduction in history, lifting 400 million people out of poverty over 20 years. Government policies and behaviours play a key role in shaping the investment climate.
Attracting investment into the various sectors of the economy is the need of the hour for poverty reduction. However, investment is very costly, risky and full of barriers. Investors are shy of these three problems. A good investment climate plays a central role in growth and poverty reduction because it provides opportunities and incentives for firms, from micro-enterprises to multinationals, to invest productively, create jobs and expand.
Financial sector reform is essential to create self-employment opportunities for youth. According to H. Dillip Singh, a Director of Institutional Finance in the government of Manipur, “there has been a paradigm shift in the economy. During the last ten years there have been limited opportunities for creating employment. This has left many unemployed people in a vulnerable position.”
Mr. Singh added, however, that there are current schemes to assist unemployed youth. For example, 2,488 unemployed people have been selected to take part in the Self-employment Generation Program to increase employment in Manipur.
Various other national schemes have been created to reduce poverty in India. Some are successful while others are not. It is necessary to support, restructure and re-orient the development programs and schemes in order to yield a maximum desired result.
Strong steps need to be taken to minimize the risk, cost and barriers associated with a firm’s investment in the region. Poverty programs should explore different approaches to penetrate into the interior parts of the State.
Financial institutions have become very important for generating self-employment as part of poverty reduction programmes. Therefore, these institutions need to be strengthened. The nexus between bureaucrats and politicians should not stand in the way of the implementation of poverty schemes.
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