Answer – Guaranteed Income
Dr Saheb Sahu
Introduction
According to the recent report by NITI Aayog, India’s multidimensional poverty rate has declined to approximately 11.28% as of 2023. The multidimensional poverty index (MPI), has total of 10 indicators: 2 for education, 2 for healthcare and 6 for living standards. In 2023, Odisha’s MPI was reported at 15.68%, down from 29.34% in 2015-16. At the state level, Uttar Pradesh, Bihar and Madya Pradesh saw the largest decline. Himachal Pradesh, Punjab, Tamil Nadu and Kerala had poverty rate of less than 5%. The MPI for Kerala was 0.55%, the lowest in the nation.
What is Guaranteed Income?
Guaranteed income, often refers to as a Universal Basic Income (UBI), is a policy proposal where a government provides its citizens with regular sum of money without any condition. This concept has gained significant attention in recent years as a potential solution to economic inequality and poverty.
The Rational Behind Guaranteed Income
The idea behind guaranteed income stem from the belief that all individuals should have a basic level of economic security. The idea goes back to the 18th century to people like Thomas Paine (1737-1809) and John Stuart Mill (186-1873). According to the experts, a guaranteed income could act as a safety net, ensuring that everyone has enough resources to meet their basic needs, regardless of their employment status. Advocates argue that this financial stability would allow people to pursue education, entrepreneurship, or other endeavors without the constant pressure of lack of money. Additionally, a guaranteed income could simplify multiple existing welfare programs, reducing bureaucratic costs and inefficiencies by replacing various forms of social assistance with a single monthly payment. However, critics point out that implementing such a program on a national scale (or state) would be expensive, and would require significant tax increase.
Research on Guaranteed Income
The results of the biggest study on guaranteed income was published in the National Bureau of Economic Research on July 23, 2024. The study was undertaken by Center for Guaranteed Income Research (GIR) of University of Pennsylvania, USA.
For three years, 1,000 people in the state of Texas and Illinois in USA, ages 21 to 40, were given $1,000 per month without any strings attached. The group had an average household income of $30,000 per year, creating representative sample of young low-income Americans. The median household income in USA in 2024 was $ 70,780 in USA, a family of four considered impoverished if they earn $30,000 or less per year.
The Result
The data clearly showed that cash helped people to spend more on their basic needs. They spent $67 per month more on food, $52 more on rent and $50 more on transportation. They also spent 26 percent more financially helping other family members, especially children. Some recipients went back to school. Others started opening businesses.
According to the researchers, the extra money, “gave them head space to dream, to believe, to hope, to imagine a future, they could not imagine before”. Multiple other researches around the world have shown similar outcome. Contrary to popular belief, people did not spend their gift money on drinking or gambling.
What Steps the New BJP Government Should Take to Eliminate Poverty in Odisha?
According to the World Bank, and other independent studies, 30% to 40% of allocated funds for various welfare schemes in India, reaches the intended recipients because of leakage ( a new word for corruption) or percentage taken by the middle men and women, ( politicians, various officials, contractors). Most Indians know that the real percentage is even higher. Aadhar linked payment and the JAM (Jan-Dhan Aadhar Mobile) trinity has reduced leakage in India in recent years.
1- Guaranteed Income
All poor Odias, young adult or old, male or female should be given a guaranteed income for at least five years. The amount should be decided by the government of Odisha, but it should be at least Rs 30, 000 (thirty thousand rupees) per year or more. The amount has to be sufficient enough to pull the poor out of poverty.
The Subhadra Yojana, recently announced by the new Government is a good start (The New Indian Express, Aug23, 2024). According to the SOP (standard operating procedures), women between 21 years and 60 years of age will be paid Rs 10,000 (ten thousands rupees) per annum in two installments of Rs 5,000. The duration of the scheme will be for five years 2024-25 to 2028-29. It is an excellent start but it is not good enough. The amount is too little and it will exclude all poor men, young and old. They are half the population of the poor people. What is the justification of excluding them? To eradicate poverty from Odisha, the new government has to find the ways and means to include all poor people in the state, regardless of their sex, and place of residence, rural or urban. Subhadra Yojana is a halfhearted measure. It will help but it will not reduce poverty in Odisha to below 5 %. The New Government should try to match the poverty rate of Kerala, which is 0.55%.
2- Improve Education
The state with the highest literacy rate and the lowest poverty rate is Kerala. Kerala has literacy rate of 96.2 %( male 97.4% and female 95.2%). The literacy rate for Odisha is 72.87 %( male 81.59%, female 64.01%). Quality of public education is a core stagey in fighting poverty. No country has succeeded in reducing poverty if it has not educated its people. Educating girls is even more important than educating boys. Of course, both the sexes should be equally educated. All the developmental experts agree that the benefits of girls’ education are many: delayed marriage, decrease pregnancy rate, increase productivity, reduction of under-five mortality rates, gender equality in family decision making and many more. Women who are educated are more likely to work outside the home. Women who have independent income have higher social standing and more likely to run for political, office.
The secondary school dropout rate in Odisha in 2023 for boys was 29.2% and for girls it was 25.2%. The National average was 12.6%. Odisha’s higher secondary school dropout rate is unacceptably high. The teacher’s absentee rate in Odisha typically ranges from 20% to 25%. This figure is even higher in rural and more remote areas of the state. The government has to take strong actions to reduce both the dropout and absentee rates.
Every student is not a college material. Students who cannot attend college should be provided with vocational education (plumbing, electrician, fitter, mechanic etc.) with minimal cost or at no cost.
The infrastructures of all schools should be improved. Many schools do not have toilets. Every school should have safe-drinking water and sanitation. Every school should have computers and connected to internet. It should have a library. It should also provide remedial education to those who need it.
The under-five stunted rate of Odisha’s, children is 36%. Stunted growth is a sign of chronic malnutrition. The rate is too high. Besides providing mid-day meal, the new government should provide a nutritious breakfast to all children irrespective of income. Hungry children do not learn well. The addition of free breakfast will reduce the malnutrition rate in few years.
Besides providing safe drinking water and toilet, breakfast and lunch, each student should be given de-worming medicine, Vitamin A, and Iron tablets. All the children should get the recommended vaccinations at school.
3 – Facilitate Migration
Education and migration are two of the oldest actions against poverty. People who leave their villages and move (migrate) to a nearby or distant town or city, or even to a foreign country, escape the grinding poverty of their village. The late Harvard Economist John Galbraith said many years ago – “There is nothing great about blue sky and clean air when you are starving”. The quality of education in rural schools and colleges in India, including Odisha, is not that great. Rural students have very hard time getting into good educational institutions and compete in the job market. When people migrate to a town or city, their children get better education and escape the poverty of their parents.
As of 2023, it is estimated that around 1.8 crores (18 million) Indians are working and living abroad( USA, Canada, Gulf States, Saudi Arabia, U.K., Australia and other European countries). In 2023, India received 125 billion dollars in remittance from its overseas Indians. It is estimated that around 22 lakhs (2.2 million)Keralites are working overseas, majority of them in the Gulf counties. They have been migrating to the Gulf countries since 1970s. In 2023, an average Malayali sent 2.23 lakhs rupees to his/her family back home.
The Government of Odisha has no real figure on how many Odias are working outside the state. The government does not want to know as it reflects on the poverty status of the state. It is estimated that 15% to 20% Odias are working outside the state mostly in Southern and Western states, mostly in brick manufacturing and construction industries. Instead of denying that migration is happening, the government of Odisha should do everything possible to facilitate migration to other states and especially to the Gulf Countries. In the Gulf Countries they will earn 10 to 15 times more than they will earn with in India.
Conclusion
I have been interested in developmental economy since 1997. I have kept up with the literature on the subject of poverty alleviation. I have written four books and many articles on the subject. In this article, I have suggested 3 steps for the new BJP government to implement.
1- Provide direct unconditional cash grant of thirty thousand rupees or more per year, to all the poor people in Odisha, irrespective of sex, for a period of five years. With that amount of money most poor people (notall) will get out of poverty and Odisha’s poverty rate will fall below 5 percent.
2- Improve education by providing better school and college infrastructures (internet connection, libraries, toilet and hostels), decrease dropout rate of secondary school students and improve the teacher’s absentee rate.
3- Facilitate migration from rural areas to urban areas inside and outside the state and to the Gulf counties.
Poverty is inter-generational. There is no simple and easy solution to eradicate poverty but it can be done. China has got people out of poverty in large numbers. India is doing it but not fast enough. Odisha has done it to some extent but it has been too slow and not good enough. Ten districts in Odisha have done well, ten districts have done so, so, and ten districts are among the 100 poorest districts in India. To me as an Odia, Odisha’s poverty ranking in spite of its mineral wealth is not acceptable. The new BJP government has an opportunity to take bold steps to significantly reduce Odisha’s poverty rate to match that of Kerala.
The responsibility of reducing Odisha’s poverty is all ours politicians, government officials, NGOs and all citizens of Odisha. Those of us, who are fortunate enough not to be poor or have moved out of poverty, we should do our part to help others. We can start with helping one person or one family at a time. After all the good book (The Bible) says,” We are all our brothers’ keeper”. As Nobel Laureate Amartya Sen has said:” TO END POVERTY IS TO WIN FREEDOM.’
Sources:
1- NITI Aayog- niti.gov.in
2- Chat Gpt- Aug 28, 2024
3- Saheb Sahu, How to eliminate poverty in Odisha, 2018
About the Author
Dr Saheb Sahu is a village boy from Bargarh district of Odisha. He is a graduate of AIIMS (New Delhi). He is a pediatrician settled in USA since 1970. He was an appointed expert member of WODC for six years and that is when he learned about PC (percentage) in developmental grants. He also served as Managing Director Kalinga Hospital, Bhubaneswar for four years. He has visited 24 out of 30 districts in Odisha. He has written four books on India’s and Odisha’s poverty. His personal interest are promotion of girls education and tree planting.
