India, with its vast population and diverse socio-economic landscape, has been grappling with the issue of poverty for decades. Despite making significant strides in economic growth and development, a large section of its population still lives below the poverty line. Unemployment has emerged as a key driver of poverty, particularly in the unorganized sector, where a significant portion of the population is employed. The following lines delves into the linkages between unemployment and poverty in India, analyzes the income levels of unorganized sector workers, and explores the implications for poverty eradication efforts.
Unemployment and Poverty Nexus
Unemployment is a critical factor contributing to the persistence of poverty in India. Lack of job opportunities and underemployment are pervasive issues that hinder individuals from escaping the cycle of poverty. The unorganized sector, which comprises a significant segment of India's workforce, often faces higher levels of unemployment. The lack of formal contracts, social security, and limited access to labor protections make this sector vulnerable to economic shocks and fluctuations, leading to higher unemployment rates.
To understand the magnitude of the problem, we can examine the income levels of unorganized sector workers. The Indian government established the E-Shram Portal in response to the distressing scenes of millions of people migrating from cities to rural areas during the COVID-19 pandemic. As of last year, approximately 27.28 crore workers had registered on the portal, with 94% of them reporting earnings below ₹10,000 per month. The Prime Minister's statement that 30 crore people are registered on the platform, with 90% earning less than ₹10,000 per month, further highlights the dire income situation in this sector.
Comparing Income Levels and Poverty Line
Existing poverty line estimates, such as those proposed by the Rangarajan Committee in 2013 and the Local Committee Report in 2005, provide an approximation of the income required to meet basic needs. However, the most recent poverty line data is from the World Bank, which increased the benchmark to $2.15 per person per day (PPP) from $1.9 last year. For a family of five members, this translates to ₹26,500 per month.
In stark contrast, the registered workers on the E-Shram Portal indicate that their earnings are much lower than the poverty line. Even if we account for the purchasing power parity (PPP) adjustment and convert the poverty line to normal nominal dollars, the monthly requirement still stands at ₹9,500. This implies that a significant proportion of unorganized sector families are either on or below the poverty line.
Inequality and the Path Forward
Addressing poverty requires tackling various forms of inequality. In this context, three dimensions of inequality must be considered: income inequality, regional disparity, and social inequality. Income inequality, characterized by a vast gap between the rich and the poor, exacerbates poverty by limiting access to resources and opportunities.
Regional disparities also contribute to the persistence of poverty in India. Development gaps between urban and rural areas and uneven economic growth across states widen the poverty divide. Focusing on equitable economic development, improving access to education, healthcare, and infrastructure, and encouraging investments in lagging regions can help bridge these disparities.
Furthermore, social inequality, based on gender, caste, or ethnic backgrounds, acts as a significant barrier to poverty eradication. Discrimination and marginalization restrict the opportunities available to disadvantaged groups and perpetuate their vulnerability. Promoting inclusivity and social justice through targeted policies and affirmative action can help ensure that all sections of society benefit from economic growth.
Unemployment, particularly in the unorganized sector, is a key driver of poverty in India. The income levels of workers in this sector are significantly lower than the poverty line, indicating the urgent need for measures to improve their economic conditions. Addressing the three dimensions of inequality - income inequality, regional disparity, and social inequality - is crucial for poverty eradication. By creating more job opportunities, ensuring decent work conditions, promoting inclusive growth, and bridging regional disparities, India can embark on a path towards sustainable development, where poverty becomes a thing of the past.
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