THE POOR INDIA: UNDERSTANDING POVERTY

Poverty is a word we have been hearing since our school days. Although it should be one of the most debatable topics in the news, it is not. All the fucking politicians and their economists do not put meaningful efforts into understanding this thing we call poverty or "gareebi." When I sat down to research poverty, I barely found useful information related to India's poverty. There needs to be more useful data and transparency. As you know, I am good with numbers and data, so I have tried to logically put it in numbers. Through this article, I try to understand what poverty is and how small steps can make a huge impact in the future.

WHAT EXACTLY POVERTY IS?

There are several ways to define poverty, for instance, World Bank defines poverty as a person who does not have $2.15 to spend per day and countries simply convert that into PPP and define a monetary amount to calculate their poverty rate.
Purchasing Power Parity (PPP) is a way to compare the buying power of different countries' currencies. It looks at how much money you need in one country to buy the same things you can buy with a certain amount of money in another country. For example, if a burger costs $5 in the US and the same burger costs ₹100 in India, the PPP rate between the US dollar and the Indian rupee would be 20 (because $5 × 20 = ₹100). This means 1 US dollar has the same buying power as 20 Indian rupees when it comes to buying a burger.

But India uses the Tendulkar Committee's methodology, which sets a poverty line based on consumption expenditure. The poverty line is defined in terms of per capita monthly expenditure needed for basic food and non-food items.

Hence, when we define poverty on the basis of absolute monetary is called “Absolute Poverty”. We simply define a number based on the prices of food and non-food items and then we divide people who are below that threshold and above it. People who are below we call them poor or people below the poverty line, that line is the number.

Although nations across the globe use mostly absolute methods, but there are a few other ways to define poverty such as relative poverty, multidimensional poverty index, and consumption-based poverty. Among all methods of defining poverty, there is one method that I like the most which is the multi-dimensional poverty method as it goes beyond income-based assessments to include various deprivations individuals experience in their daily lives. It assesses poverty through multiple dimensions, which typically include health, education, and living standards. Each dimension encompasses several indicators, and multi-dimensional poverty (MPI) identifies individuals as poor if they are deprived of a certain number of these indicators.

Dimensions and Indicators:

Health: Nutrition, child mortality.

Education: Years of schooling, school attendance.

Living Standards: Cooking fuel, sanitation, drinking water, electricity, housing, assets.

WHY DO WE HAVE POVERTY?

This is an interesting question: why do we have poverty? If we dig deeper into poverty, it boils down to a situation where people are unable to obtain the very basic things needed for living or survival. Therefore, if we rephrase it as: why do some people not have basic things for survival?

At first glance, you might think: "Oh! I know the answer because we have limited resources and unlimited desires." This is basic economics. However, I don't believe we have such scarcity that we can't provide for everyone in our country. For instance, look at this data: we produced around 110 million tonnes of wheat alone in 2022-23, which can feed up to 1.51 billion people, assuming a daily consumption of 200 grams per person. That’s huge, right? And we don't just grow wheat; we have hundreds of pulses, fruits, vegetables, and so on.

So, what's the problem? One major reason is unemployment. Many Indians rely on jobs and self-employment to earn their living. While the upper middle class might not feel much impact from job loss, those who are not financially fortunate suffer greatly when they lose their jobs or can't find one.

Educated individuals with skills can often find various jobs, albeit not easily, but they manage to get some work, no matter how menial. On the other hand, people who lacked resources and education in their childhood find it extremely difficult to secure a full-time, stable job. They often end up in manufacturing or agricultural work, which typically requires more physical labor. However, manufacturing units often hire these individuals only for short periods because it's difficult to fire permanent workers, leading to frequent periods of unemployment for these laborers.

Prolonged unemployment pushes these individuals into poverty and hunger. Another reason might be inefficiencies in distribution. The Government of India distributes food grains at subsidized rates to over 50% of the population. However, there are many inefficiencies in the system. Ration shops often do not supply enough food grains to meet the needs of the poor, and the quality of food grains is lacking. As a result, the Public Distribution System (PDS) fails to reach the needy due to corruption in identifying low-income families.

What's even more astonishing is that the Food and Agriculture Organization (FAO) estimates that about 40% of India's food is wasted due to poor transportation and storage. Therefore, it isn't scarcity that is causing hunger; it's inefficiency and waste.

NUTRIENTS-BASED POVERTY TRAP, A MIRAGE?

Whenever someone says something about poverty, we all first imagine a person who hasn't had food in days, and we tie poverty with food. Most economists call this the “Nutrients Based Poverty Trap.” You ask, what is it?

We all know how important nutrients are for a healthy, functioning body. Let’s understand with the help of a story. In a village, there was a 34-year-old man who lost his job. Now he doesn't have money to buy food and has started doing some menial chores like physical daily contractual work that doesn't guarantee work for more than a day. However, due to a lack of food, he is not able to do these jobs efficiently. Therefore, he doesn't earn much money. And as he doesn't earn much money to buy food, he doesn't have the strength to work. And you got me... this is called a trap where you continuously make an effort but end up in the same place. Just like Dr. Strange in the movie, trapped in the time cycle.

Now, the big question arises: if that guy somehow had enough money, would he get enough nutrients or food to get energy for his work? If food-based poverty is a real thing, then poor people should get as much food as they can when they get some money, right?

As per the 18th-century dataset on the lives of the poor, food represented 36-79% of consumption among the rural extremely poor, and 53-74% among their urban counterparts. But now, they spend much less on food. This is because they face a lot of options to spend their money on today—alcohol, tobacco, phones, festivals, etc.

For instance, in 1983, in Mumbai, a majority of households lived on 99 cents per person per day or less. Even for the very poorest group, a 1 percent increase in overall expenditure translated into about a 0.67 percent increase in total food expenditure.

So, there's this concept called Engel's Law, named after a German statistician named Ernst Engel. What he found back in 1857 was that as people's incomes go up, the percentage of their money they spend on food goes down. But even though they're spending less proportionally, they're still spending more overall because they have more money. It's like a rule that shows how spending on food changes as income changes. Neat, huh?

The fact that poor people don't spend more money on food when they earn more money doesn't mean they're not affected by nutrition-related poverty. It might not be about how much food they eat, but rather the quality of the food. Good nutrition is essential for kids and babies before they're born and in their early years. If a child gets the right nutrients early on, they can make more money throughout their life

Creating a healthy life for our future is essential and it is very cheap also. Let’s take an example -Parasitic worm infections, known as soil-transmitted helminths (STH), are a big health issue in developing countries. In India, about 225 million children are at risk of getting these infections, according to Children Investment’s Fund Foundation. STH can cause problems like anemia and poor nutrition, affect children's brain development, and lead to more school absences that can affect the overall child development.
And you will be shocked to know that the cost of treating this infection is, on average, $0.50 per person. In India, it can be as low as $0.05. Even if we assume the cost is $0.50 in India, it would cost us less than ₹10,000 crore. To give you some perspective, according to a 2023 article from The Wire, from 2014 to 2023, the Government of India waived off ₹14.56 lakh crore in corporate loans, which averages to approximately ₹1.34 lakh crore worth of loan waivers every year.

For instance, Kenya has implemented a national school-based deworming program, which is part of a broader strategy to improve children's health and educational outcomes. The program began in 2009, targeting millions of children annually.

Research shows significant long-term benefits, including increased school attendance and higher lifetime earnings. A study indicated that children dewormed for several years earned $3,269 more over their lifetime compared to those treated for only one year (Evidence Action) (Centre for Public Impact).
Let’s calculate the ROI (Return on Investment) of this treatment using the above case study which shows an additional $3,269 in income when a child is treated for several years. The cost will remain the same at $0.50 per treatment, and let’s assume the treatment lasts for 5 years. The total cost would be $2.50 ($0.50 x 5), resulting in an ROI of 1300x, which is quite significant.

As we discussed, this program could cost ₹0.50 per person, amounting to ₹10,000 crore for one year, which would be ₹50,000 crore for five years. The ROI would be an astounding ₹650 lakh crore in total over the next 50-70 years.

Suggestions for Government Action:

Expand Deworming Programs: Governments should expand mass deworming initiatives, ensuring regular treatment cycles in schools and communities. Leveraging existing healthcare and educational infrastructure can keep costs low and maximize reach.

Improve Nutrition Policies: Investing in fortification programs (e.g., iodized salt, fortified flour) can address widespread micronutrient deficiencies. Ensuring the availability of fortified foods, especially in low-income areas, can improve overall health and productivity.

Public Awareness Campaigns: Educating communities about the importance of deworming and nutrition can increase program participation and compliance. Effective communication strategies can help change behaviors and improve health outcomes.

Monitoring and Evaluation: Implement robust monitoring and evaluation frameworks to track the effectiveness of these programs. Collecting and analyzing data can help refine strategies and demonstrate impact, which is crucial for sustaining funding and political support.

By adopting these strategies, governments can significantly improve public health, enhance educational outcomes, and boost economic productivity, breaking the cycle of poverty and undernutrition.

Conclusion:

Earlier, I used to think that if we gave money to all the poor people in the world, poverty would vanish. But the convention of poverty is totally wrong because we are associating poverty only with one aspect—money—and that's not the whole picture.

The situation is more complex than we think. For instance, in Africa, many poor people die due to malaria, but with a simple mosquito net, we can reduce cases by 50%. However, here lies the dilemma: if we distribute it freely, would they actually use it? Because when something is free, it loses its value. And if we charge them money, would they happily buy it?

We can only understand them by talking to them on their own level. It's more about their psychological conditioning than about what is right and logical from our standpoint.

Therefore, we can conclude that before starting an initiative, we should really try to understand their actual situation and then take some action. Geography affects the cultures and psychology of people, so it may be true that a policy effective in one place won't show the same effectiveness elsewhere. We have to understand them and tailor our policies accordingly.

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Definitions and Methods of Poverty: