Context:

• India’s less-privileged workforce during the lockdown have highlighted the massive scale of falling incomes and loss of means of livelihood. Specific policy measures can reverse the lockdown-created trauma and stop it from snowballing into chronic poverty.

Issues with poverty before pandemic

• India’s poverty line has been a matter of contention for long for its unrealistically low thresholds leading to conservative poverty numbers.
• Irregular updating of official poverty lines and unavailability of data on consumption expenditure from National Sample Surveys in recent years have added to the ambiguity around poverty estimation in India.

Likely extent of poverty in India

• According to the household consumption expenditure reported in the Periodic Labour Force Survey (PLFS), 2017-18 (which replaces the employment-unemployment surveys of the National Sample Survey Office) and applying State-specific poverty lines (used by the erstwhile Planning Commission in 2011 based on the Tendulkar Committee recommendations, adjusted with current price indices), about 42% or around 56 crore people were ‘officially’ poor before the lockdown was announced.

A poverty deepening due to pandemic

• People who were already poor suffer a further worsening in their quality of life, a phenomenon known as poverty deepening. 
• PLFS data estimates that for the year 2020, an additional 40 crore people were pushed below the poverty line due to the lockdown.
• Around 12 crore of this lockdown-induced newly poor are in urban areas and another 28 crore people in rural areas.

What should be done to reduce poverty?

Expand NREGA

• The demand for work is anticipated to increase by 25% with reverse migration-fuelled increase in rural labour supply.
• A token increase of National Rural Employment Guarantee Act (NREGA) wage by ₹20 (₹182 to ₹202), a revamped, expanded NREGA needs to be made the fulcrum of the rural recharge. 
• The revamped scheme would require providing 90 million workers guaranteed employment of 20 days of work/month for at least the next six months. This means an additional financial stimulus of ₹1.6-lakh crore.

Universalisation of PDS

• Recent experience of expanding food coupons to non-ration card holders in Delhi suggests that such measures are likely to exclude marginalised communities.
• Thus Universalisation of the Public Distribution System needs better focus in implementation.
• At the local level, this would mean identification of the most vulnerable and including them into the programme before expanding it to the relatively better-off.

Stabilising urban economy

• The magnitude of the destabilisation in the urban economy due to reverse migration induced by pandemic, necessitates an urban employment guarantee programme to stabilise the urban economy.
• A ‘direct’ employment programme implemented through municipal corporations could be introduced to guarantee 20 days of work.
• This can be used to develop key social infrastructure in urban areas including slum development, drinking water supply, toilet construction, parks and common areas, urban afforestation and social forestry.
• The wages could be fixed with a 30% premium over prevalent MNREGA benchmark average wage in the State.
• An ‘indirect’ branch of this programme can be used to encourage a revival of small and medium enterprises (SMEs) in the most prominent clusters.

Labour class so far:

• The neo-liberal growth that we have experienced since the 1990s has been largely through breaking the back of the labouring class.
• The economy grew by paying less and less to workers and allowing surplus to accumulate in the hands of the owners of the means of production, with the expectation that this would be reinvested.
• The state worked systematically to let this model flourish.
• A series of policies made the labouring class increasingly vulnerable,
  • weakening their collective bargaining power,
  • pushing them away from their native towns out of desperation,
  • forcing them to accept any wage that is offered to them,
  • making them live in conditions which take away their sense of dignity, and
  • curtailing any social security benefit that could help them survive in times of difficulties.

Conclusion:

If the course of economic progress is not altered and development programmes reoriented the implications could be severe with increasing hunger-related deaths and destitution, leading to social unrest and crime.