| Introduction: Contextual introduction. Body: Explain the reason behind people in poor places. Also write some policy challenges that are keeping certain areas poor in India. Conclusion: Write a way forward. |
60% of the poor still reside in the states of Bihar, Jharkhand, Odisha, Madhya Pradesh, Chattisgarh, Uttar Pradesh and Uttarakhand. The reason for these states to be in the category of the poorest state is because 85% of tribal people live there.
There are no poor people, only people in poor places as the country’s massive productivity differences are due to wage differentials. These differences are due to-
- States: In the next 20 years, six states in South and West India will account for almost 35 per cent of GDP growth but only 5 per cent of population growth because economic complexity breeds higher wages.
- Cities: Hyderabad has a higher GDP than Odisha and four times that of J&K. The three pillars of governance- PM, CM, and DM is not effective. District magistrates are unelected, inexperienced, and unempowered to breed well-paying jobs.
- Sectors: Software industry employs only 0.8 percent of our labour force but generates 8 percent of GDP, while agriculture has 42 percent of our labour force but only generates 16 percent of GDP. States that increase manufacturing and service jobs will have more high-paying jobs.
- Firms: Higher productivity firms provide higher wages with more capital, technology, and meritocracy.
- Skills: States with high populations of residents with skills in demand attracts more high-paying jobs. India’s problem is not jobs but wages.
Challenges:
- Agriculture: a low productivity sector due to lack of improved seeds, fertilizers, and machines like tractors, investors, etc.
- Human Capital: The expenditure on education, skill-training, research, and improvement in health is minimal.
- Technology: The deficiency of human capital and the absence of skilled labour are major hurdles in spreading technology in the economy. Most enterprises in India are micro or small which cannot afford modern and more productive technologies.
- Lack of infrastructure: These include transportation, communication, electricity generation, and distribution, banking and credit facilities, health and educational institutions, etc.
- Lack of Capital and Entrepreneurship:The shortage of capital and entrepreneurship results in low level of investment and job creation in the economy.
- Regional Poverty: Government should provide special facilities and concessions to attract private capital investment to backward regions. Public sector enterprises should also be set up in backward areas.
State governments must sustainably create high-paying jobs by raising the productivity. Public sector should make liberal expenditure to provide at least minimum requirements.
