On Income Poverty in India – In Viksit Bharat, rural real wages are in decline

Source: This post on Income Poverty in India has been created based on the article “In Viksit Bharat, rural real wages are in decline” published in “Indian Express” on 22^nd January 2024.

UPSC Syllabus Topic: GS Paper 2 Social Justice – Poverty.

News: The article discusses the current status of poverty in India, especially focusing on agricultural wages and unemployment rates.

What is the current status of poverty in India?

According to NITI Aayog’s National Multidimensional Poverty Index (NMPI), 248.2 million Indians have been lifted out of poverty in the last 9 years.

NITI Aayog argues that NMPI is a better measure to estimate poverty than the traditional estimates based on income/consumption.

However, there is a doubt over sustainability of a development model that improves access to public utilities but does not enhance the quality of these services or income levels.

Therefore, household income is still an important indicator of poverty levels. Hence, importance should be given to income poverty, real wages, and unemployment in the country.

For instance, India still has the largest number (160 million) of people under extreme poverty in the world as per the World Bank’s estimate based on $2.15/capita/day income.

Since most of these poor people are in rural areas, it is important to look at employment in agriculture and the real wage rates in rural areas.

What is the status of these indicators?

Low Growth in Real Agricultural Wages:

a. During 2009-10 to 2013-14, real agriculture and non-agriculture rural wages grew at 8.6 per cent and 6.9 per cent per annum respectively.
b. However, during 2014-15 to 2018-19, this decelerated to 3.3 per cent and 3 per cent per annum respectively.
c. In the last five years 2019-20 to 2023-24, it has become negative for both agriculture (-0.6 per cent) and non-agriculture (-1.4 per cent). Reasons behind this include COVID-19 and more people moving into the agricultural workforce.

High Unemployment Rates Persist: As per ILO, it averaged around 8.4% during 2004-05 to 2013-14 and roughly 7.9% during the last 10 years. So, the growth model has not seen a significant reduction in unemployment.

The government data shows that in rural areas, real wages have had negative growth in the last 5 years. In this regard, there is a need to create more employment-intensive growth processes.

Question for practice:

The rural economy is in distress, as reflected in the unemployment rates and lack of growth in real wages. Explain.