Contradiction Between High Per Capita Income vs Poverty Levels in Indian States: SC

Syllabus: GS2/Issues Relating Poverty & Hunger

Context

• Recently, the Supreme Court of India Bench, led by Justice Surya Kant, raised concerns over contradiction in some states’ claims of high per capita income while a significant portion of their population continues to live below the poverty line (BPL).

Supreme Court’s Observations

• The court expressed concern over the disparity between economic indicators and ground realities during a hearing on food security for migrant workers.
  • It questioned how states could claim high per capita income while reporting up to 70% of their population as BPL.
  • It emphasized that such contradictions undermine the credibility of development claims and highlight systemic issues in the distribution of resources.
• The court also scrutinized the efficiency of subsidized ration schemes, questioning whether they genuinely reach the intended beneficiaries or serve as political tools.
• SC reiterated that access to food is a fundamental right under Article 21 of the Constitution, and ensuring food security for the poor is a constitutional obligation.
• The Supreme Court noted that corruption and mismanagement in the Public Distribution System (PDS) exacerbate the problem.

Per Capita Income in India – Per Capita Income (PCI) is the average income earned per person in a specific region over a given period. It is calculated as: – In India, per capita income is estimated by the National Statistical Office (NSO) and reported annually in the Economic Survey. Defining Poverty in India – Poverty is commonly defined as the lack of access to basic human needs such as food, shelter, healthcare, and education. – The Tendulkar Committee (2009) and Rangarajan Committee (2014) provided different methodologies to estimate poverty. 1. Tendulkar Committee: It defined poverty based on expenditure on food and essential items. 2. Rangarajan Committee: It suggested a higher poverty line, increasing the estimated number of poor people. It recommended a new poverty line of ₹972 per capita per month in rural areas and ₹1407 in urban areas for the year 2011-12.  – Poverty Statistics: According to NITI Aayog’s Multidimensional Poverty Index (MPI) 2023: 1. India’s poverty rate declined from 29.17% (2013-14) to 11.28% (2023). 2. 415 million people were lifted out of poverty between 2005-06 and 2019-21. 3. Bihar, Jharkhand, and Uttar Pradesh have the highest poverty rates.

Reason For High Per-Capita Income & High Poverty Level

• While national data sets from institutions like NITI Aayog, Reserve Bank of India (RBI), and the Ministry of Finance highlight various state-level economic indicators, some states consistently show high Per Capita Income but persistent poverty levels. These include:
  • Wealth Concentration: A high per capita income often reflects urban prosperity and business hubs rather than equitable wealth distribution.
  • High Cost of Living: States with high Per Capita Income, such as Goa and Kerala, also have high living costs, making it difficult for lower-income groups to afford essentials.
  • Agricultural Distress: States like Punjab and Tamil Nadu have strong GDPs but suffer from agrarian crises, leaving rural populations in financial distress.
  • Informal Sector Dominance: A large part of the workforce in high-PCI states works in informal sectors, earning low wages and lacking social security.
  • Ineffective Welfare Implementation: Many government welfare schemes fail to reach intended beneficiaries due to:
    • Corruption and Mismanagement;
    • Outdated Data;
    • Bureaucratic Inefficiencies;
    • Political Influence;

Way Forward

• Targeted Welfare Schemes: Expanding direct cash transfers and food security initiatives for lower-income groups.
• Employment Reforms: Strengthening social security for informal workers and promoting skill-based employment opportunities.
• Decentralized Economic Growth & Empowering Local Governance: Encouraging rural entrepreneurship to balance income levels across regions.
  • Decentralizing the implementation of welfare schemes can improve efficiency and accountability.
• Updating Data Systems: There is a pressing need to reform PDS using technology and ensure better beneficiary targeting.
• Strengthening Taxation Policies: Imposing wealth taxes or progressive taxation to improve wealth redistribution.
• Strengthening Transparency: There is a need for independent audits, transparent data collection, and standardized poverty metrics.

Source: TH