QUESTION : Examine the strategic significance of Indo-Pacific region for USA and India.
The Hindu Editorial Topic : GETTING BACK IN BUSINESS IN THE INDO-PACIFIC
WHY IN NEWS ?
US is strategically re-focusing, away from the 20 years of Afghanistan and Iraq and towards maritime Asia, where COVID-19, climate change and China are the compelling challenges.
The recent visits of top three officials of US to Indo-Pacific region reflects this sweeping change of US Diplomacy
EAST ASIA :ANALYSIS OF VISIT OF DEPUTY SECRETARY OF STATE (R.SHERMAN)
- The visit covered not only Japan, South Korea and Mongolia but also China.
- US reaffirmed its commitment to working with allies and partners for the promotion of peace and prosperity and upholding a ‘rules-based order’, the code word critical of China’s behaviour.
- There was also trilateral meeting involving US, Japan and South Korea, perhaps in a bid to smoothen tensions afflicting the two east Asian neighbours.
- The visit to China was to convey that the U.S. welcomed competition but did not seek confrontation with China. US also discussed forthrightly the dismal human rights situation in Xinjiang Province of China.
SOUTH-EAST ASIA : ANALYSIS OF VISIT OF SECRETARY OF DEFENSE (LIOD J.AUSTIN III) :
- His visit to three important ASEAN member-states — Singapore, Vietnam and the Philippines — turned out to be the most productive in that it reiterated the necessity for a U.S. military presence in the region.
- He listed China’s other objectionable actions, including “aggression against India”. And then he sent out the key signal to Beijing: “We will not flinch when our interests are threatened. Yet we do not seek confrontation.”
- US asserted “Beijing’s claim to the vast majority of the South China Sea has no basis in international law”
SOUTH ASIA : ANALYSIS OF VISIT OF SECRETARY OF STATE (ANTONY J.BLINKEN) :
- His trip to Delhi and Kuwait (July 26-29) drew attention for its positive outcomes.
- The India visit was more in the nature of a consultative, confirmatory dialogue rather than one that results in signing of new agreements.
- US repeated that the friendship with India is one of the closest that the U.S. has and the areas of convergence between the two nations are expanding while the areas of divergence are shrinking.
- By clarifying that the Quad was not “a military alliance”, Mr Blinken defined the Quad as four like-minded countries “coming together to work collectively … on regional challenges, while reinforcing international rules and values”.
The term ‘Indo-Pacific’ is used to denote America’s new geopolitical view of Asia. For the U.S. administration, the policy for Indo-Pacific is key to its maintenance of supremacy in the global order. As Joe Biden assumes the presidential office of the U.S., there are varied implications for the whole world of which the Indo-Pacific region remains to be one of the main focuses. Biden claimed that “America is back” and suggested “major shifts” in approach regarding foreign policy issues. The U.S. appears to remain in the game of Indo-Pacific for a longer time. America’s policy towards the countries like India, China and Southeast Asian nations will be a decisive factor in determining the prospects and challenges of the Indo-Pacific region. Under the Biden administration, the U.S. is expected to have a robust military presence in the Indo-Pacific region and at the same time, it has pledged to have deeper ties with the nations in the region. Hence, it will be one of the major players in the geopolitical atmosphere of the region. Thus, it has become important for the Indo-Pacific regional nations to weigh in their prospects and challenges in the given situation to draw the best out of it.
What is the strategic significance of the South China Sea?
- Some of the rich economies like Japan, the US, China, ASEAN countries are dependent on South China Sea route for trade and market access.
- About $3.5 trillion worth of international trade is dependent on the South China Sea.
- It is crucial as it is the second most used sea lane in the world.
- A report released by the US Energy Information Administration in 2013 estimated that the South China Sea may have a total of 11 billion barrels of oil reserve.
- According to a study by the Philippines’s Department of Environment and Natural Resources, the South China Sea has one-third of the entire world’s marine biodiversity.
- It is crucial for the food security of many Southeast Asian countries.
- With its huge reserve of resources, the South China Sea, the part of the Indo-Pacific region has crucial strategic significance.
STRATEGIC SIGNIFICANCE OF INDO-PACIFIC REGION FOR INDIA :
- Strategic significance: Indio-Pacific is a multipolar region, contributing more than half of the world’s GDP and population. A stable, secure and prosperous Indo-Pacific Region is an important pillar of India’s strategic partnership with the other countries especially USA.
- Mineral Resources: Maritime territories have also emerged as depositories of vital resources ranging from fish stocks to minerals and offshore oil and gas.48 The South China Sea, for instance, is estimated to hold some 10 per cent of the global catch of fish as well as 11 billion barrels of oil and 190 trillion cubic feet (tcf) of gas.
- Economic Growth: According to a report of the Asian Development Bank (ADB), countries in the Indo-Pacific produce over 60% of global GDP, making the region the largest single contributor to global growth.
- Commerce: The region consists of many of the world’s vital choke points for global commerce, including the Straits of Malacca which is very critical for the growth of world economy.
The Indo-Pacific region also stands at the intersection of international trade, with around 32.2 million barrels of crude oil pass through annually and 40% of global exports come from the region.
- Maritime Trade: Pacific islands are strategically significant from New Delhi’s point of view as they sit astride important sea lines of communication through which important maritime trade is conducted.
KEY TAKEAWAYS :
- Policy towards China & Indo-Pacific Interwined: First, that America’s China policy and the Rest of the Indo-Pacific policy will run in tandem, with inner consistency ensured by Mr. Biden.
- Non-Confrontationist approach towards China: Second, Washington maintains a tough attitude towards Beijing, but it desires to keep the doors open for dialogue. The relationship with China is marked by three characteristics — adversarial, competitive and cooperative — and is likely to stay that way.
- Integrated Deterrence: Third, the U.S. is willing to resist and counter China firmly, but with the full engagement of and contribution by the like-minded states of the region.
- US resuming its Leadership role: U.S. is back and is willing to lead — but the region will have to seriously step up too and participate actively to maintain peace and prosperity.
In short, the U.S. is back and is willing to lead — but the region will have to seriously step up too and participate actively to maintain peace and prosperity.
QUESTION : Critically examine whether growing population is the cause of poverty or poverty is the mains cause of population increase in India and give effective ways to curb the rising poverty in India.
The Hindu Editorial Topic : POVERTY IN INDIA IS ON THE RISE AGAIN
Rising Poverty In India
WHY IN NEWS ?
India has not released its Consumption Expenditure Survey (CES) data since 2011-12
- The economy has been slowing for nine quarters prior to the outbreak of the novel coronavirus pandemic.
- Unemployment had reached a 45-year high in 2017-18, as revealed by NSO’s Periodic Labour Force Survey (PLFS).
- But the CES of 2017-18 (already conducted a year late) was not made public by the Government of India.
- Now, a new CES is likely to be conducted in 2021-22, the data from which will probably not be available before end-2022.
CONSUMPTION EXPENDITURE SURVEY (CES):
- Time interval:
o Normally a CES is conducted by the National Sample Survey Office (NSO) every five years.
- Information generated:
o Reveals the average expenditure on goods (food and non-food) and services.
o Helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.
o In 2011, it was decided in the Planning Commission, that the national poverty line will be raised in accordance with the recommendations of the late Suresh Tendulkar (then professor of Economics at the Delhi School of Economics).
As it happens, this poverty line was comparable at the time to the international poverty line (estimated by the World Bank), of $1.09 (now raised to $1.90 to account for inflation) person per day.
o Based on the Tendulkar Poverty line the poverty estimates for 2004-05 and 2011-12 are to be found in the Planning Commission’s own estimates using the CES of those years.
o Hence, the 2011-12 poverty line was extended for each State and used the consumption expenditure reported by the PLFS to estimate a consistent poverty head count ratio (i.e., incidence of poverty in the population) as well as the absolute number of the poor.
ALTERNATIVE TO CES:
- In the absence of CES data, the PLFS can be used to estimate the incidence of poverty.
o It also collects the household monthly per capita consumption expenditure data based on the Mixed Recall Period methodology.
- Similar to the CES, the PLFS (PLFS annual report, 2019-20) also asks the household questions about expenses on:
o Clothing and bedding,
o Footwear and consumer durables for a 365 day recall period — prior to the day of the survey;
- But for non-durable consumption goods/services including expenses on food, housing and conveyance, etc. — its question expects a recall period of 30 days prior to the day of survey.
Sufficient to estimate the change in poverty in absence of CES data :
- India’s labour force surveys, including the five-yearly Employment-Unemployment Rounds from 1973-74 to 2011-12, have also collected consumption expenditure of households.
- The PLFS’s questions on consumption expenditure are not as detailed as those of the CES;
o They are sufficient for us to estimate changes in consumption on a consistent basis across time.
o It enables any careful researcher to estimate the incidence of poverty (i.e., the share in the total population of those below the poverty line), as well as the total number of persons below poverty.
- There is a clear trajectory of the incidence of poverty falling from 1973 to 2012.
- In fact, since India began collecting data on poverty, the incidence of poverty has always fallen, consistently.
- It was 54.9% in 1973-4; 44.5% in 1983-84; 36% in 1993-94 and 27.5% in 2004-05.
- This was in accordance with the Lakdawala Poverty Line (which was lower than the Tendulkar poverty line), named after a distinguished economist, then a member of the Planning Commission.
A URBAN AND RURAL RISE IN POVERTY :
- What is stunning is that for the first time in India’s history of estimating poverty, there is a rise in the incidence of poverty since 2011-12.
- The important point is that this is consistent with the NSO’s CES data for 2017-18 that was leaked.
- The leaked data showed that rural consumption between 2012 and 2018 had fallen by 8%, while urban consumption had risen by barely 2%.
- Since the majority of India’s population (certainly over 65%) is rural, poverty in India is also predominantly rural.
- Remarkably, by 2019-20, poverty had increased significantly in both the rural and urban areas, but much more so in rural areas (from 25% to 30%).
- It is also for the first time since the estimation of poverty began in India on a consistent basis, that:
o The absolute number of poor has risen:
From 217 million in 2012 to 270 million in 2019-20 in rural areas; and
From 53 million to 71 million in the urban areas; or
A total increase of the absolute poor of about 70 million.
- It is important here to recall two facts:
o Between 1973 and 1993, the absolute number of poor had remained constant (at about 320 million poor), despite a significant increase in India’s total population.
o Between 1993 and 2004, the absolute number of poor fell by a marginal number (18 million) from 320 million to 302 million,
- During a period when the GDP growth rate had picked up after the economic reforms.
- It is for the first time in India’s history since the CES began that we have seen an increase in the absolute numbers of the poor, between 2012-13 and 2019-20.
- The first time ever, between 2004-05 and 2011-12, the number of the poor fell, and that too by a staggering 133 million, or by over 19 million per year.
- This was accounted for by what has come to be called India’s ‘dream run’ of growth: over 2004 and 2014;
- The GDP growth rate had averaged 8% per annum — a 10-year run that was not sustained thereafter.
- By contrast, not only has the incidence of poverty increased since then, but the absolute increase in poverty is totally unprecedented.
WHAT ARE CONTRIBUTORY FACTORS :
- The economy maintained some growth momentum till 2015.
- The monumental blunder of demonetisation followed by a poorly planned and hurriedly introduced Goods and Services Tax, both delivered body blows to the unorganised sector and Micro, Small and Medium Enterprises.
- The economic slowdown followed. None of the four engines of growth was firing after that.
- Private investment fell from 31% inherited by the new government, to 28% of GDP by 2019-20.
- Public expenditure was constrained by a silent fiscal crisis.
- Exports, which had never fallen in absolute dollar terms for a quarter century since 1991, actually fell below the 2013-14 level ($315 billion) for five years.
- Consumption stagnated and household savings rates fell.
- Joblessness increased to a 45-year high by 2017-18 (by the usual status), and youth (15-29 years of age) saw unemployment triple from 6% to 18% between 2012 and 2018.
- Real wages did not increase for casual or regular workers over the same period, hardly surprising when job seekers were increasing but jobs were not at anywhere close to that rate.
o Hence, consumer expenditure fell, and poverty increased.
- Poverty is expected to rise further during the COVID-19 pandemic after the economy has contracted.
COMMITTEES ON POVERTY :
YK Alagh Committee:
In the initial decades after Independence poverty was measured in terms of income levels of individuals. Alagh Committee is the first to come up with an official poverty line. It recommended a poverty line based on calorie intake. It considered people who consume less than 2100 calorie in Urban areas as poor whereas in rural areas it is 2400 calories. The difference is justified by the fact that rural people do more physical work than their Urban counterparts. This committee had a drawback because Health and education was assumed to be provided by State Governments.
This formula included the calorific limits of Alagh committee and it also included health and education components. It considered the total amount of money needed per person in a house to meet his calorie intake. This method was reported to have methodological errors as it showed the poverty line as double compared to previous estimates.
It suggested a shift away from calorie based model and focused on nutritional outcomes and included health, education, transport and electricity. It is based on spending per individual over a fixed period for an essential basket of goods Ie., cost of living. India presently follows this method for estimation of poverty. It set Rs 27 for rural areas and Rs 33 in urban areas for consumer spending as the reference limit and based on this they estimated that 21.5% of the Indian population as poor. This estimation involved criticism from various quarters as it seemed to be very low and thus Rangarajan committee was constituted.
Rangarajan committee on poverty:
It has taken monthly consumption expenditure per person or per household as a tool for calculating poverty lines. Based on this 972 INR (Rs 32 per day) in rural areas and 1407 INR (Rs 47 per day) in urban areas is calculated based on 2011 to 2012 prices.
According to this estimate, poverty in India stood at 29.5% in 2011-12 which is significantly higher than the Tendulkar model. The group went for separate rural and urban poverty lines as there is huge complexity associated with them .There are two components in this method
1.) Food component
2.) Non food component such as
D.) House rent
E.) Behavior related expenditures
MORE ABOUT POVERTY :
- Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living.
- Poverty means that the income level from employment is so low that basic human needs can’t be met.
- World Bank: Poverty is defined as deprivation in well-being and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity.
- United Nations: Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity. It means a lack of basic capacity to participate effectively in society.
- Poverty Line: Poverty line is defined as the expenditure incurred to obtain the goods in a “poverty line basket” (PLB).
- Poverty Ratio or Head Count Ratio (HCR): The proportion of the population below the poverty line is called the poverty ratio or headcount ratio (HCR).
- Way to measure poverty: Poverty can be measured in terms of the number of people living below the poverty line (with the incidence of poverty expressed as the headcount ratio).
TYPES OF POVERTY : Mainly 2types
Absolute Poverty: A condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing). This condition makes it possible to compare between different countries and also over time.
o It was first introduced in 1990, the “dollar a day” poverty line measured absolute poverty by the standards of the world’s poorest countries. In October 2015, the World Bank reset it to $1.90 a day.
Relative Poverty: It is defined from the social perspective that is living standard compared to the economic standards of population living in surroundings. Hence it is a measure of income inequality.
o Usually, relative poverty is measured as the percentage of the population with income less than some fixed proportion of median income.
CAUSES OF POVERTY IN INDIA :
Population Explosion: India’s population has steadily increased through the years. During the past 45 years, it has risen at a rate of 2.2% per year, which means, on average, about 17 million people are added to the country’s population each year. This also increases the demand for consumption goods tremendously.
A high population increases the pressure on resources as they can support only a small number of people. It strains the ability of the government to provide for every citizen. It increases the competition for a limited number of jobs. Poverty on the other hand can also lead to an increase in population. Poor people tend to have more children so as to put them to work and support them economically. Poor also have lower access to education and healthcare and are not able to do family planning properly.
Low Agricultural Productivity: A major reason for poverty in the low productivity in the agriculture sector. The reason for low productivity is manifold. Chiefly, it is because of fragmented and subdivided land holdings, lack of capital, illiteracy about new technologies in farming, the use of traditional methods of cultivation, wastage during storage, etc.
Inefficient Resource utilisation: There is underemployment and disguised unemployment in the country, particularly in the farming sector. This has resulted in low agricultural output and also led to a dip in the standard of living.
Low Rate of Economic Development: Economic development has been low in India especially in the first 40 years of independence before the LPG reforms in 1991.
Price Rise: Price rise has been steady in the country and this has added to the burden the poor carry. Although a few people have benefited from this, the lower income groups have suffered because of it, and are not even able to satisfy their basic minimum wants.
Unemployment: Unemployment is another factor causing poverty in India. The ever-increasing population has led to a higher number of job-seekers. However, there is not enough expansion in opportunities to match this demand for jobs.
Lack of Capital and Entrepreneurship: The shortage of capital and entrepreneurship results in low level of investment and job creation in the economy.
Social Factors: Apart from economic factors, there are also social factors hindering the eradication of poverty in India. Some of the hindrances in this regard are the laws of inheritance, caste system, certain traditions, etc.
Colonial Exploitation: The British colonisation and rule over India for about two centuries de-industrialised India by ruining its traditional handicrafts and textile industries. Colonial Policies transformed India to a mere raw-material producer for European industries.
Climatic Factors: Most of India’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, Odisha, Jharkhand, etc. Natural calamities such as frequent floods, disasters, earthquake and cyclone cause heavy damage to agriculture in these states.
Pandemics like Covid-19 rise up the level of poverty and lead to unequal distribution of resources.
WAY FORWARD :
The World Health Organization has described poverty as the greatest cause of suffering on earth. Poverty eradication should not be the goal of the government but the goal of the government policies should be to create prosperity. Both monetary and non-monetary measures of poverty are needed to better inform the policies intended to address the needs and deprivations faced by poor populations.
(1).Accelerating rural poverty reduction:
- It’s not just about agricultural growth, which has long been considered the key driver of poverty reduction. Rural India is not predominantly agricultural and shares many of the economic conditions of smaller urban areas.
- Capitalizing on the growing connectivity between rural and urban areas, and between the agriculture, industry and services sectors, has been effective in the past.
(2).Creating more and better jobs
- Future efforts will need to address job creation in more productive sectors, which has until now been lukewarm and has yielded few salaried jobs that offer stability and security.
(3).Focusing on women and Scheduled Tribes
- The most worrying trends are the low participation of women in the labour market and the slow progress among scheduled tribes.
- India’s women have been withdrawing from the labour force since 2005and less than one-third of working-age women are now in the labour force. As a result, India today ranks last among BRICS countries, and close to the bottom in South Asia in female labour force participation.
- Scheduled Tribes started with the highest poverty rates of all of India’s social groups, and have progressed more slowly than the rest.
- Women and Scheduled Tribes are at risk of being locked out of India’s growth and prosperity.
(4).Improving human development outcomes for the poor
- The recent past shows that some problems, such as undernutrition and open defecation, are endemic and not only confined to the poor but others too, and have not improved with economic growth.
- Better health, sanitation and education will not only help raise the productivity of millions, they will also empower the people to meet their aspirations, and provide the country with new drivers of economic growth.
Together with mooting the discussion on the need to provide a universal basic income, infrastructural and skill development combined with effective implementation of welfare policies will go a long way in eradicating poverty in the country.