Challenges Before Indian Economy: Major Challenges Before the Economy and Tackling Poverty and Unemployment

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Country is responsible to provide peaceful life to its citizens. In order to lead a decent life every citizen of country should be able to get minimum needs such as food, clothes, shelter, healthcare and basic education. As India is a populous and poor country, it is a big task for India to provide reasonable services to all citizens.

Major Challenge Before the Economy

  • Eradication of poverty and unemployment.

  • Getting proper education and health care facilities.

  • Control over the rising prices of commodities in the market i.e. inflation.

  • Economic growth along with population growth.

In order to tackle above mentioned challenges Indian government is implementing many schemes and policies.

Tackling Poverty and Unemployment

Poverty and Unemployment go hand in hand. People should get some work to get money then only they can satisfy their needs. If they do not get any work, they won’t get any money. That will lead to poverty. One third of world’s poor is in India. It is around 21.9% of India’s population (as per 2012 stat.)

Poverty Definition

  • Poverty in India is defined based on many factors.

  • According to Planning Commission “Anybody who is not able to get 2400 kilo calories (Kcal) from food intake in rural areas and 2100 Kcal from food intake in urban areas is termed as poor”. This definition was given based on calories consumption.

  • According to National Sample Survey Organization (NSSO) –” Anybody who is not able to spend Rs.328/month (for rural people) and Rs.454/month (for urban people) is termed as poor”. This definition was given based on expenditure.

  • World Bank defines Poverty in absolute terms. As per World Bank-” People who are living on less than US $1.90 per day (PPP) is considered as extreme poor”.

There are many reasons for poverty. Some important reasons are -

  • Due to unemployment and low wages for work

  • People subjected to exploitation on grounds of caste and religion.

  • Lack of property i.e. land to cultivate.

  • The efforts of the government have not been effective.

Unemployment is most important reason behind poverty.

Definition of Unemployment

  • Unemployment is a state of being unemployed. The unemployment rate is a measure of prevalence of unemployment.

  • As per Union Ministry of Labour and Employment India’s unemployment rate is around 3.7% in 2015-16. Unemployment could be

  • Frictional Unemployment – Time spent between jobs when a worker is transitioning from one job to another. Also called search unemployment.

  • Structural Unemployment – Skills not matched with the job requirements due to technological advancements.

  • Cyclical Unemployment – Due to economic downturn or fall.

  • Seasonal Unemployment – Due to production schedules as per seasons.

Poverty Cycle

Image of Diagram of cycle poverty

Image of Diagram of Cycle Poverty

Employment Generation or Poverty Alleviation Programs

To tackle poverty and unemployment problems government has been making policies and spending a lot of money. That is why poverty has been reducing over time, though slowly. These are some of the programs and policies implemented by the government of India.

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

  • Started on 2nd Feb 2006 based on MGNREGS Act, 2005.

  • Aim: To provide at least one hundred days of guaranteed wage employment in a year to rural population who are unskilled manual workers.

  • In some areas the unemployment is extended to 150 days.

  • Money for work is distributed through post offices located in villages.

  • For Financial year 2017-18 Rs. 48,000 cr. was allocated for MGNREGA.

Swarnjayanti Gram Swarozgar Yojana (SGSY)

  • Started in April 1999

  • Aim: To help the rural poor to increase their income generating capacity through self-employment.

  • Under this poor people are given training in self-employment skills, provide bank loans to start self-employment and other facilities.

  • Government has set up rural self-employment training institute (RSETI) in each district under this scheme.

  • About 24,58,298 rural youth trained and 16,12,310 got employment.

Swarna Jayanti Sahari Rozgar Yojna (SJSRY)

  • Started in 1st Dec 1997

  • Aim: To provide employment to poor families living in urban areas of the country.

  • Under this many programs launched:

    • Programs to generate self-employment

    • Programs for urban women

    • Training for urban poor

    • Community development program

    • Wage employment program

  • Cost sharing of funds by Central and State governments in the ratio of 75:25

  • A target of 500 million people to be trained by 2022 has been fixed by the National Council on Skill Development.

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