Poverty – Change in Perspectives

The thought of poverty is synonymous with a picture of destitutes lazing around, living without basic facilities in impoverished conditions with too much idle time. This singular dimension of the existence of poverty is because of the existence of literature, as much as social theory that points to the very same. This reduction of poverty to a set of clichés is what makes the situation seem devoid of the exact circumstances and characteristics of the poor. Hence, the policy solutions for poverty are also captured by vague singular solutions such as “free markets for the poor,” “more employment,” “cash transfers,’’ and “affordable legal services.”

While all these policy solutions are not completely ineffective or inherently bad, they are based on uni-dimensional definition of poverty. This view of the situation can often cloud  judgement of policy makers, policies most probably made in five star hotel rooms, impacting millions.

The poor are never seen as a source of knowledge or individuals to be consulted. Their beliefs and doubts, aspirations and limitations, ways of living or existing are in such a case, completely disregarded. We often fail to realize that the poor might just be better economists than most of us can ever be. In their impoverished state, with bare minimum resources, they manage families of five or more, planning and allocating their meagre resources to optimize their benefits.

To consider some stats, the average poverty line in fifty countries where the most of the poor live is 16 Indian Rupees per person per day. The numbers seem impossible, yet in 2005, 13%, about 875 million people did so.(Poor Economics-Banerjee and Duflo) These numbers emphasize- that the poor are much like the rest of us with the same instincts, desires and weaknesses. It’s only because they have much less than we do we find them putting much careful thought into the choices that they make. For most of us who tend to take things for granted and a small slip or a missed opportunity for maximizing welfare would be inconsequential, could possibly wreak havoc in their lives.  Not only must we give them credit where it’s due but also incorporate them in the policy decisions that are supposed to uplift them from the possibly self-perpetuating cycle of poverty. Perhaps it works better to take a case by case problem and provide area specific solutions.

A classic example: The much acclaimed micro-finance institution, Grameen Bank worked splendidly in Bangladesh but when the same model of micro-finance was replicated in Guatemala, it failed miserably. It’s understandable that the scale of this issue is overwhelming, however that should not discourage policy makers and development economists from finding answers; not simplistic answers covered by generalized theories but rather an approach incorporating all facets of poverty.

For example: the food subsidy programs in Orissa aim at providing 55 pounds of rice at Rs. 4 per pound, which is less than 20% of the market price.(source: Banerjee and Duflo) Such policies are replicated all across the country. It is important to note that such policies inherently assume that the reason for this poverty trap is that individuals are not able to procure enough calories which leads to inability to work and hence poverty. Such a trap would have been initiated by insufficient levels of nutritional intake. The root cause of the problem could perhaps be unemployment. In such a scenario, provision of only food grains would temporarily solve the problem and the spillover effect would be a long term dependency on subsidy.

“There can be no universal answer to poverty eradication.”



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