Excluding the poor

Print edition : October 18, 1997

THE international experience is that when there is a shift from a universal welfare system, one that is designed to help the poor more than others, to a targeted one, the new system leaves the poor worse off. There is no reason to believe that the Indian experience will be any different.

Take a hypothetical, though not improbable, example, of a person living in a Mumbai slum, a slum that has not been "notified". He lives in a family of four, he is a daily-waged manual worker, and travels 20 km to and from his place of work. Income-wise, family welfare hangs by a slender thread; the head of household earns Rs.1,500 to Rs.2,000 a month, depending on the work he is able to get. A single medical emergency - not unlikely in a slum where industrial and faecal pollution are extensive - can push the family into debt.

Such a person is excluded from the Targeted Public Distribution System on two counts: he and his family live in an un-notified slum and they do not qualify as a poor household, that is, they earn more than the "poverty line" income of Rs.15,000 per family per year.

In a Maharashtra village, the situation is substantially worse. The rural poverty line that is fixed at Rs.4,000 per family per year will exclude even a family whose income is Rs.375 a month.

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