It is clear to see from the past few years that India’s economy has been surging. With their economy now being classified as the fastest growing economy in the world, it looks like everything is good in this country of 1.2 billion. However, what the Indian underclass will tell you is a story that is starkly different from what Indian businessmen such as Ratan Tata will say. The problem of poverty in India is a dark stain on the face of humanity, with Indian labourers frequently toiling 10 or even 12 hours a day, for little or no reward. For too long has bureaucratic red tape covered up the real problem, which is that a greater proportions of Indians need to be above the UN poverty line. To do this, we need progressive and constructive solutions, some of which I am trying to provide here. I must iterate that in no way are these solutions guaranteed to work if implemented, and that they are simply suggestions, and nothing more. The first way in which we can solve India’s poverty problem is through offering incentives to families who send their children to school.
It is my firm belief that education is the key to financial success. With an increased level of education, children have more skills with which to carry out formal labour. As of now, many families whose primary source of income is agriculture do not see the financial reward in sending their children to school, and as such, the education levels in these places are very low. We can combat this problem by offering financial incentives to parents who send their children to school. The financial incentives need to be large enough in order to sway parents’ mind to send their children to school, and as such, they need to be greater than the cost of sending children to school. As aforementioned, the second part of my plan is to subsidise the prices of school for families with less than a specified annual income. This would eventually give families financial reward for sending their children to school, which means that they both have a monetary reward short term, and a strong educational base for the long term. On a larger scale, this means that families will be more prosperous in the long term, as their levels of education and therefore their skill bases will also be increased.
Of course, some families will still not see the reward in sending their children to school, and in order to develop a fully airtight plan, we must account for both possible scenarios. We must still account for the agricultural sector of India by investing in greater technologies which improve crop yields, and therefore revenues for families relying on subsistence agriculture. It is inevitability that a great proportion of India’s families will still rely on agriculture, and as the old saying goes, “if you can’t beat them, join them”. With mechanisation of labour decreasing operating cost, and increased crops to sell allowing for greater revenue, families will be overall richer and, as a result, more will live above the UN poverty line. As of now, too many Indian families are stuck with backwards technologies that simply are not keeping up with the times, and thus they are not able to sell enough crops in order to maintain a decent and orderly lifestyle. With this new proposed system, more Indian farmers will hopefully have enough money in order to live well, and thus, a greater proportion of people will be out of poverty.
The final solution which I will propose in this article is to reduce corporation tax, while tightening down on corporate tax avoidance. Some might rebuke this point by saying that we will receive less revenue from taxation; however I counter this by saying that we will in fact receive more money from taxation, as many major Indian companies engage in corporate tax avoidance, which costs the Indian government billions of rupees each year. Reducing corporation tax will also encourage more corporations to base themselves in India, which will further increase the revenue the Indian government will raise from tax, in order to fund my previous two solutions. The point of this is to give the corporations more leeway to give more jobs to more people. As corporations will instinctively want to raise their revenue, they will hire more workers to increase profits, and so more people in India will be living on a steady wage, that is not seasonal and can be threatened by the slightest movement of the clouds. All of these solutions, in my opinion, will contribute to the ameliorating of Indian poverty, which is what any developing country needs to truly class themselves as a successful nation.
This was originally published on my blog, Shrey’s Finance Blog, at www.shreysfinanceblog.com Please check it out in addition to this website if you liked the article! 🙂