Poverty

What is Poverty?

Poverty is a condition in which basic needs of an individual cannot be fulfilled. Facts say that two- thirds of the population in India live in poverty.

 Main Causes:

  •  Unemployment
  •  Lack of education
  • Migration to urban areas

 Unemployment and lack of education are interrelated with each other. Education is the most important and basic need of every person for his/hers well-being. With poverty, comes the lack of basic human needs.

 Although India is a developing country, it still fails to eliminate the serious issue of poverty. The other main cause is over- population. Deprivation is more deadly than any other disease a man encounters.

Deprivation has caused people to pay less attention to health. It leads to malnutrition, which in turn leads to high infant mortality. Children in the poverty line have no access to education. It affects the life of a poor family.

Steps the government has taken:

In order to make education reach every individual, the government has taken several steps like establishing government schools by providing free education, free uniforms, and books. Still, the parents of the poor kids don’t realize the importance of education. Instead of educating their child, they indulge them into child labor trading the kid’s future for money. The awareness of education to the people in poverty should be created. Personal hygiene plays a crucial role in order to lead a healthy and peaceful life. Poor sanitation leads to several health risks. The best example will be the issue the whole world is facing- Covid19. It stressed us the importance of personal hygiene.

How to eradicate poverty?

  • Increase in employment
  • By satisfying the basic needs of an individual
  • Sanitation facility

Besides, we could also contribute something to control it. We could donate our old clothes to poor people, provide them a good meal, help them with education etc.

Our one such act may not fulfill all their requirements but can make their day.

Written by- R.Varsha

http://neelakalam.com/author/Varsha/

The Plight of the MSMEs

The declaration of the COVID-19 as a global pandemic gave rise to a state of confusion amongst nations. With people foraging for an answer during these uncertain times, Google reported that “since the first week of February, search interest in coronavirus increased by +260% globally.” The pandemic was successful in not only putting a dent in the health-related sectors but also in the economic sphere. McKinsey and Company revealed that the onset of this pandemic made huge ripples around the globe. The effects of these ripples were further built up with the discovery of the situation of several jobs around the globe.  A recent data of the International Labour Organization (ILO) with regards to the impact of COVID-19 pandemic on labour market revealed the ruinous effects it had on workers in the informal economy and on hundreds of millions of enterprises worldwide. The closure of factories and business mostly in MSME sectors was seen.

abstract art circle clockwork
MSME

The declaration of COVID-19 as a pandemic in March saw and continues to see a steep surge in unemployment. The sharp drop in work as a result of the outbreak meant that around 1.6 billion workers in the informal economy (approximately 50% of the global workforce) face the danger of levelling of their livelihoods warned the International Labour Organization. “ILO Monitor third edition: COVID-19 and the world of work,” brought to light that the drop in working hours especially in the current quarter of 2020 is expected to be notably worse than anticipated.  “Compared to pre-crisis levels (Q4 2019), 10.5 per cent deterioration is now expected, equivalent to 305 million full-time jobs (assuming a 48-hour working week). The previous estimate was for a 6.7 per cent drop, equivalent to 195 million full-time workers. This is due to the prolongation and extension of lockdown measures,” stated a document issued by the International Labour Organization regarding the crisis.

The disturbance in the economic sphere has led to a damage of billions of informal economy workers (representing the most vulnerable in the labour market), out of which a worldwide total of 2 billion and a global workforce of 3.3 billion suffered massive impairment to their livelihood. The ILO revealed that the initial months of the crisis is estimated to have resulted in a drop of 60% in the income of informal workers globally. Statistics divulged that a drop of 81% in Africa and the Americas, 21.6% in Asia and the Pacific, and 70% in Europe and Central Asia was witnessed. The challenge regarding employment has been especially critical for small businesses. Firms with fewer than 100 employees have been seen to be more vulnerable when compared to 40% of the large private-sector employers.

Moody’s Investor Service claimed the downgrading of Indian economy by estimating 0% growth in FY21. The study laid bare that the fiscal measures introduced by the Government were unlikely to offset lower consumption and slow-moving economic activity. Berstein entertained -7% growth, whereas both Goldman Sachs and Normura forecasted a 5% contraction in the Indian economy. The report further stated that although the direct fiscal impact of the policy reforms 1-2% of GDP, it would provide limited impetus to the furtherance of the economy. A strain in the fiscal deficit would contribute to an increase in future debt in debt-to-GDP term reported Moody’s. Moreover, the Investor Service opined that Indian Government’s extension of ‘working capital loans’ to micro, small, and medium enterprises (MSMEs) will not suffice and shield from the economic shock they are facing now as they were already facing financial strain well before the crisis.

The MSME sector which is among the worst-hit, globally, accounts for 33.4% of India’s output along with a whopping 45% of Indian export. These enterprises, since the day of the announcement of the pandemic, have been facing the possibility of extinction. The MSMEs that rely upon daily transaction to stay afloat have been facing serious problems as a result of thee nationwide lockdown. A survey conducted by All India Manufacturers’ Organisation (AIMO) that covered 5000 MSMEs showed how 71% of the small businesses were unable to pay salaries since March. Moreover, the findings of the survey revealed that more than 40% of the businesses would shut shop sooner or later.  The CII CEOs snap poll disclosed that almost 54% of company heads predicted job losses irrespective of the sector they are in whereas 45% foresee 15-30% layoffs. For instance, one of the most famous auto-manufacturing company, Maruti Suzuki informed that the production in April was ‘zero’. The predicament has been visible across different manufacturing industries, including textiles, chemicals, etc. TransUnion Cibil discussed that there was a risk of 2.3 lakh crores worth loan might become non-performing. Moreover, with the increase in the demand for cash flow, there will emerge issues that are expected to prevail even with relaxations introduced by the government.

To give a shove to the MSMEs and inject life-blood to this sector:

  1. GOI declared a cut in a policy of repo rate by 75 basis points to 4.4%.
  2. More than 3 lakh crore rupees was injected into the system.
  3. Moreover, it allowed a 3-month moratorium on the payment of instalment with regards to existing loans.
  4. Reserve Bank of India (RBI) opened another window of 50,000 rupees for refinancing. Based on this, post receiving this money, banks will be mandated to invest within one month. RBI also reduced liquidity coverage ratio to 80% whilst providing a special financial scheme to All India Financial Institutions (AIFIs) at repo rate.
  5. Emergency credit lines have been created by several banks.
  6. A low-interest rate of 5% has been declared.
  7. Various business continuity measures have been adopted by the RBI.

Nitin Gadkari, Minister for Road Transport & Highways, Minister of Shipping and the Minister of Micro, Small and Medium Enterprises, explained that Government of India has been working tirelessly on policies concerning the MSMEs with focus on entrepreneurship development. The sector that accounts for nearly 30% of the economy of Indian nation needs a robust economic plan so that it can get its engine running once again after COVID-19 ceases to exist. The post-pandemic economic scenario would be one that would introduce capital scarcity to the globe. Nations all around need to conclusively come up with a plan that would be mainly concerned with reviving the MSME sector. A comprehensive system that would get back the MSMEs on track is the need of the hour.

                                                                                                                         

By: Sagarika Mukhopadhyay

Join our speak up campaign here – SpeakUP