Why did Modi start GST


Poverty and inequality

India has been committed to fighting poverty since independence. Jawaharlal Nehru the first Prime Minister believed that poverty could be overcome through government planning and management of the economy (in the form of five-year plans). However, the modest successes of this policy have been largely undermined by population growth and the resulting new social challenges as well as by excessive bureaucracy and mismanagement.

The poverty rate in India has steadily declined since independence - especially in the last few decades. However, India is still characterized by extreme poverty and extreme inequality in life opportunities: Around a quarter of all Indians live below the international poverty line of USD 1.25 per day - which corresponds to around 1/3 of the world's poor - and around Sixty percent of the population lives on less than $ 2 a day. However, poverty is unevenly distributed both regionally and between social groups. The majority of the poor live in rural areas and belong to minorities (mostly Dalits, Adivasi and Muslims).

Inequality has increased since the economy was liberalized in 1991. On the one hand, this is due to the increase in inequality between urban and rural areas, and on the other hand, because some sections of the population have benefited disproportionately from the liberalization of the economy.

India often performs worse than its poorer neighbors on a number of social indicators (e.g. child mortality). In no other country do more people go hungry than in India. In the current World Hunger Index, which was published in 2020 by Welthungerhilfe in Bonn and Concern Worldwide Dublin, India ranks 102 out of 117, on a par with countries such as Niger, Sierra Leone and Uganda. The situation in India is classified as "serious".

The first results of the current National Health and Family Survey for 2015/16 show that around 40% of children under 5 are too small for their age and around a third too light. Around 23 percent of women between 15 and 49 also have a body mass index that is too low, and even half of all pregnant women suffer from anemia.

The current Human Development Report ranks India in 130th position. Although the index value has risen in recent years, the values ​​on income, education and life expectancy clearly show that the emerging economic power India still has many hurdles to overcome before one can speak of prosperity that encompasses the masses. This is also due to the so far largely unsuccessful poverty reduction programs.

The reasons for the ineffective and largely inefficient poverty reduction programs are diverse: Since independence, a large number of programs have been introduced at the central and state levels, which has led to a fragmentation of the programs, with many being chronically underfunded. Furthermore, poor target group selection and orientation, high seepage losses due to corruption, political influence, cumbersome bureaucracy and mismanagement have negatively affected the effectiveness of the programs.

The aim and focus of poverty reduction was traditionally set in the five-year plans. In the eleventh five-year plan (2007-2012), in addition to the known priorities such as integrated measures in the areas of education and health, vocational training, loans and infrastructure measures and the establishment of social security systems and land reforms, the existing differences in development ("Bridging Divides . Including the Excluded ") and ways of overcoming them are discussed. These topics are also present again in the twelfth five-year plan (2012-2017), whereby the focus is primarily on rapid, sustainable and inclusive growth. It also outlines measures in the main economic and social sectors. Under Narendra Modi, the creation of five-year plans was discontinued and the responsible planning commission was dissolved, which has been replaced by a think tank (NITI Aayog) since 2015.

Current social policy

So far, three general tendencies can be identified in current social policy. First, the government is essentially continuing the existing social programs initiated by the Congress Party (e.g. the Mahatma Gandhi National Rural Employment Guarantee Scheme, MGNREGS) or expanding them ("Housing for all by 2020"). Second, the government tries to make existing and new programs more transparent, more efficient and more corruption-free (e.g. through digitized administration). Thirdly, new programs have been launched under Modi, especially the so-called Jan Dhan Aadhaar Mobile Program (JAM), which, among other things, aims to provide financial inclusion and social security for the poor. It includes the free opening of bank accounts for everyone, a mobile phone-based payment model and, above all, a biometric identity card - the Aadhaar card - with an individual identification number (which, however, was already brought into being under the previous government). The JAM program offers the chance to reduce poverty in Indein, as it already covers most of the Indians (approx. 93% of the population) and enables a faster and more targeted transfer of benefits. It also includes defined contribution life and accident insurance as well as a pension. Considerations are currently being discussed to replace all subsidy programs (such as the Public Distribution System - PDS) with direct payments. This is also made possible by the JAM.

In 2018, the BJP government presented under Modi what it claims to be the world's largest government-financed health program, which aims to protect a large number of families at risk of poverty and improve the quality of the existing health system. A similar undertaking was announced in the 2016 budget, but never achieved the goals set.