Source: The hindu
1. The Big Squeeze: Why 80% of India is Still Struggling
Global economists track living standards using three daily spending lines (adjusted for local purchasing power, or PPP):
- Crushing Extreme Poverty: The share of Indians living on less than $3.00 a day has fallen to just 2.6%. Those below the lower-middle-income line ($4.20 a day) also dropped sharply from 57.7% to 16.1%.
- The Middle-Class Gap ($8.30 a day): For a country aiming to become developed (Viksit Bharat), the real benchmark for a secure lifestyle is the upper-middle-income line of $8.30 per person a day (~₹800/day). By this measure, 80% of Indians still fall short.
- The Vulnerable Middle: Nearly 64% of Indians sit in a narrow band between $4.20 and $8.30 a day. They are no longer extremely poor, but a single hospital bill, crop failure, or job loss can easily push them back into poverty.
2. The Job Market Trap: Distress Work vs. Real Opportunity
Welfare schemes help people survive, but only good jobs build real wealth. Right now, India’s job market is struggling to create enough steady, well-paying roles:
- 90% Informal Workforce: Per the ILO, nearly 90% of Indian workers are in informal jobs with no written contracts, paid leave, or social security. Only 23.6% hold regular salaried jobs.
- Flat Real Wages: After adjusting for inflation, earnings for regular salaried workers stayed nearly flat—or slightly dipped—between 2012 and 2022, squeezing family budgets.
- Rise in Unpaid Family Work: Lacking formal factory or office jobs, more people are working on family farms or small shops without pay. The share of unpaid family helpers rose from 12.4% to 17.1%—a clear sign of distress work.
3. Educated Yet Unemployed: The Skills Mismatch
This job crunch hits young Indians the hardest, showing a wide disconnect between classroom degrees and real-world industry needs:
- The Degree Trap: According to the ILO’s India Employment Report, educated youth (with at least a secondary school certificate) make up 65.7% of all unemployed youth in India. Degrees are rising, but practical job skills and matching vacancies are lagging.
- Youth Left Waiting: Less than half of young adults aged 20–29 are currently employed, pointing to a major shortage of entry-level jobs in manufacturing and modern services.
Wiping out extreme poverty is a historic milestone. However, turning India into a prosperous nation requires moving beyond free rations and cash transfers to creating formal, skill-driven jobs—so the 64% of Indians stuck in the middle can build lasting financial security.
Mains Practice Question
“While India has made remarkable strides in eradicating extreme poverty, transitioning the vast majority of its population from survival to prosperity remains constrained by labour market frictions and human capital mismatches.” Discuss. (15 marks · 250 words)
Introduction: Cite World Bank data (~500 million lifted out of extreme poverty; only 2.6% below $3/day) but contrast it with the 80% living below the $8.30/day upper-middle-income line.
Body Part 1 (Labour Market Bottlenecks): Highlight the 64% “squeezed middle” ($4.20–$8.30/day) and World Bank Prosperity Gap (4.9). Link this to 90% informality, flat real salaried wages, and rising unpaid family labour (17.1% in PLFS).
Body Part 2 (Skills Mismatch & Way Forward): Cite ILO data showing 65.7% of unemployed youth are educated. Propose boosting labour-intensive manufacturing (MSMEs, Employment-Linked Incentive schemes), enforcing the Code on Wages, expanding e-Shram social security, and linking college education with NSQF skills.
Conclusion: Conclude that achieving Viksit Bharat @ 2047 depends on shifting from welfare-led poverty relief to job-led middle-class growth.
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