Can 138 Crore People Giving Rs. 1 Each End Poverty in India?

Imagine a scenario where each of the 138 crore people in India contributes a mere ?1. Would this substantial amount of ?700 million be enough to end poverty in this vast and diverse nation?

Understanding India's Economic Landscape

To assess if this amount would make a significant impact, it is crucial to examine the current economic situation of India. Over the years, India's GDP has witnessed substantial growth:

Year GDP in Trillion Nominal Population in Billions Per Capita GDP in Nominal (?) 1947 0.05 0.36 140 1991 0.27 0.8 338 2007 1.0 1.1 909 2014 2.0 1.3 1538 2021 3.0 1.4 2143 2025 (estimate) 4.0 1.4 2860

The key point to note is that faulty economic policies delayed India's journey to its first trillion GDP for 60 years. The second and third trillions were achieved in just 7 years each, indicating a steady acceleration due to the power of compounding. However, if the pandemic hadn't had a significant impact, it could have taken even less time to reach two trillions.

Defying the Oracles: A Predictive Scenario

Considering a plausible future scenario, let's examine how the economy might evolve in the coming decades:

Year GDP in Trillion Nominal Population in Billions Per Capita GDP in Nominal (?) 2025 (estimate) 4.0 1.4 2860 2031 (estimate) 7.0 1.45 4827 2040 (estimate) 11.0 1.45 7586

By 2031, India could reach the status of a middle-income country, and by 2040, further progress could be made. The combination of the compounding effect and a declining population growth rate will significantly improve the economic condition over the next 16 years.

Ensuring Sustainable Growth

To sustain this economic growth, the yearly gross capital formation needs to be around 35% of GDP, assuming an ICOR (Incremental Capital Output Ratio) of 5. This is achievable within the current economic framework of India. Current estimates show that the Indian GDP is ?326 trillion or ?3.9 trillion, which means 35% of this amount would be ?114 trillion or ?1.4 trillion. As the GDP rises, more money will need to be spent annually to maintain the growth trajectory.

However, when the donated ?700 million is juxtaposed against the required ?114 trillion, it is clear that this amount constitutes merely 0.0006% of the current yearly requirement. Therefore, while it might contribute to small impactful initiatives, it will not have a substantial impact on poverty alleviation efforts.

Conclusion

While the idea of 138 crore people giving ?1 each sounds like a commendable endeavor, targeting this specific monetary impact as a solution to poverty is quite unrealistic. Instead, focusing on sustainable growth strategies, better economic policies, and targeted poverty alleviation programs could provide more sustainable and measurable outcomes. The compounding effect of economic growth and a reduction in population growth rate hold the key to a significant decline in poverty levels in the near future.