Destabilise the Pyramid

Rajesh Shukla    November 24, 2023

OPINION I The Economic Times

The right to resources is increasingly becoming the major talking point in the country. The tussle is about how this pie of resources can be cut up more equitably to benefit more and more people in the country, particularly the impoverished millions. While political parties have typically dealt with this issue by demanding higher shares of benefits for the traditionally under-represented, underprivileged caste groups, the Prime Minister recently shifted the focus from castes to the poor. Calling the poor the biggest caste group, PM Modi said, “For me, the poor is the biggest caste in the country. If the poor are empowered, the country will be benefitted in totality.”

This focus on empowering the poor and treating them as a homogeneous group enables policymakers to dive deeper into their socio-economic status and plan appropriate policy interventions. Instead of applying the complicated and ambiguous parameters of a matrix to measure the economic status of the poor, let’s consider the concept of Bottom of the Pyramid (BOP), a term that describes the largest and poorest global socio-economic group. Franklin D. Roosevelt first used the term in a 1932 public address during the Great Depression. He called for the building of plans that “rest upon… the forgotten, the unorganized but the indispensable units of economic power…. that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid”.

Almost 100 years later, BOP is still a relevant term and understanding the size, location and other socio-economic parameters that govern this population group in India is critical. Only then will it be possible to ensure that they are able to derive the benefits that accrue from the nation’s march towards economic growth and prosperity.

Data from PRICE’s ICE 3600 surveys (2021) provide some major insights into the status of this population.

  • BOP is defined as the bottom 20% of the population by per capita income. In terms of size, BOP forms a fifth of the country’s population (bottom quintile): 28 crore people equivalent to 5 crore households who constitute the Indian BOP by per capita income. Rural India accounts for 84% of the BOP population.
  • Over 70% of the BOP population is concentrated mostly in five states. Bihar tops the list with 20% followed by Uttar Pradesh (19%), Odisha (14%), West Bengal (12%), and Madhya Pradesh (9%).
  • Nearly 40% of the BOP population is OBC followed by SC (25%), General (18%), and ST (17%).
  • More than 45% of chief wage earners of such households are illiterate and nearly 27% drop out after primary schooling. This compares poorly with the all-India average where nearly 46 % attain matriculation and above.
  • Nearly 39% of BOP households are employed as casual labour in non-farm activities such as domestic work, construction, electrician and plumbing jobs, sales work, delivery and logistics, cleaning, tailoring, artisan work, etc.  For 25% of BOP households farming activities are a major source of income while 10% of households are small entrepreneurs, including shop owners, hawkers, street vendors, tea vendors, etc. Barely 4% of such households are engaged in government employment, mainly at the Grade-IV level, while clerical and executive jobs are practically non-existent for this group.
  • Due to COVID-19, between 2015-16 and 2020-21 nearly 40% BOP households have turned into net dis-savers. These households resorted to increased borrowings from informal sources to prevent a significant decline in consumption. Borrowings from informal sources was reported by a much larger proportion of such households (35%) in 2020-21 compared to 2015-16 (21%).
  • In light of this, it is therefore relevant to look at the government’s actions to alleviate the hardship of the economically weaker sections of society. PRICE’s ICE 360 surveys provide empirical evidence on some of these issues. On the positive side, government schemes that targeted the BOP households did manage to reach them in a significant manner. Delivery of welfare schemes has improved significantly over the five-year period. Consider the following:

Cash transfersOf the rural households, 28% and 26% of BOP households benefited from the PM-KISAN Samman Yojna and PM Jan Dhan Yojna, respectively.

LPG/Gas subsidy: Although the percentage of households (all India) receiving LPG/gas subsidy fell drastically from 49% in 2015-16 to 19 % in 2020-21, the percentage of BOP benefiting from improved targeting increased from 12% to 27%.

Internet access: While access to the Internet increased from 22% to 52% for all households, for BOP households it was a quantum leap from 4% to 45%. 

Access to water and sanitation:  BOP households with tap water have grown from 18% to 60%. Access to toilets for this group rose from 26% to 61% during 2015-16 to 2020-21.

Enhancement of food security:  Nearly 35 % of such households benefited from PM-Garib Kalyan Yojna, boosting their food security.

Health Care: Overall healthcare coverage increased from 7% to 20% under the central scheme and from 16% to 29% under the state health schemes. The benefits reached the BOP more than proportionately - from 4% to 25% under central schemes and from 15 % to 28 % under the state schemes over the period 2015-16 to 2020-21.

In the ultimate analysis, while the poverty picture is still very skewed in terms of growing vulnerability, there has been significant progress made in targeting of welfare schemes for the economically weaker sections of society. More efforts in growing employment and education opportunities while widening the net of health coverage and food security to reach BOP households will go a long way in adding more muscle to India’s economic growth story. The BOP – be it a Dalit, Adivasi or OBC or general category – mostly depend on 3G’s (God, Government and Growth)- we have to cater to them and change their life.