Egypt and India poverty comparison

Introduction

Poverty in the world is the result of diverse and interrelated reasons. Poverty is a concept that depends on the general standard of living standards in the society. Egypt and India are important to compare in terms of their poverty. The main reason for comparing chosen countries is that they have common societal problems but are situated in different world regions and number of people in poverty formed and rose under the influence of various factors. The social problem of poverty has large negative impact on all spheres of life. Poverty greatly hinders the economic, societal, political development of India and Egypt. The purpose of the paper is to analyze the problem of poverty in Egypt and India; to show what structural factors account for this problem4 what were the efforts to eliminate the issue and its consequences and try to oversee the state of poverty issue in ten years.

Extent/magnitude of the problem

India

In the South Asia, India historically gained the leadership in many spheres and indicators of economic, political, historic, geographical indices confirm that. India holds a membership in many international organizations such as SAARC or BRICS where the country represents a key actor in its Asia region due to effective economic growth. On the other hand, the success of socio-economic development of the country hinders the continuing acuteness of a number of problems that exacerbate the poverty of the population and creating a threat to regional and international security.

Since gaining independence, the poverty issue remains a matter of serious concern in India. According to the general definition of poverty, when a person can no longer meet the required levels to maintain this level of life, he or she is considered as the one living in poverty. This means that India has nearly 220 million people living below the poverty line. In 2007 that represented almost 25% of India’s population, and it is a truly staggering number. Separation of resources and wealth is uneven in India. This discrepancy creates different poverty ratios for different states. For example, areas such as Delhi and Punjab have very low poverty rates. On the other hand, almost half of the population in the states of Bihar and Orissa are living below the poverty line. According to World Bank estimates, a third of the world’s poor now reside in India, and the country has a high level of malnutrition among children under the age of three years (46% in 2007) than any other country in the world. Poverty and the situation, in which people are forced to live, combined with the ardent desire of people to survive led to the fact that they are doing some incredible things to stay alive.

The level of poverty in India over the past five years has fallen by more than seven percentage points, consisting 29.8 percent in 2009-2010. Thus, the country for the first time in the history of its independence the proportion of poor people was less than a third of the population. Most notable was the growth of welfare in the rural areas. There the poverty rate have fallen from 42 to 24 percent during last five years. In some states, the drop was more than 10 percent. However, a number of poor people primarily settling in the northeastern region in recent years has increased. With the calculation of the level of poverty, the Government of India regulates its social policy. If a person or family is officially recognized as living below the poverty line, they get from the government subsidized food and fuel. Planning Commission, however, has faced harsh criticism when, during its recent study it concluded that a person should not be considered poor if he earns more than 50 cents per day. Later, officials had to give up this definition. Poverty in India is calculated differently in each state. It is based primarily on the level of household expenditure on food, clothing, education and other important goods and services.

The level of pervasiveness is too high. Poverty touched upon all societal classes except the top one. Moreover, some people were born and meant to be poor: it is not allowed legally, but India still preserves castes system in society, dividing all citizens in many strata. It is not possible to transit to another cast. Permanent lack of jobs, employment, and sustainable excess of labor supply over demand were the main causes of mass poverty in the country. India is the most multi-ethnic country, with complex religious composition. Against the backdrop of extreme inequality in income distribution, there are ethno-confessional problems that exacerbate poverty. India cannot fulfil the demands of growing population, as it is experiencing boom in births but possess limited resources. The demand for necessary conditions for life is not met that exacerbates existing problems in social and economic spheres while India has other conflicts on political and territorial base.

Egypt

Egypt has always been the most economically developed country in Northern Africa. However, the modern international relations system is changing rapidly and the African region became too unstable. After the events of Arab spring in 2011 that brought revolutions, riots, changes in government, Egypt’s problems undisclosed all at once. In general, the Egyptian economy is characterized by inefficiency and serious systemic problems that cause poverty. One of the issues is a strong social stratification of society. On April 2014 about 26% of Egypt’s population lived below the poverty line. In fact, 40% of the population can be attributed to the poor. The level of poverty of Egypt is on 85^th place in the world. The great incomes gap within society together with poverty is the source of intolerance and social tensions.

Egypt is notorious for its low labor productivity, which turned into severe economic problem that reduces the competitiveness products made in Egypt, exported abroad, and created the foreign trade deficit and foreign debt issue. Non-competitiveness closes markets of many countries for Egypt. Low productivity and low wages do not allow Egypt to solve the main problem that is the problem of poverty. Productivity factor development is crucial for successful reforms in economic sphere and reducing poverty because of higher revenues from foreign trade and new jobs. At the same time, improving productivity will inevitably impact on the level of unemployment in the country. More than 27 million people belong to economically active population. The official unemployment rate rose in 2013 to 13.5% against 12.5% in 2012. The overall level of unemployment in 2013 was increased by 0.7% comparing to previous years and is still rising. Among young people under the age of thirty, more than half are unemployed. Every year more than a million new job seekers come on the labor market and jobs created do not meet the demand. Inflation has risen to 8% with the budget deficit of 13% of GDP. Twenty-five percent of Egyptians live below the poverty line, and the same can replenish their ranks at the slightest failure in the economy.

A serious problem for Egypt is its overpopulation. Egypt has a population of 89.58 million people with an annual population growth of 1.5 million. The population in could reach 100 million over the next 10 years. Overcrowding factor threatens economic progress and social development of Egypt. The problem of providing the population of Egypt, water and food is closely linked with the overcrowding of the country and lack of that resources deepens poverty.

The negative balance of foreign trade reached 30.4 billion dollars. The main problem in Egypt is that it, in fact, has nothing to offer the world market. The mineral resources of the country can hardly meet the needs of the population and the export share is minimal. Agriculture provides only 14.7% of GDP of Egypt. The country is one of the largest importers of food products, despite the fact that around 30% of the population work in the agriculture. Agriculture stalled due to unfavorable climatic conditions, and the peasants migrating to the cities slows shortage of jobs in the industry. Over 51% of rural residents live below the poverty line. Based on the provided statistical data the Egyptian economy’s budget deficit widened about to $ 30 billion.

There was a 33% reduction in the flow of tourists since the overthrow of Hosni Mubarak. Meanwhile, for many years, tourism was the only consistently growing sector of the Egyptian economy. The tourism industry, however, was hit hard by the global economic crisis, and then from Arab spring revolutions, adverse for foreigners. Before the spring of 2008, and in January 2011 in terms of the level of poverty of the population, Egypt has remained one of the most prosperous countries of the Third World. During Arab spring, the rapid rise in global food prices against the background of a pronounced dependence of Egypt on food imports has led to a rapid increase in the number of Egyptians whose the standard of living is below the internationally recognized poverty line. Moreover, in fact, and in another case a few months below that level it appeared about three million Egyptians. In 2015, Minister for Social Affairs of Egypt Ghada Waly on the Cairo press conference announced that more than 26 percent of Egypt’s population of 90 million people live below the poverty line. Egypt Statistics Center recently reported that about 28% of children suffer from poverty in Egypt.

The pervasiveness of poverty problem is notorious for touching upon vulnerable parts of population. They are unemployed young people and children. The structural factors that contributed to the rapid development of poverty are revolutions and unstable political environment in region, high Egypt debts, low efficiency of labor, too low number of jobs and others. The specific factor is migration. Egypt citizen try to emigrate escaping events and consequences of Arab spring as well as migrants from other countries flow into Europe from their countries in recent months.

Efforts to reduce/eliminate the social problem

India

To overcome problems, the government of India is conducting a series of economic reforms, that directly improve economic indices, power, conditions and helps the lifted economy to resolve social issues and mollify tensions caused by income inequality. The best, but not the easiest method to reduce the poverty is improving the level of socio-economic development of every citizen and the country on the whole. So thanks to the action of the state government observed India’s economic growth and, consequently, improving the quality of life that means rising incomes, low rate of poverty and increasing rate of literate people in India. Luckily, the state makes investments in the social infrastructure development, namely catering, health care, housing and communal services, education, cultural institutions and leisure, social funds and charities, production infrastructure (communication networks), environmental protection facilities and others. India seeks for solving problems that led to poverty, wants to retain political stability, to combat existing terrorism, separatism and extremism and looks for the ways to implement all federalism provisions proscribed in Constitution of India.

Among all Southeast Asian countries only India tried to conduct a coherent policy regarding aid to the poor citizens and made attempts to reduce its multi-million dollar scale using state mechanisms. This policy includes a provision for a five-year financing plans, boosting economic situation and thereby employment. For example, in the eighth five-year plan with the help of government loans created 700 thousand microenterprises with extra jobs for people. The ruling coalition, realizing the threat of mass poverty, tried to develop the law “On the right to food” on a proposal from the head of the Indian National Congress Sonia Gandhi, but it had no support. Permanent measure was the purchase of the state grain that is a main food in reserve for subsequent sale to the neediest at discounted prices through fair prices shops, whose number exceeded 320 thousand. Like any public distribution system, it generated a lot of violations.

The most effective program by the government was adopted in 2006 when one person in every rural family in need was provided gainful employment for 100 days a year on the construction and repair of infrastructure in rural areas. In this program, India’s government each year has spent 8 billion USD. Moreover, according to official figures, 50 million households improved their position. Additionally, 100 million Indians opened a bank account for the transfer of salary. However, roads and other objects are rapidly destroyed due to the poor quality of work; a large part of the funds dissolved in bribes. For all the shortcomings of this system it was critical  due to its direct connection and providing real earnings. State participation in support programs for the poor brought feedback. The poverty rate in India from 1951 to 2005 decreased from 51 to 26%; acceleration of the process was outlined in 1990 and global crisis stalled it twice, in the 90s and in 2008. The positive trend in reducing the number of poor in India was evident.

The Indian authorities had not been able to find a worthy and effective solution to the poverty problem though there were many initiatives. Therefore, the government decided on a radical and even somewhat desperate move; it has developed the largest worldwide program to support the poor. Social scheme that was issued by the Parliament of India, suggests food subsidies for two-thirds of the population living below the poverty line. At the core of the program there is a the law on national food security, which imposes the duty of the government on a monthly basis to provide an inexpensive five kilograms of grain to each of the 800 million Indians in need. Food program, passed by the Government of India provides nearly 800 million poor residents with 5kg of cheap cereals every month. It is assumed that the program will be the world’s largest social security scheme. The program will cost the government $ 23.9 billion annually. The government decided to start subsiding, despite the fact that a law on food security still must be approved by Parliament.

The main disadvantage of the above-mentioned social programs is the risk to the public treasury, which will annually lose 1.3 trillion rupees because of such subsidies, which in dollar terms amounts to 24 billion. The program has already gained many enemies, predicting the destruction of India because of the free care to the needy. This measure will increase India’s budget spending by about 7 percent. Given that up to this the expenditure has increased by 16 percent from April 1, 2013, the bill will increase the burden on the state budget and, possibly, cause the rating agencies, if adopted, revise status of the country’s sovereign bonds. Currently, India’s budget deficit was 5.2 percent of GDP. Fighting poverty in India with the help of social support is not able to reduce the number of poor people in the country, as it cannot not solve the fundamental problems associated with the reasons of poverty. However, at the same time, the gratuitous food aid for the poor by Indian government has enough supporters who are aware of the scale of the problem and believe that the adoption of social programs may be the first serious step to solve such a difficult task, as overcoming poverty. Maybe it may impose a huge burden on the budget. Nevertheless, ultimately, if India really wants to establish itself as a great power, developing a large country that is at the forefront of modern technology and so on, then it has to solve its primary problem.

Steps, taken by Egypt

UN experts called on the Egyptian authorities to create jobs in the poorest areas of the country, improve the efficiency of the system of subsidies and to invest in social projects.

The Egyptian authorities are planning to build one million houses within the social housing program for the poor. The total project cost is about $ 20 billion over the next five years. This was announced by the Minister of Housing and Communal Services of Egypt Mustafa Madbouly Egyptian authorities need to build 500-600 thousand new homes a year to meet the demand for housing, with 70% of these homes are to be built for the benefit of the poor.

The governmental organizations that aim at reducing poverty are The Social Fund for Development (SFD), The Ministry of Social Affairs (MOSA) Shourouk: the National Program for Integrated Rural Development and others. SFD generates employment opportunities, public works and facilitating businesses development; MOSA has influence on other non-profit organizations that try to combat poverty and issues pensions. Additionally, MOSA established special structures for rural areas development called Community Development Associations (CDAs). Egypt paid much attention to rural areas and there was created a Shourouk: the National Program for Integrated Rural Development. The most effective was the work of Community Development Associations (CDAs). In Egypt, the non-governmental organizations are staying active. For example, there acts the charity called The Worldfish Center, Africa and West Asia Regional Office. The worldwide NGOs operate in Egypt as the UNICEF or UNIDO; World Bank and IMF also propose credits for lifting the economy up and improve the situation with debts and poverty. For example, recently Emergency Labor Intensive Investment Project (ELIIP) received around 200 million dollars from World Bank. Government has one more program called Emergency Employment Investment Project (EEIP) that received funding (almost 68 million euro) from the EU. To improve the position of women Egypt has The Association for the Development and Enhancement of Women (ADEW). There were many problems that made anti-poverty efforts unsuccessful. For example, bureaucracy suspended the work of Egypt Social Fund. The most efficient help is done not by government but by the NGO’s. For example, only ELIIP and EEIP should help 3,000 youth Egypt poorest areas.

Concerning poverty in India and Egypt in the next 10 years, there are possible scenarios. The situation can either get better or worse. Most likely, Egypt is going to improve its situation with poverty. One of the reasons is that Egypt belongs to the interests of the EU that can increase financial assistance. Egypt should be aware of rapid rise in population. The good point is that government understands the problem of unemployment and most of the charities and programs aim at creating jobs. As for India, its population is also growing, but the worst problem is societal system. It is much more difficult to change mentality than economic conditions as it may happen in Egypt. India, however, has higher potential to help poor people by lifting economy with the help of science and technology. Both countries, Egypt and India, have conflicts, but in Egypt, they are connected with intrastate factors while India has a perennial conflict with Pakistan. In all cases, India is in worse position than Egypt and its future remains vague.

Conclusion

In sum, to compare, in India, the scale of poverty reached the global level. India and China are the most populated countries in the world. Within the country, one third of population is considered as living in poverty. The factors contributing to poverty of India people are constant conflict with Pakistan, societal system (castes), low position of women in society. Moreover, India remains largely an agricultural country, thirty-three percent of its workforce employed in agriculture. The population is still growing rapidly. Its growth is very cumbersome for economic and educational resources: only half of Indian population are literate. In Egypt, the share of people living in poverty is approximately same as in India, but the number of people is considerably lower. In Egypt, the factors influencing poverty are different: Arab spring, decay of tourism industry, inefficient political management. It is worth noting that one of the important effects of political violence and the continuing unrest in Egypt is the Egyptian military involvement in the worsening of the economic problems of this country.

The comparison of India and Egypt in terms of poverty is important because it shows what different political, economic, cultural, social factors influence the risk and development of poverty. Moreover, these countries are bright example of the state of poverty in two world regions that suffer from that issue the most: Africa and Asia. Lastly, India and Egypt give important lessons to learn about how governments and NGOs use various methods to combat poverty and whether they were successful or not.