National Register of Citizens

National Register of Citizens

This article deals with ‘National Register of Citizens – Indian Polity.’ This is part of our series on ‘Polity’ which is important pillar of GS-2 syllabus . For more articles , you can click here.

National Register of Citizens

What is the National Register of Citizens (NRC)?

  • On the eve of Independence, the Indian government felt the need to identify Indian Citizens. Hence, the National Register of Citizens was conducted in 1951 in respect of each village, showing the houses and holdings of each person in a serial order. Based on the National Register of Citizens, the Citizenship of each person was confirmed.
  • This Register was used to be kept in the office of the District Collector and Sub Divisional Officer. But in 1960, on the orders of the Home Ministry, all data was given to the Police and was never updated after that.
  • The issue in Assam: Due to the large-scale migration of Bangladeshis in Assam, the need was felt to recognize the Indian Citizens. 

Assamese vs Outsiders

The issue of Outsiders coming into Assam dates back in history.

  • Assamese used to resent the settlement of outsiders (Bengali and Bihari labourers) brought by Britishers to work in Tea Plantations. 
  • After Independence, Assam saw a large-scale arrival of Bengalis.  
  • During the persecution of Bengali Muslims in Bangladesh at the end of the 1960s, more than 10 lakh people came to Assam to take shelter. After the formation of Bangladesh, most of them went back, but some stayed.
  • Even after 1971, Bangladeshis kept on settling in Assam. 

All this created fear in the indigenous population of Assam. They started to fear demographic change, converting them into a minority and heavy stress on the limited resources of Assam.

Assam Accord

1978: Powerful agitation under the All Assam Students Union (AASU) started, which demanded that before conducting elections, the problem of illegal migrants should be solved. They demanded the removal of those who arrived after 1961 from Assam.

1985: Assam Accord between Rajiv Gandhi Government and AASU

  • Those who arrived between 1951 and 1961 will be given full Citizenship and the right to vote. 
  • Those who have arrived after 1971 will be sent back
  • Those who arrived between 1961 and 1971 were given Citizenship, but the right to vote wasn’t given
  • A Special Package was given for the development of Assam
  • Oil Refinery, Paper Mills and Technical institutions would be opened in Assam

But due to politics, little happened over the decades. Finally, in 2014, the Supreme Court asked the state government to update the 1951 NRC in a timebound manner and conduct the exercise under its supervision.

NRC updating process in Assam

NRC updating involves the procedure of adding the names of individuals (or their descendants) whose names are found in either of the following lists.

  • Any of the Assam’s Electoral Rolls up to March 24 1971, or
  • National Register of Citizen of 1951, or
  • Any of the admissible documents stipulated, such as land or tenancy records, citizenship certificate, permanent residential certificate, etc.

In August 2019, the updated and final National Register of Citizens, which validates bonafide Indian citizens of Assam, was released with over 19 lakh applicants who had failed to make it to the list (and many were Hindus).

Hence, this process has the danger of exclusion and inclusion errors, and a large number of legitimate Indian citizens could end up being denied their rights. Along with that, Illegal migrants out of NRC will be sent back to Bangladesh. However, India does not have any deportation treaty with Bangladesh. Moreover, there are apprehensions that a large number of stateless people can be created in India, thus impacting the overall image of people.

Assam Accord vs Citizenship Amendment Act

There are inherent differences between the Assam Accord and the Citizenship Amendment Act, as the Amendment provides citizenship rights to Hindu migrants who have arrived post-1971.

Ayushman Bharat Scheme (UPSC Notes)

Last Updated: June 2023 (Ayushman Bharat Scheme (UPSC Notes))

Ayushman Bharat Scheme (UPSC Notes)

This article deals with ‘Ayushman Bharat Scheme (UPSC Notes).’ This is part of our series on ‘Society’ (GS 1) and ‘Governance’ (GS 2). For more articles, you can click here.

Models of Health Care

Models of Healthcare across World (case study of Free Market Insurance Based Model vs. Cuba Model of Healthcare)

There are two main models of healthcare that are worth discussing: the Free Market model and the Cuba model.

Model 1: Free Market Model

  • Countries like Japan, Switzerland, Germany, and South Korea rely on the private sector and insurance companies to provide healthcare services. 
  • In these countries, the government does not directly provide healthcare services, but it still has significant control over the system. The government regulates the services offered, sets prices for healthcare services, and establishes protocols for treatment. 
  • If any country, including India, wants to promote a healthcare system that involves the private sector and insurance providers, strict regulation and effective implementation of those regulations are crucial.

Model 2: Cuba Model

  • In Cuba, all healthcare services are provided by the public sector. 
  • The country has made substantial investments in medical education, producing a large number of doctors. These doctors now work under the government to provide healthcare services to the people.

Ayushman Bharat Scheme

Ayushman Bharat has two components i.e.

  1. Health and Wellness Centres 
  2. National Health Protection Scheme 

Component 1: Health and Wellness Centres

  • The government is converting 1.5 lakh existing sub-centres into Health and Wellness Centres. 
  • Services provided in these centres will include 
    1. Pregnancy Care and Maternal Health Services 
    2. Neonatal and Infant Health Services
    3. Child Health
    4. Chronic Communicable Diseases
    5. Management of Mental Illness
    6. Dental Care
    7. Eye Care
    8. Geriatric Care 
    9. Emergency Medicine

Component 2: National Health Protection Scheme (NHPS)

Ayushman Bharat Scheme (UPSC Notes)

10 crore households across the country, constituting 40% of the total population selected based on “deprivation and occupational criteria” as per SECC data, 2011, are covered under this scheme.

The main provisions of the scheme are

  • Annual medical insurance coverage of Rs. 5 lakhs per household.
  • All secondary care & most tertiary care procedures are included.
  • Benefits can be availed both in public as well as empanelled private hospitals. 
  • There is no cap on the family size. 
  • It is Centrally Sponsored with Centre and State sharing 60: 40 (90: 10 in case of Special Category States)
  • Implementing Agency: National Health Authority (NHA) (body under Health Ministry)
  • The scheme includes pre and post-hospitalization expenses as well.
  • It includes transportation allowance per hospitalization.
  • Pre-existing diseases are covered under the scheme.
  • Access is given by cashless health card.
  • Benefits are portable throughout the country.

Significance of the Scheme

  • It leads to massive cuts in the Out of Pocket Expenditure of the patients.
  • It increases access to affordable healthcare, especially for the poor.
  • It has strengthened the public healthcare infrastructure.
  • The scheme has also incentivized the creation of new healthcare infrastructure in rural, remote and under-served areas.

Critical Appraisal of the Scheme

Achievements of the Scheme
  • The Ayushman Bharat Scheme implemented by the Indian government is the largest publicly-funded health program globally.
  • The Ayushman Bharat Scheme has successfully consolidated various health insurance schemes and offers greater health coverage compared to the previous Rashtriya Swasthya Bima Yojana.
  • The scheme has expanded the beneficiary base of health insurance schemes, and several states have achieved universal coverage for their citizens.
  • It incorporates a robust monitoring mechanism, leading to the identification and blacklisting of numerous hospitals involved in fraudulent activities under the scheme.
  • The scheme serves as a solution to address the issue of rising out-of-pocket healthcare expenditure, which often leads to individuals falling into a cycle of poverty.
Limitations of the Scheme
  • Limited Government Control over Private Hospitals: Regulation of clinical establishments in India is ineffective, resulting in many fraudulent activities. It includes the creation of ghost beneficiaries and the conversion of outpatient (OPD) patients into in-patient (IPD) patients.
  • The evaluation of the Rashtriya Swasthya Bima Yojana (RSBY) in the past has revealed a lack of institutional expertise and capacity in India to effectively implement public health insurance. India doesn’t have the prerequisite regulatory framework to regulate Insurance based healthcare. 
  • International Experience: International experiences have demonstrated that relying on insurance-based healthcare provision can be a costly financing model for governments.
  • Against the Federal Principles: The scheme limits the autonomy of states as healthcare is a subject under the jurisdiction of the state list, thus posing challenges to federalism.
  • Budget Constraints: The allocated budget for the scheme is insufficient to cover the overall costs, posing financial limitations on its effective implementation.
  • Quality Control Issues: Out of the 18,000 private hospitals enlisted under the scheme, only 600 have received quality certification, raising concerns about the overall quality control measures in place.
  • Low Coverage as Middle Class not covered: NITI Aayog has suggested to include the ‘missing middle class’ within the ambit of PMJAY as they can’t afford private health insurance and are currently not covered under PMJAY.

Question: In India, since Public Health Infra is weak, is Insurance the way out? 

  • No doubt, Insurance provides a simple way out, but it isn’t a sustainable way. Examples from the U.S., the Netherlands etc., have shown that a simple solution at one time becomes a problem for the next generations. The U.S. tried to rely on Private Insurance, and the result was a politically empowered industry dedicated to preserving its business at the expense of better risk pooling, equality, more efficiency, and simpler administration.
  • Building strong Public Healthcare is the sustainable way to reach the goal of providing Healthcare facilities to all. Countries such as Cuba have shown to the world that in spite of their lower GDP, the best and cheap health services can be provided to people if the government has a vision.
  • But since Public Healthcare can’t be built in a day, we can’t ignore Insurance altogether. There is a need to provide Insurance coverage to people as a cushion. But at the same time, we have to build a strong regulatory framework so that Insurance companies don’t charge exorbitant rates to vulnerable people. Government should try to stop Insurance companies from “actuarial” rate-setting.  

Ayushman Bharat Digital Mission (ABDM)

  • Announced by the PM on Independence Day Speech of 2020.
  • Implementing Agency: National Health Authority (NHA) (body under Health Ministry)
  • This initiative enables citizens to generate their Unique Health ID (UHID), which serves as a central point for their digital health records. 
  • By using this UHID, individuals can securely access health records in an electronic format. Further, the system allows patients to share their health information with doctors and insurance companies, eliminating the need for multiple physical files, photocopies, or X-rays.

Citizen’s Charter – Concept, Benefits and Shortfalls

Last Updated: June 2023 (Citizen’s Charter – Concept, Benefits and Shortfalls)

Citizen’s Charter – Concept, Benefits and Shortfalls

This article deals with ‘Citizen’s Charter – Concept, Benefits and Shortfalls.’ This is part of our series on ‘Governance’ as well as ‘Ethics’ . For more articles , you can click here.


  • Citizen Charter is a document of an organization which contains different services hosted by the organization and the information related to the standard of services along with the cost and time required to deliver such service. 
  • In other words, it is a set of commitments made by an organization regarding the standards of service which it delivers.
  • Citizens’ Charter scheme in its present form was first launched in 1991 in the UK. The aim was to ensure that public services are made responsive to the citizens they serve.
Citizen's Charter - Concept, Benefits and Shortfalls

Components of Citizen’s Charter

Every Citizen’s Charter has several essential components to make it meaningful

Vision & Mission Statement

  • Vision = Long-Term Objectives of the Organization
  • Mission = Specific Goals to be achieved in the stipulated time 


  • Which services will be provided 
  • Time frame in which they will be provided 
  • Standard and Quality of Service to be provided 
  • Price at which it will be provided

Grievance Redressal Mechanism

  • Remedy in case the above expectations aren’t fulfilled.
  • These promises are not enforceable in a court of law. Still, each organization should ensure that promises are kept and, in case of default, a suitable compensatory/remedial mechanism should be provided. 

Expectations from Client

It includes

  • Responsibilities of the citizens 
  • Qualification criteria 
  • Logistic & paper-oriented issues 

It is an Indian innovation. This wasn’t there in the UK Model. 

Gandhi's view on  Citizen's Charter

The 6 principles of the Citizen’s Charter movement, as framed initially, were: 

  1. Quality: Improving the quality of services
  2. Choice: Provide choice wherever possible 
  3. Standards: It should tell what to expect and redressal if standards are not met. 
  4. Value: For the taxpayers’ money 
  5. Accountability: Of Individuals and Organizations 
  6. Transparency: Of Rules, Procedures, Schemes and Grievances

Benefits of the Citizen’s Charter

  • Improved Service Delivery: Citizen Charter has led to improved service delivery, reduced bureaucracy, and enhanced citizen satisfaction. For example, the Ministry of Railways introduced the Passenger’s Charter, which outlines the rights and responsibilities of railway passengers. It includes commitments such as providing clean coaches, on-time departures, and prompt grievance redressal. This initiative has improved the overall passenger experience.
  • Increased Accountability: Citizen Charter has helped increase accountability as it establishes performance standards, service commitments, and timelines for service delivery, making government officials accountable for their actions.  
  • Better Grievance Redressal: It has ensured better service quality and grievance redressal systems for the aggrieved citizens. E.g., the Citizen’s Charter of Hyderabad Metropolitan Water Supply and Sewerage Board has incorporated the provision of payment of compensation as a token of commitment to its customers in the event of failure to provide services.
  • Trust and Public Confidence: When government agencies publicly commit to service standards and demonstrate their adherence to them, it instils citizens’ confidence.
  • Continuous Improvement: By monitoring performance against service standards and seeking feedback from citizens, government agencies can identify gaps, address shortcomings, and make necessary improvements.
  • Incorporating Citizen Feedback in Policymaking: Citizen Charter helps incorporate the feedback from the service users to improve the quality of service delivery. 
  • Decrease in Corrupt Practices: Citizens Charter helps reduce corruption due to increased transparency and reduced discretionary powers.

Reasons for failure

Lack of Public Awareness

  •  Only a small percentage of end-users are aware of the commitments made in the Citizens’ Charter. For example, despite the existence of Citizen’s Charters in various government departments, a significant portion of the population in rural areas is unaware of their rights and the standards of services they should expect. 

Setting Lofty Goals 

  • Most of the time, lofty promises were made without giving attention to the capacity of the organization to deliver promises.
  • For example, A government hospital may have a Citizen’s Charter promising timely medical services and access to essential medicines. However, if the hospital lacks sufficient infrastructure, medical equipment, or qualified healthcare professionals, it becomes challenging to fulfil the commitments made in the Charter.

Poor Design & Content 

  • Critical information that end-users need to hold agencies accountable is simply missing from a large number of charters. 

Charters are rarely updated

  • Charters are rarely updated, and the Charter of some agencies dates back nearly a decade when the Citizens’ Charter program was started. 
  • Few Charters indicate the date of release.  

End users & NGOs not consulted 

  • Since a Citizens’ Charter’s primary purpose is to make public service delivery more citizen-centric, agencies must consult ordinary citizens and civil society organizations while formulating Citizen’s Charter. 

Faulty Grievance Redressal 

  • Grievance Redressal Mechanisms, in most cases, are defunct and inactive. 

No Legislative/Statutory Backing

  • Citizen Charters are toothless since they have no legal backing.
  • Lack of legal enforceability allows officials to disregard the commitments mentioned therein without facing any repercussions. 

Resistance to Change 

  • The new practices demand significant changes in the behaviour and attitude of the agency and its staff towards citizens. At times, vested interests work to stall the Citizens’ Charter altogether or in making it toothless. 
  • Employees of the organization are not trained in tune with Citizen Charter.

ARC II recommendations on Citizen Charter

7 Steps have been suggested by ARC for effective implementation of the Citizen Charter

Internal restructuring should precede Charter formulation

  • Merely announcing the Charter will not change the way the Organization functions. It is important to create conducive conditions through interaction and training of employees. 

One Size Doesn’t Fit All

  • Formulation of Citizens’ Charters should be a decentralized activity, with the head office providing broad guidelines.

Wide Consultation Process

  • Charter must be framed not only by senior experts but by interaction with the cutting edge staff who will finally implement it and with the user.

Firm Commitments to be made

  • Citizens’ Charters must make firm commitments in quantifiable terms.  

Redressal mechanism in case of default

  • Citizens’ Charter should clearly lay down the relief which the organization is bound to provide if it has defaulted on the promised standards of delivery. 

Periodic reviewing of Citizens’ Charters

  • Obtain feedback and review the Charter at least every six months, as the Citizens’ Charter is a dynamic document. 

Include Civil Society in the Process

  • Encourage collaboration between government departments, civil society organizations, and citizens in formulating, implementing, and monitoring Citizen’s Charters. 

Sevottam Model

Sevottam = Seva + Uttam

  • Seva = Service
  • Uttam = Excellence

Hence, Sevottam = Excellence in delivery of Public Service

Sevottam Model is an evaluatory model, i.e. Government Services as hosted by different Departments and Ministries are evaluated against the Sevottam Model. Based upon performance and evaluation, Grades are given in terms of Standards of Excellence achieved

There are three pillars of the Sevottam Model against which evaluation is done.

Sevottam Model

First Pillar – Citizen Charter / Standard of Service Delivery

  • The Sevottam Model emphasizes the importance of delivering services to citizens promptly, transparently, and effectively. It promotes the concept of Service Standards, which are the commitments made by government departments regarding the quality and timeline of service delivery. For instance, a passport office may commit to issuing a passport within 15 working days from the date of application.

Second Pillar – Grievance Redressal Mechanism 

  • The Sevottam Model recognizes the importance of addressing citizen grievances promptly and effectively. It emphasizes establishing grievance redressal mechanisms to handle complaints and ensure timely resolution. For example, if a citizen faces a delay in receiving their passport even after the committed timeframe. In this case, the Sevottam Model expects the passport office to have a well-defined grievance redressal system in place. 

Third Pillar – Drive for Excellence 

  • The Sevottam Model emphasizes the importance of providing excellent customer service to citizens. For example, in the context of the passport office, the Sevottam Model expects the staff to be courteous, professional, and responsive to citizen queries and concerns. The office should have well-trained staff members who are equipped to handle various situations efficiently. 

e-Governance (UPSC Notes)

Last Updated: June 2023 (e-Governance (UPSC Notes))

e-Governance (UPSC Notes)

This article deals with the ‘e-Governance (UPSC Notes).’ This is part of our series on ‘Governance’ series, which is an important pillar of the GS-2 syllabus respectively. For more articles, you can click here.


e-Governance (UPSC Notes)

It is of the following forms 

Government to Citizens (G2C)

E.g., e-District, Pravahan etc.
Government to Government (G2G) E.g., Pragati, e-Samiksha etc.
Government to Business (G2B) E.g., e-Procurement, GSTN etc.

Note: e-Governance is not just using Apps or Websites for the purpose of Governance (as people assume it commonly). In fact, it covers the use of a whole range of Information and Communication Technology (ICT) tools.

Models of e-Governance

US Prof Arie Halachmi gave 5 models of e-Governance

Models of e-Governance

1. Broadcasting

  • Use of Information and Communication Technology & Media to disseminate/broadcast governance info that is already present in paper form.
  • For example, Broadcasting Laws, Rules, Judgements, result-mark sheets on the internet.

2. Critical Flow

  • Only critical information is released using ICT to the targeted audience (like weather forecasts or crop prices to farmers)

3. Comparative Analysis

  • Benchmark parameters are created (like IMR, MMR, Life expectancy etc.) & then Regional parameters at District, State & National levels are measured and compared with the benchmark parameters 

4. e-Advocacy Model

  • Place the opinion of eminent persons or the opinion of the public collected through surveys on an online forum & try to change public opinion on certain laws or policy stances. 

5. Interactive Services

  • It is a 2-way channel that is used to provide public services online. 
  • For example E-Payment of Taxes, Electricity Bills etc.  

Benefits/Potential of e-Governance

  1. Accessibility and Convenience: e-Governance makes government services accessible to citizens and saves them from visiting government offices physically. For instance, citizens can digitally apply for driving licenses and vehicle registrations using the “Parivahan” portal (by the Ministry of Road Transport and Highways). 
  2. Transparency and Accountability: e-Governance promotes transparency and accountability by making the information accessible to the public. E.g., the Right to Information (RTI) Act has a provision for digitizing documents, thus promoting transparency and increasing accountability.
  3. Efficiency and Cost Savings: e-Governance helps streamline administrative processes, leading to faster service delivery. E.g. Direct Benefit Transfer (DBT) of subsidies into the bank accounts of beneficiaries. It decreases the leakages and also reduces the cost of transfers. 
  4. Increased Citizen Engagement: e-Governance promotes citizen engagement in governance through processes such as citizen feedback and surveys. E.g., MyGov enables citizens to provide feedback and suggestion on various government initiatives.
  5. Financial inclusion: e-Governance initiatives such as Direct Benefit Transfers and UPI have helped in increasing financial inclusion in India.  
  6. Data-driven Decision Making: e-Governance initiatives generate enormous data which can be utilized for data-driven, evidence-based decision making. E.g., National Health Stack (NHS) will integrate health data from different sources to create a comprehensive health information system enabling the government to make data-driven decisions to promote health services in India.

National e-Governance Plan (NeGP)

  • NeGP is the joint initiative of the Ministry of Electronics and Information Technology (MEITY) and the Department of Administrative Reforms and Public Grievances (DARPG).
  • It was started in 2006.
  • The NeGP comprises 31 Mission Mode Projects (MMPs) and 10 components.
  • It aims at improving the delivery of government services to citizens and businesses with the vision of making Govt. services accessible to the common person through common service delivery outlets and ensuring transparency, reliability and efficiency of services at affordable costs.
  • Some of the Mission Mode Projects implemented under NeGP include
    1. e-District: Aimed to digitize the delivery of services at the district level, like issuance of certificates, licenses, and permits.
    2. National Land Records Modernization Program (NLRMP): To computerize land records 
    3. National Citizen Database: Create a comprehensive database of citizens, including demographic and biometric information 
    4. e-Procurement: Digitize government procurement processes 
    5. Common Service Centers (CSCs): Physical centres at the village level equipped with computers and internet connectivity to provide access to several government services to citizens. 
    6. State Wide Area Networks (SWANs): To establish robust and secure communication networks across states to connect government departments, enabling them to share data and information seamlessly with each other.
    7. State Data Centers (SDCs): Centralized repositories for storing and managing government data. 

ICT Initiatives in Governance

G2G or Government to Government Initiatives

1. National e-Vidhan Application

It is a mission-mode project to make the functioning of State Legislatures paperless.  

It is a Software suite of

  • Public website
  • Secure website (for members)
  • Mobile apps 

that fully automate the functioning of the legislative assembly  

What will be done?

  • No papers in the House: All replies to questions, copies of bills and reports will be provided online
  • MLAs will use touch-screen devices.  
  • Government departments will communicate with Vidhan Sabha online to send replies to approved questions.
  • The government will cut down expenditures incurred on the use of paper and other overheads. 
  • Common people will also get access to important documents and videos. They can also ask questions from the MLAs and MPs.

2. PRAGATI (Pro-Active Governance and Timely Implementation)

  • AimTimely implementation of government programs (especially in infrastructure, worth trillions of rupees.)
  • The PMO, Union Government Secretaries, and State Chief Secretaries constitute the PRAGATI application, and hence it is a three-tier system.
  • PM holds monthly meetings with Secretaries of the Union government and Chief Secretaries of all state governments to scan the progress of projects under implementation. Meetings are held through video conference. 

3. e-Samiksha

  • e-Samiksha is an online monitoring and compliance mechanism developed by the Cabinet Secretariat.  
  • It is used for tracking the progress of projects & policy initiatives by the cabinet secretary and PM on a real-time basis.

4. UPaAI System

  • UPaAI (Unified Planning and Analysis Interface), or ‘solution’ in English, provides an integrated platform for data on infrastructure and social indices for each constituency to the MP and helps them take better decisions related to MPLAD funds and other Central Schemes. 
  • It is monitored by PMO too. 
  • In the next phase, it will be extended to include state schemes and bring district magistrates and members of legislative assemblies on the same platform. 

5. e-Office

  • NIC has developed an e-Office application to transform the traditional functioning of government departments
  • It has functions like 
    • Unified Internal Messaging  
    • E-Files: To make digital files and share them with others
    • E-Financial Management
    • Knowledge Management System providing essential documents and files accessible at any place

G2C or Government to Citizen Initiaves

1. e-District

  • e-District digitize the delivery of services at the district level, like issuance of certificates, licenses, and permits through Common Service Centers (CSCs)

2. Digilocker

  • It is a cloud-based application that allows people to store and access their documents digitally.
  • Citizens can store their documents digitally and also shares them with government agencies and other organizations.

3. Pravahan

  • It is an initiative of the Ministry of Road Transport and Highways
  • Pravahan allows citizens to digitally apply for and renew their driving licenses and vehicle registrations


  • UMANG is a mobile app that provides access to various government services like passport services, income tax filing, and utility bill payments through a single platform.  

5. e-Ticketing

An initiative of Indian Railways which allows passengers to book tickets, check seat availability, and make payments electronically. 

6. MyGov

  • MyGov is an online citizen engagement platform that allows citizens to participate in policy-making and Governance through their suggestions and feedback on various government initiatives and programs.

G2B or Government to Business Initiatives

1. MCA21

  • Ministry of Corporate Affairs 21, or MCA21, allows electronic filing as well as retrieval of documents such as company registration and compliance certifications.

2. e-Biz Portal

  • It is a unified platform for various regulatory clearances and permits.
  • It has simplified the process of starting and operating businesses.

3. Government e-Marketplace (GeM)

  • GeM helps to ensure that public procurement of goods and services is carried out through the online platform. 
  • It promotes transparency & eliminates corruption. 
  • Helpful in easy auditing because it will leave an audit trail.

4. Goods and Services Tax Network (GSTN)

  • GSTN is the technology platform that is the backbone of the GST regime. 
  • It handles the registration under GST, filing and payment of GST, handling complex system of GST credits etc. 

5. e-NAM


6. Indiastack

  • IndiaStack is a collection of open APIs and digital public goods. 
  • API or Application Programming Interface allows two applications to interact with each other. 
  • IndiaStack includes APIs of Aadhaar, Unified Payment Interface (UPI), DigiLocker, Aarogya Setu, eSanjeevani, UMANG, DIKSHA, etc. 
  • Software makers can use these APIs in their software to utilize their functionality. E.g., UPI API is used by Banking Applications of various banks.


  • e-Governance is seen more as computerization & office automation rather than as a means to transform citizens from passive to active participants in Governance.   
  • Digital Divide: According to INDIA INEQUALITY REPORT 2022 by Oxfam, there is a huge digital divide in India. For instance, 61% of men-owned mobiles in contrast to 31% of women  
  • Funding for these programs is short in comparison to the huge ambitions we have placed on these schemes. 
  • Privacy & No Data Protection Law (Legal Vacuum): Aadhar information & other records are to be used, but there is no law to ensure privacy. 
  • The quality of local content is not good. Most portals aren’t user-friendly.  
  • No special programs to make the public aware of these programs.  
  • A status-quo attitude of the government departments: Despite a push for e-governance initiatives, many government departments continue insisting upon physical forms and signatures. 


According to Kentaro Toyama, formerly Microsoft India’s CEO, IT intervention has a limited impact on developmental outcomes when political will is absent. It is because technology can only be the ‘force multiplier’; it is not the force itself. The positive intent must originate in politics and motivate the bureaucracy to deliver on its mandate.

Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Government policies and interventions for development in various sectors and issues arising out of their design and implementation

This article deals with ‘Government policies and interventions for development in various sectors and issues arising out of their design and implementation.’ This is part of our series on ‘Governance’ which is important pillar of GS-2 syllabus . For more articles , you can click here.

How is Policy Made?

Policy Making involves various stages 

  • Problem Definition: In this stage, policymakers identify and define a particular issue or problem that requires attention and action from the government. 
  • Agenda Setting: Once a problem has been defined, it should be placed on the political agenda for consideration and action. Agenda setting involves determining which issues receive attention and priority from policymakers. This stage often involves debates, lobbying, advocacy efforts, and the formulation of policy proposals.
  • Policy Development: In this stage, policymakers and relevant stakeholders work together to formulate potential policy solutions or approaches to address the identified problem. 
  • Implementation: Once a policy has been developed, it needs to be put into action. Implementation involves the actual execution of the policy, including the allocation of resources, the establishment of procedures and guidelines, the coordination of various stakeholders, and the enforcement of regulations. 
  • Policy Evaluation: After a policy has been implemented, evaluating its effectiveness and impact is essential. Evaluation can involve collecting and analyzing data, conducting research, measuring key indicators, and soliciting feedback from stakeholders and affected communities. The findings from policy evaluation provide valuable insights for policymakers to determine if adjustments, modifications, or alternative approaches are necessary to improve the policy or address any shortcomings.
Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Different Types of Policy Implementations

Policy implementation is the fourth stage of the Policy cycle in which adopted policies are put into effect. 

Different Types of Policy Implementation

Policy Implementation 1.0

  • It is the ability to deliver a standard product or carry out a standard procedure across the country. 
  • It can work well when one size fits all— the same dose of the same polio vaccine, the same procedure for voting, the same identity card etc. 
  • India has already proved its mettle in this area. For example – conducting the world’s largest election, ADHAAR project, 100% coverage of UIP (Universal Immunization Program), etc. 

Policy Implementation 2.0

  • In addition to carrying out the standard procedure, it also entails a change in behaviour. This policy implementation depends not solely on administrative actions but also on fostering behavioural change among the target population.  
  • The best example is the Swachh Bharat Abhiyan (Clean India Campaign). Here, the challenge was not limited to the construction of toilets and infrastructure; it also required a fundamental shift in societal norms and individual behaviours related to sanitation.

Policy Implementation 3.0

  • It requires coherence amongst many policies, coordination among many agencies, and cooperation of many stakeholders. The successful execution of a policy often relies on its alignment and integration with other related policies to ensure a comprehensive and harmonized approach to addressing societal challenges.  
  • For example, the Industrial Policy of 1991 requires Policy 3.0 competencies. Implementing the Industrial Policy of 1991 necessitated a comprehensive approach that considered the interconnectedness of various policies, ensuring their compatibility and coherence to drive economic growth and development.

Why is there bad policy formulation, design & implementation? 

Excessive fragmentation in thinking and action

When multiple departments or ministries are responsible for addressing different aspects of a particular sector, it can lead to challenges such as lack of coordination, conflicting objectives, and duplication of efforts. For example, 

  • Five departments/Ministries in India deal with the transport sector, whereas in the US and UK, it is a part of one department. 
  • Environmental protection in India involves multiple ministries and departments, including the Ministry of Environment, Forest and Climate Change, the Ministry of Water Resources, River Development and Ganga Rejuvenation, and the Ministry of Power.

Excessive Overlap between Policymaking and Implementation

  • Those who formulate are themselves involved in implementation. Hence status-quo or a minimum amount of changes are presented in the new policy. E.g., In the education sector, policymakers who formulate education policies often include officials from the Ministry of Education and other relevant government bodies. However, these policymakers are also responsible for implementing the policies they create. This overlap can result in limited innovation and transformative changes in the education system. 

Lack of Non-governmental Inputs and Informed Debates

  • In India, policymakers exclude or marginalize inputs from non-governmental actors, such as NGOs and civil society organizations. Hence, the resulting policies may fail to adequately address the needs, perspectives, and concerns of the affected communities. For example, in the formulation of public health programs, the exclusion of NGOs working with marginalized communities can result in policies that inadequately address their specific health challenges. 

Lack of Evidence-based Research

In India, the policies are often developed without a robust foundation of empirical data, analysis, and research, leading to suboptimal outcomes. E.g.,

  • Implementing the National Health Insurance Scheme (Ayushman Bharat) faced challenges due to a lack of evidence-based research. While the intent was to provide health coverage to economically vulnerable populations, the design and implementation of the scheme encountered issues related to inadequate infrastructure, limited healthcare provider networks, and low awareness among beneficiaries. Insufficient research on existing healthcare systems, demand patterns, and cost projections hindered the effectiveness of policy implementation and limited the scheme’s impact.

Politically Motivated policies

Politically motivated policies can lead to inadequate policy formulation, flawed design, and suboptimal implementation in India. These policies are driven primarily by political considerations, such as electoral gains or appeasing specific interest groups, rather than being based on sound evidence, expert advice, or the long-term welfare of the nation. E.g., 

  • Agriculture Sector: The introduction of populist measures like loan waivers and high minimum support prices (MSP) for crops, without considering market dynamics or fiscal sustainability, can distort market forces, create inefficiencies, and burden the government finances. 
  • Education Sector: The introduction of reservation quotas in educational institutions based solely on political calculations rather than the principles of merit and equal opportunity can undermine the quality of education and compromise the overall academic environment. 
  • Infrastructure Sector: Projects driven by electoral considerations rather than economic viability can result in poor planning, cost overruns, delays, and inadequate infrastructure quality. 

Centralized Policy Making

Centralized policy making, which follows a one-size-fits-all approach, can lead to challenges in policy formulation, design, and implementation in India. This approach overlooks the diversity of contexts, needs, and challenges across the country’s different regions, sectors, and communities. E.g.,

  • uniform Minimum Support Price (MSP) for crops across the country does not account for variations in production costs, market dynamics, and local demands, leading to unequal benefits and discontent among farmers.
  • Centralized educational policies, such as uniform curriculum frameworks or standardized assessments, may not align with the specific needs and aspirations of students and communities in different states or regions. 

Insufficient Capacity and Expertise

Effective policy formulation and implementation require skilled personnel, adequate resources, and institutional capacity. Limited technical expertise and a lack of capacity-building initiatives can impede the implementation of policies. For example

  • Implementing the Continuous and Comprehensive Evaluation (CCE) system in schools faced challenges due to a lack of trained teachers, resulting in inconsistent implementation and ambiguity in assessment practices.
  •  Implementation of Crop Insurance Schemes has faced difficulties due to limited awareness among farmers, inadequate risk assessment capabilities, and challenges in timely claim settlements.
  • Implementation of pollution control measures in industrial sectors has been hampered by limited expertise in monitoring and enforcement.

Complex Procedures

  • Complex procedures in policy implementation can hinder the participation of individuals, especially those from disadvantaged backgrounds. 
  • According to a World Bank report, when schemes are designed with intricate procedures that require poor individuals to visit offices, fill out forms, and navigate complex rules, their participation decreases significantly, often to as low as 10%. However, when these schemes are revamped and local officials, such as Asha workers or postmen, go door-to-door to implement them, participation increases substantially, reaching as high as 70%.

Fear of Unknown

  • The fear of the unknown, particularly prevalent among individuals with limited resources, can contribute to challenges in policy formulation, design, and implementation in India. This fear stems from the constant worry about potential financial loss and the inability to absorb setbacks.
  • Due to their precarious financial situations, individuals with limited resources may prioritize immediate gratification over long-term investment. Individuals with limited resources may not show significant interest in schemes designed to promote financial inclusion. Despite the potential long-term benefits of financial inclusion, immediate concerns and the need for immediate gratification take precedence for these individuals.
  • Programs focused on skill development and vocational training may struggle to attract individuals from economically disadvantaged backgrounds. The fear of investing time and resources in acquiring new skills without a guaranteed immediate return on investment can discourage participation, hindering the effectiveness of such initiatives.
  • Addressing the fear of the unknown and aligning policies with immediate needs and concerns can contribute to better policy formulation, design, and implementation in sectors aiming to uplift the economically disadvantaged population.

Social Dynamics and Obligations

Policies must be formulated and implemented while keeping in mind the social dynamics and obligations that influence the behaviour and decision-making of the poor. When policies are formulated, designed, and implemented without considering these factors, they might not work. E.g., 

  • In rural India, where agriculture is a predominant occupation, poor farmers often face pressures to conform to social expectations. It can influence their cropping decisions and practices. For instance, if a farmer chooses to cultivate a crop that differs from what their neighbours or relatives cultivate, they may face the risk of crop theft or vandalism. 
  • Microfinance plays a crucial role in providing financial services to the poor, especially in rural India. However, some poor individuals may take microfinance loans not necessarily because of their dire need for cash but to signal their relatives and neighbours that they do not have spare money. This stems from the social obligation to help others in times of need, even if it means taking on debt. If policymakers fail to recognize this underlying motivation, it can lead to misinterpretation of the actual financial needs of the poor and the effectiveness of microfinance interventions. 

How to Address these issues?

  • Enhanced Interdepartmental Coordination: Establish mechanisms and platforms for improved coordination and communication among the relevant departments and ministries. This can include regular meetings, joint task forces, and the sharing of information and resources. 
  • Stakeholder Engagement and Consultation: Involve relevant stakeholders, such as civil society organizations, industry representatives, and affected communities, in the policymaking and implementation processes. Their perspectives and expertise can contribute to more comprehensive and balanced decision-making.
  • Separation of Roles: One approach is to establish a clear separation between policymakers and implementers. Policymakers should primarily focus on formulating effective and innovative policies, while implementers should be responsible for executing those policies. 
  • Enhancing Stakeholder Engagement: Policymakers should actively engage and involve non-governmental actors, including NGOs and civil society organizations, in the policymaking process. This can be achieved through regular consultations, open dialogues, and structured platforms for meaningful participation. 
  • Strengthen Research Infrastructure: Invest in building robust research infrastructure, including research institutions, think tanks, and universities, equipped with the necessary resources, expertise, and technology to conduct empirical studies. This will facilitate the generation of reliable data and evidence to inform policy decisions.
  • Decentralization and Regional Autonomy: Introducing decentralization in policymaking allows for greater regional autonomy and decision-making power at the local or state level. This enables policies to be tailored to the specific needs, contexts, and challenges of different regions. 
  • Enhance Training and Capacity Building: Implement training programs and capacity-building initiatives to equip personnel involved in policy implementation with the necessary skills and knowledge. This could involve conducting workshops, seminars, and specialized training sessions to enhance technical expertise and understanding of policy objectives. 
  • Simplify Procedures: This can include reducing paperwork, eliminating unnecessary bureaucratic steps, and streamlining the application process. By making procedures more straightforward and user-friendly, individuals are more likely to participate.
  • Societal Understanding: Policymakers need to develop a comprehensive understanding of the social dynamics and cultural norms that shape the behaviour and decision-making of the target population. It requires conducting thorough research, engaging with local communities, and consulting experts or social scientists who possess knowledge of the specific context. By gaining insights into the social pressures, expectations, and obligations faced by the poor, policymakers can design policies that align with these realities.

Regulatory Bodies in India

Last Update: June 2023 (Regulatory Bodies in India)

Regulatory Bodies in India

This article deals with ‘Regulatory Bodies in India.’ This is part of our series on ‘Governance’ which is important pillar of GS-2 syllabus . For more articles , you can click here.


Regulatory Bodies in India
  • The regulatory body is an organization set up by the government to monitor, guide and control a particular sector, such as banking, insurance, education or healthcare.
  • It is in contrast to laissez-faire which demands an entirely unregulated/free economy. But since we know the perils of a completely free market economy, regulation, up to a certain extent, is very much desirable. 
  • After Liberalization and Privatization, the state’s role changed to rule-maker and regulator. With this, we saw the emergence of a special category of regulatory systems, i.e.,  Independent Statutory Regulating Agencies. 

Need of Regulation

In the case of Natural Monopoly

  • A natural monopoly is a condition when an entire market is more efficiently served by one firm than by two or more firms. 
  • In the case of a natural monopoly, regulation is necessary to protect consumer interests, control prices, and ensure the quality of service, as there is no competition in the market.
  • In India, the sectors such as transmission and distribution of electricity and railways are still natural monopolies.  

Asymmetric Information

  • It is a situation when one party has more information than another. In India, asymmetric information is a significant reason for government intervention.
  • For example, In many sectors, like healthcare, insurance, and financial services, consumers may not possess the same expertise as service providers. Hence, regulation helps protect consumers by mandating disclosure requirements, ensuring transparency, and setting product quality and safety standards. 

Presence of Externalities

  • Negative externalities refer to the costs or harms imposed on third parties not directly involved in a transaction or activity. When negative externalities exist, market forces alone may not be adequate to address the issue. In India, regulation is often implemented to address negative externalities in various sectors. 
  • For example, Industries or activities that generate pollution or degrade natural resources often impose negative externalities on the environment and surrounding communities. India has implemented regulations governing air and water pollution, waste management, and environmental impact assessments to mitigate these externalities. 

Check Anti-Competitive practices 

Detecting and preventing anti-competitive practices is a crucial reason for regulation in India. For example, 

  1. The regulation targets cartels and collusive behaviour, where competitors engage in agreements to fix prices, allocate markets, or rig bids, aiming to restrict competition and maximize their profits. 
  2. Regulatory bodies monitor and address cases where a dominant firm exploits its market power to restrict competition, drive competitors out of the market, or engage in predatory pricing.
  3. Regulations govern mergers, acquisitions, and combinations that have the potential to reduce competition significantly. 

Promote Public Interest

  • Government regulations are implemented to safeguard the welfare, rights, and well-being of the general public.

Categories of Regulation in India

Regulation in India can be mapped under three broad categories: economic regulation, regulation in the public interest and environmental regulation. 

1. Economic Regulation

  • Economic regulation aims at preventing market failure. 
  • It is achieved by punishing market-distorting behaviour.
  • Examples include the Competition Commission of India (CCI), which addresses anti-competitive practices, and the Telecom Regulatory Authority of India (TRAI), which regulates the telecommunications sector.

2. Regulation in Public Interest

  • Public health and safety regulations aim to protect individuals and communities from health risks, hazardous substances, and unsafe practices. E.g., the Bureau of Indian Standards (BIS) sets quality and safety standards for various products  

3. Environmental Regulation

  • Regulations on environmental protection focus on conserving natural resources, preventing pollution, and promoting sustainable development. 

Reasons for the Proliferation of Regulatory Bodies from the 1990s

  • To Sustain Market Economy: The market economy demands competition. Regulatory Bodies were made to ensure a level playing field. 
  • To Attract Foreign Investment: Regulatory Bodies were made to ensure Foreign Investors that Populistic considerations will not guide decisions. 
  • After LPG, the capacity of states to answer various business problems was limited. Bureaucracy failed to answer many questions related to emerging sectors. Hence, the government decided to rope in Technocrats via Technocratic Regulators. 

Issues related to Regulatory Bodies in India

Based on the recommendations of the Damodaran Committee (formed in 2012 when the World Bank ranked India 132 on Ease of Doing Business) and the 2nd Administrative Reforms Commission.

1. Independence

Functional independence of Regulatory Bodies is curbed by the dependence of regulators on concerned line ministries for 

  • Regulatory bodies in India face financial constraints as their budgets and resources are subject to approval by the government.
  • The lack of transparent and merit-based appointment processes can undermine the independence and credibility of regulatory bodies.
  • Political pressure on regulators can impact their ability to make impartial and unbiased decisions, particularly in cases involving influential individuals or corporations.

2. Over-Regulation

India is an over-regulated country, but many of the regulations are  not implemented in the right earnest due to complex procedures & outdated regulations.

  1. RBI has been criticized for over-regulating the banking sector with numerous regulations, including stringent capital adequacy requirements, lending restrictions, and extensive reporting obligations.
  2. Real Estate Regulatory Authorities (RERAs) were established to regulate real estate and protect the interests of the homebuyer. But they have imposed excessive burdens by imposing excessive paperwork, multiple approvals, and delays in project clearances.

3. Regulatory Gaps

Regulatory gaps refer to deficiencies or shortcomings in existing regulations or the absence of regulations in certain areas. For Example

  1. Sectors like e-commerce face challenges in ensuring consumer rights, addressing grievances, and holding businesses accountable for unfair practices.
  2. Although the financial sector is regulated by various authorities, including the RBI and SEBI, regulatory gaps exist in areas such as fintech and shadow banking. 

4. Accountability

In India, there have been instances where regulatory bodies have faced criticism for a perceived lack of accountability. 

  1. SEBI has faced criticism for handling several high-profile cases, where it was perceived to have failed to ensure accountability. For example, the case of the Satyam Computer Scandal of 2009 revealed significant gaps in SEBI’s oversight, where it failed to detect the financial irregularities in Satyam’s accounts.
  2. Reserve Bank of India’s accountability has been questioned due to cases such as the Punjab National Bank (PNB) fraud involving unauthorized transactions worth billions of rupees.
  3. Central Board of Film Certification (CBFC) has faced criticism for delays in certification, leading to debates on the infringement of creative freedom and the need for greater accountability of the CBFC.

5. Regulator vs Executive

  • Executive tries to encroach space given to regulators to enforce populistic agendas  
  • E.g., Electricity Sector, where State Governments try to keep charges low to keep consumers, and farmers lobby happy 

6. Overlapping functions

In India, regulatory overlap between different regulators can sometimes occur due to the complex nature of the regulatory landscape. For example

  • Competition-related Regulation: The Competition Commission of India (CCI) and sector-specific regulators, such as the Telecom Regulatory Authority of India (TRAI) or the Securities and Exchange Board of India (SEBI), may encounter areas of regulatory overlap.
  • Financial regulation: There can be overlaps in financial regulation between different regulatory bodies such as the RBI, SEBI), IRDAI), and PFRDA.

7. Lack of Transparency

There is a lack of transparency in regulatory bodies in India

  • The Environmental Impact Assessment (EIA) process, which assesses the potential environmental impacts of projects, suffers from a lack of transparency due to non-disclosure of project-specific information, limited public participation, and inadequate dissemination of environmental impact assessment reports. 
  • Central Electricity Regulatory Commission (CERC) has faced criticism for its lack of transparency in its functioning, such as non-disclosure of tariff-related information, limited access to relevant data, and insufficient transparency in decision-making processes. 

Ways to Improve Regulatory Bodies

  • Regulate where necessary and don’t over-regulate the sector because it chokes development (2nd ARC).
  • 2nd ARC has given 5 Principles on which Regulatory Mechanism should be based. These include
    • Simplicity
    • Objectivity
    • Transparency
    • Convergence
    • Speedy Disposals
  • Regulatory Impact Assessment (RIA) of every proposed regulation should be carried out
  • Ensure independence of regulatory bodies
  • Self Regulation is the best form of regulation. E.g. the News Broadcasters and Digital Association is an industry-led regulator regulating current affairs and news broadcasts.
  • Still, many sectors are under the regulation of State Departments—E.g., DGCA under Civil Aviation Ministry. Government should move towards Independent Statutory Regulators for all non-strategic sectors.
  • There should be constant interaction between Regulators and Policy makers and Regulators and other stakeholders so that regulators are aware of the concerns of stakeholders and also the regulator can explain the rationale of various regulatory decisions.
  • Introducing Multi-Sector Regulators:  The government should establish multi-sector regulators for sectors like communications; transport; electricity, fuels and gas. It would eliminate the proliferation of regulatory commissions. Even Justice BN Srikrishna Commission (also known as Fiscal Sector Legislative Reforms Commission (FSLRC)) has recommended to form the Unified Financial Agency (UFA), which will subsume the functions of SEBI, IRDI and PFRDA.

Example: Good Regulator vs Bad Regulators

For a regulator to work independently, it must be independent of the Executive, Pressure Groups, Industrial Lobbies etc., which can pressurize them to get favourable outcomes 

Example of Bad Regulators

  • Forward Market Commission (FMC): FMC regulated Commodity Markets but couldn’t stop NSEL Scam. Hence, it was dissolved by the government.
  • MCI (Medical Council of India): Its Chairman, Ketan Desai, took bribes to grant clearance to medical colleges.
  • Nuclear Safety Regulatory Authority (NSRA): NSRA falls under the Department of Atomic Energy. But the Promoter of any sector can’t be its Regulator. 
  • FSSAI: In 2015, FSSAI banned the sale and production of Nestle Maggi due to alleged excessive lead content and mislabeling of MSG (monosodium glutamate). However, later, the Bombay High Court overturned the ban, stating that FSSAI had failed to follow proper testing procedures and acted arbitrarily.

Examples of Good Regulators

  • RBI: It has played a crucial role in maintaining monetary stability, safeguarding financial stability, and ensuring the integrity of the financial system. 
  • TRAI: It has protected Mobile Customers against Mobile Companies by ensuring competition and regulating tariffs.
  • Competition Commission of India: CCI broke the cartelisation of cement companies 
  • SEBI: SEBI managed the Security Market well (in stark contrast to FMC)

In questions about the Independence of Regulators is necessary to regulate the sector effectively; give examples of both good and bad regulators. Don’t just stick to bad ones. 

Important Regulatory Bodies (Prelims Point of view) 

IRDA Regulator of the Insurance Sector   
SEBI Regulator of Equity Market   
CCI To check monopolistic tendencies in the market  
TRAI Regulator of the telecom sector   
CERC Central Electricity Regulatory Commission was under the Electricity Act of 2003 to regulate the sector in India.  
FMC Forward Market Commission (FMC) was the Regulator of the Commodity Market 
It was dissolved in 2015. Now the Commodity market is regulated by SEBI   
FSSAI FSSAI regulates the Food Safety and Standards in India
It establishes food safety standards for various categories of food products, permissible levels of contaminants, labelling requirements, food additives, packaging, and hygiene practices.

Self Help Groups (SHGs) – UPSC Notes

Last Updated: May 2023 (Self Help Groups (SHGs) – UPSC Notes)

Self Help Groups (SHGs) – UPSC Notes

This article deals with ‘Self Help Groups (SHGs) – UPSC Notes.’ This is part of our series on ‘Governance’ which is important pillar of GS-2 syllabus . For more articles , you can click here


SHGs are an association of people(20-30 persons, primarily women, from similar socio-economic backgrounds) who choose to come together (either on their own or organized by outside Institutions like NGOs) to find ways to improve their living conditions. They help build social capital by providing mutual support, encouraging savings, and promoting entrepreneurship among their members. 

Self Help Groups (SHGs) - UPSC Notes

Success stories include ​Kudumbashree in Kerala, Jeevika in Bihar, Mahila Arthik Vikas Mahila Mandal in Maharashtra, and recently, Looms of Ladakh.

Functions of SHGs

 The main functions of SHGs are

  • Financial Inclusion: SHGs encourage savings and provide access to small loans and credit facilities. Members pool their savings, which are then used to provide loans to members at affordable interest rates. 
  • Skill Development and Capacity Building: SHGs focus on enhancing the skills and capacities of their members by providing training and support in various areas
  • Empowerment and Social Support: SHGs create an environment where individuals (particularly women) can share their experiences, discuss issues, and collectively find solutions. 
  • Collective Bargaining: SHGs enable members to negotiate collectively with various stakeholders, such as banks, suppliers, and local authorities. 
  • Social Capital to solve livelihood problem: Social Capital is the network of relationship among people living and working in a particular society, enabling that society to function effectively. Self Help Groups use the concept of Social Capital to solve the problem of livelihood and income generation by organizing the poor and marginalized people to come together to solve individual problems. They do this by pooling their resources, creating a common fund to make small interest-bearing loans among themselves.

How are SHGs formed?

Most of the SHGs have come through the help of mentor bodies (either government or NGO), which provided initial information and guidance to them.

  1. Identification of Potential Members: The first step is identifying individuals willing to join and participate in an SHG. 
  2. Formation Meeting: Once potential members are identified, a formation meeting is organized. This meeting serves as a platform to explain the concept, purpose, and benefits of an SHG.
  3. Group Formation and Membership: During the formation meeting, interested individuals formally express their commitment to forming an SHG. They agree to abide by the group’s rules and regulations and actively participate in its activities. 
  4. Group Registration (Optional): SHGs have the option to register themselves formally under various government schemes, programs, or society acts.
  5. Regular Meetings and Activities: Once the SHG is formed, regular meetings are held at a mutually agreed frequency, such as weekly or monthly. These meetings serve as a platform for members to discuss and plan their activities, share experiences, address issues, and make collective decisions. 
  6. Savings and Internal Lending: A crucial aspect of SHGs is promoting savings and internal lending. Members contribute a predetermined amount of money as savings during each meeting. These savings are pooled together and kept as a common fund, which can be used for internal lending within the group. 
  7. Capacity Building and Linkages: SHGs often collaborate with NGOs, government agencies, or other stakeholders to access training programs, skill development initiatives, market linkages, and government schemes.

Evolution of Self Help Groups in India

The Self-Help Groups (SHGs) in India have developed over the span of several decades, with the following significant milestones.

1954 The first initiative came from GujaratTextile Labour Association (TLA) of Ahmedabad formed its women’s wing to organize & train the women belonging to households of mill workers in primary skills like sewing, knitting, embroidery, typesetting and, stenography etc.  
1970s The MYRADA (Mysore Resettlement and Development Agency) in Karnataka initiated the formation of village-level savings and credit groups with the objective of ending poverty, which later evolved into SHGs
1980s NABARD introduced the concept of SHGs as a strategy for financial inclusion and rural development.  
1988 Kudumbashree Program was started in Kerala  
1990s NABARD launched the SHG-Bank Linkage Program in 1992 to provide formal banking services to SHGs.  
Present Presently, various SHGs are successfully working in diverse sectors. E.g., 
1. Prerna Canteens in Uttar Pradesh running community kitchens
2. Aajeevika Farm Fresh in Jharkhand selling vegetables online
3. Gamusa Masks in Assam produced masks during Covid
4. Floating Supermarkets in the backwaters of Kerala

Case Study: Kudumbashree Program

Kerala Government launched Kudumbashree Program for poverty eradication and women’s empowerment in 1998, which translates to “prosperity of the family” in Malayalam.

Kudumbashree Program

SHG-Bank linkage Program

Earlier Issue

SHG Movement was mainly started in the 1980s with the help of NGOs which wanted to provide alternate models of Credit Services to the poor. All the members of SHG were saving and anybody in the group who wanted the money could take out money from that collective savings at a nominal interest rate. 

But these groups comprised poor women. Their savings were low & hence, members cant get large loans. As a result, linking SHGs with banks was necessary, which could provide credit in multiple of savings of the SHG.

Main feature of the loans under SHG – Bank Linkage Program 

  • Lending is to the group as a whole.
  • The group decides how to use loan without outside interference 
  • Lending is without any collateral
  • SHGs have to practice the ‘Panchasutra’, i.e. regular meetings, savings, regular inter-loaning, timely repayment and updated account books to avail of loans from banks.
  • The loan is in Multiple of the savings. For groups having a good credit history, this can be up to 1:4 wrt their savings. Hence, they can get loans as large as 4 times their savings without collateral. It was the major turning point in the whole movement. 
  • NABARD refinances the banks for this project. It is the money of NABARD that these banks give to SHGs. 

Models of SHG-Banking Linkage

  • In the first model, Banks give loans to NGOs or some Microfinance Institutions, and these NGOs and MFIs lend this money to SHGs. Banks provide loans to MFIs at commercial rates, and these MFIs / NGOs charge around 24% so that they can make their administrative costs out of the difference
  • In the second model, NGOs act as facilitators between SHGs and Banks and charge 6% of the loans given by Banks to SHGs as their commission (to make up their administrative charges)
SHG-Bank linkage Program

How does making groups help?

  • SHG work as a collective guarantee system for members who propose to borrow from organized sources. As a result, commercial banks and other institutions which otherwise are not receptive to the demands of marginalized individuals start considering such groups as their potential customers. 
  • The loan is issued in the name of SHG & not to a particular person. Hence, it is the collective responsibility of the group to repay that loan. It is the main reason the repayment rate is very high in SHG loans. If the person is not paying, extreme peer pressure works in that situation 

Fodder to be used in answers: NGOs involved in SHG Movement

SEWA Ahmedabad
MYRADA  Karnataka
PRADHAN Rajasthan
DHAN foundation, Janodaya,  Cohesion Foundation, Jan Chetna Sansthan Other prominent NGOs in this field

Steps taken by Govt. to promote SHGs

SHG Bank Linkage Program

  • Discussed above

Village Poverty Reduction Plan

  • All the SHGs are involved in the preparation of Village Poverty Reduction Plans 

StartUp Village Entrepreneurship Program (SVEP)

  • It is a component of the Deen Dayal Upadhaya National Rural Livelihood Mission.
  • The program helps SHG members to setup non-farm enterprises at the village level.

SHG & Empowerment of Women 

In rural India, where the wind of development is yet to reach, farm labour is the primary employment for women, but this doesn’t fulfil all their needs. Hence, participation in SHG helps them in saving some money out of their daily household expenses & can also avail of loans with lower interest which has the potential to  change the situation

1. Social Empowerment

  • Members of SHG are mainly women. They can save money & invest in SHG & can use it in time of need. With money in hand, they get status in their family & this increases their self-confidence & esteem. 
  • SHGs discuss women-centred issues which help them in gaining social security. 

2. Political Empowerment

  • SHGs gave women a taste of leadership which they had never experienced earlier and gave them the aspiration to become leaders of society. 
  • Also, SHGs organized women, and they started acting as local pressure groups for and against particular candidates.

3. Social Justice

  • SHGs have taken up issues like domestic violence, bigamy, dowry deaths, prevention of child marriage, support for separated women to remarry etc.

4. Financial Inclusion

  • SHG program has contributed to reduced dependency on informal money lenders & other non-institutional sources 
  • This financial inclusion has led to increased spending on the education of children, lower drop rate, reduction in child mortality, improved maternal health & ability of the poor to combat diseases through proper nutrition. 
  • Due to loans, they have managed to come out of poverty. With these loans, women started small businesses, bought dairy animals, or helped their husbands start some work. It is argued that this program has played a most important and effective role in reducing poverty. 

5. Skill Development

  • SHGs often organize training programs to enhance the skills and capacities of their members. Women are trained in various areas, such as entrepreneurship, vocational skills, financial literacy, and leadership development.

Key Issues with SHGs

Although in a short span, a lot has been done, a lot needs to be done to make SHG a success story

1. Changing nature of SHGs today

  • After the SHG program’s success was shown to the world, the government decided to use it as a policy tool. But this changed the whole scenario. Now it has become a top-down approachBanks are given targets to give loans to SHGs, and these targets need to be met each financial year. Hence, Banks don’t check the quality of SHG work and provide loans to untrained groups. As a result, these SHGs aren’t able to pay back loans. Hence, due to the mistake of Banks and Authorities, questions are raised on the viability of projects nowadays.

2. Moral Hazards

  • Bankers have always warned that giving low-interest loans to people living in areas where getting a loan is difficult and the rate is higher can set in moral hazards where people who get loans at lower can start giving that loans to others at even higher rates. 
  • Since credit available is large and banks don’t bother to go and check whether the loan is used in a constructive way, people have indulged in this practice.

3. Giving credit is mean and not an end in itself

  • Banks and officials think that giving easy loans is an end in itself. But it is just a means to help these people come out of poverty and empower them.
  • Only a minority of the Self-Help Groups can raise themselves from a micro-finance level to that of micro-entrepreneurship. 
  • Hence, along with loans, the government should merge these schemes with skill development and entrepreneurship programs. The time has come to take this program to a higher level. 

4. Need to Expand (to urban areas & excluded states)

  • There is a need to extend small group organizations (SHGs) to peri-urban and urban areas. As per the existing statutory provisions, NABARD’s mandate is to provide micro-finance facilities only to rural and semi-urban areas. 

5. Financial Assistance to Self-Help Promoting Institution SHPI

  • 45% of women SHGs are situated in AP because of the initiative shown by promoter NGOs called SHPI. If we want SHG to spread throughout India, the SHPI model needs to be replicated in the whole of India. 

NGOs (UPSC Notes)

NGOs (UPSC Notes)

NGOs (UPSC Notes)

This article deals with ‘NGOs (UPSC Notes).’ This is part of our series on ‘Governance’ which is important pillar of GS-2 syllabus . For more articles , you can click here

What are NGOs?

According to the UN, NGOs are organizations that are not part of the government & are not conventional profit businesses. In case NGOs are funded totally or partially by governments, NGOs maintain their non-governmental status by excluding government representatives from membership in the organization. 

Other Names

  1. Third Sector Organizations (TSO) 
  2. Non Profit Organizations (NPO) 
  3. Voluntary Organizations (VO) 
  4. Civil Society Organizations (CSO) 
  5. Self-Help Organization (SHO)
  6. Non-State Actors 

Types of NGOs

NGOs can be classified in two ways

  1. By level of orientation 
  2. By level of operation 

By Level of Orientation

Charitable NGOs with activities directed towards meeting the needs of poor
Service NGOs with activities such as the provision of health, family planning or education
Empowering NGOs that aims to help the poor develop a clearer understanding of the social, political & economic factors affecting their lives and to strengthen their awareness about their own potential to control their life

By Level of Operation

National E.g. YMCA and YWCA
International E.g. Save The Children Org, CARE, Ford Foundation and Rockefeller Foundation


 Not a single model 

  • Some are highly professionalized & rely mainly on paid staff.
  • Others are based on voluntary labour and are less formalized. 
  • Many NGOs are associated with the use of international staff working in developing countries, but many NGOs in both the North and South rely on local employees. 


  • Major sources of funding are membership dues, the sale of goods and services, grants from international institutions, national governments & private donations
  • Even though the term NGO implies independence from governments, many NGOs depend heavily on governments for their funds. 
  • Some NGOs, such as Greenpeace, don’t accept funding from government or intergovernmental organizations.

The Theoretical Explanation for the growth of NGOs

Two explanations of why NGOs emerged

1. Market Failure Theory

  • NGOs emerged to provide services that the public sector can’t or will not provide services for which businesses can’t get a sufficient return on their investments. 

2. Contract Failure Theory

  • NGOs are created to provide services where the parties who want them offered are not in a position to provide these services. These parties are donors or well-wishers of clients receiving services.

Note: The Right to Association is Fundamental Right guaranteed under our constitution. Forming NGOs is part of it.

Relationship between NGOs and the Indian State 

State policies have significantly influenced the formation of NGOs, e.g. government-sponsored and aided programs & provided financial assistance to NGOs. In addition, several government committees have acknowledged the need to involve NGOs in social development processes.

Initial years

  • After independence, some attention was given to the NGO sector by the central government mainly because NGOs were Gandhian in nature, and Balwant Rai Mehta Committee was constituted to look into the work of the Community Development Program. The committee recommended that more emphasis should be laid on NGOs. But after that, the next initiatives came in the 1980s.

From the 6th Five-Year Plan

  • The government increasingly recognized the NGO sector’s vital role & provided increasing levels of funding. In the past two decades, the government has increased engagement with NGOs at all levels. 

GO- NGO Interface

  • It was launched in March 2000.
  • The Planning Commission was made the nodal agency.
  • The message was clear; the government would work with NGOs for the development of India.
  • The main reason for this was State Minimalism after LPG reforms. NGOs became mediators and managers of development processes. 

Government-NGO Collaborations

  • Although social development has emerged as a significant sector in the 21st century & NGOs are a vital part of it, there is no institutionalized mechanism of collaboration between the Government & NGOs. Evolving long-term & sustainable collaboration between Government & NGOs is the need of the hour.
  • Andhra Pradesh Model: The Government of Andhra Pradesh has formed a State Level Coordination Committee consisting of NGOs & Governmental officials headed by the CM to promote coordination between the Government and NGOs. All states must learn from this.  
  • CAPART (Council for Advancement of Peoples Action & Rural Technology) & various Ministries have evolved their schemes to be implemented by funding NGOs. For example
    1. Swachh Bharat Abhiyan: In Swachh Bharat Abhiyan, the government has partnered with NGOs like Sulabh International, Gram Vikas, and WaterAid to promote awareness, build toilets, and implement sustainable sanitation practices nationwide.
    2. National AIDS Control Program (NACP): The program works closely with NGOs like HIV/AIDS Alliance and Naz Foundation to provide HIV testing, counselling, treatment, and support services. 
    3. National Health Mission (NHM): NGOs like CARE India, Child in Need Institute (CINI), and Jan Swasthya Sahyog (JSS) collaborate with the government in implementing NHM interventions. 
    4. National Skill Development Mission (NSDM): NGOs like Pratham Education Foundation, Gram Tarang Employability Training Services, and Srijan Foundation collaborate with the government to implement skill development projects.
  • NITI Ayog also wants to involve leading Civil Society Organizations & NGOs in taking forward social sector initiatives of the government.

The role played by NGOs in India 

At the international level, the NGOs have proved their mettle and NGOs like Red Cross & Amnesty International are even awarded the Nobel Peace Prize. UN has also accepted its constructive role, and some NGOs are allowed to participate in UN Agencies for their ability to reach people and spread awareness. In India, too, they are playing an important role.

Poverty Alleviation

  • 22% of the Indian population lives below the poverty line (according to Tendulkar Committee Report)
  • NGOs are involved in poverty alleviation in various ways. For example,
    • Oxfam India: It works towards reducing poverty through advocacy, research, and campaigns focused on various social and economic issues.
    • Goonj: Goonj addresses the clothing and sanitation needs of marginalized communities.

Woman’s Movement

NGOs play an important role in women’s emancipation by addressing issues of gender inequalities and promoting women’s rights. For example

  • Self-Employed Women’s Association (SEWA): SEWA is a trade union and NGO that organizes and empowers self-employed women workers in the informal economy.
  • Breakthrough India: The NGO aims to end violence against women and girls in India.
  • Women on Wings: Women on Wings collaborates with rural women artisans and entrepreneurs in India, providing them with business mentoring and market linkages.

Environment Conservation

NGOs play an essential role in environment conservation by raising awareness, implementing conservation projects, advocating for policy changes, and collaborating with local communities. For example

  1. Greenpeace India: Greenpeace focus on climate change, pollution, and deforestation by conducting research, campaigns, and direct actions.
  2. Kalpavriksh: It works with indigenous communities in environmental conservation and promotes environmental education.

Disaster Management

  • NGOs have always been at the forefront of providing recovery, relief & rehabilitation after natural calamities. The government has also acknowledged NGOs’ role in these situations.
  • For example 
    • Goonj: It is an important NGO working in disaster rehabilitation processes 
    • Center for Science and Environment (CSE): It is involved in advocacy work on resilience and disaster risk reduction.
    • All India Disaster Mitigation Institute (AIDMI): It focuses on training and building the capacity of communities and local governments.

Fight against Corruption

NGOs have played an essential role in the fight against corruption in India. For example

  • India Against Corruption: It has played an important role in the passage of many laws most important being the Right to Information.
  • Transparency International India (TII): TII works to raise awareness about corruption, promote ethical behaviour, and advocate for strong anti-corruption laws by conducting research, engaging in policy advocacy, and facilitating public campaigns to combat corruption.  
  • Association for Democratic Reforms (ADR): It works toward increasing transparency in political funding, improving disclosure of candidates’ criminal records, and promoting voter awareness. 
  • 5th Pillar: 5th Pillar is a Chennai-based NGO known for its “Zero Rupee Note” campaign. They distribute these notes to citizens, encouraging them to use them as a symbolic way to express their refusal to pay bribes.

Giving Voice to the Voiceless

  • Downtrodden people like Prostitutes, Bonded Workers, Displaced due to projects, LGBT, Undertrials etc., don’t have such power that they can make political parties hear their voices. NGOs take up their causes and give voice to the voiceless.  
  • Bachpan Bachao Andolan Bandua Mukti Morcha are important NGOs working in this sector. 

NGOs as Pressure Groups

  • Working as pressure groups, NGOs have forced governments to act on juvenile Justice, end corporal punishment in schools, anti-trafficking, environment protection, and resettlement of displaced people, to name a few. 

Civil Servants, too, work as an agent of Economic and Social Development, but they don’t have a reach to the ground level in the way these NGOs have. If these NGOs & Bureaucracy work together, they can end all the problems like Naxalism, Poverty etc., that India is facing.

Strengths and Weaknesses of NGO Sector in India


  • Strong Grassroots Links: NGOs work closely with local communities, understand their needs, and develop context-specific solutions. 
  • Ability to Mobilize Resources:  The NGO sector in India has successfully mobilized funding from domestic and international sources, including governments, corporations, foundations, and individual donors. 
  • Ability to Innovate and Adapt: The NGO sector in India exhibits a culture of innovation and has pioneered new approaches, models, and technologies to address social challenges effectively. 
  • Collaboration and Networking: NGOs in India actively collaborate, forming networks and alliances to maximize their collective impact
  • Cost-effectiveness: NGOs operate with limited resources and are adept at optimizing their expenditure.
  • Long-term commitment to the cause


  • Limited finances: NGOs are known as an independent voice, but in recent years NGOs have increased in number & range of activities, but the number of donors hasn’t increased with that pace. Hence, there is large competition for funding. It adds the risk of donors adding conditions which can threaten the independence of NGOs. Additionally, Over-dependence of NGOs on official aid has the potential to dilute their stand to speak on public issues critically.
  • Fragmentation and Duplication of efforts: Numerous NGOs working on similar issues within the same geographical areas
  • Low levels of self-sustainability: Ensuring the long-term sustainability of programs is a significant challenge due to factors such as over-reliance on donor funding, difficulty in generating sustainable income streams, and limited integration of projects with government policies.  
  • Political interference: NGOs in India sometimes face political interference, mainly when they work on sensitive issues or criticize government policies. 
  • Capable of small-scale interventions only

Accountability & Transparency Issues in NGOs

  • India has 2 Million registered NGOs, but there is an accountability & transparency problem. Their credibility is questioned because there is a lack of transparency about their finances.
  • Main Problems include
    • NGOs are registered under multiple acts in India like Societies Registration Act,1860; Indian Trust Act,1882; Bombay Public Charitable Trust Act,1950 & Companies Act. Accountability requirements of all acts differ, with some not requiring any form of annual filing. 
    • NGOs are required to register annual returns with the Income Tax department, but annual returns filed by NGOs are not subject to public disclosure. 
    • While receiving Foreign funding, NGOs only need to inform Government of India and file annual reports to Home Ministry under FCRA and no public disclosure is required.

Hence, the statutory framework doesn’t require NGOs to be accountable directly to the Public. 

  • NGOs should build and regain lost public trust through better transparency in functioning. They can adopt the following.
    • External auditing  
    • Increased Information disclosure

Obstructionist Role of NGOs

NGOs running PIL Industry 

  • NGOs are tutoring victims to seek larger compensation when some development project runs on their land. They file bogus affidavits & PILs. 

Harming Internal Security 

  • They have a soft glove and apologist attitude towards Naxalites, Insurgents & Terrorists.
  • They force the government to repeal some acts like AFSPA, which can prove dangerous in some situations. 

Try to put Animal Rights above Human Rights 

  • Resulting in Street dog/monkey menace
  • Animal Right Activists NGOs vs Inconvenience to Public Issue 

They Cherry Pick Causes on Donor Priorities 

  • Initially, Chipko Movement was a success, but NGOs failed during Bhopal Gas Tragedy because foreign donors didn’t want to raise their voices against those companies. 
  • There is a particular scene that emerges when we see funding patterns from a particular nation and issues raised by NGOs who receive this fund. French Funded NGOs are soft on Maoists, German-funded are Anti-GM Crops, and US-funded are Anti-Coal. 

Intelligence Bureau Report (2014) also brought to the forefront the obstructionist role played by Foreign Funded NGOs and the loss of GDP to the tune of 2% happening due to their protests.

Further Reforms required

  • Need to shift from Protest to Pro-action Mode: This can be achieved by ensuring a ‘think-tank’ way of functioning & also providing alternative solutions.
  • Outcome Measurement: NGOs should use outcome-based approaches to evaluate the impact of their programs. 
  • Ethical Fundraising: NGOs should adhere to ethical fundraising practices and maintain transparency in their fundraising activities. 
  • Strengthening Governance: NGOs should adopt strong governance practices, like transparent decision-making processes, independent audits, and disclosure of financial information.      
  • Collaboration and Networking: NGOs should promote collaboration and networking among themselves to share best practices, resources, and knowledge.  

On the other hand, the government should also distinguish between activist & services provider NGOs.


  • Foreign Contribution (Regulation) Act,2010 replaced FCRA,1976 
  • The Act seeks to regulate the flow of foreign funds to voluntary organizations to prevent their diversion towards activities detrimental to the national interest. 
  • NGOs have to register under FCRA to accept foreign contributions & central government can deny certification under certain conditions. 
  • Organizations must renew FCRA certification every 5 years. Dormant accounts can be weeded out using this provision.
  • NGOs can receive these foreign contributions only through designated banks ( New Delhi Branch of SBI).
  • Further, the NGO has to report to the central government any foreign contribution within 30 days of its receipt, in addition to filing annual reports.
  • If any organization receive a foreign contribution of over ₹10 lakh in an instance, the bank concerned would immediately inform the government so that the source of such fund can be tracked. 
  • NGOs cant spend beyond 20% of their foreign funding on Administrative expenses. 


Last Updated: May 2023 (Minorities)


This article deals with ‘Minorities ’. This is part of our series on ‘Society’ which is an important pillar of the GS-1 syllabus. For more articles, you can click here.

Why do Minorities need protection? 

  • In democratic politics, it is always possible to convert a numerical majority into political power through elections. It makes minorities politically vulnerable. 
  • State Machinery, mainly under the majority community, can suppress religious or cultural institutions of minorities. 
  • In the Constitutional Assembly debates, Ambedkar described the minorities are an explosive force that, if erupts, can blow up the whole fabric of the state. The history of Europe bears ample and appalling testimony to this fact. 

Sachar Committee  Recommendations

Main Recommendations

  1. Set up an Equal Opportunity Commission  
  2. The delimitation procedure should not reserve constituencies with a high minority population for Scheduled Castes.  
  3. Increase employment share of Muslims
  4. Work out mechanisms to link madrasas with the school board.  
  5. Recognise degrees from madrasas for eligibility in defence, civil and banking examinations.  

Population of different Religious Groups

The population of various religious groups in India is as follows.

Population of different religious groups

Although the Muslim population has increased, but the reason is low socio-economic development. Sachar Committee estimated that Muslims’ proportion will rise from 18% to 21% by 2101 under different scenarios. 

States with the highest percentage of Muslims include J&K (67%), Assam (30.9%), West Bengal (25.2%), and Kerala (24.7%). 

School Education of Minorities

  • The educational Status of Muslims is marginally higher than SC/ST.
Population composition of Minorities
  • Contrary to the common belief that a large number of Muslim children attend madrasas for primary education, only 4% of Muslim children among the school-going age go to madrasas.  
  • Instead, many Muslim children are enrolled in Maktabs, which provide supplementary religious education to children enrolled in public schools.  

Job Share

Job Share of Muslims in any government job is not near their population proportion

Job Share of Muslims

Schemes for  Minorities


  • USTAAD Scheme is used for skilling minority artisans.
  • The scheme primarily focuses on arts like Kashmiri embroidery, Bengali jardosi, Sikh phulkari embroidery, Buddhist Thangka paintings etc. 

Nai Manzil

  • Nai Manzil is used for skilling the Madrassa passouts with skills such as computer education, English speaking etc. so that they can join the mainstream.


  • Udaan Scheme is used for skilling J&K youth.

Sikho aur Kamao

  • Under the scheme, a person belonging to Minority Community can get computer knowledge, tailoring skills etc. from Private institutions and the Government to reimburse that institution. 

Nai Roshini Yojana

  • Nai Roshini Scheme is used for generating Leadership among Minority Women.

Garib Nawaz Skill Development Centres

  • Under the scheme, the Skill Development Centres will be established in 100 districts.
  • Employment-oriented skill development courses of short term (2 to 6 months) in fields such as mobile and laptop repairing, security housekeeping training, etc., will be given to minority students.

Jiyo Parsi

  • Jiyo Parsi is a scheme focussed on Parsi Community.
  • Need of the Scheme: The population of the Parsi community in India declined by 50% in the last 60 years.
  • Objective: To increase the Total Fertility Rate of the Parsi community.

Issue of Poverty

Last Updated: March 2024 (Issue of Poverty)

Issue of Poverty

This article deals with the Issue of Poverty.’ This is part of our series on ‘Governance’ and ‘Economics’ series, which is an important pillar of the GS-2 and GS-3 syllabus respectively. For more articles, you can click here.

Poverty is the worst form of violence- GANDHI


What is Poverty?

Poverty is a social concept which results due to unequal distribution of benefits of socio-economic progress.

How does it manifest itself?

Poverty manifests itself in the following ways

  • Hunger & Malnutrition
  • Lack of access to education and health care
  • Social Discrimination
  • Lack of participation in decision making

World Bank definition

World Bank defines extreme and moderate poverty in the following way

Extreme poverty Living on less than $ 1.25 per day.
Moderate poverty Living on less than $ 2 per day.

Note – Poverty is measured in Purchasing Power Parity(PPP) exchange rate & not absolute exchange rate.

A recent World Bank Report has shown that extreme poverty in India more than halved between 2011 and 2019 – from 22.5 per cent to 10.2 percent. 

Poverty Gap

Poverty Gap
  • It measures the Depth of poverty
  • It is also called Foster-Greer-Thorbecke (FGT) Index.

Engel’s Law

Engel Law states that when incomes rises, percentage of overall income spent on food items decreases. This is known as ENGEL’S LAW.

Engel's Law
Engel's Law

SDG & Poverty

  • Sustainable Development Goals gives utmost importance to poverty. The First SDG talks about ending poverty in all its forms everywhere by 2030.
SDG 1: End Poverty in all its forms everywhere by 2030
  • India is home to 26% of the global extreme poor. Hence, the Indian role in achieving that goal is most important.

Causes of Poverty

Economic Reason

  • Growth Model not conducive to poverty alleviation: India chose a capital-intensive model in a labour-intensive country, which was a great fault. 
  • Widespread reliance on agriculture (42% population is dependent on sector contributing 17% to the GDP)
  • Lack of formal institutional credit pushes a large number of Indians into poverty every year.
  • MATTHEW EFFECT:  The phenomenon, widely spread across advanced welfare states that the middle class tends to be the primary beneficiary of social benefits & services targeted to the poor (India is trying to rectify this using Targeted Delivery of Subsidy with the help of Jan Dhan-Aadhar-Mobile).   

Demographic Factors

  • Rapid Population growth in India is also the primary cause of poverty as enough resources were not available for all.

Social Cause

  • Caste system: The subordination of low caste people by the high caste people caused poverty of the former.
  • Joint family system: Joint Family System, followed by many families in India, provides social security to its members. As a result, some people take undue advantage of it and live upon the income of others. They become idlers. Their routine of life consists in eating, sleeping and begetting children.
  • Social Customs: Ruralites spend a large percentage of annual earnings on social ceremonies like marriage, death feasts etc., which force them to take debt and remain trapped in poverty.

Climatic Factors

  • Drought, Floods, Cyclones etc. perpetuate poverty.

Historical Factors

  • Historical reasons such as colonialism & imperialism led to the exploitation of Indian people. India’s wealth was drained to metropole Britain for two centuries. 

Institutional Factors

  • Withdrawal of Government from Social Security, especially after LPG Reforms.
  • Anti-poverty schemes are not successfully implemented due to institutional inadequacies.

Poverty Line

What is Poverty Line?

  • The poverty line is the threshold income and households earning below this threshold are considered poor. 
  • Different countries define the poverty line in different ways depending on local socio-economic needs.

Different approaches to define the poverty line

There are two approaches regarding this 

  1. Nutritional Approach: It is based on specific minimum criteria of nutrition intake 
  2. Relative Deprivation Approach: It doesn’t take into account just nutritional deficits, but in comparison to the progressive section, the person is not that progressed. E.g., a person earning less than 60% of the country’s per capita income

Developing countries generally follow the nutritional Approach. But now the time has come that India should move from the Nutritional Approach to the Relative Deprivation Approach to ensure sustainable and equitable development.

Poverty line in India is decided by

  • Earlier it was used to be determined by erstwhile Planning Commission
  • Now NITI Aayog determines the Poverty Line. NITI Aayog made the Commission under Arvind Panagariya recommend Poverty Line in India.
  • Panagariya has suggested that 
    • Tendulkar Committee’s report should be accepted for poverty line estimation. 
    • But socio-economic indicators, say, as collected by Socio-Economic Caste Census, should be used to determine entitlement for benefits.

Various Committees constituted for Poverty Line Determination

Timeline of Committees to define Poverty

1. Lakdawala Committee

In books, we frequently come across the Poverty Line defined as 2400 calories in Rural & 2100 calories in Urban. This definition of the Poverty Line was based on the recommendations of the Lakdawala Committee (1999). 

2. Tendulkar Committee

Tendulkar Committee defined Poverty Line based on per capita monthly expenditure.

Tendulkar Committee

While calculating, Tendulkar Committee based its recommendation on food, health, education and clothing.

Tendulkar Committee for Poverty

According to Tendulkar Committee Report, Poverty has declined in India from 37.2% in 2004 to 22% in 2011.

Number of people below Poverty Line

3. C Rangarajan Committee

C Rangarajan Committee defined Poverty Line based on Monthly Expenditure of family of five.

Rangarajan Committee

Rangarajan Committee took more things than Tendulkar Committee into its calculations

Rangarajan Committee for Poverty

Rangarajan Committee also recommended delinking the Poverty line from the Government entitlement benefits. Food Security benefits should be given as per Social and Caste dimensions and not BPL. 

4. Saxena Committee on Rural Poverty (2009)

  • When Tendulkar Committee Report came, the Ministry of Rural development hurriedly set up a committee known as the SAXENA COMMITTEE in 2009 to review the methodology for inclusion of a person in the BPL Category to include them in government schemes. 

Recommendation of the Committee

Committee gave the famous Automatic Inclusion and Automatic Exclusion principle.

  • The automatic inclusion criterion for the most vulnerable sections of society (E.g. homeless people, persons with disabilities etc.)
  • Automatic Exclusion: Those having motorbikes etc. 
  • Apart from being Automatically included, find other using scores of various deprivations. 

5. Hashim Committee on Urban Poverty (2012)

  • To suggest a methodology for inclusion of a person in the BPL category in Urban Areas to include them in government schemes.

Recommendations of the Committee 

  • Automatic Exclusion 
  • Automatic Inclusion 
  • Scoring Index: remaining households will be assigned scores from 0 to 12 based on various indicators. They should be considered eligible for inclusion in the BPL List in the increasing order of higher scores.  

Multidimensional Poverty Index

  • In India, we calculate poverty using Tendulkar Method based on household consumption.
  • But UNDP takes a holistic view of poverty and measure it differently. 
  • The report has been released since 2010.
  • In Multidimensional Poverty, they look into the following components to measure poverty (HES)
    • Health with components like child mortality
    • Education with components like years of schooling
    • Standard of Living with components like Electricity, water etc.
Multidimensional Poverty Index

Andhra Pradesh is already using this approach.

Capability Approach to Poverty by Amartya Sen

Traditional Approach

  • Poverty is defined by an individual’s income
  • E.g., Extreme Poverty is defined as those who live on $1.25 per day or less. 
  • As a result, following this approach, governments centre their Poverty Removal Policies on job creation, GDP growth and other economic policies.

Capability Approach 

  • In richer countries, all are fortunate enough that they can earn a good income. Does that mean they are not poor?
  • Amartya Sen’s Capability approach defines poverty in a Holistic Way. A better approach to look at poverty is the deprivation of a person’s capabilities to live the life they value. 

Well Being Approach

Given by Erik Allard, it includes three dimensions as:

  1. ​Having (Material),
  2. Loving (Social), and
  3. Being (Spiritual-emotional)

World Poverty Clock

  • The World Poverty Clock was developed by World Data Lab to monitor global progress toward ending extreme poverty.
  • The latest data (released in March 2024) shows that India has managed to reduce extreme poverty to below 3% of its population.

Critique of these Poverty Lines

  • Experts argue that the Indian way of calculating poverty is incorrect.  It is simply what some call a “starvation line”. Critics argue that governments around the world keep the poverty line at low levels to show that millions have been moved out of poverty.
  • India should be using some relative measure as opposed to the absolute measure to define poverty. In most Europe, a family with a net income of less than 60% of the “median net disposable income” is counted as poor. A poverty line “relative” to the national average also gives an idea about the state of inequality.  
  • A comparison shows that India’s poverty line is abysmally low than even African Poverty Lines. Even the poverty line of Rwanda is higher than that of India. The per capita poverty line of a rural adult Rwandan in Indian terms comes out to be Rs. 900/ month, more than Rs. 816 for a person in rural India.  
  • Another critique that Poverty Line faces is that once decided, the PL remains the same for years & don’t take into account inflation.  It needs to be updated every year by applying a cost inflation index to keep it realistic.
  • Multidimensional Poverty Index: We define poverty in a minimal way by just looking at household consumption. UNDP defines poverty using the Multidimensional Poverty Index, which takes a holistic view and considers indicators like Health, Education, and Standard of Living. India should move toward that.

Reduction of Poverty in India

According to Tendulkar Committee Report, poverty in India has reduced from 37.2% in 2004 to 22% in 2011.

Poverty Rate in India

Reduction in poverty is attributed to

  1. Increase in employment in the non-agriculture sector – The construction sector absorbed the landless labourers & daily wage earners from villages
  2. Schemes like MGNREGA, National rural livelihood mission also reduced the stress during the lean season by creating employment opportunities during the non-agricultural season.
  3. India’s demographic bulge provided more working population compared to dependents (Children and elders).
  4. Social welfare schemes like PDS, AAY, MGNREGA, NRLM, Pension schemes and others provided a safety net to the poor 
  5. Inward remittances – Large emigration of the citizen to the US, EU etc. and to west Asian destinations like UAE, Saudi, Qatar etc. generated huge inward remittances for India, which directly benefited dependents in India
  6. Quality jobs in the Service sector like BPO, Hospitality, Retail chain, E-commerce supply chain provided heavy wages.
  7. The rapid growth of the economy provided better opportunities to come out of poverty through better employment opportunities, increased demand for services etc.

Chinese Case Study

  • According to World Bank, people living below the poverty line reduced from 770 million in 1978 to 5.5 million in 2019.
  • In 2021, China declared that it had eradicated extreme poverty.
  • Steps taken by Government in this regard
    1. Targeted Approach: China identified the poorest region to allocate more resources there.  
    2. Economic Development: China’s economic development generated a lot of jobs, helping people to come out of poverty
    3. Social Welfare Programs: The government provided healthcare coverage, education, housing assistance etc. 
    4. Agriculture and Rural Development: China focused on agricultural reforms, modernization, and supporting farmers. 

Impact of LPG Reforms on Poverty

  • Poverty has decreased: Consider any Poverty Line, all points to the fact that Poverty in India has declined. Take the example of the extreme poverty line as defined by the World Bank.
Poverty in India and LPG Reforms
  • Inequality: Inequality in India has increased after LPG Reforms.
Inequality and LPG Reforms

The rich section has reaped the benefits of LPG Reforms. This is the leading cause of the increase in Inequality.

The above Paradox can be explained by the Redistribution of Income by Government. Because of the increase in income of richer sections, the government is getting more taxes. Therefore, redistribution of this source has ensured that Poverty has decreased.

Impact of Poverty

Several issues like hunger, illness and thirst are both causes and effects of poverty. Hence, the term known as poverty trap is usually used for this i.e. bad cycle is created not allowing people to come out of poverty

Poverty Trap
On Society Poverty results in inequalities which can culminate into violent upheavals like Arab Spring. Various Revolutions in Arab Spring started because of the lack of jobs and high poverty levels.    
On Children Poverty leads children to build antisocial behaviour and social exclusion.    
Terrorism Most of the time terrorists do come from poor countries with high unemployment.  
Diseases Diseases are very common in people living in poverty because they lack the resources to maintain a healthy living environment.   
Education Those living below the poverty line cannot attend schools and create a vicious cycle in which poverty prevents people from getting a good education, and being uneducated prevents them from escaping poverty.  
Poverty Trap

How can India reduce poverty?

Even though India has grown rapidly, its growth has been less effective at reducing poverty than in some of India’s middle-income peers such as China, Vietnam, Brazil and Turkey. The following can be done in this respect.

In Agricultural sector

With 4 out of every 5 of India’s poor living in rural areas, progress will need to focus on the rural poor. Hence, the government should focus on following to increase the income of those involved in the agriculture sector.

  • Value addition through food processing 
  • Organic farming  
  • Cooperation farming, milk cooperatives, and farmer producer organizations. 

In Manufacturing Sector

Create Jobs in India via

  • Skill development
  • Make in India
  • Startup India

In Service Sector

  • Creation of quality jobs in BPO, IT and ITES for youth 
  • Promotion of tourism
  • Promotion of higher job creation in e-commerce, supply chain, Hospitality and construction sectors.

In Governance

  • Implement Jan Dhan- Aadhar- Mobile (JAM) effectively to target subsidy to the poor and eliminate inclusion and exclusion errors.
  • Look into the feasibility of providing Universal Basic Income.