Planning and economic policies have failed to produce inclusive growth to enable substantial parts of the country to get the benefits of development. Although India has made considerable progress in poverty reduction in proportionate terms, vast sections of the society are yet to enjoy the fruits of growth, according to an analysis made by PHD Chamber. Keeping this in view, the Chamber has adopted the theme “Integrating Rural and Urban India – Inclusive Growth” for its 103rd Annual Session on 17 December 2008.
PHD Chamber analysis points out that there is a concentration of poverty and backwardness in a group of contiguous states accounting for 50 per cent of the total population. The gap between the highest and lowest per capita income (in 1993-94 prices) among the 15 major states has increased from 2.55 times to 3.76 times (in absolute figures, from Rs.5,735 to Rs.14, 967) between 1980-81 and 2004-05. This is indicative of a stark widening of income disparity among the states and regions. There are instance of entire villages remaining poverty stricken and backward despite recent economic progress.
Equally significant is that over the last two decades, the growth has been uneven- between different social groups, economic groups, geographic regions, and rural and urban areas. And there are regions and villages which are predominantly poverty stricken.
Despite the focus on poverty alleviation programs for decades no significant impact has been made on poverty reduction. The fact remains that 85% of the resources earmarked for the poor do not reach the targeted beneficiary. Equitable distribution of the dividends of growth is among the most important aspects for poverty reduction. This requires reforms in governance, procedures, implementation and strengthening delivery systems.
The answer lies not in spending more but in spending well.
Sixty percent of the population, classified as poor, lives in rural areas indicating that poverty is mainly a rural phenomena. Thus agriculture growth plays an important role in poverty reduction. This makes the hastening of reform in agriculture sector more a necessity than an option. Outmoded laws, non-merit subsidy and land ceiling laws need review while the deficit of investment in agriculture needs to be addressed. A second green revolution for exploiting more sophisticated versions of seed-fertilizer technology for higher yields is critical. Agricultural diversification and commercialization must be encouraged by stimulating off-farm employment.
Efficient infrastructure and logistics are crucial for improving our investment climate and this would go a long way towards reducing poverty. The vision of doubling per capita income during the next ten years requires the backing of a strong infrastructure support. Investments in rural roads / access improvement can have a positive impact. It would lead to increases in total factor productivity in agriculture, encourage shifts from subsistence farming to higher earning commercial farming, increase rural wages, and enhance growth of non-agricultural employment. It can make a better social impact through improved access to basic services. Transport has been seen as central to economic growth and development. It is helpful in employment generation, etc.
Public expenditure on education, health, sanitation and rural infrastructure must be made more efficient and accountable. Accessible avenues of education and health care would ensure a minimum standard of living for the entire population. In past several years literacy rates have risen from 52 per cent to 65 per cent but still there is huge illiteracy in the nation. This figure has to be further enhanced, as education and skill development would empower the under-privileged, enhance their employability and lift them out of poverty.
There must be greater attention to poverty reduction in backward States like Bihar, Uttar Pradesh, Jharkhand and Orissa and backward districts/regions. Villages/regions with no basic amenities should be identified and State Government should come forward to develop policy package for these regions. Special attention to the development of less developed regions should be a policy goal.
Finally, there is a case for redefining the poverty line, since it was constructed on the assumption that education and health would be taken care of by the State and should therefore not figure in personal consumption expenditure calculations. This is no longer the case and private expenditure on both has increased in the nineties.
For decades our country has followed a limited definition of poverty. The official poverty line in India is based only on calories and accounts for little else but the satiation of hunger. The present inadequate definition of poverty has ensured that all the policies aimed at alleviating poverty aim much too low by focusing on eliminating hunger rather than eliminating poverty as a whole.
Unemployment is one of the major problems in India; rural India suffers from seasonal, disguised and frictional unemployment which lead to poverty. Hence there should be government encouragement for enhancing employability of its populace.
