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Prof. S.Mahendra Dev, Chairman, Commission for Agricultural Costs and Prices, Government of India
Introduction
Since independence, significant improvement in Indias economic and social development. In the post-reform (since 1991) period, India has done well in some indicators such as balance of payments, resilience to external shocks, service sector growth, significant accumulation of foreign exchange, Information technology (IT) and stock market, improvements in telecommunications etc. GDP growth was around 8 to 9% per annum in the period 2004-05 to 2007-08. Investment and savings rates were quite high 32 to 36%.
Poverty
Income poverty and non-income poverty We concentrate here on income poverty The official poverty lines are anchored to a fixed commodity basket corresponding to the poverty line (Rs.49.09 per person per month at 1973-74 prices for rural areas and Rs.56.64 for urban areas). The suggested rural commodity basket by the Expert Group contained 2400 kcal per capita per day in rural areas and the urban food basket had 2100 kcal per capita per day in 1973-4. For subsequent years, poverty line is updated with consumer prices.
1983
1993-94 2004-05
323
320 302
Poverty
Income poverty declined from 55% in the early 1970s to 28% in 2004-05. Although there has been progress in decline, still more than 300 million below poverty line. World Bank Estimates: 42% below $1.25 poverty line. ADB 65% with $1.35 poverty line 80% of the poor are from rural areas. Poverty concentrated in few states (Bihar, Uttar Pradesh and Madhya Pradesh and Orissa, Chattisgarh and Jharkhand) Concentrated among agricultural labourers, casual workers, Scheduled Castes and Scheduled Tribes
1970-71 1990-91
1993-94
2004-05
35.7
29.3
15.7
12.5
25.6
20.6
8.2
6.3
2004-05 66.1
47.5
59.9
34.5
300
257.9
250
237.4
231.1
200
158.7
150
121.3 100 106.7 114.1 118.6 120.4
122.6
100
100
50 2005 2006
India WPI
2007
Year
2008 Qtr I
2008 Qtr II
250
227.3 208.4
200
167.4
150
120.7
124.6
125
128.8
100
100
50 2005 2006
India WPI
2007
Year
2008 Qtr I
2008 Qtr II
300
261.5
250
200
179.2
150
115.5 100 105.5 102.1 108.4 113.5 115.8 117
100
100
50 2005 2006
India WPI
2007
Year
2008 Qtr I
2008 Qtr II
Employment
Sector Agriculture 1961 75.9 2004-05 56.4
Industry
Tertiary
10.6
12.4
18.2
25.4
Total
100.0
100.0
Problems in Employment
Share in Ouput and Employment of different sectors Agriculture: 20% in GDP, 57% in Employ. Industry: 23% in GDP,18% in Employ. Services: 57% in GDP, 25% in Employ. Employment growth increased in recent years but quality is low. Problem of working poor Poverty is much higher than unemployment
Problems in Employment
There are 458 million workers in India in 2004-05 Out of this 423 million workers are informal/unorganised workers (92%). Growth in employment more in unorganised sector. Thus, quality of employment is a problem Workers in this sector do not have social security. Government is trying to provide minimum social security to unorganized workers
Long term factors: Steeper decline in per capita land availability. Shrinking of farm size Slow reduction in share of employment (still 55%) Main problem is low labour productivity in agriculture. Gap between agri. and non-agri. is widening. We should blame non-agriculture (industry and services) for not absorbing workers from agriculture.
Poverty can not be removed with 55% of workers in agri. Need to promote rural non-farm sector. India currently produces about 50 million tonnes of fruits and 90 million tonnes of vegetables. Only 2% of these are processed as against 23% in China, 78% in Phillippines, 83% in Malaysia. Half of those engaged in agriculture are still illiterate and just 5% have completed higher secondary educ. Even in 2004-05, around 60% of rural male workers and 85% of rural female workers are either illiterate or educated upto primary level. In other words, education and skills are constraints
Social Development
In social sector, significant achievements in education and health However, Human development index rank is 127 out of 170 countries. Social indicators are much lower for Scheduled castes and Scheduled tribes Malnutrition among children is one major problem (46% of children suffer from malnutrition
Regional Disparities
Significant Regional Disparities in India. Per capita income : Highest per capita income Rs.16,679 in Punjab; lowest per capita income state Rs.3557 in Bihar Female infant mortality varies from 12 in Kerala to 88 in Madhya Pradesh Female literacy varies from 33.6% in Bihar to 88% in Kerala
Regional Disparities
Inter-state disparities in the growth of Gross State Domestic Product (GSDP) increased in the post-reform period compared to the eighties. In general, richer states grew faster than the poorer states. Causes for disparities; Investment in physical and human capital Technology Institutions including governance
Environment
Degradation of land, water. Increase in pollution levels Challenges of climate change Consumption patterns of rich Higher economic growth should not lead to decline in our environment
Conclusion
There is a need to have a broad based and inclusive growth to benefit all sections of society and improve economic growth. We have examined issues and challenges in five elements of inclusive growth (poverty and employment, agriculture, social sector, regional disparities and environment) It is more challenging for the country to achieve inclusive growth than getting 8 to 10 per cent growth in GDP
Conclusion
There are strong social, economic and political reasons for achieving broader and inclusive growth. Socially, lack of inclusive growth leads to unrest among many people. There is also an economic argument. The measures which raise equity also promote economic growth. Lastly, the political argument is that no government in a democracy can afford to ignore large sections of workers and non-working population. If it is not inclusive it can generate very severe social tensions. Thus, politically, for having a stable and democratic society one needs to have inclusive growth.
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