India

Inclusive Growth Issues

Consultations
August 29, 2007
New Delhi
 Context
Growth has been stellar: 6% p.a since the mid-
1980s, and over 8% per annum in the past four
years
But poverty impact of growth has been muted:
poverty declined from 36% in 1993/94 to 28%
in 2004/05, a 0.8% point reduction p.a.
compared to 1.6% poverty reduction p.a. in
Bangladesh and Nepal
This has raised concerns that Indias growth is
not inclusive or its benefits are not widely
shared.
Close to 300 million still live in deep poverty at
less than a dollar a day.
 Four reasons that help to
explain Indias growth is not
adequately
Growth inclusive.
has diverged across regions, leaving behind
the large populous states of North Central and
North East India.
Growth has not been creating enough good jobs,
that provide stable earnings for households to climb
and stay out of poverty.
Growth in the agriculture sector, which employs
more than half of Indias workers, has been an
anemic 2%.
Growth has left behind key sections of the
population -- females, the 90 million tribal
population, some SC groups religious minorities, --
lagging behind in job opportunities, earnings, and
human development.
 Financial Times, August 14, 2007

Underlying all this is Public services

fail the poor and are weakest in the
poorer states
Growth Rates have been
lower in the poorer states
 Employment is dominated
by informal sector jobs
100%
16.1 15.7 16.2 16.5
80%
31.6 34.3 35.5 31.1
60%
40%
20% 52.3 50.0 48.3 52.4

0%
1983 1993-94 1999-00 2004-05

Self Employed ( percent) Casual Workers ( percent)

Regular Workers ( percent)
 Wage Growth is heavily
concentrated at the top
end
325
300
Real daily wage, 93-94 Rs

275
250
225
200
175
150
125
100
75
50
25
0
p2 p7 p12 p17 p22 p27 p32 p37 p42 p47 p52 p57 p62 p67 p72 p77 p82 p87 p92 p97

Percentiles

1983 1993-94 2004-05 mean 1983 mean 1993/94 mean 2004/05

Public Services Weak in the
poorer regions: e.g.
Immunization Coverage
 Exclusion

Female labor force participation rates have remained stubbornly

low despite rising education levels among women due to
absence of opportunities.

Significant wage discrimination Among casual laborers, women

get about half the wages of men. Less than one third of this gap
can be explained by conventional factors such as skills, location,
industry, etc.

Access to Finance - Rural Finance Access survey, 87 percent of

the poorest households surveyed (marginal farmers) do not have
access to credit, the rich pay a relatively low rate (33 percent),
the poor pay rates of 104 percent and get only 8 percent of the
credit.
A special Issue is the Tribal
Population concentrated in some
of poorest but mineral and forest
rich areas but cannot take
advantage of those assets
Although SC groups have made
progress, large sections of SC and ST
groups are agricultural workers, the
poorest earners
 What is the Bank doing?
The CAS lays a strategic emphasis on the
poorer regions
Projects Rural Livelihoods projects, Rural
Roads, VET program, Rural Credit
Cooperatives, Decentralization, support for
state level reforms for development efforts
Major focus on inclusion in economic work:
DPR, Social Protection, On-going Work
Poverty Analysis, Employment Study,
Lagging Regions, North Eastern area