Inclusive Growth, poverty and Economic Development in India - PowerPoint PPT Presentation

1 / 35
About This Presentation
Title:

Inclusive Growth, poverty and Economic Development in India

Description:

Since independence, significant improvement in India's economic and social ... Product (GSDP) increased in the post-reform period compared to the eighties. ... – PowerPoint PPT presentation

Number of Views:3109
Avg rating:3.0/5.0
Slides: 36
Provided by: mahe86
Category:

less

Transcript and Presenter's Notes

Title: Inclusive Growth, poverty and Economic Development in India


1
Inclusive Growth, poverty and Economic
Development in India
  • Prof. S.Mahendra Dev,
  • Chairman, Commission for Agricultural Costs and
    Prices, Government of India

2
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.

3
Need for Inclusive Growth
  • However, exclusion continued in terms of low
    agriculture growth, low quality employment
    growth, low human development, rural-urban
    divides, gender and social inequalities, and
    regional disparities etc.
  • There is now recognition that inclusive growth
    should be achieved in order to reduce poverty and
    other disparities and raise economic growth.
  • 11th Plan (2007-12) advocates for inclusive
    growth.
  • Even at international level, there is a concern
    about inequalities and exclusion and now they are
    also talking about inclusive approach for
    development.
  • In this presentation, I will be discussing issues
    and challenges for achieving inclusive growth.

4
Elements of Inclusive Growth
  • Five interrelated elements of inclusive growth.
  • Poverty Reduction and increase in quantity and
    quality of employment
  • Agricultural Development
  • Social Sector Development
  • Reduction in regional disparities
  • Protecting the environment

5
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.

6
Trends in Poverty () India
Year Rural Urban Total
1973-74 56 49 55
1983 46 41 45
1993-94 37 32 36
2004-05 28 26 28
7
Number of poor (in million)
Year Number (million)
1973-74 321
1983 323
1993-94 320
2004-05 302
8
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

9
Determinants of Rural Poverty
  • Agricultural Growth
  • Relative food prices
  • Rural non-farm sector
  • Rural wages
  • Governments development expenditure
  • Infrastructure
  • Human Development

10
Percentage budget share of cereals
Year Rural Rural Urban Urban
Bottom 30 Top 30 Bottom 30 Top 30
1970-71 53.7 29.5 38.9 13.4
1990-91 39.4 18.2 27.6 9.5
1993-94 35.7 15.7 25.6 8.2
2004-05 29.3 12.5 20.6 6.3
11
Percentage budget share of food
(cerealsnon-cereals)
Year Rural Rural Urban Urban
Bottom 30 Top 30 Bottom 30 Top 30
1970-71 84.1 71.3 80.0 62.5
1990-91 73.7 59.4 70.7 48.1
1993-94 69.8 52.6 66.4 43.8
2004-05 66.1 47.5 59.9 34.5
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
Reasons for low domestic food prices
  • India insulated domestic food prices from the
    recent high global food prices
  • Reasons are the following
  • -- high oil and fertilizer subsidies
  • -- Duty cuts, export bans
  • -- Administrative measures on hoarding, ban on
    futures markets
  • -- Procurement, buffer stock and public
    distribution of food

16
Policies for Poverty Alleviation
  • India adopted two pronged approach
  • -- Growth approach all three sectors contribute
    agriculture, industry and services
  • -- Direct approach Safety nets or anti-poverty
    prog.
  • -- Self employment progra. (womens groups), wage
    employment progra, food subsidies, nutrition
    programmes for children, old age and maternity
    benefits
  • -- Public Distribution System Subsidized food
  • -- National Rural Employment Guarantee Scheme
    (NREGS) Giving 100 days of wage employment to
    the poor

17
Employment
Sector 1961 2004-05
Agriculture 75.9 56.4
Industry 10.6 18.2
Tertiary 12.4 25.4
Total 100.0 100.0
18
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

19
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

20
Inclusive Growth Agriculture
  • Concerns in Agriculture
  • --Deceleration in growth from 3.5 during 1981-97
    to 2 during 1997-2005. Decline in yield growth.
  • -- Land and water problems, vulnerability to
    world commodity prices, farmers suicides, 45 of
    farmers want to leave agri but no where to go.
  • ----Disparities in growth across regions and
    crops growth rate declined more in rainfed areas.

21
Problems in Indian agriculture
  • 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.

22
Three Goals of Agricultural Development
  • 1.Achieve 4 growth in agriculture and raise
    incomes. Increasing productivity (land, labor),
    diversification to high value agri. and rural
    non-farm by maintaining food security.
  • 2.Second goal is sharing growth (equity) focus
    on small and marginal farmers, lagging regions,
    women etc. On lagging regions, focus on Eastern
    India and other rainfed areas.
  • 3. Third is to maintain sustainability of agri.
    by focusing on environmental concerns.

23
Deficits in Agriculture Growth
  • Six deficits in agriculture
  • (a) land and water management deficit
  • (b) investment, credit and Infrastructure
    deficit,
  • (c) research and extension (technology) deficit,
  • (d)market deficit,
  • (e) institutions deficit,
  • (f) education/skill deficit

24
Rural non-farm sector
  • 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

25
Lessons from China
  • India leap frogged from agriculture to services
    with less focus on manufacturing.
  • The share of employment in manufacturing in
    Malaysia is 50, in Korea 62, in China 31. On
    the other hand, the share of employment in
    manufacturing in India is only 12
  • Diversification towards rural non-form sector in
    China is one of the important factors
    responsible for rural poverty reduction
    (poverty 3).
  • This was partly due to high agricultural
    productivity and investment in physical and human
    capital.

26
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

27
Six problems in Social Sector education and
health
  • There have been significant achievements but
    there are problems
  • Low levels of social indicators
  • Slow progress
  • Significant regional, social and gender
    disparities
  • Low level and slow growth in public expenditures
    particularly on health
  • Poor quality delivery systems
  • Privatization of Health and Education

28
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

29
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

30
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

31
What Should be done to improve inclusive growth?
  • Equity is important for economic development
  • Agricultural Development
  • Economic reforms are important. But macro-poor
    policies (fiscal, trade, financial, monetary
    etc.) should have pro-poor focus
  • Structural change should have followed
    agriculture-industry-services sequence
  • Development of manufacturing sector is important
    for creation of productive employment
  • Equality of opportunities (education)
  • South East Asian and East Asian experience

32
What should be done? (contd.)
  • Role of Technology
  • Shift focus of reforms to delivery systems
  • Importance of womens economic and social
    empowerment
  • Decentralization
  • Economic reforms in relation to socio-political
    environment
  • Rights approach (civil, political and economic)

33
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

34
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.

35
  • THANK YOU
Write a Comment
User Comments (0)
About PowerShow.com