27-Jul-2010

Nothing's Trickling Down

Alok Ray, former professor of economics at IIM, Calcutta, writes in DH: Where is inclusiveness?.  He notes India's growth is not all that inclusive.  We lag behind in adult literacy, life expectancy, malnutrition, number of people below the international poverty line, to take just a few indicators.  Job growth seems to have slowed down post-liberalisation:  

One area of major concern is that post-liberalisation, job creation which is a major mechanism of inclusion of more people in economic prosperity, has been slowing down. Employment growth fell sharply in the post-reform years, from 2.6 per cent per annum over 1983-1993 to 1.2 per cent over 1993-2000.

The fall in employment growth rate was specially concentrated in organised sectors (particularly in the public sector). This trend has been reversed to some extent as the latest available National Sample Survey (NSS) data show employment growth during the period 2000-05 was 2.7 per cent per annum. But, then again, the growth in jobs has been mostly concentrated (about 87 per cent) in the unorganised sector.

In terms of equality we seem to be doing well, which is quite surprising.  It does look like inequality is rising (see the graph in this wikipedia article).  And then there is this factoid: The total value of the assets of the country's five billionaires equalled those of the bottom 300 million people (link).  C P Chandrasekhar sums it up concisely, as he writes about a well-ignored recent study of Indian poverty, in The Hindu:
Finally, it has been known that once we went beyond pure income measures of poverty and looked at other indicators of deprivation, not only was the incidence of deprivation substantial in terms of indicators varying from literacy to child malnutrition, but the progress in alleviating certain forms of deprivation had slowed during the high growth years. The problem is not just that India has significantly underperformed when addressing poverty and deprivation over 60-plus years of post-Independence development, but that progress has slowed in precisely those years when the surpluses available to tackle this problem has increased substantially. The problem is not inadequate growth, but one of institutional inadequacy. It is also one of an increasing reluctance of the elite to address those inadequacies and, therefore, of the failure of what is undisputedly one of the most remarkable experiments with parliamentary democracy.
Relatedly : Inclusive Growth, Lip Service Only

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