The Hindu Business Line : Poverty and India's changing image

There are dismal statistics about poverty in this fourth largest economy in the world, which ranks 126th out of 177 in the World Human Development Index. The need to improve the situation is urgent.

In his Republic Day message, the President, Mr A.P.J. Abdul Kalam, summed up the outlook for the nation in these words: "If we perform in an integrated way with development politics as the focus, in mission mode with transparency, I visualise even before 2020 that a prosperous nation is possible." His emphasis on the focal nature of development politics aptly captured the vision that should inspire the national effort. A vision that no doubt draws confidence from our achievements so far but is aware of the unfinished tasks that lie ahead.

Reforms

In this season for heady predictions about India's economic prospects in various time-frames, the mention of unfinished tasks would make many people think of the remaining agenda of reforms. But identifying the real unfinished tasks against those which cast an enchantment over us in our quest for double-digit growth, is to get the India story right. All the more so as the country is now moving into the Eleventh Plan. The 56th year of this unique Indian enterprise is an appropriate moment to reflect on what characterises Indian economy beyond the glamour of our achievements in several fields.

Centrestage in Davos

The glamour was most in evidence at this year's Davos meet. Media reports of the event spoke of India, along with China, assuming centrestage in the global review of economic developments and future growth prospects. With growth rates trending towards 9 per cent and FDI flows surging to $12 billion during 2006-07, India received wide attention at the Davos jamboree, whether from governments, multinational corporations or the international investment community.

And close on its heels, striking a high point in the emergence of Indian multinationals, has come the acquisition of Corus by Tata Steel. More such foreign acquisitions have been foreshadowed, the creditworthiness of Indian companies and India's own upwardly revised country ratings making them favoured clients in the global financial markets for loans and leveraged transactions. Apart from large-scale acquisitions, there is a long train of strategic buy-outs by Indian manufacturing and services companies that are in the offing, with sizeable potential to augment the capabilities and geographical reach of Indian business and industry.

And in the economy, indicators have never been more reassuring than at the present moment. Nowhere is the buoyancy manifest more than in export trade that is now benefiting increasingly from the new capacities created since the commencement of reforms in 1991.

Over the last three years, India's exports have almost doubled. And in the area of information technology and BPO, where its outstanding performance has given the country its high global visibility, the latest Nasscom forecast is $31 billion for the next year. Manufacturing industry may not reveal such spectacular pace of growth but segments such as automobiles and two-wheelers measure up to the Chinese benchmarks.

What is perhaps as important as all these impressive developments in the Indian economy is the vastly changed perception of India's prospects as a market and production base on the part of global business and industry as well as of governments and opinion-makers in industrial nations. Leading figures of MNCs, such as those of IBM, Microsoft, GE and Wal-Mart, are among those who have hailed the possibilities for India. The increasing coverage that Indian companies are now receiving in the world economic press is an indication of the perceived change of regard that it has for India's capability to perform and compete effectively in a globalised economy.

While the Indian story can thus be expected to engage world attention even as the Chinese story bids fair well to dominate, there is one significant difference between the two - a difference both in substance and resonance. That difference turns on the one dominant Indian reality that is almost a defining element for the country in the eyes of the world.

In simple terms, while both China and India are poor developing countries by accepted criteria, China has made far greater strides in elimination of poverty, compared to India. Statistics of per capita income and other details apart, poverty is no longer a visible feature in China the way it continues to be in India.

And in the imagination of the wide world, China has virtually ceased to be a poor country; it is rather a fast-growing premier emerging nation with increasing dominance in international trade and production and a formidable competitor in metrics of economic prowess with the leading industrial nations.

Dismal poverty statistics

The pathos of the Indian story is that 220-230 million of our people, that is 22 per cent of the total population, are poor, according to the latest findings of the National Sample Survey. That makes India home to the world's largest proportion of the poor, even if the percentage of people living below the poverty line reduced from 36 per cent in 1993-94 to 22 per cent in 2004-05.

There are other dismal statistics about poverty in this fourth largest economy in the world (by GDP at purchasing power parity): 126th rank out of 177 in the World Human Development Index and the rate of child malnutrition double that of sub-Saharan Africa. With such factual and visible evidence reinforcing existing bias, the defining element of our economy would remain identified with our poor millions, much as we would like it to be otherwise.

The painful paradox of such poverty in the midst of consistently high rates of economic growth over the last few years and the sustained development effort pursued through economic planning since 1950 is the measure of the pathos in the Indian story.

What is all the more disquieting is that there has been no dearth of recognition in political rhetoric or official thinking of the need for elimination of poverty as the primary objective for the country but what has been done and accomplished has fallen so tragically short of proclaimed intentions.

`Direct attack'

Garibi Hatao of 1971 apart, the Planning Commission itself had said in its approach paper to the Fifth Plan, "The elimination of abject poverty will not be attained as a corollary to a certain acceleration in the rate of growth of the economy alone. It will be necessary to launch a direct attack on the problems of unemployment, underemployment and massive low-end poverty."

Thirty-four years since that urgent call for action was made, it would be interesting to see what the Planning Commission will have by way of a composite strategy in the Eleventh Plan to deal with poverty in the world's fourth largest economy and how the political class will set about "performing in an integrated way with development politics as the focus".

The government's eight flagship programmes, notably the Rural Employment Guarantee Scheme, are at the heart of the present development effort and each of them requires a rigorous and continuous outcome-based review.

(The author, a former Indian envoy to several countries, is a Professor at XIME, Bangalore.)