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Despite the high growth rate of the economy, in absolute terms India still is a low
income economy, with its per capita income at a level less than $500 per annum.
Low per capita income is a pointer towards the existing sharp divide between
India’s wealthiest and poorest sections of society. Out of the total population,
about 26 million people live below poverty line and 35 per cent out of this group,
also classified as the poorest of the poor, have income level of less than $1 per
day. As per 2001 Census, about 78 million people in the country were living
without a home and more than that number were holed up in urban slums. The
number of the poor living in the country is more than the poor living in any other
country of the world.

Despite the above socio-economic problems plaguing the Indian society, post-
reforms period has been marked by high growth rate, placing the country among
the front runners in the race for highest growth in the world. During the past five
years, India has been second only to China in terms of the growth rate achieved.
India’s Information Technology (IT) industry, services, manufacturing and
automobile sectors have been booming. The urban areas, particularly the
metropolitan cities, have been the centers of growth. Industrial centers have also
been the hubs of economic activity and the income levels in the country are on
the rise.
During the past about a decade, the foreign sector in the country has also been
performing extremely well and the policy of globalization has paid rich dividends,
with the foreign sector, registering over 20 per cent growth in the past several
years. Without taking away the credit from the liberalization policy, the resilience
of the Indian economy must also be given its due credit for outstanding

Unfortunately, the spurt in economic activity in the country and increase in the
growth rate over the past few years has not been able to make a discernible dent
on the problem of poverty, deprivation and exploitation of the downtrodden. The
divide between the rich and the poor has now become a tangible reality. There
are more Indian billionaires in the Forbes list than ever before. But the number of
the poor and hungry is also not decreasing. The growth centers are encircled by
the group of underprivileged people whose basic needs are still to be met. During
this era of rapid growth, the problems of unequal and skewed distribution of
economic resources and the fruits of growth have surfaced.

In addition to the economic divide between the rich and the poor, the digital
divide between various regions of the country has also become an important
issue. It has been admitted by the government policy makers that the growth rate
in the rural areas has been quite sluggish despite high growth rate in the urban
centers. Economic activity in the rural areas has not been able to pick up to match
the rapid growth of the cities. The result is that in the hope of getting better
employment and growth opportunities a large number of people are migrating to
the cities every year.
Rural economy is largely comprised of the agriculture and allied activities. The
growth rate of the agricultural sector has been between 2 to 4 per cent over the
past couple of decades, while the rest of the economy is growing at the rate of
around 8 per cent. It implies that increase in incomes in the rural sector has been
almost one-third of the average growth of incomes in the country. Resultantly,
the rural economy has emerged as a poor cousin of the urban and industrial
sectors and the existing yawning gap has actually increased further.

The above does not imply that all is well in the urban sector as a whole. Urban
areas have their own set of problems and inequalities resulting in what is known
as urban-urban divide. The urban problems in India are no different. With about
300 million people living in 5,000 cities and towns, the urban population cries for
more care, investment in urban infrastructure and basic civic amenities.

About 40% of the urban population in India lives in 60 metropolitan urban

agglomerations. As per one estimate of the government, about 65 million urban
people live in slums and squatter settlements in these agglomerations. It is
estimated that the urban population of the country would increase to 468 million
by the year 2020. This poses a Herculean task to the cities
in terms of improvements in civic infrastructure, housing, basic amenities and
employment opportunities.

The current situation in most of the cities and towns is pathetic. Mumbai, Delhi
and Kolkota are the main business and growth centers in the country. In addition
cities like Bangalore and Hyderabad are the hub centers of the IT revolution in the
country. But these very cities have their darker side as well. There is a huge
population of urban poor and slum dwellers living there. Water supply and
sanitation is a serious problem and solid waste collection and its safe disposal is
something that requires a major national initiative.

While a person from the middle class and upper middle class in the cities would
invariably have access to better health, educational and other facilities, the
poorer sections would generally be denied these facilities, which come at a higher
cost than they can afford. The variation in the income levels in the cities has also
created a kind of dichotomy in the society and the vertical split in the society is a
matter of serious concern for the sociologists as well as the economists.

Bridging the Gap

Equitable growth of the economy is the ultimate goal and every government must
strive hard to achieve this goal. Indian Constitution, through the Directive
Principles of State Policy entrusts this responsibility of equitable distribution of
economic resources to the government policies.

Globalization cannot snatch away the basic right of decent living from the poor
and the downtrodden. It is the duty and responsibility of the government to take
immediate measures for bridging the widening gap, which requires pragmatic
policies aimed at redistributive justice on sustainable basis.
Government of India has already launched an ambitious programme aimed at
stimulating the economic activity in the rural areas. Known as Bharat Nirman, this
new initiative is expected to pump in huge sums of public expenditure in the
development of rural infrastructure of the country. Two more flagship
programmes, called Sarv Siksha Abhiyan and “National Rural Health Mission”, are
being implemented which aim at bringing in qualitative as well as numerical
improvement in the education and healthcare sectors, particularly in the rural
areas. To take care of the urban-urban divide, another ambitious programme
called Jawaharlal Nehru National Urban Renewal Mission is being implemented in
66 major cities of the country under which a lot of funds are being spent to
upgrade the urban infrastructure, housing and service delivery mechanism.

In addition to the above initiatives, the government has to ensure distributive

justice through its taxation and other economic policies. Due attention is required
to be paid to the education sector in the rural areas so that the people living there
are able to get the best possible education to compete with their urban
counterparts. Healthcare and sanitation facilities need a total upgrade in the
entire country. Special attention of the government is required to be focused on
stepping up the economic activity in the rural areas so that the rural incomes
experience the required upsurge and the existing gap is bridged to some extent.
Divide in the early stages of development is a global phenomenon but it must not
be allowed to perpetuate beyond reasonable limit.