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STEPSUNDERTAKENTOREDUCE
POVERTYININDIA

Thegovernmentspolicy,asreflectedinvariousplans,hasallalongbeen
thatoftheremovalofpoverty.
Forthis,theproblemofpovertyhasbeenconceivedasoneoflow
productivityofthepoor,whichstemsfromthelack/inadequacyof
work/employment,asalsofromlittleandpoorequipment,andalmostnil
infrastructuralfacilitiessuchascredit,marketing,etc.
(i)GeneralGrowth:
Thisisconcernedwiththemouldingofthegrowthstrategyinamanner
thathashelpedtosomeextentinimprovingtheconditionsofthepoor.
Thisinvolvedsucharestructuringoftheproduction,andofproductmix,
thatprovidedmorework/incomeandmoremassgoods,tothepoor.
Inconcreteterms,thiswasattemptedalongthefollowinglines:
expansionofagriculturalandnonfarmactivitiesintheruralareas,asalso
ofactivitiesintheunorganisedsectorsintheurbanareasadoptionof
labourintensivetechniquesenlargedproductionoffoodgrainsandother
itemsofnecessities,etc.Allthesetogetherwiththedevelopmentofother
sectorslikeindustries,etc.,weresupposedtobenefitthepoor.
However,ithasalsobeenrealisedthatthesemeasuresareby
themselvesnotsufficientforthepurpose.Thisawarenessbecameacute

inrecentyears,whenitwasfoundthatthetrickledowneffectsofthe
generalgrowthhavebeenoflittlehelp.

(ii)SupplementaryMeasures

One category of such measures consists of anti-poverty programmes


like National Rural Employment Programme (NREP), Integrated
Rural Development Programme (IRDP), Rural Landless Employment
Guarantee Programme (RLEGP), etc.
These programmes have twofold purpose. In the first place, these
provide direct employment on wages paid in cash, and in cash and
kind (like wheat, etc.). Secondly, these help the poor in earning by
providing them with assets, inputs, credit, marketing facilities,
training for skill formation, etc.
The government has been expanding these programmes by devoting
more and more resources, and by enlarging its coverage in terms of
the number of the poor, the areas and the activities.

Anothercategoryofmeasuresrelatestotheprovisionof
cheap/subsidisedfoodgrainstothepoorthroughtheTargeted
PublicDistributionSystem(TPDS).PDSwasredesignedasTPDS

higherratesofsubsidiesweregiventothepoorandthepoorest
amongthepoor.
Asaresultofthesegovernmentefforts,someimprovementshave,
infact,beeneffectedinthesituation.Aspertheestimates(byNSSO
61stSurvey),thepercentageofpoorbelowthepovertylinehas
fallenfrom54.9percentin197374to36percentin199394and
furtherto27.5percentin200405.
Thereisagainsomeprogressintheprovisionofproductiveassets
andfacilitiesofproductionforthepoor.Someadvanceshavealso
beenmadeinraisingtheskillandhealthstatusofthepoor.
Whileallthesemeasureshavehelped,thelastingsolutiontothe
problemofpovertyliesonlyintheframeworkofanexpanding
economyanddynamicagriculturalsector.

Abudgetthemeofopeneconomy,marketsandpovertyreduction.
fitsnicelywiththegrowthexpectationsunleashedbyPrime
MinisterModi.Also,thesearethethreelegsforequitablegrowth.
OpenEconomystance
Since1991,anOpenEconomypolicystancehasbeen
consistentlyfollowedinexternaltrade.Theproblemis,Indiahasnot
benefitedasmuchasourneighborsinEastAsia.Thefaultisclearly
ourown.

Ourgovernmenthasnotseizedopportunitiesoverseaswhichcould
bedovetailedwithdomesticcomparativeadvantagetomakethe
economypartofglobalvaluechains.Thisbecomesvitalnowifjobs
aretobeaddedinIndia.
Therealissueiswhatwemustdonexttoopentheeconomyto
bothdomesticandinternationalcompetition.
Fourstepsaresuggested:
1.
Linkingmarketsphysicallybyafirstrateinfrastructuregrid
ports,roads,railandelectricityarekeytocreatingaseamless
nationalmarket.
2.
Adigitizedtaxgridthatlinksnational,stateandlocalleveltax
systemstoenhancerevenuesthereductionoftaxevasionandthe
reductionoftheaggregatetaxburdenbyavoidingthepancakingof
multipleautarchictaxes.TheongoingGoodsandServicesTax
(GST)initiativebarelyscratchesthesurface.
3.
Aggressiveprivatizationofstateownedenterprises,includingin
armsandammunition,asModihasjustannounced.Thiscanprovide
therequiredbusinessmomentumforcompetitiveness,assistin
reachingfiscaldeficittargetsandbenefitconsumers.
4.
Openingofhithertocloseddomesticmarketsinland,legaland
mediaservicestoforeigninvestment,exceptwhereconsiderations
ofnationalsecurityexist.
TheFinanceMinistercouldsignalasecondwaveofliberalization
andreformtofollowuponthe1991wavefocusingonsupporting

Indianbusinesstoreapthebenefitsofanopeneconomy
internationally.

SOMEECONOMISTSHAVEPOINTEDOUTTHATTHECURRENT
GOVERNMENT'SSTANCEHASCHANGEDTOWARDSGREATER
ROLEOFTHEMARKETS
Livingbymarketlogic

TheBJPhasalwaysenjoyedthetrustofbusiness.Curiously,thepartys
commitmenttoexpandmarketsandcompetitionisnotdeeplyingrained
enough.
Instead, there is a lingering fondness for using and growing the already vast
powers of the state to bypass markets and to advance fast-track development
in a top-down Developmental State mode.

Endingpovertybycreatingjobs

Theinternationalconsensusonpovertyreductionisthatstrategiesthat
allocatemoreresourcesforhumandevelopment,livelihoodsandprivate
sectoremploymentworkbest.
Indiahaslaggedinenhancingbudgetaryallocationstoeducationand
health(includingwaterandsanitation),ascomparedtoanyother
growthorientedsectorsoftheeconomy.

Ifthislogicisfollowed,thesmallandmediumscalemanufacturingsector,
ratherthanmegaprojects,shouldbethefocusforjobsandpoverty
reduction.
Wemustavoidthetrapofsubvertingthegrowthagendaintoglitzybut
suboptimalactionpoints.
Togrowjobsforthepoor,itisthesmallthingsthatcount,likeremoving
municipalandpoliceharassmentofstreetvendors,simplifyingtax
assessmentprocessesandproblemsolvingbygettinglocalandstate
governmentsingrowthmissionmode.
Indiaseconomyconsistsof10%oftheworkforceinthelarge,formal
sectorand90%intheinformalsector.ThekeydialecticofIndiaisthis:
ThelotofemployeesinIndiasinformalsectorcanonlybeimprovedby
facilitatingemployerstogrowtheirbusinesses.

BJPGOVERNMENTHADGIVENINDICATIONINITSMANIFESTOAS
TOWHY
whyGrowthisFundamentaltoIndiasProgress

EarlierissuesoftheSignhavediscussedtheneedforIndiatounlockthe
potentialofitspeople,itsresources,itsentrepreneursanditsgovernment
inordertorealiseitstrueeconomicpotentialThepoliciesimpliedbythis
approachhavethepotentialtoaccelerateIndiasGDPeconomicgrowth
todoubledigits.

ForIndia,GDPgrowthismorethanjustanumber,itisalsoaproxyfor
developmentindicatorssuchasproductiveemploymentandpoverty
reduction.

Forexample,Indiahasmadethemostprogressonreducingpoverty
duringtheperiodsofrapidgrowth.Indiatodaystillhasanestimated
300mlivinginpovertyandeconomicgrowthisafundamentalnecessityin
ordertocreateopportunitiesforthem.

Indiatodayneeds@.10%growthsimplytomaintaincurrentlevelsoutput
perworkforceparticipantgiventhenumberofyoungstersenteringthe
labourforceinthisdecade,andevenfastergrowthtosolvetheissueof
underemploymentinitscurrentlabourforce.
Moreover,thispaceofgrowthneedstobesustainedoverthenext
severaldecadeswith250mmorepeopleexpectedtoenterthelabour
forceby2030

Creatingandmaintainingtherequiredlevelofdevelopmentwillrequire
morethanjustshorttermstimulusmeasuresitwillinvolvefundamental
transformationofIndiasproductivepotential.

Finally,growthisnotjustcriticaltoIndiaeconomicallyandsocially,itis
criticaltoIndiasleaderspolitically.Achievinghighratesofeconomic
growthisalsothebestwayforIndiaspoliticianstocounternatural

antiincumbencytrendsandthereforethebestwayforthemtoensure
politicalstabilityandcontinuityatboththestateandcentrallevels.

Themostobviousexamplesofthisarethestrongpositionsenjoyedby
leaderswhohaveemergedinstatessuchasBihar,MadhyaPradesh,
TamilNadu,and,ofcourse,
Gujarat(thehomestateoftheBJPsprimeministerialcandidate,Mr
NarendraModi)anddeliveredhighgrowthfortheirconstituents.

ThebestwayfortheincominggovernmentandIndiasleaderstoensure
successistomaketangibleprogressoncreatinganeconomicsystem
whichallowsallIndianstofeelthattheyhavetheopportunitytorealise
theirpotential.Creatingsuchasystemgoestothecoreofthemany
challengesofthehugeandcomplexdemocracythatismodernIndia.

IncaseyouvelosttrackofthedebatebetweenNobelPrizewinning
economistAmartyaSenandJagdishBhagwati,professoroflawand
economicsatColumbiaUniversityinNewYork,heresaFriday
briefingoftheconfrontation,whichhastakenonapoliticaldimension
inrecentdata

Inthesocialspendingcorner,Mr.Sen,whosaysthateconomic
growthmustaccompanysocialimprovementandgovernmentmust
spendmoneyoneducation,healthcareandfoodsubsidyprograms.

Thetwoeconomicheavyweightshavesluggedtheissueoutbefore.
Butthistime,bothofthemhavebookstosell.
Mr.BhagwatiwrotetoTheEconomistnewspaper
inmidJuly
criticizingthecentralassertionofMr.SenandJeanDrezenewbook
AnUncertainGlory:IndiaanditsContradictions,thatredistribution
hasledtorapidgrowthinAsia.
Thatproposition,hewrote,hasnobasisinrealityandputsthecart
beforethehorse.

Growthhasmaderedistributionfeasible,nottheotherwayround,
theColumbiaprofessorswrote.
Incidentally,thepairarecoauthorsof,WhyGrowthMatters:How
EconomicGrowthinIndiaReducedPovertyandtheLessonsforOther
DevelopingCountries,publishedinIndiainDecember.

Economicgrowthisveryimportantasameansforbetteringpeoples
livesbutithastobecombinedwithdevotingresourcestoremove
illiteracy,illhealth,undernutritionandotherdeprivations,Thenlocal
mediainIndiapickedupthespatbetweentwoofthecountrys
greatestminds,andaflurryofopinionpiecesfollowed.

10

Somecomparedthedifferencesbetweenthetwoeconomiststothe
mainpoliticaldivideinIndiabetweentherulingCongressparty,which
hasalargesocialspendingprogram,andtheBharatiyaJanataParty
themainopposition,whosecampaignforelectionisledby
businessfriendlyGujaratChiefMinisterNarendraModi.

InasubsequentpieceforMintheadlined,Mr.Bhagwatipraised
Gujaratsdevelopmentstorybutaddedthathistheoriesongrowth
couldbeadoptedbyanyparty.

PREPAREDBYMRNARESHSEHDEVMAMPHIL
nareshsehdev200789@gmail.com
pocketc2,flat8c,keshavpuram,newdelhi35

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