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Tuesday, 31 May 2016

Poor Prediction

I n the latter half of April, Amitabh Kant, NITI Aayog CEO, made a presentation that said if India could sustain 10 per cent average annual growth till 2032, it would become a $10-trillion economy, create 175 million jobs and, above all, lift its entire population above the poverty line by that year. Currently, India's GDP is around $2.2 trillion, with 35 per cent of its urban population and almost half of its rural, classified as 'poor'. Is such a dramatic transformation in 16 years possible?

It is not, for two important reasons, even if the over optimistic growth rate is indeed achieved. For one, the position of the poverty line will keep changing, as it has been doing ever since Independence. Indeed, in the past few years, the extent of poverty in the country has even been the subject of much controversy, with two committees, both of them official ones set up by the Planning Commission (Niti Aayog's predecessor), using different methodologies and arriving at widely varying conclusions. (See Contentious Definition). While the Suresh Tendulkar committee estimated that 21.9 per cent of the population was below the poverty line (BPL), the C. Rangarajan committee set the figure at nearly 30 per cent. As the country prospers, the poverty bar will keep rising and a section of the population will always remain below it. After all, even the US and European countries have sections termed 'poor', though they may be much better off than the poor in India.
For another, income alone does not determine poverty. Even if Indian incomes increase to the extent the Niti Aayog hopes, the country's performance on Human Development Index (HDI) parameters are extremely unlikely to touch those of the developed nations by 2032. According to the 2014 United Nations Development Programme (UNDP) report, India ranked 130 among 188 countries on HDI. In contrast, China, with which India is often compared on the global stage, invested heavily in health and education before it turned to market-led growth. Still, in 2015/16, India's growth rate did surpass China's and the government hopes a trickle-down effect from such sustained growth will also improve HDI parameters.
Extending development and jobs to every part of the country will also be difficult, given that 83 districts in the heart of India have a sizeable Maoist presence, allowing the administration only limited access. A couple of months ago, Power and Coal Minister Piyush Goyal himself admitted at a CII function that there were some mines even he could not visit. He was obviously referring to those in the Maoist areas. All these districts are extremely poor, their people survive only on primary sector jobs related to agriculture, horticulture or mining, and are likely to remain so in the absence of proactive government intervention.
Besides, if the economy is expanding, so is the population. As Clint Laurent notes in his book Tomorrow's World, India's population will have risen to 1.46 billion from the current 1.25 billion by 2032. The Niti Aayog presentation expects per capita income to grow to $6,846 by then from $1,615 in 2015, and manufacturing's contribution to the economy to rise to 25 per cent of GDP from the current 16 per cent. Agriculture's near-stagnant, single-digit growth is also expected to change. All these are tall orders.
Even so, the National Democratic Alliance (NDA) government is making a concerted effort to realise the zero poverty dream. All-round development is being pushed aggressively using the trio of JAM (Jan Dhan Yojana), by which the unbanked have been given zero balance bank accounts; Aadhaar, the identification number used to target direct cash benefits; and Mobile connections) to track implementation and plug leakages. From May 1 this year, it began the Prime Minister's Ujjawala Yojana, giving LPG connections to all BPL families, where the government subsidises more than half the cost of installation. Of the 18,452 villages Prime Minister Narendra Modi promised to electrify in his last Independence Day address, 7,654 have already been. While earlier a village qualified as 'electrified' if 10 per cent of its residents had power, now all BPL homes have to receive power for it to do so. Easy loans are also being given to set up sanitation facilities. The only hitch is that, if incomes do not rise simultaneously, BPL families may not be able to afford even this. 

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