Galloping Growth Amidst Deepening Poverty

When government announces that GDP is growing at the rate of 9.4 percent and that India has emerged as the second fastest growing economy of the world, next only to China, it gives a feeling of pride. Infact in the last fiscal year April 2006 to March 2007, our growth was the highest it has been in 20 years. Last year also our growth rate was more than 9 percent per annum.
Government is pating its back for the so called unprecedented growth experience. What does GDP mean to an average person living in this country? If we have a look at the composition of GDP, it includes agricultural products including food grains, industrial products and services. On the one hand more of GDP should mean more of wheat and rice, more of cars and two wheelers and other industrial goods. But it also means more of transport services, electricity, tele-communication etc.If we try to look into the factors leading to increase in GDP, we find that agriculture does not contribute to this growth experience, industry is growing almost equal to the rate of growth of GDP and growth of services surpass all limits and as such the contribution of services sector to GDP jumps from 45.80 percent in 1997-98 to 54 percent in 2005-06, whereas gain of services is the loss of primary sector, contribution of which dips from 26.50 percent to 19.80 percent during the same period.
Latest NSSO data shows that still 58 percent of the population depends on agriculture and rest 42 percent is engaged in non-agricultural activities. Another important thing to note is that hardly 7 percent of total work force is engaged in organised sector, both public and private. If we try to compare the share of primary sector (including agriculture, fishing, mining and animal husbandry) in GDP with the proportion of population engaged in the same, story of unequal and non-inclusive growth experience becomes evident. Vast majority of population is reeling under poverty, while a few enjoying all sorts of luxuries.

FACT SHEET 1: SHOCKING UNDERNOURISHMENT

Given the fact that contribution of primary sector in total GDP has declined from 33.53 percent in 1993-94 to 22.97 percent in 2004-05, how can we imagine any better position for poors living in rural areas. National Family Health Survey conducted by Ministry of Health and Family Welfare also support the the hypothesis that vast majority of population is still reeling under poverty. The survey says that 46 percent of all children are underweight and 38 percent are stunted (too short for their age) and 19 percent are wasted (too thin for their height). National Family Health Survey has been conducted for three times in the past 15 years, conclude that some of these indicators have actually worsened over the years.
According to National Sample Survey Organisation, nutritional intake of India is declining. NSSO says that between 1993-94 and 2004-05 calorie intake in both rural and urban India has declined by 4.9 and 2.5 percent respectively. Protein intake in rural areas is down by 5 percent. More than two-thirds of rural Indians and 70 percent in urban Indians are reporting that they don't get a full intake of 2,700 kilo calories, defined to be a minimum norm. The percentage of people reporting that they don't get two square meals a day is still relatively large. The levels of undernourishment and malnourishment continue to be shockingly high as per the NSSO data.

FACT SHEET 2: PACE OF POVERTY REDUCTION SLOWING DOWN

We witnessed a high rate of GDP growth in the post 1991 period, which is claimed to be a big arguement in favour of economic reforms. But, even the most vocal supporter of economic reforms Montek Singh Ahluwalia also concedes that reforms have not resulted in desired level of poverty reduction and decline in poverty is less than what the government had perceived. His confession is supported by the findings of NSS 61st Round data, which clearly speaks out that in the post reform period the pace of poverty reduction has not only been much lower than the official assessments made after NSS 55th Round, it is also less than the actual pace of reduction recorded during 1970’s and 1980’s. Thus, it is ample clear that the high rate of growth of GDP recorded in the post reform period has not made lives better for poors in the same proportion. Rather, in the post reform period inequalities have exentuated as shown by higher ‘Gini Coefficient’ (a measure of inequality), which shows an increase in ‘Gini Coefficient’ from 28.6% in 1993-94 to 30.5% in 2004-05 for Rural India and an increase from 34.4% in 1993-94 to 37.6% in 2004-05 in Urban India. Most notable is the fact that it is a reversal of the trend seen in the previous decade (1983 to 1993-94). These figures implies that poors have less claim on growth and rich have taken the bulk of the benefits from the GDP growth. These figures are not only true for all India, but are applicable for almost all states except a few. If we go on riding this high growth- pro reform phenomenon, it is an alarming signal for times to come.

FACT SHEET 3: AGONY OF JOBLESS GROWTH

The paradox of galloping growth and with deepening poverty in the country is explained by the phenomenon of jobless growth. No doubt GDP is rising and rising at a fast pace, but no enough jobs are being created. This has resulted in rising rate of unemployment in the country both in the rural and the urban areas. We note rate of unemployment which was 7.3. percent in urban areas and 7.2 percent in rural areas (males) in the year 1999-2000 as per 55th round of NSSO, which increased to 7.5 percent and 8.0 percent in urban and rural areas respectively. Similar is the condition with regard to females where rate of unemployment increased from 9.4 percent and 7.0 percent in 1999-2000 year as per 55th round of NSSO to 11.6 percent and 8.7 percent in the years 2004-05 in the urban and rural areas respectively.
Increasing malnourishment of Indian poors is explained by the increasing unemployment in the country. Apart from this increasing inequalities of income represented by increasing Gini Coefficient also explain the phenomenon of deepening poverty in the country.
If the data published by National Family Health Survey and National Sample Survey Organisation are any guide, one can safely conclude that the growth which India is experiencing, the growth which is unprecedented, the growth which is second highest in the world does not bring any better treatment for the masses in general and poor in particular, condition of which is constantly deteoriating.