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Ppt on Indian Economic Reform Since 1991

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					     Inclusive Growth in India:
        Policies, Prospects and
               Challenges
       Presented at UN-ESCAP/MPDD
        Development Seminar Series
                     by
           Prof. S.Mahendra Dev
                  Chairman,
    The Commission for Agricultural Costs and
       Prices (CACP), Government of India




       Introduction and Context
Concept of inclusive growth: The inclusive approach is
not a new or novel idea for the world in general and
India in particular.
The approach of growth with equity has been followed
in India since independence.
But, the present context related to economic reforms
started in the early 1990s.
In the post-reform (since 1991) period, India has done
well in some indicators such as economic growth,
exports, balance of payments, resilience to external
shocks, service sector growth,
 significant accumulation of foreign exchange,
Information technology (IT) and stock market,
improvements in telecommunications etc.
         Introduction and Context
GDP growth was around 8 to 9% per annum in the
period 2004-05 to 2007-08. India is trillion dollar
economy. Investment and savings rates were quite high
32 to 36%.
However, exclusion continued in terms of low agriculture
growth, low quality employment growth, low human
development, rural-urban divides, gender and social
inequalities, and regional disparities etc.
The immediate context for inclusive growth in India is
the 2004 general elections. It was argued that the verdict
in the elections was against the urban-biased economic
development policies pursued earlier.
The UPA government included inclusive policies in their
common minimum programme.
However, reforms may not lead to inequalities if initial
conditions are better (East and South East Asia.




        Introduction and Context
 The approach paper for 11th Five Year Plan
 acknowledges that the economic growth has failed
 to be sufficiently inclusive
 11th Plan (2007-12) advocates for faster and more
 inclusive growth.
 Of course now we have the problem of
 financial crisis impact on economy and
 employment
 Growth came down to less than 7% in 2008-09
 and expected the same in 2009-10. It would
 adversely affect the employment and incomes.
 In order to come out of financial crisis also we
 need inclusive growth policies
    Introduction and Context
Recent high growth path of 7-9% also
highlighted the rural-urban divide, rich-poor
divide, regional and social divide.
Some people object to the word ‘growth’ in
inclusive growth. They say we are still talking
about growth and not development.
Anyway we should not attach much importance
to the words. We are talking about equitable
development
Also, economics alone can not do justice to
inclusive approach. We need other disciplines in
social sciences.




Elements of Inclusive Growth
According to me, there are five inter-related
elements of inclusive growth
Agriculture
Employment generation and poverty reduction
Social Sector Development
Reduction in regional and other disparities
Protecting the environment
In this lecture, I will be discussing issues, policies
and challenges in these five elements and also
offer suggestions for raising inclusive growth
  Macro policies and challenges
      for inclusive growth
  Fiscal Policy
  Trade Policy and Exchange Rate
  Monetary Policy
  Industrial policy
  Privatization
  Three crises and India: Food, fuel and
  Financial Crisis




                  Agriculture
   Concerns in Agriculture
--Deceleration in growth from 3.5% during 1981-97
   to 2% during 1997-2005. Decline in yield growth.
--Worse still growth of foodgrains output fell short of
   population growth over this period.
-- This led to rising rural distress and also farmers’
   suicides.
-- Land and water problems, vulnerability to world
   commodity prices, 45% of farmers want to leave
   agri but no where to go.
----Disparities in growth across regions and crops:
   growth rate declined more in rainfed areas.
         Problems in Indian agriculture
 Long term factors: Steeper decline in per
 capita land availability. Shrinking of farm size
 Slow reduction in share of employment (still
 55%)
 Main problem is low labour productivity in
 agriculture. Gap between agri. and non-agri.
 is widening.
 We should blame non-agriculture (industry
 and services) for not absorbing workers from
 agriculture.




   Sources of growth in agriculture
Steering Group for 11th Plan has estimated
sources of growth
Sources of growth: Five factors: (a) Public
invest. (b) private invest. (c) Technology;
(d) diversification (e) fertilizer
There has been slowdown in all these factors
Terms of trade also declined
Higher growth in the post-reform period only in
the case of agricultural credit
               Decline in growth (%)
               1980-81 to   1990-91 to    1996-97 to
               1990-91      1996-97       2005-06
Technology     3.3          2.8           0.0

Public Inve.   3.9          1.9           1.4

Private Inv.   0.6          2.2           1.2

Irriga.area    2.3          2.6           0.6

Area under     5.6          5.6           2.7
Fruits&veg
NPK use        8.2          2.5           2.3
Credit         3.7          7.5           14.4




  Some Dynamism in Recent Years
  4% growth in agri. in the last three years. Record
  foodgrain production last year (231 m.t.). Exports
  in cotton, rice and sugar. It created rural demand .
  Useful in financial crisis.
  Revolution in cotton. (cotton production growth
  rates during 2003-04 to 2007-08; 19.7%, 12.8%,
  22.2%,14%). Cotton prod. doubled in six years.
  Some positive signs on bio technology (BT cotton).
  Some increase in high value agriculture
  Lagging regions showing relatively high growth.
  Comfortable buffer stocks
       Three Goals of Agricultural
             Development
1.Achieve 4% growth in agriculture and raise
incomes. Increasing productivity (land, labor),
diversification to high value agri. and rural non-farm
by maintaining food security.

2.Second goal is sharing growth (equity): focus on
small and marginal farmers, lagging regions,
women etc. Share of women is increasing in agri.
On lagging regions, focus on Eastern India and
other rainfed areas.

3. Third is to maintain sustainability of agri. by
focusing on environmental concerns.




Policy Challenges to achieve the goals

Both Supply side and demand side are
important.
Land issues, Subsidies and investments,
Land and Water management, Technology,
Credit
Diversification and Marketing
Institutions and Sustainability
                 Land Issues
Small size of farm: Chinese experience says it is not a
constraint.
Tenancy and other land reforms: Steering Committee
suggested some reforms (protect both tenants and land
owners).
Other emerging issues: Demand for land for non-
agricultural purposes. Displacement of farmers, tribals
and others due to development projects.
With growing industrialization and urbanization, the
rising demand for land for industrial purposes, including
special economic zones and for housing.
Need for careful and calibrated land acquisition.
Land alienation is a serious problem in tribal areas.




              Other Challenges
 Investment(public and private) : presently 12% to
 13% of agri.GDP. We need 16% of agri.GDP.
 Subsidies: Main problem with subsidies is its
 adverse affect on environment
 Land and water management: The decline in
 productivity growth is attributed, inter alia, to
 deterioration in soil quality and water shortages.
 Therefore, land and water management should be
 given number one priority.
 Credit: Only 27% of farmers have access to
 institutional credit.
 Distributional problems. Small farmers, Eastern
 region get less credit.
 Technology Fatigue and yield gap
     Technology Fatigue and Yield Gaps
          (Planning Commission)
There is clear technology fatigue.   2003-
                                     2003-05 data show
New varieties of major crops are       very large yield
   not showing higher yields:               gaps:
                                     Wheat: 6% (Punjab) to 84%
                                     (M.P.)
                                     Rice: Over 100% in Assam,
                                     Bihar, Chattisgarh and UP
                                     Maize: 7% (Gujarat) to
                                     300% (Assam)
                                     Jowar:
                                     Jowar: 13% (M.P.) to
                                     200% (Karnataka)
                                     Mustard: 5% (Haryana) to
                                            (Chattisgarh)
                                     150% (Chattisgarh)
                                     Soybean: 7% (Rajasthan)
                                     to 185% (Karnataka)
                                     Sugarcane: 16% (A.P.) to
                                     167% (M.P.)




       Diversification Challenges
Diversification of agriculture is a great
opportunity for small farmers to
increase income and employment
However, the policy support is still
geared to cereal crops. Farmers prefer
rice and wheat because risk is very low.
Being perishable in nature,
diversification needs a fast moving
infra. and institutions and reduce risk.
       Improving Agriculture Growth
 Six deficits in supply of food and agriculture
 :(a) land and water management deficit
 (b) investment, credit and Infrastructure deficit,
 ;
 (c) research and extension (technology) deficit,
 (d)market deficit,
 (e) institutions deficit,
 (f) education/skill deficit
 Need for massive increase in outlays for agriculture
 and rural infrastructure by simultaneously improving
 the delivery systems.
 Govt. is thinking of big push to education in 11th Plan.
 Such a big push is needed for agriculture sector




                     Poverty
  Income poverty and non-income poverty
  Income poverty declined from 55% in the early 1970s
  to 28% in 2004-05.
  Although there has been progress in decline still more
  than 300 million below poverty line.
  Two unambiguous conclusions:
(1) There is no evidence of higher rate of decline in
  poverty in the post-reform compared to pre-reform
(2) Inequality increased significantly in the post-reform
  compared to pre-reform
(3) Poverty is getting concentrated among some regions,
  some groups (SCs, STs)
 Policies for Poverty Alleviation
   India adopted two pronged approach
-- Growth approach
-- Direct approach : Safety nets or anti-poverty
   programmes
-- Self employment programmes, wage
   employment programmes, food subsidies
   (public distribution system), nutrition
   programmes for children, old age and
   maternity benefits




      Poverty allev. programs
Self Employment programs: Micro credit
Earlier micro credit to individuals (IRDP)
Now group approach mainly (Grameen Bank of
Bangladesh)
Several institutional innovations. Following RBI
guidelines in 2000, several MFIs started
intermediation including Non-banking financial
institutions.
Due to self help groups and MFIs, interest rates in
the market have come down.
     Two important models on SHGs
One is Kerala model: Kudumbasree programme
improved empowerment and reduced poverty
Andhra Pradesh : The government is implementing
a statewide rural poverty eradication programme
based on social mobilization and empowerment of
rural poor women.
This programme is popularly known as ‘Indira Kranti
Pathakam’
Self Help Groups: It is relatively successful in Andhra
Pradesh
Social and economic empowerment of women improved.




National Rural Employment Guarantee Act
       (NREGA): Salient Features
The NREGA was notified in September, 2005
Objective: To enhance livelihood security in rural
areas by providing at least 100 days of
guaranteed wage employment in a financial year
to every household
Primary Objective: Employment Creation
Auxiliary Objective: Regenerating natural resource
base and creating productive assets
Third is process objective: Strengthening grass
root processes of democracy infusing transparency
and accountability in governance
First time a rights based approach for employment
throughout India.
This is the largest ever public employment
programme visualised in human history
  Salient Features of Design and
          Implementation
 (1) Workers entitlements
 (2) Unemployment Allowance
 (3) Works permitted under the scheme
 (4) Implementation and monitoring
 (5) Transparency and Accountability




   Transparency and Accountability
All NREGA-related documents to be available for public
scrutiny.
Copies of documents to be made available at nominal
cost.
Muster rolls to be pro-actively displayed at Panchayat
Bhawan.
Documents can also be obtained under the Right to
Information Act.
Gram Sabhas to conduct social audits of all works
taken up within Gram Panchayat
All relevant documents to be provided to the Gram
Sabha by the Gram Panchayat and others
Social audit
              Macro Level Data (Official)
   The Government has implemented the Act in the first phase
   in 200 districts of the country from Feb., 2006
   In Phase II, additional 130 districts were included from April
   2007 (total 330 districts)
   From April 2008, phase III, universalization of NREGA.
   Extended to all 596 rural districts in the country.
   Expenditure in the Programme
-- Rs. 88.1 billion ($1.76 billion) in 2006-07
-- Rs. 158.6 billion ($ 3.17 billion) in 2007-08
-- Rs. 300 billion ($ 5 billion) in 2008-09
-- Rs. 390 billion ($ 8 billion) allocated in 2009-10
   The expenditure is around 0.5% of GDP; 3.3% of budget
   exp.; 10% of plan exp.
   Employment provided to households in 2008—09 : 42
   million




             Problems and Challenges
     The performance is uneven. The problems
     and challenges where it is not working are
     the following
     (1) Awareness Problem among workers
     (lack of awareness about their entitlements,
     getting job cards, applying for work)
     (2) Implementation and administrative
     Problems ( fudging of muster rolls, improper
     measurements, non-payment of minimum
     wages, delay and transparency in wage
     payments, lack of basic worksite facilities
     including child care, fictitious gram sabhas)
     Problems and challenges
            (contd.)
   (3) Lack of professionals:
-- Comptroller and Audit General (CAG)
   indicates that NREG being run with very
   little professional input
--50 per cent of NREG works have to
   implemented by Gram panchayats. But in
   many states their capacity is weak.
--Technical help for Panchayat institutions
   and other government administration is
   lacking.




        Conclusion on NREGS
Most evaluations-official and non-official show that
implementation has been more effective than any of
its predecessor schemes.
In particular, the leakages have been reduced
significantly in many places
Significant rise in agricultural wage shows its success.
The success of course is by no means uniform
Much needed relief during financial crisis even for the
urban poor returning to rural areas
11th Five Year Plan indicates that NREGS is going to
be one of the important programs for poverty
reduction in India
NREGS can transform livelihoods of the poor but also
will also lead to revolution in rural governance.
       Public Distribution System
      PDS is one of the important food security
      programme
      According to evaluations, there are four problems
      in the present TPDS
(a)   High exclusion errors
(b)   Non-viability of fair price shops
(c)   Not fulfilling the price stabilization objective
(d)   Leakages
      The performance is mixed across states
      National Food Security Law (Right to Food)




          Trends in Cereal Prices
Year               International     India Wholesale
                   Cereal Prices     price Index
                                     (Cereals)
2005               100.0             100
2006               121.3             106.7
2007               158.7             114.1
2008 (1st Qtr)     237.4             118.6
2008 (2nd Qtr)     257.9             120.4
2008 (3rd Qtr)     231.1             122.6
      Movement in Indices of Commodity Prices India vs International:Cereals


300

                                                                              257.9

250                                                  237.4                                   231.1




200

                                  158.7


150                                                                                           122.6
                  121.3                                      118.6               120.4
                                      114.1

      100                 106.7

100
      100



 50
      2005         2006             2007      Year    2008 Qtr I           2008 Qtr II    2008 Qtr III

                   India WPI                            International (IMF Indices)




       Movement in Indices of Commodity Prices India vs International:Wheat

300

                                                     269.9


250
                                                                                  227.3

                                                                                               208.4


200
                                  167.4



150                                                                                          128.8
                   125.8              120.7                                      125
                                                             124.6
                          113
      100
100
       100



 50
      2005         2006              2007     Year     2008 Qtr I           2008 Qtr II   2008 Qtr III
                   India WPI                            International (IMF Indices)
          Movement in Indices of Commodity Prices India vs International:Rice


 350
                                                                             331.1


 300
                                                                                                  261.5

 250



 200
                                                          179.2



 150
                                                             113.5                   115.8
                                  115.5                                                          117
          100      105.5 102.1
                                                 108.4
 100
        100


  50
        2005          2006                2007     Year    2008 Qtr I           2008 Qtr II   2008 Qtr III

                      India WPI                             International (IMF Indices)




       Reasons for lower rise in food
             prices in India
   The policy stance was to attempt insulation of domestic
   prices from the high world prices by combining different
   measures including high subsidies, lower tariffs and
   export restrictions and food management policies
   (procurement, buffer stock and subsidized food)
   Five reasons
   (1) High Input subsidies
   One of the reasons for global price increase was
   increase in oil and fertilizer prices. India has huge Oil and
   fertlizer subsidies
-- Fertilizer Subsidy $20 billion
-- Only small part of diesel prices passed on to farmers and
   consumers
           Production and Imports
 (2) Increase in production and Less
 Dependence on Imports for foodgrains
 --- 16% increase in foodgrain production over
 three years from 198 million tonnes. in 2004-5 to
 231 m.t. in 2007-08
 Imports mainly in case of pulses and edible oils
 Imports of wheat in 2006-07 (5.5 million tonnes)
 and 2007-08 (1.8 million tonnes)
 Simultaneously India was exporting rice varying
 from 3 to 5 million tonnes per year till 2007-08.
 Import of pulses 1 to 2 m.t.
 Edible oils: India imports soyabean and palm oil
 Domestic consumption is 10 m.t. Domestic
 production is around 6 m.t. India imports 4 to 5
 m.t. depending on supply-demand gap.




 (3) Export Bans and reduction in duties
Ban on export of rice,wheat, edible oil and pulses
Export duty on Basmati rice
Import of pulses at zero duty from June 2006
Reduction in duty on palm oil by 20-22.5% in two
phases (August 2006 and Jan 2007)
There has been continuous reduction in the import
duty on edible oils.
In April 2008, the basic customs duty on crude oils
(palm, de-gummed soybean and sunflower) has
been set at nil, with refined oils attracting 7.5% rate
     (4) Administrative and Other
             Measures
  Close monitoring of prices on weekly basis
  Ban on futures trading in eight commodities
  viz., rice, wheat, pulses (urad, tur, chana),
  potato, rubber and soy oil
  Food stock limits under Essential Commodities
  Act from August 2006.
  State Governments have been given powers to
  take effective action on hoarding of food stocks.
  Central Issue Price of rice and wheat for Public
  Distribution System has not been revised since
  2002




  (5) Procurement, Storage and distribution

  Food management policy consists of three
  instruments
- Minimum support price policy for 24 crops
  and procurement of foodgrains and others
  by the Govt.
- Buffer Stocks
- Public Distribution System
               Employment
 Share in Ouput and Employment of
 different sectors. Mismatch between share
 in GDP and share in employment.
 Agriculture: 20% in GDP, 55% in Employ.
 Industry: 23% in GDP,18% in Employ.
 Services: 57% in GDP, 27% in Employ.




         Employment: Issues
Four major issues on employment.
First, rate of growth in employment. (quantity)
Second, quality of employment.
Third structure in terms of diversification to rural
non-farm sector.
Finally, the policies for taking advantage of
demographic dividend.
Employment growth has not improved in the post-
reform period (1993-94 to 2004-05) as compared
to pre-reform period (1983 to 1993-94)
Quality of employment is a concern as there is a
mis-match between growth and employment
across sectors.
        Issues in Employment
 There are large working poor because of low
 wages.
 Employment growth in organized sector declined
 in the post-reform period.
 Some people say that labour market reforms are
 important for raising employment
 Focus on youth employment for taking advantage
 of ‘demographic dividend’
 Skill improvement to shift to non-farm sector
 There are 458 million workers in India in 2004-05
 Out of this 423 million workers are
 informal/unorganised workers (92%).




                  Social Security
More than 90% of the workers are unorganized and do
not get social security benefits.
 Several social security programmes, introduced by
Central and State Governments and NGOs cover only a
small proportion of the unorganised workers.
 Employment Guarantee Scheme is one of the important
components of social security
National Commission on Enterprises for the Unorganized
sector chaired by Arjun Sengupta recommended several
measures.
They relate to growth poles for self employment, social
security and conditions of work.
However, extending social security to around 400 million
workers covering all states and all groups of workers is a
major challenge.
               Rural non-farm sector
Poverty can not be removed with 55% of workers
in agri. Need to promote rural non-farm sector.

India currently produces about 50 million tonnes of fruits
and 90 million tonnes of vegetables. Only 2% of these fruits
and vegetables are processed as against 23% in China,
        Phillippines,
78% in Phillippines, 83% in Malaysia.
Half of those engaged in agriculture are still illiterate and
just 5% have completed higher secondary educ.
Even in 2004-05, around 60% of rural male workers
and 85% of rural female workers are either
illiterate or have been educated upto primary level.
In other words, education and skills are constraints
India can learn from China on rural transformation.




             Lessons from China
 China experienced a structural transformation in the
 last three decades
 The state’s role has been decisive in building up the
 physical and social infrastructure (including land
 reforms).
 India should learn from China on reforms in
 agricultural growth, rural non-farm employment,
 public investment and human development. The
 impact of growth on poverty reduction is quite
 significant (CHH Rao, 2007).
 China started with agricultural reforms. Agricultural
 growth was quite high
 The economic and institutional reforms in the whole
 economy created space for Rural non-farm sector
       Lessons from China
 India leap frogged from agriculture to services
 without focusing on manufacturing sector.
 The share of employment in manufacturing in
 Malaysia is 50%, in Korea 62%, in China 31%.
 On the other hand, the share of employment in
 manufacturing in India is only 12%
 Diversification towards rural non-form sector in
 China is one of the important factors
 responsible for rural poverty reduction
 (poverty 3%). This was partly due to
 agricultural productivity.




       Social Development
In social sector, significant achievements
in literacy and enrolment rates
However, health indicators have not
improved much.
Human development index rank is 124 out
of 170 countries.
Social indicators are much lower for
Scheduled castes and Scheduled tribes
Social and Human Development
  India neglected primary education and
  primary health since independence.
  Importance given to higher education.
  Gross enrolment ratio for higher education
(11% in India, world average 25%)
  There are five problems in health (same
  apply to education)
  1. India’s health record absolutely and
  relatively is poor compared to China,
  Bangladesh




          Problems in Health
Equity and quality considerations are neglected;
regional, rural-urban, social groups
Progress and improvement in health has been slow.
Fourth, there have been glaring failures in the
management and delivery of quality health care; most
of the government operated rural health sub-centres
and primary health care centres are on the verge of
total collapse; growth in large private sector; Amartya
Sen says ‘Quackery and crookery’
India’s health sector is grossly underfunded. There are
only four countries of the world Nigeria, Sudan,
Indonesia and Myanmar which spend less than India
        Distribution of workers by general
        education category(%) (above 5)
Category     Rural M   Rural M   Rural Fe   Rural Fe
             1977-
             1977-78   1999-
                       1999-00   1977-
                                 1977-78    1999-
                                            1999-00
Illiterate   55.0      40.3      88.1       74.9
Literate &   30.8      27.7      9.1        15.7
primary
Middle       8.5       15.9      1.6        5.6
Second&hi 4.7          13.0      1.0        3.0
gher secon

Graduate& 1.0          3.1       0.2        0.7
above
Total        100.0     100.0     100.0      100.0




    Six problems in Social Sector
    Low levels of social indicators
    Slow progress
    Significant regional, social and gender
    disparities
    Low level and slow growth in public
    expenditures particularly on health
    Poor quality delivery systems
    Privatization of Health and Education
                Problem of Malnutrition
  Levels of malnutrition is exceptionally high in India (46%)
  (National Shame!)
  The undernutrition in India varies from 21% in Mizoram
  to 60% in Madhya Pradesh in 2004-05.
  Undernutrition is low in Kerala (28.8%), Goa (29%) and
  North Eastern States. Mizoram (21%), Manipur (23.8%).
  What are the reasons for lower undernutrition in North-
  Eastern states and Kerala?
  Women’s agency plays an important role. Women’s
  health, education, empowerment etc.




                South Asian Enigma
                       Enigma”
   The “South Asian Enigma” : two of the three differences
                               Sub-
   between South Asia and Sub-Saharan Africa relate to
   women:
- (1) Low birth weight is the single largest predictor of
   undernutrition
- (2) Women in South Asia tend to have lower status and less
   decision-                                   Sub-
   decision-making power than women in Sub-Saharan Africa.
               women’
- This limits women’s ability to access the resources needed
                            children’
   for their own and their children’s health and nutrition,
- associated with low birth weight, as well as poor child
   feeding behaviors in the first twelve months of life
--South Asia is the only sub-region in the world where female life
--South                  sub-
   expectancy is lower than male life expectancy.
 Factors that determine malnutrition
Economic growth alone can not reduce
malnutrition. For example, in India, GDP
growth was 6 to 7% per annum during 1992-93
to 2005-06.
But child malnutrition declined from 52% to
46% --0.5 percentage points per annum.
In fact, the per cent of underweight children in
India declined only one percentage point from
47% in 1998-99 to 46% in 2005-06 inspite of
high economic growth.




 Factors that Determine Malnutrition
Income poverty is another reason.
However, studies have shown that malnutrition exists
even after removal of poverty.
For example income poverty in India is 26% while
child malnutrition is 46%.
The data for India, Bangladesh and some other
countries show that malnutrition levels are surprisingly
high even in rich income quintiles.
Thus, reduction in malnutrition is going to be a
bigger challenge than income poverty.
  Factors that determine malnutrition
Therefore, one has to look beyond economic growth, income
poverty and food availability
For example, a package consisting of expanded child and
maternal immunization, antenatal care coverage,
nutritional supplementation (including breast feeding) and
home based neo-natal services (including treatment of
pneumonia) bring about significant reduction in both infant
mortality and child malnutrition .
In other words, basic health services have to be improved.
Women’s Health and Well Being: Malnutrition can be
reduced by enhancing women’s health, promoting gender
equality, empowerment of women including female educat.
Similarly, drinking water , sanitation and hygiene are
important.




     Divides in the Economy and
                Society
  Rural-urban disparities
  Social Inequalities: Social and Economic
  Indicators
Lowest for SCs/STs
Muslims
OBCs
Other castes
  Gender Disparities
           Regional Disparities
 Significant Regional Disparities in India.
 Per capita income : Highest per capita income
 Rs.16,679 in Punjab; lowest per capita income
 state Rs.3557 in Bihar.
 The per capita income of Bihar as ratio of Punjab
 was 30% in 1993-94 but the ratio declined to 22%
 in 2004-05
 Female infant mortality varies from 12 in Kerala to
 88 in Madhya Pradesh
 Female literacy varies from 33.6% in Bihar to 88%
 in Kerala




             Regional Disparities
Reduction in regional disparities is an important
component of inclusive growth.
Regional disparities increased in respect of poverty,
inequality, underweight children and infant mortality.
Human development and nutritional levels are better
in North Eastern Sates.
It may be noted that some states benefited from
reforms while some others lagged behind.
Several measures including investment, technology,
governance including decentralization are required
for reduction in disparities.
Central Govt. role: Backward Grants Fund, Separate
provision for North Eastern states
             Environment
Degradation of land, water. Increase in
pollution levels
Challenges of climate change
Consumption patterns of rich
Higher economic growth should not lead to
decline in our environment




             Climate Change
Climate change is a reality. It has impact on food
security and livelihoods of people.
Who is responsible for the climate change? It is
the production and consumption of developed
countries that are responsible.
Climate change will worsen the living conditions
of farmers, fisheries, forest-dependent people
who are already vulnerable and food insecure.
Adaptation and mitigation measures should be
undertaken by all countries.
National and international efforts are needed
 What should be done to improve inclusive
                 growth
First one is that growth and equity policies should be
followed simultaneously rather than ‘growth first and
equity next’ approach.
Growth and equity are complements rather than trade-
offs.
Economic growth is important. It improves tax/GDP
ratio. You can spend on agriculture, social sector.
Growth is necessary but not sufficient for inclusive.
Second, agriculture development should be given
priority
Third, macro pro-poor policies are more important than
having only safety nets for poverty reduction. The
macro policies such as fiscal, trade, financial,
monetary policies have to be more pro-poor. This is
important during financial crisis also.
Investment in infrastructure




          Improving Inclusive growth
However, inclusive growth does not mean populist
policies like free power, more subsidies or loan melas
Fourth, women’s social and economic empowerment is
important
Fifth, economy should follow agriculture-industry-
service sequence
Sixth, employment (both quantity and quality) should be
the focus of inclusive approach.
Skill improvement and youth employment need to be
the focus areas. Otherwise you can not shift people
from agriculture to non-farm sector.
Seventh, equality of opportunity is important. Even if we
do not follow equitable distribution of assets, everyone
should get equal opportunity for better education and
health. Social inequality has to be reduced.
    Improving Inclusive Growth
  Eighth,, South East Asian and East Asian
  experience shows that globalization with better
  initial conditions led to equitable development. India
  should learn from china on rural non-farm
  employment.
  Ninth, development of technology is important for
  inclusive growth.
  Tenth, rights approach
  Eleventh, Inclusive governance
  Some people say that when things are not working,
  democracy is responsible for lack of governance.
  There is a need to strengthen democracy by
  decentralizing and inclusive governance.




       Improving Inclusive Growth
For example, small and marginal farmers can get
better services if they are organized through
collectives like self help groups or cooperatives.
This collective approach is gaining importance in the
country.
This is important for reduction in deprivation and
disparities and for sustainable economic growth.
Basically, we have to achieve freedom from food and
nutrition insecurity, illiteracy, ill-health, low quality
employment, regional, gender and social disparities
remain one of the biggest challenges in a
democratically free India.
The road map should consist of improving physical
infrastructure, social sector/human development and
improving inclusive governance
                Conclusion
Elephant (India) has to learn many lessons from Dragon
(China) on high economic growth, rural transformation
(agriculture and non-farm) and social development.
Of course China also should learn from India regarding
democracy and free press.
In a democracy we debate more before implementing
policies. Democracy is our strength and weakness
It is more challenging to achieve inclusive growth
than getting 9% growth in GDP.
There are strong social, economic and political
reasons for achieving broader and inclusive growth.
India will be a running tiger if inclusive growth is
achieved (agriculture, poverty reduction, employment,
social sector, regional disparities) along with faster
economic growth




           THANK YOU

				
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Description: Ppt on Indian Economic Reform Since 1991 document sample