Ready, Set, Grow: Is our growth rate good enough?

Thursday, July 19, 2007

Even before Darwin said "Survival of the fittest", "the struggle for existence" was pervasive. This struggle was always won by the one who had more "strength", need not be just physical. Some people are born with "strength", some acquire it, some keep struggling for the rest of their lives. Consequently the same "strength" determines their tag, namely "rich" or "poor". This differentiation can be seen at any point of time in the history, contemporary world is no different. We live in a world where some people feel uncomfortable if they do not eat in a five star hotel, where as some people are not even capable of getting a cheap food on the foot path. That is inequality, the biggest enemy of any economy; to be more specific, of any developing economies.

According to the Human Development Report of The United Nations, richest 20% have 74% of the total income and and the poorest 20% have just 2% of the total income! 1.2 billion people in the world (19%) fall below the poverty line (BPL) i.e. people earning less than 1$ per day. Not only this, huge regional differences in income distribution is the matter of concern. Out of 630 million people in Africa, 420 million people fall below poverty line. On the other hand, out of 1130 million people in OECD countries, there is not even a single citizen earning less than 1$ per day!! (HDR 2005). This is one important reason why most of the economist conclude that "Rich is getting richer and poor is getting poorer".

Considering the Indian scenario, successive governments at the center always claimed that the poverty has reduced by certain percentage. But (according to govt sources) the absolute number remained same. That means over a long period of time, number of people starving in India remains same! Despite decent development measures, poverty in India is widespread. More over, poverty and unemployment go hand in hand. Absolutely no doubt, Indian population is "one of the many reasons" for the twin problems of poverty and unemployment. By the time you finish reading this sentence, seven kids are already born in India! Finance minister says "our human and gender development indices are low not because of high growth but because growth is not high enough". But does the "high growth" reduce the pervasively existing poverty in India? Some economists say Indian economy is already overheating, meaning unsustainable growth and hence high growth rate alone cannot solve the problem of poverty. India also faces the problem of "jobless growth", meaning high unemployment in spite of high growth rate! Thus, high growth rate is "necessary" but not "sufficient" in the Indian context. Proactive measures to ensure socio-economic development, economic policies to curb inequality and the sustainable "good enough" growth can pave the way to solve the twin problems of poverty and unemployment.

The question is, can "India Shine" in fighting against these twin problems despite the odds?

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This work by Manjunath Singe is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.5 India License. The views and opinions expressed in this work are strictly those of the author and do not represent his employer's views in anyway.