Wednesday, August 22, 2012

GURCHARAN DAS, MANAGEMENT GURU AND PUBLIC INTELLECTUAL

India’s economic journey from the times of the measly Hindu rate of growth is indeed incredible. Economic reform coupled with administrative reform is the way forward

Things began to change with modest liberalisation in the eighties when annual economic growth rose to 5.6%. This happy trend continued in the reform decade of the nineties when growth averaged 6.2% a year, while population slowed to 1.8%; thus, per capita income rose by a decent 4.4%.

Gaurav Datt and Martin Ravallion, both respected economists, employed a new series of consumption-based poverty measures from 1950 to 2006 and 47 rounds of National Sample Surveys, to show that slightly more than one person in two lived below the poverty line in India during the 1950s and ‘60s. By 1990 this had fallen to one person in three. By 2005, it fell again, and only one in five persons now lives below the poverty line. The authors conclude that “the post-reform process of urban economic growth has brought significant gains to the rural poor as well as the urban poor.”

An earlier study by the two economists had examined the period prior to 1991 when our economy grew more slowly. India’s per capita GDP grew at an annual rate of barely 1% in the 1960s and 1970s; it picked up to 3% in the 1980s; and accelerated to 4-5% after 1991. In the pre-1991 period, modest urban growth brought little or no benefit to the rural poor. Rural poverty decreased only through rural growth, such as the Green Revolution.

In another study comparing India, China and Brazil, Martin Ravallion shows that China (with higher growth) and Brazil (with lower growth) have done a much better job at poverty reduction. India’s failure in education and health is not a function of money alone, as the Prime Minister suggested this week when he vowed to raise spending on education to 6%. When one in four teachers is absent and one in four is not teaching, we need accountability in delivering services to the poor. Thus, administrative reforms are just as important to the lives of the poor than even economic reforms.


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