Poverty rate fell due to liberalisation, say experts

Rising per capita income and growth have reduced poverty among all classes, including socially-disadvantaged classes. Though there are skeptics who argue that growth has bypassed the socially disadvantaged classes, the analysis of National Sample Survey (NSS) data proves otherwise. But, high prevalence of poverty in the states where more SC, ST populations are living still remains same.

A Columbia University, USA, study that had analysed the NSS figures from 1988 to 2005, found poverty steadily declining across every social class. The study also observed that India has neglected labour-intensive manufacturing sector, which otherwise would have play a huge role in reducing poverty compared to services sector, which mainly offers employment to semi-skilled and highly skilled people. Arvind Panagaria, Professor of Economics and Indian Political Economy, Columbia University, said, “In the next 15 years, India can eradicate poverty and even redefine it. Young workforce proportion is the highest in Indian population compared to other countries and Indian workforce will be everywhere in the world.” He added that the analysis of NSS figures showed that poverty declined in every group across the country from 1983 to 2004-05. So growth has not bypassed the socially disadvantaged.

“Ten states with largest SC and ST populations have also witnessed a decline in poverty,” he added at a conference on ‘Reforms, Poverty and the Socially Disadvantaged’ organised by CII and Columbia University School of International and Public Affairs in Bangalore.

Rishikesha T Krishnan, Professor, Corporate Strategy and Policy, IIM-Bangalore, felt that India would not have enjoyed many facilities of today without growth. “But it also led to more inequalities,” he added.

Trade liberalisation increases growth and efficiency of an economy. Free trade leads to higher wages for unskilled workers in poor and labour-abundant countries. It was the opinion of Rana Hasan, Principal Economist, Asian Development Bank, that according to the NSS’s region level poverty data from India from 1987-88 to 2004-2005, the labour market institutions had grown when there was a financial growth and good road connectivity.

“The states that were more open to outside world have avenues for more employment. States with developed financial markets and liberalised tariff rates achieved reduced numbers in poverty,” he added.”