Reforms Have Reduced Poverty: Ibrd Bank

A World Bank report released at the India Development Forum (IDF) meet in Paris says economic liberalisation has done more to reduce poverty in India than government development programmes.

The report, titled India: Achievements and Challenges in Reducing Poverty, notes that some of the government programmes have in fact largely missed their supposed targets the poor and delivered the bulk of their benefits or subsidies to the politically or economically more advantaged.

On the other hand, economic growth in India has widened opportunities at the bottom as well as near the top of the society, the Bank says, adding that this has raised the wages of landless rural workers since liberalisation.

 

Overall, the reforms India started in 1991 hold the promise of considerable improvements in the living standards of the countrys 300 million poor, the Bank says.

Inward looking industrialisation strategies of the past could not achieve the rate of poverty alleviation possible with alternative policies, says the report.

While praising the high growth rates in the past five years resulting from liberalisation, the Bank cautions that much remains to be done to sustain this growth.

High fiscal deficits, tremendous infrastructure problems, inefficient financial systems and heavily subsidised sectors like agriculture are problems facing the Indian government, it says.

Over the past 50 years, there have been many achievements to Indias credit, but the pace (of poverty alleviation efforts) remains both slow and uneven ... and more likely to empower men than women, says the report. It adds that poverty reduction was far more responsive to overall growth of the economy than to various government efforts to direct resources to reduce poverty.

The new surges of growth brought on by liberalisation should spur the government to re-examine rural poverty more than three-fourths of the total and extend the reforms to unleash productivity growth in agriculture which historically has contributed most to poverty reduction, says the report.

Involving the private sector and non-governmental organisations in poverty eradication is critical, as is the need for high quality data, it adds.

While some of Indias Asian neighbours have made a point of combining growth-oriented development with investments in health and education, India has not given the education of the poor the kind of priority it deserves.

Some 33 million of the 105 million children aged between six and 10 years are out of school and working in low-wage jobs with little chance of improving their lot, points out the report.

Modified state intervention essential for growth

India must accelerate pace of reforms

Neglect of primary education has gone hand-in-hand with gender discrimination, and bridging this gap among the poor needs special efforts. A determined public policy action to eradicate gender discrimination is necessary, asserts the report.

It is important that the poverty reduction strategy should strike a balance between investments that give significant dividends and subsidies that actually benefit better-off sections of the population and distort markets, says the Bank.

India has not yet found that balance, according to the report. And investments in education and health have been below those necessary to accelerate growth and poverty reduction. Anti-poverty programmes have not been cost-effective in reducing poverty, the report emphasises.