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Tue Jun 19, 2012, 05:43 PM

Why Is India Still Poor?


from YES! Magazine:



Why Is India Still Poor?
India’s development was supposed to be an economic success story. What we can learn from what actually happened.

by Ashish Kothari, Aseem Shrivastava
posted Jun 18, 2012


In March 2012, the Indian Planning Commission stated that 29 percent of India’s population was poor. These were people who had less than Rs.22.42 (US $0.41) a day if they were living in villages, or Rs. 28.35 (US $0.52) if in a city. The Commission’s happy conclusion was that poverty had fallen from 37 percent since its last measurement in 2004-05.

It is difficult to decide which is the more remarkable figure here. The fact that more than six decades after India gained independence, and after two decades of some of the highest economic growth rates in the world, almost a third of the country was still poor—or the fact that India’s highest planning body actually considers anyone earning more than $0.52 a day as not fitting into their definition of poor. Activists pointedly asked the government economists if any of them could live on that amount in New Delhi; the response, of course, was a resounding silence.

If even slightly more realistic figures are used, the grim reality of poverty in India is revealed. Taking the World Bank criterion of $1.25 (PPP) a day, for instance, there were 456 million “poor” Indians (42 percent of population) in 2005. Estimates that take nutritional and caloric needs into account bump the number in poverty up to 60 – 80 percent.

Development’s failed promise

This is not how it was supposed to be. Post-independence, an industrial model of “development” had promised to eradicate poverty. When this was seen to be clearly failing, partly due to the inefficiencies of a state-led economy, the country was taken into the era of economic globalization with the same promise. It has now been two decades since the introduction of new economic policies in 1991, which included a shift away from an inward-focused model of self-reliance towards a stress on exports and imports, the opening up of various economic sectors to foreign investment, liberalization of regulatory regimes, and a move from public sector investments to privatization. ...............(more)

The complete piece is at: http://www.yesmagazine.org/new-economy/why-is-india-still-poor



9 replies, 1879 views

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Response to marmar (Original post)

Tue Jun 19, 2012, 05:48 PM

1. huge gap in distribution of wealth

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Response to JI7 (Reply #1)

Tue Jun 19, 2012, 08:33 PM

5. Agreed! n/t

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Response to marmar (Original post)

Tue Jun 19, 2012, 05:52 PM

2. how many people are there these days? nt

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Response to marmar (Original post)

Tue Jun 19, 2012, 06:01 PM

3. 53 cents per day is NOT poor?? I'm speechless and sad.

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Response to marmar (Original post)

Tue Jun 19, 2012, 06:38 PM

4. I remembered running across

this interesting factoid some time back.



America's Poorest 5% = India's Richest 5%



http://mjperry.blogspot.com/2011/01/americas-poor-indias-richest.html



I make no representation for the webpage, it was the first one which came up when I did a google on the quote I remembered hearing. It may or may not be the original source for my memory of it.



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Response to newblewtoo (Reply #4)

Tue Jun 19, 2012, 11:41 PM

7. i didn't look at the site, but these things can be very misleading, in india you can get much more

for a dollar than in the US. when i visited a few years ago we could go to very nice restaurants for cheap(based on US dollars and spending). but an uncle who went with us saw the bill thought it was very expensive .

just like how you can buy a far decent size home for much less than some small shack in Los Angeles.

the problem in india is the distribution in wealth. it's much more extreme than in the united states. there is also a lot more corruption involving public officials.

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Response to marmar (Original post)

Tue Jun 19, 2012, 09:00 PM

6. India is tied down in bureaucratic BS.

Most of the "regulatory" structure in India goes to protecting private interests who benefit from the economic status quo. it is much like how Big Business lobbyists here make sure regulations are written in a way that drives small businesses out of business. You you are a small businessperson in India you almost have to get a license to take a shit.

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Response to marmar (Original post)

Wed Jun 20, 2012, 05:16 AM

8. Very disheartening that the linked article doesn't even mention population growth.

According to Indian census data -- available here -- population went from about 361 million in 1951 (soon after independence) to about 1.03 billion in 2001. Over that period, India needed to triple its GDP just to maintain the same average GDP per capita, regardless of distribution issues.

AFAIK it's correct to argue that Indian society is very unequal, and that greater equality would lead to a reduction in poverty. Nevertheless, that's not the whole story. The IMF provides figures for GDP and GDP per capita, both in nominal amounts and with the PPP adjustment. (Using PPP, or purchasing power parity -- see http://en.wikipedia.org/wiki/Purchasing_power_parity -- is to correct for the lack of comparability noted by JI7 in #7.) In 2012, India's GDP per capita -- the amount each person would get if the distribution of income were perfectly equal -- was just under $4,000 per year with the PPP adjustment. (See http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/weorept.aspx?pr.x=51&pr.y=6&sy=2009&ey=2012&scsm=1&ssd=1&sort=country&ds=.&br=1&c=534&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC%2CLP&grp=0&a= for the IMF data.)

The PPP is normed to the U.S. economy. Therefore, with perfect equality of income distribution, the average Indian family of four would have the goods and services that would cost an American family about $16,000 per year. For hundreds of millions of people in India, that would be an improvement, but they'd still be among the least well off populations in the world.

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Response to marmar (Original post)

Wed Jun 20, 2012, 07:42 AM

9. They just skipped building a middle-class?

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