Rampant economic growth and poverty in India – two sides of the same coin

BY GOPAL RANJAN PADHEE

I am an enthusiastic, dynamic, hard working young Indian, part of the India rising and a strong believer in the globalization and liberalization. I am very optimistic about the future economic prospect of India and above everything else I am proud to be part of the Rising India. But the recent media reports about the suicide of debt ridden poor farmers in Vidarbha, starvation deaths in Orissa, and an overwhelming 836 million people in India live on a per capita consumption of less than Rs 20 a day, has startled me to take stock of the situation and introspect.


Booming economy and market – One side of the coin

India a country not so long ago known only as a highly spiritual, fascinating third-world country has embraced the globalization and liberalization of the economy in the past two decades. This is yielding high economic dividends with a flourishing and competitive service sector and a moderately growing industrial sector. This has the effect of constantly changing urban landscape with glittering and swanky shopping mall, high quality and comfy multiplexes, classy and glossy advertisement board, one of the fastest growing aviation sectors, grand and glassy commercial complexes, world class residential real estate, internet and cell phones at everybody’s reach and the list goes on and on. Now India is the second fasted growing economy of the world, fourth largest economy in terms of purchasing power parity, and part of so called future tri-polar world along with China and United States as the superpowers. The awe-inspiring economic progress has awakened the world to India’s potential as a global player. The rich and middle class with ever increasing disposable income are demanding high quality services and facilities fueling the growth of prominent sectors such as infrastructure, telecom, real estate and banking. But achievement creates new challenges and one of the most important is expending the benefit of this exponential growth across demography and geography.

Poverty - The other side of the coin

The media reports in the last few days have startled me.

In an American channel I saw the documentary film about an enormous toll of cotton farmer suicides at a rate of about one every eight hours - three per day in 2006. The farmers take loans from private parties for genetically modified seeds, fertilizers and pesticide for higher productivity rather than the self grown seeds. And hope for a good monsoon and resultant harvest. Even if they get a good monsoon, the prices the produce fetch is low to make a living. So eventually in the absence of good government support systems the debt ridden farmers commit suicide in despair.

Then I read the article about how the villagers in part of Orissa grappling with the poverty, food and contaminated drinking water also had to suffer the outbreak of diarrhea and gastroenteritis that had already claimed more than 100 lives. Along with that there is shortage of doctors in that area. There are only two doctors where the sanctioned number is twelve.

After that there was another article on the statistics that 836 million Indians live on less than 20 rupees per day. This is the findings of the Arjun Sengupta report on the Conditions of Work and Promotion of Livelihood in the Unorganized Sector. And between the period 1993-94 and 2004-05 this number rose by 100 million.

A recent World Bank report documented the persistence of extremely high levels of malnutrition in India: among the middle-income group more than half of children were underweight (less than two standard deviations below the norms of weight for age)

Expending the benefit of this exponential growth

So in one hand we have the booming economy and in the other hand we have the abject poverty. They are like two sides of the same coin, different but coexisting in the same set of environment. The growth story of India is mostly urban centric and the rural population is still derived of the basic necessity such as food, cloth and shelter. Rural population in India is 72.22% and the contribution to the GDP from the agricultural sector is 19.9% (2006 est.) where as 60% of the total labor force is employed in the agricultural sector. Perhaps the most disappointing part of the growth story has been the performance of the agricultural sector. In the period 2002/03 and 2004/05 the agricultural sector grew by 1.3% - against the Tenth five year plan target of 4%. With the rapid growth in the service and industrial sector there will be continued migration of the rural population to the urban areas in search for better livelihood. This migration is claimed to be the largest ever migration in known human history. But migrating majority of the rural population to urban areas is simply a nonstarter, considering the humongous 742 million (2001 census) rural populations. So how do we extend the benefit of this exponential growth to the rural population and poor?

India is now a booming economy with growing gaps. The government really needs to address the imbalances in the pattern of growth. There are too few jobs; some of the states are lagging behind, section of the population not part of the growth story, abysmal performance of the agricultural sector.

Reviving the agricultural sector

There is a slowdown in the agricultural sector and it has lopsided effect on the rural economy, employment and wages. The yields on many crops in India are still half or less than half of the comparator countries. Major policy initiatives are needed in the following areas to accelerate the productivity on agricultural sector:
Intensification of the crops with irrigation, mechanization, agro-chemical etc.
Shift to more profitable crops i.e, fruits, medicinal plants etc and livestock.
Emphasis on value addition: Agro processing, trading etc.
The increase in productivity would reduce the number of people to be employed in agriculture. And hence long term strategy in off farm activities.
Fair access to the market and social security measures such as Insurance and micro credit facilities.

Equalize growth

The success of India is not shared equally. And hence along with the actions required for rapid growth there is need for actions that are required for promote rapid growth in areas that needed the most. There are constraint factors that concern the equitable and aggregate growth are;
Infrastructure both social (such as education, health) and larger physical ( such as road, power supplies and water),
The fiscal deficit,
Labor laws,
Financial sector.
The government should take necessary policy decisions to overcome these obstacles.


With achievement comes challenges and with every challenge there are opportunities. The economic reforms were supposed to have the trickle down effect on all sections of the society. There is need for proper governance, fiscal accountability and the political will power along with all the development initiative to foster the equalizing accelerators to overcome disparity and promote inclusive growth. We as citizen of this young nation would not like in the long run to have (a) rapid economic growth and (b) Poverty, to be two side of the same coin.