Liberalisation in agriculture must to reduce poverty — World Bank

Expanding education and health services will require that state governments reverse the deterioration in their fiscal positions, as subsidies to the loss-making power sector crowd out spending in the social sectors, the report suggests.

The higher spending will need to be matched by better service provision. This will require improvements in governance, often weakest in country’s poorest regions, and in combating teacher absenteeism. Also needed is more equitable service provision, which will require empowering women and members of lower castes.

India suffers severe deprivations in education and health – especially in the North where caste, class and gender inequities are particularly strong.

In studies in Bihar and Uttar Pradesh, poor women and men emphasized their extreme vulnerability and the ineffectiveness of state institutions from schools to police.

India’s pace of poverty reduction slowed down in the past decade, particularly in rural areas, despite strong economic growth. The gross domestic product (GDP) growth during 1990-98 was 6.1 per cent and yet the decline in poverty levels became sluggish.

Quoting National Accounts Statistics (NAS), the WB report says there are signs of rising inequality nationally, mainly due to rising average consumption in urban areas unlike in rural areas.

However, an important factor in the slow rate of poverty reduction was tardy growth in average consumption, as measured by the national sample survey (NSS), says the report.

A closer examination shows that NSS consumption is an increasingly smaller fraction of private consumption as estimated in the NAS. NSS consumption has declined relative to NAS consumption during the past three decades – the two were much closer in the 1950s and 1960s.

If the average consumption figures from the NAS, and everybody’s consumption is adjusted proportionately, poverty would show a downward trend during the 1990s, it says.

There is evidence that part of the observed trend in rural poverty in the earlier part of the 1990s may result from using inadequate price deflators for rural areas.

As a result, "it is likely that the decline in rural poverty rates has been understated in the official poverty counts. Indeed, we are led to suggest as a working hypothesis that, between 1987-88 and 1993-94, there was no great difference in the rate of decline of urban and rural poverty, at least according to the headcount measure", the report said.

It is plausible that the NSS-based poverty numbers are underestimating the rate of poverty reduction in India. The issues involved are important not only because of the Indian poverty problems are likely to arise elsewhere.

India has a stronger statistical tradition than most poor countries. And it is not simply a matter of getting accurate estimates of poverty. Such surveys are a key resource for identifying the characteristics of poor people and thus are a vital input for focusing policy. Research in this area is a high priority.

Meanwhile, according to the quick estimates of index of industrial production with base 1993-94 the general index stands at 154.5 for July 2000. Industrial production in July, 2000 is higher by 4.3 per cent compared to the same month in last year.

The indices of industrial production for the mining manufacturing and electricity sector for the month of July, 2000 stand at 119.9, and 147.1 respectively, with the corresponding growths of 0.70 percent 5.1 percent and 1.0 percent compared to the month of July, 1999.

The commulative growths during April July, 2000-2001 over the corresponding period of 1999-2000 in the three sectors have been been 3.0 per cent 5.7 per cent and 4.0 per cent respectively, with the overall growth in the general index being 5.4 per cent.

Twelve out of 17 two digit industry groups have shown positive growth during the month of July 2000 as compared to the corresponding month of the previous year. Metal products and parts, except machinery and equipment have shown the highest growth of 37.6 per cent followed by 18.4 for the jute and other vegetables fibre textiles (except cotton) and 17.0 in wool silk and man made fibre textiles. On the other hand, paper and paper products and printing publishing and allied industries have shown a growth of 14.4 per cent followed by a growth of 10.8 per cent in transport equipment and parts and 1.0 per cent in beverage, tabacco and related products.

As per use based classification the growth in July, 2000 as compared to July, 1999 is 5.8 per cent in intermediate goods, 2.9 per cent in basic goods and 1.0 per cent in capital goods. The consumer durables and consumer non-durables have recorded growth of 23.0 percent and 1.3 per cent respectively, with the overall growth in consumer goods being 6.5 per cent.