A popular saying goes thus- "When you're already at the bottom of the pit, all you can do is go up." Rewind back two decades and you will find India in a pretty similar state. An economic crisis forced us to let go of the dead old ways. With a slew of econimic reforms, the year 1991 marked a radical shift in India's economy. Two full decades have passed and we sure have come a long way. It's time to review what has worked for India and what has not.
The writer of a leading daily has presented an interesting perspective. According to him, there are two ways of looking at India's two decade performance. The most popular way, as we all know, is looking at the key economic indicators. The numbers look quite upbeat on that front. India's economy has been growing at an average rate of about 7-8%. This is quite superior to the 5-6% growth recorded in the two decades preceding 1991. Even at a time when the developed world is desperately trying to wriggle its way out of the economic turmoil and the debt crisis, India has maintained its position as the second fastest growing economy. There has been a laudable increase in exports and investment rates. Moreover, we have witnessed the rise of Indian enterprises as global entities during this very period.
Let's look at the other side of the coin as well. During these past two decades, the rich-poor gap has intensified, poverty still remains high, and unemployment generation has grown at a paltry rate. Here are the numbers- the Gini coefficient, which measures income inequality across households, has gone up from 25.8 in 1993-94 to 28.8 in 2009-10 in rural areas and from 31.9 in 1993.94 to 38.3 in 2009-10 in urban areas. The number of absolute poor in India has declined only marginally from 404.9 m in 1993-94 to 397 m in 2009-10. What is even more perplexing is that the average rate of employment generation during this period has been a meagre 1.3% per annum. This is significantly lower than the rate of population growth or the rate of growth of working age population. In fact, during the last five years the rate of employment growth has been the lowest at 0.2% per annum.
These numbers point to the grim fact that India's growth has been extremely skewed. We seriously need some important reforms to facilitate higher employment generation and to reduce the income disparities. What we fear is that important reforms similar to the ones enacted in 1991 will be put off until we again find ourselves in a situation when things go out of control. As they rightly say, history repeats itself. Or will it not? Time will tell.
By J Mulraj
The writer of a leading daily has presented an interesting perspective. According to him, there are two ways of looking at India's two decade performance. The most popular way, as we all know, is looking at the key economic indicators. The numbers look quite upbeat on that front. India's economy has been growing at an average rate of about 7-8%. This is quite superior to the 5-6% growth recorded in the two decades preceding 1991. Even at a time when the developed world is desperately trying to wriggle its way out of the economic turmoil and the debt crisis, India has maintained its position as the second fastest growing economy. There has been a laudable increase in exports and investment rates. Moreover, we have witnessed the rise of Indian enterprises as global entities during this very period.
Let's look at the other side of the coin as well. During these past two decades, the rich-poor gap has intensified, poverty still remains high, and unemployment generation has grown at a paltry rate. Here are the numbers- the Gini coefficient, which measures income inequality across households, has gone up from 25.8 in 1993-94 to 28.8 in 2009-10 in rural areas and from 31.9 in 1993.94 to 38.3 in 2009-10 in urban areas. The number of absolute poor in India has declined only marginally from 404.9 m in 1993-94 to 397 m in 2009-10. What is even more perplexing is that the average rate of employment generation during this period has been a meagre 1.3% per annum. This is significantly lower than the rate of population growth or the rate of growth of working age population. In fact, during the last five years the rate of employment growth has been the lowest at 0.2% per annum.
These numbers point to the grim fact that India's growth has been extremely skewed. We seriously need some important reforms to facilitate higher employment generation and to reduce the income disparities. What we fear is that important reforms similar to the ones enacted in 1991 will be put off until we again find ourselves in a situation when things go out of control. As they rightly say, history repeats itself. Or will it not? Time will tell.
By J Mulraj
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