Haha. There, that points to the slavish mentality-'we will stick to China'! I dont think any Indian commenting that we need to 'stick' to any country to be prosperous. We are self-made from the damn Hindu growth rate to the boom of the last decade, and the world wants to stick with us now, not the other way round.
You Indians are delusional
Reforms and poverty numbers
NEERAJ KAUSHAL
The Economic Times September 8, 2008
India Inc gets uncomfortable when it comes to counting the poor. Recently, the World Bank and the Asian Development Bank (ADB) released separate reports that made the denizens of India Inc most indignant. The World Bank report upped its benchmark of extreme poverty by 25 cents from $1 per person a day to $1.25 per person a day. The ADB announced an even higher poverty benchmark of $1.35 per person a day. Media commentaries on these reports provide a glimpse of how outraged some people in Emerging India are about the claims that 42% to 55% of Indians, depending on the benchmark used, live in extreme poverty.
It may be a bit hard for us to believe but it looks like the World Bank did not change its definition merely to infuriate the proud inhabitants of India Inc. The new benchmark is the average of the national poverty lines of the worlds 15 poorest countries, clarifies a brief report on the World Bank website. The ADBs benchmark is Asia-specific, based on surveys from 16 Asian countries.
I find the easiest way to swallow these numbers is by further dissecting them. By World Banks old measure, 267 million Indians (almost a quarter of the population) lived on less than $1 a day in 2005. Raise the benchmark by a quarter, another 190 million would add to the tally of the poor. The next 170 million earn a mere 10 cents more. A sobering reminder of these statistics, even if we go by the Indian poverty line, is that while a quarter of the population lives in extreme poverty, another 30% is just above the poverty benchmark.
Some experts have claimed that the new benchmarks exaggerate Indias poverty numbers. Do they? I think the answer to this question depends on what you want to do with these numbers. If you want to use the poverty numbers to forecast Indias purchasing power for, say, toothpaste or soap, the new poverty rates may be an exaggeration. For it is possible for someone who earns $1.25 or $1.35 a day to occasionally buy toothpaste and/or soap. I may add another statistic for this purpose alone: in 1981, by World Banks new poverty line, there were 280 million non-poor in India, and in 2005, the number increased to 630 million. So did Indias purchasing power for soap, toothpaste, cell phones and thousands of other consumer items.
But if you want to understand Indias political economy and study whether the fruits of economic growth of the past decade have been shared with the poor, the new poverty statistics provide an essential reading.
Experts often like to argue that global poverty has declined because of India and China. This is wrong and misleading. As the World Bank report clearly points out the story of reduction in global poverty in the past quarter century is basically the story of China or East Asia. By both poverty benchmarks, $1 a day and $1.25 a day, the number of persons in poverty in the world outside of China has remained almost constant between 1980 and 2005.
I find that the statistics on poverty are most useful in comparing trends over time. There the story appears to be the same whether we use the World Bank data or the National Sample Surveys. In the past quarter century, poverty rate in India has slowly declined by somewhat less than one percentage point a year. But the number of poor, irrespective of the poverty line we use, have remained stubbornly large, and roughly the same within a margin of 8% to 10%. The World Bank data, like the NSS estimates show that the decline in poverty was modestly fast during the 1980s than during 1990-2005.
However, I will not hasten to blame economic policies since 1990 for the slow progress in poverty reduction. There are so many factors that have affected the plight of the poor that it would be wrong to blame all on economic policy changes since 1990. In fact, I am not sure how to measure the effect of policy since the initial set of economic reforms in the 1990s was in direct response to the policies of the 1980s that brought the country to the brink of bankruptcy.
Clearly, India has not experienced the same spectacular declines in poverty that were the hallmark of economic progress in most of east Asia during the 1980s and much of the 1990s. And it is important that Indian policymakers acknowledge the lack of progress made by India on this front. The numbers are startlingly clear: in 1981, there were roughly 1 billion poor people in East Asia and 421 million in India living on less than $1.25 dollars a day (at 2005 prices). Twenty-five years later, there are only 337 million poor in East Asia, in comparison to 457 million in India.
The World Bank numbers are for 2005. Since then the Indian economy experienced an explosive 9% growth in its output. In several East-Asian economies, including China, such explosive economic growth has been found to lower poverty substantially. We will have to wait for the next round of surveys to find out whether similar growth has brought any rewards for Indias poor.
(The author teaches at Columbia University)
Reforms and poverty numbers- Opinion-The Economic Times