POVERTY: India needs growth to pull people out of poverty

Srikanta Tripathy, TNN, Jan 14, 2011
JAIPUR: India can play a leadership role on the global stage and emerge as the third largest economy in the world after the US and China, said Arvind Panagariya said here on Thursday while delivering the 5th Raj Krishna Memorial lecture in the University of Rajasthan.
"India's economy is growing at over 12% in dollar terms. It's $1.3 trillion economy can the reach the size of China $ 6 trillion in 15 years if it continues to grow at the current pace," said Panagariya, professor of economics at the Columbia University.
Referring to Barack Obama's India has risen' statement, he said people from India and Indian origin are doing great work in different countries in various fields, except for sports. "There are 3 lakh students studying in the US, the UK and Canada, and they can enhance India's sway when they enter the global workforce," he added.
But there are lot of areas where India needs to do catch-up. Its share of global output, trade and other developmental parameters are still far below the levels of advanced economies.
"India's share of world trade is still less than 2%. Per capita income wise, India ranks at 153 position in the world. To play a leadership role India needs reforms. It has done so when the Narashima Rao led a minority government assisted by left parties. The government then put an end to the Licence Raj, allowed foreign banks to operate in India and lifted lot of restrictions on FEMA," he said.
But reforms have slowed down during the UPA's regime, he said, adding that a lot could have done during the 7-year period of the UPA government.
Growth is necessary not only to play a bigger role at the global high table but also to provide jobs and pull millions out of poverty.
"Economic growth plays a vital role in bringing down the level of poverty and it is down to 27% in 2004 from 47% in 1980s. Also, the growth has helped the government to roll out programmes like NREGA," said Panagariya
While prosperity has reached some sections of the poor and brought new consumers to the market place, the growth in agricultural production has failed to keep pace, resulting in higher inflation.
"Agriculture's contribution to gross domestic production has fallen to 15%, and the best rates of growth it clocked were during 1980-1990, when it posted a growth of 4.4%. In contrast, industry and services are expanding at 11-12% growth," said Panagariya, adding, "Still about 55% of people in India are dependant on agriculture."
Moreover, as Panagariya puts it, 27% people below poverty line means a huge 300 million of the country's population. He said that manufacturing sector, which has the potential to create large number of employment opportunities, is not growing as fast as it should. The sector's share of total output has remained at a stagnant 15% since the economy was opened in 1992.
http://timesofindia.indiatimes.com/city/jaipur/India-needs-growth-to-pull-people-out-of-poverty/articleshow/7279703.cms#ixzz1BCjNOPA3