Reforms aam aadmi link
The biggest question being asked about the UPA government’s second generation economic reforms ushered in the last fortnight is whether the aam aadmi will benefit or just the corporate will become richer.
The government data on first generation economic reforms initiated in 1991 suggest that the corporate benefitted more that the aam aadmi, whose future was the threshold of Prime Minister Manmohan Singh’s speech to the nation last Friday on the need for the new wave of reforms.
“We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits which cause a loss of confidence in our economy,” PM Singh said in his address.
The PM recalled that in the last eight years the economy grew at annual rate of 8.2% but the period also witnessed increased inequality among the richest 10% and the poorest 10%.
According to the government’s National Sample Survey Organisation, the monthly per capita expenditure of top 10% of rural population was about 6.9 times of the bottom 10% in 2011-12 as compared to 5.6 times in 2004-05, when the UPA government came to power. In urban areas, the per capital expenditure was about 10.9 times of the bottom 10%, which was around nine percent in 2004-05.
The data based on preliminary survey is indicative that the gain for the poor is not as much as the richer in our society. This fact is also corroborated with figures on increase in per capita income of the poorest and the richest in absolute terms.
The PM is not wrong in saying that the aim of high economic growth is inclusiveness but inclusiveness is not of the desired level, where disparity among the rich and the poor fall, and country as a whole progress.
Data also suggests that there is high level of poverty in the states considered rich such as Maharashtra, Karnataka and Tamil Nadu.
Wardha, Washim, Akola, Amravati, Bhandara, Nanded, Dhule and Nandurbar are some of the districts in Maharashtra having poverty rate higher than 40%. Pune and Mumbai in Maharashtra have poverty rate of less than 15%.
High revenue districts in Karnataka such as Bellary and Raichur has poverty rate of over 43% indicating that the locals did not benefit much from the boom in mining activity even though individuals in far-off Bangalore, Delhi and Mumbai earned millions of rupees from it.
Data indicates that richer people or affluent areas tend to grow faster primarily because the government had failed to build capabilities among poor to gain sufficiently from any economic growth.
Education, health and infrastructure facilities — key to reap benefits of growth — in India’s 200 poorest districts is even worse than sub-Saharan Africa. Most of rural India lacks the ability to become part of India growth story.
If Prime Minister Singh really wants aam aadmi, which, to me is the poor living in far-flung areas and not vocal urbanities in Delhi or Mumbai, the government needs to change its focus.
It should build employment avenues in rural areas by investing in building infrastructure, improving human skills and taking industry there.
Only then the real aam aadmi will gain. Otherwise, the corporate will continue to loot the growth gains.