The authors examine the numerous structural and policy changes Indian authorities have adopted since the 1991 balance of payments crisis; how these changes helped India weather the Asian financial crisis of 1997-98; the risks to fiscal sustainability and their implications for growth; the challenges facing monetary policy in the face of financial market liberalization; and the benefits of structural reform and fiscal policy for growth, poverty, and the reduction of regional disparities.

Rapid growth since 1980 has transformed India the 50th ranked economy in nominal US dollars to the 12th largest in the world in 2003. When income is measured with regard to purchasing power parity, the Indian economy occupies fourth place, after the United States, Japan, and China. Along with growing incomes, India’s increasingly outward orientation and the growing optimism about its economy has led to a surge in international investors interest. At the same time evidence suggests that income inequality is rising and the gap in average per capita income between the rich and poor states is growing. This book of collected articles provides an in-depth treatment of growth and employment issues in India. It reviews India’s long-term growth experience, emerging constraints and challenges, and the way forward for sustaining rapid growth along with more and better employment. Specifically, the book identifies ways in which the investment climate can be further improved to raise productivity and reduce the cost of doing business, thereby promoting domestic and foreign private investment. It looks at the growth and productivity challenges in agriculture and suggests policies that will help raise farm productivity and incomes. Higher farm productivity and incomes along with more and better non-farm jobs will reduce poverty at a faster pace than in the recent past. It explains the reason for the low overall employment elasticity of past growth and why there has been limited expansion of good jobs, and concludes by suggesting reform option for increasing employment.

The report analyzes India's continued good progress in increasing incomes, and improving living standards over the past decade, which after the setback associated with the 1991 balance of payments crisis, economic growth picked up, income poverty continued to decline, and many social indicators, in particular literacy, continued to improve. Likewise, there has been an opening to private activity, trade policy and the exchange rate regime have been further liberalized, and capital markets have been reformed, leading to an improved investment climate. Nonetheless, development progress has been steady, but uneven, while in addition, the recent growth deceleration was accompanied by a slowdown in investment, especially in the private sector. The fiscal position of the general government has now also deteriorated, with a rising budget deficit, the result of a significant increase in government consumption, and continued low revenue mobilization. But at the same time, prudent monetary policy has helped contain inflation, and strengthen the balance of payments. Based on this analysis, fiscal reforms are needed in taxation, financial, social, as well as for fiscal management. The report also reviews the delivery of public services, showing the need to access effective social safety nets, i.e., social services that require increasing the level, but more importantly the quality of public expenditures in these areas. This in turn requires improving the governance and productivity of India's civil service, and the pressing problem of affordability. An effective program of civil service reform should include measures to achieve the following three objectives: improve access to information; strengthen accountability; and, reduce political interference. Of special concern, are the weaknesses in the service delivery of social sectors: education, health and social safety nets, and, it has been argued that decentralization, and local empowerment will ultimately improve the quality of service delivery at the village level. To this end, the report suggests improving the investment climate, with a special look at infrastructure development, while promoting rapid agricultural, and rural growth given its importance in the socioeconomic, and political fabric of India, through productivity-enhancing investments. Continued progress on poverty reduction will require a major push to reinvigorate the reform agenda.

This book brings together the latest research findings from leading economists from India and abroad on ways to revive and sustain higher growth rates in India. Divided into five parts, the first part empirically examines the various factors that affect poverty and shows that growth is crucial to poverty reduction. The second part investigates the factors responsible for sustaining industrial growth including skill formation and innovation. Part III analyses the critical role of monetary policy and shows that it is not very effective in the presence of commodity price shocks and supply constraints. It explains why RBI could not effectively control inflation and why the government must play a crucial supporting role in controlling inflation. Part IV then analyses various supply constraints to growth including agriculture, energy security, social and physical infrastructure and discusses how to deal with them effectively. Part V analyses the labour and financial market policies.

This Report Will Be Useful For Policy-Makers, Planners, Government Agencies And Ngos. Further It Will Be Of Use To Teachers And Students Of Economics, Those In Business And Finance, And Journalists And General Readers Interested In India`S Post-Reforms Development.

The Previous Century Was Marked By India S Great Transformation From A Colonial Agrarian Economy To A Modern, Vibrating, Knowledge-Based Economy Within The Framework Of A Liberal And Secular Democracy. A High Annual Gdp Growth Rate Of Over 8 Per Cent Is Now Being Achieved On A Consistent Basis. The Rapid Economic Growth Has, However, Brought Only A Marginal Decline In Rural And Urban Poverty As Nearly 250 Million People, Constituting About 25 Per Cent Of The Country S Total Population, Still Remain Below The Poverty Line.The Data Relating To The Dimensions Of Poverty Is Startling A Whopping 350 Million People Are Illiterate, 150 Million Have No Access To Safe Drinking Water, 750 Million Lack Clean Sanitation Facilities And Are Prone To Diseases Resulting Therefrom, And 50 Per Cent Of The Children Eat Below Acceptable Nutritional Levels. Average Life Expectancy At Birth Has No Doubt Risen To 63 Years, But Infant Mortality Rate (Imr) And Maternal Mortality Rate (Mmr) Are Still At Unacceptably High Levels 57 Per 1000, And 3 Per 1000 Live Births Respectively. In Terms Of Human Development Index (Hdi), India Is Ranked 126Th Among The 177 Listed Countries. Even The Mentioned Statistics Do Not Fully Capture The Sheer Destitution And Misery Our Marginalized Sections Of Population Are Subjected To. The Poverty That They Endure Robs Them Of Their Human Dignity And Makes A Mockery Of Our Claims To Social Justice And Equity.Growth, When Unevenly Spread, Dwarfs Overall Prosperity. Hence, Bridging The Income Divide Is The Biggest Challenge For India. The Government On Its Part Has Launched Several Poverty Alleviation Programmes But They Have Not Brought The Desired Result. The Approach Paper To The Eleventh Five-Year Plan Has Laid Emphasis On Strategies That Accelerate Growth And Make It Broadbased.The Present Anthology Is Comprised Of Well-Researched Articles By Erudite Scholars Who Have Deeply Analysed The Problem Of Persisting Poverty In India. Various Factors Responsible For Such A Situation Have Been Studied And Ways And Means Suggested To Considerably Reduce If Not Eradicate Poverty.The Book Will Serve As A Valuable Reference Source For Students And Teachers Of Economics And Researchers On This Subject. It Will Also Be Useful For The Policymakers, Planners, Parliamentarians, Government Agencies And Ngos. Common Readers Concerned With The Overall Development Of The Nation Will Find It Highly Informative.

Abstract: There has been much debate about how much India's poor have shared in the economic growth unleashed by economic reforms in the 1990s. Datt and Ravallion argue that India has probably maintained its 1980s rate of poverty reduction in the 1990s. However, there is considerable diversity in performance across states. This holds some important clues for understanding why economic growth has not done more for India's poor. India's economic growth in the 1990s has not been occurring in the states where it would have the most impact on poverty nationally. If not for the sectoral and geographic imbalance of growth, the national rate of growth would have generated a rate of poverty reduction that was double India's historical trend rate. States with relatively low levels of initial rural development and human capital development were not well-suited to reduce poverty in response to economic growth. The study's results are consistent with the view that achieving higher aggregate economic growth is only one element of an effective strategy for poverty reduction in India. The sectoral and geographic composition of growth is also important, as is the need to redress existing inequalities in human resource development and between rural and urban areas. This paper"a product of the Poverty Team, Development Research Group"is part of a larger effort in the department to better understand the relationship between economic growth and poverty. The authors may be contacted at gdatt@@worldbank.org or mravallion@@worldbank.org.

In its history since Independence, India has seen widely different economic experiments: from Jawharlal Nehru's pragmatism to the rigid state socialism of Indira Gandhi to the brisk liberalization of the 1990s. So which strategy best addresses India's, and by extension the world's, greatest moral challenge: lifting a great number of extremely poor people out of poverty? Bhagwati and Panagariya argue forcefully that only one strategy will help the poor to any significant effect: economic growth, led by markets overseen and encouraged by liberal state policies. Their radical message has huge consequences for economists, development NGOs and anti-poverty campaigners worldwide. There are vital lessons here not only for Southeast Asia, but for Africa, Eastern Europe, and anyone who cares that the effort to eradicate poverty is more than just good intentions. If you want it to work, you need growth. With all that implies.

This report is a pilot in the Bank's new approach to country economic reports, embodying the Comprehensive Development Framework. It begins with a chapter on reducing poverty, followed by a chapter on human development. Chapter 3 focuses on the Indian states, which are key actors in human development and infrastructure provision, as well as regulation and governance. Chapter 4 deals with governance issues, a major concern of the Bank because of its links to poverty reduction and development. The next three chapters deal with ways to increase growth and its poverty reducing content through improvements in a) infrastructure, b) the incentive and regulatory framework to encourage efficiency and labor demand, and c) the financial system and corporate governance. Chapter 8 deals with recent developments, the sustainability of growth and ways to reduce vulnerability to macroeconomic crises that hurt the poor. Finally, Chapter 9 provides a brief forecast of India's prospects and summarizes policies that would accelerate poverty reduction and sustained development. Gaps in the knowledge base and in country experience have been identified as issues deserving further analysis and research. The most important ones include: improving the delivery of social services to the poor; the links between growth, poverty reduction, and governance; and the nature, causes, and cures of urban poverty.