Saturday, September 22, 2012

More Reforms, more policy initiative to kill Aam Aadmi!FM express commitment to vibrant corporate culture.

More Reforms, more policy initiative to kill Aam Aadmi!FM express commitment to vibrant corporate culture.
Troubled Galaxy Destroyed Dreams, Chapter:802
Palash Biswas

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More Reforms, more policy initiative to kill Aam Aadmi!

Taking a jibe at Prime Minister Manmohan Singh, West Bengal Chief Minister Mamata Banerjee on Friday wondered whether the "power of (the) chair" was being misused to finish off the "aam aadmi (common people)".

She shared her sentiment with face book post and never mind, she is absolutely correct.

The government will take more steps to push reforms, boost investor sentiment and provide stable tax laws, finance minister P Chidambaram said on Saturday, while expressing satisfaction over the positive response of stock markets to the recent policy initiatives.He said good economic and financial practices, transparency and accountability in corporate dealings are a pre-requisite for a vibrant corporate culture. Prime Minister Manmohan Singh today favoured building a climate that attracts investments and establish fair and effective regulatory institutions on legal processes.Meanwhile, a day after the Trinamool Congress quit the government, Prime Minister Manmohan Singh met President Pranab Mukherjee on Saturday evening to discuss the political situation.According to sources, the PM assured the President during the meeting that his UPA-II government has the numbers to prove majority in Parliament is called to do so.The UPA has been reduced to a working minority in the Lok Sabha after the Trinamool with its 19 MPs parted ways.But it is more determined to implement the ethnic cleansing agenda as reforms have to be executed with cabinet decisions dictated by the corpoarte policy makers by passing parliament and constitution.Chidambaram reincarnated himself in a mastermine avatar in defence of capialist interests.However, the government claims it has the support of over 300 MPs in the Lok Sabha.It is yet another staticscal manipulation like redefing economic terms again and again to sustain the bubble growth story intact.The BJP on Saturday blamed Prime Minister Manmohan Singh for pushing the country to a '1991-like' economic situation and questioned the rationale for introducing reforms now after eight years of rule.For the coming week, government's next policy move after easier foreign investment rules will dictate the near term trend on the bourses.Indian markets closed an eventful week in green for the third straight week with the Sensex rising 1.56 per cent and the Nifty up by 2.03 per cent for the week ended September 21, 2012.Volatility ruled the markets this week on account of global woes both in local and overseas indices. Events like the RBI monetary policy, Consumer Price Index, and speculation on India's credit rating caught the limelight this week. Industry bodies today lauded Prime Minister Manmohan Singh for taking bold decisions to move ahead with reforms despite political compulsions.  

Minus the Trinamool, the UPA claims it has 254 MPs. The half-way mark in the 545-member Lok Sabha is 273.The UPA has now got outside support of the Samajwadi Party (22 MPs), the Bahujan Samaj Party (21 MPs) and the Rashtriya Janata Dal (4).The Trinamool quit the UPA in protest against its new economic measures - FDI in multi-brand retail, hike in diesel prices, and a cap on subsidised cooking gas cylinders.

Mind you, US economy as well politics do reflect in Indian politics more than reality. Indo US nuclear deal was signed in a haste resultant in LEFT pullout ending in unprecedented parliamentary drama which just meant to help butcher Bush just before US presidential election. It is quite an irony that Dr Manmohan Singh risked his governmet to announce FDI in retail ahead of US  presidential elections while Mighty Wal-mart, the world's largest retailer, has been thwarted once again in its efforts to open a big-box store in the Big Apple in the face of opposition from local unions much like protestors in India.However, unlike India where opposition to letting in big retailers like Wal-mart stems from a professed fear that they may kill small "Mom and Pop" stores, it is largely the business model that the company follows that has kept it away from the big cities.The world's third largest corporation, according to Fortune Global 500, considered the biggest private employer in the world with over two million employees working at 8,500 stores in 15 countries, under 55 different names earned a whopping $446.950 billion in 2012.In the US alone it has more than 4,000 stores, but only a handful in the big cities. There is none so far in New York or within the city limits of Washington DC, but there are dozens of sprawling Wal-marts within 40 km in the surrounding suburbs in Maryland and Virginia.

The recent announcement by the RBI of strong growth in the service sector in 2011-12 has brought cheer to the real estate developers, as it may sustain the present high demand of commercial real estate in the near future.Economic Times reports.The projected slowdown in overall economic growth globally, and particularly in India, to 6.5% in 2011-12 , as against 8.4% in 2010-11 , has affected the sentiment in the market place.The recent decision of the government to allow foreign direct investment (FDI) in the multi-brand retail sector will also help the real estate sector in the country. This will also increase the demand for commercial space in the market.At the same time, as the demand for office space will continue to be strong, fresh jobs creation in the country will also see a strong growth.

Aam AAdmi is once again trapped in Indian Politics while the econmy kills him in exclusion.Poverty in India is a major issue. Rural Indians depend on unpredictable agriculture incomes, while urban Indians rely on jobs that are, at best, scarce.Since its independence, the issue of poverty within India has remained a prevalent concern. As of 2010, more than 37% of India's population of 1.35 billion still lives below the poverty line. More than 22% of the entire rural population and 15% of the urban population of India exists in this difficult physical and financial predicament. The division of resources, as well as wealth, is uneven in India - this disparity creates different poverty ratios for different states. For instance, states such as Delhi and Punjab have low poverty ratios. On the other hand, almost half the population in states like Bihar and Orissa live below the poverty line.Since 1970, the Indian government has implemented a number of programs designed to eradicate poverty, and has had some success with these programs. The government has sought to increase the GDP through different processes, including changes in industrial policies. There is a Public Distribution System, which has been effective to some extent. Other programs include the Integrated Rural Development Program, Jawahar Rozgar Yojana and the Training Rural Youth for Self Employment (TRYSEM), and other on-going initiatives.

The World Bank's definition of the poverty line**, for under developed countries, like India, is US$ 1/day/person or US $365 per year. As per this definition, more than 75% of all Indians are, probably, below the poverty line!As per the Government of India, poverty line for the urban areas is Rs. 296 per month and for rural areas Rs. 276 per month, i.e. people in India who earn less than Rs. 10 per day. As per GOI, this amount will buy food equivalent to 2200 calories per day, medically enough, to prevent death. At this level of earning, even in a poor country like India, survival on Rs. 10 per day is a nightmare! This actually translates to Rs. 3650 per year or US $ 75 per year.On what basis have our planners decided this definition of "Poverty Line"? Does it mean that the person will get enough food to stay alive? How and where is he or she supposed to cook it? What about the minimum needs in education, housing, health services, clothing,and other basic necessities? Are we supposed to live on pavements and sleep under trees from birth till death? YOU BE THE JUDGE!The minimum wages in India, vary from state to state and city to city, and average Rs. 1000 - 1250/month or Rs. 12,000 - 15,000/yr. Or US $ 250 - US $ 300/yr. India's per capita is US $ 440 per year. (China's is US $ 990).

Poverty in India
From Wikipedia, the free encyclopedia
Poverty in India is widespread, with the nation estimated to have a third of the world's poor. In 2011, World Bank stated, 32.7% of the total Indian people falls below the international poverty line of US$ 1.25 per day (PPP) while 68.7% live on less than US$ 2 per day.[1]

According to 2010 data from the United Nations Development Programme, an estimated 37.2% of Indians live below the country's national poverty line.[2] A 2010 report by the Oxford Poverty and Human Development Initiative (OPHI) states that 8 Indian states have more poor than 26 poorest African nations combined which totals to more than 410 million poor in the poorest African countries.[3][4]

According to a new poverty Development Goals Report, as many as 320 million people in India and China are expected to come out of extreme poverty in the next four years, while India's poverty rate is projected to drop to 22% in 2015.[5] The report also indicates that in Southern Asia, however, only India, where the poverty rate is projected to fall from 51% in 1990 to about 22% in 2015, is on track to cut poverty in half by the 2015 target date.[5]

The latest UNICEF data shows that one in three malnourished children worldwide are found In India, whilst 42 percent of the nation's children under five years of age are underweight. It also shows that a total of 58 percent of children under five surveyed were stunted. Rohini Mukherjee, of the Naadi foundation-one of the NGO's that published the report-stated India is "doing worse than sub-Saharan Africa,".[6]

The 2011 Global Hunger Index (GHI) Report places India amongst the three countries where the GHI between 1996 and 2011 went up from 22.9 to 23.7, while 78 out of the 81 developing countries studied, including Pakistan, Nepal, Bangladesh, Vietnam, Kenya, Nigeria, Myanmar, Uganda, Zimbabwe and Malawi, succeeded in improving hunger condition.[7]
http://en.wikipedia.org/wiki/Poverty_in_India


A day after Samajwadi Party chief Mulayam Singh Yadav said that a non-Congress, non-BJP alliance will win the next General Elections, the SP chief on Saturday met President Pranab Mukherjee in New Delhi. Mulayam having ensured the lifeline for the collapsed government, activates the third front hype once again as Mamata is all set to transfer her agitation mode right into the heart of Indian capital. In such a volatile situation,Uttar Pradesh (UP) chief minister Akhilesh Yadav who, until now, used to divert queries related to national politics and his father Samajwadi Party (SP) president Mulayam Singh Yadav's support to the UPA, on Saturday attacked prime minister Manmohan Singh, holding him responsible for the economic crisis of India.He also said that though the SP has given support to the UPA government to keep communal forces out, the party is ready to face the Lok Sabha elections. Reacting to the prime minister's address to the nation on Friday on the issue of the FDI in multi-brand retail, Akhilesh on Saturday said that his party is opposing the FDI because it is not good for small farmers and traders. He said that Manmohan Singh is a renowned economist and has been prime minister since 2004 but only now he is saying that India's economic situation has gone from bad to worse. "The question is who is  responsible. The ruler or the people? " he asked. The Samajwadi Party had pledged support to the UPA government after the Trinamool Congress withdrew their support. But after remarks that they are supporting the present government just to keep communal forces at bay and that the SP will continue to oppose Foreign Direct Investment (FDI) in retail, it seems that the SP is not in a mood to support the government for too long. May be the Samajwadi Party is trying to look for other options by which they can keep the so called "communal forces" at a bay.Earlier in the day, Mulayam also met Shiromani Akali Dal leader and Punjab Deputy Chief Minister Sukhbir Singh Badal. The reason behind the meeting is still not clear.

RJD's Delhi unit was disbanded by party chief Lalu Prasad on Saturday after the man, who protested against the Prime Minister at a conference in New Delhi, was found to be the head of its state legal cell.A protester raising slogans against FDI and disrupting Prime Minister's meeting and his speech at a conference on Economic Growth in Asia and Changes of Corporate Environment, organised by Indian Law Institute, at Vigyan Bhawan in New Delhi.

"I strongly condemn it. Santosh Kumar Suman was made a member of the related stories party by the Delhi state unit without verifying his credentials. He was made the in-charge (of the legal cell) one-and-half-year back," party chief chief Lalu Prasad told PTI from Patna.

In a forceful message to the Centre, Bihar chief minister Nitish Kumar today said that the special category status was a matter of right for Bihar and its people and not begging for alms.

A man today shouted slogans against Prime Minister Manmohan Singh as he got up to deliver his address at an international conference here, protesting against the recent hike in diesel prices.

Lawyer Santosh Kumar Suman (32), a member of the Supreme Court Bar Association, stood on the desk, took off his shirt and shouted, "Prime Minister, go back. Roll back diesel prices."

The incident took place at Vigyan Bhawan where Singh walked to the rostrum to deliver his address 'Conference on Economic Growth in Asia and Changes of Corporate Environment'.

The Prime Minister waited for a while at the rostrum as security officials took the lone protestor out of the plenary hall of Vigyan Bhawan.

Security personnels immediately whisked the lawyer out of the venue.

Taking a jibe at Prime Minister Manmohan Singh for his "money does not grow on trees" statement, Chief Minister Narendra Modi today alleged that for the Congress, 2G scam and Coalgate have become money trees.

"How can a great economist like him try to convince the people in such a language? PMji, people of this country know that money doesn't grow on trees," he said while addressing a gathering at Vivekanand Youth Convention, held in this tribal city.

"We also know that 2G spectrum is money tree for you, Coalgate is money tree for you. Which other bigger rupee-tree you need other than your dealing in coal ?," he asked.

"I am directly alleging that the Congress party has made 2G spectrum and Coalgate, their money tree and its ruining our country," he said.

Singh yesterday in his address to the Nation had made an appeal while explaining the reasons behind the decisions of price hike in diesel and allowing FDI in multi brand retail.

In a veiled attack on the Congress, West Bengal chief minister Mamata Banerjee on Saturday said she would never bow to those who showed arrogance of power.

"Maa, Maati, Manush (people, land mother) are assets of our democracy. I will bow before them but I will never give in to those displaying arrogance power," she said here at a function.

"There is no use threatening us, for we too can strike back," she added.

Taking a jibe at Prime Minister Manmohan Singh, West Bengal Chief Minister Mamata Banerjee on Friday wondered whether the "power of (the) chair" was being misused to finish off the "aam aadmi (common people)".

"I want to ask - what is the definition of aam aadmi? What is the definition of democracy," Banerjee asked in a fresh post on Facebook.

"Is it not becoming clear that use of the name of aam aadmi, and misuse of power of chair, is to finish aam aadmi? Is it the game plan," she asked.

Banerjee's comments came hours after the Prime Minister asserted that his government was voted to office twice to protect the interests of the common man.

"No government likes to impose burdens on the common man. Our government has been voted to office twice to protect the interests of the aam aadmi," Manmohan Singh said in a rare televised address to the nation at prime time on public broadcaster Doordarshan.

In the address, he defended economic reforms, saying they were in the national interest and "hard decisions" will be pursued with people's support, despite political opposition.

"I can always hiss if I can't bite," this was Trinamool Congress Mamata Banerjee's remark after her six ministers quit the UPA government on FDI and other 'people' related issues.

Banerjee was referring to a folklore on Sri Ramakrishna Paramhansa, the spiritual guru of Swami Vivekenanda.

Ramakrishna is believed to have advised a cobra, whom he had told not to bite people, that it could frighten away people by hissing.

"I can always hiss if can't bite. If the people's rights are endangered we will hiss. We can bow our heads to Ma, Mati, Manush, but not to the arrogance of power," she said at a state government water project at Tallah Park here.

The Chief Minister, said "When we are shouted, the louder will be our protest. We roar when intimidated. This is our pride.

"We may be poor, but we have dignity. People are the main assets of democracy. What Bengal thinks today, the world thinks tomorrow," Banerjee said.

Six Trinamool Congress ministers resigned from the government Friday and the party met the president to inform him of withdrawal of support to the ruling United Progressive Alliance (UPA) coalition.

There is also talk of a reshuffle in the ministry with six berths having fallen vacant.Union minister CP Joshi was given additional charge of railway ministry on Saturday, a day after the resignation of Mukul Roy and other Trinamool Congress ministers.According to Rashtrapati Bhavan spokesperson Venu Rajamony, Joshi was assigned with the additional charge by President Pranab Mukherjee on the advice of Prime Minister Manmohan Singh.The announcement came on a day the Prime Minister met the President amid speculation of a Cabinet reshuffle. The Trinamool quit the UPA in protest against the economic measures announced - namely FDI in multi-brand retail, hike in diesel prices, and a cap on subsidised cooking gas cylinders.

Prime Minister Manmohan Singh today favoured building a climate that attracts investments and establish fair and effective regulatory institutions on legal processes.

Addressing a Conference on Economic Growth in Asia and Changes of Corporate Environment, he said the government is bracing to meet international standards in corporate laws and will soon bring before Parliament the new Companies Bill.

"We must build a climate that attracts investment and encourages and rewards innovation, and establish fair and effective regulatory institutions and also legal processes. Above all, we have the responsibility to ensure probity, transparency and accountability in processes of governance," he said at the conference.

In response to transformational changes of this century, the Prime Minister said government was examining many of the commercial and corporate laws to make them relevant to the challenges that lie ahead, particularly for ensuring distributive equities and empowerment of the marginalised sections of our society.

"Increasing use of this word inclusive is indication of this new emphasis on equity in economic and social processes."

He said new laws in areas such as regulation of securities market, competition and limited liability partnerships have been put in place.

"We will soon bring before Parliament the new Companies Bill that has been in the making for quite some time now," the Prime Minister told the audience that included delegates from Korea, Chief Justice of India S H Kapadia, CJI designate Altamas Kabir, Law Minister Salman Khurshid.

Finance Minister P Chidambaram today differed with Planning Commission Deputy Chairman Montek Singh Ahluwalia on aligning Indian laws and practices with the global standards, saying what was needed was "fair and non-discriminatory" norms.

"Montek said that we should align our laws and align our practices to global standards. I am not sure that global standards are necessarily the best standards. Not all global standards are the best," he said.

Chidambaram, who was speaking at a seminar organised by the Indian Law Institute, said it should be recognised that countries were at different stages of development in this otherwise unequal world.

"I don't think that we should be tempted by the phrase global standards. What we should aim at is standards which are the best standards which are fair, non-discriminatory," he said while responding to Ahuluwalia's suggestions.

According to Chidambaram, the recent global financial crisis had shown that India standards were far better than the US standards.

"For example in terms of banking regulation, we found that the Indian standards were far better than the US standards and we discovered it to our surprise and pleasure and to their dismay in 2008," he said.


"We are committed to undertaking a range of actions, small and large, that ensures that we are able to support our economic growth with a stable environment,"  finance minister P Chidambaram said at a conference, 'Economic Growth and Changes of Corporate Environment in Asia'.

The assertion came a day after the finance ministry cut withholding tax on overseas borrowings to 5 per cent from 20 per cent and approved the Rajiv Gandhi Equity Savings Scheme to attract first time investors to stock markets. Stock markets cheered the announcement, with the BSE benchmark Sensex closing 404 points higher at 18,752.83 on Friday.

"I am happy to note that the recent decisions taken by government have been widely welcomed, especially by markets and by important stake-holders in the market," he said. Underlining the need for clarity in tax laws, Chidambaram said lack of clarity in laws can create a great degree of instability in the environment which is not good for economic growth.

"And one of the most important contributor to stable environment is clarity in law, especially tax laws, fairness in tax administration, and non-adversarial approach to tax administration and collection of taxes and above all a fair and quick dispute resolution mechanism ..." he said.

The minister asked the lawyers community to "strongly endorse the steps the government has taken to provide an environment of stability that will help corporates make their contribution to economic growth".

"I would most respectfully urge lawyers, judges, academics, we must all work towards clarity in tax laws.

Chidambaram said the Companies Bill introduced recently in Parliament seeks to address the issue of good corporate governance, investor protection and corporate social responsibility.

He said good economic and financial practices, transparency and accountability in corporate dealings are a pre-requisite for a vibrant corporate culture.

Equally important, Chidambaram said, are the issues related to corporate social responsibility that provide opportunity for the corporate sector to contribute to economic growth on a wider scale.

"We as the government in India are committed to providing an environment where corporates among other players are able to contribute to economic growth," Chidambaram added.

Industry bodies today lauded Prime Minister Manmohan Singh for taking bold decisions to move ahead with reforms despite political compulsions.

"With his action last week and address to the nation last evening, the Prime minister has unambiguously sent a message that the government is determined to see through the reforms that have been at the centre of a political controversy lately," CII said in a statement.

Its President Adi Godrej expressed hope that this would be the beginning of a series of reforms that the country needed to arrest the economic downtrend and ensure higher growth for greater inclusiveness.

FICCI Vice President Sidharth Birla said the recent government steps would begin to address the fiscal position, thereby reviving investor confidence.

The industry felt that increase in the prices of diesel and LPG can be seen in the context of unsustainable fuel subsidies and the need to improve the fiscal position.

Drawing comparison with the economic liberalisation of early nineties, Godrej said when India had the first round of reforms in 1991, there was pain and apprehension and the economics was not fully appreciated.

"It is to be noted that every government since then, irrespective of their political colour, has taken that process forward. The economic logic of these reforms has been too compelling for anyone to ignore," he said.

He added that per capita income of India has grown several fold and India is the second fastest growing economy in the world.

"We have also seen poverty come down over the last two decades," Godrej said.

The BJP on Saturday blamed Prime Minister Manmohan Singh for pushing the country to a '1991-like' economic situation and questioned the rationale for introducing reforms now after eight years of rule.

"The Prime Minister's (televised) address on Friday (explaining the need for FDI and increase in diesel price) is disappointing, deceptive and unconvincing. He could not justify the reasons and convince his own allies," BJP leader and Rajya Sabha MP M Venkaiah Naidu told reporters here.

Charging UPA with deflecting attention from "its scams and scandals" by introducing the FDI move and diesel hike, he also asked Singh to get Parliamentary approval for FDI if Congress claimed to have the numbers in Parliament despite TMC's withdrawal of support.

The government 'betrayed' Parliament and the people when it did not stick to its word on implementing FDI only after securing consensus among all stakeholders as promised by then finance minister Pranab Mukherjee in Parliament, he said.

"The Prime Minister has admitted a 1991-like economic situation. Who is responsible for this? You, the Prime Minister and your party (Congress) who have been in power for eight years," Naidu said.

"It is because of the economic mismanagement, wrong policies, policy paralysis, lack of priorities and extremely unproductive schemes," he said.

Referring to the Prime Minister's contention that some people (parties opposed to FDI) were misleading the country on the issue, Naidu said the UPA's own allies DMK and SP had taken part in the recent nation-wide bandh.

Kerala Chief Minister Oommen Chandy had opposed FDI, while party chief Sonia Gandhi had asked Congress-ruled states to provide nine subsidised LPG cylinders even as Singh had argued that six were enough for one household, Naidu said.

With Samajwadi Party and DMK participating in the bandh and Trinamool Congress pulling out, Congress should explain whether these parties were misleading people as claimed by the Prime Minister, he said.

Naidu also slammed Singh for defending the diesel price hike by insisting that rich persons used diesel-run cars. Naidu said crores of farmers used the fuel for irrigation purposes in non-delta regions in motor pumps besides widely using it in tractors.

"Every political party except Congress is protesting against these. We challenge the government get the Parliament approval for FDI in retail, hike on prices of diesel and cap on LPG if it says it has the numbers (to keep itself afloat)."

Naidu expressed fears that prices of kerosene and PDS sugar could also be increased even as bus and train fares were likely to shoot up in the wake of diesel price rise.

The BJP's national executive will meet at Faridabad from September 26-28 which will chalk out future programmes as part of intensifying protests against the "anti-people" policies of the government.

On the controversy surrounding Madhya Pradesh BJP government inviting Sri Lankan President Mahinda Rajapakse for a Buddhist function, which has been opposed by parties including DMK and MDMK, he said it was a government function where heads of states of all Buddhist nations were invited.

Underlining BJP's commitment for Lankan Tamils, he said his party colleague Sushma Swaraj, the leader of Opposition in Lok Sabha, had herself many times highlighted their plight in Parliament.

The government may have spread the red carpet out for overseas retailers last week, but the political heat its reforms burst has generated means that footfalls on this carpet will be few for now. And those who plan to tread it will only do so gingerly.Economic Times reports.

After last November's experience when the government was forced to freeze its decision to allow foreign firms into the retail sector, global retailers are choosing to adopt a "wait and watch" attitude to decision permitting foreign retailers to invest in India's supermarkets sector.

At the global retail industry's annual schmoozefest -- World Retail Congress - taking place in London, the Indian participation is strong, but the outside interest in the country is, as Arvind Singhal of Technopak put it, good but not good enough.

As one London-based private equity and real estate consultant says: "All my clients ask about India. But they don't seem quite ready to put their money in it."

Speaking on the sidelines of the Congress, Lucy Neville Rolfe, board member of Tesco, Britain's biggest retailer, was clear: "We're glad about the progress that has been made in India... But there are conditions. We have to study the impact of the conditions."

The consensus response to the reforms: given what happened last year, investors want to be assured this time the decision will stick. As the international business director of a major European food retailer said: "The fact that reforms were withdrawn last year, Parliament sessions are aborted regularly, no policy gets through, constant changes in policy...It does not make for confidence for a global manager."

Not everyone is aware of the intricacies of policy-making in India, and the big question being asked is: will this have to go through parliament? It does not, but the fear is that in that case, it's a non-starter.

Pankaj Ghemawat, management guru and a professor at IESE business school in Barcelona, is of the view that companies like Walmart, which changed its global model to partner with BhartiBSE 4.01 % in India, is better placed to take advantage of the changes than anyone doing a cold start.

"The domestic political environment may have changed, but global investors aren't aware of that - after last November there's still some scepticism. The jury is still out on whether these reforms are really about Manmohan Singh finally putting his foot on the pedal, or are these just some more political we 'have to do something' imperatives," he said.

At the World Retail Congress a variety of questions seemed to bob up. How do we tackle the state-wise division? Is India getting federalised like the European Union? What will that mean for my business plan?

A senior official of a major retailer noted that while it was all very fine for big ticket names such as Walmart and Tesco because they already have local partners, for others finding an Indian partner with the financial clout to handle the 49%, sourcing conditions and navigating the federal environment was not going to be easy. "There are still so many questions. The conditions have to be studied, we have to understand the state-wise conditions, and I'd say this is a good beginning, but there's still a long way to go," he said.

Poverty in India

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Map of world poverty by country, showing percentage of population living on less than $1.25 per day. Based on 2009 UN Human Development Report.
Map of world poverty by country, showing percentage of population living on less than $2 per day. Based on 2009 UN Human Development Report.

Poverty in India is widespread, with the nation estimated to have a third of the world's poor. In 2011, World Bank stated, 32.7% of the total Indian people falls below the international poverty line of US$ 1.25 per day (PPP) while 68.7% live on less than US$ 2 per day.[1]

According to 2010 data from the United Nations Development Programme, an estimated 37.2% of Indians live below the country's national poverty line.[2] A 2010 report by the Oxford Poverty and Human Development Initiative (OPHI) states that 8 Indian states have more poor than 26 poorest African nations combined which totals to more than 410 million poor in the poorest African countries.[3][4]

According to a new poverty Development Goals Report, as many as 320 million people in India and China are expected to come out of extreme poverty in the next four years, while India's poverty rate is projected to drop to 22% in 2015.[5] The report also indicates that in Southern Asia, however, only India, where the poverty rate is projected to fall from 51% in 1990 to about 22% in 2015, is on track to cut poverty in half by the 2015 target date.[5]

The latest UNICEF data shows that one in three malnourished children worldwide are found In India, whilst 42 percent of the nation's children under five years of age are underweight. It also shows that a total of 58 percent of children under five surveyed were stunted. Rohini Mukherjee, of the Naadi foundation-one of the NGO's that published the report-stated India is "doing worse than sub-Saharan Africa,".[6]

The 2011 Global Hunger Index (GHI) Report places India amongst the three countries where the GHI between 1996 and 2011 went up from 22.9 to 23.7, while 78 out of the 81 developing countries studied, including Pakistan, Nepal, Bangladesh, Vietnam, Kenya, Nigeria, Myanmar, Uganda, Zimbabwe and Malawi, succeeded in improving hunger condition.[7]

Contents

Poverty estimates

There has been no uniform measure of poverty in India.[8][9] The Planning Commission of India has accepted the Tendulkar Committee report which says that 37% of people in India live below the poverty line(BPL).[10]

The Arjun Sengupta Report (from National Commission for Enterprises in the Unorganised Sector), based on data between the period 1993-94 and 2004–05, states that 77% of Indians live on less than INR 20 a day (about $0.50 per day).[11] The N.C. Saxena Committee report states, on account of calorific intake apart from nominal income, that 50% of Indians live below the poverty line.[12]

A study by the Oxford Poverty and Human Development Initiative using a Multi-dimensional Poverty Index (MPI) found that there were 650 million people (53.7% of population) living in poverty in India, of which 340 million people (28.6% of the population) were living in severe poverty, and that a further 198 million people (16.4% of the population) were vulnerable to poverty.[13] 421 million of the poor are concentrated in eight North Indian and East Indian states of Bihar, Chattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal. This number is higher than the 410 million poor living in the 26 poorest African nations.[14] The states are listed below in increasing order of poverty based on the Multi-dimensional Poverty Index.[15]

Estimates by NCAER (National Council of Applied Economic Research) show that 48% of the Indian households earn more than INR90,000 (US$1,629) annually (or more than US$ 3 PPP per person). According to NCAER, in 2009, of the 222 million households in India, the absolutely poor households (annual incomes below INR 45,000) accounted for only 15.6% of them or about 35 million (about 200 million Indians). Another 80 million households are in income levels of INR 45,000– 90,000 per year. These numbers also are more or less in line with the latest World Bank estimates of the "below-the-poverty-line" households that may total about 100 million (or about 456 million individuals)[16]

Impact of poverty

Since the 1950s, the Indian government and non-governmental organizations have initiated several programs to alleviate poverty, including subsidizing food and other necessities, increased access to loans, improving agricultural techniques and price supports, and promoting education and family planning. These measures have helped eliminate famines, cut absolute poverty levels by more than half, and reduced illiteracy and malnutrition.[17]

Presence of a massive parallel economy in the form of black (hidden) money stashed in overseas tax havens and underutilisation of foreign aid have also contributed to the slow pace of poverty alleviation in India.[18][19][20]

Although the Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas.[17][21] Between 1999 and 2008, the annualized growth rates for Gujarat, Haryana, or Delhi were much higher than for Bihar, Uttar Pradesh, or Madhya Pradesh.[22] Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme.[23]

Despite significant economic progress, one quarter of the nation's population earns less than the government-specified poverty threshold of 32 rupees per day (approximately US$ 0.6).[24]

According to a recently released World Bank report, India is on track to meet its poverty reduction goals. However by 2015, an estimated 53 million people will still live in extreme poverty and 23.6% of the population will still live under US$1.25 per day. This number is expected to reduce to 20.3% or 268 million people by 2020.[25] However, at the same time, the effects of the worldwide recession in 2009 have plunged 100 million more Indians into poverty than there were in 2004, increasing the effective poverty rate from 27.5% to 37.2%.[26]

As per the 2001 census, 35.5% of Indian households availed of banking services, 35.1% owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a bicycle, 11.7% a scooter, motorcycle or a moped, and 2.5% a car, jeep or van; 34.5% of the households had none of these assets.[27] According to Department of Telecommunications of India the phone density has reached 33.23% by December 2008 and has an annual growth of 40%.[28] This tallies with the fact that a family of four with an annual income of 1.37 lakh rupees could afford some of these luxury items.

Causes

Lack of a market economy & over government regulation and red tape, known as License Raj is the main cause of poverty in India. While other Asian countries like China, Singapore and South Korea started with the same poverty level as India after independence, India adopted a socialist centrally planned, closed economy. Fortunately India has started to open its markets since the economic reforms in 1991 which has cut the poverty rate in half since then. Another cause is a high population growth rate, although demographers generally agree that this is a symptom rather than cause of poverty. While services and industry have grown at double digit figures, agriculture growth rate has dropped from 4.8% to 2%. About sixty percent of the population depends on agriculture whereas the contribution of agriculture to the GDP is about eighteen percent.[29] The surplus of labour in agriculture has caused many people to not have jobs. Farmers are a large vote bank and use their votes to resist reallocation of land for higher-income industrial projects.

India's economic policies

A rural worker drying cow dung in Bihar.

In 1947, the average annual income in India was US$619, compared with US$439 for China, US$770 for South Korea, and US$936 for Taiwan. By 1999, the numbers were US$1,818; US$3,259; US$13,317; and US$15,720, respectively.[30] (numbers are in 1990 international Maddison dollars) In other words, the average income in India was not much different from South Korea in 1947, but South Korea became a developed country by 2000s. At the same time, India was left as one of the world's poorer countries.

License Raj refers to the elaborate licenses, regulations and the accompanying red tape that were required to set up and run business in India between 1947 and 1990.[31] The License Raj was a result of India's decision to have a planned economy, where all aspects of the economy are controlled by the state and licenses were given to a select few. Corruption flourished under this system.[32]

The labyrinthine bureaucracy often led to absurd restrictions - up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced, how much, at what price and what sources of capital were used.
—BBC[33]

India had started out in the 1950s with:[34] high growth rates, openness to trade and investment, a promotional state, social expenditure awareness and macro stability but ended the 1980s with:[34] low growth rates, closure to trade and investment, a license-obsessed, restrictive state (License Raj), inability to sustain social expenditures and macro instability, indeed crisis.

Liberalization policies and their effects

Other points of view hold that the economic reforms[clarification needed] initiated in the early 1990s are responsible for the collapse of rural economies and the agrarian crisis currently underway. As journalist and the Rural Affairs editor for The Hindu, P Sainath describes in his reports on the rural economy in India, the level of inequality has risen to extraordinary levels, when at the same time, hunger in India has reached its highest level in decades. He also points out that rural economies across India have collapsed, or on the verge of collapse due to the neo-liberal policies of the government of India since the 1990s.[35] The human cost of the "liberalisation" has been very high.[clarification needed] The huge wave of farm suicides in Indian rural population from 1997 to 2007 totaled close to 200,000, according to official statistics.[36] That number remains disputed, with some saying the true number is much higher. Commentators have faulted the policies pursued by the government which, according to Sainath, resulted in a very high portion of rural households getting into the debt cycle, resulting in a very high number of farm suicides. As professor Utsa Patnaik, India's top economist on agriculture, has pointed out, the average poor family in 2007 has about 100 kg less food per year than it did in 1997.[36]

Government policies encouraging farmers to switch to cash crops, in place of traditional food crops, has resulted in an extraordinary increase in farm input costs, while market forces determined the price of the cash crop.[37] Sainath points out that a disproportionately large number of affected farm suicides have occurred with cash crops, because with food crops such as rice, even if the price falls, there is food left to survive on. He also points out that inequality has reached one of the highest rates India has ever seen. In a report by Chetan Ahya, Executive Director at Morgan Stanley, it is pointed out that there has been a wealth increase of close to US$1 Trillion in the time frame of 2003-2007 in the Indian stock market, while only 4-7% of the Indian population hold any equity.[38] During the time when Public investment in agriculture shrank to 2% of the GDP, the nation suffered the worst agrarian crisis in decades, the same time as India became the nation of second highest number of dollar billionaires.[39] Sainath argues that

The per capita food availability has declined every five years without exception from 1992-2010 whereas from 1972-1991 it had risen every five-year period without exception.

Farm incomes have collapsed. Hunger has grown very fast. Public investment in agriculture shrank to nothing a long time ago. Employment has collapsed. Non-farm employment has stagnated. (Only the National Rural Employment Guarantee Act has brought some limited relief in recent times.) Millions move towards towns and cities where, too, there are few jobs to be found.

In one estimate, over 85 per cent of rural households are either landless, sub-marginal, marginal or small farmers. Nothing has happened in 15 years that has changed that situation for the better. Much has happened to make it a lot worse.

Those who have taken their lives were deep in debt – peasant households in debt doubled in the first decade of the neoliberal "economic reforms," from 26 per cent of farm households to 48.6 per cent. Meanwhile, all along, India kept reducing investment in agriculture (standard neoliberal procedure). Life was being made more and more impossible for small farmers.

As of 2006, the government spends less than 0.2% of GDP on agriculture and less than 3% of GDP on education.[40] However, some government schemes such as the mid-day meal scheme, and the NREGA have been partially successful in providing a lifeline for the rural economy and curbing the further rise of poverty.

Reduction in poverty

Despite all the causes, India currently adds 40 million people to its middle class every year.[citation needed] Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an estimated 300 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. However this has to be seen in perspective as the population of india has also increased by 370 million from 1991 and 190 million from 2001 so the absolute number of poor have actually increased.

Despite government initiatives, corporate social responsibility (CSR) remains low on the agenda of corporate sector.[citation needed] Only 10 percent of funding comes from individuals and corporates,[citation needed] and "a large part of CSR initiatives are artfully masqueraded and make it back to the balancesheet"[citation needed]. The widening income gap between the rich and the poor over the years, has raised fears of a social backlash.[41] n

Efforts to alleviate poverty

Since the early 1950s, govt has initiated, sustained, and refined various planning schemes to help the poor attain self sufficiency in food production. Probably the most important initiative has been the supply of basic commodities, particularly food at controlled prices, available throughout the country as poor spend about 80 percent of their income on food. The schemes have however not been very successful because the rate of poverty reduction lags behind the rapid population growth rate.[42]

Outlook for poverty alleviation

Eradication of poverty in India is generally only considered to be a long-term goal. Poverty alleviation is expected to make better progress in the next 50 years than in the past, as a trickle-down effect of the growing middle class. Increasing stress on education, reservation of seats in government jobs and the increasing empowerment of women and the economically weaker sections of society, are also expected to contribute to the alleviation of poverty. It is incorrect to say that all poverty reduction programmes have failed. The growth of the middle class (which was virtually non-existent when India became a free nation in August 1947) indicates that economic prosperity has indeed been very impressive in India, but the distribution of wealth is not at all even.

Controversy over extent of poverty reduction

The definition of poverty in India has been called into question by the UN World Food Programme. In its report on global hunger index, it questioned the government of India's definition of poverty saying:

The fact that calorie deprivation is increasing during a period when the proportion of rural population below the poverty line is said to be declining rapidly, highlights the increasing disconnect between official poverty estimates and calorie deprivation.[43]

While total overall poverty in India has declined, the extent of poverty reduction is often debated. While there is a consensus that there has not been increase in poverty between 1993–94 and 2004–05, the picture is not so clear if one considers other non-pecuniary dimensions (such as health, education, crime and access to infrastructure). With the rapid economic growth that India is experiencing, it is likely that a significant fraction of the rural population will continue to migrate toward cities, making the issue of urban poverty more significant in the long run.[44]

Some, like journalist P Sainath, hold the view that while absolute poverty may not have increased, India remains at an abysmal rank in the UN Human Development Index. India is positioned at 132ond place in the 2007-08 UN HDI index. It is the lowest rank for the country in over 10 years. In 1992, India was at 122ond place in the same index. It can even be argued that the situation has become worse on critical indicators of overall well-being such as the number of people who are undernourished (India has the highest number of malnourished people, at 230 million, and is 94th of 119 in the world hunger index), and the number of malnourished children (43% of India's children under 5 are underweight (BMI<18.5), the highest in the world) as of 2008.[43]

A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees per day (USD 0.50 nominal, USD 2.0 in PPP), with most working in "informal labour sector with no job or social security, living in abject poverty."[45][46] However, a new report from the UN disputes this, finding that the number of people living on US$1.25 a day is expected to go down from 435 million or 51.3 percent in 1990 to 295 million or 23.6 percent by 2015 and 268 million or 20.3 percent by 2020.[47]

Persistence of malnutrition among children

According to the New York Times, is estimated that about 42.5% of the children in India suffer from malnutrition.[48] The World Bank, citing estimates made by the World Health Organization, states that "About 49 percent of the world's underweight children, 34 percent of the world's stunted children and 46 percent of the world's wasted children, live in India." The World Bank also noted that "while poverty is often the underlying cause of malnutrition in children, the superior economic growth experienced by South Asian countries compared to those in Sub-Saharan Africa, has not translated into superior nutritional status for the South Asian child."[49]

A special commission to the Indian Supreme court has noted that the child malnutrition rate in India is twice as great as sub-Saharan Africa [50]

Data from The World Bank shows that the percentage of underweight children in sub-Saharan Africa is 24% while India has almost twice the amount at 47%. Out of the 47%, 50 % were from rural areas, 38% from urban areas, 48.9% of the underweight are girls and 45.5% are boys.[51]

Malnutrition is often associated with diseases like diarrhea, malaria and measles due to the lack of access in health care which are also linked to the problem of poverty. The United Nations had estimated that "2.1 million Indian children die before reaching the age of 5 every year – for every minute".[52]

The Indian government had come up with the Integrated Childhood Development Service (ICDS) in 1975 to combat the problem of malnutrition in the country. ICDS is the world's largest child development program but its effects on the problem in India are limited.[53] This is because the program failed to focus on children under 3, the group that should receive the most help from the ICDS. This is due to the fact that most growth retardation would have developed during the age of 2 and are mostly irreversible.[54] With the lack of help, the chances that newborn babies are unable to develop fully would be higher. The quality of ICDS centers also varies from states to states and often, the barbies with the most serious problem of malnutrition have the lowest amount of help given.[53] Examples are "Rajasthan, Uttar Pradesh, Bihar, Orissa and Madhya Pradesh, all rank in the bottom ten in terms of ICDS coverage".[54] Despite the poor distribution of help, the ICDS is still considered to be efficient in improving the health of the children in the country.[55] Statistics from UNICEF shows that the mortality rate of children under 5 has improved from 118 per 1000 live births in 1990 to 66 in the year 2009.[56]

However, malnutrition is still a problem for India; it has been found that "micronutrient deficiencies alone may cost India US$2.5 billion annually".[57] Malnutrition can lead to children not being able to attend school or perform to their fullest potential, which in turn leads to a decrease in labor productivity, affecting India's economic growth as a whole.

See also

Wikimedia Commons has media related to: Poverty in India

Corruption:

References

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Further reading

External links

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Poverty in Asia

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