(a) whether the world bank has sounded a warning that the poverty reduction process in India has slowed down since 1990s and the poorer States have not recorded improvement in this respect even despite the higher growth rates;
(b) if so, the facts in this regard and the reasons therefor; and
(c) the steps proposed to be taken by the Government in the matter?
MINISTER OF URBAN DEVELOPMENT & POVERTY ALLEVIATION ( SHRI JAGMOHAN )
(a)&(b): World Bank in their report entitled `India: Policies
to Reducing Poverty & Accelerate Sustainable Development` has
made certain observations about the sluggish poverty reduction
in recent years in India despite the improvement in human
development and higher GDP growth in the mid-1990s. The
relevant extracts of the observations made by the World Bank are
given in the Annexure.
(c): To alleviate the urban poverty, the Govt., on 1.12.1997,
launched a unified Urban Poverty Alleviation Programme viz.
`Swarna Jayanti Shahari Rojgar Yojana` (SJSRY) replacing the
earlier urban poverty alleviation programmes. The SJSRY scheme
seeks to provide gainful employment to the urban unemployed or
underemployed through encouraging the setting up of self-
employment. ventures or provision of wage employment. This
scheme is funded on a 75:25 basis between Centre and the States.
The other Ministries are also taking action to
contain/alleviate poverty through their own poverty/alleviation
programmes.
ANNEXURE
ANNEXURE REFERRED TO IN REPLY TO PARTS (a)&(b) OF LOK
SABHA UNSTARRED QUESTION NO.273 FOR 25.7.2000.
RELEVANT EXTRACTS FROM THE WORLD BANK`S REPORT ENTITLED `INDIA:
POLICIES TO REDUCE POVERTY AND ACCELERATE SUSTAINABLE
DEVELOPMENT`
A. `Sluggish Poverty Reduction in Recent Years:- Despite the
improvements in human development and the higher GDP growth in
the mid-1990s, India`s household sample surveys suggest that
poverty reduction has been sluggish recently. In the early
1990s, poverty worsened following the stabilization of the
unsustainaable policies of the 1980s, a poor harvest and a
decline in food availability. Soon, poverty began to fall again
and by 1993-94 was somewhat below the 1987 level. However, from
1993-94 until 1997 (the last available survey), improvement has
been limited in the rural areas which contain over 70% of the
poor. Moreover, analysis suggests that the large poor states in
the north and east, containing 40% of India`s population, have
lagged in reducing poverty since the late 1970s.
The estimated slowdown in the overall reduction of
poverty may merely reflect one of India`s many statistical
inconsistencies the estimates of consumption and food grains
consumption in the national accounts suggest much faster
consumption growth than the sample surveys, while the surveys
suggest little worsening of distribution. The need to improve
the consistency and quality of these and other statistics, in
order to provide a former basis for policy-making, is a major
recommendations of this report.
B. Despite Achievements, Significant Challenges Ahead:- More
worrisome is the possibility that growth became less potent in
reducing poverty in the 1990s. Further work is needed on this
complex issue. Nonetheless, the characteristics of agricultural
growth in the 1990s; the slowdown of growth in the poor States;
and the problems of infrastructure, social services and poverty
programmes, especially in the poorer States which are linked to
their increasing fiscal problems, poor incentive frameworks and
weaknesses in governance and institutions, are all problems that
may explain the lack of progress in reducing rural poverty.
Note that statements made regarding individual States or the
States GDP as a group refer to the old (1980-81 based) GDP
accounts; once they are rebased, like national GDP, to the new
(1993-94 based) accounts, the growth rates of states could be
different from what the old accounts show, since the new GDP
accounts include a much higher estimate of national agricultural
output). Agriculture`s average growth has remained roughly
constant since 1980 according to the new series of GDP.
However, productivity growth in the sector seems to be slowing,
even in the Punjab and Haryana, where some analysts suggests
that environmental issues are a concern. Further, agricultural
growth in some of the poorer states seems to have lagged.
Public spending on agriculture has focused on subsidies, which
lead to inefficiencies and environmental problems and at best
have limited impact on poverty. The implicit and explicit
subsidies have crowded-out public investment and social spending
in Government`s budgets and substantially worsened the fiscal
problems of States. While private investment in agriculture has
increased, to some extent this reflects inefficiencies and
distortions that are partly related to the subsidies, such as
the purchase of pumps to reach deep aquifers and generator sets
to run them when free, low quality power fails. Moreover, the
limited growth in agricultural productivity may also reflect the
limited deregulation, which has left many distortions in the
sector. For example, the restrictions on domestic and
international agricultural trade contribute to occasional, sharp
transitory increase in prices, which hurt the poor.
C. The poorer States have lower GDP growth, not just weak
agricultural growth. Partly, of course, this reflects their
structure-agriculture is a large percentage of their GDP.
However, the poor States lower growth also reflects differences
in initial conditions and State level policies the poorer
States` problems in infrastructure, human development, and in
some cases, governance, have limited their ability to take full
advantage of the post-1991 reforms. Moreover, catching-up is a
problem because of their increasingly severe fiscal problems- in
the late 1980s the States began unsustainable increase in
spending and large untargeted subsidies (explicit and implicit)
that have never been adjusted, which has led to a large, costly
debt build-up. Indian States are constitutionally prevented
from external borrowing and limited in their domestic borrowing
by the Central Government. Nonetheless, several States,
including some of the poorest, now face unsustainable debt
service obligations, mainly to the Central Government, which is
turn had borrowed to fund these loans. Infrastructure and
social spending have slowed in most States as a consequence of
the high debt service particularly in the highly indebted and
poorer States. The States` problems have worsened in the last
two years, with the cascading down of the excessive central
public sector wage settlement of 1997`.