July 11, 2011, New Delhi

“Independent of the method of assessment, poverty in India has decreased in the last two decades. However, this has not translated into equality of access to opportunities. And therefore, ‘inclusion’ requires a multi-pronged response,” said Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission. He added that there is greater economic growth across all states, however, within states the inequality is worrisome. He underlined that four areas require concerted efforts, namely: energy, agriculture, urbanisation, water and land, to make growth inclusive.

He was speaking at the release of a book titled “Growth and Poverty – The Great Debate”, and a well attended panel discussion organised by CUTS International today in New Delhi. The book is an outcome of a debate on the CUTS e-forum, which was triggered by a lecture at the parliament by noted economist Professor Jagdish Bhagwati in December last year. The other panellists, who spoke at the event included, Bibek Debroy, Ashok Chawla, Nirmala Sitharaman, Jean Pierre Lehmann, and Shekhar Shah.

Introducing the subject, Pradeep Mehta, Secretary General of CUTS, as the Chairman of the event, said that without the kind of economic growth over the last two decades the reduction in poverty would not have been achieved. However, in order to improve the efficacy of economic growth, more efforts are needed to improve ‘access to opportunities’ of disadvantaged communities so that they can overcome the poverty trap.

“As Prof Bhagwati said in his famous lecture, we now need to launch Stage-2 reforms to address the social deficit, i.e. education and health care”, said Mehta. “In fact if one looks at the successes in many South East and East Asian countries, the social issues were addressed concomitantly with economic liberalisation, and results of the same are very visible”.

On the issue of inequality across territories, Bibek Debroy of the Centre for Policy Research raised a key question that why poverty and inequality are concentrated in a few districts of India and why have we not been able to address this? Ashok Chawla, former finance secretary, asserted that along with growth it is important to ensure that government’s resources in terms of tax-GDP ratio need to be improved. This will generate more resources for direct intervention on the part of the government.

Nirmala Sitharaman, national spokesperson of Bhartiya Janata Party highlighted that there is lack of institutional readiness to take up the challenges of liberalisation. She added that we are giving out doles, rather than creating employment opportunities. In the current framework there are disincentives for entrepreneurs and micro-enterprises, which are bad for both growth as well as poverty reduction.

Jean Pierre Lehmann of the IMD, Lausanne draw attention to the fact that given that many countries are disadvantaged in terms of demography, etc, India holds a great future.

Shekhar Shah, director general of National Council of Applied Economic Research reinforced the idea that growth provides the resources, which in turn, ensure the ‘equality of access to opportunities’. He referred to the history of economic growth where one sees that a lot of countries, which gained a growth rate of seven per cent or so over twenty five years, have faded away later. He added that only those countries have survived which developed ‘institutional endowment’ to help them sustain the growth.

In response to the floor discussions, Ms Sitharaman said that the huge governance deficit will negate all efforts to reduce poverty. In conclusion, Mehta said that the next debate on the CUTS e-fora will be conducted on the issues of governance and institutional reforms to address the poverty reduction agenda in India.