India – Need for the Inclusive Growth & Sustainable development rather than increasing growth rate to compete with china

1. 1/29/2012 1

2. 1/29/2012 2

3. Since independence, significant
improvement in India’s economic & social
development.
In the post-reform (since 1991), India has
done well in some indicators such as
balance of payments, resilience to
external shocks, service sector growth
Significant accumulation of foreign
exchange, Information technology (IT)
and stock market, improvements in
telecommunications etc.
Investment and savings rates are quite
high - 32 to 36%.
1/29/2012 3

4. VISION 2020/ ASPIRATION
After one of the talks delivered by Dr.Kalam, a ten-year-old girl came up
to him for his autograph. 'What is your ambition?' he asked her. 'I want to
live in a developed India', she replied without hesitation Source :India2020
ISSUES
For growth it is not sufficient that the income of bottom 20% rise at the
same level as average. Mr. Kaushik Basu Chief Economic Advisor of Indian Government
WHAT INDIA CAN BE
India can became one of the economic super power in world .According
to a recent report published by Goldman Sachs, India is anticipated to
be the 3rd largest economy in the world by 2020
WAY FARWARD
“A right system/strategy/approach/Method will give automatically right
results “.
Core of human development:
E Q U I T Y , S U S TA I N A B I L I T Y
1/29/2012 4

5. 1/29/2012 5

6. Shanti Mantra” from Kato Upanishad
Om Sahana Vavatu Sahanau Bhunaktu, Saha Viryam
Karawavahai, Tejasvinavaditamastu, MaVidvishavahai, Om
Shanti hi Shanti hi Shanti hi”
Together may we be protected, together may we be
nurtured, together may we work with great vigor, may our
journey together is dazzling and effective, and may there
be no wicked feelings between us, Peace, Peace, and
Peace”
Importance of growth for all has been recognized way back
1/29/2012 6

7. PERIOD AVG GDP GROWTH/YEAR
(%)
1st 30 years after
independence 3.5
1980‟s 5.6
1990‟s 5.8
2005 to 2010 8.5
2011 7.6 (Est)
Source – Economic Survey 2010-11
1/29/2012 7

8. 1/29/2012 8

9. S
O
C
I
O D
- I
E V
C I
O D
N
E
O
M
I
C
1/29/2012 9

10. S
O
C
I
O D
- I
E V
C I
O D
N
E
O
M
I
C
1/29/2012 10

11. ROUTINE AT BOP
 Hunger
 Malnutrition
 Employment insecurity
ASPIRATION
 Poor or non existent
social security  Moving out of poverty
 Lack of proper  Give their children an
Healthcare facility & opportunity for a
support better life
 Threat of livelihood  Build up some capital
 Have at least the basic
needs of food, shelter &
clothing met without
thinking what will
happen the next day
1/29/2012 11

12. Inclusive growth as per the literal meaning of
the two words, refers to both the pace and
the pattern of the economic growth of a
country
It focuses on economic growth which is a
necessary and crucial condition, for poverty
reduction
It adopts a long term perspective and is
concerned with sustained growth.
1/29/2012 12

13. Inclusive growth as a strategy of economic
development, received attention owing to a
rising concern that the benefits of economic
growth, have not been equitably shared.
Inclusive growth grants people to contribute
to & benefit from economic growth
Even at international level, there is a concern
about inequalities and exclusion and now they are
also talking about inclusive approach for
development.
1/29/2012 13

14. India is shining however Future GDP growth
exclusion continued in Currently a $1.73 trillion*
terms of Economy with a population
Low agriculture growth, of 1.2 billion
Low quality employment To sustain 9% growth &
growth, progress to a double digit
Low human development, growth rate, inclusiveness
of all members of society is
Rural-urban divides, required
Gender and social Recognition that Inclusive
inequalities, and growth should be achieved
Regional disparities etc to reduce poverty & raise
economic growth
1/29/2012
* World Bank data
14

15. 11th Plan (2007-12) International Concerns
advocates for inclusive 1.U.N Millennium
growth Development
Approach paper for its Declaration
12th five-year plan 2000„Improve the lives
(2012- 2017), the of the impoverished
Planning Commission‟s people in their countries
focus on instilling by 2015‟
“inclusive growth”. 2.World Bank's mission
to help developing
countries to alleviate
poverty
Source- planningcommission.nic.in 1/29/2012 15

16. Before you do anything, stop and recall the face of the
poorest, most helpless destitute person you have seen
and ask yourself, “Is what I am about to do going to
help him?” ~ Mahatma Gandhi
Source: genderit.org
“Loyal and efficient work in a great cause, even though
it may not be immediately recognized, ultimately bears
fruit”
-- Jawaharlal Nehru
Source: thinkexist.com
If those who are better off do not act in a more
socially responsible manner, our growth process
may be at risk, our polity may become anarchic and
our society may get further divided. We cannot
afford these luxuries.”
Source: CII AGM
1/29/2012 16

17.  Five interrelated elements of inclusive growth
Poverty Reduction
and increase in Agricultural Social Sector
quantity and
quality of Development Development
employment
Reduction in
Protecting the
regional
environment
disparities
1/29/2012 17

18. Year % Population below poverty line Population (million)
Rural Urban Total Number
1973-74 56 49 55 321
1983 46 41 45 323
1993-94 37 32 36 320
2004-05 28 26 27.5 302
Tendulkar committee report – Revised estimate
41.8 25.7 37.2 410
Source:- Planning comm. Of India
1.Poverty level more in few states - Bihar, Uttar Pradesh , Madhya
Pradesh ,Orissa, Chhattisgarh & Jharkhand
2.In state Like Maharastra , Gujarat ,Tamilnadu & Karantaka, Andhra
Pradesh 1/3 rd of Population living under poverty
3.Concentrated among agricultural labourers, casual workers,
Scheduled Castes and Scheduled Tribes
4.80% of the poor are from rural areas.
1/29/2012 18

19. Agriculture Growth Rural wages Corruption
Stagnated real wages
Agri. GDP 2% during 1997 & Government schemes
2004 from 3.5% per year Below the minimum wages not reaching to poor
during 1981 &1996 people
Rural India
Rural non farm Relative Food prices Population
sector Ban on Exports More than Double in
Not fully Developed.
last 40 years.
Not much alternative other
than agriculture Decade growth -18%
Caste System Social
Social discrimination -Dalits Health, Education ,Social Urban poverty
are deprived of basic welfare
facilities & opportunities Immigration to city
Is unable to provide
livelihood &
Infrastructure Infrastructure infrastructure.
Road , Electricity , Water Financial system,
Mangement Technology, Governance
1/29/2012 19

20. Sector-wise Share of Employment (%)
Industry 1983 1993–94 1999–2000 2004–05 2006–07
Agriculture 66.08 61.81 57.31 52.69 50.8
Manufacturing 14.17 15.14 16.91 18.82 19.76
Services 19.74 23.06 25.78 28.47 29.43
Total 100 100 100 100 100
Source-Planning Commission 11TH Plan
Share of output & Employment (2006-07)
60
50
40
%
30
20
10
0
Agriculture Industry Services
% Of GDP 20 26 54
% Employ 51 20 29
Source-Planning Commission 11TH Plan/Economic survey 10/11
1/29/2012 20

21. Type of Employment and Sector(fig In Millions)
1999-2000 2004-2005
Sector Informal Formal Total Informal Formal Total
Unorganised 341.28 1.36 342.64 393.47 1.43 394.90
Organised 20.46 33.67 54.12 29.14 33.42 62.57
Total 361.74 35.02 396.76 422.61 34.85 457.46
 423 million workers are informal/unorganised workers -92%
 Growth in employment - more in unorganised sector.
 Quality of employment -Do not have social security.
Growth of Average Daily Wage -Casual Labour -1999 TO 2005(% per
annum)(1993/94 Prices)
Public Works 2.01Agriculture 0.93Non Agri. 1.32 All Activities 1.21
 Wage Growth -Average Daily Wage Earnings in Rural India are
stagnated . Wage growth heavily concentrated at the top end
 Working poor -Poverty is much higher than unemployment
Source-Planning
1/29/2012 Commission 11TH Plan
21

22. The Largest Wave of Suicides in History
Farmers who have committed suicide in India between1997
and 2007 now stands at a staggering 182,936. - Source
counterpunch.org/by P. SAINATH
Concerns in Agriculture
Agriculture Growth Land & Water Technology
• Deceleration in • Increased non-agri. • Uneven and slow
growth from 3.5% demand as a result development
during 1981-97 to of the higher GDP • Inefficient use of
2% during 1997- growth & available
2005 urbanization. technology
Disparities Institution Commodity prices
• Widening economic • To help small • Vulnerability to
disparities farmers increasing world commodity
between irrigated their productivity price volatility
& rain-fed &marketing following trade
areas.(All India liberalization
60% rain-fed area) • e.g cotton and oilseeds
1/29/2012 22

23.  Land and Water management.
 Fragmentation
Size of land holdings is very small often over-manned, resulting
in disguised employment and low productivity of labour
 Land Availability
Steeper decline in per capita land availability. Shrinking of farm
size
 Quality Of soil
Unbalanced and irrational system of fertilizer subsidy is an
important cause of deteriorating soil quality. Severe soil erosion,
degradation due to heavy rainfall/floods and deforestation
 Irrigation
Irrigation facilities are inadequate. As 60 % of the land is rain-fed
, result in farmers still being dependent on rainfall, the Mansoon
season. A good monsoon results in a robust growth for the
economy, while a poor monsoon leads to a sluggish growth
 Ground Water
Over pumping made possible by subsidized electric power is
leading to an alarming drop in aquifer levels , adverse impact on
small &marginal farmers.
1/29/2012 23

24.  Investment , Credit & Infrastructure
 Credit
Inadequate or inefficient finance services for farm produce .Still 22%
rural household takes loans from the informal source & 27% from
formal source ,remaining has no credit outstanding.
 Investment
Subsidies have increased from around 3% of agriculture GDP in 1976–
80 to about 7% in 2001–03. During the same period, public
investment in agriculture declined from 4% of agri. GDP to 2%.
 Infrastructure
A third of all food that is produced rots due to inefficient supply
chains .
 Education/skill
 Half of those engaged in agriculture are still illiterate.
 Even in 2004-05, around 60% of rural male workers and 85% of rural
female workers are either illiterate or educated upto primary level
.Only 5% completed higher secondary educ
 Source-Planning Commission 11TH Plan
1/29/2012 24

25. Marketing

Farmers' access to markets is hampered by poor
roads, rudimentary market infrastructure, & excessive
regulation
 Government policy.
1.Agricultural subsidies & taxes often changed without notice
for short term political ends.
2.Slow progress in implementing land reforms
 Technology & Research
 Technology : Modern agricultural practices & use of technology
is inadequate, hampered by ignorance, high costs &
impracticality in the case of small land holdings
 Research
1.Inadequate strategic research , such as cropping systems
suited to various agro-climatic conditions and towards
enhancing the yield potential in rain-fed areas through
development of drought- & pest-resistant varieties.
2.Development of Region specific technology .
1/29/2012 25

26. Poverty can not be removed with 51% of workers
in agri. Need to promote rural non-farm sector.
Micro and Small Enterprise- MSEs
Weavers, artisans, people engaged in food
processing, hawkers, vendors,& carpenters.etc
Issues - Unorganized ,Competition ,
Standard Infrastru
Credit Technology Marketing
ization cture
Small and Medium Enterprise – SMEs
China where over 68% of the exports come from the
SMEs called Chinese Town and Village Enterprises Level of processing
Segment India Other’s
Food processing-India produces about 50 Milk & 35% 60to 75% in
million tonnes of fruits & 90 million tonnes of products developed
Countries
vegetables.Only 2% of these are processed as Poultry 6%
against 23% in China, 78% in Phillippines, 83% in Fisheries 12%
Malaysia.
Buffalo 21%
1/29/2012 Meat 26

27. Malnutrition : 42 %of children under 5 are underweight and 59 %
are stunted; about half of all children are underweight or stunted
by age 24 month A recent HUNGaMA Report
Lota syndrome : 700 million people do not have access to safe
and hygienic toilets. The waterborne diseases this causes ,kill
500,000 children every year, mostly from diarrhea,“ Bindeshwar
Pathak, Sulabh Sanitation Source : www.ctv.ca/CTVNews
Education & Skill : Literacy rate 74% -Census Of India
Retention -Drop-out Rates at Class I-V -24% & Class I-VIII- 50%
Source –Times Of india/District Infor. System for Education
Skill -Only 9-10 per cent students passing out of colleges are
skilled enough to get employment . Few IITs and IIMs.
Healthcare
Over 40% of hospitalised Indians borrow heavily or sell assets to
cover expenses.
25 million Indians are pushed below poverty line every year due
to healthcare expenditure alone. Health costs are the SINGLE
LARGEST contributors to non-productive rural debt
IRDA Journals/Insurance Post/ Insurance Chronicle
1/29/2012 27

28. Drinking Water -Household access to safe Drinking water – 77%
All India : Rural 73% & 90% urban -Economic survey of India
30 % Rural India -250 million unsafe drinking water leading to
various waterborne diseases
Human development index
Broader definition for well being & provides a composite
measure of three basic dimensions of human development
Health, Education & Income . India‟s Rank 134 Out Of 187
countries. ShriLanka has better rank. Source :UNDP.ORG
There have been achievements in education & health but
problems are -
Regional,
Low levels of
social &
Human Dev. Slow progress
gender
Index
disparities
Low level of Poor quality Privatization
public delivery of Health and
expenditures systems Education
on health
Source :- National Rural Health Mission
1/29/2012 28

29. In general, richer states grew faster than the poorer state
Post-reform period Income inequality across the States increased
(Per capita GSDP) & its worsening.
Benefits of economic growth have been largely confined to the better
developed areas.
Paradoxically, it is the natural resource-rich areas which continue
to lag behind
 Growth Rates have been lower in the poorer states
Income :Per capita net state domestic product at current prices(2009-
10) Highest Rs.77,878 in Haryana, lowest Rs. 14,654 in Bihar , All-India
Net National Income / capita- Rs 44,345
Human Development Indicators
Female infant mortality rate-13(12)in Kerala to 72(70)in Madhya Pradesh
Literacy rate varies from 47% in Bihar to 91 % in Kerala Source-Eco. survey 10-11
Causes
Investment in
physical and Technology Governance
human capital
1/29/2012 29

30. Financial Times, August 14, 2007
1/29/2012 30

31. Only 55% persons
Only 20% persons Only 9 % have non
have bank
have life
account-Many are life insurance
insurance
dormant ?
VILLAGES EXCLUDED FROM BANKING – 95 %
 Financial inclusion Measures to ensure each house-
hold/individual (urban/rural poor) is financially literate,
have access to banking system (Deposits , Loans
,Remittances , Insurance)
Affordable for the poorest of poor & Enables beneficiaries
of Govt. welfare schemes to enjoy timely payment
 Why Exclusions - High cost & burdensome procedures
Low Literacy, Geography ,Language , Infrastructure
, awareness, Social exclusion, Attitude at branch ,Reach
 Ease of availability of informal credit
 Who are excluded – Mainly Marginal farmers,landless
labour, self employed – unorganized sector ,urban slum
dwellers ,migrants ,ethnic minorities ,socially excluded
groups ,senior citizens ,women – NER, East & Central regions
 Is Microfinance the answer
High interest rate? ,Regulation ? Small loan
Major role of Banks & Financial Institutions

32. 1/29/2012 32

33. 1/29/2012 33

34. Urban Slums Dominant Drinking Water –A problem in Untreated wastewater &
habitat for Humanity- Urban India , Lots of people industrial discharge.
Unhygienic living depend upon tanker water.
Varanasi, on the Sanitation continue to be Consumption patterns of rich
Ganges, problems of inadequate
pollution, holiest river.
1/29/2012 34

35. It takes 1000 years for a plastic Deforestation :A single tree
Floodwaters -effects of
bag to get degraded :effects will absorb approximately one
on ground water & land quality ton of carbon dioxide during
climate change ?
its life time
Major Contributor To CO2 emission
Global warming
Energy generation : Mostly Manufacturing industries: Exponential Increases in
from coal in India Thermal steel, cement etc. vehicles using fossil fuels
power
1/29/2012 35

36. Exploitation of Nature- Jal , Jungal , Zameen
World’s most disadvantaged people suffer the most from environmental
degradation, including in their immediate personal environment, &
disproportionately lack political power, making it all the harder for the world
community to reach agreement on needed global policy changes.
Source: UN Human Development. Report 2011
Sustainable development is
development that meets the
needs of the present without
compromising the ability of
future generations to meet
their own needs.
Time for a change
1/29/2012 36

37. India‟s economy needs to grow at 8 % to 10 % per year for two to
three decades to meet its human development needs.
Growth coupled with growing population puts significant stress on
natural resources & environment.
India‟s Land &Water Resource
India has 2% of world‟s land, 4% of freshwater, 16% of population.
Area :329 Mha :47% cultivated, 23% forested, 7% non-agri use, 23% waste.
Per capita availability of land 50 years ago was 0.9 ha, could be only 0.
14 ha in 2050.
Future -Limited Water & Land resources - More demand.
How We want to use ?
Energy consumption
Major area of concern of India’s development arises from energy use.
Per capita consumption of energy in India is one of the lowest in the
world. India consumed 540 kg of oil equivalent (kgoe) per person of
primary energy in 2008 compared to 1480 in China, 7750 in the U.S. & the
world average of 1820 Source : Taken from World bank global Indicator
If India grow like West?
Per capita resource consumption of 1.2 billion Indians reach the level in
the West ? Can this be our future?
Nature is already retaliating
Technology can help but cant support consumption beyond a point
1/29/2012 37

38. Source : UN Human
Development Report 2011
1/29/2012 38

39. 1/29/2012 39

40. 1/29/2012 40

41. Similar in terms of growth potential & large populations ,but there are
crucial differences .Growth in China is stupendous. India started late&
most growth limited to urban areas
Rates of GDP growth
Chinese economy has grown at an avg.annual rate of 9.8 % for two & a half
decades
India’s economy has grown at around 5-6 per cent per year over the same
period,But recently the avg.growth rate for last five years is above 8 %
Structural change over four decades
China:Cassic pattern, moving from primary to manufacturing sector, which
has doubled its share of workforce and tripled its share of output.
India: India leap frogged from agriculture to services with less focus on
manufacturing & the structure of employment has not changed much.
Share of the primary sector in GDP fell from 60 %to 20 %, but share in
employment still more than 50 %
Poverty reduction
China:Officially 4 %of the population now lives under the poverty
line, unofficially around 12 %.
India: Official poverty 37% of population. food deprivation is much higher.
1/29/2012 41

42. Institutional conditions
India : “Mixed economy” with large private sector, so essentially capitalist
market economy.
China : Mostly a command economy, which until recently had a very small
private sector; there is still substantial state control.
The financial sector
India : Mixed economy,without comprehensive government control over
the financial system; liberalisation since early 1990s,further loss of
control over financial allocations by the state.
China: Still under control of the state, despite liberalisation. Four public
sector banks handle the bulk of the transactions in the economy, & can
regulate the volume of credit to manage the economic cycle & direct
credit to priority sectors.
Trade patterns
China: Rapid export growth,aggressive increases on world market shares,
based on relocative capital attracted by cheap labour & heavily subsidised
infrastructure.
India: Lower rate of export growth, with cheap labour & poor
infrastructure development. So exports have not yet become engine of
growth, except in services.
1/29/2012 42

43. Number
of times
China’s
growth
over
India
Source: IIFL
 To replicate the success of a brand in an emerging market by copying previous
business models is close to impossible .
 This is due to the fact that emerging economies have different needs.
 In the same fashion emerging economies should innovating and tailoring their
growth models accordingly . A report by Delloitte Touché
1/29/2012 43

44. Poverty Alleviation, Sustainable Development, Inclusive Growth are Intimately
Interlinked
More challenging to achieve inclusive growth than getting 8 to 10 % growth in
GDP
Governance : Administrative Reforms , Lokpal , land reforms,…………etc etc
 An honest & transparent administration.
 Enactment of appropriate laws.
Infrastructure & Growth : Serious problem of infrastructure. The resources &
the infrastructure will make it possible for the weakest Indians to receive the
benefits of economic growth
Hard Infrastructure:
 Transportation (Road, Rail, airports, seaports)
 Energy ( Power, Natural Gas, Coal mines, petroleum , Renewable )
 Water Management (Drinking water, sewage, irrigation)
 Communication (Postal, Phones, TV/Radio , Internet )
Soft Infrastructure:
 Social ( Education, Healthcare, Social Welfare)
 Industrial ( Manufacturing)
 Institutional ( Financial system, Information Technology)
Role of all stakeholders:
The Government, bureaucrats, the public sector, private sector, NGOs, media
and civil society, has to play a active constructive role

45. Reasons -Inclusive growth & sustainable development
Social • Lack of inclusive growth leads to unrest among many
people.
• The measures which raise equity also promote economic
Economic growth.
• No government in a democracy can afford to ignore large
Political sections of workers and non-working population.
• Good life or growth does not mean over consumption as
Environmental resources are limited
A stable ,developed, prosperous & democratic society.
1/29/2012 45

46. Let all people be happy
Sarve bhavantu sukhinah Let all live with complete good health
Sarve santhu niramayaaha Let all know what is good and what is
Sarve badraani pasyantu not so good
Ma kaschith dhukha baag bhavet Let no body be subjected to troubles
1/29/2012 46