http://www.globalpolicy.org/globaliz/econ/2006/0212india.htm
When Globalization Leaves People Behind
By Kevin Watkins*
International Herald Tribune
February 12, 2006
Going by economic measures, India is a globalization success story. Average incomes, rising at 3 percent to 4 percent a year, have doubled since the mid-1980s. Dynamic new industries have emerged, most visibly in the high-technology hubs of Bangalore and Hyderabad. Foreign investment, while still dwarfed by flows to China, has grown from $1 billion a year in the mid-1990s to $5 billion this year.
When we try to measure whether people's lives have improved, however, the figures tell a different story. Poverty has fallen far more slowly than one would expect, given India's economic success. One in three Indians live on less than $1 a day and India is still home to the world's largest conglomeration of malnourished people. Almost half of the country's children are underweight for their age - which helps to explain the two million child deaths each year. The latest UN Human Development Report draws attention to the worrying gap that is emerging between economic growth and social progress.
What is going wrong? Part of the problem is that economic growth has been built on a narrow base. The information technology sector, for example, has so far created around one million jobs - but meanwhile, the labor force is expanding by about eight million a year. Broadening and deepening the growth process in labor-intensive manufacturing and in rural areas is vital.
The more profound challenge is to tackle head-on the deep-rooted inequalities that are holding back social progress, especially the deep inequalities in opportunity that divide women and men. These inequalities start at birth, with fatal consequences. Girls aged from 1 to 5 face a 50 per cent higher risk of childhood mortality than their brothers, reflecting disadvantages in access to nutrition and health provision. That statistic translates into 130,000 "missing" girl children - deaths that would be averted each year if death rates for girls were the same as those for boys.
Overlapping with these gender-based differences are wider inequalities. Child mortality rates among the poorest 20 per cent are more than three times higher than among the richest. And there are glaring gaps between the northern "poverty belt" states like Uttar Pradesh and Bihar and more successful states such as Tamil Nadu and Kerala. With a population larger than Nigeria, Uttar Pradesh immunizes only one in five children against the major childhood diseases. Accelerating social progress will require more than sustained economic growth, critical as that may be. As Amartya Sen has written: "Even a hundred Bangalores and Hyderabads will not, on their own, solve India's tenacious poverty and deep-seated inequality."
In 2004, India's electorate decisively rejected a government that celebrated "Brand Bangalore" instead of focusing on spreading prosperity more widely. Since then, the Congress-led government, has set a new course. Legislation has been approved for a $2.5 billion a year scheme that targets poor rural areas through public works programs. In last year's budget, the government signaled a far sharper focus on education, imposing a tax surcharge to fund a $1 billion increase in spending this year.
Across rural India, the public health system, starved of resources, has become a byword for clinics that lack drugs and trained staff. If current budget plans are implemented, health spending will rise from less than 1 per cent of national income to 3 per cent. Changing public spending priorities is difficult. But changing the structures that consign India's rural poor, especially poor women, to a lifetime of disadvantage is more difficult still. It will require fundamental changes in governance and - more important - in public attitudes to gender equality.
The challenges are immense. But economic growth and a thriving democracy provide India with an opportunity to become a real globalization success story.
About the Author: Kevin Watkins is the director of the UN Development Program's Human Development Report Office
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Reflections:
It is undoubted that India’s tremendous economic growth has not translated into the eradication of poverty as ideally as expected by many economic experts.
The statistics are there for us to see, the rising of average incomes from about 3 to 4%, doubling that of the 1980s and the growing of foreign investments from $1 billion in the mid 1990s to $5 billion of the mid 2000s are all vital statistics that point towards how India’s economic growth has been steady and rapid. Despite the fact of India’s strong economic growth, the fact is, many Indians are still living in poverty.
The fact that one in three Indians live on less than $1 a day, the fact that India is home to the world’s largest conglomeration of malnourished people and the fact that almost half the country’s children are underweight and two million of them die each year are all cold hard facts that point towards how India has failed to replicate its success in the areas of economic growth onto the scene where they ought to eradicate poverty.
However, despite the facts that point towards India’s failure to eradicate poverty with the globalization of its economy, and its strong economic growth, the truth is that there are many other factors that we ought to look at.
India’s failure to remove their caste system, that has been etched to its society for a very long time now, is probably a key factor where we should look at when we compare the economic growth and the poverty rates. The truth is that majority of Indians belong to the lower classes of the caste system and since the caste system is determined by occupation and it is very hard to work hard and out of the caste system, many children in the Indian society inherit the social class as well as the jobs of their parents. This also means that if the parents of these children are very poor, it is highly likely that their children will remain poor as well. And this goes to explain why the mortality rates among the poorest 20 per cent of people in India are more than three times higher than among the richest in India. As the poor remain the way they are, the richer classes become even richer as the economy develops. Even if there is an impact on economic development on the poor, it will be minimal.
Also, the economic growth of India has largely been attributed to the growth of the information technology sector, which in comparison to the labor force of India, only creates 1 million jobs per year compared to the labour force which expands at eight million jobs per year. This only shows that a small percentage of Indians are getting richer through the expansion of the information technology sector of India, and these Indians get richer and richer. The fact that there are as many as 52,000 Indian workers in an established and global brand of IBM, while there are an estimated 22,000 Indian workers working for Citibank group, of which 600 of them command high-value jobs, shows one thing -- that India’s information technology sector is developing at a very steady rate. But this does not mean that the remaining sectors of India’s society follow suit, and this explains why, despite the growth in economy, majority of India still lives poorly, if not in poverty. Thus in Uttar Pradesh, a poor region in India, where it has a population larger than Nigeria, only one in five children is immunized against major childhood diseases.
The richer people from India only get richer as the world sees a demand for not only foreign talents, but also a demand for skilled workers in the areas of information technology. Their pays will increase, and they would lead better lives, however, they leave behind the majority of the people in their homeland,
The only way where the eradication of poverty could take place is the removal of this caste system, and perhaps other kinds of discrimination that are prominent in the Indian society, such as gender discrimination. Through the removal of these, the Indian society would be based now on merit, as it is possible for people to know work from the lower classes to the higher classes. People will become more motivated not only to study, to improve themselves and to work harder. This would result in more development, but now, it would be developments throughout all sectors in the society, as everyone seeks to be more efficient methods and seeks to be among the top.
Also, a more reasonable amount of money should be invested into the development of rural areas in India, where the majority of the poor are. The Indian legislation has approved a 2.5 billion a year scheme targeting the development of rural areas, and it is estimated that health spending will rise from less than 1 per cent of national income to 3 per cent throughout rural areas.
Perhaps it is a little too early to give a verdict on whether the idea of globalization, the development of the information technology sector of India, or India’s phenomenal economic growth has failed to eradicate poverty. India is still only in a stage of development, although rapidly, but it would still have to learn and implement new ideas along the way. Further developments, more allocation of money to the development of rural regions would definitely see results in the eradication of poverty.
Future Perfect; Economic Expert
6:13 AM
