As India gears up for its general election next month, it has some cause to celebrate: Extreme poverty is finally in retreat.
In 2012 — two decades after the Indian government launched a series of economic reforms aimed at opening up the economy — the official poverty rate had reached 22 percent, less than half the rate in 1994.
However, it is time for India to raise its aspirations. Escaping abject destitution, although an important milestone, is not the same as achieving a decent standard of living and sense of economic security. To that end, there is still much to be done.
The extent of the task is reflected in a new McKinsey Global Institute report titled: From Poverty to Empowerment, which uses an innovative analytical framework, the “empowerment line,” to estimate the cost to the average citizen of fulfilling eight basic needs: food, energy, housing, potable water, sanitation, healthcare, education and social security.
According to this metric, 56 percent of Indians in 2012 “lacked the means to meet essential needs.”
Remarkably, this number is more than 2.5 times the number of people still living below the poverty line in India. Even more striking is that the “empowerment gap” — that is, the additional consumption required to bring these 680 million people to the empowerment line — is seven times larger than the cost of eliminating extreme poverty.
Furthermore, while the empowerment line is a measure of individual consumption, a household’s ability or willingness to spend is not sufficient to guarantee a decent life.
People also need access to community-level infrastructure like health clinics, schools, power grids and sanitation systems. However, the average Indian household lacks access to 46 percent of basic services, with the severity of the gaps varying widely across districts.
What can the Indian government do to provide its citizens with the dignity, comfort and security that they deserve? Given that approximately half of current public spending on social programs fails to deliver better outcomes for poor people, simply directing more funds through existing channels is unlikely to have much of an impact.
Instead, policymakers should focus on supporting employment and productivity gains — historically the most potent weapons against poverty. Of course, this will not be easy. India’s economy has slowed in recent years. If economic growth remains on its current trajectory with no major reforms, more than one-third of the population will remain below the empowerment line in 2022, with 12 percent still trapped in extreme poverty.
To avoid such an outcome, the Indian government should pursue a set of bold reforms that boost growth by encouraging businesses to invest, scale up and hire. The reform agenda should be based on four key priorities:
■ The addition of 115 million non-agricultural jobs over the next decade to absorb the growing pool of workers and accelerate the shift toward more modern industries.
■ A doubling of agricultural productivity growth to raise India’s farm yields to the levels achieved in other emerging Asian countries.
■ A doubling of real (inflation-adjusted) public spending on social services over 10 years, with much of the increase allocated to fill gaps in healthcare, the provision of clean drinking water and sanitation.
■ An overhaul of social service delivery.
With the right set of measures, more than half a billion people could cross the threshold of consumption required for an economically empowered life, and Indians could gain access to more than 80 percent of the basic services they need by 2022. Jobs and productivity growth could contribute 75 percent of the potential gains, while increased public spending alone, without measures to improve its effectiveness, would contribute less than 10 percent.
To realize this potential, policymakers should eliminate arcane regulations that handcuff businesses, accelerate infrastructure projects, make the labor market more flexible, remove market distortions and expand vocational training for the poor and uneducated. At the same time, they should work to place the efficiency of all public spending on par with that in India’s best-performing states.
All of this demands a strong commitment to better governance and a relentless focus on outcomes. Common sense strategies — such as improving coordination among the plethora of ministries and departments that comprise the bureaucracy, and establishing accountable and empowered agencies to deliver results in high-priority areas — could go a long way toward meeting this demand.
Moreover, technology could be used to streamline government services and render them more transparent.
Finally, closer engagement with actors in the private and social sectors and local communities could help to increase efficiency, while reducing the burden on the public sector.
India’s young, dynamic population is demanding a better quality of life. With strong, sustained political will and results-oriented policies, New Delhi can deliver it.
Subir Gokarn, a former deputy governor of the Reserve Bank of India, is director of Research at Brookings India. Anu Madgavkar is a senior fellow at the McKinsey Global Institute.
Copyright: Project Syndicate
A series of strong earthquakes in Hualien County not only caused severe damage in Taiwan, but also revealed that China’s power has permeated everywhere. A Taiwanese woman posted on the Internet that she found clips of the earthquake — which were recorded by the security camera in her home — on the Chinese social media platform Xiaohongshu. It is spine-chilling that the problem might be because the security camera was manufactured in China. China has widely collected information, infringed upon public privacy and raised information security threats through various social media platforms, as well as telecommunication and security equipment. Several former TikTok employees revealed
Two sets of economic data released last week by the Directorate-General of Budget, Accounting and Statistics (DGBAS) have drawn mixed reactions from the public: One on the nation’s economic performance in the first quarter of the year and the other on Taiwan’s household wealth distribution in 2021. GDP growth for the first quarter was faster than expected, at 6.51 percent year-on-year, an acceleration from the previous quarter’s 4.93 percent and higher than the agency’s February estimate of 5.92 percent. It was also the highest growth since the second quarter of 2021, when the economy expanded 8.07 percent, DGBAS data showed. The growth
At the same time as more than 30 military aircraft were detected near Taiwan — one of the highest daily incursions this year — with some flying as close as 37 nautical miles (69kms) from the northern city of Keelung, China announced a limited and selected relaxation of restrictions on Taiwanese agricultural exports and tourism, upon receiving a Chinese Nationalist Party (KMT) delegation led by KMT legislative caucus whip Fu Kun-chi (傅崑萁). This demonstrates the two-faced gimmick of China’s “united front” strategy. Despite the strongest earthquake to hit the nation in 25 years striking Hualien on April 3, which caused
In the 2022 book Danger Zone: The Coming Conflict with China, academics Hal Brands and Michael Beckley warned, against conventional wisdom, that it was not a rising China that the US and its allies had to fear, but a declining China. This is because “peaking powers” — nations at the peak of their relative power and staring over the precipice of decline — are particularly dangerous, as they might believe they only have a narrow window of opportunity to grab what they can before decline sets in, they said. The tailwinds that propelled China’s spectacular economic rise over the past