Inclusive growth, here we come PDF Print E-mail
Wednesday, 13 July 2011 00:00
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We are so focused on berating ourselves, and often with good reason, we’re unable to focus on the good news. To be sure, India has a long way to go on any parameter you can think of, but the past week has seen a series of good news coming out from two NSSO samples, one on employment and the other on consumption. Both indicate economic growth has begun to deliver results, something even the government has been unwilling to believe, given its sole focus on all manner of anti-poverty programmes.

Take the jobs data first. This is the first time since the reforms began in 1991 that unemployment levels have come down, and mind you this is when 2009-10 was a drought year—indeed, the NSSO has agreed to do another large survey for 2011-12 so that more meaningful results can be got. It is true that 401 million jobs were created in 2009-10 as compared to 383 million in 2004-05 and 338 million in 1999-2000—that is, while the NDA government created 45 million jobs, the UPA created just 18 million. That’s on the surface. The reason why less jobs got created by the UPA is that there was less demand for jobs. Keep this in mind and the NSSO data shows unemployment fell—after rising from 6.06% in 1993-94 to 7.31% in 1999-2000, it went up to 8.2% in 2004-05 and then fell to 6.6% in 2009-10, a drought year.

Many argue this doesn’t wash, that since women are being discriminated against and find it difficult to get jobs, they’re just not entering the labour force (defined as those looking for jobs)—so the unemployment numbers, the argument goes, are misleading. Between 2004-05 and 2009-10, the participation rate of women is down from 22% to 18% and that for men is up from 53% to 54%. While there’s no explanation given as to what new factor ensured women were suddenly not getting jobs in the last five years, the more likely explanation is that with an increase in schooling levels among girls, more of them are no longer in the labour force—around 12 million more girls enrolled in schools in this period. The figure for boys is 16 million, implying that 28 million people are not in the labour force out of choice. Indeed, this explanation of less people being available for employment is consistent with the rise in wage levels. In the period 2004-05 to 2009-10, wages and salaries have gone up by 72-102% for men and women in rural and urban areas.

For salaried women workers in rural areas, salaries grew at 1.7% per year in the 1999-2000 to 2004-05 period as compared to a whopping 12.8% between 2004-05 and 2009-10; for urban women, the growth rose from 1.8% to 15.1% in the same two periods. For salaried men in rural areas, salaries grew by 2.6% per year in the first period to 11.5% in the second period. For casual workers who are women, annual growth in wage rates rose from 3.5% to 14.6%; for urban women who were casual workers, income growth was 2.8% per year in urban areas in the first period and this rose to 11.8% in the second period.

This hike in employment growth and in wages, logically enough, led to a sharp hike in expenditure levels. In real terms, monthly per capita expenditure in rural areas rose by 0.2% per year between 1987-88 and 1993-94; this rose to 0.8% in the 1993-94 to 2004-05 period, and then to 1.4% per year in the five years from 2004-05 to 2009-10. For urban areas, real per capita expenditures grew by 0.98% in the 1987-88 to 1993-94 period, by 1.47% between 1993-94 and 2004-05, and further to 2.67% between 2004-05 and 2009-10. Given how NSS data capture less and less of consumption in the country (the consumption you get from NSS data is around 40% of the consumption you get from National Accounts or GDP data), the actual growth would be a bit higher.

As a result, poverty in 2009-10 is likely to have fallen to 32.2% (the real number should be out in a few months), which means poverty levels fell by one percentage point each year since 2004-05—keep in mind 2009-10 was a drought year, with the worst agriculture GDP growth since 2002-03. While poverty fell by one percentage point each year between 2004-05 and 2009-10, it fell by 0.81 percentage points per year between 1993-94 and 2004-05. For some states, the fall was nearly double the national average over the five years—9.9% for Andhra Pradesh, 10.6% for Tamil Nadu and 11.7% for Andhra Pradesh.

Equally important is the further improvement in health indicators like infant mortality, maternal mortality (17% fall in 5 years) and the under-5 mortality rate—all go to show that most states are focusing on health delivery. Nine states have a fertility level that ensures no growth in population (2 children per woman)—in 12 years, that will be true of the entire country. As in other cases, there’s a long way to go (the UN’s Millennium Development Goal for maternal mortality is 109 by 2015; just three states have achieved it and four are close to it), but the improvement is steady. Pity the UPA’s not talking about what it has achieved.

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Last Updated ( Thursday, 22 March 2012 06:20 )

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