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India: Economic power house or poor house?

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Mary Albino

Special to the Star


India’s economic miracle is a perfect example of how appearances can be deceiving.

The dominant narrative on the country goes like this: as the fourth largest economy in the world, with a steady annual growth rate of close to 9 per cent, India is a rising economic superstar. Bangalore is the new Silicon Valley. Magazines such as Forbes and Vogue have launched Indian editions.

The Mumbai skyline is decorated with posh hotels and international banks.

There are numbers to back up this narrative. The average Indian takes home $1,017 (U.S.) a year. Not much, but that’s nearly double the average five years ago and triple the annual income at independence, in 1947. The business and technology sector has grown tenfold in the past decade. Manufacturing and agriculture are expanding, and trade levels are way up.

India is also on the up and up in terms of human well-being. Life expectancy and literacy are steadily rising, while child mortality continues to decline. The poverty rate is down to 42 per cent from 60 per cent in 1981. While 42 per cent still leaves a long way to go, India’s situation seems rosy compared with that of, say, Malawi and Tanzania, which have poverty rates of 74 per cent and 88 per cent, respectively.

If we examine these statistics in real numbers, however, a different narrative emerges, one the Indian government likes less.

With a population as big as India’s, 42 per cent means there are some 475 million Indians living on less than $1.25 per day. That’s 10 times as many facing dire poverty as Malawi and Tanzania combined.

It means India is home to more poor people than any other country in the world.

To put it another way, one of every three people in the world living without basic necessities is an Indian national.

The real number is probably even larger. The recently launched Multidimensional Poverty Index (MPI), a more comprehensive measure of deprivation than the current “poverty line” of $1.25 per day, uses 10 markers of well-being, including education, health and standard of living. The MPI, developed by the Poverty & Human Development Initiative at Oxford University, puts the Indian poverty rate at 55 per cent. That’s 645 million people — double the population of the United States and nearly 20 times the population of Canada.

By this measure, India’s eight poorest states have more people living in poverty than Africa’s 26 poorest nations.

A 10-year-old living in the slums of Calcutta, raising her 5-year-old brother on garbage and scraps, and dealing with tapeworms and the threat of cholera, suffers neither more nor less than a 10-year-old living in the same conditions in the slums of Lilongwe, the capital of Malawi. But because the Indian girl lives in an “emerging economy,” slated to battle it out with China for the position of global economic superpower, and her counterpart in Lilongwe lives in a country with few resources and a bleak future, the Indian child's predicament is perceived with relatively less urgency.

One is “poor” while the other represents a “declining poverty rate.”

What’s more, in India there are huge discrepancies in poverty from one state to the next. Madhya Pradesh, for example, is comparable in population and incidence of poverty to the war-torn Democratic Republic of Congo. But the misery of the DRC is much better known than the misery of Madhya Pradesh, because sub-national regions do not appear on “poorest country” lists. If Madhya Pradesh were to seek independence from India, its dire situation would become more visible immediately.

As India demonstrates, having the largest number of poor people is not the same as being the poorest country. That’s unfortunate, because being the poorest country has advantages. In the same way a tsunami or earthquake garners an intense outpouring of aid and support, being labelled “worst off” or “most poor” tends to draw a bigger share of international attention — and dollars.

When Bangladesh became independent from Pakistan in 1971, it was the poorest country in the world, so poor most economists were skeptical it would ever succeed on its own. But being labelled “dead last” worked in its favour: billions of dollars in aid money flooded in, and NGO and charity groups arrived in droves. The dominant narrative of Bangladesh at the time was of a war-ravaged, cyclone-battered and fledgling country on the brink of famine. That seemed to help rally the troops.

No doubt India’s government wants the world to perceive the nation in terms of its potential and not its shortcomings. But because it’s home to 1.1 billion people, India is more able than most to conceal the bad news behind the good, making its impressive growth rates the lead story rather than the fact that it is home to more of the world’s poor than any other country.

Still, at least part of the blame should be placed on the way poverty is presented on the international stage. If the unit of deprivation is a human being, then the prevalence of poverty should be presented in numbers of lives. If we know precisely how many billionaires India has — 49 in 2010, double last year’s number — than we should also know precisely how many people live without basic necessities. The Mumbai skyline is decorated with posh hotels and international banks.

There are numbers to back up this narrative. The average Indian takes home $1,017 (U.S.) a year. Not much, but that’s nearly double the average five years ago and triple the annual income at independence, in 1947. The business and technology sector has grown tenfold in the past decade. Manufacturing and agriculture are expanding, and trade levels are way up.

India is also on the up and up in terms of human well-being. Life expectancy and literacy are steadily rising, while child mortality continues to decline. The poverty rate is down to 42 per cent from 60 per cent in 1981. While 42 per cent still leaves a long way to go, India’s situation seems rosy compared with that of, say, Malawi and Tanzania, which have poverty rates of 74 per cent and 88 per cent, respectively.

If we examine these statistics in real numbers, however, a different narrative emerges, one the Indian government likes less.

With a population as big as India’s, 42 per cent means there are some 475 million Indians living on less than $1.25 per day. That’s 10 times as many facing dire poverty as Malawi and Tanzania combined.

It means India is home to more poor people than any other country in the world.

To put it another way, one of every three people in the world living without basic necessities is an Indian national.

The real number is probably even larger. The recently launched Multidimensional Poverty Index (MPI), a more comprehensive measure of deprivation than the current “poverty line” of $1.25 per day, uses 10 markers of well-being, including education, health and standard of living. The MPI, developed by the Poverty & Human Development Initiative at Oxford University, puts the Indian poverty rate at 55 per cent. That’s 645 million people — double the population of the United States and nearly 20 times the population of Canada.

By this measure, India’s eight poorest states have more people living in poverty than Africa’s 26 poorest nations.

A 10-year-old living in the slums of Calcutta, raising her 5-year-old brother on garbage and scraps, and dealing with tapeworms and the threat of cholera, suffers neither more nor less than a 10-year-old living in the same conditions in the slums of Lilongwe, the capital of Malawi. But because the Indian girl lives in an “emerging economy,” slated to battle it out with China for the position of global economic superpower, and her counterpart in Lilongwe lives in a country with few resources and a bleak future, the Indian child's predicament is perceived with relatively less urgency.

One is “poor” while the other represents a “declining poverty rate.”

What’s more, in India there are huge discrepancies in poverty from one state to the next. Madhya Pradesh, for example, is comparable in population and incidence of poverty to the war-torn Democratic Republic of Congo. But the misery of the DRC is much better known than the misery of Madhya Pradesh, because sub-national regions do not appear on “poorest country” lists. If Madhya Pradesh were to seek independence from India, its dire situation would become more visible immediately.

As India demonstrates, having the largest number of poor people is not the same as being the poorest country. That’s unfortunate, because being the poorest country has advantages. In the same way a tsunami or earthquake garners an intense outpouring of aid and support, being labelled “worst off” or “most poor” tends to draw a bigger share of international attention — and dollars.

When Bangladesh became independent from Pakistan in 1971, it was the poorest country in the world, so poor most economists were skeptical it would ever succeed on its own. But being labelled “dead last” worked in its favour: billions of dollars in aid money flooded in, and NGO and charity groups arrived in droves. The dominant narrative of Bangladesh at the time was of a war-ravaged, cyclone-battered and fledgling country on the brink of famine. That seemed to help rally the troops.

No doubt India’s government wants the world to perceive the nation in terms of its potential and not its shortcomings. But because it’s home to 1.1 billion people, India is more able than most to conceal the bad news behind the good, making its impressive growth rates the lead story rather than the fact that it is home to more of the world’s poor than any other country.

Still, at least part of the blame should be placed on the way poverty is presented on the international stage. If the unit of deprivation is a human being, then the prevalence of poverty should be presented in numbers of lives. If we know precisely how many billionaires India has — 49 in 2010, double last year’s number — than we should also know precisely how many people live without basic necessities.

India: Economic power house or poor house? - thestar.com
 
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India's billionaires are committing robbery and murder against the poor of India. They also contribute to capital flight from India. While billions of FDI go to india how much black money goes from India to switzerland?
 
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Looking at the numbers, I would say that India is a "future" economic power house.

It is commonly said in the financial media that India is a future economic superpower, and I agree with them. Just look at the GDP projections.
 
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@munshi... I am not too clear why there are so many thread in this forum challenging India's economic status... but here is my point of view.... If even with around 500 million poor people it is able to clock in a phenomenal growth in GDP... imagine how will it do, when even half of those 500m people start contributing to the economy.

Thats the reason why everyone labels India as the emerging economic super power and not a current economic superpower. Everyone was skeptical and uncomfortable with the Chinese growth back in the 80s and 90s... and see now... they are a true economic superpower... India is on a similar track and you will see the changes in the next 10 years.
 
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Thanks @hobbes... one thing I don't understand is that why are all our neighbors so envious of India's growth?.... every now and then there seems to be articles pointing out the deficiencies in our country.... we all know that... and no one refutes this claim... India didn't go to the world thumping its chest and claiming it was a superpower and everyone should accept it, but rather this was a termed coined by the major economies because they saw a potential market in India.... I know personally how things have changed in the past 10 years.... heck, the 70s, 80s and 90s... when no one had any expectations from the country to the roaring 21st century... it is a phenomenal change.
 
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India's billionaires are committing robbery and murder against the poor of India. They also contribute to capital flight from India. While billions of FDI go to india how much black money goes from India to switzerland?

I wouldn't say the billionaires are robbing. It is mostly the politicians who rob and send the money to Swiss banks.(Indians have more than a $1 trillion in Swiss banks)

The poor are that way because of various reasons. The poorest of poor have been like that for centuries and they think that is their destiny and do not try to improve. The lower middle class and middle class is what tries and develops. Most of the richest Indians were from middle classes and have come up because of their talent. The ones sending their wealth to Swiss won't feature in richest list.

India being a chaotic democracy sometimes cannot do what is good for the people in longer run but what will pacify them for the moment.

Said that, I wish more rich Indians would initiate programs to benefit the masses.
 
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India's billionaires are committing robbery and murder against the poor of India. They also contribute to capital flight from India. While billions of FDI go to india how much black money goes from India to switzerland?

Now Come on, What is that You think of The Term billionaires?? That he/She has all the Liquidity Worth that much and Is safe In Swiss Bank and Hence termed a billionaire??? Come on, you do not know How Ambani, TATA, Wipro etc etc Came up, How Much of Hard work they had to Put in to root themselves..... Do You know these are the few Men who are Giving India the Title "The Land Of opportunities" , Now If you are so Concerned About India's Growth and Growing Potential then I dont think there are any patented Medicines Available for Your Jealousy
 
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India's billionaires are committing robbery and murder against the poor of India. They also contribute to capital flight from India. While billions of FDI go to india how much black money goes from India to switzerland?


.... and yet India is doing well !
 
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Thanks @hobbes... one thing I don't understand is that why are all our neighbors so envious of India's growth?.... every now and then there seems to be articles pointing out the deficiencies in our country.... we all know that... and no one refutes this claim... India didn't go to the world thumping its chest and claiming it was a superpower and everyone should accept it, but rather this was a termed coined by the major economies because they saw a potential market in India.... I know personally how things have changed in the past 10 years.... heck, the 70s, 80s and 90s... when no one had any expectations from the country to the roaring 21st century... it is a phenomenal change.

The article simply reveals the realities of India's economic powerhouse myth. It has nothing to do with neighbours being envious. The article in fact reveals Bangladesh as a true economic success story.
 
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is it? how many people are going to starve while a fat politician or foreign businessman uses money as toilet paper? india should not learn from 19th century britain.

Its Better to do something than nothing and still remain in Poverty, Well Iam not Reasoning the Bloody Politicians In My Country who drain out all the Money from the Poor People and fill there Pockets, But Ou Top diplomats Like MM Singh are Not Leaving them alone he has set his Goal and His Achieving it.... You have a Very Genuine Question to Raise "What MM Sing as a single Man Could Do?" Well He certainly can change the Tax Rules.... Dont worry The Next Financial Year we are starting our Tax Liberalization.... So Lets Keep Our Fingers crossed, No Assessee can Escape From Paying Tax
 
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the problem has ALWAYS been the population and nothing but the population.

I suspect India's population is UNDER-counted. My guess the number is 1.4 billion plus.
The census will find out.
 
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the problem has ALWAYS been the population and nothing but the population.

I suspect India's population is UNDER-counted. My guess the number is 1.4 billion plus.
The census will find out.

What makes you think so??
 
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Request to Indians --- Please dont reply to this kind of threads.. We all know their intention to start this kind of threads.. Let them read alone and be happy.....
 
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