a comparative study of pre & post liberalized economic growth, inequality and poverty in up

7/25/2019 A comparative study of pre & post liberalized Economic growth, Inequality and Poverty in UP

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A comparative study of pre & post liberalized Economic growth, Inequality and Poverty

in UP

Introduction

Pre-liberalized Indian economy:

!he Indian Economy

The Economy of Indiais the tenth largestin the world by nominal GDPand the fourthlargestbypurchasing power parity(PPP) The country!sper capita GDP(PPP) is"#$##%(I&'$ %th) in ** 'ollowing strong economic reforms from the post-independencesocialist economy$ the country!s economic growthprogressed at a rapid pace$ as free mar+et

principles were initiated in %% for international competition and foreign in,estmentDespite fast economic growth India continues to face massi,e income ineualities$ highunemploymentand malnutrition

The Indian economy before the economic reforms in %%was a highly centralised economyin which the 'i,e .ear Plans played an important role In the post-reform period$ though thePlans still continue$ focus of the fi,e year plans has changed /oting the change in functions$Planning 0ommission (**1a) obser,ed that 'rom a highly centralised planning system theIndian economy is gradually mo,ing towards indicati,e planning where Planning0ommission concerns itself with the building of a long term strategic ,ision of the future anddecide on priorities of nation(Planning 0ommission$ **1a)

Due to the high economic growth$ there has been rapid progress in the ci,ic amenities The

per capita income has increased which has impro,ed the standard of li,ing of the masses 2seconomic growth is a great factor behind the impro,ement of the po,erty$ the rise in theeconomic condition of India had a fa,orable impact on the reducing the rate of po,erty in thecountry

Effects of "eforms

3e are the 'ourth 4argest Growing 5conomy in terms of PPP with a GDP of

67 "##1 trillion

In 58change terms$ we are the Tenth 4argest in the world with a GDP of 67 "

1%9 billion (**;)

7econd 'astest Growing &a of **?-*1

2fter reforms in %%$ huge amounts of foreign direct in,estment came into India

In %%#$ foreign institutional in,estors were allowed to purchase shares of listed Indian

companies in the stoc+ mar+et

U!!A" P"A#E$% At a glance
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/Per_capita_GDPhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capitahttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capitahttp://en.wikipedia.org/wiki/IMFhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Income_in_Indiahttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Malnutrition_in_Indiahttp://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/Per_capita_GDPhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capitahttp://en.wikipedia.org/wiki/IMFhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Income_in_Indiahttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Malnutrition_in_Indiahttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)


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Uttar Pradesh is the most populous state in the country accounting for 1; per cent of the

country@s population It is also the fourth largest state in geographical area co,ering %* per

cent of the country@s geographical area$ encompassing $%;$; suare +ilometres and

comprising of 9# districts$ %* de,elopment bloc+s and $9*; inhabited ,illages The

density of population in the state is ;# people per suare +ilometres as against ; for thecountry

Population

!he total population of the state was 99 crores in % It increased to crores in %9and then reported to be #% crores in %% The increase$ in population in these two decadeswas almost identical at ? per cent 2s against this$ the national population shows a decliningtrend from ? per cent in %-9 to #9 per cent in %9-% 7ince %-9 the decadal,ariation of 6P population in percentage forms has remained higher than that of thenational 6ttar Pradesh is the most populous state in Indiawith a population of %%$?9$;

million people as of &arch * If it were a separate country$ 6ttar Pradesh would be theworld!s fifth most populous nation$ ne8t only to 0hina$ India$ the 6nited 7tates of 2mericaand Indonesia 2s of the ** census of India$ about 9*= of 6ttar Pradesh population isAindu$ while &uslimsma+e up around 9= of the population The remaining populationconsists of 7i+hs$ Buddhists$ 0hristiansand Cains

Urbanisation

!he pace of urbanisation has been lower in the state The le,el of urbanisation has also been

lower than most other states The numbers of urban centres with more than one la+hpopulation ha,e grown slowly o,er last thirty years The growth of urban centres withpopulation less than fi,e thousand ha,e$ on the other hand$ ha,e grown more significantlyand these centres ha,e grown in larger numbers in the western part of the state
http://en.wikipedia.org/wiki/List_of_states_and_union_territories_of_India_by_populationhttp://en.wikipedia.org/wiki/List_of_states_and_union_territories_of_India_by_populationhttp://en.wikipedia.org/wiki/Hinduhttp://en.wikipedia.org/wiki/Muslimshttp://en.wikipedia.org/wiki/Sikhshttp://en.wikipedia.org/wiki/Buddhistshttp://en.wikipedia.org/wiki/Christianshttp://en.wikipedia.org/wiki/Jainismhttp://en.wikipedia.org/wiki/List_of_states_and_union_territories_of_India_by_populationhttp://en.wikipedia.org/wiki/Hinduhttp://en.wikipedia.org/wiki/Muslimshttp://en.wikipedia.org/wiki/Sikhshttp://en.wikipedia.org/wiki/Buddhistshttp://en.wikipedia.org/wiki/Christianshttp://en.wikipedia.org/wiki/Jainism


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Economic#evelopment in UPnly during the 'ifth (%;-%) and the 7e,enth 'i,e .ear Plan period (%9?-%*) that is$

prior to the reforms$ the state@s growth rate has eualled or surpassed the country@s growthrate In the post-reform period that is$ after %% while the country@s growth rate has beenmuch higher$ the growth rate of the state has lagged considerably behind The o,erall growth

rate of the state has been ,ery low particularly$ since %%-%9 During the year **-*#$ thestate@s growth rate declined by ? per cent$ largely due to a decline in the agricultural outputThe low growth rate of the state is a reflection of the growth in the state@s agriculture$industry and the ser,ices sector f all the decades growth rate was highest in the eightieswhile in the nineties$ growth slowed down in all the sectors The two sets of factors$ whiche8plain slow growth of the state in the post-reform period$ are: i) economic factorsE and ii)social and political factors The economic factors are: tapering of the green re,olution effectin the nineties in the western region of the state (/ Ba


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%9*-9 9

%%*-% 1?

= change(pre liberalisatio) %=

%%%-*** ?1?

= change(post liberalisation) ;#=

**9-**% ;9

= change %=

!he per capita income of the state at Hs ;9 in %%#-%; is one of the lowest in the countrye8cept rissa (Hs ;1) and Bihar (Hs #1*) The per capita of the state in %?*-? at Hs?% was ,ery close to the national per capita income of Hs 1$ short by only Hs 9 ie # percent only In %%?-%1 this shortfall stood at Hs #?9 and is li+ely to go up The a,erageannual growth in total income of the state in the period between %?-; was always far lessthan the country Aowe,er$ the population growth in the state being lower in the countryduring the period$ the gap in the per capita income between the state and the country wasconstructed to some e8tent

The post-%; period was$ howe,er$ mar+ed by a significant impro,ement in the total income

of the state The state achie,ed a growth of ?- per cent per annum$ which is higher than thenational growth of ?# per cent But this gain in higher growth rate of total income in thestate was lost to the state due to increase in the growth rate of population from 9 per cent

per annum in %1- to # per cent in %-9 which is higher than the country@spopulation growth rate of percent

The increasing trend of growth in income in the period following %; is li+ely to be replacedby an a,erage annual growth of e,en less than # percent which is much lower that thecountry@s growth rate of almost si8 per cent This means that the shortfall in the states percapita income$ which was #? percent in %%;-%?$ is unli+ely to change in recent time

!hus the lower rates of growth in the total income of the state during the period )45)/67was followed by high population growth in the last two decades8 9ut the state is now

faced with the reappearance of lower growth of income while the population growth

remaining unchanged in foreseeable future8

The structure of state income shows that the contribution of primary sector has declined to ;percent of the state income though the sector still sustain # percent of the total wor+ingforce This shows the continued pressure of wor+ing population in the primary sector Theshare of secondary sector$ on the other hand$ has gone up to * percent of the total stateincome which now employ % percent of the total wor+ers in the state This pecentage is thelowest among all the ma


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percentage share of wor+ers employed by this sector has risen from ? percent to 9 percentin %% It thus shows that the 6P!s growth has been more capital intensi,e than labourintensi,e$ more urban based than rural based and the shift income from primary to othersectors is not accompanied by corresponding change in employment pattern

Distinguishing feature of 6ttar Pradesh!s economy is its regional imbalances In terms ofeconomic indicators li+e agricultural producti,ity$ infrastructural facilities$ industrial growth$the 6ttar Pradesh!s economy can be categorise into fi,e regionsE 3estern$ 5astern$ 0entral$Huhel+hand and Aill The 3estern 6ttar Pradesh is agriculturally prosperous It is relatirelyindustrialised and has seen greater degree of urbanisation 2t the other end is Bundel+hand4ow agricultural growth$ less number of industrial units$ lesser gross ,alue of industrial

products mar+s touts his region as the least de,eloped in the state

Economic "eforms in UP

5conomic reforms commenced in the country in %% Though the central go,ernment ga,e

the o,erall direction to the economic reforms$ states also introduced ma


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Poverty in UP

Poverty The word po,erty@ has been used in two senses$ in the broad and all encompassingone it describes the whole spectrum of depri,ation and ill-being$ and in a narrow sense$ it isused for purposes of measurement and comparison has been defined as low income$ or morespecifically$ as low consumption which is considered more stable and easier to measure Incommon parlance$ this (the second definition) is +nown as income po,erty (7ri,asta,a$**)Po,erty could be relati,e as well as absolute People falling below some basic minimum le,elof the chosen po,erty indicator depict absolute po,erty 'or e8ample$ in India those who donot meet nutrition le,el of ;** Jilocalorie per day (+calKday) in rural areas are poor (inabsolute sense)

2 measure of relati,e po,erty defines Lpo,ertyM as being below some relati,e po,ertythreshold 'or instance$ when po,erty is defined as households that earn less than ?* percentof the median income Helati,e po,erty compares two indi,iduals on the chosen po,ertyindicator In de,eloping countries li+e India$ relati,e po,erty is not ta+en to be as much acause of concern as absolute po,erty isThe most common measure of po,erty is the !Aead-0ount! ratio$ defined as the percentage of

population li,ing below the po,erty lineIndi,idual 8 and y both are poor as their incomes being N?* and N%* whereas the po,erty lineis N** Though both are poor by A0H as their income is below the po,erty line$ indi,idual8@s po,erty gap is ?* whereas that of y is * only2 sizable chun+ of India@s po,erty comes from 6ttar Pradesh (6P) 2s per Go,ernment of

India (GI) estimates$ 6P is home to si8ty million poor and *= of total population of IndiaBased on an estimate by 3orld Ban+$ about 9= of world@s poor li,ed in 6P during %%9


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The ,ery notion of the fact that it is one of the BI&2H6@ states$ gi,es a general picture ofpo,erty and lac+ of de,elopment in the state 3ith a large share in India@s population and adeep rooted po,erty within$ 6P acts as a drag on the Indian economy

'rom the abo,e shown chart it is clear that in 6P multidimensional po,erty inde8 (#9)is,ery high in comparisons to Indian multidimensional po,erty inde8(%1)Hiding on the high wa,es of Green He,olution$ 6P was performing well during %*s$ wheneconomic performance of most sector of this state were better than the rest of India (Jozel FPar+er$ **#) Hich in potential - in human and natural assets O 6ttar Pradesh once appearedto a pace setter for the country@s economic and social de,elopment (3orld Ban+$ **)7ince then$ the economic pace in 6P staggered and it lagged behind rest of India 'ailing toseize opportunities created by economic reforms in %% is cited as a reason (Jozel F Par+er$**#) 2 study by 3orld Ban+ (**#) opines that loss of effecti,eness of public sector lies atthe heart of loss of economic momentum by 6P This inefficacy of public sector led to

discouragement of pri,ate in,estment and growth and to poor deli,ery of social andinfrastructure ser,ices (3orld Ban+$ **) 2 lac+lustre performance in 6P would result in asimilar show at country le,el as 6P commands a large population size in country

Inequality -easuresIneuality is a broader concept than po,erty as it ta+es into accountincome distribution o,er entire population rather than focusing only on the poor (Aandboo+of Po,erty and Ineuality$ p*)2lthough globalization has led to the economic de,elopment in the country$ it has not reallyhelped to minimize income ineualities across the country Hecent sur,eys say that lots of

people across the country still li,e below the po,erty line and their standard of li,ing hasgone down considerably The wealth distribution pattern is also une,en in the country Hecentsur,eys ha,e shown that the top *= of the income groups share around ##= of the totalincome of the country 5,en after globalization and economic progress$ around a uarter ofthe population of the country has a earning less than the minimum le,el of "*;* per day


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1993-94 2004-05

0.03

0.040.04

0.07

Change in Inequality: IndiaUP (1993-94 to 2004-05

India UP

0

0.02

0.04

0.06

0.080.1

0.12

0.14

0.16

0.18

Ru

0.030.03

0.05

0.18

0.02

0.17

0.05

0.04

Rual U!an

Inequality in UPapart from economic growth and reduction in po,erty rate$ ineualityremain the ma


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mil+ and mil+ products$ ,egetables and edible oil /on-food e8penditure included Hs ?; forfuel and light$ and Hs ;? for clothing and footwear

In the rural sector$ among the ma

a comparative study of pre & post liberalized economic growth, inequality and poverty in up

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