Samir Saran– Senior Fellow and Vice President, Observer Research Foundation (ORF), 110002, 20, Rouse Avenue Institutional Area, New Delhi, India; E-mail: samirsaran@orfonline.org

Vivan Sharan– Associate Fellow, Observer Research Foundation (ORF), 110002, 20, Rouse Avenue Institutional Area, New Delhi, India; E-mail: vivansharan@orfonline.org

Abstract

India is a study in contrasts. In the post liberalisation era, since 1991, the country has witnessed a rapid GDP growth, secular expansion of its services sector, and a commensurate increase in per capita consumption. As a result, in 2012, the country overtook Japan’s GDP (in purchasing power parity terms), to become the third largest economy in the world. At the same time, a recent survey across 100 districts in the country revealed that 42 per cent of India’s children under the age of 5 are underweight and a shocking 59 per cent are stunted in their physical development (Naandi Foundation, 2011). Extrapolating these results to reflect the overall state of socio-economic development, the picture at once becomes stark. This paper delves into some macro trends through which it aims to unbundle facets of the country’s distorted growth narrative.

 According to the National Sample Survey data only about 4 per cent of India’s population earns more than INR100 a day (approximately USD1.8 a day in nominal terms). The majority of rural population has no access to drinking water and electricity. The disparity among classes, castes, urban and rural population is also high. The country experiences a lack of qualified labour force. The authors recommend that the government measures on reducing inequality should be based on understanding its causes with account of the multidimensional nature of inequality, which can not be reduced only through the intensive economic growth.

It is suggested that inequality could be reduced by improving access to education for all and professional training for the most vulnerable groups. It is also important to create jobs that guarantee permanent employment; develop the export sector; revitalize the secondary sector; stimulate the private sector by a better environment for doing business. Developing the financial sector and increasing financial literacy of the population would also contribute to reduction of inequality. Household savings must be productively and efficiently deployed in order to finance the current account deficit. According to the authors emphasis should be placed on reducing all forms of inequality despite political cycles.