Vinod Anand

WE shall briefly look at three indicators to assess the extent to which the benefits of growth have trickled down to the people. These indicators are: Absolute Poverty Line, Gini-Lorenz Ratio, and Unemployment Rates. We shall also look at the Reforms and their impact on the economy.
It is indicated that the number of people below the poverty line declined from a massive 54.9 per cent in 1973-74 to a low of 36 per cent in 1993-94, though there has been a better improvement in urban poverty as against rural.

Talking of Gini-Lorenz Ratio to assess the extent of income disparities, some of the studies have calculated Gini-Lorenz Ratios of the size distribution of nominal per capita household private consumption expenditure both for rural and urban India, using the National Sample Survey (NSS) data on consumption expenditure.. It can be seen that inequalities in the distribution of consumption expenditure have declined overtime, though rural areas show slightly better improvement with Gini-Lorenz ratio falling to 0.30 in the seventies and eighties as compared to 0.33 in urban areas...
The improvement in the unemployment situation is, however, not very encouraging. In order to understand this, we must know the following connotations:

? Usual Principal Status (UPS) refers to a reference period of 365 days preceding the date of survey; according to this criterion, a person is considered unemployed if he/she was available for work, but had no work for a major part of the year;
? Current Weekly Status (CWS) refers to a reference period of 7 days preceding the date of survey; according to this criterion, a person is considered unemployed if he/she was available for work, but had no work even for one hour during the reference period;
? Current Daily Status (CDS) refers to each day of the 7 days preceding the date of survey as the reference period. This is a measure of unemployment in terms of person-days of unemployment of all the persons in the labour force during the reference period.

Out of these three measurements of unemployment, as devised by the National Sample Survey Organisation, the measurement of the Current Daily Status (CDS), covering both open and partial unemployment, is the most inclusive, and hence the most appropriate On the other hand, the Current Weekly Status (CWS) is rather a rough measure of the proportion of workers remaining unemployed for a whole week, and the Usual Principal Status (UPS) is a rough estimate of chronic unemployment, which is not a serious problem in India as compared to discontinuous underemployment.

It is easy to see that the rates of unemployment do not indicate any clear trend over the period 1972-88, except for the fact that during this period there has been a shift from underemployment towards greater open unemployment. But for the period between 1989 and 1991, rural unemployment has definitely come down, whereas urban unemployment shows an upward trend.

Talking in terms the magnitude of unemployment, it was estimated by the Planning Commission (1990) that “at the beginning of the year 1990-91, about 16 million persons, 10 million in rural areas and 6 million in urban areas,” were unemployed on Current Weekly Status (CWS). It was further estimated that another 12 million persons were severely underemployed. Thus, up to the year 1990-91, the backlog of unemployment could be taken to be around 28 million. This is despite the fact that the Government of India has over the years launched a number of area-specific and people–specific programmes to combat both poverty and unemployment. India's Ninth Five-Year Plan projects generation of 54 million new jobs during the Plan period (1997-2002). But performance has always fallen short of target in the past, and this is what is going to happen in time to come too.

Section 3: Epilogue - reforms and after

Prior to 1990-91, India had witnessed three major crises in the years 1965-67, 1973-75, and 1979-81, largely caused by exogenous factors (like wars, oil scarcity and shocks, and drought). Each time, these crises took their toll in terms of high inflation, severe balance of payments, and low growth, but fortunately after every crisis the economy bounced back within a relatively short span of time because of timely and effective intervention by the Government , and every time a total collapse of the economy was prevented. In contrast to these crises of the sixties and seventies, the one that hit the Indian economy in 1990-91 was one of the worst in terms of high inflation rate, declining agricultural production, poor industrial growth, falling exports and adverse balance of payments, completely exhausted foreign exchange reserves, and political instability. This fast deteriorating economic situation was the result of the wrongly focussed policies of the preceding years. Even after the end of that decade, it is felt that this crisis is not yet over, and its aftermath still afflicts the country and counteracts against the growth process. The immediate shock of this crisis was so great that the Government responded very differently from before, and instead of coming out with its own measures, it adopted the policy of stabilisation and comprehensive structural reforms (also termed as the New Economic Policy) assigning, thereby, a greater role to the private sector, and opening up the economy to the outside world with much greater initiatives combined with a spirit of liberalization. The whole macro-economic management, thus, witnessed a paradigm shift.

As an epilogue to this Paper, we shall briefly assess here the impact of this shift on the economy. There is no denying the fact that prior to the short-period world-wide recession as has been there for the last few months, the economy presented a complete contrast to that gloomy past, as witnessed in the year 1990-91, and the revival did show itself, essentially in the external sector and that too in the stock of foreign exchange reserves. But then there is enough evidence to show that the reforms process has not yet fully worked, and the objectives of the stabilisation and structural programmes have not yet been fully achieved. In fact, many critical areas have been neglected, and the whole process has led to many adverse effects on the economy, some of which are briefly described below:

? All efforts to promote exports were more than neutralised by liberalized imports with the result that the trade deficit touched a high of Rs16325 crore in 1995-96, and then a further high of Rs 20102 crore in 1996-97 as compared to Rs.3810 crore in 1991-92, and Rs. 3350 in 1993-94. Liberalization has a wrong focus in the sense that instead of being selective it is indiscriminate.
? During the period 1990-91 and 1995-96, the growth rate of food grains production (1.5% per annum) has been less than the growth rate of population ( 2.1% per annum), and this speaks of the neglect of agriculture.
? The period of economic reforms has witnessed higher prices of food grains in terms of Consumer Price Index of Agricultural Labourers (CPIAL) on the one hand, and lesser job creation on the other with the result that it has adversely effected the food security of the poor.
? The process of reforms has been more instrumental in labour displacement (by establishing new power projects, encouraging multi-nationals to enter food-processing industries, and by initiating big industry to enter in agriculture) rather than in employment creation.
? Although the fiscal deficit of 8.4 per cent (of the GDP), existing in the crisis year 1990-91, was contained by the Reform Process, yet it could not keep it under check for very long and in 1993-94 it again soared to 7.7 per cent, and the economy was back to square one. It is surprising that the Union Budgets year after year put the fiscal deficit at a very low level without looking at what happens in reality.
? The process of Reforms has worked against the indigenous industry, especially small, medium and large, in the wake of stiff and unhealthy competition offered by the entry of multi nationals, especially in areas where the economy has attained self-sufficiency.
? The idea of emphasising private health services has worked against the poor in terms of medical fees.

We, therefore, conclude that the magic has not worked and there is a long way to go. It is pertinent here to look back and focus on the shortcomings of the whole reforms process and, thereby, learn from the past mistakes and make a way forward. There is a need to devise an optimal mix of planning and reforms keeping in mind the needs of the people, and also remembering that nothing much can be done to change the basic social, political, and administrative assumptions that dominate the scenario, and that, somehow, do not permit a majority of the people to share the fruits of planning or the reforms process.

There is one heartening aspect and that relates to the stabilizing power of our economy (just like China and Brazil) despite the world-wide recession. This does indicate that India will become a super power in time to come. The only thing is that the benefits of growth must somehow reach the poor masses.

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