[p2p-research] Poverty in Brazil, China and India and in Particular Bihar, India

[Ryan]

  Sent to you by Ryan via Google Reader: Poverty in Brazil, China and
India and in Particular Bihar, India via Next Big Future by
noreply at blogger.com (bw) on 11/29/09

Between them, Brazil, China and India account for half the world’s
poorest people and an even bigger share of those who have escaped
poverty.

In 1981, 84% of China’s population was below the poverty line of $1.25
a day (in 2005 prices); in 2005 the share was just 16%. Brazil’s share
of those in poverty fell by half from 17% to 8%, an annual reduction of
3.2%. India did least well, cutting the share below the poverty line
from 60% to 42% between 1981 and 2005. This implies an annual reduction
of 1.5% a year, though there are problems with Indian statistics; using
different consumption figures yields an annual reduction of 3%,
comparable to Brazil’s.

Brazil cut poverty by more than India despite much lower growth, just
over 1% a year in 1993-2005, compared with India’s 5%. If you calculate
the rate of poverty reduction for each unit of GDP growth per person,
Brazil did even better than China: the ratio is 4.3 for Brazil, 0.8 for
China and 0.4 for India (0.8 if you use the adjusted consumption
figures). Per unit of growth, Brazil reduced its proportional poverty
rate five times more than China or India did.

Government policy played a big role in reducing inequality. Brazil’s
main cash-transfer programme, called Bolsa Familia, provides help to
11m families, or 60% of all those in the poorest tenth. In contrast,
social security in China is still provided largely through the
enterprise system (ie, companies), so it tends to bypass those not in
work. And government interventions in India are extraordinarily
perverse. People in the poorest fifth are the least likely to have any
kind of ration card (the key to public handouts), whereas the richest
fifth are the most likely to.

India had both growth and social policies, yet did worst because its
policies in fact did rather little to help the poor. With its caste
system, and bad state schools, India may be a more unequal society than
the numbers alone suggest



Bihar, India's Poorest State But Fast Growing Since 2006

The economy of Bihar is largely service oriented, but it also has a
significant agricultural base. The state also has a small industrial
sector. As of 2008, agriculture accounts for 35%, industry 9% and
service 55% of the economy of the state. Manufacturing has performed
very poorly in the state between 2002-2007, with an average growth rate
of 0.38% compared to India's 7.8%. Bihar has the lowest GDP per capita
in India, although there are pockets of higher than the average per
capita income. Between 1999 and 2008, GDP grew by 5.1% a year, which
was below the Indian average of 7.3%. More recently, Bihar's state GDP
recorded a growth of 18% between 2006-2007, and stood at 942510 Crores
Rupees] ($21 billion nominal GDP). This makes Bihar the fastest growing
major state.

The state has a per capita income of $148 a year against India's
average of $997 and 30.6% of the state's population lives below the
poverty line against India's average of 22.15%. However, Bihar's GSDP
grew by 18% over the period 2006-2007, which was higher then in the
past 10 years. Hajipur, near Patna, remains a major industrial town in
the state, linked to the capital city through the Ganga bridge and good
road infrastructure. The level of urbanisation (10.5%) is below the
national average (27.78%); and behind states like Maharastra(42.4%).
Urban poverty in Bihar (32.91%) is above the national average of
23.62%. Also using per capita water supply as a surrogate variable,
Bihar (61 litres per day) is below the national average (142 litres per
day) and that of Maharastra (175 litres per day) in civic amenities.

Bihar is the third most populated state of India with total population
of 82,998,509 (43,243,795 male and 39,754,714 female). Nearly 90 per
cent of Bihar's population lives in rural areas.

The 90% rural situation in Bihar means a massive boost is possible IF
India urbanizs Bihar.

The recent surge in GDP if it held means per capita GDP is up to
$220-250 per cap. Still bad but in the right direction.

Indian view of Bihar: , NK Singh is a Member of Rajya Sabha, Government
of India.

Five factors leading to endemic economic backwardness of Bihar:

1. In the post-independence period, the policy of freight equalisation
did not enable Bihar to derive the advantage of its rich mineral
resources as well as a large growing market. This policy which remained
effective from 1952 to 1993 had serious repercussions in neutralising
Bihar’s comparative factor advantage.

2. Notwithstanding Bihar’s considerable clout in the Central
Government, central investments, (except by Public Sector Undertakings
in what is now Jharkhand), there was little investment North of the
Ganges or in the drought-prone areas in the South of Bihar.

3. The failure to break away from the past in implementing tenurial
land reform changes resulted in excessive social stratification which
prevented both vertical and horizontal mobility. Excessive
preoccupation with caste and even communal factors dominated political
discourse. Successive Governments were not held accountable on indices
of improvement in life quality and other developmental indicators
either in the overall growth achievement or performance of Index of
Human Resource Development.

4. The failure to transit from a feudal-based economy to a
market-oriented economy emphasised value systems which did not
facilitate rapid economic development. This coupled with poor quality
of infrastructure, social indicators and governance quality did not
enable the State to attract meaningful private investment even in areas
of its comparative factor advantage. Poor governance also resulted in
decline of education and health.

5. The political parties in the State failed to secure meaningful
arrangements with Nepal for better harnessing its river and hydro
electric potential. The Kosi and Gandak embankment, the result of
international treaty with Nepal, did bring significant relief to a
large population in North Bihar from the vulnerabilities of floods but
could not convert these transitional arrangements to permanent
solutions.

These temporary structures have long outlived their expected life span,
and in any case they were designed to be transitional arrangement to be
followed by taming these rivers upstream to harness the irrigation and
hydel potential. These remained unimplemented. Durable infrastructure
wasn’t created to withstand the destruction due to periodic floods and
other vulnerabilities.

During the last four years, the initiatives taken by the Nitish Kumar
Government have concentrated on six factors.
- Improved Governance
- Macro Management
- Human Resources Development
- Emphasis on factor endowments
- Enactment of key legislations to improve climate for private
investments.
- Improvement of Infrastructure.

The future of Bihar would depend on five key variables.
1. To what extent fiscal federalism works in a manner which is in line
with the spirit of the constitution? This concerns four components.

The compensatory additional central investment in a State considering
that in the near future private investment will remain shy.

To what extent will the State be enabled to take fuller advantage of
Central investments already made, namely a higher percentage of
allocation from Central power projects? The present agreements are
discriminatory and unequal. These agreements do not enable the State to
secure a fair percentage of the energy produced in the State.

Permitting the development of downstream industries from existing
Central investment, say from the Barauni refinery as well as other
investments which may be in the offing.

A degree of fairness in access to raw material inputs like coal for new
power generating companies necessary to meet the energy deficiency in
the State.

2. The State has to succeed in harnessing its rich water potential
through the optimum utilisation of resources and adoption of new
technology. It’ll prove their comparative factor advantage in
agriculture. The extent to which agricultural productivity can be
enhanced by diversified agriculture practices, creating and
implementing an enabling policy framework.

There is also a broader issue of mitigation and adaptation to Global
Warming and Climate Change. Does it make sense for planners in India to
pursue, say water intensive cultivation in other parts of India which
are water deficient than say North Bihar, where water is abundant? What
special assistance can be given for enabling Bihar to become the food
granary of India?

In Punjab water aquifers have fallen significantly and rice production
may become increasingly more expensive. This is an opportunity for
Bihar to enhance both the production and productivity of its
agriculture even as further research and development is needed to
develop strains and cropping patterns which better factor the
consequences of global warming.

3. To what extent can its very young population be harnessed and
vocational skills imparted to create the “Missing Middle”. This entails
increasing urbanization very significantly through many more satellite
towns and skill inculcation programme which can provide gainful
employment activities outside agriculture sector, even while
agriculture can gain advantages of externalities in scale instead of an
exclusive reliance on agricultural produces.

4. To what extent can Bihar leverage its political power to create an
enabling international framework on sharing our river basins,
particularly with Nepal for generating irrigation and hydel potential
to optimise the resources of this region.

5. The issue of whether Bihar can rewrite its history, and foster new
green shoots of investments, employment and diversification in its
activity patterns?
All these, of course require continued good governance and stable
policy framework and institutions which can incentivise private
investment.

The restoration of Bihar’s lost glory will demonstrate the success of
strategic initiatives and technology can do to one of the most backward
and densely populated regions in India. Unless backward States become
growth drivers, India would find it difficult to grow at 9 per cent. In
some ways the future of India is linked with the future of Bihar.



Things you can do from here:
- Subscribe to Next Big Future using Google Reader
- Get started using Google Reader to easily keep up with all your
favorite sites
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listcultures.org/pipermail/p2presearch_listcultures.org/attachments/20091201/abf2f42b/attachment.html>