Economic growth post-reform period not inclusive

Professor Rokkam Radhakrishna.   | Photo Credit: C.V.Subrahmanyam

HYDERABAD: Economic growth in the post reform period has not been inclusive. The pattern of development has aggravated inter-state inequality, widened rural-urban disparity and worsened intra-rural and intra-urban inequality, according to R. Radhakrishna, economist and Chairman of the Hyderabad-based Centre for Economic and Social Studies (CESS).

In the post-reform period, Prof. Radhakrishna stated, the growth was led by the private corporate sector.

The share of the private corporate sector in investment increased from 28 per cent in 1991-92 to 41 per cent in 2007-08, while the share of the public sector declined from 43 per cent to 24 per cent.

He, however, pointed out at the study of Michael Walton, a Senior Visiting Fellow at the Centre for Policy Research, which revealed that the private corporate sector led growth was associated with the rent seeking, under-pricing of public sector assets in the process of the privatisation of the public sector and transfer of public and private lands to the corporate sector.

Increase in casual labour

With regard to labour market trends, Prof. Radhakrishna said that employment increased at a low rate of 1.3 per cent per annum and decelerated in the recent years while the growth rate of Gross State Domestic Product (GSDP) accelerated to 7.1 per cent a year.

The growth of the labour-intensive manufacturing sector has been slow and has been lagging behind the service sector, which is less labour intensive.

Also, a high growth in the post-liberalisation period has been accompanied by increased informalisation and de-unionisation of workforce.

Economically and socially deprived sections of society were mostly employed as casual labour.

“These are some of the worrisome features of the labour market,” he said.

Coming to reduction of poverty, the absolute number of poor declined by a meagre one million between 1993-94 and 2004-05 whereas the decline was much higher at 38 million between 2004-05 and 2011-12. Yet there were an unacceptably high number of 270 million of poor in 2011-12. This apart, 80 per cent of the poor continued to be in rural India.

Widening inequalities

Another disquieting characteristic of the growth process in the post reform-period was widening regional inequality, Prof. Radhakrishna stated in his presidential address at the 99th Annual Conference of the Indian Economic Association held in Tirupati recently.

On the whole, he said, poorer states gained less from economic reforms and continued to remain poor till 2014-15 while developed states other than Punjab gained the most.

Among the major states, Assam, Uttar Pradesh, Jammu & Kashmir, Jharkhand and Madhya Pradesh lagged far behind on level of GSDP per capita as well as growth. On the other hand, Kerala, Andhra Pradesh, Uttrakhand, Gujarat, Haryana and Himachal Pradesh witnessed impressive growth.

Creating employment

If the worsening of inequalities persisted, Prof. Radhakrishna warned, growth would be affected and “may also lead to social disarticulation”.

For inclusive economic growth, he said, labour-intensive process of development is vital. It could be achieved by incentivising the small and medium sized firms or farms, in the formal and informal sectors, and imparting education and skills to the people so that they could take advantage of opportunities created by small and medium enterprises.

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Printable version | Apr 11, 2021 10:29:13 AM |

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