India struggles to climb economic ladder out of poverty. Finance official: country's ability to feed self in drought is proof of gains
Barber B. Conable, president of the World Bank, has an ambitious goal for the larger Asian countries: eliminate the worst aspects of absolute poverty by the year 2,000. That means doubling the average annual income of individuals in these nations by the end of the century.
Asked if that was possible in India, the country's finance minister, Narain Dutt Tiwari, replied during a recent interview: ``It is feasible in certain circumstances. We are for doubling ... It is an objective worth planning for.''
Should that happen, India would move from being a poor nation to a ``middle income'' country. Or, as Mr. Conable put it last month, India and other large Asian nations would move ``from poverty to relative affluence.''
Whether masses of beggars and other aspects of deep poverty would disappear in India would depend on the distribution of income.
Mr. Tiwari spoke of ``poverty alleviation'' as his government's main goal.
Over the past seven years, India's economy has grown at an annual rate of more than 5 percent. At that rate, compounded, it would take about 14 years for India's total income to double. But because of its high population growth, growth in per capita income would not keep pace. India, with about 800 million people, has doubled its population in the last 40 years.
This year India has suffered from a drought said to be the worst of the century. The prevalent water shortage has caused a sharp drop in power generation, the death of large numbers of cattle, and the migration of some villagers. By contrast, three or four states have suffered some severe flooding.
``Keeping in view the scale of national calamities, the economy is doing well,'' says Mr. Tiwari. He expects ``adequate growth'' in industry, hit by power shortages, and a ``shortfall'' in agriculture.
Overall, there may be no growth this year, say reports from New Delhi.
The finance minister was pleased that with 23 million tons of grain reserves set aside from earlier good crops, India can continue to feed itself despite a drop in farm output that is estimated at 10 percent. It has not needed to ask for massive imports of grain from abroad as it has had to after past crop failures.
He also spoke of various measures taken to help the more than 100 million people hurt by the natural disasters. These include food distribution and a huge program of food for work. Landless laborers and others work on roads, reforestation, water conservation measures, and other projects in return for foods for themselves and their families. Special trains haul water to drought-stricken areas, hoping to avoid large-scale migration of people and animals.
India expects to avoid famine, though malnutrition will remain widespread.
The World Bank earlier this month came to the aid of India with extra financing of more than $500 million in addition to the $2.5 billion already planned in Bank loans. The money, it is hoped, will help restore economic growth in India.
To help pay for the relief measures, the government has imposed a 5 percent surcharge on the income tax paid by those relatively well off and on larger corporations. It has also boosted duties on imported luxury goods and put extra taxes on first class train travel and air fares.
Mr. Tiwari said he hopes these measures will raise revenues by about $1 billion.
Some economists charge that India has a bureaucratic, inward-looking economic policy that has slowed growth and initiative.
The finance minister describes India's policy as one of ``maximum self reliance.'' This policy, he said, is helping India in its current economic emergency.
However, Mr. Tiwari admitted that as a result of this economic policy much of Indian industry is not technologically up-to-date. However, he said, the government is now attempting to modernize the large chunk of heavy industry owned by the government through ``massive infusions'' of funds.
``The results will be seen in the next two or three years,'' he says. ``Indeed, they are already there.''
Some observers heap praise on Prime Minister Rajiv Gandhi for his efforts to deregulate the economy and permit greater free enterprise. Others say he is not moving fast enough.
Mr. Tiwari argues that a developing nation like India needs a ``mixed economy,'' with large amounts of government, as well as private, industry. ``You have to have some planned investment of resources,'' with the government setting priorities.