India needs to do more to reduce poverty: World Bank

Monday, 09 December 2002, 20:30 IST
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NEW DELHI: India has made substantial progress in poverty reduction during the last decade but the country needs to accelerate its efforts to improve access to basic services to poor people, according to the World Bank. The Indian government must work towards achieving higher economic growth and move ahead "assertively" with its reforms agenda to banish poverty, the Washington-based body said in a mid-term report on Country Assistance Strategy for 2001-04. "India can be proud of its impressive progress in poverty reduction during the 1990s, progress that has touched many lives," said Michael Carter, World Bank country director for India. "But there is still much to do to improve access to basic services for poor people and to continue current rates of increase in income, both essential ingredients for the achievement of the Millennium development Goals," Carter added. The Millennium Development Goals is a set of targets, agreed upon by the international community, for halving global poverty by 2015. Official figures put 26 percent of India's billion-strong population below the poverty line in 2000, down from 40 percent in 1993-94. The World Bank report says India substantially improved poverty and education indicators during the 1990s, but progress in health indicator was slow. As a result of faster progress in better performing states, poverty and illiteracy have become concentrated in India's poorer states like Uttar Pradesh, Bihar and Madhya Pradesh, who between them account for 50 percent of India's poor, it added. "The country will not be able to achieve the Millennium Development Goals without continued economic growth to widen opportunities and determined efforts to deliver more effective basic services, especially in the poorer states," the report said. India's economy grew 5.4 percent in 2001-02, up from four percent in the previous fiscal year, but way off the eight percent mark that analysts say is needed to wipe out poverty in the world's second most populous nation. The report says India's growth prospects are weakened by "excessively high" fiscal deficit, a slowdown in the implementation of reforms and a financial system "that is successful at mobilising savings but not in their efficient allocation". India's fiscal deficit touched 5.9 percent of gross domestic product (GDP) in the financial year ended March 31, 2002, much higher than the targeted 4.7 percent. The government expects to limit it to 5.3 percent of GDP in 2002-03. "It will be difficult to raise, or even sustain, economic growth rates without substantial progress in fiscal consolidation, faster structural reforms and improved governance," said Carter. "The risk of not making good progress in all these areas is the risk of not making a difference in the many lives hungry to turn a small opportunity into a life's chance," he added. The World Bank's India portfolio is the second largest in the world, comprising 69 ongoing projects with a net commitment of $12.9 billion at the end of September 2002. The International Finance Corporation, the bank's private sector lending arm, has a portfolio of investments in 84 companies in India as of June 2002. "The World Bank will continue to back India in its fight against poverty. But if growth is not to slow down, India must move ahead assertively with its reform agenda and, importantly, secure the sort of good governance in the very functions of state that hard-working Indians deserve," Carter said.
Source: IANS