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LATEST NEWS UPDATES | Growth is necessary to remove poverty, and interventions like NREGA help

Growth is necessary to remove poverty, and interventions like NREGA help

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published Published on Mar 21, 2012   modified Modified on Mar 21, 2012

-The Economic Times

Over the first five years of the UPA government, the number of India's poor fell from 37% of the population to a little less than 30% of the population and rural poverty fell faster than urban poverty did. A closer look at the numbers shows that states performed very differently when it came to poverty reduction through the years 2004-05 to 2009-10.

States like Madhya Pradesh, Maharashtra and Orissa saw the biggest falls in poverty numbers; Bihar, Uttar Pradesh and Assam were the worst laggards. Ever since the UPA launched its flagship welfare scheme the NREGA, there's been a lot of bickering about whether such interventions are necessary to reduce poverty and whether growth, by itself, will lift people from poverty to well-being. Looking at poverty reduction, growth and NREGA implementation numbers, we can now come to some conclusions.

Of the three best performing poverty-reducing states, two, Maharashtra and Orissa, grew faster than the national average in the five years till 2009-10. Both are among the worst implementers of the NREGA scheme: in 2009-10 of all households that accessed the benefits of the scheme, Orissa's share was a measly 2.7% and Maharashtra's an even worse 1.1%. So, it is tempting to conclude that growth, not intervention, lifted people out of poverty.

That would be too hasty. Madhya Pradesh, one of the best performers in poverty reduction, grew below the national average at 7.1% through these five years. Its success is attributable to effective intervention: an impressive 9% of all NREGA beneficiaries belong to MP. Bihar is a complete outlier, where neither growth nor intervention works. Bihar grew 10% on average through the period and has impressive NREGA numbers, but lags in poverty reduction.

UP's low growth rate is a drag on its fairly impressive NREGA numbers, Assam suffered from both poor growth and NREGA implementation. Growth is necessary to lift people out of poverty, but states like Madhya Pradesh show that even when growth lags, schemes like NREGA, implemented well, can do a wonderful job. The growth versus intervention debate is pointless; growth with intervention makes sense.

The Economic Times, 21 March, 2012, http://economictimes.indiatimes.com/opinion/editorial/growth-is-necessary-to-remove-poverty-and-interventions-like-nrega-help/articleshow/12349076.cms


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