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LATEST NEWS UPDATES | India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak </title>
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-The Guardian
India's PM points to Gujarat as an emblem of economic success. But despite impressive growth, the state lags behind on welfare
Narendra Modi has just unveiled his first budget after winning a massive electoral victory on a development platform. The..."/>
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India's PM points to Gujarat as an emblem of economic success. But despite impressive growth, the state lags behind on welfare
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<h1 class="cat-box-title">India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak</h1>
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Published on</span><span class="text-date"> Jul 15, 2014</span>
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<div align="justify">-The Guardian</div><p align="justify"><br /><em>India's PM points to Gujarat as an emblem of economic success. But despite impressive growth, the state lags behind on welfare</em></p><p align="justify">Narendra Modi has just unveiled his first budget after winning a massive electoral victory on a development platform. The budget presented last week has disappointed those who were expecting stronger signals about a pro-market shift in economic policy, as well as in the stock market. However, the budget has confounded the expectations of the left as well, as the cuts they expected in the flagship pro-poor programmes launched by the previous UPA government did not happen.</p><p align="justify">Perhaps it is early days, as the finance minister himself has indicated. There are a few clues, however, about how Modi's vision of development differs from the UPA's. Take, for example, a curious sentence in the chapter on human development in the Economic Survey, which accompanies the Indian budget document: "Economic policy has often to strike a delicate balance between the two goals of economic growth and human welfare which need not necessarily be contradictory."</p><p align="justify">Isn't economic growth desirable only for its potential for enhancing human welfare? Perhaps it is an inadvertent slip, but the statement does make you worry whether the new government will adopt a "growth will take care of everything" approach, given the doubts about trickle-down theory. Tellingly, the overview chapter of the Economic Survey has the following word frequency counts: growth (127), poverty (2), health (6), and education (6). The only time the word "environment" shows up is in references to environmental regulations as a potential bottleneck to investment.</p><p align="justify">To see if there is a vision beyond trickle-down, we can look at the results of the Gujarat model of development, which was projected as the blueprint for the rest of India in the elections. According to the latest available data, Gujarat has the third highest level of per capita state income, and its average growth rate since 2001, when Modi became the chief minister, has been the highest among the 16 major Indian states in terms of population. That is undoubtedly an impressive record, and clearly the one that appealed to many voters - even though Modi cannot take full credit for a growth spurt that started in the early 1990s with the liberalisation process.</p><p align="justify">However, the Gujarat model begins to lose its lustre if you look at other development indicators. Gujarat is ranked seventh in the human development index (HDI), eighth in having the lowest percentage of people below the poverty line, and eleventh in equality.</p><p align="justify">Moreover, there is no evidence of sharp improvements in these social indicators during Modi's tenure. Gujarat's state ranking in HDI has stayed at number seven since the early 1990s, and the rate of improvement during Modi's tenure has been similar to the national rate. Similarly, the rate of decline in poverty in Gujarat during Modi's rule has been similar to the national rate over the same period.</p><p align="justify">Evidently, the impressive growth rates in Gujarat did not translate into a corresponding change in human development indices. This is largely true of India under the UPA government as well: despite a slew of pro-poor programmes, real GDP increased at the rate of 7.6% per year, whereas the rate of decrease in poverty was only 2.2% per year during 2004-2013, and improvements in many of the development indicators were minuscule. According to latest estimates, in 2011-12, 29.5% of the population - more than 350 million Indians - lived below the poverty line. For them, the speed of benefits from economic reform trickling down through employment generation and rises in real wages has been slow, and yet rising prosperity around them has raised aspiration levels. In addition, the demands of industrialisation have created pressure on land, forestry and mining resources, often bringing big business into conflict with the traditional livelihood of rural communities.</p><p align="justify">Thus, it was not just the middle-class or the corporate sector that was fed up with the economic slowdown, corruption scandals, inflation and a perceived lack of strong leadership under the UPA.</p><p align="justify">To fulfil the aspirations of the millions of voters who voted for change, falling back on trickle-down theory will not work. Structural reforms are needed to facilitate growth, make it broad-based, and improve the efficiency and accountability of anti-poverty programmes. As of now, it is not clear either from the budget or the Gujarat model, how this will be done.</p><div align="justify"><br /></div>
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<br><a href="http://www.theguardian.com/commentisfree/2014/jul/14/narendra-modi-india-trickle-down-model-gujarat" class="re" target="_blank">The Guardian, 14 July, 2014, http://www.theguardian.com/commentisfree/2014/jul/14/narendra-modi-india-trickle-down-model-gujarat</a><div class="clear"></div>
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LATEST NEWS UPDATES | India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak </title>
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<h1 class="cat-box-title">India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak</h1>
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Published on</span><span class="text-date"> Jul 15, 2014</span>
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<div align="justify">-The Guardian</div><p align="justify"><br /><em>India's PM points to Gujarat as an emblem of economic success. But despite impressive growth, the state lags behind on welfare</em></p><p align="justify">Narendra Modi has just unveiled his first budget after winning a massive electoral victory on a development platform. The budget presented last week has disappointed those who were expecting stronger signals about a pro-market shift in economic policy, as well as in the stock market. However, the budget has confounded the expectations of the left as well, as the cuts they expected in the flagship pro-poor programmes launched by the previous UPA government did not happen.</p><p align="justify">Perhaps it is early days, as the finance minister himself has indicated. There are a few clues, however, about how Modi's vision of development differs from the UPA's. Take, for example, a curious sentence in the chapter on human development in the Economic Survey, which accompanies the Indian budget document: "Economic policy has often to strike a delicate balance between the two goals of economic growth and human welfare which need not necessarily be contradictory."</p><p align="justify">Isn't economic growth desirable only for its potential for enhancing human welfare? Perhaps it is an inadvertent slip, but the statement does make you worry whether the new government will adopt a "growth will take care of everything" approach, given the doubts about trickle-down theory. Tellingly, the overview chapter of the Economic Survey has the following word frequency counts: growth (127), poverty (2), health (6), and education (6). The only time the word "environment" shows up is in references to environmental regulations as a potential bottleneck to investment.</p><p align="justify">To see if there is a vision beyond trickle-down, we can look at the results of the Gujarat model of development, which was projected as the blueprint for the rest of India in the elections. According to the latest available data, Gujarat has the third highest level of per capita state income, and its average growth rate since 2001, when Modi became the chief minister, has been the highest among the 16 major Indian states in terms of population. That is undoubtedly an impressive record, and clearly the one that appealed to many voters - even though Modi cannot take full credit for a growth spurt that started in the early 1990s with the liberalisation process.</p><p align="justify">However, the Gujarat model begins to lose its lustre if you look at other development indicators. Gujarat is ranked seventh in the human development index (HDI), eighth in having the lowest percentage of people below the poverty line, and eleventh in equality.</p><p align="justify">Moreover, there is no evidence of sharp improvements in these social indicators during Modi's tenure. Gujarat's state ranking in HDI has stayed at number seven since the early 1990s, and the rate of improvement during Modi's tenure has been similar to the national rate. Similarly, the rate of decline in poverty in Gujarat during Modi's rule has been similar to the national rate over the same period.</p><p align="justify">Evidently, the impressive growth rates in Gujarat did not translate into a corresponding change in human development indices. This is largely true of India under the UPA government as well: despite a slew of pro-poor programmes, real GDP increased at the rate of 7.6% per year, whereas the rate of decrease in poverty was only 2.2% per year during 2004-2013, and improvements in many of the development indicators were minuscule. According to latest estimates, in 2011-12, 29.5% of the population - more than 350 million Indians - lived below the poverty line. For them, the speed of benefits from economic reform trickling down through employment generation and rises in real wages has been slow, and yet rising prosperity around them has raised aspiration levels. In addition, the demands of industrialisation have created pressure on land, forestry and mining resources, often bringing big business into conflict with the traditional livelihood of rural communities.</p><p align="justify">Thus, it was not just the middle-class or the corporate sector that was fed up with the economic slowdown, corruption scandals, inflation and a perceived lack of strong leadership under the UPA.</p><p align="justify">To fulfil the aspirations of the millions of voters who voted for change, falling back on trickle-down theory will not work. Structural reforms are needed to facilitate growth, make it broad-based, and improve the efficiency and accountability of anti-poverty programmes. As of now, it is not clear either from the budget or the Gujarat model, how this will be done.</p><div align="justify"><br /></div>
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<br><a href="http://www.theguardian.com/commentisfree/2014/jul/14/narendra-modi-india-trickle-down-model-gujarat" class="re" target="_blank">The Guardian, 14 July, 2014, http://www.theguardian.com/commentisfree/2014/jul/14/narendra-modi-india-trickle-down-model-gujarat</a><div class="clear"></div>
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LATEST NEWS UPDATES | India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak </title>
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<h1 class="cat-box-title">India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak</h1>
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Published on</span><span class="text-date"> Jul 15, 2014</span>
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<div align="justify">-The Guardian</div><p align="justify"><br /><em>India's PM points to Gujarat as an emblem of economic success. But despite impressive growth, the state lags behind on welfare</em></p><p align="justify">Narendra Modi has just unveiled his first budget after winning a massive electoral victory on a development platform. The budget presented last week has disappointed those who were expecting stronger signals about a pro-market shift in economic policy, as well as in the stock market. However, the budget has confounded the expectations of the left as well, as the cuts they expected in the flagship pro-poor programmes launched by the previous UPA government did not happen.</p><p align="justify">Perhaps it is early days, as the finance minister himself has indicated. There are a few clues, however, about how Modi's vision of development differs from the UPA's. Take, for example, a curious sentence in the chapter on human development in the Economic Survey, which accompanies the Indian budget document: "Economic policy has often to strike a delicate balance between the two goals of economic growth and human welfare which need not necessarily be contradictory."</p><p align="justify">Isn't economic growth desirable only for its potential for enhancing human welfare? Perhaps it is an inadvertent slip, but the statement does make you worry whether the new government will adopt a "growth will take care of everything" approach, given the doubts about trickle-down theory. Tellingly, the overview chapter of the Economic Survey has the following word frequency counts: growth (127), poverty (2), health (6), and education (6). The only time the word "environment" shows up is in references to environmental regulations as a potential bottleneck to investment.</p><p align="justify">To see if there is a vision beyond trickle-down, we can look at the results of the Gujarat model of development, which was projected as the blueprint for the rest of India in the elections. According to the latest available data, Gujarat has the third highest level of per capita state income, and its average growth rate since 2001, when Modi became the chief minister, has been the highest among the 16 major Indian states in terms of population. That is undoubtedly an impressive record, and clearly the one that appealed to many voters - even though Modi cannot take full credit for a growth spurt that started in the early 1990s with the liberalisation process.</p><p align="justify">However, the Gujarat model begins to lose its lustre if you look at other development indicators. Gujarat is ranked seventh in the human development index (HDI), eighth in having the lowest percentage of people below the poverty line, and eleventh in equality.</p><p align="justify">Moreover, there is no evidence of sharp improvements in these social indicators during Modi's tenure. Gujarat's state ranking in HDI has stayed at number seven since the early 1990s, and the rate of improvement during Modi's tenure has been similar to the national rate. Similarly, the rate of decline in poverty in Gujarat during Modi's rule has been similar to the national rate over the same period.</p><p align="justify">Evidently, the impressive growth rates in Gujarat did not translate into a corresponding change in human development indices. This is largely true of India under the UPA government as well: despite a slew of pro-poor programmes, real GDP increased at the rate of 7.6% per year, whereas the rate of decrease in poverty was only 2.2% per year during 2004-2013, and improvements in many of the development indicators were minuscule. According to latest estimates, in 2011-12, 29.5% of the population - more than 350 million Indians - lived below the poverty line. For them, the speed of benefits from economic reform trickling down through employment generation and rises in real wages has been slow, and yet rising prosperity around them has raised aspiration levels. In addition, the demands of industrialisation have created pressure on land, forestry and mining resources, often bringing big business into conflict with the traditional livelihood of rural communities.</p><p align="justify">Thus, it was not just the middle-class or the corporate sector that was fed up with the economic slowdown, corruption scandals, inflation and a perceived lack of strong leadership under the UPA.</p><p align="justify">To fulfil the aspirations of the millions of voters who voted for change, falling back on trickle-down theory will not work. Structural reforms are needed to facilitate growth, make it broad-based, and improve the efficiency and accountability of anti-poverty programmes. As of now, it is not clear either from the budget or the Gujarat model, how this will be done.</p><div align="justify"><br /></div>
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<br><a href="http://www.theguardian.com/commentisfree/2014/jul/14/narendra-modi-india-trickle-down-model-gujarat" class="re" target="_blank">The Guardian, 14 July, 2014, http://www.theguardian.com/commentisfree/2014/jul/14/narendra-modi-india-trickle-down-model-gujarat</a><div class="clear"></div>
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LATEST NEWS UPDATES | India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak
India needs more than Narendra Modi's trickle-down model -Maitreesh Ghatak
Published on Jul 15, 2014
Modified on Jul 15, 2014
-The Guardian
India's PM points to Gujarat as an emblem of economic success. But despite impressive growth, the state lags behind on welfare
Narendra Modi has just unveiled his first budget after winning a massive electoral victory on a development platform. The budget presented last week has disappointed those who were expecting stronger signals about a pro-market shift in economic policy, as well as in the stock market. However, the budget has confounded the expectations of the left as well, as the cuts they expected in the flagship pro-poor programmes launched by the previous UPA government did not happen.
Perhaps it is early days, as the finance minister himself has indicated. There are a few clues, however, about how Modi's vision of development differs from the UPA's. Take, for example, a curious sentence in the chapter on human development in the Economic Survey, which accompanies the Indian budget document: "Economic policy has often to strike a delicate balance between the two goals of economic growth and human welfare which need not necessarily be contradictory."
Isn't economic growth desirable only for its potential for enhancing human welfare? Perhaps it is an inadvertent slip, but the statement does make you worry whether the new government will adopt a "growth will take care of everything" approach, given the doubts about trickle-down theory. Tellingly, the overview chapter of the Economic Survey has the following word frequency counts: growth (127), poverty (2), health (6), and education (6). The only time the word "environment" shows up is in references to environmental regulations as a potential bottleneck to investment.
To see if there is a vision beyond trickle-down, we can look at the results of the Gujarat model of development, which was projected as the blueprint for the rest of India in the elections. According to the latest available data, Gujarat has the third highest level of per capita state income, and its average growth rate since 2001, when Modi became the chief minister, has been the highest among the 16 major Indian states in terms of population. That is undoubtedly an impressive record, and clearly the one that appealed to many voters - even though Modi cannot take full credit for a growth spurt that started in the early 1990s with the liberalisation process.
However, the Gujarat model begins to lose its lustre if you look at other development indicators. Gujarat is ranked seventh in the human development index (HDI), eighth in having the lowest percentage of people below the poverty line, and eleventh in equality.
Moreover, there is no evidence of sharp improvements in these social indicators during Modi's tenure. Gujarat's state ranking in HDI has stayed at number seven since the early 1990s, and the rate of improvement during Modi's tenure has been similar to the national rate. Similarly, the rate of decline in poverty in Gujarat during Modi's rule has been similar to the national rate over the same period.
Evidently, the impressive growth rates in Gujarat did not translate into a corresponding change in human development indices. This is largely true of India under the UPA government as well: despite a slew of pro-poor programmes, real GDP increased at the rate of 7.6% per year, whereas the rate of decrease in poverty was only 2.2% per year during 2004-2013, and improvements in many of the development indicators were minuscule. According to latest estimates, in 2011-12, 29.5% of the population - more than 350 million Indians - lived below the poverty line. For them, the speed of benefits from economic reform trickling down through employment generation and rises in real wages has been slow, and yet rising prosperity around them has raised aspiration levels. In addition, the demands of industrialisation have created pressure on land, forestry and mining resources, often bringing big business into conflict with the traditional livelihood of rural communities.
Thus, it was not just the middle-class or the corporate sector that was fed up with the economic slowdown, corruption scandals, inflation and a perceived lack of strong leadership under the UPA.
To fulfil the aspirations of the millions of voters who voted for change, falling back on trickle-down theory will not work. Structural reforms are needed to facilitate growth, make it broad-based, and improve the efficiency and accountability of anti-poverty programmes. As of now, it is not clear either from the budget or the Gujarat model, how this will be done.
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