Thursday, July 15, 2010

Galloping Poverty: Indian GDP Fake or a Myth?

The Hindu Thursday, Jul 15, 2010
Jason Burke
  • Madhya Pradesh, Democratic Republic of Congo show near identical poverty level
  • India ranks 63rd in the new poverty index, after Togo, before Haiti
  • Quarter of the world lives on $1.25 a day or less: World Bank estimate

    New Delhi: New U.N. index builds up fuller picture of poor lives; Madhya Pradesh ‘comparable to Congo.' There are more poor people in eight states of India than in the 26 countries of sub-Saharan Africa, a study reveals today

    More than 410 million people live in poverty in the Indian States, including Bihar, Uttar Pradesh and West Bengal, researchers at Oxford University, England, found. The “intensity” of the poverty in parts of India is equal to, if not worse than, that in Africa.

    When the vast central Madhya Pradesh, which has a population of 70 million, was compared with the Democratic Republic of the Congo, the war-racked African state of 62 million inhabitants, the two were found to have near identical levels of poverty.

    Multidimensional poverty index
    The study is based on an innovatory “multidimensional poverty index”, or MPI, developed by specialists at Oxford. To be used for the first time in the authoritative and influential United Nations Human Development Report when it is published this autumn, it will replace a simpler method of calculating poverty introduced over a decade ago.

    The index uses ten major variables including access to good cooking fuel, schooling, electricity, nutrition and sanitation. “[It] is like a high-resolution lens which reveals a vivid spectrum of challenges facing the poorest households,” said Dr. Sabina Alkire, Director of the Oxford Poverty and Human Development Initiative and a co-developer of the index. “Before, you might know a person was poor but did not know if their children went to school, if they had a floor or if they cooked on wood.” In Madhya Pradesh poverty levels were higher because of malnutrition. In Congo, access to schooling was a problem.

    The study's conclusions will reinforce claims that distribution of the wealth generated by India's rapid economic growth — recently around 10 per cent year on year — is deeply unequal. Prime Minister Manmohan Singh has repeatedly said he wants to see “inclusive” development.

    Difficult to define
    Poverty has long proved difficult to define. The World Bank bases its definition on household income and estimates that a quarter of the developing world lives on $1.25 a day or less. However, relying simply on money “excludes everything that is outside the cash economy and doesn't look at issues such as housing [or] access to safe water” said William Orme, a spokesman for the United Nations Development Programme in New York.

    To compile the index, researchers analysed data from 104 countries with a combined population of 5.2 billion, 78 per cent of the world total. About 1.7 billion — a third — live in multidimensional poverty, they found.

    “Extreme” poverty
    This is 400 million more than are estimated by the World Bank to be in “extreme” poverty. The new index is also designed to track variations within countries much better. So while the poverty rate is more than 80 per cent in the rural Bihar, it is about 16 per cent in Kerala.

    Some countries have dropped steeply down the poverty rankings in the new list. Turkey, Egypt, Pakistan and Morocco were found to have much more poverty under the new index than when using simple household income.

    Others, such as Tanzania, Nicaragua, Uzbekistan, Vietnam and China were found to have less. China was ranked 46 out of 104, three places behind Brazil. India came in 63rd, just after Togo, but ahead of Haiti.

    “In many cases, it is probably linked to previously high levels of social investment,” Alkire said. “It shows that a low per capita GDP income doesn't necessarily mean high poverty.” — © Guardian Newspapers Limited, 2010
    Poverty more in India than sub-Saharan Africa
    Rate of Indian Galloping Distress and Poverty (GDP) far exceeds the Gross Domestic Product (GDP). It seems the that Black Money, Money Laundering and Hawala Transanctions far transends the Indian economy.
    Black money enters the system for a variety of reasons, of which corruption is not an insignificant part. However quite a bit a black money is pooled in due to evasion of taxes, levies, excises and duties on the part of major manufacturing, road transport and other companies. Cash transactions, which are again unaccounted for money, make up almost half of current financial dealings, especially in the real estate, electronic goods and transportation departments. The film industry is a regular boost to the parallel economy as are personal incomes and the various illegal industries. Even the recent elections greatly benefited the black economy, since each election produces about 10 billion dollars of black money, as shown by a study conducted by the CMIE (Centre for Monitoring Indian Economy) in 2006. In other words our Black economy is thriving.
    The black face of Indian economy
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