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Who benefited the most by liberalization?

Posted by VASUDEVA REDDY on Tuesday, January 4, 2011

It is quite obvious to get the question “who benefited the most by the economic reforms done in India whether the poor or the rich”. One might think after 20 years, almost, of liberalization India. It is a very difficult issue to conclude to one point. Let us see the things happened and the economic development that India made after 20 years of liberalization.

According to the recent statistics India is the eleventh largest nation in the world according to the value of nominal GDP with the value of nearly $1.43 trillion, given by International Monetary Fund (IMF). Also ranked at fourth place in terms of purchasing power parity (PPP), given by IMF. Economists predicting that by the year 2020, India will be among the leading economies in the world.

At the same time according to 2005 World Bank estimate 41% of Indian population is below the poverty line. These are the people who not able to earn 21.6 rupees a day. Indian government made a different measurement to measure the poverty in India. According to the Indian government 27.5% of population is below the poverty line in year 2004-2005. In the year 2008 according to the United Nations Development Programme (UNDP), India got the place 132 which is the worst rank that India ever secured. Of course it decreased to 199 in the year 2010, thanks to recession.

Some critics say that the human cost of “liberalization” had been very high, as the government following the neo-liberal policies after 1990’s. The huge wave of farm suicides in Indian rural population from 1997 to 2007 totaled more than 200,000, according to official statistics. That number remains disputed, with some saying the true number is much higher. The government policies are encouraging the farmers to shift to cash crops from the traditional crops. It resulted in exponential increase in input costs, while the market forces are determining the price of the product made.

At the time of liberalization Indian GDP is at the worst condition. India had the $1.2 billion of foreign exchange reserves in January 1991, was still depleted to half by June of that year. To secure an emergency loan of $2.2 billon, india pledged 67 tonnes of Gold by airlifting them to London from IMF. Now India is one of the top country in the world in terms of nominal GDP, as stated above.

According to the Forbes 2010, India with 69 billionaires stands just after USA and china which have 403 and 128 billionaires respectively. The total worth of top 10 billionaires in India contributes 12% of national GDP, while it is just 1% for China, 5% in Brazil and 9% in Russia, while the 40% Indians are lying under the poverty line.

According to the UNDP 2010 rankings India climbed up to the 119th place.

Country like El Salvador, which saw a bloody civil war for over a decade from 1980’s, ranked at 90 which Is far ahead of India’s ranking. Guatemala, nearly half of whose citizens are poor indigenous people, saw the longest civil war in Central America. One that lasted close to four decades and which saw 200,000 people killed or disappear ranked at 116. In Africa, Botswana — ranked below us in the 2006 HDI at 131 — climbed four places above us at 98 this time. It replaced fellow African nation Gabon which quit that slot to move upwards to 93 from119 in 2007. But India has been fluctuating around 120 for the decades.

Coming to the Human Development Index points, given out of 1, India scored 0.389 while the South Asia’s average is 0.387 in the year 1990. Coming to the recent statistics which released in the year 2010, India got 0.519 points where the South Asia’s average is 0.516. These statistics tells that the India has not developed much in terms of Human Development compared to that of any nation in South Asia.

In the same period of two decades India drastically developed in terms of economy strength. From the hardly countable no.of billionaires in the year 1990, India developed to a stage of 3rd position of countries producing maximum no.of billionaires.

Even though we developed to a stage of 11th largest economy in the world and second fastest growing nation in the world, deaths because malnutrition, farmer suicides, infant mortality rate(55, stands at 143 position), deaths because of hunger are still continuing.

Really who benefited the most by the liberalization, whether the poor or the rich?

 


Tags: liberalization poverty poor development economic 

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