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T
he goal of halving poverty in the because of expanding township and vil- In a low income country, the poor cannot
world by 2015 agreed at a world lage enterprises (TVEs), which absorbed afford to be unemployed; most of the poor
summit at the United Nations in surplus labour in rural areas. While in in India are the working poor. Most poor
2000 is unlikely to be achieved, as two 1978 just under one-third of all manu- families are in casual employment or self-
UN reports – one by the Food and Agri- facturing employment took place in the employed, while those with regular em-
cultural Organisation, noting that the countryside, by 2000 this had risen to half ployment are least likely to be poor. What
number of hungry people is rising, and [Mehrotra 2004]. the employment guarantee act will do is
another by the International Labour India’s situation has to be contrasted ensure at least 100 days a year of regular
Organisation – warned this week. The with that of China. Despite rapid growth employment to the poor – eliminating a
only reason why globally there has been and increases in income inequality in basis of poverty. On the basis of a popu-
some progress on this goal so far is be- both, in China poverty declined to barely lation-weighted average minimum wage
cause China and India have succeeded in 30-40 million people, average incomes of Rs 60 per day, 100 days work will raise
increasing economic growth rates and re- rose, and education levels and life expect- incomes by Rs 6,000 a year for poor
ducing poverty – as the Human Develop- ancy rose to levels much higher than households. That could potentially raise
ment Report noted last year. China has had India’s. Hence, rising income inequalities two-thirds of India’s population of poor
such significant growth and poverty re- in the two does not make their social above the poverty line.
duction in the recent past that progress in situation comparable. Although India
poverty reduction will be much slower in managed to reduce poverty in the 1990s, The Costs
the coming decade. However, if India fails increasing inequality could lead to serious
to make serious inroads against poverty, social tensions and urban turbulence – How much will it cost the national
the one goal of the many Millennium frightening away investors, just as foreign exchequer? Dreze (2004) has estimated
Development Goals on which the world investment has begun to climb. that the total cost of the programme with
seems on track, will also not be achieved. Only employment-intensive growth will phased implementation will rise from 0.5
One of the most important ways in which ensure that poverty will decline and in- per cent of GDP in the first year (2005),
India’s growth experience in the last two equality does not increase. However, the at 2004 prices, to 1 per cent of GDP in
decades contrasts with China’s is that China employment-elasticity of manufacturing the last year of the inception phase (2008).
managed to increase employment rapidly has fallen sharply in the 1990s. The only Thereafter, the ratio will decrease, as the
– mostly in manufacturing and construc- reason employment has been growing as number of households below the poverty
tion. Industrial employment accounts for rapidly as the labour force is on account line decreases.
22 per cent of China’a labour force, of growth in services. But that has left the The scheme, and these costs, are mo-
compared to 16 per cent in India (2000). majority of those dependent upon delled on a similar scheme which has been