Geography Reference
In-Depth Information
Industry still only accounts for about 27 per cent of GDP, marginally more than 25 per
cent in 1991. This is mainly because manufacturing has been stagnant at around 16 per cent
since the 1980s (compared with 25-35 per cent in other Asian economies), employing only
about 10 per cent of the workforce. Industry and government together have failed to capit-
alize on the potential generated by Maruti in the 1980s, and by the skills that enabled some
leading companies to grow in later years. The services sector has grown to 60 per cent of
GDP, but its labour force only accounts for 27 per cent of the total. There is a mismatch
because manufacturing is not creating the jobs that India's so-called demographic dividend
of young people will need in the next 20 years, while the services sector faces shortages.
The social record is disappointing. Poverty has been considerably reduced from 50 per
cent of the population in 1990 to between 20 per cent and 30 per cent, according to (much
debated) official figures, and there have been considerable improvements in areas such as
access to drinking water and basic education, but it is more significant to say broadly that
more than half of the 1.2bn population are poorly fed and with inadequate access to basic
health care, clean water, sanitation facilities and adequate education. So slow has been the
improvement of living standards that World Bank data shows only five countries outside
Africa (Afghanistan, Bhutan, Pakistan, Papua New Guinea and Yemen) have a lower liter-
acy rate for female youth, with similar low ratings for child mortality, underweight children
development of an economy growing so fast for so long with such limited results in terms
of broad-based social progress,' say Amartya Sen, economist and Nobel prize winner in
1998, and Jean Drèze, a development economist.
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This has led to a debate over how much policy priority should be given to pushing
growth or to financing aid schemes that are inherently wasteful because of the weakness
and corruption of public institutions responsible for distribution programmes, and because
it is people who are not poor who often benefit from subsidies. The emphasis of the
2009 UPA government was more on distribution, with Sonia and Rahul Gandhi favouring
handouts for the poor, while Manmohan Singh and his advisers wanted reforms and cuts in
subsidies that would lead to growth. What is needed, of course, is a mixture of both, but
what India needs most is basic changes in the way the governments in the states as well as
in Delhi operate and implement policies that are already in place.
That said, the stories of Beejna, Maruti, Tata and others show that Narasimha Rao did
indeed launch India on a new path in 1991, when he picked up the threads of reforms de-
veloped and debated in previous years, and turned them into policies that were then imple-
mented. The gains that he set in motion are beyond doubt.
Notes
