Poverty reduction in India

Professor TN Srinivasan of Yale has written a sharp rebuttal to Robert Wade on the world economy (see 1 May post) in a letter to the Financial Times. Srinivasan challenges Wade’s contention that only China has enjoyed a sharp reduction in poverty. India too has experienced substantial poverty reduction:

“India’s average annual rate of growth of per capita real gross domestic product was around 1.5 per cent in the period 1950-80. In the 1980s, the rate more than doubled to around 3.7 per cent, and then accelerated to 4.1 per cent during the 1990s. It has grown further to 5.3 per cent since then.

“Poverty, estimated as the proportion of the population having consumption below a modest national poverty line (rather than World Bank’s poverty lines, which have very weak analytical underpinnings), fluctuated at around 50 per cent during 1950-1978. It declined to 39 per cent in 1987-88, 36 per cent in 1993-94, and to 27.5 per cent in 2004-05. Had the poverty ratio in India remained unchanged at 50 per cent after 1977-78, the number of poor in 2004-05 would have been 547m, more than twice what it was: namely, 238m.”