A Tale of Two Indias

Presentation made to Semester at Sea

Nisha Agrawal, CEO, Oxfam India

October 8, 2011

Context for Big Bang Liberalization in India in 1991

• Balance of payments crisis in 1991

• Elections in 1991 of a new Government

• Abandoning of piece meal approach to reforms and launching systemic reforms

Reforms Undertaken• Trade liberalization• Opening up of most industries to Foreign

Direct Investment• Taxation reforms• Reform of the financial sector• Trimming of fiscal deficit• Opening up of telecom and domestic

aviation to private sector

Result: A Jump in the GDP Growth Rate

1990-93 1993-97 1997-2003 2003-20070.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

4.0%

7.1%

5.2%

8.6%

Source: Panagariya (2008)

Beginning of the Transformation of India

• And the emergence of “two Indias”

• A middle income country, with a large and growing middle class, that is influential in global affairs

• And yet an India that is still home to a large number of poor people

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1990 2010

Population, millions

839 1,186

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1990 2010

GDP, $ billion

433 1, 538

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1990 2010

GDP per person, $

503 1,265

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1990 2010

GDP world ranking ($PPP)

9 4

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1990 2010

Exports as a % of GDP

6.9 21.5

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1990 2010

Gross savings as a % of GDP

21.9 34.7

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1990 2010

Adult Literacy Rate %

48.2 68.3

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1990 2010

Official Poverty Rate %

45.3 32.2

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1990 2010

Urban population % of total

26 30

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1990 2010

Number of billionaires in Forbes rich list

1 49

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Two Indias—An India Shining• With the rapid growth of the last two decades,

India is creating wealth at an unprecedented rate and is now home to a large number of rich and middle class people (about 200--300 million by some estimates)

• With its booming and large economy and its democratic politics, India is emerging as an influential power in global geopolitics (trade, aid to South Asia and Africa, investments, climate change, G20, BRICS etc)

• Nuclear deal; rocket to the moon, etcDemanding Rights for All16

And a Bharat in darkness• India is home to 350 million poor people

•60% of Indians live on agriculture, which accounts for less than 16% of GDP

•Rates of malnutrition are as high as 50%; India has 60 million chronically malnourished children (40% of the world’s total)

•School attendance after class 8 declines to 50%

• Infant and maternal mortality rates are amongst the highest in the world

•Society is fragmented and many groups (women, Dalits, tribals and Muslims) face high levels of social exclusion, discrimination, and violence

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Concluding Remarks• Poverty has been falling in India for the last 30

years and continues to decline steadily, if not rapidly

• Inequality is on the increase• Improving India’s human development indicators

will require systemic change• A redoubling of efforts to eradicate social

exclusion on the basis of caste, ethnicity, religion and gender are needed to get onto a truly inclusive development path

Two Indias—both true!

• India today is in a state of rapid transition

• Whatever you say about India—the opposite is also true!

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• Thank you for your attention

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Roadmap

Visit us at http://www.oxfamindia.org

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