Thursday, November 3, 2011

India Country Overview -Growth

 With a population of just over 1.2 billion, India is the world’s largest democracy. In the past decade, the country has witnessed accelerated economic growth, emerged as a global player with the world’s fourth largest economy in purchasing power parity terms, and made progress towards achieving most of the Millennium Development Goals.

However, poverty remains a major challenge though it is declining steadily but slowly. Based on the new official poverty lines, 42% of people in rural areas and  26% of people in urban areas lived below the poverty line in 2004-05.  Official poverty estimates for 2009-10 are not yet available but preliminary estimates suggest that in 2009-10 the combined all India poverty rate was 32% compared to 37% in 2004-05. Resources generated from recent growth are now being invested into a set of very ambitious programs to deliver services to the poor. These include programs to provide elementary education, basic health care, health insurance, rural roads and rural connectivity, and other services to the poor.

These programs are achieving partial results on the ground. Between 2003 and 2009, the number of out-of-school children declined from 25 million to 8 million (less than 5% of the 6-14 age group). Leprosy, polio, and TB are almost under control and the spread of AIDS has been kept in check. Large numbers of women have been mobilized into self-help groups to generate new livelihood opportunities. Massive new initiatives are being pioneered that are revolutionizing the way services are being delivered to low-income groups.

India continues to grow at a rapid pace, although the government recently reduced its annual GDP growth projection from 9% to 8% for the current fiscal year ending March 2012.  The slowdown is marked by a sharp drop in investment growth resulting from political uncertainties, a tightening of macroeconomic policies aimed at addressing a high fiscal deficit and high inflation (going well beyond food and fuel prices), and from renewed concerns about the European and US economies.  Although the Government was quite successful in cushioning the impact of the global financial crisis on India, it is now clear that a number of MDG targets will only be met under the Twelfth Five Year Plan (2012-17).


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