Global Policy Forum

By Kevin Watkins*

Going by economic measures, India is a globalization success story. Average incomes, rising at 3 percent to 4 percent a year, have doubled since the mid-1980s. Dynamic new industries have emerged, most visibly in the high-technology hubs of Bangalore and Hyderabad. Foreign investment, while still dwarfed by flows to China, has grown from $1 billion a year in the mid-1990s to $5 billion this year.

When we try to measure whether people's lives have improved, however, the figures tell a different story. Poverty has fallen far more slowly than one would expect, given India's economic success. One in three Indians live on less than $1 a day and India is still home to the world's largest conglomeration of malnourished people. Almost half of the country's children are underweight for their age - which helps to explain the two million child deaths each year. The latest UN Human Development Report draws attention to the worrying gap that is emerging between economic growth and social progress.

What is going wrong? Part of the problem is that economic growth has been built on a narrow base. The information technology sector, for example, has so far created around one million jobs - but meanwhile, the labor force is expanding by about eight million a year. Broadening and deepening the growth process in labor-intensive manufacturing and in rural areas is vital.

The more profound challenge is to tackle head-on the deep-rooted inequalities that are holding back social progress, especially the deep inequalities in opportunity that divide women and men. These inequalities start at birth, with fatal consequences. Girls aged from 1 to 5 face a 50 per cent higher risk of childhood mortality than their brothers, reflecting disadvantages in access to nutrition and health provision. That statistic translates into 130,000 "missing" girl children - deaths that would be averted each year if death rates for girls were the same as those for boys.

Overlapping with these gender-based differences are wider inequalities. Child mortality rates among the poorest 20 per cent are more than three times higher than among the richest. And there are glaring gaps between the northern "poverty belt" states like Uttar Pradesh and Bihar and more successful states such as Tamil Nadu and Kerala. With a population larger than Nigeria, Uttar Pradesh immunizes only one in five children against the major childhood diseases. Accelerating social progress will require more than sustained economic growth, critical as that may be. As Amartya Sen has written: "Even a hundred Bangalores and Hyderabads will not, on their own, solve India's tenacious poverty and deep-seated inequality."

In 2004, India's electorate decisively rejected a government that celebrated "Brand Bangalore" instead of focusing on spreading prosperity more widely. Since then, the Congress-led government, has set a new course. Legislation has been approved for a $2.5 billion a year scheme that targets poor rural areas through public works programs. In last year's budget, the government signaled a far sharper focus on education, imposing a tax surcharge to fund a $1 billion increase in spending this year.

Across rural India, the public health system, starved of resources, has become a byword for clinics that lack drugs and trained staff. If current budget plans are implemented, health spending will rise from less than 1 per cent of national income to 3 per cent. Changing public spending priorities is difficult. But changing the structures that consign India's rural poor, especially poor women, to a lifetime of disadvantage is more difficult still. It will require fundamental changes in governance and - more important - in public attitudes to gender equality.

The challenges are immense. But economic growth and a thriving democracy provide India with an opportunity to become a real globalization success story.

About the Author: Kevin Watkins is the director of the UN Development Program's Human Development Report Office

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