CHAPTER-VI

GLOBALIZATION AND ITS IMPACT ON PRO-POOR GROWTH IN INDIA:

ISSUES AND CHALLENGES

Background: The year 1990-91 was the doorstep year for the beginning of an eight Five
Year Plan. The Seventh Plan, which ended in the previous year, showed a potential
backdrop for the formulation of a new plan. The overall performance of the economy
during the Seventh Plan had been impressive with an average annual growth rate of 5.6
per cent as against the target of 5 per cent. The performance of the infrastructural sector
also contributed to the success of the Seventh Plan. In addition, qualitative aspects of life
also improved. The number of poor as a percentage of total population was brought down
to 30 per cent in 1987-88 from 37 per cent in 1983-84.

However, there was a better performance on the declining percentage of poor and
economic growth as the absolute numbers of poor are increased drastically from 1980s.
As per official statistics in 1993-94, almost 320 million Indians were deemed to be living
in poverty. This is not much less than the entire population of 360 million in 1950-51.1

Moreover, with the rapid development of population, food insecurity has become
a major threat to India. In addition, decade of 1980‘s showed the decline trend in public
investments in agriculture leading to low production in agricultural commodity and these
changes in turn have affected domestic prices of commodities making the decline of Per
Capita Food Consumption (PCFC) as described in fifth chapter.2 Against this situation,
policy makers emphasised on trade reforms in all the sectors including agriculture.
Agriculture is the most significant sector of the Indian economy from the perspective of
poverty alleviation. Along with liberalisation of trade, private sector has been allowed
and encouraged to participate in agricultural investments and create a favourable
environment for exploitation of technological potential, as it is an increasingly important
element of globalization. Moreover, it is believed that trade liberalization advances
agricultural techniques such as irrigation, quality of seeds and multiple cropping etc.

1
Bee Hive (2000): The New Phase of Planning: New Economic Policy of 1991, MG University, India,
p.122
2
Sharma AK (2006): Rural Poverty in India, Sumlime Publication, Jaipur, p.56

148
 In 1990s, at international level, a number of agreements were emphasised by
developed countries on relaxation of restriction in the import or export of farm products
through various tariff and non-tariff barriers. This support consisted of measures such as
high support prices for farm products and export subsidies.3 As a result, a significant rise
in the share of global exports in advanced countries was found.4 At the same time in
India, beyond the controversy that agriculture in India was unprotected, whereas industry
has been somewhat protected.5 Therefore, the terms of trade for agriculture have been
unfavorable to Indian agriculture which led to poor returns for the farmers. For the reason
of low economic growth and low per capita income, there has been an increased trend in
rural poverty in 1990s.

Therefore, the Indian policy makers believed that liberalization of trade, external
as well as domestic, would improve the incentives for farmers, raise their resources
position and contribute to technological up gradation of agriculture leading to sufficient
production with low cost, which may help poor people have access to more food grains
and reduce nutritional poverty.

In this connection, the UN General Assembly, resolution passed in 1988

expressed its concern about the situation and emphasized the need for new and
imaginative approaches for eradicating poverty in developing countries as an integral part
of the promotion of growth and development.6 It urged the international community to
achieve as a priority and a supportive international economic environment for growth and
development that will reinforce the efforts of developing countries to revitalize their
development process and eradicate poverty. It also requested the UN regional
commissions to study options, including new approaches toward the revitalization of
developing countries in order to enable them to address effectively the eradication of

3
Hanumantha Rao C.H (2006): Agriculture, Food Security, Poverty and Environment, Oxford University
Press, New Delhi, p.42
4
Ibid, p.42
5
Gulati, Ashok and Gary Pursell (1991): Trade Policies, Incentives and Resource Allocation in Indian
Agriculture, The World Bank, Washington, p.3
6
Edward Lawson (1996): Encyclopedia of Human Rights, Taylor & Francis, Washington, p.1179

149
poverty. It should be noted that the UN also released a detailed report on the existence of
poverty.

Based on the Poverty report, UN Secretary General has drawn the following
conclusion:7 International cooperation is essential if progress is to be made towards
achieving the goal of eradicating poverty on an urgent, lasting and comprehensive basis.
Cooperation on the international trade and debt matters would help restore the conditions
necessary for renewed economic growth in countries undergoing adjustment. Based on
the report UN Secretary General emphasized that such growth would expand investment
and employment opportunities, support increased social expenditures and thus raise the
incomes and living standards of a majority of the poor. Indirectly as the United Nation
General assembly influenced the developing countries to embrace New Economic Policy
to overcome the under development of the concerned nations.

Against this situation, India also proposed to adopt the new economic policy. In
1991, Manmohan Singh, the Finance Minister and Prime Minister Narasima Rao
introduced first structural reforms of the economy, which came to be known as
―Liberalisation Policy‖

6.1 Globalization and Pro-Poor Policy

The policymakers and the progressive thinkers in India have been emphasizing
that higher economic growth is an outcome for poverty reduction. Adam Smith, the
founder of modern economics, was a strong champion of both free markets and free
trade, and his arguments are encouraging open market policy. Free trade allows countries
to take advantage of their comparative advantage, with all nations benefiting as each
specialises in the areas in which it excels.

Often the linkages of poverty reduction to economic growth through liberalisation

becomes little more than a justification for advocating structural adjustment programme
to enhance investment incentives to strengthen private property rights, also, the lower
taxes boost them. Each of these may contribute to deepening, rather than the reduction of
poverty. Hence, the optimistic scholars on globalization emphasize the idea of ‗pro-poor

7
Ibdi, p.1180

150
growth‘, to make globalization work for the poor. There is a general agreement that
higher rates of growth usually result in more rapid poverty reduction. As pro-poor growth
as an average incomes rise faster, the incomes of poor people tend to rise faster as well.

Pro-poor growth concept became popular in mainstream of economic circles in

the late 1990s as opposition to the negative impact of liberal economic policy on poor
people. It‘s growth has encouraged mainstream economist to analyses how changes in
both growth and inequality after poverty reduction. Advocates of pro-poor growth,
especially, World Bank argues that in the long terms only pro-poor economic growth can
bring poor countries out of poverty. The recent research and policy discussions identify
two definitions for measuring pro-poor growth. The first is a relative definition, which
compares changes in the incomes of the poor people with reference to changes in the
incomes of the people who are not poor. Under this definition, growth in pro-poor when
distributional changes accompanying growth favors poor people. This definition
emphasizes inequality reduction rather than poverty reduction themselves.

The second absolute definition considers growth to be pro-poor only when poor
people benefit according to a standard measures of poverty. The measures of pro-poor
growth depends on changes in the rate of poverty with reference to both the rate of
growth and distributional patterns.

Based on pro-poor growth approach, growth is method of channeling wealth into

social safety programmes such as education, health, employment and rural development
programmes. The recent studies on globalization illustrate that pro-poor growth ideology,
as it benefits the poor more than the non-poor, in an absolute sense as an increase in GDP
that reduces poverty.

Moreover, contemporary marketing strategy on business emphasized on the

concept of Corporate Social Responsibility (CSR). Through the business principles of
CSR, Multi-National Corporation or the large scale industries, working with the local
export agencies which will support inputs, capital and skills to smallholders to enable
their participation.

151
 Furthermore, trade theory illustrates that it would create lots of new jobs and
allow new wealth to be created, some of the wealth would be trickled down to poor
people. Hence, the regulated market and pro-poor growth theory suggest that growth
would keep control of key services (eg, education, health, social service sector, etc.) to
make sure that poor are not ignored. But in the Indian experience, such schemes are
limited in scope and do not reach the poor members of the community by effectively
following the ‗pro-poor‘ growth policy and CSR.

There are several reasons behind the failure of pro-poor growth policy. Small
scale industries could not compete with MNC‘s, the high cost of certification and
infrastructure required for participation at the international marketing, hence, small scale
industries are not able to sustain during this period. In addition free markets have not
liberated poor farmers, by investing more on research and development and technology.
As a result of agricultural failure, the increasing trend of consumer price inflation and
ignorance of mass rural employment creates more number of absolute and relative
poverty in India.

Though remarkable financial growth is registered, the new economic policies,

targeting growth oriented industrialisation, aim at preventing the trends against
inequitable growth, jobless growth, voiceless growth, rootless growth and non-
sustainable growth. Due to the de-regulation policy, the taxes are lowered to the industry.
As taxes are lower, automatically public revenues are forced to cut down and are not able
to invest more on health, social security schemes and rural development. The booming
economy with growing gaps has created regrettable development in health sector. As a
result, India is too behind in achieving the basic health problems of poor.

In this background, poverty concept is inter-related with globalization. Moreover,

India has not addressed the problem of poverty in a prompt way. As of the reason, the
older version of Income poverty initiated from 1973 has been followed. From the
beginning of liberalisation policy, India has been enjoying a strong rate of economic
growth. However, human development indicators remain uneven and weak. Therefore, it
is significant to study about the impact of globalization on poor people and pro-poor
growth policy of India, especially on the following fields: agriculture, health,

152
employment, financial crisis and other forms of social deprivation. In addition,
shortcomings of the existing poverty definition, is also focused in the study as per the
present economic standard of life. The following section discusses about the development
pattern of agriculture in terms of poverty reduction.

6.2 Agriculture and Poverty Eradication in the Era of Globalization

Agriculture is considered to be the backbone of Indian economy. It plays a

significant role in determining India‘s poverty ratio, also because the large portion of
people in India is engaged in agriculture and allied activities. Agriculture serves as a
major source of income for nearly 49 per cent of the world population and 55 out of 147
countries are identified by the World Bank as predominantly agriculture based
economies.8 Agriculture and poverty are closely related. The World Bank illustrates
about the importance of agricultural development and poverty alleviation as, ―absolute
poverty bright the lives of millions in many developing countries. They have barely
adequate and often uncertain diets and income so low that they can spend little for
clothing, fuel, shelter and other essentials. Past experience clearly shows that a
combination of the growth of agriculture and of the economy is essential for long term
alleviation of poverty.9‖

The growth rate of investments in agriculture has started to decline from 1980s
and it was more in the post 1990s. For the reason that of low investment in agriculture,
there has been a decline in the share of agricultural income towards national GDP (as
depicted in the table no.1). Good agricultural performance operates to reduce measured
poverty through both the income and the price channels.10 As rural India has a large
number of population involving into agriculture and related works effort for poverty
reduction need to be initiated effectively. In this connection, a study by Bresciani and
Valdes conclude that when both the direct and indirect effects of agricultural growth are

8
Mehmet Odekon ed (2005): Encyclopedia of World Poverty, Vol.1, Sage Publication, p.17
9
Ibid,p.18
10
Cervantes-Godoy, D. and J. Dewbre (2010): Economic Importance of Agriculture for Poverty Reduction,
OECD Food, Agriculture and Fisheries Working Papers, No. 23, OECD Publishing, p.7

153
taken into account. Which is more poverty reducing than growth in non-agricultural
sectors.11

From various reports, it is understood that food inflation is a major structural and
policy issue in the present scenario for which the declining of agriculture sector and
growing of industrial sectors are responsible especially in creating a positive impact on
food price. P.Sainath, Sundaram and Utsa Patnaik highlight the declining ratio of
agricultural wage and increasing level of industrial wage in their studies. Due to very low
wage to agricultural farmers as they note nutritional poverty is high among rural areas.
Due to the absence of risk mitigation strategies, the farmers are forced to commit suicide
as they are frustrated with their persistent poverty oriented life as well as lack of capacity
to repay the loan to banks from where they get financial help for their affiliated work,
especially farming.

6.2.1 Farmer’s Suicide in India during the Globalization Period

Farm suicides rose sharply in the 1990s at all India level. Among all Indian states,
Maharastra is the prime ‗farmer suicide hit‘ state. According to NCRB (National Crime
Record Bureau), there were 3,337 suicides in 2011 and 3,786 suicides in 2012.12 In
addition, NCRB reports highlight that Maharastra, Chattisgarh, Andhra Pradesh,
Karnataka and Madhya Pradesh are the major five states that account for over two-thirds
of all farm suicides in India.13 P.Sainath demonstrates that the big five accounted for over
68.4 per cent of all farm suicides in the country in 2012.14 It is matter of concern that
some states do not record properly the data with regard to farm suicides. Chattisgarh and
West Bengal do not record data at all on farm suicides data. However, NCRB make it
clear that three year--2009-11 average suicide was 951 in these states.15 Governments
under estimation on farm suicide also happened in the post reform period. In order to
project India in the international platforms. For instance, the NCRB figures on farm

11
Ibid, p.4
12
P. Sainath(2013): Farm suicide trends in 2012 remain dismal, The Hindu, 29th June 2013
13
Ibid,
14
ibid
15
ibid

154
suicide from 1995 to 2012, show that at least 2,84,694 Indian farmers have committed
suicide since 1995, at an average of 16747 suicides per year or 45 suicides per day.16 It
should be noted with concern that more suicides are happening from 2004 to 2012—the
period of drastic decline in Indian poverty. In this connection, P.Sainath points out that a
large amount of the suicide deaths happened because of debt burden and poverty during
that period.17

Also, Prof. K. Nagaraj, an eminent economist says that ―farmer suicides picture
remains dismal‖18 and a large number of farm suicides still occur, which has not been
recognized officially and politically even today. Prof M.S. Swaminathan, the father of
Green Revolution and Chairman of National Commission on Farmers (NCF) also points
out that farmers continue to commit suicide and hundreds of tenant farmers are reported
to have committed suicide in the recent period.19

There are several reasons behind farmers‘ suicide. However, the main reason is
that the banks failed to extend their support to agricultural activities in the post 1990s.
The share of agriculture in total bank credit (both direct and indirect) declined sharply
from a peak of 15.9 per cent in March 1990 to 9.6 per cent by March 2001.20The failure
of scheduled commercial banks to expand their credit base for agriculture is reflected in a
significant reduction in the number of agricultural loan accounts from the peak of 24.5
million in March 1996 to 19.8 million by March 2001.21 Similarly, the credit deposit of
rural branches declined steeply from 97 per cent in the early 1990s to 49 per cent in
22
March 2002. In addition, the small farmers were neglected from getting loans. In this
connection, the Indian Agricultural Credit Review Committee reveals that in the case of
large farmers borrowing from commercial banks, the incidence of overdue is higher than

16
National Crime Record Bureau-2013
17
P. Sainath(2013): Farmers‘ suicide rates soar above the rest, The Hindu accessed from http://www.the
hindu.com/opinion/columns/sainath/farmers-suicide, accessed on 18th September 2013
18
Ibid,
19
Kurmanath K.V (2013): 45% of Farmers Want to Quit Farming: Swaminathan, Bussiness Line,
December 30
20
Hanumantha Rao(2005): Agriculture, Food Security, Poverty and Environment, Oxford University Press,
New Delhi, p.102
21
Ibid, p.103
22
Ibid, p.102

155
the average and in the case of the marginal farmers it was the lowest.23 Though, in the
union budget (2008-09), government has waived the farmer‘s loan, whereas, the small
scale farmers were not given any major helps in waiving of loans to that extent. Due to
the fact, the farmers were addressed by the private finance agency or pawn brokers.
According to P.Sainath, around 62,000 crores of the agricultural debt was from the
private finance institutions in the post 90s.24 As a result, there was low income and low
productivity from agricultural sectors and most of the farmers never restored their
valuable ornaments from the pawn brokers. Thus, P.Sainath points out that jewellery and
household furniture of a small farmer were auctioned for a few thousand rupees,25 which
not only affected the income trend of farmers but also the Indian economy over all.

It is understood that post 90s as the period of negligence of agriculture sector

leading to reduction in number of farmers cultivating their fields. It should be noted that
during that period, many farmers started shifting from agricultural work to some other
works resulting in huge migration to urban areas. By 1996, it was reported that 110
million farmers left their farming works.26 The Institute of Applied Manpower Research
(IAMR), a part of the Planning Commission, 15 million workers shifted from agriculture
to services or industries resulting in total fall from 57 per cent to 53 per cent. Also, the
NSSO noted that half of the farmers in the country did not wish to continue farming.27

Unless India addresses this problem effectively, the younger generation will not
take part in farming activities in the future. Consequently, India will face severe food
crisis. Therefore, India needs to consider the problem and invest more money on
research and development.

The following table-1 and chart-1, illustrate that the share of agricultural income
towards Gross Domestic Product (GDP) of the country has come down and though,

23
Ibid,p.108
24
P. Sainath (2013):The People who matter most, accessed from http://mediapeople.tripod.com/media
forpeople/id5.html, accessed on 18th July 2013
25
Ibid,
26
Sainath. P(2013): Over 2,000 Fewer Farmers Every Day, The Hindu, May 2
27
Prabu M. J.(2011): Farmers Would Quit Agriculture If They Had An Alternative, The Hindu, August 25

156
agricultural income started to decline from 1980, the declined ratio is lower than post
reform period. It also depicts that there is 17.9 per cent decline of agricultural income
during 1980 to 1990-91 and 40.14 per cent during the period 1990-91 to 2012-13. Thus, it
indicates that the structural changes make employee shift from a traditional agrarian
economy to industry or service sectors.

Table No.6.1

Contribution of Agricultural Income Towards National GDP

Year Declined %
1980-81 35.39
1985-86 30.89
1990-91 29.02
1995-96 26.26
2000-01 23.12
2005-06 18.81
2010-11 17.98
2011-12 17.55
2012-13 17.37
Source: Various years’ data from Ministry of Agriculture, GoI

Chart No.6.1

Contribution of Agricultural Income Towards National

GDP

40
35
30
25
20
15
10 Declined %
5
0

Source: Various years’ data from Ministry of Agriculture, GoI

The liberalisation policy as understood by all, consist of macro-economic policy

changes, changes in exchange and trade policy, devaluation of the currency, gradual

157
dismantling of the industrial licensing system and controls, reduction of tariffs, reform of
public enterprises and increasing privatisation.28 These are the major driving forces
behind reduction of agricultural income. Also, with the expansion of urbanisation, the
availability of land is decreased for the last two decades and such a decrease is expected
to be much greater in the developing countries especially in India. Although, there has
been a remarkable increase in food grains between1980-2010, it does not meet the
demands of increasing population. As a result of food deficiency, public health problems
arise public health problems arise leading to decline of human potential in India.

6.2.2 Agricultural Development: Developed Countries Vs Developing Countries

In 1960, the agricultural productivity in developed countries was more than 13

times higher than that of the less developed countries. By 1995, this productivity gap had
widened to fifty and one per cent respectively.29 The main reason of manifestation of the
productivity gap relates to land productivity. The table no.6.2 drawn from the World
Bank, shows variations in the land productivity measures as kilogram of grain harvested
per hectare of agriculture land in 1995.

Table No.6.2

Developing Vs Developed Countries Average Grains Yield

Country Average Grain Population(million)
Yield (kg/hectare) involved
Japan 6119 125
US 5136 263
Bangladesh 2602 120
Mexico 2506 92
Brazil 2383 159
India 2136 929
Pakistan 1943 130
Nigeria 1172 111
Source: Encyclopaedia of World Poverty, Vol.1, p.18

The above said table illustrates that developing countries average grain yield is
too low than developed countries. However, Bangladesh is a developing country, its yield

28
G.S.Bhalla(2010): Planning Commission Project Growth of Indian Agriculture: A District Level Study,
Centre for the Study of Regional Development, Jawaharlal Nehru University, New Delhi, p.3
29
E0WP, p.18

158
on food grains is much higher than India. In addition, Nigeria and Pakistan comprise low
number of population involved in the agriculture and their average yields per hectare on
grains are also lower than India. Thus, it is understood that technologically advanced
countries led in agricultural production during the period.

In developed countries, there has been a steady growth of agriculture output since
19th century. This growth has been influenced by technological and biological
improvements, resulting in higher levels of labour and land productivity. However, on
other hand, India started to improve its agricultural system from 1970s only.

Compared to developed nations India is providing lower level of subsidies to the

agricultural farmers. Joseph Stiglitz ironically points out that the average European cow
gets a subsidy of $2 a day (the World Bank measures of poverty); more than half of the
people in the developing world live on less than that. 30 It appears that it is better to be a
cow in Europe than to be a poor person in a developing country.31

6.3 Health and Poverty

Health is essential for normal life of a person. Studies by Srinivas, A. Kuruvilla

and K.S. Jacob recognize that poverty and health are complexly intertwined. According
to them, poor people are especially vulnerable to major health risks due to insufficient
and improper nutrition, unsafe water supply, poor sanitation and hygiene, toxic indoor
smoke, and extremely limited access to health education and services contributing huge
disease burden in India. Illness keeps poor wage earners away from work, children away
from the school depriving them of education they need. Finally, it leads to reduce
children‘s ability to learn. Thus, the vicious cycle of poverty is noticed in developing
countries especially in India.

Thus, there is a direct correlation between poverty and disease. Poverty creates a
cyclical relationship and it causes people and countries to be hopeless, unaccountable and
irresponsible, which in turn creates the unhealthy environment.32 However, the developed
as well as developing nation‘s development of technology and research in medicine have

30
Joseph E. Stiglitz (2006): Making Globalization work, Allen Lane, London, p.85
31
Ibid,p.85
32
Mehmet odekon ed (2006): Encyclopedia of World Poverty, Sage Publication, New Delhi, Vol.2, p.471

159
created a positive impact on curing many chronic diseases. However, they are not in
favour of the poor and marginalised people. This may be an another reason for
persistence of poverty and poor health in India. Due to the failure of government in
public health system, most of the poor people are forced to spend more money on health
care by benefitting the private health sectors.

Indian President Pranab Mukherjee drew attention to the healthcare emergency

that India faces as 80 per cent of costs are paid out-of-pocket and healthcare debts force
40 million Indians into poverty every year.33 In addition, he said, ―I am deeply concerned
about the impoverishing impact of health and medical expenses on the vulnerable
sections of our society,"34 on the contrast, as per the report of WHO, the Indian
government spends only 0.9 percent of its gross domestic product on health care, ranking
171st out of 175 countries in public health spending.35 Therefore, it is clear that India
lacks in providing medical facilities to the poor and needy people.

In this connection, United Nations Millennium Summit in September 2000 has

agreed upon the following eight Millennium Development Goals (MDGs) supported by
190 countries:36

 Eradicate extreme poverty and hunger

 Achieve universal primary education
 Promote gender equality and empower women
 Reduce child mortality
 Improve maternal health
 Combat HIV and AIDS, malaria and other diseases
 Ensure environmental sustainability
 Develop a global partnership for development

33
Joverdorf(2013): India: Medical expenses plunge 40 million people into poverty each year, accessed
from http://www.globalpost.com/dispatches/globalpost-blogs/india/india-medical-expenses-poverty,
accessed on 17th October 2012
34
ibid
35
Nirmala M Nagaraj(2009): India hits health-spend rock bottom, Times Of India, 11th August
36
Accessed from http://www.un.org/millenniumgoals/, accessed On23rd June 2102

160
 It is significant that out of eight goals, three are focusing exclusively on health related
issue proving to the fact that international community recognizes, health and poverty as
the most important problem areas in the new millennium.

6.3.1 Uneven Growth of Health System in India

Table No.6.3
Health and Poverty Linkages in India
State Poverty ratio IMR IMR Per capita Public health OOPs
/1000 /1000 public health expen 2006-07 per
Rural Urban rural urban expen 2006-07 as % of SDP capita
And. Pradesh 11.2 28 63 39 207 0.95 613.38
Arun. Pradesh 22.3 3.3 39 17 645 2.73 612
Assam 22.3 3.3 71 39 263 1.41 534.11
Bihar 42.1 34.6 62 47 114 1.38 490.35
Chattisgarh 40.8 41.2 65 52 222 1 468.96
Delhi 6.9 15.2 44 33 664 0.89 106.41
Goa 5.4 21.3 16 15 934 1.25 612
Gujarat 19.1 13 63 37 177 0.59 516.96
Haryana 13.6 15.1 64 45 216 0.58 918.26
HP 10.7 3.4 50 20 547 1.58 1104.05
J&K 4.6 7.9 53 39 539 2.65 650.55
Jharkhand 46.3 20.2 53 33 281 2 317.39
Karnataka 20.8 32.6 54 39 225 0.86 507.51
Kerala 13.2 20.2 15 12 379 1.2 1441.05
MP 36.9 42.1 80 54 155 0.98 356.85
Maharashtra 29.6 32.43 41 27 198 0.59 657.06
Manipur 22.3 3.76 12 14 336 1.75 612
Meghalaya 22.3 4.36 50 42 450 1.8 612
Mizoram 22.3 1.02 26 10 759 2.59 612
Nagaland 22.3 3.87 17 22 515 1.33 612
Orissa 46.8 44.3 78 55 151 1.27 520.03
Punjab 9.1 7.1 49 37 330 0.89 995.35
Rajasthan 18.7 32.9 75 43 186 1.09 640.33
Sikkim 22.3 3.3 31 15 848 3.6 612
Tamil Nadu 22.8 22.2 39 34 257 0.84 622.37
Tripura 22.3 6.18 31 29 571 1.33 612
Uttarakhand 40.8 36.5 56 19 534 2 759.15
Uttar Pradesh 33.4 30.6 77 54 217 1.12 841.36
West Bengal 28.6 14.8 40 31 203 0.86 650.85
All India 28.3 25.7 64 40 299 1 653.94
Source: Ravi Duggal(2007):Poverty & health: Criticality of public financing, Indian J Med Res 126,
October 2007, Nagpur, p.315

161
 Despite India‘s impressive economic performance after the introduction of
economic reforms in the 1990s, progress in advancing the health status of Indians has
been slow and uneven.

Large inequities in health and access to health services continue to persist and
have even widened across states, between rural and urban areas, and within communities.
The difference between rural and urban indicators of health status and the wide interstate
disparity in health status are well known.

The above table illustrates about the linkages between health and poverty. It is
observed that that high proportion of poverty consisting states has high Infant Mortality
Rate (IMR). The high proportion of rural poverty ridden states consists of high number of
rural IMR. They are Uttarkhand (40.8 per cent)-56, Chattigarh (40.8 per cent)-65, Uttar
Pradesh (33.4 per cent)-77, Orissa (46.8 per cent)-78 and Madhya Pradesh (36.9 per
cent)-80. However, majority of the states follow high rural poverty with high IMR, it is
significant that few states confirm low rural poverty with high rural IMR. It happens in
Andhra Pradesh (11.2 per cent)-63, Jammu and Kashmir (4.6 per cent)-53, Haryana (13.6
per cent)-64 and Rajasthan (18.7 per cent)-75. Many states confirm that low poverty with
low IMR. Such states are: Kerala (13.2 per cent)-15 and Goa (5.4 per cent)-16.

Similarly, in urban India, high proportion of poverty states have high number of
IMR, such states are: Bihar (42.1)-47, Chattisgarh (40.8 per cent)-52, Uttarpradesh (33.4
per cent)-54, Madhya Pradesh (36.9 per cent) and Orissa (46.8 per cent)-55

It is clear from the above table that the states, which have higher proportion of its
public expenditure on health have lower number IMR in rural as well as urban India.

The disparity between rural and urban IMR is wide among Gujarat (26), Madhya
Pradesh (30), Assam (32), Rajasthan (32) and Uttarkhand (35). The rural urban disparity
in IMR is low in Goa (1), Tripura (2) and Kerala (3). The difference between high and
low level of IMR states is too high. Manipur consist of 12 and Madhya Pradesh consists
of 80 in rural India. In urban India, Mizoram consists of 10 and Orissa consists of 55.

Also it is understood that the economically developed states provide low

percentage of its State Domestic Product to the public health expenditure. Such states are:

162
Haryana--0.58 per cent, Maharastra--0.59 per cent, Gujarat--0.59 per cent and Tamil
nadu--0.84 per cent.

6.3.2 Expenditure on Health

India may be growing as fast as the other developed economies, but its spending
on healthcare is much lower than developed countries. NSSO highlights, over eighty per
cent of health expenditure in India comes out-of-pocket and the public exchequer
accounts for only 15per cent of total health expenditure in the country.37
Developing countries‘ percentage of share of GDP on health care is far higher
than India. Planning Commission of India also recognized that India's public spending on
health as a proportion of GDP (1.4 per cent) which is the lowest in the world.38 While Sri
Lanka spends 1.8 per cent of its GDP, figures in China and Thailand are 2.3 per cent and
3.3 per cent respectively. The corresponding figure for the US is in excess of 7 per cent
while European nations like the UK, Spain, Germany, Italy spends 6.5 to 8 per cent of
39
their GDP on healthcare. Prime Minister Manmohan Singh announced a specific
emphasis on health in the country‘s twelfth five-year plan covering 2012-2017 pledged to
increase public spending from 1.4 per cent to 2.5 per cent of GDP.40
According to World Bank development indicators report 2013, India is the lowest
public health expenditure among the South Asian countries. This report also confirms
that India‘s public health expenditure on its GDP is 1.2 per cent in 2011, while, Nepal
spent 2.1 per cent, Sri Lanka spent 1.5 per cent and Bangladesh as 1.4 per cent.
The following table describes about Health Expenditure and Health Indicators in
select countries. It illustrates that countries with low per capita income with low
expenditure on health have low life expectancy. The country which spends more
percentage of its GDP for health leads in Hunger Development Index and dropped Infant
Mortality Rate. From the table, it is observed that India is a leading country in private
expenditure on health. However, USA‘s share (7.7 per cent) of its GDP for private health

37
GOI(2006): NSS 60th th Round, NSSO, New Delhi, accessed from mospi.nic.in/nspb_m.htm, accessed
on 18th March 2013
38
Healthcare spend to rise to 2.5% of GDP, The Indian Express, 1st March 2012, New Delhi
39
The National Bureau of Asian Research for the Senate India Caucus(2012): Healthcare in India: A Call
for Innovative Reform, p.1
40
Ibid,p.1

163
 expenditure, its public health expenditure share is 6.2 per cent. The variations between
public and private expenditure on health is too high in India. The difference between
India and USA in per capita expenditure on health is $80 and $4887 respectively. In other
words, USA is 61 times higher than that of India.

Table No.6.4

Health Expenditure and Health Indicators in selected countries

HDI Country Health Exp. as Per Capita Out-of Life Infant Mortality Per
Rank % of GDP Exp on pocket Expectancy Rate Per 1000 Capita
(2001) Health Exp as % at Births live GDP ($)
Public Private (PPP US $) of Private (2001) Births (2001)
Exp (2001)
(2001)
7 USA 6.2 7.7 4887 26.5 76.9 7 34946
8 Canada 6.8 2.8 2,792 52.3 79.2 5 22385
9 Japan 6.2 1.8 2131 74.9 81.3 3 32540
13 UK 6.2 1.4 1989 55.3 77.9 6 24186
18 Germany 8.1 2.7 2,820 42.4 78 4 22418
99 Sri Lanka 1.8 1.9 122 95 72.3 17 849
127 India 0.9 4.2 80 100 63.3 67 462
131 Myanmar 0.4 1.7 26 99.6 57 77 1027
Source: World Health organization Report-2003 and HDI Report-2003

India and China recorded the same growth rate till 70s. It should be noted that
China initiated its economic reforms in 1980s and it is a forerunner of globalization. As
per the WHO‘s National Account Data-2013, China‘s health expenditures per capita is
$21.1 in 1996 and $278 in 2011, while in India, it is $ 11.5 in 1996 and $ 59.1 in 2011.
The increased share of India in its health expenditure from 1996 to 2011 as 5.1 times and
for China it is 13.1 times. Similarly, the percentage of private expenditure on health or
out of pocket health expenditure in China is decreased from $ 93.7 to $ 78.8 from 1995 to
2011. At the same time in India, it is decreased from $ 93.7 to $ 86. It is clear that China
plays a better role in investing more on public health expenditure than India.

After adopting the Fiscal Responsibility and Budget Management (FRBM) Act
and neoliberal policy since the early 1990s, the expenditure on health has come down in
India.41 As a result of decline in the public health expenditure, private provision of

41
Sakthivel Selvaraj, Anup K Karan(2009): Deepening Health Insecurity in India: Evidence from National
Sample Surveys since 1980s, Economic & Political Weekly, 3rd October 2009 Vol. XLIV no.40, p.55

164
healthcare has been increased both in rural and urban India. Thus, the absence of
sufficient public health investment not only results in poor health outcomes but it also
leads to growth of poverty too.

6.3.3 Life Expectancy

Life expectancy is defined as the average number of additional years a person can
expect to live if current mortality trends are to continue for the rest of that person's life.42
Health improvements in India are poor but have improved slowly over the last three
decades. Because of health improvements, decline of Infant Mortality Rate and Child
Mortality bring increase in life expectancy of India. Studies have explored that the three
major reasons for life expectancy to have increased are better food supply and nutrition,
healthier lifestyle and better hygiene.
However, there has been a steady increase of Indian‘s life expectancy. Compared
to Bangladesh and China, India lags behind. At international level India placed 135th rank
in life expectancy. On other hand, China (85th place) and Bangladesh (122nd place) are
too forward than India.
Table No.6.5

Life Expectancy

Year Average year

Increased/year
Country Rank 1981 1991 2011

India 135 58.6 62 65 0.32

Bangladesh 122 55.8 60 68.9 0.69
China 85 67.3 69 73.5 0.31
Source: WHO, Various year of National Health Account Database

According to the latest life expectancy report by the Registrar General of India,43
among Indian states between 2006 and 2010, men are living longer period in Kerala (71.5

42
Life Expectancy and Infant Mortality Rates for Selected Indian States, accessed from http://infochang
eindia.org/women/statistics/life-expectancy-and-infant-mortality-rates-for-selected-indian-states.html,
accessed on 18th June 2013
43
Kounteya Sinha(2012): Average Indian‘s life expectancy up 4.6 years, The Times of India, 2nd October
2102, accessed from http://articles.timesofindia.indiatimes.com/2012-10-02/india/34217600_1_life-
expectancy-rural-males-indians.

165
years), Jammu & Kashmir (69.2 years), Maharashtra (67.9 years), Himachal Pradesh
(67.7 years), Punjab and West Bengal (67.4 years) and Tamil Nadu (67.1 years). Life
expectancy among males is lowest in Assam (61 years).44

Similarly, for females, Kerala is placed in a leading position with the average life
expectancy between 2006 and 2010 at 76.9 years, followed by Himachal Pradesh (72.4
years), Maharashtra (71.9 years), Punjab (71.6 years) and J&K (71.1 years). Assam was
once again at the bottom of the ladder with an average woman expected to live until just
63.2 years.45

6.3.4 Providing Decent Sanitation Facilities for the People

Sanitation continues to remain one of the key health issues in India. 2.5 billion
people, over one third of the world's population, lack in access to adequate sanitation
facilities, perpetuating disease and high rates of child mortality.46 In order to address
severe poverty and global diseases, India launched several health programmes. Among
them, Jawaharlal Nehru National Urban Renewal Mission (JNNURM), supports
provision of housing and basic services to urban poor in slums in specified cities under
the Sub Mission Basic Services to the Urban Poor (BSUP) 47and in other cities and towns
under the Integrated Housing and Slum Development Programme (IHSDP) are the major
health and sanitation programme for the poor.48 The provisions of basic civic amenities
including water supply, drainage, sewerage, community toilets or baths etc. are
admissible components under the BSUP and IHSDP. The Global Poverty Project
describes, ―Sanitation, despite being perhaps the 'dirtiest' theme in aid and development,
is undeniably a life-saving one for poor."49 In addition, it highlights that poor sanitation is
most likely the single biggest contributing factor to child mortality in the developing

44
Ibid,
45
Ibid,
46
Global Poverty Info Bank, Sanitation and Poverty, Accessed from http://www.globalpovertyproject.com
/infobank/Sanitation, accessed on 3rd June 2013
47
Indian Sanitation Portal, Housing and Sanitation Facilities for Below Poverty Line, accessed from
http://indiasanitationportal.org/2407, accessed on 3rd July 2013
48
ibid
49
Global Poverty Info Bank, Sanitation and Poverty, Accessed from http://www.globalpovertyproject.com
/infobank/Sanitation, accessed on 3rd June 2013

166
world; about 5000 children die of diarrhoea-related diseases every day.50 Thus, it is
understood that decent sanitation facilities are linked with child development, Infant
Mortality and poverty.

Table No.6.6
Providing Decent Sanitation Facilities
Country Rank %Achieved &Year

1990 2010

India 145 18 34

Sri Lanka 72 68 92

Bangladesh 126 39 56

Maldives 50 68 97

China 119 24 64

Pakistan 136 26.7 48

Source: World Bank Poverty Report-2012

The above table reveals that India is deficient in providing decent sanitation
facilities to the people. However, India is emerging as a great economic power among the
Asian countries; India‘s rank at international level for providing decent sanitation
facilities is 145. In other hand, the neighbourhood countries were positioned at the
forefront of India--Srilanka 72nd place, Bangladesh 126th place, Maldives 50th place,
China 119th place and Pakistan placed 136th. Moreover, the above data makes it clear that,
all the nations did more on providing decent sanitation facilities in post 90s.

In June 2012, Minister of Rural Development Jairam Ramesh stated that ―India is
the world‘s largest open-air toilet.‖ He also mentioned that ‗Pakistan, Bangladesh and
Afghanistan have better sanitation records than India.‖51 Therefore, India need to do more
reforms on health and sanitations in order to diminish poverty ratio.

50
ibid
51
The Telegraph, India the world's largest open air toilet, 25 June 2012.

167
6.3.5 Water Sources for Living

In the era of globalization, source of water is very significant. Most recent studies
and discussions highlight the need for water. Based on this, on 28 July 2010, through
Resolution 64/292, the United Nations General Assembly explicitly recognized the
human right to water and sanitation and acknowledged that clean drinking water and
sanitation are essential to the realization of all human rights.52 However, many nations
are not ready to recognize water as a basic problem. Many countries around the world are
not taking their responsibilities seriously to retain safe water supplies for their citizens.
As a result, Public-Private-Partnership (PPP) water projects become increasingly more
popular in developing countries, especially in India. Privatizations on water makes the
poor people do not have access to safe drinking water liberally. It becomes very
expensive for them.

In urban India, it is estimated that about 70 per cent of diseases in human being
are due to consumption of unclean water.53 Consequently, majority of the poor people
automatically fall in the vicious cycle of poverty. In rural India, large share of population
from the poorer section of the society spend much more time to collect water for their
daily needs.

World Organization emphasized that there should be a water accessing center

with in a 1000 meters. Article 47 of Indian constitution also discusses about the duty of
providing clean drinking water and improving public health standards to the State.
However, water as a statutory welfare measures to the people are not provided to the
people of India thus, going against the Article-47

However, according to WHO‘s Data Base-2013, India placed 95th position in

offering good water facilities for the people and 42 countries achieved this target by
2010.

52
Accessed from http://www.un.org/waterforlifedecade/human_right_to_water.shtml on 2nd Jan 2103
53
ABDUL SHABAN(2008): Water Poverty in Urban India: A Study of Major Cities, Tata Institute of
Social Science, Mumbai, p.1

168
6.3.6 More Facts about Indian Health care

To bring a sustainable society or disease free society, the young children have to
be provided high immune health care facility. For the reason, children receive vaccination
in order to prevent viral diseases. According to WHO Report-2011, accessing
Immunisation, Measles (Viral Disease) of children among 12-23 months age Group, Sri
Lanka placed 1st Rank and India placed 155th Rank. India is far behind Pakistan and
South Africa. In addition, 32 countries were achieved 99 per cent in providing
Immunisation, Measles to the 12-23 months age group.

The following data explains the percentage of children in the age group of 12-23
months in accessing Immunisation, Diptheria, Pertussis and Tetanus(DPT).

Table No.6.7

Accessing Immunisation,Diptheria, Pertussis and Tetanus(DPT)

Country % of Achieved and Year Rank

1981 1991 2011

India 6 70 72 165

Bangladesh 1 - 96 62

Source: Various year of WHO Reports

The above data reveals that India developed more on accessing DPT during 1980-90.
The period from 1991 to 2011 highlights that India is stagnant in providing the facilities.
Nevertheless, Bangladesh achieved more on the same in pre and post 90s.
Moreover, the same report highlights that 36 countries achieved 99 per cent in
providing DPT. China and Sri Lanka were placed number one position, Bhutan placed
79th position and Pakistan placed 155th position.
Central Research Institute, Kasauli, which supplied a significant share of the
vaccines for the national immunisation DPT vaccine, Institute director, report that
shutdown of government manufacturing agency on medicine as the major reason behind

169
 the backwardness of India in offering DPT.54 In addition, he highlights that government
Institutions are running without even half the posts for senior scientists, medical
personnel or senior administrative staff ever being filled up.55 However, these reasons
are determining low rate of accessing DPT. Therefore, more awareness is to be created
among the people.

According to WHO--Global TB Control Report-2012, India placed 43rd position

in achieving (88 per cent) TB treatment in a successful way. On the other hand, seven
countries have achieved 100 per cent success in the treatment. Moreover, it highlights
that 12 countries achieved 100 per cent of TB case detection. In TB detection rate India
placed 146th place. It is far below than South Africa (116), Ethiopia (106), Pakistan (127)
and China (36).

It should be noted that, Bangladesh, being a very poor country, has achieved great
health outcomes by focusing on selected core child health interventions, including
vaccinations, TB, IMR etc. and India could not even match with Bangladesh. Therefore,
it should learn lesions from many countries. As noted above, poor health and poverty are
intertwined and therefore, India should address these problems carefully and accordingly
improve the health system.

6.4 Poverty and Employment Growth in the Post Reform Period

6.4.1 Employment and Poverty

Personal well-being of a person or family is achieved merely through minimum

income and food. For that, a decent employment is needed which is widely recognized by
all. For the poor, labour is often the only asset that can improve their well-being.56 Hence,
the formation of creative employment opportunities is necessary for achieving poverty
reduction and sustainable socio economic development. Therefore, it is essential to

54
Rema Nagarajan(2013): Premier vaccine institute neglected, half the top scientific posts vacant, the
Times of India, Mar 30 accessed from http://articles.timesofindia.indiatimes.com/2013-03-30/india/381
44706_1_dpt-vaccine-posts-private-vaccine-manufacturers
55
Ibid,
56
Poverty and Unemployment, UN-Poverty Social Policy and Development Division, accessed from
http://undesadspd.org/Poverty/PovertyandEmployment.aspx, accessed on 18th march 2012

170
provide decent jobs for all to secure income and empower the poor, especially women
and younger people.

ILO recognizes about the linkages between poverty and employment and the
International Labour Conference held in Geneva focused on the promotion of rural
employment for poverty reduction.57 Following them, report of the Secretary General,
United Nations for Economic and Social Council has also highlighted the importance of
accelerating employment growth for reducing poverty. Thus, it is accepted globally that
employment is the main route to achieve poverty eradication.

Over the last five decades in India, given the importance of employment for
poverty reduction, job-creation occupies a central place in national poverty reduction
strategies. Several employment strategies are often related to agricultural and rural
development that includes using of labour-intensive agricultural technologies; developing
small and medium-size enterprises, and promoting micro projects in rural areas. Also,
many strategies promote self-employment, non-farm employment in rural areas, targeted
employment interventions, microfinance and credit as means of employment generation,
skill formation and training.

6.4.2 Globalization and its Impact on Employment and Poverty

While introducing liberalization policy in India, it is proposed that rapid economic

growth can potentially bring a high rate of development of productive and remunerative
employment, which can lead to reduction of poverty. In reality, it has created positive as
well as negative growth of employment generation in India. The recent studies are
revealing that the contribution of the growth process to poverty reduction does not
depend only on the rate of economic growth, but also on the ability of the poor and
providing opportunity for all.

In both developed as well as developing countries, globalization process increased

the mobility of global corporations with decreased government regulation on labour
policies. The de-regulations of labour policy decreased worker protection, undermining

57
International Labour Conference 97th Session-2008, Promotion of rural employment for poverty
reduction
Geneva,p.1

171
the rights of unions, no minimum wage procedure, and no ensured safety provisions.
They also reveal that globalization has increased income inequality and declining of
income among majority of the poor people. In this connection, Antonia Juhasz point out
that while on introducing liberalization policy, governments must reduce labour rights
and protection requirements for obtaining loans from IMF and World Bank.58 According
to Joseph Stiglitz, due to trade liberalization unemployment goes up, and then the
promised benefits of liberalization are likely not to be realized. When workers move from
low productivity, protected jobs into unemployment, it is poverty, not growth that is
likely to increase.59

Liberalization policies implemented in India attracted more MNC products to the

domestic markets. A study reveals, ―It is unable to face the competition from the MNCs
and many small-scale industries, which were source of employment to many, are closing
down‖.60 Also, it is estimated that during the last few years over 6,00,000 units have
closed down in India, and millions of people have been thrown out of their jobs.61

All the five-year plans incorporated rapid growth in employment opportunities

along with improvement in the quality of employment. The tenth five year plan appointed
‗Special Group‘ to create ten million job opportunities under the chairmanship of
S.P.Gupta.62 The ‗Special Group‘ emphasized the growth of unorganized sectors as the
surest method to reduce unemployment and poverty in India. Thus India acknowledged
the raising employment opportunity in unorganized sector which could minimize the
poverty ratio.

The creation of job opportunity merely do not tend to reduce the poverty ratio.
Only the real wages for the labor should be ensured, which will take care of eradication
of poverty. According to the India‘s Annual Survey of the Industries, the real wages
declined for workers in the un-organized sectors, although managerial and technical staff
58
Antonia Juhasz (2002): The Failure of Globalization, Cambridge Review of International Affairs,
Volume 15, No 3, USA, p.3
59
Joseph E. Stiglitz (2006): Making Globalization work, Allen Lane, London,p.14
60
Employment Generation in Post Globalization Era in Greater Mumbai, EFI – Solar Foundation,
Mumbai, 2006, p.21
61
Ibid, p.21
62
Ruddar Datt and Sundharam KPM (2010): Indian Economy, S.Chand & Company, New Delhi, p.385

172
did secure large increase.63 In addition, report on Employment and Unemployment
Survey highlight that agriculture sector is projected to generate no additional employment
during the 11th five-year plan. 64 These are the major hurdles of persistence of absolute
poverty in India.

The private corporate sectors saving capacity or profit rose sharply in the
liberalization period, while the trends for household savings were declined. The
following table depicts that the growth rate of the corporate sector is fundamentally based
on exploitation of the labour in the form of real wage reduction. In this context, Ruddar
Dutt highlights that corporate sectors employ over 20 per cent of the workers as
temporary or casual workers without any social security. 65

Table No.6.8
Employer’s Profits and Employee wages
Year Net Value Profit Wage
Added share(%) share(%)

1989-90 42663 19.1 50.8

1994-95 1,05,852 40.6 38.9

1999-00 1,54,974 30.5 38.2

2000-01 1,43,621 24.9 43.1

2004-05 2,59,907 55.6 32.4

Source: Ruddar Datt and Sundharam KPM (2010): Indian Economy, S.Chand &
Company, New Delhi, p.256

Also, the above table indicates that, if, profit share decrease (2000-01, 24.9 per
cent) then the wage share is increasing (43.1 per cent). Therefore, it is understood that
liberalization policy permitted unlimited growth of profits to the private corporate. Later,
through the de-regulation of labour policy, labour retrenchment has been raised over the

63
Ruddar Datt and Sundharam KPM (2010): Indian Economy, S.Chand & Company, New Delhi, p.256
64
Report on Employment & Unemployment Survey (2009-10), Government of India, Ministry of Labor &
Employment Labor Bureau
65
Ruddar Datt and Sundharam KPM (2010): Indian Economy, S.Chand & Company, New Delhi, p.256

173
period. As a result of labour retrenchment, unemployment problems were noticed as a
huge burden to India‘s sustainable development and poverty eradication.

6.5 Financial Crisis and Poverty

Poverty could not be seen as a feature of a fixed group. To a certain extent

marginalised or just above the poverty line people have the chance of falling into poverty.
It should be noted that financial crisis may lead to a fall in earnings of the workers in
formal and informal sectors. Losses of jobs and the government may reduce its
expenditure on social protection and educations are due to such uneven financial crisis.
At international level, financial crisis between 1994 and 2002 pushed approximately 40-
60 million people into poverty line.66 According to World Bank Report-2010, 64 million
people were estimated to be fallen under poverty during the great recession (2008-09).
Also, Word Bank Report-2009 portrays that, 130 to 155 million people pushed into
poverty in 2008 due to soaring of food and fuel prices.

6.6 Impact of Globalization on Social Exclusion and Poverty in the Post Reform Period

Economic growth with ―equity and social justice‖ or ―faster, more broad-based
and inclusive growth‖ has always been the premier objective of the development
programmes in India.67 Though, several efforts, both constitutional and developmental,
were made by the government, a large proportion of Scheduled Caste/Scheduled Tribes
and other marginalized people continued to face multiple disadvantages and was trapped
in the ―vicious circle of poverty‖.68 World Bank Poverty Report to India for the year of
2012 depicts that caste play predominant role in determining poverty. Also, it emphasized
that reserved category people are twenty years back with other community people due to
prevalence of structural inequalities in the society. Structural inequalities in India are not
a new phenomenon. Existing literatures of the linkages between socio-economic factors
such as poverty, income, occupation, class, etc. have a long history. To a large extent, the

66
Cline William(2002): Financial Crisis and Poverty in Emerging Market economies, Working Paper No.8,
June, Centre for Global development Washington DC, p.4
67
Biradar R R(2012): Social and Economic Change Monographs:Incidence of Poverty among Social
Groups in Rural India, Who are the Poorest and Why?, Institute for Social and Economic Change,
Bangalore, p.1
68
Ibid, p.1

174
historical caste system, which has been the prime marker of deprivation and privilege in
India, is responsible for such inequalities among people.

Poverty and social exclusion are important socio-economic variables which are
often taken for granted while considering ill-health effects. Social exclusion mainly refers
to the inability of our society to keep all groups and individuals within reach of what we
expect as society to realize their full potential.69 Marginalization of certain groups or
classes occurs in most societies including developed countries and perhaps it is more
pronounced in underdeveloped countries. In the Indian context, caste is the prime, as
noted above, driving force in determining socio-economic status and poverty. In the
identification of the poor, scheduled caste and scheduled tribes and in some cases the
other backward castes are considered as socially disadvantaged groups and such groups
have a higher probability of living under adverse conditions and poverty.

According to Amartya Sen, the concept of social exclusion has to take into
cognizance the issues regarding poverty and deprivation and denial of rights.70 Indian
constitution ensured liberty, equality and fraternity to all. Also, it directs the state to take
necessary steps to put an end to exploitation and poverty. In practice, many of them are
denied to attain the legal service very frequently. Nair, an eminent human rights activist,
argued that laws protecting Scheduled Caste exist, but have not used them effectively and
to some extent they were denied to people have access to the same.71 As a result, many of
them are still backward. Thus, the development is not one and the same to all in India and
therefore, it is highly discriminative. In this connection, International Dalit Solidarity
Network (IDSN), highlights in its report that that Poverty levels are highest among
India‘s Tribal population (81.4 percent), followed by Scheduled Caste (65.8 percent) and
Other Backward Classes (58.3 percent). The poverty level among the rest of the
population is 33.3 percent.72 Therefore, it is a clear indication of social exclusion and
uneven-growth.

69
Accessed from http://www.who.int/social_determinants, accessed on 7th July 2013
70
Amartya Sen(1999): Development as freedom., Oxford University Press, New Delhi.
71
The Hindu, Socio Economic Future of Dalits Remains Bleak, March 25, 2011
72
Accessed from http://idsn.org/news-resources/idsn-news/read/article/two-thirds-of-indias-dalits-are-
poor/128/, accessed on 18th May 2013

175
 The following table no.6.9 also explains about the percentage of poverty level to
the Scheduled Caste/ Scheduled Tribes and Others since 1983. It portrays that poverty
has been drastically declined over the period and the percentage of poverty declined in
the pre reform period (1983 to 93-94) is higher than the post reform period (1993 to
2004-05). According to it, total percentage of poverty declined from 45.6 per cent to 35.8
per cent during 1983 to 1993-94 and it declined from 35.8 to 27.5 per cent during 1993-
94 to 2004-05. Though there has been huge number of decline between the SC and ST,
comparatively it is lower than other castes. Also, the data depicts that there is a wide
disparities between SC and ST poverty decline ratio and others poverty decline ratio in
rural as well as urban India.

Table No.6.9

Percentage of Poverty Rates between SC/STs and Others

Location, Social 1983 1993-94 2004-05 % of Decline from

Group 1983 to 2004-05
Rural ST 63.9 50.2 44.7 30
SC 59.0 48.2 37.1 37
others 40.8 31.2 22.7 44
All 46.5 36.8 28.1 40
Urban ST 55.3 43.0 34.3 38
SC 55.8 50.9 40.9 27
others 39.9 29.4 22.7 43
All 42.3 32.8 25.8 39
Total ST 63.3 49.6 43.8 31
SC 58.4 48.7 37.9 35
others 40.5 30.7 22.7 44
All 45.6 35.8 27.5 40
Source: World Bank Report on Poverty and Social Exclusion in India-2011, Washington ,p.11

Compared to Non-SC, SCs socio economic status has shown little success as they
continue to face severe social and economic discrimination. An eminent scholar, Thorat
claims that 70 per cent of Dalits live in rural areas, and over 90 per cent work in the
agricultural sector as unskilled or daily laborers.73 Most of them are employed in manual,

73
The Hindu, Socio Economic Future of Dalits Remains Bleak, March 25, 2011

176
unskilled labor jobs in urban areas. Given these facts, he argues that only five per cent of
the working dalit population has actually benefited from the Indian reservation system.74
It is a well-known fact that government reservation system does not extend to the private
sector, the largest and fastest growing segment of the economy. Liberalization shifts more
of the economy from the public to the private sector, where hiring managers are almost
exclusively from high castes which constantly discriminates the Dalits, denying the
opportunities guaranteed by reservations. These are the prime factor behind social
exclusion and inequality in the society. Though government‘s poverty alleviation
programmes lift Dalit‘s socio economic condition, the government does not strictly
monitor them and many are never implemented properly. Thus, majority of Dalits are
denied upward socio-economic mobility due to lack of access to education, land, and
capital.

Poverty and social exclusion are the result of inequalities, including the gender
inequality. Their gendered temperament is usually negligible because women usually
referred to as a weaker section. Women‘s poverty and social exclusion in India is a
multifaceted problem making it difficult to assess and address.

Table No.6.10
Labour Force Participation Rate Since 1983 to 2009-10
NSS rounds Male Female
Rural Urban Rural Urban
1983 55.5 54.0 34.2 15.9
1987-88 54.9 53.4 33.1 16.2
1993-94 56.1 54.3 33.0 16.5
1999-2000 54 54.2 30.2 14.7
2004-05 55.5 57.1 33.3 17.8
2009-10 55.6 55.9 26.5 14.6
Source: Various reports of NSSO’s Employment and Unemployment Survey, Government of India

The above table depicts that female LFP (Labour Force Participation) not only is
lowest but is also showing a declining tendency in rural as well as urban area. It is a

74
ibid

177
matter of concern that rural-urban difference in LFP rate does not show any significant
variation among male. On the other hand, the LFP rate among females varies widely
between rural and urban area. Since, 1983 urban female LFP rate is twice than rural
female labour force participation. During the post reform period, growth rate of male LFP
is stagnant and it has no improvement. Contrast to this, female LFP started to decline
from 1993.

There are several reasons why female LFP has been excluded and is low in India.
Lack of technical skills of traditional women, household responsibilities, higher level of
participation in education of the younger generation, inaccessibility of higher education
etc. In the recent year, rapid development of mechanization also plays a significant role in
diminishing of labour force participation in agriculture field. NSS survey on employment
and un-employment reveals that three fourth of the agricultural labourer force are
women. Due to mechanisation of agriculture, the requirements of manual labour go down
and hence affect female participation. Besides, the slowdown in overall job creation that
is jobless growth of the economy, it may also have deceleration effect on the rate of
labour force participation of female. All these potential influences bring changes in trend
of female labour force in India. Studies have been arguing that if women are encouraged
to employ in all forms of employment without having partiality, there are chances to
eradicate the poverty. Therefore, it is understood that women LFP is closely associated
with poverty eradication.

6.7 Globalization and its Impact on Inequality and Poverty

In spite of the right to equality ensured by Indian Constitution (Articles 1,

15,16,17, and 18), India could not do much to the poor people till 1991. However, the
post-reform period has witnessed relatively better economic growth compared to the pre-
reform period.75 In a developing country like India, the growth process has to be inclusive
as the welfare of the people is the prime consideration. The development economists
argue that benefits of growth need to be broadly based not only on profit but also on the
basis of addressing the needs of the poor people. In addition, the progressive thinkers on

75
Biswa Swarup Misra (2007): Regional Growth Dynamics in India in the Post-Economic Reform Period,
Palgrave Macmillan, New York,p.85

178
globalization believe that growth process could bring reduction in poverty and inequality.
Nevertheless, the reality has accompanied by increasing inequality among the social
groups. Official poverty line of India has been declining between 2004-05 and 2011-12, a
gap between the rich and the poor increased for the first time in rural areas in almost 35
years and to an all-time high in urban areas.76 Number of studies has been found strong
relationship between Inequality and Poverty. Studies by Angus Deaton,
M.H. Suryanarayana, Utsa Patnaik, Suresh Tendulkar, Drez Jean, P.Sainath, Amartya
Sen, Ravallion, Himanshu, Abhijith, Prabhat Patnaik are very vocal in exposing the
indication of raising inequality and poverty in the post reform period. They are also
concerned about rising inequalities and uneven distribution of the benefits of growth and
suggest that fast poverty reduction will be hard to be achieved without decline in
inequality.

In India, inequality is computed from the National Sample Survey on Household

Consumption Expenditure based on Gini coefficient. Gini coefficient ranges from 0 to
one, with zero representing perfect equality and 1 showing perfect inequality.77

Planning commission of India illustrates that in rural areas, the coefficient rose to
0.28 in 2011-12 from 0.26 in 2004-05 and to an all-time high of 0.37 from 0.35 in urban
areas.78 The following table adopted from the World Bank poverty report shows that
inequality is declined in the rural area from 0.3166 to 0.2854 during the period of 1983
to1993-94 and it has increasing trend in the post reform period. In urban India, Gini
coefficient inequality is stagnant during 1983 to 1993-94, but it is considerably increased
during 1993-94 to 2004-05.

76
Poverty declines, but rich gets richer, Business Standard, September 20, 2013 accessed from
http://www.business-standard.com/article/economy-policy/poverty, accessed on 17th December 2013
77
Perspectives on poverty in India stylized facts from survey data, The International Bank for
Reconstruction and Development / The World Bank, Washington, DC, p.25
78
Poverty declines, but rich gets richer, Business Standard, September 20, 2013 accessed from
http://www.business-standard.com/article/economy-policy/poverty, accessed on 17th December 2013

179
 Table No.6.11
Trends in Inequality and Gini Coefficient
year Rural Urban Total

1983 0.3166 0.3425 0.3237

1993-94 0.2854 0.343 0.3035

2004-05 0.2976 0.3784 0.3254

Source: Perspectives on Poverty in India, World Bank Report-2012

Although, article 38(2) of Indian constitution states that ―state has to strive to
minimize inequalities in income, status, facilities and opportunities, not only among
individuals but also among different spatial and occupational groups‖, still inequality and
poverty is persisting among the society.

Poverty and Inequality are associated with many factors such as income and
consumption, regional disparities, interstate disparities, widening disparities between
rural and urban, widening disparities between poor and rich, employment growth and
distribution of income generation opportunities, increasing gap between employment and
unemployment, inequalities in accessing health, nutrition, education and structural
inequality among the social groups.

6.7.1 Poverty Gap and Inequality

The poverty gap index is the mean distance below the poverty line as a proportion
of the poverty line, counting the non-poor as having zero poverty gaps in which the
proportionate poverty gaps are weighted by themselves to reflect the extent of inequality
amongst the poor. 79 This measurement is used to reflect the severity of poverty.

The following data shows that South Asian countries did more on reducing
poverty gaps. However, India reduced poverty gap. Comparatively it‘s poverty gap is
lower than lower than other South Asian countries.

79
Gaurav Datt and Martin Ravallion (2002): Is India‘s Economic Growth Leaving the Poor Behind?,
Journal of Economic Perspectives, Volume.16, Number 3, p.90

180
 Table No.6.12
Decline of Poverty Gap among the South Asian countries
Countries Year Declined Total Declined
poverty Level Declined % %/year
India 1978-1988 23.2 to 15.2 8 0.40
1994-2010 13.6 to 7.5 6.1 0.38
Nepal 1985-1996 31.1 to 25.6 5.5 0.5
2003-2010 18.4 to 5.6 5.6 1.8
Pakistan 1987-2008 23.9 to 3.5 21 0.97
Bangladesh 1992-2010 23.8 to 11.2 12.6 0.7
Source: World Bank Poverty Report-2011

Based on the above data, India reduced poverty gap at the rate of 0.40 per cent per
year from 1978-1988, and 0.38 per cent per year from 1994 to 2010. It is marked that
post liberalization period has not bothered about reducing poverty gap in India.

6.8 Need for Redefining Poverty

The official poverty estimates are widely accepted to be too low and no longer
meeting the requirements of recognized basic needs. Despite its claim that it is a regional
economic power India stands too behind all the South Asian countries. Himanshu rightly
illustrates that, both urban and rural official poverty estimates are well below the
incidence of persons falling short of original calorie norms. According to him, the
anthropometric estimates of urban malnutrition are close to official urban poverty
estimates while independent estimates of rural malnutrition far exceed official rural
poverty.80 It is to be noted that, less attention has been given to the methods used in
drawing the poverty line in India. In order to understand the seriousness of poverty,
therefore, it is necessary to know its dimension and the process through which it seems to
be deepened. It was expected that economic growth can provide resources for public

80
Angus Deaton, Jean Drèze (2009): Food and Nutrition in India: Facts and Interpretations, EPW, Vol.
XLIV No 7, Feb14, Mumbai, p.47

181
policy initiatives to support health, education and employment opportunities for the
poor.81 Such growth could be translating into a better quality of life and poverty free
society. According to Jagadeesh Bhagawathi, growth will generally create jobs, pulling
people up into gainful employment and hence out of poverty and it is an ―indirect‖ anti-
poverty strategy.82

The minimum level of monetary or non-monetary package is necessary for a man

to survive, which is taken into account for calculating poverty line. However, the basic
needs are changing from time to time and place to place. In Indian context, poor people‘s
requirement in 1980s were food and employment, in 1990s theirs requirement were
employment, good nutrition and education and in the post 90s--technological world,
education, health, information, employment, social equality, sanitation, good health and
minimum wage. It is to be noted that post 90s was branded as a period of social
deprivation, disparity, inclusion and exclusion. Thus, based on the multiple deprivation
and adequacy, one has to be identified as a poor. In this context, United Nations
Development Programme suggests multi-dimensional poverty approach as viable one.
However, western researchers and many international organizations have taken the next
step towards measuring multi-dimensional poverty. However, India keeps on following
the traditional methodology based on food consumption and it has failed to recognize
poverty as a multi-dimensional approach. Moreover, India has not measured the basic
needs of poor from time to time. As a result, many BPL people are excluded from the
survey. In the absence of such improvements, disparities will persist and poverty
reduction goals will remain unfulfilled.

6.8.1 Multi-Dimensional Approach: Monetary Form

In the post globalization period, there were several discussion raised on the
estimation and re-definition of poverty line. There has been a growing interest in what
come to be termed as ―multidimensional indices of poverty.‖83 Necessity of defining

81
Aasha Kapur Mehta et (2011): India Chronic Poverty Report: Towards Solutions and New Compacts in
a Dynamic Context, Indian Institute of Public Administration, New Delhi, p.12
82
Uma Kapila ed (2000): Indian Economy Since Independence, Academic Foundation, New Delhi, p.91
83
Martin Ravallion(2011): On Multidimensional Indices of Poverty , Policy Research Working Paper
5580, The World Bank, Development Research Group, p.1

182
poverty as a multidimensional concept rather than relying on income or consumption
expenditures per capita.84 As UNDP commented, ―income poverty is only a part of the
picture. Just as human development encompasses aspects of life much broader than
income, so poverty should be seen as having many dimensions.85 Accordingly, many
countries recognised that poverty should not be examined merely in terms of Monthly Per
Capita Expenditure or calorie intake. Although, several suggestions and
recommendations were emerged on poverty definition, India followed the same
traditional methodology suggested by the expert group in 1973-74.

Scholars like Amrtya Sen, Eswarappa Kasi and others suggest in the post
economic reform period, India need to understand poverty from the point of view of
vulnerability.86 The eminent economists P.Sainath, Jagadeesh Bagawathi, Utsa Patnaik
and Joseph Stiglitz also suggested the same. Vulnerability and deprivations can be
therefore, seen as cause and consequence of poverty experienced by certain deprived
sections of the society. To this effect in the World Summit on Social Development held
in Copenhagen in 1995, 117 countries adopted a declaration and programme of action
including commitments to eradicate and reduce ―absolute‖ and ―overall‖ poverty
respectively.87 According to the summits note, absolute poverty was defined as "a
condition characterised by severe deprivation of basic human needs, including food, safe
drinking water, sanitation facilities, health, shelter, education and information. Thus, it
depends not only on income but also on access to services.

United Nations also recognizes ―poverty is a denial of choices, and opportunities,

and violation of human dignity. It means lack of basic capacity to participate effectively
in society by such as food, cloth, school, clinics, cultivable land, job to earn and access to
credit. Poverty also means insecurity, powerlessness and exclusion of individuals,

84
François Bourguignon and Satya R Chakravarty (2003): The Measurement of Multidimensional Poverty,
Journal of Economic Inequality , Academic Publishers , Netherlands, p.8
85
UNDP Report-1996, p. 27
86
Eswarappa Kasi(2013): Conceptual and Methodological Issues of Poverty and Vulnerability: An
Ethnographic Study from the South, Advances in Anthropology, Vol.3, No.1, p.38
87
Zitha Mokomane (2012): Types of good practices focusing on family poverty reduction and social
exclusion,Paper prepared for the United Nations Expert Group Meeting on ―Good Practices in Family Poli
Making: Family Policy Development, Monitoring and Implementation: Lessons Learnt‖, New York, p.14

183
households and communities and susceptibility to violence, marginal or fragile
environments, without having access to clean water or sanitation‖88

However, the well-being of a person is to be considered as a main indicator of

Multi-Dimensional Poverty. It depends on both monetary and non-monetary variables.
Without doubt, it is true that with a higher income or consumption budget a person may
be able to improve the position of some of his or her monetary and non-monetary
attributes. However, Income as the sole indicator of well-being, it should be
supplemented by other variables, such as housing, literacy, life expectancy, provision of
public goods and other related facilities. The need for such a multidimensional approach
to the measurement of inequality in well-being was emphasised as noted above by many
scholars. Oxford Poverty and Human Development Initiative‘s(OPHDI) country briefing
of India presents the results of the composition of Multidimensional Poverty Index (MPI)
and explains key findings as follows in the table no.6.13. The Multi-Dimensional Poverty
Index (MPI) has three dimensions and ten indicators, which are explained in the
following table and chart.
Table No. 6.13
Composition of Multi-Dimensional Poverty
% of contribution
Indicators to poverty

Years of Schooling 10
Education School Attendance 12
Child Mortality 13
Health Nutrition 23
Electricity 6
Sanitation 9
Living Drinking Water 2
Standard Floor 8
Cooking Fuel 10
Assets 7
Source: Oxford Poverty and Human Development Initiative (OPHI), UNDP Human
Development Report-2011, p.3

88
ibid

184
 Chart No. 6.2

Composition of Multi Dimensional Poverty

Assets Years of Schooling

7% 10%
Cooking Fuel
10% School Attendance
Floor 12%
8%
Drinking Water
2%
Sanitation
9% Child Mortality
13%

Nutrition
Electricity 23%
6%

Source: Oxford Poverty and Human Development Initiative (OPHI), UNDP Human Development
Report-2011, p.3

The above data illustrates that, poverty does not occur with single factor.
Moreover, several factors which have been interlinked with each other are determining
poverty. Therefore, in defining monetary form of MDP, the following factors should be
carried out with the subsequent proportion such as years of schooling-10 per cent, school
attendance-12 per cent, child mortality-13 per cent, nutrition-23 per cent, electricity-6 per
cent, sanitation-9 per cent, drinking water-2 per cent, floor-8 per cent, cooking fuel-10
per cent and assets-7 per cent. Therefore, the minimum income determination on poverty
has to follow the above composition.

The table no.6.14 figures out on the basis of NFHS-I (1992–93), NFHS-II (1998–99)
and NFHS-III (2005–06). The data lay a figure on the degree of deprivation factor
excluding the nutritional poverty, which influence a person fall under poverty line. In
rural area, fuel for cooking was the major derivational factor throughout the three periods
of survey. Government subsidies on cooking fuel may influence factor behind the decline
trend of deprivation in urban area. However, over 72 per cent of all households in India

185
and 90 per cent households in the country‘s poorer, rural areas use traditional solid fuels,
such as crop residue, cow-dung and firewood to meet their cooking needs.89

Table No. 6.14

Deprivation Factors Determining of Multi-Dimensional Poverty

Factor Rural (in %) Urban (in %)

NFHS-I NFHS-II NFHS-III NFHS-I NFHS-II NFHS-III
Drinking water 13.52 14.31 17.70 14.87 17.36 20.49
Electricity for 10.64 9.51 7.44 6.61 3.79 2.61
lighting
Clean fuel for 18.22 18.03 18.14 17.32 12.71 11.56
cooking
Access to toilet etc 16.13 15.37 13.48 10.13 7.81 5.17
Education of the 9.69 8.60 8.73 9.73 8.63 8.86
household
Access to 11.87 10.86 9.68 19.56 19.93 17.02
bicycle/transport
Access to 12.65 13.22 14.24 16.77 21.80 26.34
radio/communication
Falling to poorest 4.45 5.04 4.93 0.58 1.06 1.00
wealth quintile
Share of stunted 2.15 2.30 2.34 3.37 2.96 2.83
children
Share of wasted 0.68 0.75 0.84 1.07 1.08 1.25
children
BMI of the mother N.A. 2.01 2.48 N.A. 2.87 2.87
Source: Ranjan Ray and Ankita Mishra (2012): Multi-dimensional deprivation in the awakening giants: A
comparison of China and India on Micro Data, Journal of Asian Economics, Elsevier, p.9
Note: NFHS-National Family Health Survey

The burning of solid fuels indoors, in open fires or traditional cooking stoves
(‗chulhas‘) result in high levels of toxic pollutants in the kitchen area. As such, the use of
these fuels is considered a major risk factor for lung cancer as well as cardiovascular and
respiratory disease.90 The existing literatures suggests that the indoor air pollution from
biomass fuels and traditional cooking wood stove may be a serious health threat,
particularly to women and young children who spend a considerable amount of time near

89
Esther Duflo, Michael Greenstone, and Rema Hanna (2008): Cooking Stoves, Indoor Air Pollution and
Respiratory Health in Rural Orissa, Economic & Political Weekly , August 9, p.71
90
Ibid, p.71

186
the cooking area associating also with increased rates of infant mortality.91 The World
Health Organization Report-2002 estimates that the percentage of the national burden of
disease due to solid fuel use is 3.5 per cent in India and exposure to indoor air pollutants
is a major risk factor for chronic obstructive pulmonary disease.

In India, water supply and sanitation are the constitutional responsibilities of state
governments to the people. However, in the last two decades investment in these services
has become a very significant one. In this context, National Sample Survey
Organisation‘s (NSSO) estimate in 2002 reveal that, only a little over 11 per cent of all
households in India were assured of an adequate supply of drinking water.92 Also, report
of Planning Commission‘s Deputy Chairman Montek Sing Ahluwalia emphasizes that,
―deprivation cannot be analysed while on measuring poverty, it is by just consumption
expenditure, but factors like clean water, sanitation etc. should also be taken into
account.‖93

From the above data, the accessing of drinking water facility is decreased in rural
as well as urban India. It should be noted here that drinking water assumes a significant
role in food consumption factor. Due to the industrial development, the deprivation level
of drinking water is high in urban India.

However, accessibility to electricity facility, toilet, education of the household

and access to bicycle or transport are positive. It is to be noted that electricity has become
a very basic requirement of life. Compared to economic and technological development,
decreasing percentage of the deprivation is not up to the mark. In addition, Ranjan Ray
emphasizes that India is too behind in achieving multi-dimensional deprivation at
international level.

Although, average monthly per capita income level has been increased, poorest
wealth quintile percentage is registered in rural and urban India by widening the gap of
income inequality and income deprivations among people. Share of stunted children and
91
Ibid, p.71
92
Jayaraj D and Subramanian S (2010): A Cchakravarty-D‘Aambrosio View of Multidimensional
Deprivation: Some Estimates for India, Economic & Political Weekly, Vol. XLV, No.6, February 6, p.59
93
Accessed from http://www.business-standard.com/article/economy-policy/montek, on 23rd June 2013

187
share of wasted children proportion in rural India is increased over the periods, which a
sign of low fertility of children resulting in lower earning capacity and productivity. Body
Mass Index of the mother is high among the rural people, normal BMI is free from
disease and physically fit for active work. Moreover, this kind of deprivations may be the
influencing factor in producing poverty.

According to the report of Human Rights Commission, shifting from the

traditional base of fundamental needs and income, the modern definition of poverty is
necessary.94 Since the old definition only include income and basic needs, it is not easy to
study the potential of cross margins of poverty ridden people in connection with their
health and productive life which are important tenets for suitable sustainable
development. Moreover, the authorized denial of opportunities pushes them into
unemployment resulting in loss of income and finally pushing them to a stage of inability
to meet the basic human needs shifting the problems into individual settings to
environment. Thus, the denial of opportunity and unavailability of security make the poor
people fall into the web of poverty. Mere inadequate income does not therefore,
adequately describe poverty and the lack of opportunity in economic and political life
consequently creates vicious cycle of poverty. As of the reason, defining poverty in a
dynamic environment is more important than conceptualizing poverty eradication.

6.8.2 Multi-Dimensional Approach: Non-Monetary Form

6.8.2.1 Social Insecurity, Poverty and Vulnerability

The percentage of unorganized workers in India is more than organized workers.
Especially in agricultural fields and construction workers, unorganized workers are more
in numbers. They suffer from series of disproportionate seasonality of employment,
fragmented work places, poor working condition, and lack of attention from the trade
unions. As a large number of labor forces are pushed, therefore, into organized category
of works, the excess labor supply creates disequilibrium or imbalance in the market that
leads to several adjustments in the unorganized labor economy. The surplus or excess of
labor supply into the unorganized category leads to partial or casual employment at low

94
Accessed from http://www.humanrightsinitiative.org/.../millenium_report_review.htm on 22nd June
2012.

188
wages without state job and social security provisions. It is to be noted that casual
laborers are highly exploited in terms of assurance of employment, contract procedure,
paid leave, provident fund, pension, medical benefits and sufficient notification for
termination. Due to the globalization process further, the unorganized workers are put in
highly disadvantageous position. Also, insecurities have risen even in the organized
formal sector in India due to globalization. Study done by National Commission for
Enterprises in the un-organized sector (NCEUS) reveals that there are 25 per cent of
Indians, or 236 million people are living on less than 20 rupees per day without proper
working environment, especially to the unorganized workers security viable living
condition thus falling in abject poverty.

Though India consists of plenty of legislation for the employees, it has not
addressed the problems of unorganized workers seriously. It should be realized that
Factories Act- 1948, which covers working conditions, health and safety, basic amenities
like toilets, working hours, prohibition of child labor and night work for women,
workplace creches, and much more is not utilized to the advantage of the workers.
Similarly the Employee State Insurance Act-1948, providing accident compensation and
sickness and maternity benefits, it also not implemented effectively. Although, such
statutory provisions make the employers provide social security measures for employees
in the small-scale industries and un-organized sectors, they are yet to see the light of the
day.

Splitting up an establishment into smaller units which are supposedly independent

of one another, creating artificial breaks in employment so that workers never become
permanent, employing large numbers of contract workers who are deemed to be
employees of labor contractors and therefore do not appear on the payroll of the
company, or subcontracting production to smaller workplaces are some of the important
areas of concern that have to be addressed effectively in India. To this effect, the
Payment of Bonus Act-1965, Employees' Provident Fund and Miscellaneous Provision
Act-1972 and Payment of Gratuity Act-1972 which are not valid to informal workers
should be modified accordingly.

189
 ILO convention 102 also provides comprehensive social protection covering nine
areas: access to medical care, survivor‘s benefit, invalidity benefit, sickness, maternity
benefit, family benefit, employment injury, unemployment and old age benefit. In reality,
only a few countries currently provide such comprehensive protection. According to
International Labour Organisation‘s World Social Security Report, 2010-11, only one
third of countries globally (28% of the global population) have all nine types of social
security.95 Taking into account those who are not economically active, the report
estimates that only about 20 per cent of the world‘s working age population have
effective access to comprehensive social protection. This implies that about 5.6 billion
people in the world are vulnerable to various degrees.96 Of world‘s poor, 74 per cent live
in rural areas where agricultural wage workers suffer the highest incidence of poverty,
largely because of seasonal unemployment and the low wages paid by small farmers.97
There has been no social security provision or agricultural laborer insurance scheme
available in India. As a result of severe vulnerability and social exclusion, many people
are automatically pushed into poverty.

The GEDA study carried out in 2008-2009 by the Robert Koch Institute, shows
that unemployed people between the ages of 30 and 59 years are especially often affected
by physical, emotional, and functional impairments such as sleep chaos, nervous
disorders, and substance addictions. But, they don‘t have facilities to meet out their entire
problem resulting in demotivation especially in relation to utilizing health care system.98
Due to the fact, workers lose interest in social life and continuous employments resulting
in loss of social reputation.

6.9 Summary

This chapter analyses globalization and its impact on pro-poor growth policy of
India and related issues and challenges. As globalization and inequality are inter related

95
Jomo Kwame Sundaram(2012): Poverty Matters, Economic and Political Weekly, Vol.XLVII No.49,
December 8,p.22
96
Ibid, p.24
97
World Bank(2009): Global Economic Crisis: Assessing Vulnerablity with a poverty lens, accessed from
http://sitesources.worldbank.org/NEWS/resources/WBGvulnerablecountriesbrief.pdf
98
Times of India, 2nd March 2011, New Delhi

190
with each other. Optimists, suggests pro-poor growth strategy for the equitable growth
and poverty alleviation. However, from the analysis it is understood that India failed to
carryover pro-poor growth strategy which resulted in negligence of agriculture leading to
farmer suicide and decline of national agricultural income.

The privatization of health and low investment on health makes poor people
sufferer more than others. It is a matter of concern that India is too behind than other
countries in achieving health indicators. The absence of sufficient public health
investment not only results in poor health outcomes but it also leads to growth of poverty
too. Thus, the failure of pro-poor growth strategy leads to social exclusion of certain
group of poor from the mainstream, especially SC/ST and some OBC. Moreover,
globalization has created more inequality and deprivation among the social groups. Thus,
this chapter stresses the need of addressing the multi-dimensional poverty in the
forthcoming years.

191