India needs high GDP growth to reduce poverty at faster pace By PTI Dec 01 2012 , New Delhi Tags: Economy

India needs high GDP growth to reduce poverty at faster pace

By PTI Dec 01 2012 , New Delhi

Tags: Economy

The reduction in poverty will be slower if the economic growth is not brought back on high growth track, said Planning Commission Deputy Chairman Montek Singh Ahluwalia.

"If we don't bring the GDP growth back (on track) up, the rate of poverty reduction will go down," Ahluwalia said during panel discussion here.

He further said that the GDP growth in the first half of the year (2012-13) is 5.4 per cent and if this would continue then we would have a very poor performance (this fiscal)."

This rate was lower than the 7.3 per cent clocked in April-September period in 2011-12.

According to the Planning Commission estimates, the rate of poverty reduction was 0.8 percentage point per year during 10 years till 2004. This shot up to two percentage point per year during the seven year till 2011.

"If you look at the last seven years, between since 2004 and 2011, percentage of people below the poverty line declined by two percentage point per year. In the 10 years before 2004-05, the poverty was declining at the rate of 0.8 percentage point every year," he said.

According to Ahluwalia, higher growth has resulted in a quantum jump in the real wages during the 11th Five Year Plan spanning from 2007 to 2012.

"In the period after 2007, real wages have gone four times faster than in the previous period. It is simply not correct that nobody is benefiting (because of high economic growth)," he said.

He said that in the last seven years, the government has done a good job as rate of poverty reduction has been high amid good growth in GDP.

Inclusive growth in India would be possible only when people have higher income levels and as a result they will get social justice, Ahluwalia said.

He also underlined the need for upgrading skills of people so that they can get higher income jobs in non-agriculture areas in rural areas.

From a high over 9 per cent GDP growth for many years prior to the 2008 crisis, the economy grew 6.5 per cent last year and is projected by analysts to slow down further to a decadal low of 5.5 per cent or even lower this fiscal.