Yet another setback for poverty eradication
In this issue:
» Indian banks write off Rs 1 trillion in 13 years
» JP Morgan fined US$13 bn over toxic assets sale
» Obama falsifying unemployment figures
» OECD pegs India's growth at 3.4%
» ...and more!
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The World Bank has curtailed its window which offered concessional loans to India to fight poverty. These concessional loans are available to countries that are below a certain benchmark. The benchmark in this case is per capita GDP. With India surpassing that benchmark, it is now no longer eligible for such concessional loans.
This effectively indicates that India is no longer poor and the standard of living has improved. However, in reality more than half of the country's population can barely afford a reasonably decent standard of living. And with no hope of redressal, neither from the government nor by way of international aid, Indians may have to learn to live in poverty.
World banks' withdrawal has indeed come as a setback to India. But we believe this is because of the use of a flawed benchmark. Per capita GDP measure gives wrong picture of any nation's standard of living when there is a huge income divide. Increasing wealth amongst the rich can result in higher per capita GDP. And this is precisely what is happening in India. Rich are getting richer and poor are getting poorer. While this increases the per capita GDP, it does not reflect the true picture of India.
Now considering that support window from World Bank has been curtailed, it is yet another setback to poverty eradication in India.
We pity that even after 65 years of independence, there are no visible signs of large scale poverty reduction in India. As per one World Bank report nearly half of the Indians still do not have access to basic sanitation facilities. And this is a sorry sign for a country which is en route to conquering Mars!
The current state is a result of rampant corruption and lack of intent from the politicians. Money destined to be used for the poor is siphoned off. Then there are scams, subsidies and wasteful expenditures which swallow the balance money!
We feel that no government can change the face of India unless there is an intent to do so. And the intent can change only when people at the helm rise above their own personal self interests and work towards creating a more equitable society.
Do you think money alone can eradicate poverty in India? Let us know your comments or post them on our Facebook page / Google+ page
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It is interesting to note that average wages in most states are higher than the one that are being paid under Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA). Since MNREGA sets base wage rate below which labourers do not work it has been blamed in the past for having inflated rural wages to a large extent. However, the fact that most rural wage rates are currently higher than prescribed by MNREGA suggests that there are other factors driving rural wage inflation. One factor could be infrastructure boom. This has led to significant demand in unskilled labourers thereby driving wage rates across states.
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*AP= Arunachal Pradesh |
----------- India's growth story - from 9% down to 3.4%! -----------
It almost feels like yesterday...
India was comfortably growing at over 9% and hoping to cross 10% very soon. And everybody was just so optimistic about India.
Fast forward to the present, and the latest prediction for India says that the Indian economy will grow at just 3.4% in the current financial year.
This is lower than the 3.7% projection of the International Monetary Fund (IMF)... and in fact, the worst prediction so far!
But it is not without valid reasons. We have discovered, from our own research, that things are indeed really bad and could get a LOT worse in the days to come.
To understand why we are saying this, and the direct impact these things could have on YOUR financial future, please read this letter.
Believe me, it will be the most important letter you've ever read!
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But now the politicians can breathe a sigh of relief for the Supreme Court too has decided to backtrack to some extent on its own ruling. In a recent amendment to its Representation of the Public Act, the apex Court has stated that politicians can contest the elections even when in police custody. While the ruling would certainly raise the hopes of fraudulent politicians but it comes as a slap in the face for the governance standards in the country. The question is what forced the Supreme Court to take a U-turn on its stance to clean up the political scenario in the country? Was it a conviction that its own ruling was wrong? Or was it political pressure?
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Is a US$ 13 bn fine a fair retribution? Does it solve the real maladies plaguing the US banking system? We are doubtful. First of all, the damage to the American banking system and the economy at large, have been colossal. A fine cannot reverse the problems that the US economy is facing now. What is ironical is the way the US Fed responded to the crisis. The massive quantitative easing program is nothing but a backdoor bailout for the very institutions that were responsible for the crisis. A real solution would have been to allow the too-big-to-fail institutions to fail and shrink in size. But we have seen the exact opposite happen. While the economy is suffering, these large banks have gone totally unhurt.
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04:50 | Today's investing mantra |
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4 Responses to "Yet another setback for poverty eradication"
Krishna Kanth
Dec 1, 2013NOthing could ve been more farther from truth than your statement that "Rural Wage hike is hurting manufacturing the most" & "rural labourers are mostly unskilled and are typically employed in manufacturing industry" - Was this a inadvertent error or you really meant it ! Any student reading Economics 1st year will tell you that its Agriculture & not manufacturing.
You dont seem to be aware of what these so-called 'Employment' schemes have done to agriculture. Or, are perhaps not interested.
Labour is a key input in agriculture & its costs have rocketed over the years.
These column writers ! I'm sure there's none among them who has ever practised agriculture, or atleast studied it theoretically. All seem to be employees or ex-employees of industry & services.
To bring a very mundane fact to your notice - It become impossible to get farm labour in villages, at least in my part of Andhra Pradesh, even if we r paying the Employment Guarantee wages or even more. The reason being that people are flocking to these schemes as they are getting more money for lesser work. LESSER WORK, YES, I mean it. Its an open secret that people hardly work for few hrs in these schemes.
Rishabh Jain
Nov 21, 2013Neither money nor any government can change the society. It can be changed only by changing attitude of individual to change.
SHEKHAR SHIRALI
Nov 20, 2013A recent Bollywood Hindi film had the song 'Birla ho yaa Tata Ambani ho yaa Bata sab ne apne chakkar me desh ko hai kata.' This is true. Most Indian Industrialists have become rich due to crony capitalism. They are all equally Bad and have become rich due to corrupt Indian Politicians.
Raghuveer Singh Rathore
Feb 11, 2014You have well said that in India the Rich are becoming richer & the poor more poor. This gap is widening day by day. Unless siphoned off money destined to be used for the poor is well checked by the good governance, India would remain a poor country, but if the citizens of India forgo their self interest and come out volunteerly to work for creating a equitable society, India would turn into a country whose per capita income would not be less than any developed nation in the world and politicians will not succeed in befooling the masses educated. Besides, linking of renowned rivers with rainy season rivers of all States will prove a booster dose to agriculture. Barren lands will turn fertile & economy will definitely take U-turn.