Corruption will keep India in chaotic poverty trap: Survey
New Delhi : Recognising that self-interest drives a market economy, the Economic Survey for 2011-12 tabled Thursday also says India will stagnate and remain in the grips of chaotic poverty in the absence of morality and persistence of graft.
"We now know that a market economy cannot function if people are totally self-serving," says the survey, authored by Chief Economic Advisor Kaushik Basu and tabled by Finance Minister Pranab Mukherjee in parliament.
"While self-interest is a major driver of economic growth, it is important to recognize that honesty, integrity, and trustworthiness constitute the cement that binds society," the survey says.
"Honesty and integrity can be nurtured and aversion to corruption can be shored up," it says, and adds: "If these traits are absent or inadequate in a nation, it is likely that that nation will stagnate and remain in a chaotic poverty trap."
According to the survey, as India enters the 12th Five Year Plan April 1, the challenges before it are to lay down a sound foundation for a major push to infrastructure investment, building human capital, and eradicating poverty and malnutrition.
At the same time, the federal government has taken a position that in a nation with widespread poverty and malnutrition, the state has to take direct responsibility for
eradicating the worst forms of such deprivation. While growth is important, it should also be seen as an instrument for uplift.
The survey also dwells on the different estimates of people below the poverty line, notably based on the Lakdawala Committee and the Tendulkar Committee, pegged at 27.5 percent and 37.2 percent, respectively, for 2004-05.
But the survey also makes another observation to drive home the point that poverty levels have, indeed, fallen in India.
"Even though the Tendulkar methodology gives higher estimates of headcount ratios for both 1993-4 and 2004-5, the extent of poverty reduction is 8.1 percentage points
which is not very different from the reduction of 8.5 percentage points during the same period as per Lakdawala Methodology," it says.
"The state-wise estimates of poverty as recomputed by the Tendulkar Committee show that the highest poverty headcount ratios for 2004-5 exist in Odisha (57.2 percent), followed by Bihar (54.4 percent) and Chhattisgarh (49.4 per cent) against the national average of 37.2 per cent.
Taking a global outlook, the survey says India has now entered a "critical decade" where it has emerged a large and important economy, enjoying a unique advantage of having many indicators in its favour -- notably a large domestic market, robust investment and sound demographic profile.
"However, all of these will need to be leveraged to get the full advantage out of them. Undoubtedly this requires India to address its internal challenges, which include the long-standing problem of poverty and development of social and physical infrastructure."
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