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Modi’s Biggest Challenge: Tackling Poverty

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By John Richardson on 05-May-2014



By John Richardson

Narendra Modi, as we discussed last week, faces a big job in unlocking the stalled infrastructure investment that is holding back India’s economic growth.

Optimists, however, point to his success as chief minister of Gujarat, which he might repeat at a nationwide level if, as expected, he becomes Prime Minister. They say that he has:

  • Improved the roads and water supply, whilst bring regular electricity supply to villages, unlike many of India’s most-prosperous southern states.
  • Freed businesses from day-to-day interference by bureaucrats, thus leading to more investment and jobs.
  • Corruption appears to have been kept in check due to what is described as a ‘trusted team of bureaucrats”, who Modi will take with him to New Delhi if he becomes Prime Minister.

But critics point out that he has always batted on a very flat, easy-paced wicket, given that Gujarat has a long tradition of entrepreneurship – a “can do” culture in the face of any obstacles – which dates back to the 12th century.

And the critics add that:

  • Pollution remains a problem: In 2010, the Central Pollution Control Board labelled Gujarat the country’s most polluted state.
  • Gujarat scores poorly on human development measures like poverty reduction, education, and sex ratios. It ranked ninth of 28 states in India’s latest Human Development Index, faring worse than other poorer states.
  • Marginal and tribal populations in the under-developed eastern region of the state  continue to struggle. A survey here found 55% of children under five are malnourished in this region.

This last point particularly worries the blog. As we keep arguing, rich, or even middle income, people can only buy a relatively limited volume of chemicals and polymers – and so the biggest opportunity for the chemicals industry is in poverty alleviation. And, of course, it is also the right thing to do.

In an April 2013 report, the World Bank (see the chart above) said that 400 million people were in extreme poverty in India in 2010 – a number relatively unchanged since 1981 when 429 million were very poor.

In the same period, China brought its absolute poor down from 835 million to 156 million.

Sub-Saharan Africa had 34% of  the world’s very poor population compared with 33% in India.