Slowing growth hits India's poorest
Sher Singh has not found work in weeks. The 33-year-old day-labourer - who lives in one of India's largest industrial districts outside Delhi - says things were different a year ago.
Sher Singh has not found work in weeks. The 33-year-old day-labourer - who lives in one of India's largest industrial districts outside Delhi - says things were different a year ago.
"Every day I would get up to three different jobs," he says, leaning against a rickety wall along Harola Labour Chowk road, where hundreds of labourers gather each morning to look for work. "I used to make Rs 6,000 (USD 108) a month."More News From Financial Times
China surplus jumps on weak imports Euro hit by slowing manufacturing growth Slowing imports push China back to trade surplus Brazil's real at five-month low Michael Page sees strong demand in Asia But since India's economic growth rate started cooling from the 8% highs of 2010 to 6% in late 2011, Mr Singh's wage, like that of millions of other day labourers, has dropped sharply. Economists have long held divergent views over the extent of the impact economic growth can have on people's lives and in reducing poverty. But there is a broad consensus that the current slowdown in growth threatens to spread poverty faster in India than wealth trickled down during the boom years. "The benefits of growth are very unequally shared, and the poor are gaining much less from it than they would otherwise. This applies at 8% as well as at 6%," says Jean Dreze, a development economist. "Having said this, the decline from 8% to 6% could certainly make things more difficult for them."There are no official statistics on unemployment in India, but the plummeting of industrial production and exports - due to subdued domestic and overseas consumption - has left millions on the street, say economists and social workers. Official estimates say that the population living below the poverty line has been cut from 37.2% in 2004-05 to 29.8% in 2009-10. But the threshold between survival and absolute poverty remains thin and a few rupees can make a big difference.New Delhi estimates that an urban dweller needs only Rs 28 a day - 50 US cents - to survive. But the reality on the ground seems to suggest otherwise. In spite of India's economy doubling between 1990 and 2005, 42% of the country's children under five are officially underweight, a marginal improvement from a decade ago.Manmohan Singh, India's prime minister has called the country's high malnutrition levels a "national shame". But development economists fear that a slowdown will damage the government's efforts to improve healthcare, education and food security for those at the bottom of the pyramid. Without a national health system, losing a job in India can mean losing an already tenuous access to healthcare, for example."Little was done before to share the benefits of high growth, now we can expect even less," says AK Shivakumar, a member of India's National Advisory Council.New Delhi is due to release its first-quarter growth figures on Thursday, but the slowdown is not the only concern for investors, industrialists and ordinary Indians. New Delhi's fiscal and trade deficits have ballooned to 5.8% and 9.9% of GDP respectively, while the Indian rupee has weakened to a record low against the dollar. Inflation has also been picking up due to rising energy prices. The nightmare scenario presented by slowing growth and rising inflation will be a tough one for India's policy makers to untangle. Keeping interest rates high to battle inflation could mean choking off investment. It could mean that companies cannot afford to borrow cash, while India's middle class refrains from buying cars or houses as they wait for rates to fall. The political paralysis that has characterised India's Congress-led government in the past two years, following a series of corruption scandals, has also played a significant role in depressing investment. It is something that even middle consumers feel. "I earn quite well [and] the crisis is not really having an effect on me," says A Sharma, a software engineer. "But now isn't the right time to invest, it's too expensive and there is too much political uncertainty . . . I'll wait [until] after the 2014 elections."Hopes that key laws such as the land and mining bill - which could reignite investment - will pass in parliament are slim, as politicians in New Delhi are more likely to focus on how to get themselves re-elected in two years' time.However, back on Harola Labour Chowk, day labourers say they cannot wait for two years for the economy to recover. "If this goes on [like this] I think its best for my family to eat poison," says Mr Singh. "There is no other choice." Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
