US-India Global Review

being the biggest beneficiary in 2014-15. Prime Minister Modi has offered African countries a $10 billion combined line of credit and Bangladesh $2 billion. The coun- try that used to be a bottomless pit for aid is now a bountiful finan- cier. Its commercial finance has been spurred by economic reforms that have attracted inflows of foreign exchange other than foreign aid. Total foreign invest- ment (equity plus portfolio inflows) came to $51.2 billion in 2014-15. Foreign commercial borrowing in the same year came to $68.2 bil- lion gross and $10.4 billion net, whereas remittances from Indians overseas exceeded $70 billion. The remittance boom was a con- sequence of globalization, of Indians going abroad. Remittances remained stable through the Asian financial crisis and Great Recession (2007-9) and have greatly helped counter the volatility of foreign portfolio capital (sometimes called hot money) in difficult times. Critics of globalization once claimed it would make India subservient to foreign masters. Instead, by encouraging the movement of persons and goods, it has created a remittance flow and export strength that makes foreign aid irrelevant. In the bad old days, any major drought meant India was depend- ent on food aid. When two droughts occurred in a row, as in 1965 and 1966, India survived only because of record food aid from the United States. A 1967 best-selling book by William and Paul Paddock declared that sim- ply not enough food aid existed to save all needy countries, and so hopeless countries like India should be left to starve, conserv- ing food aid for countries that were capable of survival.8 The Green Revolution made India first self-sufficient and then a surplus producer of food. India suffered two consecutive droughts in 2014 and 2015, yet agricultural production actually rose slightly; India became the world’s largest rice exporter in 2015, exporting 10.23 million tons. India has also become a substantial exporter of wheat and maize in recent years. That is a measure of its agricultur- al transformation. Paddock and Paddock never imaged that India, which swallowed almost the entire food aid of the world in the mid- 1960s, would become a donor of food aid to North Korea in 2010. India’s poverty ratio did not improve at all between independ- ence in 1947 and 1983; it remained a bit under 60 percent. Meanwhile, the population virtual- ly doubled, meaning the absolute number of poor people doubled. That was a cruel reflection of the failure of the socialist slogan Garibi Hatao (Abolish Poverty). Poverty started declining gradual- ly after 1983, but the big decline came after economic liberaliza- tion. In the seven years between 2004-5 and 2011-12, no fewer than 138 million Indians rose above the poverty line (Table 3). India’s poverty decline was 0.7 percentage points per year between 1993-94 and 2004-5, when GDP growth averaged about 6 percent per year. The annual rate of decline accelerated to 2.2 percent between 2004-5 and 2011-12, when GDP growth accelerated to over 8 percent per year. The link between fast growth and poverty reduction is striking.9 Between 2004-5 and 2011-12, the all-India poverty ratio fell by 15.7 percent. The decline was much higher at 21.5 percent for Dalits (the lowest Indian caste group) and 17.0 percent for scheduled tribes, traditionally the two poorest groups in India. The decline in the poverty ratio of the upper castes was much lower, at 10.5 percent. Muslims are another historically disadvantaged group. Their poverty ratio declined in that seven-year period by 18.2 per- cent, faster than the 15.6 percent for Hindus. In as many as seven states, Muslims are less poor than Hindus.10 Table 4 shows a sharp decline in the proportion of people saying they have been hungry in some or all months — from 17.3 percent in 1983 to 2.5 percent in 2004-5. That statistic should be regarded as solid proof of falling hunger. Yet the International Food Policy Research Institute now publishes a supposed Global Hunger Index in which India fares rather badly with a score of 29 (on a scale ranging from zero for no hunger to 100 for complete hunger) against 12.6 for South Africa, 8.6 for 60 US-INDIA GLOBAL REVIEW JANUARY-MARCH 2018 Table 3. India’s Poverty Decline (Tendulkar Committee Methodology) Source: S. Mahendra Dev, Suresh Tendulkar Lecture, 2016. Years 1993-94 1992-2003 2003-15 Percentage of Poor 45.3 37.2 21.9 Number of Poor (millions) 403.7 407.1 269.3

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