INDIA Policies to Reduce Poverty and Accelerate Sustainable Development through Globalization

Steady Progress since Independence Decline of Poverty since the mid-1970’s 5.8% per year growth trend since 1980 End of the 1980’s development strategy proved unsustainable

Quick Recovery from 1991 Crisis Stabilization Reforms 3 years of 7.7% per year average growth

Sluggish Poverty Reduction in Recent Years Poverty reduction fell by Improvement limited in rural areas Poor states lag poverty reduction

Despite Achievements, Significant Challenges Ahead Public spending focused on subsidies Subsidies crowd-out public investment State issues with infrastructure, human development and governance

Potential Problems in Accelerating Poverty Reduction, Sustaining Growth

India's Future Growth and Poverty Reduction Deterioration of infrastructure Slower pace of reforms and the resulting uncertainty for investors Lack of agricultural deregulation Still-low indicators of human development Governance and institutional issues

Large Deficits, related to Large Explicit and Implicit Subsidies Large and rising fiscal deficit Large public sector debt Tax system Large civil service

Comfortable BOP but Constraining Domestic Policies Balance of payments comfortable Lack of further tariff reform High infrastructure and transaction costs Domestic regulations

Financial System: Remains a Concern Credit availability to private sector

Legal and Environmental Issues Enforcement of property rights and contracts “Justice delayed is justice denied” Environmental and resource degradation

A Second Wave of Reforms to Reduce Poverty Faster

Reforms Cuts in the explicit and implicit subsidies together with privatization in power

Reforms Realignment of Central and State Governments

Reforms More spending on health and education

Reforms Improved Governance

Reforms Completion of the deregulation of goods and factor markets

Reforms Financial System

Reforms Improved infrastructure provision

CONCLUSION