What about urban poverty; in India, urbanization is fast gaining momentum?
Demographics and urbanization, for which answers are not clear and adequate attention is not being given, are among the top development challenges going forward. Typically, rural poverty dominates in India and China; but urban poverty dominates Brazil and Latin America. This is because urbanization is over 80% there (Latin America), while it is 30% in India and 40% in China. But India’s urbanization will go up by 10 percentage points by 2030. Already, the urban centres are excessively crowded. The issues of poverty as well as environmental pollution are not luxuries to be dealt with; they will determine whether the growth is sustainable. In that sense, it is urgent.
Immediately, the number of poor in rural areas are far greater, but the urgency of urban poverty is growing and is becoming more intractable. The rural poor can somehow be connected to some asset base, however weak it is. But the urban asset base is harder to put your finger on. Presumably, the government and the Bank will in future lend more attention to this problem.
Because of growing inequalities as well as other factors, there is growing social unrest in India. What do you make of it, in the light of your experience in watching other economies undertake a similar transition?
If you were to compare the Bric countries (Brazil, Russia, India and China) along with Mexico, Indonesia and South Africa, then you would find that inequality in India and Indonesia is lower than that of China, lower by a large margin when compared to Brazil, as well as to South Africa and Mexico. But the trend is going the wrong way. But it is not yet a huge publicly demonstrated issue as it has been in Brazil, where President Lula began to reverse course.
But the sheer size of the population involved, and the difference among states—the fact that you have half a dozen growing well above the national average and several large states growing well below the national average—raises a special issue in India, that others don’t have in quite the same way. It is a point of discomfort. Unless this is dealt with, both through rural and urban programmes, India may have a bigger concern regarding poverty and income differences in the face of 9% growth. So while inequality per se is less, its visible part and some of the related socio-regional issues can be quite pronounced in India.