The trajectory of economic development in India has not been smooth, nor has it been as rapid as some had hoped it would be. When Indians gained independence from British rule in 1947 they faced two choices as to the path they would take to unleash India’s potential and help the poorest among its people. On the one hand there was the road pursued by the Soviet Union – that of state socialism – and on the other was the United States, which at the time was pursuing a model approximating a market economy where government was kept relatively limited.
Jawaharlal Nehru, the country’s first prime minister and a close friend of Mahatma Gandhi, settled upon the ‘command economy’: the government was to play a leading role in running and managing business enterprises and private actors were to be strictly regulated.
On the other side of Asia, the East Asian nations of Singapore and Hong Kong decided to abstain from Soviet-style socialism and became capitalist instead.
Some fifty odd years later, in light of the disparate performance of the ‘East Asian tigers’ as compared to the Indian subcontinent on important indicators of poverty, social scientists have questioned which was the wiser choice. A growing body of literature has delved into the path that economic development in the Third World takes and has analysed the barriers that stand between the present state of affairs and achieving First World outcomes. To the extent that this research has produced any substantive conclusions it would seem that the following can safely be stated:
· Market orientated reforms beginning with a major reforms package in 1991 can likely be credited for shifting India's rate of growth from the so-called Hindu rate of 3.5 percent per annum to a more rapid 6.1 percent.
· Market orientated reforms can likely also be credited for the reduction in poverty during the course of the 1990s and beyond.
There are some, such as Dani Rodrik, who have expressed scepticism at the extent to which the reforms of the 1990s were responsible for unleashing growth. J. Bradford DeLong argues that the conventional account of India is wrong in many ways. He documents that growth took off not in the 1990s, but in the 1980s. Other sceptics have gone further and entirely reject the idea that free-market reform brings about benefits at all – for them, neoliberal policies deregulating the economy are anathema and perceived as something to be resisted.
There have also been inquiries into specific programs established by Indian governments. Given India’s high rates of poverty, welfare programs have been a focal point for many scholars interested in evaluating the effectiveness of these programs in helping lift low-income individuals to a better quality of life. The National Rural Employment Guarantee Scheme is one such initiative that has been closely scrutinised, and the results of numerous studies on the scheme have helped inform poverty alleviation policies more generally. The scheme started in 2006 with the promise of work when demanded for one member of each family for up to 100 days in a year – however the actual results have been somewhat less impressive, with about 50 million people getting an average of 50 days work in 2011. Problems with ineffective targeting, leakages, poor quality asset creation etc have beset the scheme but it continues to attract millions of dollars in funding.
The India Policy Institute aims to provide an overview of policies established to tackle poverty in India, and secondly, to consider their effectiveness. I would highly recommend that readers browse the resources available at the Institute's website: indiapolicy.org.