Holistic approach in reforms can help curb poverty, says McKinsey

NEW DELHI: Pursuing an “inclusive reforms” agenda that boosts investments and generates more jobs will help to significantly reduce poverty in India, where over half of the population struggles to meet their essential needs, McKinsey Global Institute (MGI) said on Wednesday.

MGI, the business and economics research arm of global consultancy major McKinsey & Company, has projected that India could achieve an economic growth of 7.8% over the next decade provided the country implements inclusive reforms. “An economically sound path of ‘inclusive reforms’— one in which India takes steps to stimulate investment, job creation, and farm productivity and to improve the effectiveness of basic services,” MGI said in its report ‘From poverty to empowerment: India’s imperative for jobs, growth, and effective basic services’. “Reforms could significantly reduce poverty and allow India to achieve an average GDP growth rate of 7.8% between 2012 and 2022,” it said.

The report said on an average, just half of the public money spent on basic services reaches people as real benefits. “If slow pace of growth continues and no major reforms are undertaken, more than one-third of the population will remain below the Empowerment Line in 2022 and 12% will remain trapped in extreme poverty,“ said Shirish Sankhe, director McKinsey & Member of MGI Council.