Rich and poor gap widens, failure in policy planning: Study

NEW DELHI: The gap between the rich and the poor has widened in the last 25 years even as poverty and backwardness are concentrated in 15 states, a study by the industry body PHDCCI has said.

With the rich and the poor gap becoming wider, the overall gains on poverty reduction have not translated into much-touted "inclusive" growth, the PHDCCI study has shown.

"Planning and economic policies have failed to produce inclusive growth to enable substantial parts of the country to get the benefits of development," the chamber said.

The gap between the highest and the lowest per capita income (in 1993-94 prices) of states, of which 15 were included in the study, has increased from 2.55 times to 3.76 times between 1980-81 and 2004-05.

In absolute terms, per capita income gap in the two groups has increased from Rs 5,735 to Rs 14,967 during the period.

States with low per capita income are Bihar, Uttar Pradesh, Chhattisgarh, West Bengal and the North-East while states with higher per capita income include Punjab, Haryana, Andhra Pradesh, Kerala and Karnataka, it said.



"Equitable distribution of the dividends of growth is among the most important aspects for poverty reduction and this requires reforms in governance," the chamber said, adding 85 per cent of the resources earmarked for the poor do not reach them.

The answer for removing vast disparity lies in agricultural diversification, the study said.

"A second green revolution for exploiting more sophisticated versions of seed-fertiliser technology for higher yields is critical," it said. Focus must be on backward states like Bihar, Uttar Pradesh, Jharkhand and Orissa.

The chamber said there is a case for redefining the poverty line, since it was constructed on the assumption that education and health would be taken care of by the State and should therefore not figure in personal consumption expenditure calculations.

"This is no longer the case and private expenditure on both has increased in the 90's," it said.