Now that it feeds itself, India is making even greater strides

By , Staff writer of The Christian Science Monitor

India's war on poverty is bettering the lives of tens of millions of people, says Bimal Jalan, the top economic adviser in India's Finance Ministry. India's handsome real growth rate, averaging more than 5 percent a year for the past seven years, has lifted more than 70 million Indians above the poverty line and provided adequately paid employment for some 60 million more people who entered the labor force in that same period.

``People don't realize this,'' Mr. Jalan said in an interview here.

Of course, he is using his country's own poverty standard. Most of those people would remain terribly poor by American standards. India still had a per capita income of $260 a year in 1984, according to the World Bank Atlas. Measured on the basis of actual purchasing power rather than exchange rates, India's per capita number would be about twice that.

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Nonetheless, Indians are at least eating better than before as a result of the green revolution. Ten years ago, recalls Jalan, most observers would have doubted that India could grow enough food to feed its 760 million people. Now the nation is self-sufficient.

And now, encouraged by the more pragmatic administration of Rajiv Gandhi, financial markets have taken off. Five years ago companies were able to raise the equivalent of only $100 million in the money markets of Bombay, Calcutta, and New Delhi. This year, Jalan reckons, they will raise $4 billion, and ``that shows the tremendous confidence today.''

Construction in Bombay, New Delhi, and other cities is booming. Jalan also estimates that industrial output is about 25 percent of India's total national output of more than $200 billion. That means the industrial sector produces about as much as Finland's total economy.

Tax reform has lowered the top personal income tax rate to 50 percent from its previous basically confiscatory level. Import restrictions are now more likely based on tariffs than on quantitative restrictions -- a change that to some degree forces Indian industry to compete. Red tape and regulations have been reduced, too.

Unlike some Latin American and African nations, India has always followed a policy of not borrowing large sums of money from abroad.

``Our debt service ratio is below 15 percent,'' says Jalan, referring to the ratio of India's external debt to its level of exports. ``We have deliberately kept it that way. India has no debt problem.''

Of course, the progress is uneven. Some parts of this large nation with its wide variety of peoples, religions, languages, and cultures are far poorer than the Punjab or Gujarat or other relatively prosperous states. The nation is still harmed by communal strife. Nonetheless, reduction of poverty from 45 percent to 35 percent of the people in five years is noteworthy.

``We are doing reasonably well,'' says Mr. Jalan. ``There is no doubt about that.''

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