India needs more inclusive growth: OECD

India needs more inclusive growth: OECD

India's rapid economic growth has lifted 140 million people out of poverty in the past decade but large parts of the population still lack access to elecricity and toilets, the OECD said in a report on Tuesday (Feb 28).

Mumbai city skyline is seen from a seaside promenade, on January 12, 2012
File picture of the Mumbai city skyline in India as seen from a seaside promenade. (Photo: AFP/Punit Paranjpe)

NEW DELHI: NEW DELHI: India's rapid economic growth has lifted 140 million people out of poverty in the past decade but many of its people still lack access to electricity and toilets, the OECD said on Tuesday (Feb 28).

GDP per capita has risen by more than five per cent per year since the mid-1990s and reforms introduced since Prime Minister Narendra Modi's election in 2014 have "brought a new growth impetus and improved the outlook", the Organisation for Economic Cooperation and Development said in a report.

But "growth has not been sufficiently inclusive on a number of dimensions, as reflected in a still high poverty rate", the Paris-based group said in its 142-page country survey.

It added that spending on health care amounted to barely one per cent of gross domestic product.

India has been the fastest-growing major economy for much of Modi's premiership and although the government has lowered its forecast since its decision in November to pull high-value bank notes from circulation, it is still expected to expand 7.1 per cent in 2016-17.

The OECD said reforms by successive governments, such as the implementation of inflation targets and a loosening of foreign direct investment (FDI) rules, had been major factors behind the growth.

"The pace of reform is quite remarkable," said the report, adding that "about 140 million people have been taken out of poverty in less than 10 years".

But, "there is no time for complacency and the main message today is that the reform momentum must be maintained so there can be more inclusive growth," said OECD secretary-general Jose Angel Gurria at the report's launch in Delhi.

The report called on the government to do more to improve access to basic services.

"Many Indians still lack access to core public services, such as electricity and sanitation," the report said. "Public spending on health care, at slightly more than one percent of GDP, is low. Although almost all children have access to primary education, the quality is uneven."

Government figures released in 2015 showed more than 300 million people in India still had no access to electricity while hundreds of millions of people also lack access to proper toilets.

Modi has pledged that his government will provide power and toilets to every household in his term of office and claims to have already built more than 20 million toilets since coming to power.

Source: AFP/ec