How China reduced poverty; lessons for India

Source: The post is based on an article “ExplainSpeaking: How China reduced poverty; lessons for India” published in The Indian Express on 11^th October 2022.

Syllabus: GS 2 – Social Justice

Relevance: measures to alleviate poverty in India

News: The World Bank has recently released a report on global poverty.

The report stated that economic disruption brought by Covid-19 and the Ukraine war had produced “an outright reversal” in poverty reduction across the planet.

The pace of poverty reduction had been slowing down since 2015. Further, the pandemic and Ukraine war have affected so much that the “world is unlikely to meet the goal of ending extreme poverty by 2030”.

What has the World Bank stated about India’s poverty levels?

According to the WB, India has the highest number of poor people.

Further, the data from the Centre for Monitoring Indian Economy (CMIE) used by WB found that the number of people living in abject poverty increased by 56 million (5.6 crore) in 2020.

What did China achieve?

According to the WB, China lifted 765 million (76.5 crore) people from extreme poverty between 1978 and 2019.

This led to almost 75 per cent of the global reduction in the number of people living in extreme poverty in China. China has also achieved improvements in other measures of well-being.

For example, the Life expectancy at birth went from 66 years in 1978 to 77 years by 2019 and the infant mortality rate dropped from 52 in 1978 to 6.8 per thousand infants in 2019.

China’s improvement in health, education, and income over the four decades has led its position to rise from 106 (out of 144 countries) in 1990 to 85 (out of 189 countries) in 2019 in the Human Development Index.

How was China successful in alleviating poverty?

First, the rapid economic growth was supported by broad-based economic transformation in China. It provided new economic opportunities for the poor and raised average incomes.

• China started reforming from the agricultural sector where poor people got benefit directly from improvements in productivity associated with the introduction of market incentives.
• Further, the development of low-skilled, labor-intensive industries provided a source of employment for workers released from agriculture.
• Public investment in infrastructure improved living conditions in rural areas and it also connected them with urban and export markets.

Second, the government policies tried to alleviate persistent poverty.

• These policies initially targeted areas disadvantaged by location and a lack of economic opportunities. Later, the policies subsequently focused on poor households irrespective of their location.
• These policies also included social protection policies for poor households like specific programs in social assistance, social insurance, social welfare, etc.

Third, the success in China was made possible from effective governance. It acted as a key to the successful implementation of the growth strategy as well as the evolving set of targeted poverty reduction policies.

Fourth, China also got benefit from the high level of human capital. It is important to benefit from new economic opportunities once market reforms set in.

Fifth, China also invested massively in education and expansion of health care in 1950s that resulted in achievement later.

Therefore, China’s poverty alleviation strategy can be characterized as development oriented with a focus on creating economic opportunities as a means to escape poverty and India can also learn from China.