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High growth masks irritants

New Delhi, Dec. 30: Snapshot one: The economy grew by an unprecedented 9.2 per cent during the second quarter of this fiscal and the sensex, an indicator of India Inc’s health, crossed the 14000-mark in December.

Snapshot two: Nearly 2,000 debt ridden farmers committed suicide in Maharashtra, Orissa, Andhra and Punjab this year, marking what must be India’s worst agrarian crisis in decades.

As the new year dawns, Indians will have to grapple with this dichotomy and political crisis the economy has been brewing — high growth rates, higher living standards in urban areas, but continued poverty and unrest in rural areas.

The Indian economy has grown by an average of 8 per cent annually, four years in a row, making it the fastest growing economy after China.

But the growth, fueled by a boom in the manufacturing and services sector, has left large swathes of India’s agrarian hinterland untouched. Nearly 20 per cent of the population or close to 250 million people were able to spend less than Rs 14 a day on their daily needs in 2004-05 and the situation has only changed marginally in 2006.

While manufacturing grew at 11.9 per cent and services at nearly 11 per cent during July-September 2006, the farm sector grew just 1.7 per cent.

The average monthly per capita consumer expenditure in 2004-05 stood at Rs 559 in rural India compared with Rs 1,052 in urban India.

Even previously rich agrarian states such as Punjab have been reporting farmer suicides. High-cost, high-risk farming on ever fragmented land holdings is forcing farmers to opt out.

Sonia Gandhi, the leader of the country’s ruling coalition, said at a recent economic conclave in New Delhi, “There is an India of bursting growth, and there is an India of widespread want.”

More than a third of the country’s population remains illiterate, and a fifth has no access to safe drinking water. Yet the country manufactured some 11 million vehicles in 2006, 17 per cent more than what it did in the year before. It sold 85 million mobile sets in the year compared with 34 million in 2005.

This dual economy has serious ramifications for the Indian polity. Economists and politicians feel it could fuel more conflicts and cause political turmoil unless addressed quickly.

Probably this is why this time round, the Union budget making exercise is talking more to farm sector representatives and listening to their suggestions.

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