The first phase of economic reforms in the 1990s led to an initial spurt in growth of over 7 per cent a year. Continuous reforms in key sectors subsequently increased growth to 8.94 per cent during the later period of 2003-04 to 2007-08, helping to buffer India against the financial crisis. GDP growth declined to 6.7 per cent in 2008-09, but in 2010 the economy revived and the robust 8.9 per cent growth in GDP for the first half of 2010-11 raises the possibility of a faster recovery to pre-crisis levels.

Among the Indian states, the best performer in terms of growth during 2002-2009 was Gujarat, followed by Bihar, Orissa, Haryana and Uttarakhand. The best performer in 2008-09 was Bihar, with a growth rate of 16.59 per cent; the good growth performance of backward states like Bihar and Orissa is helping these states to improve the literacy rate and health indices and reduce poverty.

Data from the Ministry of Finance shows that, due to enhanced economic growth, India’s total revenue receipts increased from Rs 1926 billion in 2000-01 to Rs 6144 billion in 2009-10. The revenue expenditure of the government also grew tremendously during this period from Rs 2778 billion in 2000-01 to Rs 8972 billion in 2009-10. ‘Major subsidies’ such as food subsidy (Rs 605.72 billion) particularly towards targeted public distribution system, fertilizer subsidy (Rs 499.97 billion), petroleum subsidy (Rs 236.40 billion), interest subsidies (68.68 billion) granted to public sector undertakings and other subsidies (Rs 24.90 billion) such as price support scheme for agricultural produce, subsidy on import of various food items constituted the main part of the total expenditure, which grew from Rs 258.6 billion 2000-01 to Rs 1342 billion in 2010-11, only next to the interest payments and well above defence expenditures.

Government is planning a direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilisers instead of subsidising these commodities at different levels.

The census data, released in the first week of April 2011, indicates that a major achievement of the last decade was the reduced population growth rate, with 2001-2011 registering the sharpest decline since independence in1947. For 2001-2011, the population growth was 17.64 per cent, down from 21.54 per cent for the period 1991-2001.

Significantly, the population growth rates of the Empowered Action Group (EAG) States — Rajasthan, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh and Orissa — infamous for their high population growth, low literacy and poor health indicators, saw for the first time a significant fall in population growth between 2001-2011 (about 4 per cent) after decades of higher growth of pre-1990 and stagnation thereafter.

These positive population growth trends can be attributed to high economic growth and increased literacy among the population. The census data revealed that nationwide literacy improved by nearly 10 per cent between 2001 and 2011 from 64.8 to 74.04 per cent, far outpacing the pre-reform decades before 1991.

Literacy especially accelerated in the poorest states during 2001-2011. In Bihar, long the worst performer, literacy shot up from 47 per cent to 63.82. Big gains came in other poor states — in Uttar Pradesh, literacy increased from 56.27 to 69.72 per cent; Jharkhand, 53.56 to 67.63 per cent; Orissa, 63.08 to 73.45 per cent; and Assam, 63.25 to 73.18 per cent. Some poor states gained almost 30 percentage points in the two decades of economic reform, states that performed well in economic growth, too.

This is contradictory to the view, held by a section of Indian intellectuals, that economic reforms have benefited only big business and the upper-middle class, while ignoring the poor.

The data also shows considerable improvements in selected health indicators, particularly compared to the pre-reform era. The economic survey 2011 reveals that the crude birth rate (per 1000) declined significantly from 33.9 in 1981 to 22.5 in 2009. The total fertility rate per woman has come down from 4.5 in 1981 to 2.6 in 2008, and the infant mortality rate (per 1000 live births) decreased from 110 in 1981, to 80 in 1991 and 50 in 2009. The life expectancy at birth of the Indian population has increased substantially from 55.7 in 1981-1985 to 64.2 in 2002-2006.

In addition to economic reforms — given increased public revenue available from high economic growth rates — the Indian government has introduced several poverty-alleviation and employment-generation programs to achieve inclusive development. Prominent among them are the Rural Health Mission and Mahatma Gandhi National Rural Employment Guarantee Scheme, the latter aiming at providing at least 100 days of guaranteed wage employment in a financial year to every household, mandating 33 per cent participation for women. The scheme has had a significant impact as 52.6 million households were provided employment in 2009-10, and data indicates that the poorest states benefitted the most. It is a welcome sign that the Indian government has allotted about Rs 401 million for the program in 2010-11.

Opening up the economy increases the size of GDP, reduces poverty and enables more resources to be spent on education and health. Prominent intellectuals like Professor Jagdish Bhagwati have noted the connection between India’s high economic growth and improved social developments. High economic growth has led to greater revenues, which has finally enabled India to spend more on health and education.

Nabeel A. Mancheri is a Postdoctoral Associate with the National Institute of Advanced Studies, Bangalore.