Prof. R.K.Panda
Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries. It is stated that growth can generate virtuous circles of prosperity and opportunity for achieving higher and sustained growth.
However, under different socio-economic conditions similar rates of growth can have different impacts on poverty and broader indicators of human development. In this backdrop, the present attempt is to examine the growth rate of Odisha Economy during the last decade beginning with 2004-05, how it has impacted the wellbeing of the people at large and what challenges that need to be addressed for achieving faster progress and improving the quality of life in the state.
Growth Performances
Looking at the state economy it is revealed that in recent years it shows a rising trend in GSDP growth rate. Up to 2002-03 economic growth in the state was largely stagnant with around 3 percent and from 2003-04 it has picked up and on an average it works out to 7 per cent between the period from 2003-04 and 2013-14. However growth over the period reveals a fluctuating trend and this is due to multiplicity of factors: natural, institutional and technological.
Structurally the state economy has undergone significant changes. The share of primary and predominantly agriculture sector in the state’s GSDP has fallen and that of secondary and tertiary services have gone up. No doubt the annual growth rate of secondary and services sectors is higher over the primary sector. However the primary sector is picking up in recent years. The annual growth rate of the primary sector which was hardly 1 percent during 1990s (up to 2002-03) has increased to more than 3 percent between 2003-04 and 2013-14.
As a result of all these changes, the rise in per capita NSDP has been found faster in the state over the all-India average.
Historically, economic growth is considered as the most powerful instrument for reducing poverty and improving the quality of life. In view of the higher economic growth witnessed in Odisha in recent years, we observe a significant decline in the incidence of poverty and increased progress in nutritional and food security status among the people in the state. While the incidence of poverty has fallen sharply by 24.61 percentage points between 2004-05 and 2011-12, (perhaps the sharpest in the country during the period), the state has performed better in significantly reducing Infant Mortality Rate, Stunting among the children as compared to other states between 1990-2015.
Economic growth and job opportunities are inter-related. As such, in view of Odisha having achieved high growth in the recent past, the work-participation rate in the state has recorded an improvement from 37.50 in 1991to 38.80 in 2001 and 41.80 in 2011. More so, the Census 2011 data reveal the state’s work participation rate is higher over the all-India average of 39.80. In view of the structural transformation taking place in the economy we find a sharp shift of main workers from farm to non-farm activities.
Challenges to be Addressed
The average economic growth has no doubt remained impressive in the state during the decade under study, yet it has shown widely fluctuating in individual years. While the performance of agriculture sector is largely affected by recurrent natural calamities, to counter their harmful effects on agriculture there is urgency in expanding irrigation facility, improving the use of existing irrigation network, changing the prevailing land tenure system and directing the institutional credit agencies for better credit support to agriculture and allied activities.
All these will raise farm viability and realize higher return. Since lack of entrepreneurial initiative of the private sector keeps the manufacturing activities at a low level, encouragement and support services in terms of developing infrastructural facility, procurement of inputs and knowhow, marketing of finished products etc., need to be provided by the state.
Quality improvement needs to be emphasized to make the product competitive. In view of the wide developmental disparities existing at inter-district levels, dispersal of industries and business activities has to be encouraged through developing network of transport and communication. No doubt there has been significant reduction in the incidence of poverty in the state, yet poverty in absolute numbers continues to remain high and also increasing due to population growth and lack of accessing opportunities.
As it is worked out elasticity of poverty with respect to per capita income remains very low- 0.084 in the state indicating very little percolation of growth to the poor. This suggests for more concerted efforts to reduce poverty through identifying traditional skills in rural areas and providing them training for up-grading their skill. In spite of improvement in work-participation rate in recent years, underemployment ( as per CDS category ) is quite high in the state .
There is also high concentration of unemployment among youth between the age-group of 15-29 years. This needs urgent attention. The youth should be encouraged and provided credit support to engage in different self-employed activities. The state should pursue the policy of higher and inclusive growth for effectively pulling people out of poverty and deliver them with wider objectives for a better life.
(The writer is a Former Professor of Economics, Utkal University & Former Director, NCDS, Odisha, Bhubaneswar)
