IMF chief economist Gita Gopinath says 1 per cent of population in India is cornering 21 per cent of national income
IMF chief economist Gita Gopinath said here on Monday that globalisation has helped reduce extreme poverty worldwide but there was a backlash against it due to rising income disparity.
She was delivering the Golden Jubilee Endowment Lecture on ‘Globalisation: Current Challenges and the Need for Cooperation’ organised by the JSS Mahavidyapeetha in the city.
Ms. Gopinath said the big wave of globalisation from late 1990s reduced poverty significantly and the population below the poverty line which was 42 per cent in the late 1980s and early 1990s, was down to around 10 per cent in the present times. It helped reduce extreme poverty in India, China and other countries.
But there was also a disparity in income and though absolute poverty had declined over time, the income disparity and the gap between the rich and the poor has increased across the world.
Citing statistics, Ms. Gopinath said the top 1 per cent of the population across countries cornered a larger chunk of the national income. Free trade helped increase growth and India was among the beneficiaries with its share in world exports increasing from 0.5 per cent in 1997 to 2 per cent in 2018. But there was also rise in disparity. She said in 1981, just 1 per cent of the Indian population shared 6.7 per cent of the national income but in the present times 1 per cent of the people cornered 21 per cent of the national income. It is a similar story in Australia, the U.S. and other countries and has triggered a backlash against globalisation.
“We are in an environment where even if we tell people that the country is doing well, there are lot who say there is inequality and they have not benefited’’, Ms. Gopinath added, pointing out that politically countries are moving away from free imports and trade by imposing taxes.
She said there was a need for policies for education, to retrain and re-skill workers and the policies needed to make trade more beneficial are the same policies that are required to reduce income inequality.
With regard to production in India, the IMF chief economist said the environment that exists for business in terms of labour law, infrastructure etc., encourages firms to be small and that makes it difficult for India to be a part of a global supply chain which calls for large-scale production. However, that was changing with reforms.
She pointed out that India does better in service trades and there was a push for increasing it and the country can benefit given its pool of people with engineering and technical skills.
Underlining the challenge posed by climate change, Ms. Gopinath said one of the consequences of growth and development of the countries was with respect to environment and climate and the world temperature was projected to increase by 2 degree Celsius to 4 degree Celsius by the year 2100. This would not affect the advanced economies but the emerging economies of the world like India that are already in the warmer regions, and this will have a negative bearing on agricultural output.
She said resolving it called for collaboration among nations as global climate change due to pollution by one country affects the other. Besides, there were other issues like cyber crime, corruption, and refugee flows all of which needed greater cooperation among nations than ever before to resolve, she added.
Vice-Chancellor of the University of Mysore G. Hemanth Kumar and Suttur seer Shivaratri Deshikendra Swamiji were among those present.
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