With one of the fastest growing economies in the world, clocked at a growth rate of 8.3% in 2010, India is fast on its way to becoming a large and globally important consumer economy. The Indian middle class was estimated to be 50 million persons (reckoning vehicle owners only) in 2007, by McKinsey & Company. According to Deutsche Research the estimates are nearly 300 million people for all Middle Class. If current trends continue, Indian per capita purchasing power parity will significantly increase from 4.7 to 6.1 percent of the world share by 2015. In 2006, 22 percent of Indians lived under the poverty line.
According to NCAER, India's middle class population to touch 267 million in 5 yrs. Further ahead, by 2025-26 the number of middle class households in India is likely to more than double from the 2015-16 levels to 113.8 million households or 547 million individuals. .
The standard of living in India shows large disparity. For example, rural areas of India exist with very basic (or even non-existent) medical facilities, while cities boast of world class medical establishments. Similarly, the very latest machinery may be used in some construction projects, but many construction workers work without mechanisation in most projects.
A 24.3% of the population earned less than US$1 (PPP, around US$0.25 in nominal terms) a day in 2005, down from 42.1% in 1981. 41.6% of its population is living below the new international poverty line of $1.25 (PPP) per day, down from 59.8% in 1981. The World Bank further estimates that a third of the global poor now reside in India.
On the other hand, the Planning Commission of India uses its own criteria and has estimated that 27.5% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 36% in 1993-1994. The source for this was the 61st round of the National Sample Survey (NSS) and the criterion used was monthly per capita consumption expenditure below ₹ 356.35 for rural areas and ₹ 538.60 for urban areas. 75% of the poor are in rural areas, most of them are daily wagers, self-employed householders and landless labourers.
Although Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas. Between 1999 and 2008, the annualised growth rates for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%). Poverty rates in rural Odisha (43%) and rural Bihar (41%) are higher than in the world's poorest countries such as Malawi.
Since the early 1950s, successive governments have implemented various schemes, under planning, to alleviate poverty, that have met with partial success. Programmes like Food for work and National Rural Employment Programme have attempted to use the unemployed to generate productive assets and build rural infrastructure. In August 2005, the Indian parliament passed the Rural Employment Guarantee Bill, the largest programme of this type, in terms of cost and coverage, which promises 100 days of minimum wage employment to every rural household in 200 of India's 600 districts. The Indian government is planning to bring in more economic reforms which can help farmers and unskilled labourers transition into industrialized sectors.
Since independence, India has allocated nearly half of the total outlay of the five-year plans for infrastructural development. Much of the total outlay was spent on large projects in the area of irrigation, energy, transport, communications and social overheads. Development of infrastructure was completely in the hands of the public sector and was plagued by corruption, bureaucratic inefficiencies, urban-bias and an inability to scale investment. Calcutta city was the first city in India to boast of a metro-system. Today the Calcutta metro is considered among the world's best in terms of service and infrastructure. India's low spending on power, construction, transportation, telecommunications and real estate, at $31 billion or 6% of GDP in 2002 has prevented India from sustaining a growth rate of around 8%. This has prompted the government to partially open up infrastructure to the private sector allowing foreign investment. India holds second position in the world in roadways' construction.
As of 31 December 2005, there were an estimated 835,000 broadband lines in India. Low tele-density is the major hurdle for slow pickup in broadband services. Over 76% of the broadband lines were via DSL and the rest via cable modems.
A 2007 study by the Asian Development Bank showed that in 20 cities the average duration of water supply was only 4.3 hours per day. No city had a continuous water supply. The longest duration of supply was 12 hours per day in Chandigarh, and the lowest was 0.3 hours per day in Rajkot.
One of the critical problems facing India's economy is the sharp and growing regional variations among India's different states and territories in terms of per capita income, poverty, availability of infrastructure and socio-economic development. For instance, the difference in growth rate between the forward and backward states was 0.3% (5.2% & 4.9%) during 1980–81 to 1990–91, but had grown to 3.3% (6.3% & 3.0%) during 1990–91 to 1997–98. Per Capita Income in India varies drastically. As of 2010, New Delhi had a Per Capita Income of $ 3,020 whereas Bihar's Per Capita Income was at a paltry $ 445.
The five-year plans have attempted to reduce regional disparities by encouraging industrial development in the interior regions, but industries still tend to concentrate around urban areas and port cities. Even the industrial townships in the interiors, Bhilai for instance, resulted in very little development in the surrounding areas. After liberalisation, the disparities have grown despite the efforts of the union government in reducing them. Part of the reason being that manufacturing and services and not agriculture are the engines of growth. The more advanced states are better placed to benefit from them, with infrastructure like well developed ports, urbanisation and an educated and skilled workforce which attract manufacturing and service sectors. The union and state governments of backward regions are trying to reduce the disparities by offering tax holidays, cheap land, etc., and focusing more on sectors like tourism, which although being geographically and historically determined, can become a source of growth and is faster to develop than other sectors.
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