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Last Updated: Monday, 5 February 2007, 06:33 GMT
India pledges to abolish poverty
By Steve Schifferes
Economics reporter, BBC News

INDIAN FINANCE MINISTER
Palaniappan Chidambaram
We have the right to grow, just as much as the US and Europe had a right to grow in the 19th century
Palaniappan Chidambaram

India's finance minister, Palaniappan Chidambaram, has pledged to end poverty in India within two generations.

Mr Chidambaram told BBC World Service that if economic growth continued, India could end poverty by 2040.

India would play its part in the post-Kyoto negotiations on climate change, he said, though he insisted that "we have a right to grow".

Mr Chidambaram also vowed to protect poor farmers from the ravages of free trade in agriculture.

Poverty and growth

Mr Chidambaram, who became finance minister in 2004 after the Congress Party unexpectedly won the general election, has presided over an Indian economy which is currently growing at 9% per year, almost as fast as China.

China v. India growth rates

He told the BBC that his task was "to ensure not only growth but that this growth is inclusive growth" which reaches India's 250m poor people.

Mr Chidambaram said that "growth is the best antidote to poverty".

"Growth gives incomes to people with jobs, throws up jobs for those who are not employed," he said.

"Therefore growth is imperative, but it is not sufficient in a country ... where a significant number live in poverty."

Small child eating a plate of food
Many of India's poorer children have little to look forward to

The finance minister said it would take until 2040 to wipe out "abject poverty" but he was confident that if growth continued to be strong, it would happen.

"We will not have the abject poverty that afflicts about 25% of India's population. People will have homes, work, food, clothing, and access to education and medical care."

Climate change

With negotiations entering a delicate phase on climate change, the position of India and China - who were not given any pollution targets in the Kyoto round of talks - is being closely watched.

If the developed countries with their subsidised agriculture seek access to India's market, it will of course immiserise our farming population, and we will never let that happen
Palaniappan Chidambaram

Mr Chidambaram said that the West was being unfair to India by demanding sharp cuts in emissions just as India's economy was taking off.

"When the developed world was growing, no one asked them: why are you consuming so much energy, why didn't you slow down?" he said.

"The point is, we have the right to grow, just as much as the US and Europe had a right to grow in the 19th and 20th centuries."

But he said that India was willing "to take our share of responsibility, provided we have access to clean technologies and clean development mechanisms."

Trade

The finance minister said that India's openness to the forces of globalisation had helped stimulate growth, but that there were winners and losers.

Foreign investment in India

"The positive aspects of globalisation will be greater capital flows, more trade, more jobs in the services sector, more exports," he said.

India's IT services sector has become a global leader in outsourcing, and earns $25bn a year which boosts India's foreign exchange reserves.

The finance minister said it was a myth that India's advantage was its cheap labour.

"The point is, India's labour is skilled, and today we are a major hub of manufacturing," he said.

"We even export Mercedes Benz cars made in India back to Germany."

But Mr Chidambaram accepted that there were also potential losers, especially in the agricultural sector, which still employs the majority of the workforce.

"The negative aspects which we are guarding against are the impact on agriculture," he said.

"Agriculture in India today is a livelihood issue, which is why, when we go to the WTO, we do not look at agriculture simply as a trading issue, we have to protect the livelihood of millions of people," he added.

And the finance minister said India would stand firm.

"If the developed countries continue to subsidise agriculture and then seek access to India's market, it will of course immiserise our farming population, and we will never let that happen."

His remarks on this score will not be seen as helpful for the resumption of world trade talks, which have been stalled since the summer over the issue of agricultural subsidies.

Infrastructure woes

Some economists worry that India will not be able to sustain its high rate of economic growth unless it can dramatically improve its ageing infrastructure.

But Mr Chidambaram said that foreign investment could help overcome the infrastructure gap, provided that India "continues to observe fiscal prudence... ensures that there is an enabling environment for investors, both foreign and domestic... and ensure that these investments are made widely and managed wisely."

And the markets seem to agree with him.

India's international credit rating was recently upgraded by credit agencies, and foreign investment has been surging into the country - although India is still a long way behind China on that score.


Mr Chidambaram was interviewed by Mike Williams for "The Interview", broadcast on BBC World Service on 3/4 February.

A week of special programming about India can be heard on the BBC World Service from 3 to 11 February


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