'There has been a decline in poverty in India'

Amid his packed schedule, Ahluwalia, a key member of Prime Minister Manmohan Singh's economic team, spoke to Rediff India Abroad's Ajit Jain.

Has India's growth reached all its people?

Our strategy has always been growth alone is not enough. It has to be an inclusive growth. Usually, people look at the evidence in terms of what's its impact on poverty. Poverty numbers come out every five years. The last available numbers for poverty are for 2004-2005.

There's no official indication of what has happened to poverty since this government came to power -- that you will get a couple of years later. I am pretty sure that it will show that there has definitely been a decline in poverty in India.

The evidence suggests the effect of growth do reach down, may not reach down as much as we would like. We have taken a number of steps that would increase the inclusiveness. How effective those steps are, next poverty estimates would show.

What are those steps?

Before this government came to power, a very important weakness in the Indian economy was that agriculture was not doing very well. The (agricultural) growth was 1.8 per cent during the previous government and we wanted to raise it to about 4 per cent. In the last three years, we have achieved about 3.5 or 3.6 per cent agricultural growth.

One reason I believe the growth is more inclusive is that agriculture growth during these five years will be much higher than during the previous five years. In addition, we have taken a number of steps which would provide more income support to the lower end of the spectrum.

Probably the single largest scheme from that point of view is the National Rural Employment Guarantee Scheme, which basically ensures people who need work are assured of 100 days of employment per family annually at the minimum wage.

Minimum wage for different purposes is different and the minimum wage for agricultural labour varies from state to state. It varies from Rs 70 to Rs 100-plus. In Kerala, it is very high. This is for completely unskilled manual work.

So, basically, if you live in a rural area and you are otherwise able to work, you will get work at least for 100 days just for the scheme. Other work you will find in normal ways in rural areas.

Since the agricultural growth has been better than in the previous years, on the whole the rural population should have been able to put in a better performance.

We have launched major schemes to improve the rural population's access to health and education. The welfare of an individual is not just the function of income but also the function of whether you are getting basic services. In our kind of society, these services have to be provided by the public sector for the common man. That's what we have done.

Take the Sarva Shiksha Abhiyan, the primary school education programme aimed at achieving universal coverage -- every child must be in school. The latest numbers show that 97 per cent of children are now in a school -- they are registered in a school.

Attendance has gone up very sharply, partly because we have midday meal program. About 150 million children within the age group of 6 to 14 are being given food every day. So, that's quite a substantial benefit that goes to poor people.

We have launched the National Rural Health Mission, which provides much improved health services through the public health system in rural areas. There are other schemes, like rural sanitation, rural road development to link the rural areas to urban areas and improved market linkages, and things like that.

These schemes taken together, combined with the fact that higher growth would mean there has to be some trickling down of benefits, would make the system much more inclusive than it was.

We would know the results when we see the numbers at the end of the 11th Plan period.

Why is India then importing wheat and other food grains? Why do farmers commit suicide? In Vidarbha, 1,600 farmers committed suicide last year.

On the suicide front, first of all, that's a figure of three years ago. There was a period when there was a lot of distress. Those numbers have come down. If you look at those numbers these are not higher than the peak three years ago. It is not that before this government came to power there was no suicide.

There are suicides in every group in the country every year. So, I just do not believe that the evidence of suicide suggests rural distress compared to the situation that existed earlier.

Import of food is not a sign that agriculture is not doing well. We are importing food and we are exporting food. In years of plenty we exported food. When there's shortage we import food.

Food import took place last year and actually we wanted to be absolutely sure that there won't be any food shortage. The last two years, including this year, we are running record food crops, granaries are over full. So, the import of food is not at all an indication that agriculture is not doing well.

We banned the export of food last year. We are banning export and encouraging import just because we wanted to keep adequate stocks within the country. Had we not banned export, cheap food would have been imported and expensive food would have been exported.

I don't think importing food is a sign of agriculture weakness at all. It is only a sign that there's adequate food available in all categories. For example, we didn't restrict the export of Basmati rice. If you are freely going to allow export of Basmati rice, there's no harm in importing cheaper rice that poor people need.

If you don't import cheaper rice and simply ban the export of Basmati rice, the poor people are worse off and also the farmers are worse off because the farmers get lower price for Basmati rice and the poor can't afford that price anyway.

So, it is far more sensible to let a superior product be exported so farmers benefit and import what the poor man needs by importing cheaper rice from abroad.

What I am trying to say is that successful agriculture involves farmers switching to Basmati earning three times and price and poor farmers importing Vietnamese rice. You shouldn't look at the import and say agriculture is not doing well.

Agriculture would be doing very well in net terms even though we are importing some food.

India imports 70 per cent of its oil needs. It is costing the country -- at the present rate of $50 a barrel -- up to $28 billion. What if that price increases to $100 a barrel?

As long as recession continues there's no chance of oil going to $100 a barrel. We are suffering because of a decline in demand for our export but we are benefiting from oil price. If the world economy recovers, the price of oil will also rise. If the price of oil does increase, in my view, domestic oil prices should adjust accordingly.

We shouldn't, under any circumstances, subsidise oil. Unfortunately, it is difficult to implement. In my view, if you want to subsidise your consumers, give them the money but charge them the market price of oil. Then you are really helping the poor.

In the integrated energy policy this is very clear -- in the longer term the only sustainable policy is that the price of oil should reflect its global price.

That's what happened last year also. We adjusted oil prices and then we lowered oil prices because we didn't raise to the full extent.

Will India phase out coal-fired power plants and emphasize more on renewable sources of energy?

I don't see any phasing out of coal plants in the next 20 years. The total use of coal in India would only increase. What we should do is more of an increase in the renewable energy than in this category, but both will have to increase.

Second, we have to experiment as to how we can make the use of coal clean. That's a major technological challenge but obviously we should try to develop that technology to the extent we can or bio(fuel) to the extent which we can.

Emission of carbon dioxide is 1.2 tons per capita in India. Does it have a significant environmental impact?

The emission per capita in the United States is 20 tons, in Europe it is 12 to 14 tons and in China it is 4 tons. So, I think the rest of the world should pass a motion of thanks to India for keeping its emission at a level which actually is below the level required to achieve climate sustainability -- because most people say the world has to reduce its emission per capita to 2 tons per capita.