India faces crisis as boom fails rural poor

High economic growth rates have failed to improve food security in India leaving the country facing a crisis in its rural economy, the United Nations World Food Programme warned.

India has grown at about 9 per cent a year over the past three years, making it the second fastest growing economy in the world. Yet the WFP's report on State of Food Insecurity in Rural India said rural unemployment was rising, and had worsened over a decade celebrated for rising prosperity.

They warned that the economic downturn threatened to deepen the crisis by forcing workers who have been made redundant out of cities and into the resource-starved countryside.

The findings are particularly worrying as 60 per cent of India's 1.2bn population lives in villages of no more than 5,000 people.

India has more than 220m hungry and ranks 94th out of 119 countries in the Global Hunger Index. About 56 per cent of women are anaemic and just under half the children are underweight.

The WFP report said the number of undernourished people was increasing, reversing earlier gains made in the 1990s. Falling food production growth, rising unemployment and declining purchasing power of the poor in India were combining to weaken the rural economy.

"By far the greatest contribution to the number of undernourished people in South Asia has come from changes in the state of food and nutrition insecurity in India," the report said. "The deterioration in the state of food and nutrition insecurity in India should be a serious concern for public policy."

Professor Venkatesh Athreya of the MS Swaminathan Research Foundation, the WFP's research partner, said India was facing a "major crisis" of rural unemployment reinforced by declining rural development.

Critics say high growth rates are confined to some service and industrial sectors, such as its IT outsourcing and telecommunications. The rural economy, meanwhile, is only growing at about 2 per cent. They say feeding schemes are often preyed upon by corrupt politicians and bureaucrats and never reach the rural poor.

Copyright The Financial Times Limited 2009