Answer: The LPG (Liberalisation, Privatization and Globalization) reforms introduced in India in the early 1990s aimed to reduce government control and promote private enterprises. The reforms focused on features such as privatisation, public-private partnerships, streamlined bureaucracy and increased transparency and accountability.

Positive impact of LPG reforms on poverty alleviation:

Poverty rates in India have declined significantly from 45% in 1994 to 21.9% in 2011. This could be explained by the following arguments:

• Economic growth: The reforms opened up the Indian economy leading to rapid growth in GDP which has led to the creation of jobs and opportunities for the poor.
• For example: According to the IndiaSpend, 2019 report, India had created about 61 million jobs over the 22-year period since liberalisation in 1991.
• Foreign Direct Investment (FDI): The inflow of foreign capital has helped establish new industries and expand existing ones, providing employment opportunities for the local population.
• For example, foreign companies invested in sectors like information technology, manufacturing, and services which helped in job creation and poverty reduction.
• Poverty alleviation programs: The economic growth spurred by the LPG reforms has allowed the government to allocate more resources towards poverty alleviation programs.
• For example, government implemented Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which guarantees a minimum number of days of employment to rural households.
• Increased expenditure on Social Welfare: Economic growth resulting from the LPG reforms has led to increased government expenditure on education and healthcare due to increased fiscal space.
• For example, initiatives like the Sarva Shiksha Abhiyan (Education for All) has expanded educational opportunities and has helped to reduce poverty.
• Access to Technology and Services: The reforms facilitated the entry of foreign companies and technologies into India, leading to advancements in various sectors, including telecommunications, information technology, and consumer goods.
• Improved access to technology, especially in rural areas, has opened up opportunities for education, communication, and skill development, indirectly contributing to poverty reduction.

 Negative impact of LPG reforms on poverty alleviation

• Income Inequality: One of the most significant negative impacts of LPG reforms has been the exacerbation of income inequality. This increased income inequality can perpetuate poverty and hinder poverty alleviation efforts.
• Displacement of Traditional Industries: The liberalisation of trade led to increased competition, which often resulted in the decline or closure of traditional, labour-intensive industries. This affected many low-skilled workers who lost their jobs.
• Rural-Urban Migration: LPG reforms have accelerated rural-to-urban migration. While this can lead to improved incomes for some, it also puts pressure on urban infrastructure and services, leading to the proliferation of slums and urban poverty.
• Agricultural Distress: The agricultural sector faced challenges due to liberalisation. Farmers often struggled to compete with cheaper imported agricultural products, and fluctuations in commodity prices could lead to income instability and poverty in rural areas.

While the LPG reforms have contributed to poverty reduction, the impact has not been uniform across all segments of society. Additionally, efforts to mitigate negative externalities, such as environmental degradation and inequality, remain crucial to ensuring that the benefits of economic growth are broadly shared and sustainable in the long term.