Leading Indian economist Arvind Panagariya visited South Africa this month to share his insight with business leaders, economists and politicians on how economic growth helped the Asian country make inroads in its efforts to reduce poverty – lessons that could prove valuable to other developing countries.

The visit, facilitated by the Centre for Development and Enterprise, follows on from the recent publication of a book entitled Why Growth Matters, published by PublicAffairs, of the US, and co-authored by Panagariya with fellow Colombia University professor Jagdish Bhagwati.

The study’s assessment is that, while India had prioritised poverty reduction ever since the publication of its first postindependence five-year plan, little changed until reforms were made in the 1990s, which laid the basis for accelerated economic growth.

Once the stranglehold of controls was loosened and reforms took root, growth accelerated and poverty fell in both rural and urban India and nationally, the book asserts.

The authors also seek to address what they describe as myths surrounding India’s growth, which range from arguments that there has been no reduction in poverty after the reforms, to assertions that the reforms hurt socially disadvantaged groups and increased inequality.

In a discussion with South African editors, Panagariya acknowledged that high levels of economic growth were generally accompanied by a degree of inequality, highlighted in India’s case by the growth in the number of billionaires from zero in 2000 to around 55 in 2007, as recorded on the Forbes list.

However, he said the focus should not be on the top 1% of society, but rather on whether growth was having a positive impact on those occupying the bottom 30% to 40%. The research showed that growth was a “powerful engine” in pulling the poor up into gainful employment and by generating resources for social programmes.

Panagariya said he was concerned about the current slowdown in India’s growth rate to around 5% and argued that the remedy lay in the political leadership dealing with the remaining internal constraints, notably the need for labour-market reform.