Impact of Structural Adjustment Program on Poverty in India and Africa

Running head: STRUCTURAL ADJUSTMENT PROGRAM AND POVERTY
Structural adjustment program and poverty
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1STRUCTURAL ADJUSTMENT PROGRAM AND POVERTY
Introduction
The aim of the paper is to discuss the impact of structural adjustment lending in
growing poverty and how this lending has widened the gap between the rich and the poor
within the context of two poor countries. The two countries chosen for this analysis are India
and Africa since their economic condition at the time of structural adjustment lending was
poor. This paper is divided into three distinct parts while the first part of the analysis will be
presenting the brief analysis of the issue of structural adjustment, while the second part of the
analysis is the impact of the same on the economy and society of India and Africa and the last
part of the analysis is the present status of the countries in widening the gap between the rich
and poor.
Discussion
The structural adjustment programs are the set of macro-economic policy changes
initiated by the Bretton Woods institutions (The World Bank and International monetary
Fund) in order to initiate loans to the developing countries of the South (Bond et al. 2015).
Shortly known as the SAP, such changes in the economic model of the countries were
designed to make stronger influence in the poorer countries by penetrating in their domestic
market and opening up their market to the exploitation of the global economy (Bond et al.
2015). This is nothing but the removal of the trade barriers and tariffs and regulations from
the developing countries market in order to gain easier access to their market (Fosu et al.
2015). Hence India and Africa are chosen as the two countries for the analysis of the paper
(Dreher 2018). Some of the conditions are measures imposed under SAPs are:
 Diversification of the import and export of the country, easy access to the domestic
market of the Southern nations (Kentikelenis et al. 2015).

2STRUCTURAL ADJUSTMENT PROGRAM AND POVERTY
 Replacement of the food crops with the profit oriented cash crops.
 Need of the state to have to refrain from interferences, in one word,” withering away
of the state” and play of the free market economy (Dreher 2018).
 Currency devaluation(Dreher 2018)
 Liberalization of the trade barriers and opening up of the economy to have easy
investment of the private players in the market (Haggard et al. 2018).
Hence it can be argued that the SAPs are one of the all inclusive changes in the economic,
social and political changes of the governance of the developing countries and the impact it
had was not only restricted to the economic sphere instead it spilled over the political and the
social aspects of the countries as well.
Case study: India (Impact of SAP in alleviating poverty)
There are significant changes on the indicators of poverty in the pre and post reform
era of the India’s poverty scale. It has been observed that the poverty indicators were showing
positive growth in the pre-reform period, however after the SAP are initiated, the indicators
showed a negative growth (Dreher 2018). The rural and urban parts of India showed
differential poverty indicators in terms of the widening gap of the rich and the poor of the
country (Wahab et al. 2017). While in case of the African countries, SAP consistently failed
to enhance the agricultural growth and the real wages fell, food prices were increased
drastically which impacted negatively the selected group of people, the poor and the
marginalised (Wahab et al. 2017). In case of India, the scenario was different since India
went through the mixed bag experience. The agricultural sector was one of the major hits of
the negative impact of the SAP. Industry was given higher importance in comparison of the
agricultural growth irrespective of the majority of the Indian population are solely dependent