The fact that a rising trend in economic growth, (in the short-term), leads to increasing inequality is all too obvious. More over it is common knowledge that boom in the market generates wealth, not equity and re-distribution. Achieving greater equality, is supposed to be a duty of state. What however, surprising is that today the market-friendly World Bank too admits it. The Bank's world development report 2000-2001, notes that India's gross domestic product (GDP) grew in the 1990s by 6.1 percent while the decline in poverty levels has been rather sluggish. In fact, the bank recommends a comprehensive and direct approach involving ''opportunity, empowerment and security.'' This would certainly come as a big blow to those who still continue to believe in the wonders of 'trickle-down economics.''

What is particularly disturbing is the increasing hiatus between the urban and the rural areas. In fact, the bank report on ''attacking poverty'' quotes National Account Statistics (NAS) to argue that the sign of rising inequality is mainly due to rising average consumption in the urban areas. This surely provides credibility to the argument that modern development has led to the emergence of two Indias: the rural versus the urban, the poor versus the rich. Mr. Sharad Joshi, the Kisan leader had aptly described it as Bharat versus India.

The all time rhetoric has unfortunately been proved true. What are then the lessons to be learnt from such a revelation? A predominant proportion of India's population (nearly 2/3's) continue to derive their livelihood from Agriculture even after 5 decades of independence, where the poverty alleviation programmes have not made any significant dent on the encrusted rural poverty while the urban workers in the organized sectors of urban India fared better. Diseases desperate grown need equally desperate remedies. War footing efforts to tackle the issue are never more justified than now.

Secondly, a precondition for a successful democracy, according to Barrington Moore the noted political sociologist, has been a successful alliance between the urban middle class and the rural peasantry.

This cannot come about if few cities continue to prosper while the millions of villages languish. Finally, if poverty reduction became sluggish during the 1990s such a discovery would immediately lead those against reforms to argue: ''I told you so.'' But on careful consideration it will be abundantly clear that one cannot blame the reforms for the slow process of poverty alleviation, especially in the rural areas. The markets have indeed performed. Consider the following: India in the '90s moved much beyond the sluggish Hindu rate of growth; today the World Bank admits that India is the fourth largest economy in the world going by purchasing power parity estimates. But why does India continue to house the world's largest poor? The state is the real culprit. Instead of investing in education, public health and empowering the poor by rebuilding their entitlements, the state continued to regulate and throttle the markets in the first four decades, mistaking trees for wood - Today, instead of planning out the strategies of long-term poverty alleviation, it has abandoned the basics of governance.

As a necessary fall out of globalisation and liberal economic policies, India has moved from its ''Socialistic Pattern'' stance to the ''free market economy''. Here one recognizes a distinct shift in the role of the state. India's new economic policy is based on the notion that economic growth is possible only if the internal entrepreneurs are liberated from State controls. The government is providing attractive returns for the investment by Indian and foreign business.

On the one had various concessions and incentives are being offered to enlarge the capacities of private and foreign enterprises to invest in India on soft terms with very few or no strings at all. While on the other the government has introduced or is likely to introduce cuts in governmental expenditure on development as well as mass welfare schemes.

Developing countries, like India are to face new challenges from the world trading system after the World Trade Organisation (WTO) came into force. Insistence of some developed countries on making environmental and labour standards as a precondition to market access and free trade would only further impoverish the poor in the developing economies. The million-dollar question is, Will the developing economies be able to claim an equitable share of the new world trade over? How to cope with the adverse effect of preferential trading arrangements and growing regionalism despite WTO's guiding principle of non-discrimination? What strategic laws and policies should be evolved to meet the challenge of the new world trade order. The new liberalization and globalisation regime is based on the premise of equal opportunities in trade and commerce to all, ignoring the fact that equality among unequals only favours the more equal, condemning the fess developed world to perpetual poverty.

It is worth pondering that the enforcement of labour standards will include the entire gamut of worker's rights such as freedom of association, acceptable standards of work, the rights of the migrants and enforcement of ban on child labour, bonded labour.

Can these standards be truly enforced in our country with a liberal foreign investment regime? It is true that free market forces will further reduce the overwhelming majority of the rural poor into agrarian serfs, bonded and child labour, unemployed citizens and marginal farmers? By and large, the experience of countries that have gone through the process of restructuring and privatizing their economies has been a negative one. It is true that this economic model has contributed to increasing inequality, dismantling of social services with adverse effects on the poor and restrictions on trade union rights. The development projects have caused negative impact on the local population, particularly indigenous people. India, which has launched the liberalization process will be an interesting case-study to watch, whether the system would be able to protect human rights or sacrifice them for the sake of the new economic model. India faces an uphill task and a great challenge in the fiscal reform regime. One may ask: Will India's economy continue to remain stuck-up in the mess of stagflation? Who will be the ultimate beneficiary of economic growth? We also need to analyse the economic management policies with structural adjustments so as to evolve a paradigm of ''socially responsible market economy''. This would require proposals for reform in existing legal and economic institutions and also an examination of the social meaning of various judicial decisions creating a new regime of human rights. In other words, the glib talk among vested interests and official propagandist's promising economic growth through free market economy has to be judged in terms not merely economic but social, particularly when the preamble to the constitution ensures justice, social, economic and political to ''We the people of India''.

NALSAR, University of Law, Hyderabad is fully committed to the goals enshined in the preamble of the Constitution of India. In this endeavour NALSAR has focussed on subjects like Law & Poverty, Human Rights & Project writing done by students on socially relevant subjects/topics. The idea of NALSAR as a institute of excellence in the field of legal education is to train students, as competent lawyers and also to sensitise them about realities of law and life.