Some Random Reflections on Poverty & Inequality in India
Last autumn, there was a great furore on Planning Commission's commissioning the new poverty benchmark, '32 for towns and cities and '26 for rural areas. But this 'Incredible India' has a lot in stocks to steal the limelight elbowing out drab issues like Poverty-Line/BPL - there are CWG-2G-3G etc scams, Baba-s & media-celebrity-camp of Anna-ji, their much hyped mega-episodes, state-elections, myriad of scams and etc. But quite recently the planning commission republished its poverty benchmark - '22.40 per day for an adult in rural areas and '28.65 per day for an adult in urban areas (for 2009-10) - and again it raised lots of uproar (including, mostly, misunderstood hullabaloos and nautankis by parliamentary party leaders) - but then came the saviour, this time the IPL, centre-state sweet-n-sour relations, scams ranging from Bofors to Bangaru Laxman and sensational bribing proposal to the army chief to thrilling Odisa kidnappings &c. So this time too the issue and uproar/wrath associated was easily swept under the carpet. And last of all, to make the thing more baffling, we were reported by the TOI on the morning of the last Sunday of April: "New Poverty Line - '66 for cities and '35 for Villages" - such a poverty line that will have two third of Indians under it![i] So, before the curtains are dropped let us jot down some points that were indirectly raised in the elite discourses in the corporate media.
The following points will be targeted: (1) Anmol (4 months), K Laxmi (35), Jose (46), Vijay (60) & some other Ghosts Vs our famous economists like Swaminathan S. Anklesaria Aiyar; vis-?-vis our Honourable Court, or how our super-educated media elites downplay poverty ; (2) How to Reduce number of Poor - an Innovative Indian Methodology; (3) Why they Need to Reduce number of Poor or number Below the Poverty Line; (4) Rapid GDP growth and Reduction (?) of Poverty & Augmentation of Inequality; (5) Why $1.25(PPP) should still be so Sacrosanct; and (6)Keenness concerning Corruption & Indifferent to Inequality - the Indian Civil Society
1. HOW OUR EDUCATED ELITES DOWNPLAY POVERTY
Anmol was at such an age that committing suicide was impossible for him. Actually, seniors of his family of 10 members took the decision of putting end to their lives and did so in the last great autumn festive days, etc; just a couple of days before Dussera, at Dehradun, where the effigies, for the first time, were burnt by remote control, they drank cold drinks mixed with poison before throwing themselves in a local canal. Only a very elderly female member, Kailasho Devi (60+), didn't die somehow, but she had declared in the hospital that she would again try after getting released from the hospital. All god fearing and truth abiding gentry of the investigative-journalism famed Indian Media gave the same explanation, e.g. the jagran reported, "The police believes that due to depression, they all consumed poison and then jumped into the river." [ii] Or, as another one of them reported - "Rekha died three months ago after a cyst was found in her abdomen" and "the family could not cope with the depression that struck following her death. They were reportedly under fear that the ailment could occur to them, too," said SSP Dehradun GN Goswami. Another news agency informed us about an incident near Hyderabad, "A woman [K Laxmi (35)], along with her two daughters, has allegedly committed suicide by jumping into an agricultural well in Ranga Reddy district ... Police said, the family could not celebrate the Dasara festival and the parents could not buy new clothes for the children. Police suspect this might have drove Laxmi to depression." [iii] From the western part of South India a similar story appeared almost at the same period, "...In a suspected suicide pact, five members of a family, including an 85-year-old man, were today found dead at their home near Kundara area in Kerala. Jose (46), an autorickshaw driver .... A note recovered from the house said they were committing suicide due to "intimidating" phone calls from some enemies, police said. However, neighbours of the deceased persons said Jose was going through financial problems."[iv]
As always the case are, during the last rice harvesting season in West Bengal several peasants committed suicide and the police found out depression, family problems etc as the causes.
We should have known it beforehand. As famous an economist like Swaminathan S. Anklesaria Aiyar told us some eight years ago, "The global picture suggests that the main cause of suicide is internal, not external. It relates mainly to the psychological and genetic make-up of individuals (manic depressives are very suicidal). ... ... This helps explain why suicide rates seem impervious to economic and social conditions. It also provides a cultural explanation for high-suicide areas like the Baltic zone and low-suicide areas like Muslim countries. ...... No doubt external stresses like drought and debt can tip depressed individuals over the brink. ... ... But the data do not suggest that this greatly increases suicide rates. When millions of farmers face the same problems, only a few kill themselves, and these would be prone to do so even in better economic conditions." [v] [italics ours]
Not only economists or police top-notches opine like this. Famous psychiatrists armed with all their statistical weapons also could not find correlation between poverty and suicide and only recently did we hear, "Researchers have documented a connection between low socioeconomic status (low SES, or those who are poor) and the likelihood of also being diagnosed with a mental illness or having attempted suicide. The researchers also found that a decrease in a person's income level is also associated with a higher risk for anxiety and mood disorders, as well as a higher rate of substance use.
"Previous research into the relationship between these factors has not resulted in a clear answer, according to the researchers. "Some studies have found that lower income is associated with mental illness, while other studies have not found this relationship," noted author Jitender Sareen, M.D., of the University of Manitoba." [vi]
Interestingly, on this issue our Honourable Court had a peculiar thought process that can be found within us, commoners. In a recent judgement an honourable Judge said, as a newspaper headlined, "No harsh sentence for poverty-based suicide: Court" [vii] ""Attempt to commit suicide are made due to extreme poverty and helplessness. There is no justification for imposing severe punishment upon such convicts," said ASJ Kumar, while sentencing North West Delhi resident Satish Jain to "imprisonment till the rising of the court." ... Jain was also acquitted of the charge of attempting to murder his wife and daughters aged between 6 and 16 by serving them soft-drink laced with poison."
That abject poverty causes among many other things depression, suicidal tendency and so on, that abject poverty causes dehumanisation (and consequently various manifestations/products of dehumanisation including self-destruction) is somehow unknown or unimportant to a wide section of our power-elites. They are buoyantly spreading the news that 'hunger' is now less abundant and nutrition is rather a problem with Swaminathan S. Anklesaria Aiyar floating an innovative suggestion by a scientist and improvising it: why not mix grinded coarse food-grains or grams with wheat flour for the PDS which will dissuade solvent people from buying subsidised unsavoury PDS atta and on the other hand increase calorific value of PDS food; why not discourage paddy farming and etc. [viii] Serving bad-tasting subsidised food through PDS is then the present day liberal-democratic reincarnation of 'why not eat cakes'! If we are to study what is exactly the nature and result of the so called alleviation of poverty we must not give importance to commentaries of those who produce travesty of analysis and shamelessly self-contradict while beating drums for the 'stellar' success of poverty reduction. [ix] [How shameless, and ignorant too, these renowned economists have become can be traced form Swami's tirade against subsidised rice (of naturally bad quality) distribution even for the BPL households. [x] And that is based on his utter ignorance of modern methods that had been developed long ago for rice cultivation which do not need 'standing water' in rice-fields, as for example the Fukuwaka's method developed as earlier as in the 1960s or the SRI method that is being used in partly-arid tracks of, for example, Jharkhand.]
2. HOW TO REDUCE THE NUMBER OF POOR - AN INNOVATIVE INDIAN METHODOLOGY
Before going to the innovative methodology let us make clear a common misunderstanding, that is regarding the disparity between the autumn announcement of "'32 for towns and cities and '26 for rural areas" vs. the spring announcement of "28.65 per day for urban areas and '22.40 per day for rural areas". It is not fudging. The latter figures are related to FY 2009-10 which translates roughly to the former figures for FY 2011-12 if inflation is taken into account - just that. Fudging, if it can be so called, or rather the 'trickeries', are at someplace else.
The Indian official methods of surveying poverty are as such poor methods - the MPCE (mean per capita expenditure) recall for last 365 days, or even for last 30 days, is itself unreliable as far as data integrity is concerned and it is a tormenting question to answer for those people who pass each day with uncertainties about tomorrows that how each of her last 30 or 365 days passes, what s/he bought each of these days and etc.
Then somehow the power elites had a never-changing basket of 'things the poor need each day for this much calories to be taken' and the things remained the same with the same proportions they had been for the last 30-40 or more years! Only they upgrade the price of that basket with consumer price index figures (which themselves are not much reliable). To those elite economists it never occurred that over time the content of the basket could change and their relative weights too. [xi]
But the ugliest display of their misanthropic exercise was arbitrarily lowering of minimum necessary Calorie (or Kcal) intake to 1800 Calories per day from another set of arbitrary numbers: 2100 Kcal per day for urban areas and 2400 Kcal per day for rural areas. As an excuse the Expert Committee of the Planning Commission cited a norm of Food and Agricultural Organisation where this '1800 Calories' was mentioned, but they kept hidden the fact that this 1800 Calorie was FAO norm form those doing light (sedentary) works. [xii] Example of such sedentary activity was defined by FAO as - "...a male office worker in urban areas who only occasionally engages in physically demanding activities during or outside working hours." Just compare this to the quanta of work the Indian poor have to do just to survive! While exposing this major flaw in methodology Prof Madhura Swaminathan drew attention to the scenario in some other countries in this regard: "the same FAO Report provides data on the energy intake per capita for a range of developing countries, classified by income level as well as by the level of under-nutrition. Now, in all the countries where under-nourishment affects less than 5 per cent of the population, irrespective of the income level, the average per capita energy supply is greater than 2800 Kcal per day. The per capita energy supply was, for example, 3100 Kcal per day in Iran, 3320 in Egypt, 2860 in Malaysia, and 3030 in Korea." [italics ours]
Now, if 2700 Calories (that is less than the least of the above figures in different countries) is taken as a yardstick (the NSSO calls it Consumer Unit Norm) we shall see that percentage of Indian households who cannot afford this standard food intake has been increasing over decades. The NSS organisation surveys, calculates and publishes such figures.
Table: 1 Percentage of Indian Households with intake below 2700 Calories
Percentage of Households with Intake Below Consumer Unit Norm (2700 Kcal) | ||
Year | Rural | Urban |
1993-1994 | 51.5 | 57.2 |
1999-2000 | 55.8 | 57.2 |
2004-2005 | 61.3 | 63.1 |
2009-2010 | 62.0 | 63.4 |
Source: Nutritional Intake in India, NSS 66th Round, 2009-10, cited in Bogus Methodology to Prove that Growth Busts Poverty, in a recent issue of Research Unit of Political Economy [xiii].
For a while, let us enquire from another angle: what exactly 1800 Calories or rather '32 means - as it can be safely assumed that '32 cannot provide 1800 Calories because the whole calculation had several flawed steps. As the poor people often cannot express how they are in a polished educated way so, as if like a blessing, we have with us two nexgen boys from the topmost stratum of our society who actually experimented living with '32/day. Tushar Vashisht, a University of Pennsylvania graduate, and Mathew Cherian, a Johns Hopkins and MIT grad really tried to live @'100 a day for three weeks only to start practising living @'32 a day for a week and see and feel what poverty means to the poor! Their experience was published, though in a third person form written by Nandita Sengupta, in the Crest Edition of the Times in end-October. [xiv] "Living on a budget of '32 boxes you in, makes you prisoner to a bare basic diet, distances within a radius of 5 km and an interminable slog. The days seem terribly short as everything is DIY. There's just no respite from the grind. You are left drained and raw. And hungry, as you can't even pick up the cheapest biscuit available - Parle G - from a roadside grocery. ... In their lungis and shirts, talcum sparingly applied to beat the sweat, the two spend almost all day doing chores: cooking, washing and cleaning. They share a bar of cheap soap for bathing and shampooing, and work on their Macbook Pro with the light - a single CFL bulb - off. They can't imagine physical labour at their current energy levels. Both lost weight, Vashisht 4.1kg, Cherian about 2 kg. ... "Being rich in India is a ridiculous privilege", Vashisht said. ... And @'32, "Your body normalises. We didn't feel hungry anymore," says Vashisht though there were bouts of anger and frustration."[italics ours]
It is likely that millions and millions of fellows living at, below or near '32/day too experience "bouts of anger and frustration", perhaps of a less refined/cultured kind and it is also likely that their expression will be of a different kind.
(3) WHY THEY NEED TO REDUCE NUMBER OF POOR OR NUMBER BELOW THE POVERTY LINE
Universal public distribution system of all essential consumables, a healthy (or even severely ailing, as in the case of some states of India) public health system, public transport (under public i.e. govt ownership) etc all became anachronistic with respect to the neo liberal paradigm which enforced itself worldwide in the 1990s, though, it was preparing its ground in several countries since the 1980s. According to this present ruling ideology, 'Public', per se, was thought to be ineligible in the Democratic Republics to get state assistances, and state expenditures for such things are considered as wasteful expenditure! So the public distribution system was overhauled to become Targeted distribution system, where the target was naturally not universal, but rather a small part of the population who can qualify for state assistance or subsidy, i.e., the poor. And poverty measurement became very important from totally a different angle - how many of people are there to be given subsidised (though paltry). Previously greater number of people below the poverty line could bring shame and embarrassment to the govt leaders (of course if at all they ever feel ashamed for this is another question) but still it could bring greater amount of foreign aids, assistances, grants, soft loans and etc. However, now greater number of people below the poverty line means 'subsidy burden'.
Now, the easiest way to narrow down the target is redefining poverty in such a way so that the number of poor plummets. For that various methods can be taken and were actually taken several times in the last two liberalised decades. Let us take a few glimpses:
We should like to thank friend P. Sainath for digging it out again at a proper time:
"Kill me, I say," said Prof. Madhu Dandavate in 1996, chuckling. "I just doubled poverty in your country today." What that fine old gentleman had really done, as deputy chairperson of the Planning Commission, was to jettison the bogus methodology peddled by that body before he came to head it the same year. Even minor changes in methodology or poverty line can produce dramatically differing estimates.
"The fraud he undid was "an exercise" bringing poverty down to 19 per cent in 1993-94. And that, from 25.5 per cent in 1987-88. These were the "preliminary results of a Planning Commission exercise based on National Sample Survey data" (Economic & Political Weekly, January 27, 1996)." [xv] [italics ours]
? "If we look into the poverty-statistics of WB, we'll find that in '93-'94, 40.8% of the rural population was under the poverty line (i.e., who can not afford a per capita per day food intake equivalent to 2400 Calories). In the year '98 that figure increased to 58.3%. The governments (both of the state and the union) didn't like these figures. To please them able statisticians changed the way poverty is to be measured, and to their pleasure, found that poverty has decreased suddenly within a year or so, in 1999-2000 the rural poor were only 31.85%." [xvi]
? Yet the WB govt was not satisfied. In 2007 a new circular was sent to Block (mandal) Offices of West Bengal. It contained a 13-aspects measuring technique with scores 1 to 5 for different answers from respondents. Only persons scoring 33 or below in total could claim to be a poor and s/he must prove that; otherwise the name would be deleted from the BPL list. We tried to explain this complicated method as much as we could in the Jan 2008 issue of our magazine. The method was wonderful for reducing number of poverty stricken persons. [xvii] But it was very complicated, had some probable social-political fallout, after all those were Nandigram - Raygad - 'Ration' Riot days, and therefore this measure could not effectively take off.
It is unlikely that our famous friend Sainath does not know these latter two poverty 'reduction' exercises mentioned by us and so many things unknown to us too, but somehow he refrained from telling these in his wonderful 'CPL' article. Anyway, whereas the govt is all out to reduce the official number of poor Indians the govt is no less keen in subsidising some other entities and/or entries (in their income-expenditure pages) and this was nicknamed CPL by Sainath and was beautifully exposed by him. Let us quote him in detail ?
"Now to the queue of BPL, APL, IPL, et al., may I add my own modest contribution? This is the CPL, or Corporate Plunder Line. This embraces the corporate world and other very well-off or "high net worth individuals." We have no money for a universal PDS. Or even for a shrunken food security bill. We've cut thousands of crores from net spending on rural employment. We lag horribly in human development indicators, hunger indexes and nutritional surveys. Food prices keep rising and decent jobs get fewer.
"Yet, BPL numbers keep shrinking. The CPL numbers, however, keep expanding. The CPL concept is anchored in the "Statement of Revenue Foregone" section of successive union budgets. Since 2005-06, for instance, the union government has written off close to '4 lakh crore in corporate income tax. Over '50,000 crore of that in the present budget. The very one in which it slashes thousands of crores from the MNREGS. Throw in concessions on customs and excise duties and the corporate karza maafi in this year's budget sneaks up to nearly '5 lakh crore.
"True, there are things covered in excise and customs that also affect larger sections, like fuel, for instance. But mostly, they benefit the corporate world and the very rich. In just this budget and the last one, we've written off '1 lakh crore for diamonds, gold and jewellery in customs duties. That sort of money buys a lot of food security. But CPL trumps BPL every time. The same is true of write-offs on things like machinery. In theory, there's a lot that should benefit everybody: like the equipment hospitals import. In practice, most Indians will never enter the five-star hospitals that cash in on these benefits.
"The total write-off on these three heads in eight years since 2005-06: '25.7 lakh crore. (See table.) That's over half a trillion U.S. dollars. Not far from 15 times the size of your 2G scam. Or over twice the Coal Scam, the latest addition to the CPL. Look at the table and think about BPL estimates working on cut-offs of '22.42 a day rural and '28.35 urban. To fix BPL, nix CPL." [xviii] (italics ours)
And this CPL is not everything for which the govt in overzealous to the extent of throttling budget grants for subsidies to the public. For example: compare % of budget expenditure for Health with % of budget and non-budget expenditure for police, paramilitary and military. Or for example: Our public (i.e. govt) owned Petroleum Companies and the Govt together has been spreading a sheer hoax called petrol/diesel/lpg/etc subsidy and the need to withdraw that subsidy for the sake of viability of those companies. Exact figures are available to our high-level friends like Sainath ? he can easily calculate and show that for each litre of petrol or diesel one buys or 1 litre of kerosene or 1 cylinder of LPG one buys the state govt and the central govt take this much money as cess/excise etc, the govt gets profit/dividend of so and so rupees being the owner of the company, this much money flows to the transporters or carrier companies, this heavy amount goes for the benefit of high-flying executives and so on so forth. Then it would have been clear that actually the public is subsidising both the govt and the petroleum companies or the govt and the companies are profiting so much for each litre of diesel or each cylinder of LPG. This is a good accounting problem to do, is there any taker?
So fudging poverty figure by some disfigured poverty line is intended by our rulers to dislodge greater number of our toiling poverty stricken countrymen from even the paltry govt subsidised 'care' they get. What is a statistical drill to our highly educated Messers Suresh Tendulkar or Montek Singh is but adding insult to injury for the poor toiling people of the country. Do you remember gentlemen what your guys said how one feels @'32 ? "bouts of anger ..."?
(4) RAPID GDP GROWTH AND REDUCTION (?) OF POVERTY & AUGMENTATION OF INEQUALITY
Whatever Swaminathan S. Anklesaria Aiyar or other members of our ruling class elite clan like, say, Manas Chakravarty boasts - Give us growth and we'll handle the inequality (in the Wall Street Journal - livemint [xix] ) and however gladly the Asian Development Bank approves this 'theory', real life shows something different - though it is indeed a fact that some 'things' do trickle down to the bottom layers, albeit slowly and under circumstances.
We would like to put some figures here which will show that growth cannot so easily be correlated (positively) with factors, e.g. more employment, more wages and etc, that may alleviate a fraction of poverty stricken people above some imaginary poverty-line.
? Between 1993-94 and 1999-2000 Annual GDP growth rate at Gujarat was 7.3% and for WB also it was 7.3%. But whereas in Gujarat the figure for unemployment rate fell from 5.7 to 4.55 in this time span, in WB unemployment rate rose from 10.06 to 14.99 in this same time span! Thus spoke a 2007 report prepared by a working group of the United Nations. [xx]
? The same newspaper which regularly publishes articles of Swaminathan S. Anklesaria Aiyar presented some data in a tabular form from which further calculations can be done to see th effect of Growth on Growth (?) of Real Wages. Let us see that in our Table 2:
Value Added by workers - from TOI Nov 6, 2011
Categories | FY 1998-99 | FY 2008-09 | % Change |
Net Value Added per Year (*) | '145461.05 Crores | '527765.58 Crores | |
Total Wages Paid in the Year | ' 26528.95 Crores | ' 59771.84 Crores | |
Net Value Added per Worker per Year | ' 2.29 Lakhs | ' 6.01 Lakhs | |
Wage as % of Net Value Added | 18% | 11% | |
The above figures were in Times of India, figures below are calculated from the above | |||
Categories | FY 1998-99 | FY 2008-09 | % Change |
Number of Industrial Workers (daily average) | 65,32,011 | 87,81,457 | +34.5% |
Average Wage per Worker (daily) (at current price) | '133.86 | ' 218.16 | +63% |
Average Wage per Worker (monthly for 26 days work) | ' 3480.39 | ' 5672.16 | |
Consumer Price Index for Industrial Workers (Gaziabad) | 406 | 697 | +71.7% |
Real Wage per day per Worker (base = 1998) | '133.86 | '127.08 | - 5% |
So we see that, if we take average figures for calculation of a category value at a particular place, in between 1998-99 and 2008-09, i.e. 10 years, number of workers or in other word employment opportunity grew, wages at current price also grew, but real wages fell, we calculated it only for a single industrial zone, Gaziabad, and activists who know about CPI figures in other places can calculate rise/fall of real wages in other places too.
? The UN paper that we quoted just now also has a dreadful graphical representation. [xxi] These graphs show Real Per Capita Consumption of different fractions of Indian population - the bottommost 40% or rural and urban population, the rural and urban next higher 40% of population and the top 20% rural and urban population. For each set Year 1993-94 was taken as base indexed at 100.
By the year 2001-02 the condition of bottommost 40% of rural population actually declined not only relatively but also absolutely - they were worse off at 2001-02 than they were at 1990!
The condition of the urban bottommost 40% population, after some undulation, did improve - but only 10% improvement compared to where they were 8 years before.
The condition of the rural next 40%, that is 41 - 80 percentiles of the rural people, can be said to be quasi-static with an ultimate tendency to deteriorate and fall towards Zero-Development mark! For the same percentiles of urban population there was some improvement, say 17% in 8 years, but there is clear sign of stagnation. Remember please that we are noticing only the first decade of liberalisation in these graphs.
For the rural topmost 20%, condition improved almost % in 8 years but with a tendency of stabilisation at this mark for the last 3 years portrayed here. For the urban topmost 20% of people, their lives are improving, 40% in 8 years, but they have to bear short periods of downswings.
Source: originally published in Sen, Abhijit, and Himanshu (2005). Poverty and inequality in India: Getting closer to the truth. (Available at www.networkideas.org) Reprinted in Angus Deaton and Valerie Kozel (eds). Data and Dogma:The Great Indian Poverty Debate.Macmillan, New Delhi (2005): 306-370.
If we consider the bottommost 40% of population, be rural or urban, the worst off or poor, then it can be said that the trickling-down of wealth or benefit in Real terms is not accompanying 'liberalised' growth as far as villages are concerned, and it is oozing down v-e-r-y slowly in the towns and cities. But that was till 2001-02, and we saw the real-wage-falling scenario in the table above in between 1998-99 and 2008-09.
? This slowing down of the trickling-down effect was further established in another UN paper of 2010. According to that paper:
"Other estimates of the incidence of poverty also find that it has been remarkably persistent, especially in rural India, and also much higher than the official Indian estimates. The most recent World Bank estimates (Chen and Ravallion 2008, using a cut-off of $1.25 per day at revised 2005 PPP$) estimated the number of absolutely poor people in India in 2005 to be 456 million, significantly more than the Indian government's own estimate of 301 million in 2004-05. According to these estimates, the aggregate head count poverty ratio in India declined from 59.8 per cent in 1981 to 51.3 per cent in 1990 and 41.6 per cent in 2005. So, according to the World Bank, the rate of poverty reduction slowed from 0.94 percentage points per annum during 1981-1990 to only 0.65 percentage points per annum during 1990-2005."
Furthermore, it says: "The Asian Development Bank (2008) estimate of the number of poor in India in 2005 is well over double the official Indian estimate, at between 622 to 740 million. The higher estimate is because the ADB used a higher Asian poverty line of $1.35 PPP per day per person rather than the $1.25 per day per person used by the World Bank. It also made an attempt to improve upon the World Bank by using price data for goods and services purchased by the poor rather than the usual ICP comparison relating to an overall consumption bundle (Himanshu 2008). This gives India the second highest poverty ratio (at 54.8 per cent) among all the Asian countries considered by the ADB, next only to Nepal (55.8 per cent) and higher than Bangladesh (42.9 per cent), Cambodia (36.9 per cent), Philippines (29.5 per cent), Pakistan (24.9 per cent) and Indonesia (24.1 per cent)." [xxii]
? However, on the other hand, there are literally hundreds of papers which showed liberalized growth contributed to increasing inequality. In the words of Subarna K. Samanta and Allison Heyse, "The evidence indicates that an increase in a country's income inequality is significantly correlated with economic growth." [xxiii] Or in the words of Tony Addison and Miguel Ni?o-Zaraz?a, "Economic growth is a necessary condition to rising per capital income, but it is nonetheless insufficient to guarantee a steady trend towards poverty reduction. In China, for instance, the relationship between economic growth and poverty reduction is far from being linear, with episodes of high economic performance in the 1990s accompanied with increases in the poverty rates ... In India, since the late 1990s the country has experienced the fastest economic growth, and yet the speed at which poverty is being reduced has decelerated." [xxiv]
? * ?
? Anybody spending '32 a day or above in towns and '26 or above at villages would not be counted as poor as the things stand now. That is reverting to the good old MPCE system with a new cut off mark of daily per-capita consumer expenditure. Now for a family of 5, '32 X 5= '160 and that multiplied by 30 = '4800. So a worker, with a family of 5, getting as low a wage as '185 a day (for average 26 working days '4810 per month) will not qualify to be designated as a poor. Similarly a rural family of 4 will disqualify to become identified as poor if that earning member of the family is a contract worker with a daily wage of '130. So these families will not be entitled for BPL tagged provisions. Now, did that auto-rickshaw puller of Kollam, Jose, not earned more than '4800 per month or '160 a day? Then though their neighbours related his whole-family-suicide with stress due to financial problems this cannot be considered officially as a poverty-related suicide case, particularly when the new benchmark of poverty has already been placed on September 22 this year.
But where does the contract worker's family earning '4800 a month or a rural family earning '3900 a month or that auto-rickshaw driver earning some '10,000-'12,000 a month stand in the Indian reality? (For the sake of simplicity we may take number of family members to be 5 for all cases.) Professors Reeve Vanneman (University of Maryland) and Amaresh Dubey (Jawaharlal Nehru University and National Council for Applied Economic Research) have presented a study in 2010. We can take its help. The professors divided the Indian households into 10 equal parts called 'deciles' and starting from the lowest income one-tenth or decile to the highest income decile they measured and presented the mean income of each decile group, how much % of the total income that particular decile group earns, and also many other things which we are omitting here. We inserted two more columns - one showing the cumulative % of total income earned by the decile groups of that particular group and groups below it, another for an estimation of the average earning of those groups at 2011. [xxv]
Table - 3: Household Annual Income
Income | Household Income * | Rough Estimation | ||
Deciles | Mean ' | % of total | Cumulative % | for 2011 ' ? |
1 | 2,854 | 0.50% | 0.50% | 4,281.00 |
2 | 10,701 | 1.80% | 2.30% | 16,051.50 |
3 | 15,197 | 2.40% | 4.70% | 22,795.50 |
4 | 19,709 | 3.40% | 8.10% | 29,563.50 |
5 | 24,791 | 4.20% | 12.30% | 37,186.50 |
6 | 31,914 | 6.40% | 18.70% | 47,871.00 |
7 | 41,966 | 7.70% | 26.40% | 62,949.00 |
8 | 56,871 | 11.10% | 37.50% | 85,306.50 |
9 | 83,175 | 18.10% | 55.60% | 124,762.50 |
10 | 192,384 | 44.40% | 100.00% | 288,576.00 |
* This figures are taken from Vanneman-Dubey, ? The Vanneman-Dubey figures are increased by 50% to present a Rough Estimation of Mean Income in 2011. This rough estimation can be taken as closer-to-reality to some extent only for the 5th and 6th Deciles, that is, for the 20% households in the middle. The lower the income the rate of increase was less and the higher the income the rate of increase was higher; for many higher income households earnings more than doubled in the last 5-6 years.
So a village toiler just within the new cut-off marks of rural poverty will find herself/himself above the lowest half of Indian population in the income ladder or at the 6th decile rung of the income ladder from the lowest and a contract or so-called unorganized worker with monthly income of 4800 on income per annum at 57,600 will find her/his family in the 7th decile rung of the income ladder. Our auto-rickshaw driver with an annual income of 120,000 or more can find himself, to his satisfaction, in the upper 20% of the Indian populace or in the so-called 'aspiring Indian middle class'!
The income distribution in India looks more horrible if presented graphically. That graph is like:
Graph - 1: Income Distribution in India
Professors Venneman and Dubey de facto contradicted the official income distribution and inequality statistics for India as are available from many governmental, non-governmental sources and international agencies in their paper and have shown that Inequality in India is much higher than the most unequal countries of the OECD. While the 'official' Inequality Index stands somewhere within 0.37 and 0.38 (lowest inequality or absolute equality being 0.00 in this gini index and highest inequality being 1.00) the professors found inequality in India lying at 0.536! They found maximum inequality in Kerala (0.765) and Gujarat (0.707).
? But the income distribution does not reveal everything. Additionally we are to see the Wealth Distribution figures. We will see that inequality in Wealth distribution is much higher than in Income distribution. Professor James B. Davies (University of Western Ontario) and others have presented the wealth distribution in India in their "The World Distribution of Household Wealth" (5 December 2006). We saw in Table 1 that the bottom 50% of Indian population or the bottom half earned one-eighth of the total earnings. This bottom half people have in their disposal less than one-twelfth of the total wealth, as Prof Davies showed! The bottom 70% of population earn about a quarter of total income of the country, whereas the have less than a fifth of the total wealth of the country. On the other hand the richest 10% of India earn nearly half of the total income (45.5%) and control more than half of the total wealth (52.9%) of the country. If you consider the upper strata of the rich, affluent and solvent 20% people of India, these 20% people earn about two-third of the total income of the country and have at their disposal 70% of the total wealth! For readers let us present the calculated cumulative figures that we can get from Vanneman-Dubey and Davies-et-al in a single table:
Table - 4: Income & Wealth distribution in India
% of population from bottom | Cumulative % Income (from bottom) | Cumulative % Income (from top) | Cumulative % Wealth (from bottom) | Cumulative % Wealth (from top) |
10% | 0.50% | 0.20% | ||
20% | 2.30% | 1.00% | ||
30% | 4.70% | 2.50% | ||
40% | 8.10% | 4.80% | ||
50% | 12.30% | 8.10% | ||
60% | 18.70% | 12.90% | ||
70% | 26.40% | 19.80% | ||
80% | 37.50% | 73.60% | 30.10% | 80.20% |
90% | 55.60% | 63.50% | 47.10% | 69.90% |
100% | 100.00% | 44.40% | 100.00% | 52.90% |
Surely both the inequalities, i.e., in income distribution and wealth distribution, have increased farther than 2005-06 and the present Indian reality is more unequal.
? The International Business wiki in has dealt with Income Inequality in India and a revealing picture of Rising Inequality in Consumption in India though basing themselves on official data. [xxvi] Readers may visit that webpage and see themselves the rising inequality in India since 1990-91 or the inception of the globalisation regime.
But why were they worried? They wrote "While many would argue it [income inequality - FAPP] is a very much necessary part of natural economics, as in many other countries, India's increasing income inequality continues to pose a significant threat. In most cases, income inequality plays a big role in the amount of crime a country has because "as the rich get richer and the poor get poorer" it promotes unhappiness." [xxvii] [italics ours]
(5) WHY $1.25 (PPP) SHOULD STILL BE SO SACROSANCT?
The United States Census Bureau in 2010, when the last census took place, counted a family of five poor if the household had a combined income of $26,439 a year, which worked out to $14.5 per person a day, or $434 a month. [xxviii] It is indeed difficult to compare US$ 1 of 2010 with PPP$ 1 of 2005 and then to convert that in Indian currency with the equation PPP$ 1 (2005) = '21.6 in urban areas and '14.3 in rural areas (of India 2005) and then to re-convert that to ' of 2012. But safely we can use a simple multiplication factor of say 15 at least. So a US American poor got or could buy at least '6510 worth goods and services a month which translates to '32,550 a month for a family of five or nearly '400,000 a year!
We didn't hear any furore over US Census Bureau's perception of poverty. Because at an equivalent income you cannot have or afford a car, though you can have a colour-TV with 999 or so channels, a LPG gas-stove (with chimneys?), an inverter (this is a particular for India) and refrigerator (bought of course in credit and you are paying EMI-s), you can think of a washing machine or converting to a LCD-TV; but an AC is really difficult - electric bill would shot up then; you can manage college education for your kids with some in-family austerity measures and for school education of your kids you can easily manage if you can get her/him admitted to a govt-school education otherwise you will have to buy cheaper-private-school education. In some good years you may afford to travel some tourist-spots for a week, and so on so forth. But then, to meet both ends is a constant worry that accompanies you. And if you are a govt servant then the future is already haunting you, because you'll not get governmental pensions. But in spite of all these - at this level - you are placed within the topmost 10% of the Indian population! And this is the American Poor!
So, perception of poverty is conditioned by social reality or socio-economic-cultural-etc reality. And hence there is no reason at all as to why you will have to bow your head to that World Bank and accept their prescribed $1.25(PPP2005) as poverty line for India, Bangladesh etc.
But still, if one says that $1.25(PPP2005) or '32 is OK as poverty line in India then surely s/he has such a vision-problem which no ophthalmologist can cure!
(6) KEENNESS CONCERNING CORRUPTION & INDIFFERENT TO INEQUALITY ? THE INDIAN CIVIL SOCIETY
It is indeed significant that while the Arab Spring or Spanish Summer and later #occupy etc have been storming all around, India did not experience any such wave. Because, the anna episodes, in spite of their focus on corruption and a fair amount of public rallying around them, plus, of course the extra-high media interest on these episodes - they could not shake up the society as did the former mentioned ones in our west; neither did the anna camp drew attention to rising inequality and the need for a change. It is so because that part of Indian Civil Society that manufactured the anna centric movements are part of the, what the occupiers' language will call, the1%, i.e. the ruling class itself. They might not yet be successful about introducing their version of Jan Lokpal but they could, still now, successfully divert public attention.
But there are other things, something is moving down below, at the level of toiling workers and peasants, imperceptible to the spokespersons of the ruling elite. Did we not have the Al Mahallah workers fights since 2006 before the Tahrir days? Then, did we not see Ssangyong workers, then French and Greek workers fights in 2009-2010 which agitated the intellectual minds to speak out - Be Angry (Indignez Vous) - which then translated itself into - toma la calle - take the streets? Did we not have a Madison event of workers before the Wall Street? So, workers here in India also can now say - just wait, and then, you will see.[i] The Times of India, print version, 29.04.2012
[ii] http://post.jagran.com/mass-suicide-of-10-members-of-family-shocks-dehradun-1317741338
iii http://ibnlive.in.com/news/poverty-drives-woman-two-daughters-to-end-life/191406-60-121.html
[iv] http://english.samaylive.com/regional-news/others-news/676494484/five-of-family-commit-suicide-in-kollam.html
[v] http://swaminomics.org/?p=514 Does poverty or debt cause suicide? [This entry was posted on 2004.Jul.25, and is filled under Articles, The Times of India.]
[vi] http://psychcentral.com/news/2011/04/04/poor-mental-illness-and-suicide-linked/25013.html Poverty, Mental Illness and Suicide Linked, By Psych Central News Editor, Reviewed by John M. Grohol, Psy.D. on April 4, 2011
[vii] http://www.indianexpress.com/news/no-harsh-sentence-for-povertybased-suicide-court/930117/ No harsh sentence for poverty-based suicide: court Agencies : New Delhi, Thu Mar 29, 2012: Additional Sessions Judge Ramesh Kumar gave the ruling while letting off a man, convicted for attempting suicide by consuming sedatives.
The court let him off after detaining him in the court room itself for a day after convicting him. The court also acquitted him of the charges of trying to kill his wife and five daughters, out of poverty and helplessness, after giving them sedatives-laced cola to drink. One convicted for making a suicide bid is liable to be jailed up to a year, besides being fined.
[viii] http://swaminomics.org/?p=1888 Nutrition is a bigger problem than hunger: "Dreze and Amartya Sen have shown that targeting the needy can lead to huge errors ? exclusion of the poor, inclusion of the non-poor. Targeting can be socially divisive and create poverty traps ? if a poor man becomes non-poor, he loses his subsidized food and slips back into poverty. Hence Dreze prefers subsidies for all. ... Ajai Shankar, former industry secretary, has an excellent suggestion for self-targeting in food ? mix wheat flour (atta) with soya flour, raising its protein content but making it less palatable. Richer folk will not eat this, but poor people will. Such protein fortification of atta could help reduce protein deficiency in pregnant women and children. Ajai Shankar also suggests offering brown, unpolished rice, which has more nutrition but is less palatable than white rice, and so will be self-targeted at the poor. I would fortify atta with not only soya but iron (to combat anaemia), iodine (to combat goitre) and Vitamin A (to combat night blindness). This will cost very little extra, yet combat serious nutritional deficiencies. It's not a silver bullet: other nutritional programmes need overhaul and strengthening too."
[ix] Swaminathan S. Anklesaria Aiyar wrote (Mar 28, 2012, Economic Times) - There can be no better refutation of the leftist myth that fast growth has benefited only a small rich coterie while bypassing the poor. Unfortunately, the good news has been drowned out by quasi-illiterate screams from politicians and sections of the media that the data has been fudged. The allegation is false. The data has not been fudged, and should be cause for celebration. ... If the Planning Commission had simply waited for the final data and not misled the public with its provisional estimate last year, the final data would have carried greater credibility, and the sceptical public would have been more willing to celebrate the performance as stellar.
This mood will pass. Let us wait for the next survey data, for 2011-12. That will surely show a substantial further decline in poverty. Then we can really celebrate, with full conviction and no barbs about fudging. [http://www.cato.org/publications/commentary/rapid-gdp-growthbest-antidote-poverty] How hurriedly or easily he buried or self-contradicted what he wrote just a year and half ago - The big problem is malnutrition, not hunger. A recent survey revealed anaemia rates of 51-74% in women and small children. Of children under three, 47% were underweight and 45% stunted by global standards. Protein deficiency is a culprit. [http://www.swaminomics.org/?p=1888] And now he says less than 30% of Indians can be called poor!
[x] "A bigger objection should be to rice in any form. Rice is the most expensive cereal, and guzzles the most water. It requires 22 irrigations per crop against eight for wheat. Rice cultivation is sustainable in high rainfall areas, but is environmentally disastrous in moderate-rainfall areas (Punjab, Haryana). It lowers the water table precipitously, so drinking-water wells and shallow tubewells of small farmers run dry, and some of them commit suicide.
"Any food entitlements should be for basic food, not for the most expensive cereal. A right to rice is conceptually like Marie Antoinette's right to cake. For centuries, poor Indians have eaten coarse grain (bajra, jowar) costing half as much as rice. If necessary, India can export rice to finance imports of twice as much coarse grain, which can then be fortified with nutritional supplements for the PDS. It will be self-targeting: richer folk will not buy it." - in "Nutrition is a bigger problem than hunger" http://swaminomics.org/?p=1888
[xi] http://rupeindia.wordpress.com/2012/03/23/bogus-methodology-to-prove-that-growth-busts-poverty/
[xii] The New Poverty Line: A Methodology Deeply Flawed, by Madhura Swaminathan (Professor, Indian Statistical Institute (ISI), Kolkata) in the Indian Journal of Human Development, Vol. 4, No. 1, 2010
[xiii] http://rupeindia.wordpress.com/2012/03/23/bogus-methodology-to-prove-that-growth-busts-poverty/
[xiv] Visit http://www.timescrest.com/society/the-buck-swaps-here-6532 (if you are a registered user of Times Crest you can view it, for unregistered users the site was free at least until Nov last year) Their Experiments With Poverty |The buck swaps here| by Nandita Sengupta |October 29, 2011.
[xv] Walking the Corporate Plunder Line: How to Beat Poverty in India, by P. SAINATH, Counterpunch, Weekend Edition Mar 30-Apr 01, 2012, http://www.counterpunch.org/2012/03/30/how-to-beat-poverty-in-india/
[xvi] West Bengal's Villages & Panchayati Raj ..., For A Proletarian Party, Oct 2003
[xvii] "Just imagine: a village poor with insignificant [0.03 Ha] land, who goes out to work as a contract worker for the Railways or road-maintenance and does not get work regularly, whose kid dropped out from school after class 6 and is now helping in family work, who lives in a mud-built house with 2 'rooms' ... without any electricity connection and 'possesses' two sets of ordinary garments, one winter-clothing, a cycle and a radio, who at times has to spent starving, semi-starving nights, who has a little bit of outstanding loan ... etc cannot qualify as a poor!!!" from "The New BPL and ...", FAPP Jan 2008
[xviii] To fix BPL, nix CPL, by P. SAINATH March 26, 2012 http://www.thehindu.com/opinion/columns/sainath/article3223573.ece The table presented by him is as below: www.thehindu.com/opinion/columns/sainath/article3223573.ece?viewImage=2
[xix] See http://www.livemint.com/2012/04/11134745/Give-us-growth-and-we8217ll.html Manas Chakravarty writes this essay in his 'Capital Account', dated Apr 11, 2012. Though he quoted an ADB report in his figure he was at least truthful to mention the rising inequality: For China, the Gini coefficient for per capita expenditure worsened from 32.4 to 43.4 between 1990 and 2008. For India, the Gini deteriorated from 32.5 in 1993 to 37 in 2010.
[xx] See Table 8: Unemployment rates by State between 1993-1994 and 1999-2000, Page 14, DESA Working Paper 45, ST/ESA/2007/DWP/45, July 2007, Inequality in India: A survey of recent trends by Parthapratim Pal and Jayati Ghosh, to be found at: http://www.un.org/esa/desa/papers/2007/wp45_2007.pdf
[xxi] Page 5, ibid
[xxii] Poverty Reduction in China and India: Policy Implications of Recent Trends
by Jayati Ghosh, http://mrzine.monthlyreview.org/2010/ghosh090310.html [This paper was first published as United Nations Department of Economic and Social Affairs Working Paper No. 92, http://www.un.org/esa/desa/papers/2010/wp92_2010.pdf in January 2010]
[xxiii] Income inequality and economic growth in developing countries: an empirical analysis
by Subarna K. Samanta, Allison Heyse, Indian Journal of Economics and Business / Dec, 2006
[xxiv] Redefining Poverty in China and India: Making Growth more Inclusive, Part 2, http://www.wider.unu.edu/publications/newsletter/articles-2012/en_GB/03-2012-Addison-Zarazua/_print/
[xxv] Vanneman-Dubey, Horizontal and Vertical Inequalities in India; presented in Lessons from the Luxembourg Income Study, 28-30 June 2010, Luxembourg. The data were collected by a more or less extensive field survey conducted by the University of Maryland and the National Council of Applied Economic Research in 2005.
[xxvi] (http://internationalbusiness.wikia.com/wiki/India%27s_Income_Distribution).
[xxvii] http://internationalbusiness.wikia.com/wiki/India%27s_Income_Distribution
[xxviii] http://blogs.wsj.com/indiarealtime/2012/03/20/is-india-fudging-its-poverty-numbers/
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