A United Nations organisation officially declared last week that India is on its way to achieving the Millennium Development Goal (MDG) on poverty reduction. Spelt out in 2000, the goal was to halve the level of poverty, compared to a base year of 1990 — when 51 per cent of Indians lived on less than $1.25 per day. That number, the United Nations says, is likely to drop to 24 per cent by 2015. China’s poverty numbers will have shrunk even faster. Largely because of China and to some extent India, the global poverty figure will have dropped from 42 per cent in 1990 to an estimated 15 per cent by 2015. Yet, neither Africa nor South America nor any South Asian country other than India seems likely to achieve the goal of halving poverty in a quarter-century. The correlation between rapid economic growth in China and India and poverty reduction in these two countries is too obvious to miss.
Did I hear cheering anywhere in the stands occupied by the poverty industry? Not on your life. Instead, Brinda Karat, the CPI(M) leader, was quoted as saying at the function to release the United Nations report: “Though the report is optimistic of meeting the MDGs, it cannot be achieved unless accompanied by a reversal of the current policies.” For breathtaking lack of logic, that is almost Goebbelsian.
More pertinently, Amartya Sen has pointed out that Bangladesh has been doing better than India on a variety of socio-economic indicators; in some cases, the gap in performance is very large. Indeed, India cannot take much comfort in most of its indicators, since they have substantial room for improvement. But the fact is that Bangladesh is not likely to achieve the goal of halving poverty by 2015, while India is. Professor Sen has also pointed out that China’s socio-economic indicators too are much better than India’s. But they would be, wouldn’t they, since China’s per capita income is more than twice India’s.
This is not to get into verbal callisthenics about growth or/with/for/and social justice, of the kind that India’s planners indulged in endlessly during the 1960s and 1970s, when neither objective was being achieved, but to make the limited point that all goals – like reducing poverty – become easier to achieve when there is faster growth, as China and India have now shown. If that is beyond reasonable dispute (though the poverty industry is unlikely to concede the point), the real issues are twofold. First, making sure that rapid growth continues, a point rightly emphasised at all times by Manmohan Singh; and second, designing policies aimed at tackling deprivation and improving human development indicators in the most efficient and least wasteful manner possible.
This goes to the heart of the debate about whether the government should directly provide or simply pay for what private agents are asked to provide (as with education); and whether to deliver in cash or kind (as with foodgrain). There is no one answer, but at least there is lively debate, including on whether 50 per cent or 75 per cent of people should get grain subsidised to the extent of more than 80 per cent of cost, when the prevalence of poverty (however measured) is more limited. What is not being debated in the same way is the employment question. The United Nations report says India has by far the highest percentage of informal employment in the non-agricultural sector. Surely, there is a case for changing labour laws such that greater employment in the organised sector is encouraged. Yet, the subject is a political hot potato, and not on anyone’s list of priorities.
