By Dr. V. Bijukumar
Amartya Sen and Jean Dreze in their recent book, An Uncertain Glory: India and its Contradictions, once again highlight the inherent contradictions of Indian economy – economic growth in the absence of redistribution. Sen and Dreze argue that economic growth without redistribution would adversely affect the livelihood of the underprivileged sections when they are facing acute vulnerability due to massive cut in public expenditure in education, health care and other social security schemes. Of course, many economists and political scientists of contemporary India earlier too cautioned about the mismatch between growth and equity and its implications for democracy. However, the present revelation deserves special attention in the context of Planning Commission’s recent estimate on poverty and the political debate centering on general election in 2014.
The recent Planning Commission’s Press Note on Poverty Estimates for 2011-12 shows that both rural and urban poverty have been considerably reduced. The percentage of persons below the poverty line in 2011-12 has been estimated as 25.7% in rural areas, 13.7% in urban areas and 21.9% for the country as a whole. According to the Commission, in 2011-12, India has 270 million persons below the Tendulkar Poverty Line as compared to 407 million in 2004-05, that is a reduction of 137 million persons over the seven year period.
The methodology for estimation of poverty followed by the Planning Commission has been based on the recommendation made by experts in the field from time to time. In December, 2005, Planning Commission constituted an Expert Group under the Chairmanship of Prof. Suresh D. Tendulkar, the former chief of National Statistical Commission, to review the methodology for estimation of poverty. The Tendulkar Committee submitted its report in December 2005 and computed poverty line and poverty ratios for 2004-05. Tendulkar methodology is estimated at Rs 33.33 in cities and Rs 27.20 in villages per day, per person. Any one spending more than this amount not only on food but on the consumption of all goods and services is not poor. However, the Tendulkar committee recommendations on poverty have generated lot of political controversy that the Tendulkar Poverty Line was too low. In response to augmenting criticisms from many quarters, in June 2012, the Planning Commission constituted an Expert Group under the Chairmanship of Dr. C. Rangarajan to once again review the methodology for the measurement of poverty. The Rangarajan Committee is deliberating on this issue and is expected to submit its report by middle of 2014. It is an irony that without waiting for the Rangarajan Committee Report, the Planning Commission based on the 68th Round National Sample Survey Data brought out the poverty estimates for the year 2011-12 as per the recommendations of the Tendulkar Committee.
In the North-Eastern States, the rate of poverty has declined as in the case of all India reduction. According to statistics, in Arunachal Pradesh 38.93% persons are under poverty line in rural areas followed by Manipur (38.80%), Mizoram (35.43%), Assam (33.89%), Nagaland (19.93%), Tripura (16.53%), Meghalaya (12.53%) and Sikkim (9.85%). In urban areas, Manipur has the largest number of persons under poverty line (32.59%), followed by Assam (20.49%), Arunachal Pradesh (20.33%), Nagaland (16.48%), Meghalaya (9.26%), Tripura (7.42%), Mizoram (6.36%) and Sikkim (3.66%). In overall estimated in Manipur 36.89% persons are under poverty line followed by Assam (34.67%), Assam (31.98%), Mizoram (20.40%), Nagaland (18.88%), Tripura (14.05%), Meghalaya (11.87%) and Sikkim (8.19%). The Planning Commission’s estimate on poverty evoked mixed responses in political circles. On the governmental side, there was attempt to equate the so called poverty reduction in last ten years as the outcome of good economic management and welfare policies of Congress-led United Progressive Alliance government in the last nine and half years. The Congress leaders such as Raj Babbar and Rasheed Masood and the Union Minister Farooq Abdullah said that one could eat well for Rs. 12, Rs. 5 and Rs.1 respectively. However, Congress leaders like Digvijya Singh and Kabil Sibal raised serious objection to the methodology adopted by the Planning Commission in estimating poverty in India. Digvijya Singh argued that the criteria for fixing poverty line were “abstract” and it cannot be same for all areas. Criticising the Commission’s argument that for a family of five, the all India poverty line in terms of consumption expenditure would amount to Rs 4,080 per month in rural areas and Rs 5,000 per month in urban areas, the Union Minister Kabil Sibal said that “if the plan panel says those living above Rs. 5, 000 a month aren’t on the poverty line, there is something wrong with the definition of poverty. Amid growing criticisms both within the ruling party and opposition, the Minister of State for Planning Rajeev Shukla clarified that the government has not accepted or fixed figures, based on methodology adopted by the Tendulkar Committee. On the other hand, the government has asked the Rangarajan Committee to look into the poverty figures and their report is expected to come out by mid 2014. The Planning Commission Deputy Chairman, Montek Singh Ahluwalia even admitted that the method of tabulating the number of poor is ‘abstract” and said it’s being reworked. According to him, “This is not the Planning Commission’s (poverty) line. Poverty line is not drawn by the Planning Commission. It is actually drawn by an expert group. The line you are talking about is a line recommended by the Suresh Tendulkar expert committee.”.
The subject matter of the book also deserves special attention in the context of the current debate on economic policy by two stalwarts of Academic Economics such as Amartya Sen and Jagdish Bhagwati. While Sen believes that India should invest more in its social infrastructure to boost the productivity of its people and thereby raise growth, Bhagwati argues that only a focus on growth can yield enough resources for investing in social sector schemes. Reiterating his stated position that investing in health and education is to improve human capabilities and without such investments inequality will widen and the growth process itself will falter. Bhagwati who is known for his neo-liberal stand argues that growth may raise inequality initially but sustained growth will eventually raise enough resources for the state to redistribute and mitigate the effects of the initial inequality. It is interesting to see that Sen and Dreze’s book was published immediately after Bhagwati and Arvind Panagariya’s book, ‘Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries’. While Sen and Dreze emphatically advocate state-led redistributive efforts as the solution to India’s problems, Bhagwati and Panagariya prescribe growth model for current economic crisis of India. Politically the debate is leading to the contention between Narendra Modi and Rahul Gandhi in the upcoming general election of 2014. It has to be reminded that both Sen and Dreze were stronger supporters of UPA government’s welfare schemes such as Rural Employment Guarantee Scheme and Food Security Scheme, Bhagwati, on the other hand, is an admirer or Gujarat Model of Development under Modi. To conclude, the Sen – Bhagwati debate is leading towards the debate on two economic development models which would gain momentum in the course of electioneering in 2014.
(Dr. V. Bijukumar is teaching Political Science in NEHU, Shillong and can be reached at [email protected]).