The son of a corn merchant-turned sociologist, Charles Booth had little patience for Charles Dickens and others in his time, who used lyrical prose to describe the desperation of the poor in working class London. Booth was also angry, in 1885, over the claims made by F.D. Hyndman, the leader of the Social Democratic Federation, which after an enquiry into the working classes of London had concluded that a quarter of the population of London lived in abject poverty.
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Confident of showing up the claims as sensational, he set about drawing his poverty map of the city and getting people to do door-to-door surveys. Much to his horror, his own landmark ‘Life and Labour of the People in London’ survey concluded that the numbers were much higher and a third of London lived in abject poverty. He had, unintentionally, nailed the importance of getting the numbers right, which settled the question of which class needed maximum attention.
Back In India
In India, there is now, rightly, a consensus difficult for the Government to beat down that to be able to battle COVID-19 and secure India from successive waves, the exact numbers of the dead must be carefully documented. Something else that needs equal attention, if the state of the decrepit Indian economy is to be repaired, is to be able to meticulously count the number of the poor and to prioritise them.
The World Bank $2-a-day (poverty line) might be inadequate but it would be a start and higher than the last line proposed by the C. Rangarajan committee.
A survey in 2013 had said India stood at 99 among 131 countries, and with a median income of $616 per annum, it was the lowest among BRICS and fell in the lower middle-income country bracket.
Since then — and we are still not talking of the novel coronavirus pandemic — three important data points have made it clear that the state of India’s poor needs to be acknowledged if India is to be lifted.
The first being, the fall in the monthly per capita consumption expenditure of 2017-18 for the first time since 1972-73, which the Government withheld citing concerns with the quality of data collected, then the fall of India in the Global Hunger Index to ‘serious hunger’ category and India’s own health census data or the recently concluded National Family Health Survey or NFHS-5, which had worrying markers of increased malnutrition, infant mortality and maternal health.
A fourth statistic earlier this year, of Bangladesh bettering India’s average income statistics, must also be a reason for Indians to introspect. What kind of growth path has led to India sliding in the sustainable development goals index (by at least two ranks last month) as well as in the per capita income rankings? If we do not bother to know of the increased numbers sliding into poverty, there would be little possibility of moving toward a solution.
In 2019, the global Multidimensional Poverty Index reported that India lifted 271 million citizens out of poverty between 2006 and 2016. Since then, the International Monetary Fund, Hunger Watch, SWAN and several other surveys show a decided slide.
In March, the Pew Research Center with the World Bank data estimated that ‘the number of poor in India, on the basis of an income of $2 per day or less in purchasing power parity, has more than doubled to 134 million from 60 million in just a year due to the pandemic-induced recession’.
In 2020, India contributed 57.3% of the growth of the global poor. India contributed to 59.3% of the global middle class that slid into poverty.
The last time that ‘India reported an increase in poverty was in the first 25 years after Independence, when from 1951 to 1974, the population of the poor increased from 47% to 56%’. So, India is again a “country of mass poverty” after 45 years. This has thrown a spanner in the so far uninterrupted battle against poverty since the 1970s. Urgent solutions are needed within, and the starting point of that would be only when we know how many are poor.
Poverty line debate
In India, the poverty line debate became very fraught in 2011, as the Suresh Tendulkar Committee report at a ‘line’ of ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India, calculated the poor at 25.7% of the population.
The anger over the 2011 conclusions, led to the setting up of the C. Rangarajan Committee, which in 2014 estimated that the number of poor were 29.6%, based on persons spending below ₹47 a day in cities and ₹32 in villages.
Reasons why numbers count
Numbers matter for many reasons. The first is because knowing the numbers and making them public makes it possible to get public opinion to support massive and urgent cash transfers. The world outside India has moved onto propose high fiscal support, as economic rationale and not charity; it is debating a higher level of minimum wages than it has in the past. Spain has accorded security to its gig workers by giving delivery boys the status of workers. In India too, a dramatic reorientation would get support only once numbers are honestly laid out.
The second argument for recording the data is so that all policies can be honestly evaluated on the basis of whether they meet the needs of the majority. Is a policy such as bank write-offs of loans amounting to ₹1.53-lakh crore last year, which helped corporates overwhelmingly, beneficial to the vast majority? Or has it been just beneficial to a thin sliver of the super rich? This would be possible to transparently evaluate only when the numbers of the poor are known and established.
Third, if government data were to honestly account for the exact numbers of the poor, it may be more realistic to expect the public debate to be conducted on the concerns of the real majority and create a climate that demands accountability from public representatives.
Conclusion
The late Arjun Sengupta, as Chairman of the National Commission for Enterprises in the Unorganised Sector in 2004, had concluded that 836 million Indians still remained marginalised. He spoke of the poorest of poor and the commission’s recommendations on social security resulted in the enactment of the Unorganised Sector Workers Social Security Act. At the time his conclusion was ignored — that 77% of India was marginalised — emphasising that it was a problem of a much bigger magnitude, than the figure of 25.7% conveyed.
The massive slide into poverty in India that is clear in domestic and international surveys and anecdotal evidence must meet with an institutional response. The Government must girdle up and unflinchingly quantify the slide from the ‘fastest growing economy’ to the country with the largest rise in the number of poor people. It must be accepted, to go back to the debate Charles Booth had with the Social Democratic Federation that it is “abject poverty” we are talking about; almost a sub-human level of existence of the majority of fellow Indians we cannot continue to be blasé about. Counting them would be a much-needed start to convey that each life matters.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.