GDP debate ignores widespread poverty, inequality

The back-series GDP data released by the Ministry of Statistics and Programme Implementation constructed on the new base year 2011-12 is not yet methodologically conclusive. However, the row over the data between Congress and BJP shows that their political agenda is already tuned for the 2019 general election, with tall claims of GDP growth rate during their respective regimes.

In reality, both UPA and NDA governments have been unsuccessful in creating economic opportunity and reducing economic inequality in India. Of course, the liberalisation of the Indian economy in 1991 has no doubt accelerated economic growth in GDP terms, which has clocked an average 7% annual growth for the last 18 years, and average per capita income has risen to Rs 80,000 per year.

But GDP and per capita income (PI) are not the proper indicators of development and only represent the current growth rate of the economy. The per capita income figure hides billionaires and beggars in the same bracket. However, the country has not fared well in equal distribution of the fruits of economic growth to ensure social justice and economic empowerment of millions of downtrodden. The dismal data on socio-economic indicators tell tales of our chequered economic record since liberalisation. These indicators have negatively portrayed India as “the storehouse of poverty” in the eyes of the world community.

The GDP and PI figures camouflage the poverty of around 500 million people. India is still ranked 131 among 188 countries on the Human Development Index (2017), whereas China’s rank is 90.

The multi-dimensional poverty of 41% of the total population of India in 2017, or more than 500 million people, is evident in them being deprived of the bare necessities of healthcare, education and a minimum standard of living. Among children 0-17 years of age, multi-dimensional poverty affects 50% of that population.

As per the World Inequality Report 2018, India’s economic inequality is at a historic high, with about 55% of the national income going to the top 10% of the people. The income inequality in India is the second highest in the world, higher than in capitalist America and Communist China, where the share of the top 10% of population is 47% and 41% of the respective national incomes. This income inequality is largely driven by economic liberalisation and unequal ownership of private capital. Further, the top 1% of Indians get about 22% of the national income. India’s richest 1% owns a hefty 58% of the country’s wealth, which is higher than the global figure of 50% as per the World Income Report 2018.

It is argued by the economist Simon Kuznet that a certain degree of income inequality is inevitable during the process of economic development, but the main concern is that the degree of income inequality is high and the gap between the haves and have-nots is widening. Further, hunger and inequality coexist, which causes food insecurity.

Hunger is high among economically vulnerable and socially disadvantaged groups. India is ranked 100 on the Global Hunger Index among 119 countries. Over 21% of children suffer from wasting as per the 2017 estimates of International Food Policy Research Institute.

Modern slavery in terms of forced labour has continued in India despite it being considered an evil. The vulnerability to enslavement in the form of bonded slavery, compelled prostitution, forced domestic work, coercive marriage, involuntary beggary, forced child labour is high – with some 18.3 million enslaved, India is ranked fourth in the world as per the Global Slavery Index 2016.

The dismal health indices are highest in India in comparison with other countries, particularly the high infant mortality rate and worsening daughter-aversion or child sex ratio. The main reason is that the per capita health and educational expenditure is extremely low. More shockingly, the study by Global Wage Report 2016-17 of ILO shows that India’s huge gender wage disparity is at the worst levels in the world. Even though men and women do the kinds of jobs, men earn more than women.

The acute deprivation is transformed into unhappiness as India stands at 117 out of 158 countries, with Happiness Index of 4.565 (against the highest in Switzerland at 7.587) as per the World Happiness Report 2015.

Trickledown farce

All these socio-economic indicators and the developmental disparity they expose succinctly suggest that we have made a mockery of the idea of equitable distribution and striving for equality. Economic development has allowed only some people to escape from poverty, leaving many others behind. The evidence shows that the theory of trickledown effect of economic liberalisation is a farce and it has only benefited the capitalists. This is largely reflected in the multi-dimensional poverty amongst those deprived.

This stark reality calls for development that should be equitable, just, affordable and inclusive of the deprived groups.

There is no doubt that Indians witnessed socio-economic improvements in the last 18 years, but more consolidated policy effort towards affirmative actions for empowerment of the poor is the need of the hour.

Therefore, there is an urgent need to rigorously pursue the policy of inclusive growth to secure equal rights and opportunities, access to economic resources and welfare benefits.

Reducing economic inequality will enable the downtrodden to develop their potential and capacities to participate in the development process to reap the benefits of economic growth. Equal economic opportunities will also enable them to contribute towards economic development of the broader society and to negotiate for fairer distribution of the benefits of growth, especially the share of income, employment and economic resources.

(The writer is Professor, Centre for Economic Studies and Policy, ISEC, Bengaluru)