Poor little government

The World Bank8217;s new poverty data is vulnerable to some statistical interrogation. And the Indian government8217;s poverty estimation methodology is in part outdated. Our columnist today explores these issues. And it is important to know the absolute incidence of poverty and its rate of decline. Also important is to remember that there8217;s politics in poverty studies 8212; just as governments may want to underestimate poverty, global anti-poverty organisations, whether institutional or private ones headed by rock musicians, might have an interest in keeping poverty levels high. All this will and should be debated by economists and statisticians rock musicians may join in, too. But for the bread and butter politician in India who confronts the roti, kapda, maakan question, all poverty data must be read as giving one single message: the persistence of poverty is a failure of the state, not of the market.

At the basic, intuitive and most important level, poverty is lack of sufficient income and income generation is a function of economic activity. If there were more better-paying jobs, there would be much less poverty. That means, unless there8217;s robust overall economic growth, there will be no substantial poverty reduction. That8217;s why all data, even the Bank8217;s, show decline in poverty in the period growth has picked up. But growth need not generate as many jobs 8212; basically, low-skilled, semi-skilled industrial employment 8212; as a big poverty reduction impact would require. For that, broadly speaking, four things must happen. Labour laws must not protect insiders, that is, unionised workforce, and allow employers flexibility to hire fresh workers. Agricultural occupations must not be romanticised. Primary education must be of a certain minimum standard so that chances of factory employability increase. Primary health must offer basic levels of care for workers. The state has failed and continues to fail on all four fronts.

China8217;s poverty reduction is far more remarkable and that is in part because China has a much better record on all four fronts. More, none of these requires India to abandon its democratic principles in the least. Who opposes better primary education or better primary health? Even labour law reform is opposed only by a small section of India8217;s workforce, that 10 per cent that is militantly unionised. Bad, unimaginative policies combined with waste and theft of public resources explain India8217;s poor anti-poverty infrastructure.