Why are some people poor and some relatively rich? This is an age-old question with multiple answers, in that there are different ways of looking at the problem. The income of a household is one indicator of relative prosperity. Since we don’t have satisfactory data on income, we go by a surrogate indicator, per capita consumption expenditure. How is income obtained? By selling a good or service in the market — for the most part, labour. The moment we mention the market, there is an implied price, and the poor person’s per unit labour input is valued less than the rich person’s. Often, we say the poor don’t possess the requisite skills. That’s inaccurate. Every individual possesses some skill. What we really mean is that poor people don’t possess the skills valued by the market, or possess skills with low market value. Hence the emphasis on skill development. However, in addition to developing skills, it is sometimes possible to develop markets for skills already possessed by the poor.
The market thus has a skills ladder, measured according to the per unit price of those skills. If one leaves out issues like inherited wealth, the poor are poor because they are low down on the skills ladder and the rich are rich because they are higher up. Therefore, the path towards prosperity is to make available education, skills, healthcare and other things that enable one to move up that ladder. These enable an individual to obtain a better price per unit of labour rendered and become more “productive”. Now think of the rich versus the poor with or without the urban/ rural lens. If you live in urban India, more often than not, electricity is available at the flick of a switch, and cooking gas and water at the turn of a knob or tap. That’s not true of an urban slum, where one has to queue up for water. It is certainly not true of rural India, where one has to trudge in search of water and firewood.
Water, electricity, transport, education, health, financial transactions — the average rural resident spends much more time on these pursuits than the average urban resident. The poor urban resident spends much more time on these pursuits than the rich urban resident. Stated differently, since some services have been outsourced, so to speak, the relatively rich person has more time to spend on more “productive” pursuits. Conversely, the relatively poor person spends a lot of time on “unproductive” pursuits that are unnecessarily in-sourced. Isn’t it surprising that there is little research in India on what poor people spend their time on? If you are poor, you will spend more of your income on food. If you are rich, you will have more discretionary income. There is plenty of stuff on distribution of consumption expenditure, nothing on distribution of time. Part of the reason is lack of data, since the National Sample Survey Office (NSSO) asks questions on consumption expenditure, not on time expended. But surely it would be interesting to obtain answers to such questions?
Does it make a difference? Low per capita consumption expenditure and high share of time spent on unproductive pursuits are likely to be correlated. If nothing else, it makes a difference in terms of mindset. Consumption and income are outcomes of a process of engaging with the labour market. Time is more in the nature of an input. We have plenty of public expenditure schemes for what can broadly be called public goods and services. If we focus on consumption expenditure, the mindset is one of enhancing consumption expenditure and income and therefore, the lens becomes one of income transfers and subsidies, rather than the causes of low consumption expenditure or income. If, in addition (not as a replacement), we focus on time, we will begin to recognise that in-sourcing occurs because of a lack of collective goods. Whether it is Union or state resources, the kitty for public expenditure is limited. Because of market failures, there is scope for private-sector engagement in such areas, but it is also limited. Therefore, there is a question of prioritisation in the expenditure of public resources.
Let us take an example. Does the MGNREGA increase the amount of time the poor spend on productive pursuits? In lean agricultural seasons, perhaps. But in general, even if the answer is yes, it will at best be lukewarm. Does the PMGSY increase the amount of time the poor spend on productive pursuits? Almost certainly, yes. Thus, accepting the trade-off in resources, the PMGSY is better than the MGNREGA. You will argue that this merely approaches asset creation in a roundabout way and is tantamount to asking whether public expenditure leads to incremental improvement in household asset ownership and amenities. While that’s true, it would be interesting for the NSSO to ask questions that would lead to a time-use survey.