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Inclusive growth, exclusive Indian
Surjit S Bhalla
 
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January 21, 2006
There is a distinctive aspect of the Indian elite, an aspect that I have not found replicated in any part of the world. I would appreciate any corrections to this view, and/or support.

This peculiarity about the Indian elite is meant to make it appear as a concerned and involved citizen, and one in support of all things good and beautiful - more green, less corruption, and growth in the welfare of the poor and the poorest.

This elite is oblivious of the reality that everyone is in favour of such goals - the difference between the two sets of citizens is in the set of policies they advocate.

A noteworthy feature of the Indian elite is that it never relies on logic to explain its stand; instead, it relies heavily on numbers. This emphasis on "facts" is welcome; what is not so welcome is the strain their numbers put on one's imagination.

Shifting sands is the best description of these nomads. First, they said that growth should be pro-poor; once it was shown to be so, they argued for growth with a human face; once it was shown to be so, the demand has shifted to the dire need for "inclusive growth".

The elite, not unlike Bollywood, makes appeals to the gut - the more the emotion, the more the fake roona-dhona, and the greater the conviction. Thus, the first fake objective is in showing that the poor are dying of hunger.

It is asserted that per capita cereals and pulses consumption in India today is lower than the levels that prevailed at the time of the Bengal famine in 1942! If that were the case, we would find a large percentage reporting hunger. But no such supporting evidence is found.

National Sample Surveys show such numbers to be less than 2 per cent of the population. Now we all know that colonialism made India a super rich and healthy country in 1942, but not that healthy as to have near zero per cent people hungry. Several million people died due to famine in 1942; elite logic should dictate that millions more are dying today.

Related to hunger are equally wild assertions of the state of poverty in India. Egged on by their fellow elites at the "in the name of the poor" organisations like the World Bank and United Nations, it is loudly (and proudly) stated that 35 per cent of the population is poor in India. This very conveniently ignores the fact that the Indian government itself claims poverty to be only 26 per cent in 1999/00 and less than 20 per cent today. 

Related to poverty is the justifiable concern about growth in agriculture, a major occupation of the poor. And the elite believes that "inclusive growth" can be obtained by jump starting agricultural growth to accelerate to above 4 per cent per annum (an improvement over the 3 per cent trend rate of growth).

Now there is a little emphasised political dimension to this concern; it is that political parties gain the most with rural and agriculture-related "reforms". These expenditures are hard to monitor, which explains their popularity with political parties.

Misfortune of the poor puts both politicians and the "inclusive growthwallahs" in high gear. Now who can possibly object? Is there anybody you know, or can imagine, who wishes that the income growth of the poorest should not be maximised?

The UPA government (co-incidentally the home of 99 per cent of the Indian elite) has "gone to village" proclaiming that other political parties have ignored agriculture - and that things were a lot better when it was in power, 1991 to 1996 (the Congress government).

It is worthwhile for the elites to look at what agricultural growth actually was during the 1991-1996 reign (roughly from April 1991 to March 1996). It was 2.4 per cent per annum; what was agricultural growth during the terrible non-Congress years April 1996 to March 2004? 2.6 per cent per annum. In the NDA years (April 1998 to March 2004) agricultural growth was 2.4 per cent per annum.

Another favourite slogan of the "inclusive growth" elite is that growth has not been adequately shared by the poor. If such were the case, then inequality must have worsened considerably. A popularly used index of inequality is the Gini index, which has the value 100 if the richest person has all the income, and zero if all the income is equally shared.

The chart tabulates what we know about inequality from the National Sample Survey data for the period 1951 to 1999-00. The pattern is suggestive of inclusive growth, indeed very inclusive growth. Inequality has dropped sharply since independence, and has stayed in a very narrow range for almost 40 years (since 1962). This narrow range includes the much-talked-about (by the elite) increase in real inequality of between 3 and 5 per cent in the reform years from 1993-94 to 1999-00!

In most, rather all, other parts of the world, the elite would celebrate the fact that despite high growth, inequality has stayed constant. But not the Indian elite. It is not that it sees the glass as half-empty; no, for it to score a point over mere mortals, it has to communicate that, first, it knows better, and second, there has been close to zero growth for the poor. It doesn't matter, but I would like to understand the inscrutable, argumentative, inconsistent, illogical, and dishonest Indian elite.


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