Bridging Passion and Compassion: The UPA’s New Mantra

Even a stark enemy of P. Chidambaram would not say that he is not a realist. Recently he has declared that he will break a common ground between the passions for growth and the compassion for the poor. The assimilation of the two, according to him, is the noble goal of the UPA. And this declaration is going to acquire a central part of the UPA’s electoral agenda before 20104.

In his comment on the Sen-Bhagwati debate, Chidambaram has termed Bhagwati as a fierce preacher of income growth and the noble laureate as a sympathiser with the poor. Bhagwati has already reacted against this criticism but I am not concerned with all these. What need to be underlined is the covert admission of Chidambaram that there is a distance between the urge for income growth and the compassion for the poor. He and his political associates would annihilate that distance and develop a model for inclusive growth. This effort of initiating an economic ideology is going to be highlighted as an anti-thesis of the Gujarat model that Mr. Narendra Modi is so proud of. In Gujarat, conventional economic data and income growth feature on the top in the pan-Indian context but the state is in a deplorable state when it comes to statistics like human development index.

Whatever conflicting political & economic ideologies are at work, it would not be fair to relegate the issue of inclusive development to the sphere of income growth versus poverty alleviation. A proper economic development model of a developing nation cannot leave out either GDP growth or poverty reduction. And there is no last word on how these two will correlate.

Chidambaram’s comment, in this context, emanates out of his electoral concerns. The second UPA regime has suffered blows after blows involving corruption, policy paralysis and economic downturn. Promise of a unique economic ideology can earn some political brownie points for the ruling coalition but, Indian economy, in the long run, will not gain anything.

What saddens me as a student of politics and economics is the way two celebrated academicians are exploited to serve respective political interests. Intellectual atmosphere, like the political arena, will only get polluted with this.

Unequal Attention to Equally Important Issues: Relative Poverty in India

There are two kinds of poverty measurements: relative & absolute. Absolute poverty is the measurement of the percentage of people below the set poverty line in a given society. In the midst of intense political attention & debate on absolute poverty in the wake of the recent NSSO survey, the recently published statistics on relative poverty is on the backburner. Measurement of relative poverty brings economic inequality to surface. And according to a recent NSSO survey, economic inequality has been on a constant rise over the last 15 years or so. In between 1999-2000 and 2011-12, for the 5% of the most affluent rural population, consumption expenditure has increased more than 60%; on the other hand, over the same period, for the 5% of the poorest rural population, this rate of increase is 33%. For the 5% urban & rural population of the same categories, the rates of increase are respectively 63% and 30%.

If one analyzes these data from a different perspective, one finds, in the year 2000, the richest urban socio-economic unit would spend 12 times more than the poorest urban socio-economic unit. In 2012, the former spends 15 times more than the latter. In the rural areas, this gap has grown to 9% from the previous 7%. There are two conclusions to be drawn from this body of statistics.

First, inequality, across urban and rural regions, in terms of lifestyle, has increased. Second, advantages of economic reforms or liberalization and national income growth have not trickled down to the lower economic sections of the nation. Past experiences of economic surveys show that the inequality in terms of expenditure has generally been lower than the inequality in terms of income. So the overall picture appears to be bleaker.

The result of the survey is ominous. There are worries on two fronts: political and economic. This kind of an economic inequality is dangerous for political stability. Maoist insurgency has been gaining a rapid momentum once again. Political unrest in both Kashmir and the north-eastern states is not on the wane either. Social and economic inequality of such a degree will strengthen extremists’ hands in near future. Our study of politically volatile and vulnerable nations proves that social and economic inequalities widen political instability.

Economists like Raghuram Rajan have shown how economic inequality led to the economic downturn in the USA in 2008. Indian middle classes have been benefitted from the IT boom and economic liberalization in late 1980s to early 2000s. But the poorer and especially rural population has not come to terms with the changed economic infrastructure. Spread of education is not yet a pan-Indian phenomenon. Amartya Sen and Jean Drez, in their recently published book have reminded of such a possibility. If our policymakers don’t pay attention to this ever-widening gap between economic conditions and remain obsessed with GDP growth, Indian economy will keep suffering in the long run.