Last week, the Planning Commission put out the latest poverty numbers, which revealed that the levels had dropped to a record 22% in 2011-12. Stunning, as less than a decade ago the poverty level was estimated at 37.2% of the population in 2004-05.
Given the credibility deficit of the Congress-led United Progressive Alliance (UPA), these glad tidings were not surprisingly met with disbelief. Not just from the opposition, which sees everything as a conspiracy, but even from sections of the government, the Congress party and analysts. They, like others who were equally surprised at the data, are missing the woods for the trees.
At the cost of sounding like a stooge of the establishment, actually India’s fight against poverty has turned a very important corner. Unless this is recognized there is every chance that the gains would soon be lost. The fight against poverty is no longer just about reducing the numbers of those below the poverty line (BPL); it is as much about keeping those have been rescued from poverty from sinking right back and recognizing that inequality is the new means of immiserization of the masses.
This can only happen if public policy is refocussed away from poverty alleviation programmes—like the public distribution system and the Mahatma Gandhi National Rural Employment Guarantee Scheme—to strategies that would ensure better health, education and skill development. From being given fish, people will have to be taught how to fish. It is only in this way that these sections can be absorbed into the economy and poverty can be eradicated in a sustainable manner. But for this to happen, we have to first acknowledge that the nature of the battle against poverty has radically altered.
While many may legitimately quibble at the decline in the extent of poverty, computed on the basis of the consumption estimated quinquennially by the National Sample Survey Office (NSSO), nobody can deny the trajectory of decline has always been south. From a high of 45.3% in 1993-94, poverty levels have seen a secular decline in the next two decades. From almost one in two, it has dropped to almost one in five people. Regardless on how tempting it sounds, it would be a big mistake to dismiss this as an aberration or the outcome of some piece of data manipulation. This is partly because this development is being viewed in isolation. The credibility deficit of the UPA only compounds the problem.
Something has given. Where earlier scores of programmes and funds barely made a dent, all of a sudden it seems to be generating results. Solving this puzzle is the key. For that, we need a more holistic approach.
We do know for a fact that the last decade, especially the past five years, averaged the highest growth rates of the economy ever. Unfortunately, this was not accompanied by any dramatic surge in employment. In other words, there were no means for the trickle-down theory of growth to work. Yes, the growth did generate lots more tax revenues, making it easier for the social sector spending to be enhanced. What we are missing in this puzzle is the fact that the material circumstances, for a host of reasons, have altered dramatically (captured graphically by Mint in a series titled Trading Up, drawn from Census 2011) in the last decade, making it that much easier for the populace to absorb the spending programme and improve their living standards. One should also include intangibles like rural road connectivity that makes it possible for round tripping between villages and towns.
Alongside the new employment numbers released by the NSSO show us that the Indian economy crossed an important threshold. For the first time, employment in agriculture dropped below 50% at the end of 2011-12. In other words, non-farm employment, which is relatively more remunerative, has grown. Like the fall in poverty, this trend was in the making but accelerated in the last two years dropping from 60% in 2009-10.
As reported in Capital Calculus on 8 July, the share of employment in agriculture for rural males was 65% in 2009-10, but dropped to 59% in 2011-12. This was made up by the increase in employment in the secondary sector (construction, rural jobs guarantee scheme and so on) and the tertiary sector (dhabas, corner shops and so on). Their proportion rose from 19% to 22% and 18% to 19%, respectively. The same trend played out for rural females. The proportion of women employed in agriculture dropped from 79% to 75%, while it rose from 13% to 17% in the secondary sector, the proportion employed in the tertiary sector remained unchanged at the level of 8%.
Take the above facts together and all of a sudden the drop in poverty levels seems logical as opposed to a conspiracy. But this was actually the easy part. It is going to be more difficult to keep people above the poverty line in a sustained manner, unless and until they are educated, provided adequate health care and trained. And with 200 million plus still officially poor, the numbers battle is not over. It is just that the priorities need to be realigned.
This can come about only once we concede that the fault lines of poverty have structurally altered. It is no longer only a fight for providing subsistence living. It is instead to ensure that those who are no longer poor are part of the overall growth process. Till such time we should avoid, like the spokespersons of the Congress party and the opposition did, to reduce the debate on poverty into a farce.
Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at email@example.com