A distorted poverty debate

A distorted poverty debate

The latest stunt by some members of the influential National Advisory Council (NAC) headed by Sonia Gandhi is silly. Jean Drèze, Aruna Roy and Harsh Mander—the Gang of Three —led noisy demonstrations outside the offices of the Planning Commission, whose estimate about how much it would cost an average Indian to stay out of poverty these worthies find too low. This is perhaps a sign of where policy debates have sunk to in a regime torn between a hapless Prime Minister and a domineering party leader.

Disagreements about how to define poverty are not new to India. The economist Angus Deaton had even edited a volume on an earlier round of debates, which had been eloquently titled The Great Indian Poverty Debate. Over the years, every poverty line has been criticized for either overestimating the number of poor people in India or underestimating it—be it the very first estimates by the Planning Commission in 1979 based on how much it would cost to buy a minimum level of calories to the latest ones by the Suresh Tendulkar committee that has pegged poverty rates across the country to income levels at which average national urban consumption levels can be attained.

Estimating the number of poor is burdened with statistical nuances, including variances in data between different sample surveys and the weights assigned to various items of consumer expenditure in the price indexes used to calculate minimum income levels. There is also the little problem of survey respondents having incentives to under-report incomes so that they can get access to subsidies. This is why ideology often invades debates about what is actually an empirical exercise.

The current stand-off on poverty numbers between the government and NAC is important because it sets the backdrop for a larger debate on what needs to be done for the poor. This newspaper has no doubt that every decent society needs a robust welfare system, as long as it does not distort markets and make a mess of public finances. Policy has to balance the immediate goal of making millions of lives more tolerable and the long-term goal of keeping economic growth on track. Why? The most potent weapon against mass deprivation is economic growth. In the late 1980s, Amartya Sen had compared “growth-mediated security" with “support-led security". His two favourite examples of the latter were China and Kerala. Two decades later, China has pulled hundreds of millions off poverty because of double-digit growth while more dynamic states have closed the human-development gap with Kerala. NAC and Sonia Gandhi do not seem to understand this.

Is ideology trampling fact-based economics in India? Tell us at views@livemint.com