Why everyone wants the poor to remain poor

The Planning Commission’s new poverty numbers showing a dramatic decline to a record low of 22% has had no takers in either the government or the Congress party, which leads the United Progressive Alliance (UPA). Worse, some party members have openly disparaged the numbers.

add_main_imageIn contrast, the prospect of a whisker of an increase in the growth rate will see claimants lining up to make the announcement and taking credit. Even my SMS to a cabinet minister, who is otherwise always willing to voice his opinion, querying the silent treatment meted out to the new poverty numbers went unanswered.

That’ s strange, I thought. After all, a regime that is clutching at straws in the home stretch of its highly forgettable second tenure in office should not be passing over on such a major achievement.NextMAds

Then, in a cynical moment, it came to me. It was the anti-poverty industry. The business of fixing poverty runs into billions of dollars (the budget of the rural development ministry, which oversees most anti-poverty initiatives, is nearly ₹ 100,000 crore) and there is obviously a lot at stake if poverty is no longer the country’s primary social and developmental challenge.

The key stakeholders in this business of fighting poverty are the government of the day and the political party behind it (the Congress, in particular has, for a long time, maybe since the late Indira Gandhi coined the Garibi Hatao, or remove poverty, slogan, championed and won political power on the cause of the poor); multilateral lending agencies such as the World Bank that have made the fight against poverty their calling card; the jholawallah activists who have often made a living and career out of fighting for the poor; and of course those of my ilk (particularly my western counterparts who, until recently appreciated only poverty in any journalistic piece on India), who have peddled the compelling narratives on India’s poor.

The trajectory of the fall in poverty level suggests that the fight to reduce the number of poor will be all but won very soon; from a level of 37.2% in 2004-05, poverty has dropped to 22% in 2011-12. If this trend holds, then almost every stakeholder in the business of fighting poverty stands to lose, unless of course, they reinvent themselves to fight the new challenges, such as growing inequality. For example, in the case of the World Bank, India’s access to soft loans reserved for poorest nations has already been withdrawn and the volume of arguments against further lending will only grow as poverty levels plummet. The bank’s gigantic operations in India—today the country is a much sought-after posting, a change from the time it was considered a punishment posting—will obviously have to be scaled down.

Similarly, the Congress party will face a major setback. The Congress’ DNA is to fight for the poor. If there are no poor, who will it fight for? Something similar happened to the Left parties with the demise of industries such as textiles and jute mills—bereft of blue collar workers to rally around, the Left has floundered.

If indeed this is the reason for the silence, then these fears are misplaced. The primary new challenge is indeed inequality—not just of income, but of opportunity. Inequality of opportunity in India is determined not just by the class, caste and religion one is born to, but also levels of literacy, health and so on. One should ignore the few right wing analysts who are disingenuously arguing using the latest consumption numbers that inequality is not a problem. Unlike the rest of the world, India does not measure income and, hence, any estimate based on consumption numbers understates the problem.

To fix inequality, given the sheer size of India’s population, a holistic effort—one that educates, employs and keeps Indians healthy—will be required. The budgets for this are likely to be more than those that sufficed to fight poverty, not less. So, the stakeholders only need to diversify into the business of fighting inequality and political parties, including the Congress, will have to recalibrate their agenda to focus on creating jobs.sixthMAds

If they win, as they did in the fight against poverty, India will be that much richer.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com