Government poverty reduction measures in India are usually controversial. Everyone seems to have strong opinions about them, often based on what programmes they have personally seen to be either effective or ineffective. Speaking to people in Tamil Nadu about NREGA, I heard good things. But in Punjab, there was only negative comment.
The debate about the role of government is becoming more intense with the introduction of a direct cash transfer scheme to the poorest, via an Aadhaar-based system. The unique benefit of the UID is that it has the potential to cut out middlemen and fraud in a way that no other form of subsidy can. Today, the state is responsible for spending only a fairly small share of India's GDP—around 28 per cent. The US government spends almost 40 per cent of its GDP, though even this pales into the background beside Britain and Germany, where expenditure is nearer to 50 per cent.
It would be wrong to believe that there is an ideal proportion of total national income for a government to be controlling. But when it comes to India, the arguments over state spending on poverty reduction are complicated by the frequency with which dodgy statistics are bandied about. It is regularly but falsely asserted that 77 per cent of India's population lives on less than ∃20 per day. A few weeks ago, I was having a debate on American TV with a big light from Oxfam who said that 250 million Indians go to bed hungry each night. It was an emotive phrase with no factual basis.
New work has been published which helps to set straight some of the facts about poverty and development: India's Tryst with Destiny— Debunking Myths that Undermine Progress and Addressing New Challenges. It would be wrong to think that this book by the eminent economists Jagdish Bhagwati and Arvind Panagariya seeks to downplay the serious challenges facing many Indians. Indeed, no reasonable person could imagine that poverty and its effects are anything but a continuing national blight. But the authors believe solutions should be based on evidence, rather than on the factoids frequently quoted by foreign charities, journalists and NGOs.
Take one example, the common claim that nearly half of all Indian children under the age of five are malnourished, a proportion that is higher than in sub-Saharan Africa. One of the odd things about this famous statistic is that even privileged children in India are deemed to be malnourished when measured against the yardstick set by the United Nations and the World Health Organisation. Panagariya shows that Indian children are on average smaller and lighter than those from which the standard classification was derived: so even if they have perfect nutrition, they will fail. This contribution to the debate is based on fact rather than on recycled myth.
Politicians don't help the process, since too often they are ready to pluck claims out of the sky and assume that nobody will check whether they are correct. When Sushma Swaraj told Parliament during a recent debate on FDI in retail that McDonald's never buy their potatoes from Indian farmers, she probably assumed nobody would notice the ‘fact' was invented. At large rallies—particularly those involving a Congress leader—you will often hear a politician telling the audience about the benefits they have received. The message is: we generously brought you this road, this policy, this subsidy. Some listeners might argue that all the money actually belongs to them, the people from whom the taxes were collected. The quandary is that much of the infrastructure on which any successful society depends—sewers, railways, health care—can never come exclusively from the private sector. Without state intervention, the rich will drill a borewell and buy a generator and everyone else can go hang. Poverty reduction will always depend in part on effective, well-targeted government action.
French is the author of India: A Portrait (Penguin). Feedback: @PatrickFrench2