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Income inequality in India |
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The
period since the neo-liberal economic reforms were introduced
in India, has been one of dramatically increased income
inequality. This will come as no surprise to most people.
After all, you need only to look out onto the streets,
to see the enormous increase in conspicuous consumption
by the rich and even the urban upper middle income groups,
and also to see side by side how the lives of the poor
have become even more vulnerable and precarious.
But the NDA government is trying to persuade us that
this is all a mirage and that actually all Indians are
much better off than ever before. They are systematically
trying to manipulate even the official statistics of
the country, in order to push this completely false
line. The fact that this will end up destroying the
statistical system of the country, which was earlier
one of the most impressive in the developing world,
seems to be of no concern to them. And in the process,
they also seem to believe that by distorting the presentation
of facts, they can somehow make the facts themselves
change.
Consider the changes that have already been made in
the methods of collecting and organising official data,
simply in order to ''dress up'' the data to
show much greater prosperity for the majority of the
population and less poverty, when the reality is quite
the opposite. The National Sample Survey Organisation
had been conducting surveys which indicated, up to 1998,
relatively flat consumption per person as well as no
decline in poverty.
This was clearly an uncomfortable outcome for the ruling
powers, who have put all their stakes in the process
of neo-liberal reform. Therefore, there was a dramatic
revision of poverty figures in 1999-00, and the National
Accounts data were also revised to show higher growth
of rural incomes.
In the National Sample Surveys, a change in survey reference
periods led to much lower reported inequality. As a
result, although 9 surveys from 1989-90 to 1998 had
shown no poverty reduction, the 1999-00 survey reported
10 percentage points reduction in the poverty ratio!
Further, the revision of National Accounts more than
doubled the estimates of production of fruits and vegetables
– for which there are no reliable data on which
to base the estimates! As a result, although the official
index numbers of agricultural production show stagnant
or declining per capita production since 1996, the National
Accounts data show over 1 percent growth per year.
All these statistical changes were seen to be necessary
for various reasons. In India, the middle classes were
sought to be reassured that inequality was not increasing
as a result of the reforms. Abroad, this was sold as
showing benefits of globalisation did percolate down
to the poor.
But even the attempts to massage the official data to
serve official purposes, cannot completely conceal a
much more stark and depressing reality. The truth is
that while a minority of the population (around 20 per
cent) has indeed benefited greatly from the economic
policies and processes of the last decade, for the majority
of the rural population and a significant part of the
urban population, things have got worse.
This comes out very clearly from the statistical work
done by Abhijit Sen of Jawaharlal Nehru University,
New Delhi, in calculations based on the NSS data. The
basic results of his work are displayed in the chart,
which shows the per capita consumption by different
groups in rural and urban India since the late 1980s. |
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This
chart may appear a little confusing, but actually it
shows some very clear trends in terms of which sections
of the population have benefited and which have lost
out from the years of economic reforms. The most dramatic
and remarkable improvement in consumption has been of
those who were already the richest people in India –
that is the top 20 per cent of the urban population.
Their per capita consumption has increased by around
40 per cent since 1989-90, and this increase is likely
to have been even more in actuality since the NSS usually
underestimates the consumption of the rich.
This is the highest and most rapid increase in the consumption
of the rich that has ever been recorded in India. No
wonder our rulers think India is shining, because obviously
the people they meet most often have never had it so
good in material terms.
The other group that seems to have done rather well
is the top 20 per cent of the rural population –
the rural rich – whose per capita consumption
increased by more than 20 per cent since 1989-90. This
was similar to the increase in consumption among the
next 40 per cent of the urban population.
By contrast, the bottom 40 per cent of the urban population
relatively little increase in per capita consumption
compared to these other groups, at only around 14 per
cent since 1989-90.
But the most dramatic evidence is for the bottom 80
per cent of the rural population – well more than
half of India’s total population. For these people,
who now number nearly 600 million, per capita consumption
has actually declined since 1989-90. In other words,
even the official statistics of the government still
show that more than half of India has lower consumption
per person than more than 10 years ago, after a decade
when national income were supposed to be growing at
around 6 per cent!
All through history, sharp increases in economic inequality
of this order of magnitude, have been associated with
massive social unrest, and even with cataclysmic changes
in society. This makes the coming national elections
even more notable, because it must be the case that
such huge economic changes will reflect in some way
in voting patterns as well.
February
9, 2004. |
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