Manmohan Singh to Modi: Why governments have failed to tackle India's poverty

From Nobel laureate Amartya Sen to noted economist Jean Dreze, using the purchasing power parity (PPP) method, economists came to the conclusion by 2013 that poverty in India was 68.7 per cent. That's more than two-thirds of the entire Indian population.

According to the National Sample Survey (NSS) data in 1973-74, rural poverty below 2,400 calories was 72 per cent. In the same year, urban poverty below 2,100 calories was 49.6 per cent.

In other words, as several economists, including Alice Thorner, Jean Dreze and Reetika Khera have shown, rural poverty is considerably higher than urban poverty. But by 2009-10, rural poverty using the same indices became 90.5 per cent whereas urban poverty rose to 73 per cent. This clearly shows that successive governments, including Manmohan Singh-led UPA, failed to control poverty, and they “tweaked” the useable data to play down poverty.

The consequent effect is that joblessness have grown substantially, which further aggravates rural and urban poverty. PM Modi’s promises of creating crores of urban jobs have ended with some few hundred lakhs of jobs, both urban and semi-urban. In fact, economists are still analysing the negative impact of demonetisation. It is still being debated how much currency shortage exists as a consequence since ATMs are emptying fast.

But what does this do for Modi’s “Make in India” programme. Foreign capital will come to produce goods only if there is a big market. But with such skewed incomes, the foreign goods produced in India would have a smaller market. Electronic goods, especially mobile phones, laptops, computers and the like would have to compete with the Chinese products. The diverse Chinese market is creating a problem for the US market, leading President Donald Trump to put tariffs and other measures to curb Chinese imports.

There are more problem areas.

MGNREGA is also in the doldrums. It is estimated that funds for this Act for the rural poor are highly inadequate. According to experts, of the 36 states and Union Territories, as many as 28 will not get official minimum wages, leading to even more poverty and rural distress. So despite the promises - first by the UPA and now the NDA - the poor will not only suffer, but suffer more than before. This means that the economy will also get negatively affected as purchasing power among the middle strata, excluding the upper middle strata, will drop.

PM Modi had promised "achhe din", but it's nowhere in sight for the bulk of our population.

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