India could be another US if inequality isn’t tackled: Angus Deaton

  • Zia Haq, Hindustan Times, New Delhi
  • Updated: Oct 27, 2015 01:04 IST

The Royal Sveriges Riksbank Prize in Economic Sciences, or the Economics Nobel for 2015, to the Princeton University professor Angus Deaton carries a special significance for India. Deaton’s pioneering work in the 1990s on India’s malnutrition and the ways poverty affected consumption choices of the poor are part of his outstanding contribution in the field of economics. The British-born American economist answered a range of questions in an interview to HT’s Zia Haq. Excerpts:

Q. India’s official poverty count has declined substantially, about 16 percentage points, since 2004-05. Yet, our absolute number of poor people is huge and the gap between the rich and poor has only certainly widened. Do you think the path of development we have chosen is more designed to mainly address the need for economic growth – which is not an end in itself -- rather than tackling inequality?

A. That is a concern that I share. Economic growth is very important, but it is not the only thing, and it must be accompanied by sharing with those who are left behind, through effective social services and provision. Economic growth tends to generate inequality, especially at first, but those who are first to reap the benefits must do what they can to not block progress for those who are coming behind. Indeed, they owe it to them to help.

Q. Malnutrition still remains dreadful and your work has shown that this is not merely the result of sweeping calorie deficiency. It is, as you have shown, the result of the lack of a wholesome meal. Is it the case then that our PDS system has not been adequate in tackling our levels of malnutrition? What can be done?

A. Again, I do not want to attack the PDS system, which in the current state of India, is an important source of food for the poor. But we know that calories are not enough by themselves. The diet itself needs variety, fruit vegetables and eggs, for example. Chicken for those who like it. But even beyond food intake, other things are important. Like kids not having to do too much heavy work. Kids getting their shots, and regular check-ups. Better sanitation, less open defecation.

Q. You have pointed out that while our National Sample Surveys tend to be readily critiqued, not much attention is given to the gaps in our national accounts and GDP data. Are our data not reliable enough and do you fear there could be more poverty than is thought to exist in our country.

A. Everyone’s data can be improved. I think it is widely recognized that the national accounts in India are relatively weak. So what I am most worried about is that growth is not as high as the accounts show. Revisions that increase growth are more readily accepted than revisions that reduce growth. So I am more worried about growth being overstated than poverty being understated. There is surely some omission in the surveys, which would mean that poverty is understated.

Q. Do you feel more government investments (than currently devoted) are needed in critical areas, such as nutrition, health and education?

A. Yes, though there are organizational and capacity problems that need to be overcome. In places where services don’t work, for example, because of absenteeism, putting in more money is unlikely to help. But if other states can emulate the better services in the south, with more people demanding health and education, then we can make progress, and to do that, we will eventually need more money.

Q. Lastly, what are the perils of extreme inequality in a country like India.

A. I think the same as in the US, that the rich capture more than their share of political power, so that the state stops serving the majority of people.

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