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To grow, keep numbers down

Before our politicians adopted the inclusive growth mantra, they had embraced a new orthodoxy that argued that wealth can’t be redistributed if there isn’t enough to go around.

india Updated: Mar 25, 2012 01:46 IST

Before our politicians adopted the inclusive growth mantra, they had embraced a new orthodoxy that argued that wealth can’t be redistributed if there isn’t enough to go around. The country’s latest poverty map vindicates this belief. Delhi’s urban industrial economy had 1.9 million destitutes in 2004-05, and their numbers grew by 400,000 in 2009-10. Over this time Delhi’s population, swollen by a tide of immigrants, increased by 1.5 million. On the other hand, Bihar’s predominantly agrarian economy had to sustain an extra 10.8 million population in these six years, adding another five million to the 49.3 million already living below the poverty line. As the Indian economy urbanises, its cities are lifting millions out of poverty, but the impact is dam-ped by the scale of migration from the countryside. Hence urban poverty reduction figures (a 4.6 percentage point reduction between 2004-05 and 2009-10) look tame in comparison to the rural numbers (a 8.2 percentage point fall over the same period).

The overall gains are not to be sneezed at. Over 50 million Indians now have slightly more than what the government thinks is needed to keep body and soul together. The 355 million who don’t should not take away from the accomplishment. The Planning Commission’s most recent study has two critical, and oft-repeated, takeaways. States that have not managed to lower fertility levels lag in reducing poverty. And this gap opens up if such states fail to industrialise. Uttar Pradesh and Bihar fit into both categories and the percentage of their populations in poverty remains fairly static. West Bengal has managed to arrest its population growth, thereby making some headway in lowering its poverty ratio despite de-industrialisation. Maharashtra, which has done well on both counts, posts the biggest gains in economic mobility. The trick for any state government, whatever its political persuasion, thus seems to be to get the fertility rate lower — and the economy growing faster — than the national average.

Which is easier said than done. Welfare policy makers may have the answer to the question why India’s poor precinct remains within five contiguous states from Uttar Pradesh to Odisha. They must work around the political and economic environment that keeps these states at the bottom of the league table. The argument that welfare funds released by New Delhi meant for district headquarters get waylaid in state capitals has limited traction. Welfare delivery has to be designed to bypass such accusations. The sooner the Centre can devise a biometric cash transfer mechanism for spooning out subsidies, the closer it gets to blurring the distinction between the haves and have-nots among states.