People's Democracy(Weekly Organ of the Communist Party of India (Marxist)
February 15, 2004
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.
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.
MANIPULATING THE DATA
the changes that have already been made in the methods or 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.
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.
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!
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 per cent growth per year.
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.
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.
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.
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
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.
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.
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
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.