The Indian government recently announced that the last 5 years have seen 50 million people emerge out of abject poverty. This means that now only one in 3 people in rural areas are poor and only one in five in urban areas. This is of course very welcome news. Millions of lines of journalistic and academic e-ink will now be spent discussing and studying the trickle-down effect of overall economic growth over the last five years.
One reaction that I am sure many people had on seeing the numbers, was clearly captured by the Wall Street Journal article: Is India fudging its poverty numbers? According to the journal, the answer is maybe not.
While India has tinkered with how it has been measuring poverty in recent years, these changes have brought India closer to the international method of poverty measurement. Plus, it seems that the government numbers are self-consistent.
According to Mint, the employment data released by the National Sample Survey Office (NSSO) last year shows that despite the five-year period ending in FY 2009-10 being the most vibrant phase of independent India, it generated virtually little or no employment.
However, distinct sectoral patterns could be observed in the data. Overall self-employment, including agricultural workers, declined by 25million. Note that a previous calculation (covered on this blog) put the decline in agriculture workers at around 7 million over the past 10 years. That is out of the 25M decline in self-employment, 7M was from agricultural self-employment.
During the same period, there was a corresponding growth of 22 million jobs in casual workforce and 6 million in regular workers.
So now we know the absolute numbers, but what do they mean? As I always tell my “students” in CREAM – just knowing a number doesn’t tell us much of importance: We know that a blood pressure of 140/80 is high only because we know what it is supposed to be in normal circumstance. So we have to understand the numbers in comparison to the overall total, or a benchmark.
So, are these numbers good or bad news for the country? Is an exodus of about 7 million farmers over 10 years too big, too small, or just right, as the country proceeds on its long path of economic development. Is the emergence of 50 million people out of poverty enough or too small over a 5 year period? And is the growing inequality an expected outcome of economic growth led by service sector (with known solutions), or does it present something unusual and therefore something to be worried about?
Those are the real questions to investigate further.