A poster child of globalization, India has recently lost some of its shine as growth slows and the question of inequality and serious malnutrition and hunger hits the headlines. India is doing relatively well on economic growth – an annual average of 7.9 percent – but as is often the case, poverty levels fall as incomes rise, but inequality grows. On international comparisons, India is middle-of-the-road in terms of who gets how much of the cake. But that is not good enough for those who get the narrowest slices. And such trends certainly make the government vulnerable in a populous democracy with 32 percent under the poverty line.
How India meets the challenge of inclusive globalization holds lessons for developing countries.
Take for example, the fierce policy battles over the Food Security Bill, drafted with the ambitious aim of banishing hunger from the land. Mindful of the cost, the coalition government led by Congress wants to limit the sale of heavily subsidized food grain only to the very needy. But the National Advisory Council, chaired by the head of the ruling alliance, Congress President Sonia Gandhi, is pitching for a more ambitious scheme to provide 7 kilograms of grain a month to more than two-thirds of 1.23 billion people at something like an 80 percent subsidy. Agriculture Minister Sharad Pawar insists that the proposal is financially unaffordable and impractical in terms of what the country’s farmers can produce.
This argument builds on an earlier one, over the National Rural Employment Guarantee Scheme that started out in 2006 by promising work when demanded for one member of each family for up to 100 days in a year. In practice, some 50 million, more than 10 percent of the workforce, got an average of about 50 days work last year. The critics have slammed the policy for corruption in distribution and its effect on driving up agricultural wages, making farming unviable in parts of the country. Paying out cash support to poor families, they say, would deliver better results at a lower cost.
The same critics make the same points when it comes to distributing subsidized grain. Those who defend the unemployment program – among them, some leading members of Sonia Gandhi’s NAC – say that its benefits are self-evident, and they want a hike in the program’s wage-rate. In pushing for an all-encompassing food security law, they point to embarrassing numbers on malnourishment, even as the Global Hunger Index has ranked India 15th among developing nations with high levels of hunger – the index is calculated on proportion of population that is undernourished, the proportion of deaths of children under age 5 and prevalence of underweight children under age 5.
Underlying the debate is disagreement on basic facts, about how many “poor” people are in India. The government’s basic poverty line was redefined for 2004-05 as 19 rupees per day in urban areas and 15 rupees in rural areas – 50 rupees today are equal to US$1. On that basis, government said that 37 percent of the population was below the poverty line, revised to 32 percent for 2009-10.
