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UPA Government and The Indian Welfare Economy


4 Comments

  1. Pkeday says:

    A nice post Aashish. You have described some of the biggest mistakes by UPA very well. Couple of issues though, some which I think you wont mind clarifying and others I am predicting to get quiet heated 😛

    I understand that the current stand on the poverty line taken by the Planning Commission comes from Tendulkar Committee which, this year, has pegged urban incomes of Rs 32 per day per head as the poverty line. I am unsure where you got the figure of Rs 17 but I do not believe that is correct.

    While I agree with the general idea of bashing the UPA and their silly policies, I cannot accept the criticism that the poverty numbers have not shifted significantly. Whether UPA was just reaping the benefits of earlier reforms can be argued, but when 138 million people exit the poverty line within 10 years that is a significant feat by any international standards. I recommend reading – http://swaminomics.org/why-no-applause-for-138-million-exiting-poverty/

    Now the more contentious issue: What is Mr Modi’s stand in all of this? I know that is not that positioning of your article but it is he obvious debate that it leads to.

    FDI: Modi thinks it is only meant for the benefit of ‘Italian businesses’
    MGNREGA: Modi is far from against it. He in fact personally intervened and raised Gujarat’s daily wage amount from Rs 134 to Rs 147.
    FSB: Modi has kept mum. A “deafening silence” as one columnist terms it.

    –Edit Add–

    So it doesn’t look like most of THESE issues will be corrected by The alternative.

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    • Chaturvedi says:

      Summary:
      – Agree my povery numbers were off, but argument remains same.
      – Modi’s thoughts are irrelevant as the article discusses the reality about Congress’ pro-poor image. (argument contended nonetheless)

      The figure Rs.17/day I quoted was from a NSS study conducted to see the level at which the poorest of poor are surviving in India. In retrospect and having gone over the source data, I take back the Rs. 17 poverty figure as it only underlines the cost of living at which people survive and is not necessarily a government indicated poverty line. The Tendulkar committees figures of Rs. 27 & Rs. 32 (rural and urban) are correct.

      Having said that, my argument remains that the UPA is playing an interesting game of statistical hide & seek. Sure 138 million are earning Rs.32/day but can you consider that to be ‘not-poor’ considering the erosion or real disposal income from high inflation, fiscal impact of subsidies, currency depreciation, high interest rates?

      While the govt. contends that it has lifted 138 million out of poverty in last decade, these numbers are not in line with population growth which was 20% in the same period and doesn’t factor in real per capita income growth. Core inflation of food and subsistence has remained stubbornly high, so even though millions are earning above Rs. 32 a day, in reality if you consider their real incomes over last decade or two, poverty numbers/incomes remain dismal. All this after factoring in the government hand-outs and welfare benefits to the poor. This begs the question whether people that have exited poverty have done so owing to growth and developmental benefits from govt. policies or from hand-outs and doles, which in turn have led to increased inflation (from artificially high wages, etc) and reduced real disposal incomes. It is an important economic question because we need to know whether these 138 million are rich based on subsidies and welfare schemes or have accumulated wealth that can be compounded if subsidies are retracted. Read: http://www.indiaspend.com/investigations/indias-unchanging-statistic-400-million-poor-over-30-years

      Finally, the question: what would Modi do? To answer simply, the BJP in its six years in power never brought about any legislation that was anywhere close to being as fiscally irresponsible as either MNREGA or FSB have been/will be. That is what you should believe is the stand of the BJP govt. on welfare schemes and not whether they support something that they did not bring about. Why let the adversary frame your policy stance? I will not delve deeper into this because the article focuses on UPA’s pro-poor image and the reality behind it and not BJP’s own economic agenda.

      And actually Modi has raised questions about FSB and its effects on the fiscal deficit. Read: http://timesofindia.indiatimes.com/india/Modi-writes-to-PM-opposes-Food-Security-Bill/articleshow/21797940.cms

      Thanks,
      AC

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