Read on for what lies behind India's plummeting GDP, how aid may be missing the world’s poorest, evidence that reservation is a good thing, why politicians don’t care about internal migrants, a Bhojpuri rap song that you should not miss, and more.
What lies behind the plummeting GDP: Start with this data-led and very informative piece on the Indian economy. Partha Mukhapadhyay of the Centre for Policy Research uses a range of data sources to examine the extent and nature of India’s GDP fall, and the sources of any green shoots.
He shows that India’s per capita income has fallen to a level now that is the same as when Prime Minister Modi first took office in 2014.
The fall in consumption is larger than the fall in GDP (26.7%), even more so when you adjust for the fact that spending on essentials will reflect their increased prices in the period.
Investment has been almost cut in half, falling by a stupendous 47%.
"Capital formation as a share of GDP has fallen to levels last seen when three-fourths of the Indian population had not yet been born."
Partha argues that the economy’s demand drivers have dried up - both domestic or external - and underlines the importance of MSMEs and the jobs that comes with them for any hopes for a recovery. Read the piece for a comprehensive picture of India’s economy at this time, and all the data you’ll need to quote any time soon.
Most of the world’s poorest live in ‘rich’ countries: An excellent piece here by Rohini Pande, Vestal McIntyre, and Lucy Page of Harvard’s Evidence for Policy Design programme on where the world's poor live. They argue that the decline of poverty in middle income countries “fed an erroneous belief in the West that economies rising into middle-income status are on track to end extreme poverty and no longer need assistance..”
They show that aid doesn’t reach the majority of the poor because the middle-income countries they live in either never received much, or have outgrown eligibility.
Their chart below shows that while in In 1987, 9 out of 10 extremely poor people generally lived in low-income countries, by 2015 only 4 out of 10 lived in low-income countries. The rest lived in middle-income countries.
Middle income countries may have had the growth, but their governments are unable to redistribute income to the poor thanks to problems of both capacity (e.g. low tax collection, weak administrative capacity) and will. They argue that donors should address these by supporting programmes that enhance state capability and institutions so the poor can secure greater democratic influence.
Building accountability is key - if we want country governments to take care of their own poor, the countries don't just need to have the money but also the drive and the need to do so. Otherwise what you get are the large statues and bullet trains even as millions of poor go hungry. Which is a shame, really.
In middle income countries, aid needs to push the right levers to enable poverty reduction. Spending money isn’t enough.
DUET? Do it: As survey after survey comes in with reports of rising economic distress, skipped meals and lost incomes among the urban poor, the Indian government is considering an expansion of its rural employment guarantee scheme (MGNREGA) to urban areas. Jean Drèze – one of the architects of MGNREGA – has a proposal.
Through a scheme called Decentralised Urban Employment and Training or DUET, Drèze proposes the creation of a lasting institution "as an antidote to urban unemployment and urban decay.” (Quote from the linked piece, not Jean Drèze ).
This is how it will work: The government would issue ‘job stamps’ and distribute them to public institutions such as schools, colleges, shelters, jails, municipalities etc. These institutions would convert each job stamp into one person-day of work and offer work to registered workers. To avoid collusion, the workers would be assigned by an independent placement agency. The wages would be paid by the government directly into the workers’ account on the presentation of job stamps.
As long as we can take care of the bits we almost always get wrong.
While I’m all for ensuring jobs, there is something that is often missed in such a rights-based approach to welfare. Unless DUET addresses the critical issues of limited state capacity (you can’t implement new and innovative ideas using the same old rusty framework), and excessive centralisation (genuine devolution of both powers and finances is critical) – it will not go too far.
Reservations Work: The debate around political affirmative action or reservations is an old one in India. If you grew up here in the 80s or 90s, you couldn’t have missed it. You probably even participated in a Mandal Commission protest or two.
Critics of affirmative action argue that:
Reservations displace ‘meritorious’ individuals and this impacts outcomes.
Any benefits to a minority group comes at the cost of other vulnerable groups.
If you believe this, a new study is here to tell you you're wrong.
An analysis of political reservations in the Scheduled Areas of India reveal that reservations deliver no worse overall outcomes. There are large gains for targeted minorities, but these gains come at the cost of the relatively privileged, not other minorities.
Political reservations are an effective tool to redistribute both political and economic power, with no cost to other minorities, or to society overall.
The authors do note that in the long term, quotas can create a new dominant class that just replaces the old elite, and positive effects can disappear. This is important.
A very good, accessible piece on this research is here. If you’d like to read the original paper, go here.
They couldn’t care less: If you were struck by the sheer political apathy to the migrant exodus that took place during the lockdown, this new research will not come as a surprise. Yale researchers Nikhar Gaikwad and Gareth Nellis have found that politicians do in fact discriminate against internal migrants.
Their experiments revealed that fictitious migrants are 23% less likely to receive a call-back from a councillor in response to a letter requesting assistance, compared to an otherwise similar ‘native’. Those migrants who can signal that they are registered to vote in municipal ward elections are more likely to get a response than those who don’t.
Because politicians believe that migrants are unlikely to participate in their re-election, they ignore their needs and requests for help.
This doesn't surprise me, but it does make me grumpy.
It's a Rap!: Finally, here’s a Bhojpuri rap song that captures all the emotions, angst and complexities of the migrant crisis. Performed by Bollywood star Manoj Bajpayee – himself Bihar's export to Mumbai – the song is titled “Mumbai Main Ka Ba” or What's in Mumbai? I understand a little bit of the language and the song moved me to tears. There are English subtitles too – watch for the sass, the heartbreak and the goosebumps!