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IS INDIA IN DENIAL ABOUT HOW UNEQUAL IT IS?

Last week the Times of India carried a heart-wrenching story about how four farmers committed suicide in different parts of Nashik district in Maharashtra, taking the district’s farmer suicide toll up to 53 in the past six months. One of the farmers, 77-year-old Supdu Pawar, built his own pyre before immolating himself on it. For the past five years, Pawar was in debt, owing Rs 3.40 lakh to various lenders, including presumably some state-owned institutions.  Another farmer, Appasaheb Jadhav, ended his life by grabbing a high voltage live wire. He owed a mere Rs 25,000. Stories such as these are so numerous and ubiquitous that urban readers have become too numbed by them to react. Between 2014 and 2015, according to official estimates, farmer suicides in India rose 42%, from 5650 to 8007. India’s farm sector is in deep crisis. Early this month a flashpoint was reached when farmers protested in Madhya Pradesh demanding better prices for their produce. The agitation led to clashes with the police that left five farmers dead.

The state of India’s farm sector can seem paradoxical. More than 50% of working age Indians live and work on farms and as much as 70% of the Indian population directly or indirectly depends on farm incomes. Yet, agricultural productivity has been falling steadily over the past several decades—farm produce made up 50% of GDP in 1951; today it is 16%. Of course, industrialisation and the growth of services has contributed to that declining share but if, after more than 65 years, over 900 million Indians continue depend on the farm sector whose share in GDP is falling then something is not right.

It is a fact that the majority of India’s poorest try to eke out a living off farms. And many of those who are assumed to be “employed” in agriculture are actually “disguised unemployed”. Since the Green Revolution in the 1970s there has been little focus on agricultural reforms in India. In fact, it has swung the other way—the focus has shifted to manufacturing and services. In the 1990s, liberalisation dealt another blow to the farm sector—government support for farmers got reduced and import restrictions on farm products were eased. There are other reasons for India’s low farm productivity: for example, fragmented land holdings, which inhibit modern large-scale farming and hinder the effective use of modern technology to help increase crop yields.

India’s poorest live on its farms and the gap between them and India’s richest is growing wider. This is quite in contrast to many other developing countries, including several that have economies that are much smaller than India’s and where inequality gaps have either been narrowing or, at least, not growing. The sad fact about the rural poor in India is that they get little more than lip service from those they elect to govern. Curiously, India has no official measure of inequality unlike other countries that use the Gini coefficient—a statistical measure of the degree of income inequality in an economy. India’s GDP growth rate is highest among the world’s largest economies—a fact that everyone in Indian government from the prime minister downwards never stops mentioning with pride that is often tinged with hubris. Yet when it comes to growing income inequality or the runaway growth in population, there is either embarrassing silence, or, just plain denial.

Data to gauge just how unequal incomes in India are were difficult to get till recently. Data on income and consumption levels from the National Sample Survey Organisation (NSSO), an impressive outfit that does scientific surveys on a mammoth scale, didn’t always show up an accurate picture because among those surveyed, India’s rich often under-disclosed their economic status. The more recent India Human Development Survey (IHDS), done jointly by the University of Maryland and New Delhi’s National Council for Applied Economic Research (NCAER) provides a more realistic picture of inequality. It’s not a nice one. IHDS’ data based calculations show that income inequality in India is lower than large economies such as Russia, United States, China and Brazil. India is, in fact, the world’s second most unequal country. According to Credit Suisse’s Global Wealth Data Book, in India the richest 1% owns more than half, 53% actually, of the country’s wealth. Consider the skewed distribution: India’s richest 5% owns 68.6% of the wealth; and the top 10% owns more than 76% of the wealth. Contrast that with 50% of Indians in the bottom half owning a mere 4% of the country’s wealth.

Last week, The Economist critiqued India’s prime minister Narendra Modi by saying that he was not a reformer but an administrator and noted that political conditions in India were “about as propitious for reform as they are ever likely to be”. The implication: if Mr. Modi and his government don’t seize the moment for major reforms, it could be a missed opportunity. The latest edition of the World Bank’s Global Economic Prospects, says in 2017, India’s economy is expected to grow 7.1%, a rate that will keep it among the fastest growing economies even as large economies elsewhere in the world falter. It will not mean much though if that sort of growth makes little difference to the hundreds of millions of Indians, particularly those trying to make a living off its farms, while the richest few get even richer.

Last November, in a fascinating article in Evonomics, Peter Turchin, a scientist, author and advocate of cliodynamics (a discipline that uses historical events to mathematically model societal evolution) wrote about how “over-production of elite” or the rich getting richer; growing inequality; and declining fiscal health of governments could lead to political instability and even violence. Turchin based his views on analysis of similar events or configuration of events through history. And he was writing in the context of the political upheaval that the US elections heralded last year. But what he was talking about could well happen elsewhere, including in India. Consider the three conditions Turchin listed: the rich getting richer; growing inequality; and declining fiscal health of the government. India could check all the boxes… if it doesn’t act soon.

 

 

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Shikha
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Excellent summation of the mindlessness that is producing catastrophic conditions. The farmer has not as yet risen. If he does and if his wife does too then India will be a different place.

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