Last week, while a majority of the news channels were busy focusing on Maharashtra, or the protesting students at Jawaharlal Nehru University, or the air/water pollution in Delhi, a report that should have raised many an eyebrow went virtually unnoticed.
Ever since we got independence, our government has been trying to reduce poverty. Just a few months ago, immediately after the general elections, a UN report narrated India’s success story.
The country was able to lift 271 million people out of poverty between 2006 and 2016, the report said. The multi-dimensional poverty index (MPI) released in June 2019 took note of the improvements in terms of household assets like cooking fuel, sanitation and nutrition.
Prepared after studying the performance of 101 countries, it concluded that 1.3 billion people are still “multi-dimensionally poor” globally. The report also showed why the poor should not be categorised mainly on low income. It wanted several other factors like poor health, poor quality of work and even threat of violence to be taken into consideration.
The report pointed out that of all the countries, India and Cambodia were able to reduce their MPI values at the fastest pace. It only meant that we as a nation did not leave the poorest of the poor.
This certainly helped India in marching ahead on the sustainable development goals (SDGs), essentially the first goal, which fixes a target for all countries to eliminate poverty by 2030. The news would have certainly given a boost to the government and also to us as proud Indian citizens.
The euphoria, however, ended in a few months. A report, based on the latest consumption expenditure survey conducted by the national statistical office (NSO) during July 2017 and June 2018, published in the Business Standard and the Mint, should act as an eye-opener to the government.
The survey has shown a sharp dip in household expenditure. It shows that an average Indian has reduced his monthly household expenditure by around 3.8 per cent from Rs. 1446 during the year 2017-18 as compared to Rs. 1501 in 2011-12. Now, some would say, these may not be real-term figures as the economy was in a different shape in 2011-12.
Just to put the facts in place, the above figures have been adjusted for inflation with 2009-10 as the base year. The surveyors compared 2017-18 with 2011-12 as monthly per capita consumption expenditure (MPCE) increased by 13 per cent in 2011-12.
The survey showed that MPCE for rural areas has reduced by around 8.8 per cent in 2017-18. A dip in MPCE essentially means two things. One, there is a dip in demand. Two, people don’t have resources. Essentially, both factors point out what the economists have already been speaking about – a recessionary trend, a slip in gross domestic product and hence an increase in poverty.
The report was supposed to be released by June 2019 but has been kept on hold for obvious reasons. The Business Standard has been able to get a copy of the report.
The period in which the survey was conducted saw the implementation of Goods and Service Tax (GST). Also, demonetisation happened just a few months before June 2017. So essentially, the results could be an aftermath of demonetisation.
The most worrying aspect of the survey is the dip in food consumption. It happened for the first time in many decades. On an average, people in the rural areas spent Rs. 580 on a monthly basis in 2017-18 as compared to Rs. 643 in 2011-12. This shows a reduction of 10 per cent.
However, there is a slight increase in food expenditure in the urban areas from Rs. 943 in 2011-12 to Rs. 946 in 2017-18. Ideally, the expenditure should have increased manifold.
Be it pulses, cereals, sugar, salt, spices, edible oil, beverages or fruits, there was a reduction in all the categories in both urban and rural areas except for processed foods, where there was an increase of 2.8 per cent in expenditure in urban areas. The experts pointed out that the last NSO report that saw a slump in food expenditure was in 1973 during the global oil crisis and in the mid-1960s due to the domestic food crisis.
The current crisis can also be related to the NSO report showing unemployment at an all-time high during the last 45 years. The agency had done a labour force survey which showed the unemployment rate at 6.1 per cent in 2017-18, as compared to 2.2 per cent in 2011-12. The report was withheld in a similar way despite its approval by the national statistical commission.
This validates the concerns many economists have been raising that recession is affecting the Indian economy in a drastic manner. The government never accepted its existence.
Instead of taking a larger overview of the economy, finance minister Nirmala Sitharaman has been trying to find quick-fix solutions. Yes, this recessionary trend is global, yet it seems to be affecting India more, because of the faulty government policies.
Reduction in food consumption is actually worrying as it would increase malnutrition. The recently released global hunger index (GHI) 2019 has already placed India at the 102nd position out of 117 countries. The report has warned us of serious social consequences with wasting (children below five who have a low weight for their height) leading to impaired cognitive ability and poor learning outcomes.
While GHI essentially takes note of a country’s performance in providing good quality food and health to children below five years of age, the NSO report points out the overall poor growth of the country, so much so that people could not afford good food!
Both the situations are worrisome. The indicators clearly point to the increasing poverty. The government has again put the report in cold storage for it doubts whether the data is correct. Earlier also, the NSO report on unemployment was kept on hold with similar suspicions. But the report was released without any modifications after the general elections.
However, this time the government has gone a step further with its decision to scrap the report. The survey should have, instead, helped the government in taking appropriate measures. But the way the government handled the issue has raised several concerns. Is the government running away from the situation? Simply rejecting the survey because the report does not suit its narrative is not a solution.
Instead, the prime minister should have addressed the country and shown a roadmap, which will help us in getting out of the current crisis. Anyone, who wants the country to progress, would need data to take corrective measures. But the government does not value its own institutions set up for providing timely information.
The importance of GDP data is already under the cloud as it does not match certain high frequency indicators. The way the government modified the calculation to suit its interest shows the double standards the government has been following. Withholding data and rejecting official surveys will only damage its credibility. It is akin to adding fuel to fire as acceptance and decisive action are the keys to solving all problems. Denial, certainly is not a solution.
(The writer, a company secretary, can be reached at email@example.com.)
(Published on 25th November 2019, Volume XXXI, Issue 48)