Essay

Some Views on Public Policy Outcomes in India - Is it the Message or the Messenger?

How has India been doing on the economic and social fronts? The picture that emerges—from casual empiricism as much as from careful analysis of facts and figures; from internal as much as from external critics; from dispassionate appraisal as much as from involved evaluation—is an unhappy one. One can ignore the message, or reject it, or shoot the messenger—or act constructively on it.

S. Subramanian, Economist, points out in this Essay that the Indian state’s public policy response to criticism of its public policy failures in recent times seems to have described everything from neglect to denial to aggressive rejection, without touching on any effort at introspection or self-improvement. The denial-and-accusatory reaction to informed criticism has affected public policies and institutions of democracy, he writes, and strikes a note of caution: "The situation this nation is confronted with is really not a healthy one".

This brief essay is one intended for the layperson who is interested in obtaining a summary picture of how a section of international agencies and experts, apart from domestic commentators, have viewed various aspects of the state of India’s economy and society in recent times. Whatever these perspectives may add up to—they add up, as it happens, to a picture that is unflattering on the whole—they are surely not without value as a record, or, quite simply, as information. This is especially so for those that are not given to routinely tracking, much less consolidating, scattered bits of data from different sources and on different subjects that reflect the outcomes of public policy and its implementation. At this level, the objectives of this essay are modest and utilitarian in scope.

Such a relatively unambitious project of docketing and description nevertheless opens up a larger question for examination: how does one respond to assessments and criticism of how India is doing, and by implication, evaluations of the role of the State in the country’s performance? The question assumes a particular salience in the context of the general culture of the State’s response to factual assessments and expressions of opinion that may not coincide comfortably with a cheerful view of how we are doing and where we are heading. In this general environment of extreme thin-skinnedness, internal criticism is diagnosed, and often punished, as a reflection of disloyalty, anti-national sentiment, and downright seditious undermining of the image and interests of the State.

If elitist liberal irresponsibility, combined with lack of patriotism, accounts for unfriendly criticism from within, what of evaluation from without? The approved response, in the climate of intolerance which is the season’s fashion, seems to be a graduated reaction comprised of three elements: ignoring, denying, and ‘slamming’ the evaluation. The three elements constitute a tripod of convenience supporting public policy response to external criticism. Such access to the easy rewards of immediate convenience leaves the critics unhurt, while visiting irreparable secular damage on those the criticism is intended to help. We look at some aspects of such assessment and criticism in what follows.

2

In terms of long-term structural infirmity, poverty and inequality continue to be the dominant features of the country’s socio-economic reality today—despite official (and, indeed, academic) claims that money-metric poverty has systematically declined over time1, while inequality2 has been an inevitable concomitant of the growth process, though not in any seriously alarming degree. Some critics have argued that trends in the dramatic decline of money-metric poverty are largely a function of the (dubious) official procedures employed for computing poverty, with particular reference to the ‘identification’ problem in poverty measurement, namely, the specification of a ‘poverty line’ and its ‘updating’ over time3.  Insofar as inequality in the distribution of consumption expenditure is concerned, the picture of somewhat muted growth in inequality is largely a function of the fact that the latter has been measured by means of purely ‘relative’ indices—a picture that is seriously altered into one of an increasing trend if inequality were to be measured by what are called ‘absolute’, or even ‘intermediate’, indices of inequality4. Indeed, in terms of even purely relative measures, inequality in the distribution of household wealth in India, especially in its urban areas, has exploded in the decade 2002-03 to 2012-135.

Inequality in the distribution of household wealth in India, especially in its urban areas, has exploded in the decade 2002-03 to 2012-13.

Insofar as disparities in non-income dimensions of achievement, such as literacy, mortality, and nutritional status are concerned, magnitudes continue to remain high, whether we speak of inter-personal or inter-group disparities. The divides are particularly prominent when the population is partitioned according to caste, religion, gender, geographical region, and sector of origin (rural/urban)6

3

Of course, the preceding reflections on inequality and poverty may be no more than the complaints of chronically pessimistic, if not downright trouble-making, domestic critics. In this connection, it may be worth pointing out that while Lucas Chancel and Thomas Piketty are conceivably scholars with pessimistic and/or sinister motivations, they are at least, most certainly, not home-grown analysts.  Chancel and Piketty work at the Paris School of Economics; and Piketty is the author of the book Capital in the Twenty-First Century, which has been widely hailed as one of the most important books written on economic inequality. In 2017, the two authors brought out a working paper on income inequality in India over the long haul7, from the early 1920s to the mid-2010s; and the paper suggests, among other things, that the income-share of the richest 1 per cent of income earners has now reached its highest level since Income Tax was introduced in India in 1922. On the strength of their findings, the authors ask if the phenomenon of ‘India Shining’ is only for the rich.

That inequality is a problem that must be addressed with urgency even in advanced, high-income economies is a proposition that has been highlighted in a number of recent books of exceptional merit on the subject, by scholars such as Joseph Stiglitz, Anthony Atkinson, Branko Milanovic and, of course, Thomas Pikketty8. How much more important that issue must be in a country like India, where large amounts of poverty co-exist with large concentrations of wealth! The problem is particularly pernicious when viewed in the light of the distributional ethic of ‘sufficientarianism’, due to the moral philosopher Harry Frankfurt9. This arguably conservative doctrine suggests that inequality is especially morally repugnant when it is a feature of societies in which sections of the population do not possess a sufficiency of the resources needed to extricate them from poverty. According to the National Commission for Enterprises in the Unorganized Sector, if one employed a poverty line for 2004-05 of just Rs.20 per person per day (or Rs.3,000 for a family of five per month) at current prices, 77 per cent of the population would have been plunged into poverty. Contrast this with a statistic put out by the Credit Suisse Research Foundation’s Global Wealth Handbook 201710, namely that (despite the vast disparities in poverty and per capita national income between the two countries), India has almost as many dollar billionaires (42) as the UK (44)!

Commentators like Piketty have urged enhanced progressive taxation as a route to mitigation of economic inequality.

What can be done about inequality? Commentators like Piketty have urged enhanced progressive taxation as a route to redistribution of incomes and the mitigation of economic inequality. Similar suggestions have been made by others, in favour of more progressive income-tax schedules; of more progressive property-tax schedules; of taxes on gifts and inheritances; of an annual tax on wealth; and of a minimum tax for corporations. The proceeds of increased tax revenues could be invested, perhaps, in a universal ‘minimum inheritance’ to all citizens upon the attainment of adulthood; or perhaps in a substantial Child Benefit to all children. It is important to clarify that these counsels for redistributive fairness have not emanated from lunatic radicals with no conception of either fiscal or political feasibility. They have come from a profoundly principled and supremely gifted analytical economist who was a ‘mainstream’ practitioner with a conscience (such entities do exist!): the late Sir Anthony Atkinson11.

If policy stances are anything to go by, the nationality of the critic has been no determinant of the generalised response of neglect and denial that has emerged from those that mould and implement policy: Atkinson, Piketty, and the rest have received as short shrift as their domestic counterparts. This is reflected in a relatively unprogressive income-tax schedule in which the marginal tax rate is capped at a low 30 per cent; in a structure of tax-mobilisation wherein regressive indirect taxes account for a half of all tax revenue; in which huge tax concessions to the corporate sector, by way of  discretionary ‘revenue forgone’ allowances, are made for the business class; in which wealth is not taxed; in which rich agricultural lobbies are largely exempt from any obligation of direct taxation; in which the tax-to-national income ratio is only around 16-17 per cent, when comparably poor countries have achieved rates of 30 per cent and more; in which apparently radical plans for a universal guaranteed basic income are advanced, only for the envisaged project to turn out to be both modest and a substitute for (rather than supplement to) extant social sector spending outlays; in which labour-unfriendly legislation, aimed apparently at ‘labour-reform’, is introduced in the form of regressive amendments to the Factories Act, the Industrial Disputes Act and the Apprenticeship Act; in which public spending is committed to flashy extravaganzas such as Smart Cities and Bullet Trains; and in which farmers are squeezed by debt while businessmen abscond after defaulting on their loan repayments.

4

What of poverty? The most blatant manifestation of individual deprivation resides in the phenomenon of hunger. How has India fared in this respect? In October 2017, the International Food Policy Research Institute (IFPRI) released its report titled Global Hunger Index 2017: The Inequalities of Hunger12. The Hunger Index is a weighted sum of the standardized scores of four indicators of hunger: the proportion of the under-nourished population, the prevalence of wasting in children, the prevalence of stunting in children, and the under-five mortality rate. The Index is represented on a scale of 0 to 100: the higher the index score, the higher the level of hunger. In 2017, India has been awarded a relatively high score of 31. This brings the country into the ‘serious’ category of hunger, ranked 100 in a list of 119 nations, behind China, Nepal, Myanmar, Bangladesh and Sri Lanka, with  Pakistan (ranked 106) being one of the few countries behind India. The relative situation was bad enough in 2014, when India was ranked 64 in a list of 120 countries; it has now become considerably worse.

The most blatant manifestation of individual deprivation resides in the phenomenon of hunger.

A policy-maker is not obliged to take findings such as these on hunger seriously if he adopts the line that international standards of nutrition may not be applicable to countries like India where genetic potential falls short of the global norms defining satisfactory nutritional status. This point of view was in fact advanced by the economist Arvind Panagariya in an article published in the Economic and Political Weekly in 2013, a perspective that was firmly resisted in a series of repudiations published in the same journal, and one which had earlier been disposed of by that doyen of nutrition studies in India, Professor C. Gopalan13. It may be recalled that Dr Panagariya went on to head the (sic) National Institute for Transforming India (Niti Aayog).

5

As we have seen earlier, direct pro-poor policy requires resources for public spending and redistribution. Clearly, an important source of such resources is the black money in the economy. According to a leaked press report14, a study submitted to the Government by the National Institute of Public Finance and Policy suggests that the unaccounted economy in India—driven largely by illegal activities in the mining, education, real estate and construction sectors, and through ‘havala’ transactions in foreign exchange and the over/under-invoicing of imports/exports—could be as large as three-fourths the size of the country’s Gross Domestic Product (GDP). The report, which was submitted in 2013 to the then Finance Minister, has not since entered the public domain. Independent scholars like Arun Kumar have estimated that the size of the black economy in India could be upward of 60 per cent of GDP15. Some principled effort at mopping up black money would not only provide much needed resources for the alleviation of poverty and the mitigation of inequality, but would be directly compatible with the present Government’s extravagant pre-election promises in this regard (remember the assurance of remitting Rs. 15 lakh into each citizen’s bank account from the ill-gotten wealth of tax-dodgers?).

What has the actual policy performance on this front been? In July this year, the then acting Finance Minister reported in Parliament that according to data available with the Bank for International Settlements (BSI), there was a decline in the quantum of non-bank (loans and deposits) liabilities from India to Switzerland between 2014 and 2017. It is excusable to take this to mean that there has been a decline in the quantity of black money stashed away abroad. Closer scrutiny, as undertaken by the economists Prasenjit Bose and Zico Dasgupta16, indicates that any such inference would be a product of both erroneous calculation and the use of selective statistics. First of all, the figures cited by the Minister are obtained by adding up the quarter-specific (Q1 to Q4) stock figures for each year: it is hard to make anything of this sum of cumulations. The appropriate comparison, instead, would be in terms of the quarter-specific figure for one year measured against the corresponding quarter-specific figure for another year. By this reckoning, non-bank (loans and deposits) liabilities from India to Switzerland did indeed decline from 347 million USD in 2014-Q4 to 249 million USD in 2017-Q4—but only to rise again to 453 million USD in 2018-Q1. What is much more telling is that when we look at aggregate statistics on non-bank cross-border claims of Indian residents in terms of all instruments and for all reporting countries, the figure for 2013-Q4 is 92,308 million USD, which has risen to 95,295 million USD in 2017-Q4.

It is worth reiterating that the data on which Bose and Dasgupta have based their findings are data from the Bank for International Settlements and the Swiss National Bank: these are not the product of estimates manufactured by domestic dissidents and disaffection-mongering critics. What deserves underlining here is that the policy response to a serious problem is sought to be located not in thought devoted to patient learning and corrective strategy, but in the casual misinterpretation of selectively chosen data.

6

The subject of black money leads naturally to a consideration of this Government’s demonetisation experiment of November 2016. The experiment has been widely regarded by several Indian critics as one of the worst policy disasters our country has witnessed after Independence17. But if that is just a narrow, parochial, politically-motivated, Opposition-fuelled sentiment, what is one to make of the views on the subject of the chief economist of the International Monetary Fund? In an interview given to Business Standard in 201718, Gita Gopinath is reported to have said:

‘I don’t think I know a single macro economist who thinks this was a good idea. And, it’s not something I think should be done for a country such as India at the level of development it has.’

I am not quoting this economist in the spirit of suggesting that the Oracle Has Spoken. Rather, I quote her on this subject from the consideration that it is perhaps one of the very few subjects on which very many Indian critics of demonetisation would probably agree with her.

Or consider Joseph Stiglitz’s views on the subject. (Even hard-core opponents of ‘mainstream economics’ might concede that the Nobel Committee got it right when it chose to award the Nobel Prize in Economics to Stiglitz in 2001.)  In January 2018, the NDTV put out this item19:

In a conversation with NDTV… on the sidelines of [the] World Economic Forum (WEF) at Davos, senior economist Joseph Stiglitz said, ‘India did the peculiar experiment of demonetisation. People around the world couldn't figure out what you were doing. What you did was hamper the small businesses. You took away the currency that they needed. You didn't solve the problem that you said you were attacking, which was corruption and all that. So, it is a mystery of why you did that to your economy.’  

None of the (continuously shifting) objectives of the demonetisation exercise was realised. Virtually the entire value of demonetised currency re-entered the banking system, presumably properly laundered; no estimates of the black money that was supposed to be mopped up by demonetisation are available: if anything, there has perhaps been a net injection of black money in the system, through exchange of high denomination currency notes for lower denomination notes at a premium, and frenetic trading in gold and foreign exchange in the hours immediately following the announcement of demonetisation; there has been some reduction of liquidity in the system and some increase of ‘digitalisation’ in monetary transactions; but it is not clear that either of these is either a priority policy objective nor something that could not have been achieved, if it had to be, in a less traumatic fashion; and in the absence of the extinguishment of high-denomination currency, there was no windfall gain available from demonetisation to the Reserve Bank of India. What is much worse, workers in the informal sector and the poor were strapped of cash in an economy predominantly based on cash transactions; many livelihoods were ruined; the harsh rigours of everyday living for the common citizen were rendered harsher by the exhausting logistics of exchanging the demonetised currency for new currency issued by the Reserve Bank; and the growth potential of the economy has been compromised.

It is hard to see any symptom of an honest or mature policy stance.

And the policy response to criticism? For the reader as much as for the writer, it would be painful to rehash the Government’s record, over the last couple of years, of neglecting or denying the content of criticism while also continuously shifting the rationale for demonetisation from one lame leg to another. It is hard to see any symptom of an honest or mature policy stance in such ducking and weaving and bobbing.

7

Tracking the growth of per capita national income is apparently a major national pastime, judging from the weight attached to growth performance as a reflection of successful economic policy. It is nobody’s case that robust growth rates are not an essential ingredient of good macroeconomic health—though sectorally lop-sided and largely jobless growth are also matters that ought to be of concern, even if they often are not. Here, two issues of salience are: (a) what have been the recent trends in and prospects for growth in the Indian economy? and, similarly, (b) what is the likely factual situation in respect of unemployment in the economy?

The economist R. Nagaraj has done valuable work aimed at responding to both of the above questions. Taking the second question first, Nagaraj has addressed the relatively optimistic assessment of the jobs situation in India made by the economists Surjit Bhalla and Tirthatanmoy Das20. Among other things, Nagaraj21 makes the elementary point that unemployment is not best measured by looking at trends in aggregate employment (this would be like tracking poverty in terms of the absolute numbers of the non-poor population!), and that Bhalla’s optimistic message is reversed when one looks at over-time changes in the unemployment rate instead of in aggregate employment. It is a matter of some interest that Nagaraj was obliged to publish his criticism in the Mint, because the publication that initially agreed to carry his piece subsequently declined to do so!

On the first question of growth rates, Nagaraj has done work22—which many economists including myself consider to be reliable and convincing—to call into question the possibly exaggerated growth rates estimated by the Central Statistical Office (CSO). One paper which affords a synoptic treatment of the subject is a National Council of Applied Economic Research (NCAER) publication authored by Nagaraj and T. N. Srinivasan23. Among other things, the authors suggest that there are methodological and data defects informing the so-called New Series on National Accounts Statistics (NAS), following upon a switch in the base year from 2004-05 to 2011-12, which constitute grounds for the suspicion that the new base-year aggregates might have been underestimated and growth rates overestimated. This is simply not the appropriate forum in which to attempt a discussion of the difficult technical issues involved in the controversy. What is however of significance in the context of this essay’s brief is that there is little evidence of official acknowledgement, leave alone acceptance, of the criticism of Nagaraj and others.

Demonetisation and Goods-and-Services Taxation have been held accountable for this deceleration.

All of the above is of a piece with the State’s tendency to respond to criticism of public policy outcomes or of official estimates thereof with a mixture of neglect and stone-walling. Unfortunately, the view from without only buttresses the content of domestic criticism. In October 2017, the International Monetary Fund downgraded India’s growth rate projection for 2017 to 6.7 per cent and the World Bank down-graded it to 7.0 per cent from 8.6 per cent. Demonetisation and Goods-and-Services Taxation have been held accountable for this deceleration24.

8

Even if growth in per capita income is seen to be necessary, it is seldom sufficient to secure many basic aspects of human flourishing, such as are reflected in longevity, education and good health. These are aspects of human development and the creation of human capital that often require direct public intervention, as opposed to leaving it to growth, the trickle-down of the product of growth, and market forces to secure the desired end. Such a view as this is at the heart of Amartya Sen’s ‘capability approach’25 to assessing human well-being, with its emphasis on the substantive freedoms which individuals have to achieve valued human functionings (that is, states of being and doing). In this view, the imperatives of growth are not denigrated: what is questioned, though, is the sufficiency of—and therefore unique and overriding importance accorded to—growth.

The wisdom of such a perspective has not been lost even on an institution such as the World Bank (WB), not known to be a bastion of radical philosophy. This is reflected in the WB’s latest (2019) World Development Report (WDR)26, which advances a measure called the Human Capital Index (HCI) that is constructed from an aggregation of indicators on children’s survival prospects, their expected years of quality-adjusted schooling, and access to health care. The HCI is a composite measure of the knowledge, health and skills which a child starting out on life might be expected to accumulate by the age of 18. The Index is presented as a fraction of the (maximum) standardised normative score that can be attained. The value of the Index for India is estimated at 0.44, implying, loosely, that accomplishment in the matter of human capital accumulation is only 44 per cent of some satisfactory achievable potential. The WDR has computed the value of the HCI for 157 countries. India’s rank is a disappointing 115, behind Bangladesh (with a rank of 106).

The HCI is a summary measure of certain aspects of public policy outcome. That this has not been lost on the Government is apparent from its response—which is virtually churlish in its tone—to the findings of the World Bank. According to a report in The Economic Times of October 12, 201827,

‘[T]he government has rejected the findings, saying it does not reflect the key initiatives that are being taken for developing human capital in the country, such as Samagra Shiksha, Ayushman Bharat Programme, Swachh Bharat Mission, Pradhan Mantri Ujjwala Yojana, Pradhan Mantri Jandhan Yojana and the Aadhaar identification system-enabled direct cash transfer, that have improved governance and social protection.’

What follow are ingredients of a press release by the Ministry of Finance, as reported by the Economic Times (the author has not been able to directly access the relevant press release on the web: his effort has met with the response of ‘Service Unavailable - DNS failure’):

There are serious reservations about the advisability and utility of this exercise of constructing HCI. There are major methodological weaknesses, besides substantial data gaps…These initiatives [Samagra Shiksha et al] are transforming human capital in India at a rapid pace and very comprehensively touching upon the lives of millions of people living in rural and tribal areas…The qualitative aspects of improved governance that have a strong correlation with human capital development cannot be and have not been captured by the way the HCI has been constructed…
The Government of India, therefore, has decided to ignore the HCI, and will continue to undertake its path breaking programme for human capital development aiming to rapidly transform quality and ease of life for all its children [emphasis added]

Further comment is, surely, superfluous.

9

Outside of the strictly economic domain, one major aspect of human flourishing is that related to the protection of personal liberties in the matter of  physical safety and bodily integrity. June 2018 saw the release of the Global Peace Index, which is constructed from indicators on ‘ongoing domestic and international conflict’, ‘safety and security’, and ‘militarisation’.  The Index values for a set of 163 countries are available in the report International Peace Index 2018, brought out by the Institute of Economics and Peace28. India ranks  only 136 in the list of 163 countries.

The record on gender-related security is even more woeful. The Thomas Reuters Foundation, in June 2018, reports29 - on the strength of a poll conducted by them - that ‘the world’s second most populous nation, with 1.3 billion people, ranked as the most dangerous on three of the topic questions – the risk of sexual violence and harassment against women, the danger women face from cultural, tribal and traditional practices, and the country where women are most in danger of human trafficking including forced labour, sex slavery and domestic servitude.’  

On human rights, here is what the Amnesty International Annual Report 2017/18 has to say about India in the section on country profiles30:

Religious minority groups, particularly Muslims, faced increasing demonization by hardline Hindu groups, pro-government media and some state officials. Adivasi communities continued to be displaced by industrial projects, and hate crimes against Dalits remained widespread. Authorities were openly critical of human rights defenders and organizations, contributing to a climate of hostility against them. Mob violence intensified, including by vigilante cow protection groups. Press freedom and free speech in universities came under attack. India failed to respect its human rights commitments made before the UN Human Rights Council. The Supreme Court and High Courts delivered several progressive judgments, but some rulings undermined human rights. Impunity for human rights abuses persisted.

In October of 2018, Amnesty International’s office in Bangalore was raided by the Enforcement Directorate, and its bank accounts were frozen on grounds of alleged foreign exchange violations by the organisation. Greenpeace India had been subjected to similar treatment a few weeks earlier. It would obviously be asking for trouble to assert categorically that these acts constitute the state’s policy response to adverse criticism: as Albert Camus has said in The Plague, ‘…again and again there comes a time in history when the man who dares to say that two and two make four is punished with death.’ It would be prudent, under the circumstances, to simply juxtapose one 2 with another 2, with an invitation to the reader to perform the higher mathematics of arriving at the result of adding the two quantities. Having done so, it is possible that the reader might (or, of course, might not) relate sympathetically to an observation made by Joseph Stiglitz in Bengaluru in 201631:

‘Some issues have got a lot of public attention around the world and are of a great deal of concern. One of the big concerns is the difficulties for NGOs to operate in India. It puts India in the same group of countries as Egypt and Russia, and that is not the group of countries that you want to be in.’

In an open letter32 on the Kathua and Unnao rapes addressed to the Prime Minister of India in April 2018 by a group of 637 scholars from across the world, it is stated that:

Kathua and Unnao are not isolated incidents. They are part of a pattern of repeated targeted attacks on minority religious communities, Dalits, tribals and women, in which rape and lynching have been employed as instruments of violence by gau rakshaks and others, in a sequence of events spread across Dadri in Uttar Pradesh (2015), Udhampur in Jammu and Kashmir (2015), Bijapur and Sukma in Chhattisgarh (2015-16), Harda in Madhya Pradesh (2016), Latehar in Jharkand (2016), Una in Gujarat (2016), Rohtak in Haryana (2017), Delhi (2017), Saharanpur in Uttar Pradesh (2017), and now Jammu and Kashmir and Uttar Pradesh (2018).

One supposes one can always ‘slam’ critics of this orientation with labels such as international sickularists’, or ‘global libtards’, or whatever term of abuse is currently fashionable.  As for the state, it does not just slam, it slams in triples, as it did in the cause of characterising the June 2018  Report on the Situation of Human Rights in Kashmir brought out by the Office of the United Nations High Commissioner for Human Rights Organizations33 in these terms: ‘fallacious, tendentious and motivated.’

Finally, a word on freedom of the press. ‘Reporters Without Borders (RWB)’ is an international organization based in Paris which, from 2002 onward, has been compiling an annual Index of Press Freedom34, on the basis of which countries are ranked. The coverage is roughly around 180 countries. According to RWB, 'The degree of freedom available to journalists …is determined by pooling the responses of experts to a questionnaire devised by Reporters Without Borders. This qualitative analysis is combined with quantitative data on abuses and acts of violence against journalists during the period evaluated.' On the basis of the country rankings furnished by the Press Freedom Index, we find that if we consider the period 2009 to 2014, on average about 28 per cent of the countries covered fared worse than India; and from the period 2015 to 2018, 24 per cent fared worse than India. In relative terms, that is, India has been faring badly, and there has been no improvement under the current dispensation. If anything, freedom of the press has deteriorated.

10

Everything considered, India is not doing well. Some of the problems the country is labouring under are structurally embedded in its society and economy; others are aspects of inherited baggage; and yet others are contemporary policy failures—interpreted both as absence of improvement and presence of deterioration. There is little evidence that long-term economic problems such as deprivation and disparity have been addressed with any sort of helpful policy perspective in place. For if there were, how would one explain—for instance—the widespread existence of discontent among farmers, when agrarian distress is responded to with dithering in the implementation of minimum farm support prices or bizarre promises of doubling farmer incomes in five years?

There is little evidence that long-term economic problems have been addressed with any sort of helpful policy perspective in place.

Other specific policy interventions have been outright disasters: demonetisation was doomed from the stage of its conception, while the Goods and Services Tax initiative has suffered badly from hurried and shoddy implementation. A direct set of resultant policy outcomes has been a combination of severe hardship to constituents of the informal economy and a general setback to the prospects of growth in per capita income.

Policy is not just a matter of specific fiscal or monetary actions: it is also a matter of the general ideological orientation of the governing class, and how it is perceived by the polity. In the present dispensation, it would require considerable and strenuous effort not to diagnose an orientation that is inegalitarian, pro-rich35, misogynist and discriminatory toward those of disadvantaged caste and minority religious affiliation. The phenomenon of absconding debt-defaulters and the allegations of crony-capitalism emanating from defence contracts such as the Rafale deal have done little to encourage faith in the large anti-corruption claims on the basis of which the present Government came to power.

The dilution in, if not active destruction of, the quality of higher education through a number of means ranging from mediocre leadership appointments based on ideological affinity rather than academic merit, to the selective targeting of academic centres such as the Jawaharlal Nehru University whose political culture is perceived as inimical to the values of the ruling dispensation; the public conflicts between the Government and agencies such as the Central Bureau of Investigation and the Reserve Bank of India; the complaints of these agencies about the infringement of their autonomy by the state; the unprecedented action of four Justices of the Supreme Court in organising a press conference to warn the nation of the peril to democracy posed by certain aspects of the Court’s functioning: all of these are evidence of the most parlous feature of governance on evidence in recent times—the whittling away of the institutional bases of a country’s democratic functioning.     

The reader may get the impression that this is a uniformly negative assessment of policy performance. I do hope so. The situation this nation is confronted with is really not a healthy one. That grave governance deficits underlie this state of affairs is particularly evident in the series of open letters to the Prime Minister which groups of retired civil servants have written, calling his attention to the need for reform and rectification. These letters have been with reference to rising levels of religious intolerance and vigilantism36; the Kathua and Unnao rape cases37; and the arrest of human rights activists by the Pune police in August 201838. It is instructive that in the last letter cited, the signatories have written in the capacity of ‘…citizens who have had a close association with issues of public policy and governance.’

We should be worried. A deliberative democracy characterised by a free press and a vigilant media is a necessary ingredient of the checks and balances that must be secured against poor governance and both passive and active policy lapses. We should be particularly worried, therefore, when public opinion is—with few but honourable exceptions—dominated by cheer-leading, spin-doctoring, pliancy, and self-censorship  in which an alleged stance of ‘neutrality’ serves as an alibi for cautious prudence or outright opportunism.

Poor policy outcomes must be expected to flourish in such an environment.

[S. Subramanian is a former Indian Council of Social Science Research (ICSSR) National Fellow and a former professor of the Madras Institute of Development Studies. Subramanian is an elected fellow of the Human Development and Capability Association (HDCA). He has worked extensively on measurement and other aspects of poverty, inequality, and demography, and on topics in collective choice theory, welfare economics, and development economics. In 2015, he was appointed as a member of the Advisory Board of the World Bank's Commission on Global Poverty under the Chairmanship of Sir Anthony Atkinson. He lives and works in Chennai. He can be contacted at [email protected]]

End Notes:

[All URLs last accessed on November 2, 2018.]

1. See, for example, Panagariya and Mukim (2014). Return To text.

2. See, among others, Ahluwalia (2011), Bhalla (2011), Bhagwati (2011), and Srinivasan (2017). Return to Text.

3. For a sample of critiques, see Mehta and Venkatraman (2000), Patnaik (2004), Subramanian (2005), and Reddy (2007). Return to Text.

4. Subramanian and Jayaraj (2016). Return to Text.

5. Anand and Thampi (2016), Vakulabharanam and Motiram (2018), Jayaraj and Subramanian (2018). Return to Text.

6. For a recent comprehensive account of economic inequality in India, the reader is referred to Oxfam India’s "India Inequality Report 2018", authored by Himanshu (2018). Return to Text.

7. Chancel and Piketty (2017). Return to Text.

8. Stiglitz (2015),  Atkinson, (2014), Milanovic (2016), Piketty (2014). Return to Text.

9. Frankfurt (1987). Return to Text.

10. See Shorrocks and Davies (2017). Return to Text.

11. Atkinson (2014). Return to Text.

12. International food Policy Research Institute. 2017. "The Global Hunger Index 2017: The Inequalities of Hunger". [http://www.ifpri.org/publication/2017-global-hunger-index-inequalities-hunger]. Return to Text.

13. Panagariya (2013), Gillespie (2013), Wable (2013), Sathyamala et. al. 2013. Gupta et al. (2013), Gopalan (1992). Return to Text.

14. Mehra, P. 2014.  "Black economy now amounts to 75% of GDP", The Hindu, August 4. [https://www.thehindu.com/news/national/black-economy-now-amounts-to-75-of-gdp/article6278286.ece]. Return to Text.

15. Arun Kumar (2016). Return to Text.

16. Bose and Dasgupta (2018). Return to Text.

17. The reader is referred to the important and informative book on the subject by Reddy (2017). Return to Text.

18. Palepu, A.R. 2017. "Not a single macro economist thinks note ban was a good idea: Gita Gopinath", Business Standard, December 22. [https://www.business-standard.com/article/economy-policy/not-a-single-macro-economist-thinks-note-ban-was-a-good-idea-gita-gopinath-117122101525_1.html]. Return to Text.

19. NDTV. 2018. "Why Demonetisation was launched will Remain a Mystery: Joseph Stiglitz". [https://special.ndtv.com/ndtv-davos-33/video-detail/why-demonetisation-was-launched-will-remain-a-mystery-joseph-stiglitz-477546]. Return to Text.

20. Bhalla (2018) in The Indian Express; Bhalla and Das (2018). Return to Text.

21. See Nagaraj (2018a, b). Return to Text.

22. Nagaraj (2015, 2016), Dholakia et al. (2018). Return to Text.

23. Nagaraj and Srinivasan (2016). Return to Text.

24. PTI. 2017. "After IMF, World Bank downgrades India's growth forecast", Business Today, October 11.  [https://www.businesstoday.in/current/economy-politics/after-imf-world-bank-downgrades-india-growth-forecast/story/261818.html]. Return to Text.

25. Sen (1985). Return to Text.

26. The World Bank. "World Development Report 2019". See especially Chapter 3 of the Report. [http://www.worldbank.org/en/publication/wdr2019]. Return to Text.

27. PTI. 2018. "India Rejects Findings of World Bank Report on Human Capital Index", The Economic Times, October 11. [https://economictimes.indiatimes.com/news/economy/policy/india-rejects-findings-of-world-bank-report-on-human-capital-index/articleshow/66170167.cms]. Return to Text.

28. Institute for Economics and Peace. 2018. "Global Peace Index 2018 – Measuring Peace in a Complex World". [http://visionofhumanity.org/app/uploads/2018/06/Global-Peace-Index-2018-2.pdf]. Return to Text.

29. Thomas Reuters Foundation Annual Poll. "The World’s Most Dangerous Megacities for Women 2017". [http://poll2017.trust.org/]. Return to Text.

30. Amnesty International. [https://www.amnesty.org/en/countries/asia-and-the-pacific/india/]. For the entire report, see "Amnesty International Report 2017/18: The State of the World’s Human Rights". [https://www.amnesty.org/download/Documents/POL1067002018ENGLISH.PDF]. Return to Text.

31. Ramanathan, A and Nidheesh M.K. 2016. "Joseph Stiglitz says India needs to realize it has an image problem", Live Mint, July 7. [https://www.livemint.com/Politics/1JXCW3TNZIs1AkVwQMMc4I/India-needs-to-realize-it-has-an-image-problem-Joseph-Stigl.html]. Return to Text.

32. The Wire. 2018. "Seeing ‘Pattern’ of Inaction, Over 600 Scholars Write to PM on Kathua, Unnao Rapes", April 22. The full text of the open letter. [https://thewire.in/gender/over-600-academics-scholars-write-to-pm-on-kathua-unnao-rapes]. Return to Text.

33. Office of the United Nations High Commissioner for Human Rights. 2018. "Report on the Situation of Human Rights in Kashmir: Developments in the Indian State of Jammu and Kashmir from June 2016 to April 2018, and General Human Rights Concerns in Azad Jammu and Kashmir and Gilgit-Baltistan", June 14. [https://www.ohchr.org/Documents/Countries/IN/DevelopmentsInKashmirJune2016ToApril2018.pdf]. Return to Text.

34. On index details, methodology and country rankings relating to Reporters Without Borders’ World Press Freedom Index for 2018, see [https://rsf.org/en/ranking]. Similar details are also available for earlier years. Return to Text.

35. Even as I write this, I find reports to the effect that there is one area in which the country has done exceedingly well: on the World Bank’s ‘Ease of Doing Business Index’, the country has moved up 53 ranks in the last couple of years! Suneja, K. 2018. "Ease of Doing Business: India jumps 23 notches, now at rank 77", The Economic Times, November 1. [https://economictimes.indiatimes.com/news/economy/indicators/ease-of-doing-business-india-jumps-23-notches-now-at-rank-77/articleshow/66445814.cms]. Return to Text.

36. For the full text of the letter, see India Today, 2017. "Cow Vigilantism: Retired IAS, IPS Officers slam Modi Govt in an Open Letter", July 1. [https://www.indiatoday.in/india/story/cow-vigilantism-religious-intolerance-retired-ias-ips-officers-open-letter-narendra-modi-1021826-2017-07-01]. Return to Text.

37. For the full text of the letter, see The Hindu . 2018. "Full text of open letter from retired civil servants to PM Modi on Unnao, Kathua rape cases", April 16. [https://www.thehindu.com/news/national/full-text-of-open-letter-from-retired-civil-servants-to-pm-modi-on-unnao-kathua-rape-cases/article23553651.ece]. Return to Text.

38. For the full text of the letter, see Real Report . 2018. "48 retired civil servants pen open letter to PM Modi condemning arrest of human rights activists", August 31. [https://realreport.in/48-retired-civil-servants-open-letter-modi-condemning-arrest-human-rights-activists:]. Return to Text.

 

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