Why Growth Matters (34 page)

8
. See Panagariya (2004) for details.

9
. Data for India usually relate to its fiscal year, which begins April 1 and ends March 31. Therefore, a year such as 1990–1991 refers to the period from April 1, 1990, to March 31, 1991.

10
. Two additional contributions in a vein similar to Rodrik (2003) and Rodrik and Subramanian (2005) are Kohli (2006) and Nayyar (2006). Panagariya (2008a, pp. 16–21) provides a critique of each of these contributions.

11
.
Starting in 1973–1974, India began conducting large-scale expenditure surveys approximately every five years. Figure 3.2 is based on poverty estimates derived from those surveys. The only missing survey is that conducted in 1999–2000. Due to a sample design change, poverty estimates derived from this survey are not fully comparable to those from the other surveys.

12
. The annual percentage-point reduction in poverty was 1.44 from 2004–2005 to 2009–2010. This compares with the annual percentage-point reduction of 0.85 from 1983 to 1993–1994, 0.77 from 1993–1994 to 2004–2005. and only 0.98 from 1993–1994 to 2009–2010.

13
. For example, in the op-ed “Two Decades of a Misplaced Idea” in the newspaper
Mint
(September 16, 2011), the anti-reform commentator Himnashu argues that if the reforms are judged by what they have done for the poor, the results are at best mixed. He then cites the following numbers based on the revised, higher official poverty line: “The number of absolute poor in the country, which was 404.9 million in 1993–94 and 406.6 million in 2004–05 has come down marginally to 397 million by 2009–10.”

14
. For example, in its
1999 Annual Review of Development Effectiveness
, the World Bank (1999, p. 1) noted, “The number of poor people living on less than US$1 a day rose from 1,197 million in 1987 to 1,214 million in 1998. Excluding China, there are 100 million more poor people in developing countries than a decade ago.”

15
. In fact, the World Bank was being increasingly taken over by populist economists and non-economists, especially under President James Wolfensohn when it adopted the practice of aggressively highlighting the absolute number of poor. Wolfensohn's trusted consultants among the economists were also anti-growth and anti-reforms economists such as Joseph Stiglitz (who was also the World Bank chief economist and vice president) and Amartya Sen. See, for example, Wolfensohn and Stiglitz (1999) and Sen and Wolfensohn (1999).

16
. We assume here a uniform increase in the population across rich and poor and no movement into and out of poverty. Insofar as population growth might be faster among the poor than the rich, the number
of poor in the additional population of 374 million may turn out to be even larger than in the text.

17
. The question of compensation is a valid one. Those whose lands are taken for eminent domain, that is, for a social purpose, need to be compensated. This also raises questions as to what is a valid “social purpose,” which individuals must be compensated, and by how much.

18
. The term “Dalit” refers to untouchable castes that are included among the Scheduled Castes by the Indian Constitution.

19
. For the document with the statement by the National Campaign on Dalit Human Rights, see
www.publications.parliament.uk/pa/cm201011/cmselect/cmintdev/writev/616/m02.htm
(accessed June 3, 2011). The statement by Bidwai can be found in the article “Equity, Not Growth, Is the Key,” at
www.mydigitalfc.com/op-ed/equity-not-growth-key-359
(accessed June 3, 2011).

20
. See Das et al. (2011).

21
. Thorat and Dubey (2012) also note the larger decline in poverty among the socially disadvantaged groups relative to the overall population.

22
. These surveys identify the ownership of proprietary and partnership enterprises by social group, though not of cooperative and corporate enterprises. Therefore, it is possible to study the evolution of entrepreneurship by social groups within the proprietary and partnership enterprises.

23
. In the case of the Scheduled Tribe–owned enterprises, value added as well as the number of workers employed grows faster than the corresponding average growth for all groups taken together. Therefore, shares of the Scheduled Tribe–owned enterprises in the value added and the number of workers employed grew larger between 2001–2002 and 2006–2007. For the Scheduled Castes, the growth in value added is slightly below the average for all groups and that for workers significantly above it. Consequently, despite healthy growth, its share shows a tiny decline in value added and a rise in the number of workers employed.

24
. See
www.globalpost.com/dispatch/news/regions/asia-pacific/india/110421/india-untouchable-dalit-business-entrepreneur
(accessed November 10, 2012).

25
.
The following discussion draws heavily on Panagariya (2012a).

26
. Not only was Professor D. T. Lakdawala a leading scholar of poverty, he also stood on the broad shoulders of such stalwarts as Pitamber Pant, once handpicked by Prime Minister Jawaharlal Nehru to head the Perspective Planning Division of the Planning Commission, and V. M. Dandekar and Nilakant Rath, both pioneering scholars of poverty in postindependence India. Although Professor Lakdawala passed away before the report of his committee was submitted, the latter was largely the result of his work with other committee members.

27
. Our discussion of this myth is substantially borrowed from Bhagwati and Panagariya (2012).

1
. Thus, economists' salaries are particularly high owing to the opportunities they enjoy outside of academia. Hence, there are resentments by academics from lesser-paid disciplines, such as anthropology, philosophy, and comparative literature. An inside joke is that if you wanted academic signatures on an anti-liberal or anti-establishment petition, you were assured of many signatures if you went to these lower-paid departments: their resentments would prompt them to sign any such petition in huge numbers!

2
. They use not the Gini measure, which is explained in Appendix 2, but what economists know as the Theil index. The latter has the advantage that it allows overall inequality in a population to be broken down into inequality within and across subpopulations. For example, it allows inequality among households within a country to be broken down into inequality among households within states and that across states. Like the Gini coefficient, the Theil index varies between 0 and 1.

3
. Some analysts rest their assertion of a large increase in inequality on the grounds that the NSS expenditure surveys, on which all estimates of expenditure inequality are based, are characterized by a systematic underreporting at the top of the distribution relative to the bottom end
and that this underreporting has gotten worse over time. But without some hard evidence, we cannot be sure that this is true.

4
. Some identify the precise period of the high point of the American Gilded Age as 1869–1877, which coincided with the administration of President Ulysses Grant, with many writers including 1878–1889 as well.

5
. The Progressive Era prompted several writers, such as Upton Sinclair, to write novels about the abysmal social conditions afflicting the poor. These writers were called the “muckrakers.”

6
. Cf.
www.pbs.org/wgbh/amex/carnegie/gildedage.html
(accessed November 10, 2012).

7
. See Panagariya (2011d).

8
. The businessmen who profit thus are “cronies” of the politicians who favor them. But of course, the bribes that are involved need not go to cronies.

1
. In the op-ed mentioned earlier, Amartya Sen (2011) puts the matter thus: “India's per-capita income is now comfortably more than double that of Bangladesh. How well is India's income advantage reflected in our lead in those things that really matter? I fear not very well—indeed not well at all.” Sen also cites an op-ed by Jean Drèze (2004) titled “Bangladesh Shows the Way,” which implies that Bangladesh has moved ahead of India in health outcomes. Most recently, the themes of these articles have been repeated in Drèze and Sen (2011).

2
. For example, see the recent attack by Drèze and Sen (2011) on the health achievements of India relative to those of Bangladesh and other South Asian countries.

3
. We may also add that in terms of the United Nations Human Development Index (HDI), India ranks ahead of Bangladesh by ten places. It may be recalled in this context that it was Amartya Sen, a leading proponent of the view that Bangladesh has outdone India in terms of
human development, who helped the UN Development Programme design the HDI. Oddly, as Panagariya (2011b) points out, Sen (2011) neglects to cite this statistic in his critique of India in relation to Bangladesh. Indeed, any references to the index remain conspicuously missing even from Drèze and Sen (2011), which was published after Panagariya (2011b).

4
. It is odd that authors disparaging India often applaud Bangladesh for doing well in health outcomes despite its lower per capita income but gloss over the much larger per capita income gap India suffers vis-à-vis China.

5
. See “An ‘Annie Hall' Moment: A Nobel Prize–Winning Economist Spouts Off, and a Chinese Survivor Sets Him Straight,”
Wall Street Journal
, February 21, 2005;
www.parrikar.org/misc/amartya-wsj.pdf
(accessed March 3, 2012). According to the report, speaking in Hong Kong, Sen had argued that while China had made great strides in medicine during the Cultural Revolution, the move to a privatized system in recent years had made the system less fair and efficient. It so happened, however, that the audience included a Hong Kong banker, Weijian Shan, who had lived through the Cultural Revolution and had been one of Mao's “barefoot doctors.” The report notes that Shan was surprised by Sen's comments and went on to state to the audience, “I observed with my own eyes the total absence of medicine in some parts of China. The system was totally unsustainable. We used to admire India.” He added that when he observed medical school graduates in Taiwan serving in the countryside in the 1980s during a visit there, he thought, “China ought to copy Taiwan.” Shan further stated that had Mao's medicine system been made optional, “nobody would have opted for it.”

6
. The post is at
http://blogs.ei.columbia.edu/2011/03/24/india-is-booming-so-why-are-nearly-half-of-its-children-malnourished-part-1
(accessed September 21, 2011).

7
. There is a third measure of child nutrition known as wasting, which measures weight for height. The problem with this measure is that even if the height-for-age and weight-for-age measures are showing improvements, it will show deterioration if the former improvement is
sufficiently faster. Because of this strange characteristic, we do not discuss this measure.

8
. The interested reader may look up the details and references in the entry “Kerala model” in Wikipedia (accessed September 23, 2011).

9
. The nature of the redistribution in different parts of the country depended on the land tenure system in place. The different land tenure systems came from different ideas and philosophies of the British in the different presidencies, as brilliantly documented by the historian Eric Stokes.

10
. An early influential case study of Kerala in this context was done by the Center for Development Studies at Thiruvananthapuram for the Department of Economic and Social Affairs of the United Nations (1975).

11
. For consistency over time, Uttar Pradesh, Madhya Pradesh, and Bihar are defined to include Uttarakhand, Chhattisgarh, and Jharkhand, respectively, in these data. The latter three states were carved out of their mother states in 2000.

12
. Unfortunately, there remains one small element of non-comparability due to the fact that the literacy rates for years 1951, 1961, and 1971 relate to rates for the above-five-years of population while those for subsequent years to above-seven-years population. This means the starting-year literacy rates for Kerala and Maharashtra were calculated on above-five-population basis and that for Gujarat and India on above-seven-population basis. Insofar as the literacy rate among children five to seven years in age is likely to be lower than that for the above-seven population, if calculated on above-seven-population basis, the starting-year literacy rate of Kerala (and Maharashtra) would be higher than that shown in Figure 5.7. This would make the gains in Kerala by year 30 even less impressive. We suspect, however, that since the population between five and seven years is a small proportion of the total above-five population, any bias on this account is likely to be tiny.

13
. The unwillingness of progressive developmental groups to concede Gujarat's success on these social (and sometimes even economic) dimensions is partly attributable to their insistence on looking at everything
related to the state through the lens of the 2002 massacre of Muslims in the wake of the burning of fifty-eight innocent passengers in a train by a Muslim mob. This is like looking at the Congress Party performance through the lens of the similar massacre of many more Sikhs in 1984 following the unfortunate and deplorable assassination of Prime Minister Indira Gandhi by her Sikh guards. All such communal violence is a blot on the Indian secularism, but it is not the exclusive experience of Gujarat, whose great citizen Mahatma Gandhi gave his life in defense of Muslims and secularism. We concentrate in the text, however, on Gujarat's performance along the social dimension.

1
. Bhagwati has appeared on two prominent TV shows in the United States, a documentary partially broadcast on
NewsHour
on PBS and one with Christiane Amanpour on CNN, where Sainath was cited and Vandana Shiva made a cameo appearance with claims about farmer suicides and their causes (such as the use of new BT seeds), which Bhagwati challenged. Interestingly, the PBS documentary, which was produced with great finesse, concentrated on one suicide, attributed to the use of the new BT seeds; later, during a panel discussion of the film at Asia Society in New York where Bhagwati appeared, the producer made a frank admission: they had discovered that this suicide had nothing to do with the farmer's use of the new seeds.