Absolute Poverty is in fact India’s Urgent Concern: CEA

In an essay titled ‘Perspectives on the Inequality Debate in India’ Chief Economic Adviser V Anantha Nageswaran has raised many points. Some of the important issues that he has raised need immediate attention. Here are some of these points –

1. CEA considers absolute poverty a more direct and pressing concern for India. He argues that inequality is a relative concept. Simultaneously, with formerly economically deprived sections joining the ranks of the middle class, policy attention needs to extend beyond ‘roti, kapda, makaan’ to keep the growth engine up and running.
2. Nageswaran observes that, in contrast to advanced economies where higher inequality led to adverse socioeconomic outcomes, the Indian experience has been one of convergence between growth and inequality rather than conflict.
3. He notes that for a developing country like India, where the growth potential is high and the scope for poverty reduction is significant, the focus needs to remain on rapidly growing the size of the economic pie, at least for the foreseeable future.
4. He terms redistribution of wealth as a solution to raise living standards and alleviate poverty and inequality as problematic, and calls for raising the average income several times to afford a decent standard of living for everyone. This makes continuous high economic growth a prerequisite for poverty alleviation.
5. He says that policy attention towards the middle class involves looking beyond a polar view of a rich versus poor economy and beyond the charitable notion of redistribution towards rights-based claims for economic justice. In the empowerment of this class lies the path to a self-sustained, virtuous growth cycle.
6. CEA notes that India’s taxation policies are progressive, as a large part of the taxes is collected from the top 10 per cent of the population. Also, in India, expenditure on public goods has led to the redistribution of about 6 per cent of the national income to the bottom 50 per cent.