The Planning Commission’s estimate that people were pulled out of poverty three times faster between 2004-05 and 2011-12 than 1994-95 to 2004-05 should settle, once and for all, the debate about growth versus equity or distributive justice. One can question the methodology of the Planning Commission’s Expert Group under S. D. Tendulkar for estimating the reduction in the number of poor in the country. Likewise, it can be debated whether being able to afford a daily consumption expenditure of more than Rs 33 in urban areas or Rs 27 in rural areas should make a person ‘non-poor’ and, hence, ineligible for many state welfare programmes. But even if one agrees on a more stringent norm for poverty measurement, the basic conclusion will be the same. Reduction in poverty in India has taken place at a faster pace in recent times than ever before in recorded history.
The reasons for this are not difficult to fathom. From 1993-94 to 2003-04, the Indian economy grew by an average 6.2 per cent annually and the subsequent period up to 2011-12 saw this rise to 8.3 per cent a year. Agricultural growth too was higher. Alongside this, prices of farm produce rose more than general inflation and agricultural wages went up in real terms, translating into increased rural purchasing power. In short, it was acceleration in growth that made an effective dent on poverty. Increased economic activity not only created more jobs — including for the rural poor who earlier had limited options outside of working in farms — but also revenues for governments to spend on welfare schemes.
The latest poverty estimates come even as two of India’s most renowned economists, Amartya Sen and Jagdish Bhagwati, are at the centre of a lively debate on whether growth should be made an overriding policy goal. The simple answer is that growth matters. Without it, there can be no sustained improvement in welfare outcomes or even in the capacity of governments to pursue the objectives of equity and distributive justice. Given this, it is important to make growth the focus of public policy and the fall in growth and investment levels over the last couple of years is something to be truly worried about. It will be no surprise if there is a reversal in the trend of the accelerated decline in poverty when the next estimates are out. It is time to shift the debate. It should no longer be about the ‘why’ but on the ‘how’ of growth. Growth is a necessity, not an indulgence; it cannot be sacrificed at the altar of political correctness.