Profile: Bibek Debroy is Professor at the Centre for Policy Research, Delhi. He is an economist and has worked in universities, institutes, industry bodies and for the government. He has authored several books and articles, with an interest in trade, education, health, law and governance.
Welfare state’ is an abused expression. Specifics differ across countries and Sweden can’t be placed in the same bucket as the USA. If equity is defined as every citizen obtaining access to basic needs, no one disputes that goal. Problems arise when one fails to target the poor and assumes the state has the capacity to deliver. Sure, the UNDP ranks countries by a human development index (HDI) based on purchasing power parity (PPP), per capita income, education and health. Sure, ‘developed’ countries perform well on HDI and at a rank of 136 (out of 186), India is way down the pecking order. There is a correlation between HDI and per capita income.
India’s per capita income is $1,492. Even if one does PPP conversions, India’s per capita income is $3,830. But governance is more difficult to quantify and pin down. There are some cross-country governance rankings, the World Bank’s governance indicators being one. There is a correlation between governance levels and per capita income too. This is correlation, not causation. While improved governance may lead to higher levels of per capita income, higher levels of per capita income may also lead to improved governance. Therefore, one cannot assume that governance levels in developed countries can be imported and applied in India.
Lant Pritchett (Harvard) coined an expression for India—flailing state. The problem hasn’t been one of enunciating policies driven by equity but administrative incapacity to deliver. John Kenneth Galbraith was anything but a die-hard market fundamentalist and even he castigated India’s ‘post-office socialism’. Those goals of equity concern social sectors. Had we been serious, we would have recognised this and pushed the decentralisation/devolution agenda since, logically and constitutionally, social sectors are state government subjects and should become local body subjects. Improved governance is also correlated with decentralisation/devolution. Instead, there have been a plethora of social sector schemes devised in Delhi.
While all subsidies aren’t Central, 14 percent of GDP is spent on them. Had subsidies led to equity and opened up market opportunities, as they have in other countries, we wouldn’t have debated whether India’s poverty head-count ratio is 22 percent or more. It would have been down to about 5 percent. It shouldn’t be surprising that improvements in India’s HDI score from 1991 have resulted from improvements in per capita income, not that much from health and/or education indicators.
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(This story appears in the 23 August, 2013 issue of Forbes India. To visit our Archives, click here.)
Excellent article. The accompanying table takes the states’ ranking on the basis of the recent poverty numbers for 2011-12 (states with the lowest poverty percentage having the highest rank), and compares that with their ranking in terms of per capita net state domestic product for 2011-12 at constant prices. The 11 special category states as well as Delhi, Puducherry, Chandigarh and the union territories have been omitted. http://www.livemint.com/Opinion/7vj8oQm5rE9zvq5TkloDpN/The-correlation-between-poverty-and-per-capita-income.html (Source: The correlation between poverty and per capita income State policies have had different impacts on poverty, even at the same levels of income. A few observations Manas Chakravarty , Aug 05 2013,live mint THE WALL STREET JOURNAL). Per Capita Income in India as presented may not be in actual terms true in a populous country like India. Dr.A.Jagadeesh Nellore(AP),Indiaon Aug 18, 2013
After giving excellent reasons why FSB is a bad project he has concluded wonderfully saying \"we have neither the capital,nor the social\" The congress wants to push the bill for political gains and for the same reason the opposition parties will support it whether they like it or not. It is unfortunate that people suffer from vote bank politics.on Aug 17, 2013