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India’s Poor Will Not Be Wished Away

indias poor
Written by Ashoka Mody

India is commonly hailed as a coming global economic superpower. Yet it has fundamental problems. The greatest is the extreme poverty of an increasing number of its citizens, which its present government tries to conceal. In stark contrast is the wealth of a tiny minority. Beware the official hype.

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The late, sharp-witted economist Michael Mussa, my first boss at the International Monetary Fund, once told me that every statistic must pass the “smell test.” I  recalled this sage advice recently when Indian authorities published the first driblets of a consumption survey in over a decade. The numbers stink.

Indian statistics are in bad shape. Economists have long maintained that GDP data overstates growth. Before the September 2023 G20 summit in New Delhi, the Indian National Statistical Office issued a particularly brazen overestimate. The last decennial census was in 2011. A survey highlighting stubbornly high malnutrition and anemia cost the survey’s director his job.

The last comprehensive consumption-expenditure survey in 2012 showed 22% living in poverty. The government junked a 2018 survey when leaked data indicated an increase in the poverty rate. Not surprisingly, the new partial consumption figures generated much excitement. Hastily, Surjit Bhalla, India’s former executive director at the IMF, and economist Karan Bhasin proclaimed – ­under the Brookings Institution’s imprimatur – that extreme poverty has been “eliminated.”

But while such misuse of statistics will amplify the India hype in elite echo chambers, poverty remains deeply entrenched in India and broader deprivation appears to have increased as inflation erodes incomes of the poor.

The gap between the India’s rich and poor has widened startlingly. Consider the $120 million pre-wedding celebrations for tycoon Mukesh Ambani’s son: the lad wore a $1 million watch, a superstar received a $6 million performance fee, and the Indian aviation authority temporarily cleared a nearby airport to fly in international celebrities …

This extract is published by courtesy of Professor Mody and Project Syndicate, where it first appeared on March 14, 2024.  To read the full article, see https://www.project-syndicate.org/commentary/indian-government-data-conceal-poverty-increase-by-ashoka-mody-2024-03


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Ashoka Mody