Indian row over poverty and policy extends to Harvard, Columbia

Indian government figuresshowing that poverty has been cut by a third since 2004 has setoff a row between the country's main political parties onwhether the data is accurate, and a slanging match between twoof the world's best-known economists on the implications forpolicy.

The debate boils down to what path India should take incoming years as slower growth puts further poverty reduction atrisk in the world's second-most populous nation.

The opposition Bharatiya Janata Party (BJP) backsgrowth-oriented reforms that would include a curb on publicspending, while the ruling Congress party believes subsidies anda range of social welfare projects have lifted millions out ofpenury.

Neither of these parties has a commanding lead in opinionpolls ahead of general elections due by next May, so they willbe competing fiercely for the votes of the poor.

India's Planning Commission said last week that 138 millionpeople - more than the combined population of Britain, Spain andAustralia - had climbed out of poverty between fiscal 2004/05(March-April) and 2011/12. That left the official number of pooramong a population of 1.2 billion at 269 million.

"The reduction of the poverty level across the country is aclear manifestation and endorsement of the pro-poor policies andthe policy of inclusiveness of the UPA regime," said BhaktaCharan Das, a spokesman of Congress and its United ProgressiveAlliance (UPA) coalition that has been in power since 2004.

Critics say the numbers have been massaged to look good andany gains are pitiful compared to countries like China orIndonesia.

Congress party policies, which include guaranteed employmentfor 100 days a year and plans to provide subsidised grain to 800million people, are also a huge financial drain. India's budgetdeficit is already around 5 percent of GDP and is seen as amajor contributor in drooping investor sentiment.

"It is certainly an achievement," said Nobel laureateAmartya Sen of the reduction in poverty. "Is it a fantasticachievement? No, because the poverty line is low."

A Harvard University professor of economics and a confidantof Prime Minister Manmohan Singh, Sen is widely seen as a majorinfluence on the Congress party's jobs and food programmes.

Jagdish Bhagwati, professor of economics and law at ColumbiaUniversity, says Sen is an apologist for Congress and its brandof welfare spending at the cost of reforms.

"Sen is not simply wrong; he also poses a serious danger toeconomic policy in India," Bhagwati wrote in a newspaper column.

"The UPA government is now poised to damage the economy, andto harm the poor ... because its near-paralysis on track Ireforms has meant that revenue growth has slowed too, making itmore difficult to finance the track II reforms on health,education and PDS (public distribution system) expansion for thepoor.

"At the same time, owing to electoral pressures and with thepopulist rationales provided by the likes of Sen, theexpenditures on such track II policies are set to go up thisyear."

Sen, Bhagwati and Prime Minister Singh all studied economicsat Britain's Cambridge University in the 1950s.

EMPOWERMENT, NOT ALLEVIATION

Many economists say the Congress party-led government hasdelayed decisions on opening up the insurance and pensionsectors for foreign investment, tax and other reforms and thatthe inertia has squandered gains of high growth before the 2008global crisis.

The BJP, which pursued high-growth policies when it was inpower from 1998 to 2004, says the Planning Commission's figureson poverty are fixed, and aimed at giving Congress apre-election boost.

"The government only wants to showcase their achievementswith artificial figures before elections," BJP spokesman PrakashJavedkar said. "So far as the BJP is concerned we want a decentliving for the poor. We want their empowerment, not simplyalleviation of poverty."

According to the World Bank, about one in three Indians werepoor, or living on less than $1.25 a day, in 2009-10 compared to41.6 percent in 2004-2005. In absolute terms, its estimates showthe number of poor dropped to 359 million from 419 million.

The government, by contrast, says the number of poor droppedto 269 million in 2012 from 407 million in 2005. However, ituses about 5,000 rupees ($83) per month for a five-member familyas its poverty line for urban areas, an amount critics say wouldbarely cover food costs, let alone shelter, clothing and othernecessities.

Many international economists agree that India has reducedpoverty, but it still has a long way to go.

"Our analysis shows that while targeted poverty-programmesare important for reducing poverty, a good investment climate isvery useful," said Rana Hasan, principal economist at the AsianDevelopment Bank. "Good investment climate is not only good forbusiness, it is also an important means for making growth morepro-poor in India."

India's achievements, however, compare poorly with otherAsian nations. In China, for instance, poverty levels fell to 12percent in 2010 from 60 percent in 1990, according to the WorldBank.

Many of India's poor scoff at the idea that they are betteroff than they were in 2004.

"In the past five years, nothing has changed in my life,"says Nitai Karmakar, a resident of the eastern city of Kolkata.The 31-year-old, who makes about $84 a month washing cars ofresidents in a housing colony, says he is not able to marrybecause he cannot feed another person.

Palani, a security guard in the southern city of Chennai,says he takes care of his wife, two children and an 80-year-oldmother on an income of $67 a month.

"We just about manage our expenses and sometimes borrow tomake ends meet," said the 49-year-old. "But we cannot budget fortimes when kids fall sick and we unexpectedly end up spending ondoctors' visits and medicines.