Poverty and inequality debate resurfaces in election season

As Indians vote, a new chapter in the poverty debate unfolds. Economist Maitreesh Ghatak discusses recent data showing decline in poverty but widening inequality gap.

As Indians heads to the poll this season, a new chapter is being written in a very old debate about poverty and inequality in India. This debate has been stirred up by the release of new data from a government-sponsored consumption survey, which some have argued shows a massive decline in poverty in India. Others believe that this data are not so unequivocal and point to a widening gap between top income-earners and ordinary Indians.

This debate has been stirred up by the release of new data from a government-sponsored consumption survey. (HT Photo)

The economist Maitreesh Ghatak spoke about the resurgent debate over poverty and inequality on last week’s episode of Grand Tamasha, a weekly podcast on Indian politics and policy co-produced by HT and the Carnegie Endowment for International Peace.

Ghatak is a Professor of Economics at the London School of Economics, where he has been the Director of the Development Economics Group at the research centre, STICERD, since 2005. He is a widely respected voice on India’s economic development and has been especially focused, in recent years, on questions of growth, poverty, and inequality. Ghatak and host Milan Vaishnav discussed the government’s recent consumption survey, contested claims that India has eliminated extreme poverty, and recent inequality trends.

“Inequality is a very charged topic and anytime you even utter the term, it’s ideological,” explained Ghatak. “The left does not like inequality and the right thinks: ‘Come on, Sachin Tendulkar, Shah Rukh Khan—they earn lots of money [due to] hard work and talent. What’s your problem?’” Ghatak says the more serious discussion amongst economists is about equality of opportunity. Here, Ghatak says, “it’s not a matter of resenting somebody being rewarded for hard work or enterprise, it’s more like—are we losing the future entrepreneurs, scientists, innovators [due to lack of opportunity]? That I think is a very serious concern. No serious thinker on this, whether on the economic right or the economic left, would disagree.” The trouble, Ghatak said, is answering the pragmatic question of what government should do about entrenched inequality “short of a radical redistribution program that I don’t think even the Left parties have on their manifesto these days.”

The economist also highlighted how India’s data woes have made this debate unnecessarily complicated. Ghatak lamented the fact that the reliability and accessibility of data from official governmental sources have declined in recent years. He emphasized that India has boasted a long record of robust debates about poverty and inequality. Without adequate data, however, he argued the strength of those discussions has badly suffered.