Five development lessons Angus Deaton can teach Mr Modi

Angshukanta Chakraborty
Angshukanta ChakrabortyOct 12, 2015 | 21:50

Five development lessons Angus Deaton can teach Mr Modi

It might have become unfashionable to talk of "welfare economics" in the age of India's unapologetic embrace of reforms and free market under the steerage of Jagdish Bhagwati and Arvind Panagariya, but it seems the topic has a habit of making dazzling re-entries via big endorsements. Endorsements such as a nod from the Nobel committee. This year's Nobel laureate in Economics, Angus Deaton - the Dwight D Eisenhower Professor of Economics and International Affairs at Princeton University - is sure to reignite questions on development which have been consigned to the margins of public conversation within India, but still enjoy formidable clout in the Ivy Leagues.  

TV grab of Nobel committee anouncing the 2015 Nobel Prize in Economics which went to Angus Deaton of Princeton University.

According to the Nobel committee, Deaton's work has "exemplified how the clever use of household data may shed light on such issues as the relationships between income and calorie intake, and the extent of gender discrimination within the family. Deaton's focus on household surveys has helped transform development economics from a theoretical field based on aggregate data to an empirical field based on detailed individual data.

Interestingly, much of Deaton's work revolves around India, covering aspects like poverty, nutrition and health gaps, income inequality and related areas. Along with noted economists such as Jean Dreze, Abhijit Vinayak Banerjee and Esther Dufflo (both at MIT, and co-authors of the brilliant book Poor Economics), Deaton has pioneered research that clearly demonstrate how closely linked development is with areas such as health, nutrition, sociocultural and civic freedom, distribution of resources, people's consent and say in public or private projects, a rights framework, etc. After Amartya Sen and Joseph Stiglitz, Deaton's Nobel win is a significant victory for development economics, which puts a human face to the largely theoretical and statistical preoccupations of market/trade-driven mainstream and neoliberal economics.     

Deaton has authored a number of books including The Great Escape: Health, Wealth and the Origins of Inequality (Princeton University Press: 2013); The Great Indian Poverty Debate (co-edited with Valerie Kozel: 2005); The Analysis of Household Surveys: A Microeconometric Approach to Development Policy (Johns Hopkins University Press for the Work Bank: 1997), among others.  

Because "development" is the catchphrase that catapulted Narendra Modi to the topmost elected post in this democratic republic on May 16 last year, would the prime minister care to listen to what the current Nobel laureate in Economics has to say on it? And, how inextricably it is entangled with questions of freedom, liberty, health, working conditions, caste/religion/gender disparity?

1. Nutrition standards in India is appalling: don't mess with them further

As India wrestles with culturally specific bans on food items, particularly those that are sources of animal protein, such as beef, or the elimination of eggs from the mid-day meal scheme in Madhya Pradesh, the battle to achieve global standards of nutrition becomes that much harder to win. Deaton, along with Jean Dreze, and a few others, has shown how rising per capita income has not ensured a corresponding rise in calorie intake. There is a grave protein deficiency among Indian children and women, resulting in stunting, malnutrition, etc., as well as a deficit of important nutrients across the board, and this has not improved in spite of sustained growth in consumption patterns such as purchase of electronic goods, mobile phones etc.

Nutrition standards in India are still very low.

To quote Deaton and Dreze: "Under nutrition levels in India remain higher than for most countries of  sub-Saharan Africa, even though those countries are currently much poorer than India, have grown much more slowly, and have much higher levels of infant and child mortality."

In other words, Deaton's point is to understand how socioeconomic and political factors interfere with nutritional intake: women are expected to eat less than men; girl children are given less food than their male siblings; lower caste groups and religious minorities, while struggling with chronic economic and sociocultural discrimination, end up consuming fewer calories and often their food is just carbohydrate-heavy, minus crucial protein and vitamins necessary for mental and physical health.

Modi government must end its reign of food terror and focus on nutritional parity which can only be achieved by not interfering with the seasoned and geopolitically sensitive dietary patterns of communities, carrying within them the fingerprints of gastronomic secularism.

2. GDP alone will not change things

Modi-fied India is assertive, cocksure of itself, but also poor, and absolutely ashamed to admit it. In fact, post-liberalised India has been in a hurry to leave its "poor economics" behind, a tag it assumes has been shed under the rule of Narendra Modi and his mantra of "Make in India". That explains why the PM's high-decibel initiatives, such as Digital India, Swachh Bharat, among others, are geared towards a rose-tinted future of hyperconnectivity and bullet trains, rather than focused on the unpalatable present of farmer suicides, displacements, land grab, communal tensions, etc.

Like his fellow welfare economists, Angus Deaton, too, would have advised Mr Modi to not overlook the constraints of the current times and oversell a "superpower future" for political mileage. That despite a commendable GDP of 1.87 trillion US dollars, which is third highest in the world after the United States and China (not including European Union), India struggles with swathes of poverty-stricken regions with conditions worse than sub-Saharan Africa. Poverty reduction is as much a matter of surgical interventions to improve local conditions of healthcare, education, employment, etc., as it is a matter of driving growth by bringing in foreign capital and investment and steering the growth story. Slashing public funds for healthcare initiatives and employment schemes from the previous government will not help anybody.       

3. Match rising incomes with equality

While per capita income and per capita purchasing power have increased substantially, income gulf among different sections of Indian society has only widened. India features among the bottom few as far as Millennium Development Goals (MDGs) are concerned, with abysmal performances in health, nutrition, education, human rights, and other indicators of well-being. While Angus Deaton certainly shares PM Modi's penchant for anecdotes to shed light on particular situations, the Nobel laureate certainly does not endorse the obfuscation that is a habit of our prime minister. It would do well for the PM to become responsible with his public speeches and approaches and get rid of the bubble wraps such as the mythical "Gujarat model of development" for any real outcomes.  

4. Job growth is as real as job loss

Every time the PM launches a new scheme, there's the effervescence and euphoria of how many new jobs will be created as a result. For example, any mention of Digital India, Make in India, among others, include talk of the tens of thousands of brand new employment opportunities. However, Deaton sounds an important caveat, using the "Schumpeterian theory of creative destruction", wherein older jobs are lost to technological innovation. In other words, the net jobs created must be calculated against net jobs lost in order to calculate employment growth. Hence, an over-reliance on technology and industry, without the important supervision of a government as regulator and provider of equal opportunity, can in fact harm the economic ecosystem in the long run.

India lags behind in MDGs.

5. Go beyond the aggregate and average

Angus Deaton has always been a vociferous critic of national accounts statistics, that provide data averaged and aggregated for the entire country. Instead, Deaton has championed the household survey method, which adjusts and takes into account individual fluctuations, differences in income and consumption pattern. In a large country like India, with a staggering population to boot, such diversity is encountered on not only a state-to-state basis, but also between cities, villages and districts of the same state.

Time and again, Deaton has stressed how India's "social statistics are awfully out of date" and has emphasised the need to steer the economic narrative to better conditions of affordable and efficient healthcare, education for all, nutrition and social happiness. For Deaton, it's not a growth story until it's an inclusive growth story. Can Mr Modi, with one foot in the communal boat and other in over-reliance on private capital, genuinely claim an inclusive growth story for India?      

This is for you, Mr Modi. Tell the carefully-appointed overseers of NITI Aayog to not junk Angus Deaton's work the way they have cast aside Amartya Sen's invaluable research. Here's one for the cheerleaders of equality - economic and otherwise.     

Last updated: October 12, 2015 | 21:50
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