The Paradox of Indian Poverty

For the longest time, India had a lock on a dubious global distinction: it was home to the world’s largest pool of extremely poor people. No more. Earlier this year, Brookings Institution scholar Homi Kharas estimated that the number of Nigerians in extreme poverty – defined by the international benchmark of living on under $1.90 per day – had overtaken the number of Indians in a similar condition. According to the World Poverty Clock, an online database, Nigeria now houses 88 million extremely poor people compared with just 63 million in India, or 4.6% of the population. About 41 Indians escape extreme poverty every minute. This means that by 2025 less than 0.5% of Indians will be extremely poor. This will dwindle to a mere 0.1% of the population by 2030. Less than 90 years after the Bengal famine, a land that was a byword for poverty would have ended its most egregious manifestation.
India’s achievement is creditable by any yardstick. But it occurs against a backdrop of rising prosperity worldwide. With plenty of wrong turns along the way, most of the world’s countries have arrived at a common understanding that now appears glaringly obvious: the single best antidote to poverty is economic growth. A small cohort of northern Europeans and their north American cousins have lost their monopoly on the magic ingredients of wealth creation – free trade, rule of law, property rights and a culture of entrepreneurship. Not all countries have embraced these ingredients in equal measure, but most of the world has at least managed to turn away from the unworkable ideas – usually anchored in leftist utopianism of some sort – that marred the twentieth century.
In a little over a decade, extreme poverty will all but cease to exist in Asia. Most of it will be confined to sub-Saharan African countries where growth rates have not kept pace with soaring birth rates, such as Nigeria and the Democratic Republic of Congo. A political paradox of sorts has accompanied India’s upward economic arc. For the first four decades of independence, single-party majority governments delivered anaemic growth. India’s most dramatic assault on poverty has come in the coalition era that followed Rajiv Gandhi’s defeat in the 1989 general election.
Between 1950 and 1980, India’s economy expanded at an annualised average of 3.6%. Per capita income grew at a sluggish 1.5% per year. These figures ticked upward in the 1980s, but the real breakthrough only came after India embraced liberalisation and globalisation in 1991. Since then per capita income has grown on average by 4.9%. Since 2004, it has grown even faster – by over 6.1% annually. In this period, India has lifted more than 350 million people out of extreme poverty. Why did weak governments deliver better results than strong ones? The simple answer: in India, the era of single-party majorities coincided with the heyday of state planning. After Independence, instead of embracing a market economy, where supply and demand determine production, India scurried down the rabbit hole of socialism where pointy-headed bureaucrats and their political masters called the shots.
Under both Jawaharlal Nehru and Indira Gandhi the government raised trade barriers, nationalised private enterprises, raised extortionate taxes on the rich, and told companies how to run their business. Had they instead used their power to build infrastructure, strengthen rule of law, encourage private enterprise and educate the masses, India need not have waited this long to nearly wipe out poverty. Luckily the odds of India returning to full-blown socialism of the pre-liberalisation variety appear slim. But as four years of Modi have shown, a strong government’s tendency to overreach remains a recurring national problem.
Only a strong government could have come up with a cockamamie idea like demonetisation, deemed too crazy to try even by a basket case economy like Venezuela. In a less dramatic – but nonetheless destructive – vein the Modi government has armed tax inspectors with extortionate powers, escalating the tax terrorism the Bharatiya Janata Party (rightly) protested when in opposition. On trade, tariff-loving bureaucrats have prevailed over liberalisers. And while an elegant simplicity marks a goods and services tax in most countries that have adopted it, in India it’s a hot mess designed to privilege discretion over clarity. Five years ago, Indian businessmen would swell with hope when they spoke about Modi. These days the dominant emotion is a combination of fear and resignation.
This does not mean that a strong government cannot do good. Indeed, many of those who welcomed Modi’s sweeping victory in 2014 did so with the expectation that he would push through long-pending reforms in land and labour markets, and privatise loss-making behemoths such as Air India and BSNL. The argument that only a strong government can champion politically contentious reforms remains sound. That Modi has failed on this front is a separate matter. Why fret about this when India remains on track to defeat poverty? The answer is simple. Extreme poverty may belong in the past, but it’s not as though widespread prosperity has arrived in the present. The fight for economic liberty – making sure that lessons learned remain learned, and that old mistakes don’t reappear in new guise – is never-ending. The successes of the post-liberalisation era only prove that these are ideas worth fighting for.
The right to information is being steadily constricted by gross subversion of the law and Constitution. RTI Act mandates in Section 7 (1) that information can only be refused for exemptions specified in Section 8 and 9. Personal information may be exempted under Section 8 (1)(j) when “disclosure … has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information: Provided that the information, which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.”
A simple reading of the words shows that information under this clause can be denied if it is personal information whose nature has apparently no relationship to any public activity or interest; or whose disclosure would cause unwarranted invasion of the privacy of the individual. If the information is personal information, it must be seen whether the information came to the public authority as a consequence of a public activity. Generally, most of the information in public records arises from a public activity. Applications for a government job, ration card, passport, caste certificates are some examples of public activity.
However, there may be some personal information which may be with public authorities which is not a consequence of a public activity, eg medical records, or transactions with a public sector bank. Similarly, a public authority may come into possession of some information during a raid or seizure which may have no relationship to any public activity. These would be exempt.
Unfortunately, it has become commonplace for adjudicators to truncate this clause and deny all information which can be connected with any person. Across the country information about MLA funds expenditure, officer’s leave, caste certificates, file notings, educational degrees, beneficiaries of subsidies and much more is being denied. Many PIOs are denying information which may have the name of a person claiming it is personal information and hence exempt.
Even if the information has arisen by a public activity, it could still be exempt if disclosing it would be an unwarranted invasion on the privacy of an individual. The denial of information from public records on grounds of privacy has to be in line with Article 19 (2) of the Constitution which allows placing restrictions on Article 19 (1) (a) in the interest of ‘decency or morality’. If, however, it is felt that the information is not the result of any public activity, or disclosing it would be an unwarranted violation of ‘decency or morality’, before denying information it must be subjected to the acid test of the proviso: “provided that the information, which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.”
Public servants have been used to answering questions raised in Parliament and legislatures. Hence, when they have a doubt, the law requires them to consider if they would give this information to the elected representatives. They must first come to the conclusion that they would not provide the information to MPs and MLAs, and record it when denying information to citizens.
Another perspective is that information is to be denied to citizens based on the presumption that disclosure would cause unjustified harm to some interest of an individual which should be protected. If, however, the information can be given to legislature it means the likely harm is not very high since what is given to legislature will be in public domain. Hence, it is necessary that when information is denied based on the provision of Section 8 (1) (j), the person denying the information must give his assessment that such information would be denied to Parliament or State legislature if sought in the decision. This exemption has been illegally made so wide as to deny most information. This is an illegal and unconstitutional emasculation of RTI by a majority of officials, commissioners and courts. An important fundamental right is being curtailed and the right to publish could be next.
Updated: December 21, 2018 — 6:24 pm

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