The late Arjun Sengupta will be recalled by the new generation of scholars and public persons for his study, Report on Conditions of Work and Promotion of Livelihoods in the Organised Sector. He had stressed that poverty in post-1991 India has lingered on massively. Although his numbers looked problematic, the report has become a favourite statistical weapon for many.
His report (as wide sections of the public came to know it) was based on government data for the period between 1993-94 and 2004-05. While the number rose by a staggering 100 million, the numbers of the new rich has also grown by 93 million. He removed the blinkers on the collective eye by turning traditional definitions of poverty on their head. An Indian was classified as ?absolutely poor? if his per capita consumption was less than Rs 9 a day. However, if the per capita consumption was Rs 13 a day, then the individual was considered above the poverty line. The justification for economic reforms was supposed to be the trickle-down effect but for those who live in trying conditions, 10 years of economic reforms seem to have made little difference. ?The rich tend to hide their consumption. So if you account for that, they are actually richer than the report reflects. This again reflects the fact that the gap between the rich and poor is even wider,? Sengupta explained.
That admission brought out the acute crisis faced by our leading economic analysts. They hit a data vacuum very early because in spite of the hundreds of billions of rupees spent on poverty alleviation, there is a serious paucity of statistics on households? well-being indicators, which is why issues like poverty estimates are mired in controversy. So we plod along with insufficient data. The Right to Education Act, for instance, seeks to rid the country of ?unrecognised? private schools, but there is no authentic official data on the number of students being educated at such schools or how their performance compares with the products of government schools. Similarly, the Mahatma Gandhi National Rural Employment Guarantee Act is supposed to tackle the unemployment problem, but despite the annual surveys, there is yet to emerge a clear understanding on the scale of unemployment.
We addressed the problem that Sengupta faced with respect to rich folks? expenditure patterns by using the quintile method. We found that families in the top quintile (Q5) tend to spend about 3.5 times that of those in the lowest quintile; households in Q4 tend to spend double those in Q1. The difference in expenditure patterns tends to be the least in the higher income quintiles (Rs 19,620 versus Rs 30,948); this difference gets reduced to about 30% in Q5 (Rs 62,644 for ST families versus Rs 90,419 for upper caste families). While families in the lowest quintile spend about 54% of their annual expenditure on food, this falls to about 37% in Q5. Expenditure on education remains broadly similar across income quintiles (5% for STs in the lowest quintile versus 7% for upper castes) and rises to about 9% each in the top quintile.
One of the outstanding legacies of the Sengupta Commission was to end the official sanctity of the National Minimum Wage, which never cared to adjust for differences in prices in rural and urban areas and across the states. When a uniform National Minimum Wage norm of Rs 66 is used, the plight of rural workers was found to be a lot worse than that of their urban counterparts, irrespective of gender. He found that the difference in percentage terms below the National Minimum Wage norm (Rs 66) between men and women is more marked in non-agriculture than in agriculture, and more marked in urban than in rural areas. Among industry groups, the percentage of men below the minimum wage norm is highest in trade, whereas among women it is highest in manufacturing in rural and urban areas.
We look forward to the continuation of Professor Sengupta?s good work. The term ?informal sector? was originally coined by the anthropologist Keith Hart, in a study of Ghana?s urban unemployment in the 1970s. Just as Sengupta stunned his peers in the 2000s, so too did Prof. Hart, who, using anthropological fieldwork, succeeded in highlighting the enormous variety of economic activities that were not registered anywhere and were often clandestine in nature or, anyway, outside the pale of official regulation. It is groundbreaking works like these that redefine policy parameters. The legacy of the professor is, therefore, considerable.
?The author is director, NCAER-CMCR