By Ashok Gulati and Shyma Jose

As this column appears, Prime Minister Narendra Modi and many in his government, along with the Chief Minister of Uttar Pradesh, would be busy in the pran pratishtha of the idol at the Ram temple in Ayodhya. One hopes that with the consecration of Ram Lalla (Lord Ram), the country will also see the beginning of Ram rajya in true sense, where communal harmony and safety of all people, especially women, is secured, and poverty is abolished. 

While PM Modi has given a clarion call for a ‘Viksit Bharat’ by 2047, the NITI Aayog has recently come up with a report estimating that 248.2 million Indians have been lifted out of poverty in last nine years of the Modi government. This is based on the National Multidimensional Poverty Index (NMPI). While the UNDP’s methodology of MPI has 10 indicators under three dimensions—health (nutrition & child mortality), education (years of schooling & school attendance) and standard of living (cooking fuel, sanitation, drinking water, housing, electricity & asset), NITI’s NMPI adds maternal health and bank account to this list, making for 12 indicators. 

NITI argues that NMPI is a better measure of poverty than the traditional estimates based on income/consumption. The space in this column does not permit getting into the details of the limitations of NMPI vis-à-vis income poverty, but suffice it to say that we welcome this improvement in the conditions for a larger chunk of the population based on the 12 indicators. It is driven largely by government investments. But the income part of the household is perhaps as important, if not more, as access to sanitation, school, bank account, etc. What is the point of enrolment in schools if the quality of education remains poor, as pointed out in Pratham’s ASER reports? The education system may create ‘educated unemployable youth’. And similarly, what is the point in having accounts if poor have low incomes and hardly any savings? 

This raises questions about the sustainability of a development model that provides better access to public utilities (education, health, and even gas), but does not work towards improving their quality or people’s income levels.

We are not sure whether it is a calculated move to replace income poverty by NMPI, but we do feel that there is equal need to track income poverty, real wages, and unemployment in the country to make sure that development pathway to 2047 helps masses improve their incomes significantly. India still is home to the largest number (160 million) of people globally living in extreme poverty, as per World-Bank estimates based on $2.15/capita/day income (at 2017 purchasing power poverty). True Ram Rajya will be established only when these poor people come out of income poverty as well as NMPI. 

Where are these extremely poor engaged? Majority of them are in rural areas, working both in agriculture as well as non-farm sector as labourers. So, it is important to see what is happening to employment in agriculture and real wage rates in rural areas over the last two political regimes at the Centre. 

Our research shows that during UPA-1 period (2004-05 to 2008-09), real agricultural wages for men (deflated by CPI-AL) grew meagrely at 0.2% per annum, whereas real rural non-agricultural wages (deflated by CPI-RL) declined by 0.9% p.a. But we observe a spectacular growth during UPA-2 period (2009-10 to 2013-14) with real agriculture and non-agriculture rural wages growing at 8.6% and 6.9% p.a, respectively. In contrast, during the NDA-1 period (2014-15 to 2018-19), growth of real farm and non-farm wages in rural areas decelerated at 3.3% and 3% p.a, respectively. However, the most concerning has been the situation in the last five years of NDA-2 (2019-20 to 2023-24), when the annual growth rate of real rural wages has become negative for both agriculture (-0.6%) and non-agricultural (-1.4%). It may be the impact of Covid-19 and its aftermath, giving credence to the K-shaped recovery. 

The share of the workforce engaged in agriculture had been declining secularly, from 69.7% in 1951 to 54.6% in 2011 (Census), and then to 42.5% in 2018-19 (PLFS). But in 2019-20, it reversed to 45.6%, and then increased further to 46.5% in 2020-21 (reverse migration due to Covid effect), before falling to 45.5% in 2021-22. This may be one of the reasons why growth in farm and non-farm rural real wages has become negative during the second term of the present regime. 

As far as the unemployment rate is concerned, the International Labour Organisation (ILO) data suggests that it averaged around 8.4% during 10 years of UPA government (2004-05 to 2013-14) and roughly at 7.9% during the ten years of the Modi government. So, the growth model under both dispensations has not seen significant reduction in unemployment. The only difference is that during the UPA government, the BJP was at the forefront, saying that it was ‘jobless growth’. The same criticism is now being dealt to the BJP by the Congress and other opposition parties. 

Interestingly, government data from Periodic Labour Force Survey (PLFS), which started collecting information on unemployment since 2017-18 shows a much lower level as well as a clear declining trend. It came down from 6% in 2017-18 to 4.1% in 2021-22. The significant difference between ILO estimates and PLFS estimates, says Santosh Mehrotra, former Economic Advisor in the erstwhile Planning Commission and a prolific writer on this topic, is due to difference in the definition. PLFS tends to include some work as employment even when it is not paid for. That makes PLFS estimates non-comparable with other countries, which follow ILO methodology and definitions. Mehrotra further argues that CMIE estimates are on the lines of ILO, and they are giving much higher levels of unemployment compared to PLFS. 

For us, the litmus test of employment hinges on real wage rates, and we have seen from the government data itself that in rural areas, real wages have had negative growth in the last five years (the second term of the present dispensation). This needs urgent attention and further research to create more employment-intensive growth process. 

Authors Ashok Gulati and Shyma Jose, respectively, are distinguished professor, and research fellows, ICRIER. Views expressed are personal.