Is India on Its Way Out of Poverty?

Jerri-Lynn here: In this Real News Network interview, Jayati Ghosh, professor of economics at Jawaharlal Nehru University in New Delhi, discusses a recent UNDP report showing that poverty in India has halved in the last 10 years, and the newly unveiled healthcare plan for the bottom 40% of the population, nicknamed “Modicare.”

Ghosh calls Modicare “a scam that is going to benefit private healthcare companies” by providing healthcare insurance, based on the US model “instead of expanding a public health system which could actually provide [health care] much more cheaply, much more equitably and much more efficiently.”

GREG WILPERT: It’s The Real News Network and I’m Greg Wilpert, coming to you from Baltimore.

The United Nations Development Program, the UNDP, published a report recently showing that according to its multi-dimensional definition of poverty, poverty in India has halved in the past ten years. This comes on the heels of another report earlier this year which found that India stopped being the country with the largest population living below the poverty line in the world with, Nigeria taking first place in 2018. Then last week, India’s Prime Minister Narendra Modi unveiled a new national healthcare plan. The plan is said to offer free health care to the bottom 40 percent of the population of India, about 100 million families. Here is how he announced the new program.

NARENDRA MODI: The number of people who will benefit from Ayushmaan Bharat scheme is more than the combined population of the whole United States, the whole of Canada and the whole of Mexico too. More than all three of these countries, and more than even more countries.

GREG WILPERT: The new health care plan is being nicknamed Modicare and is expected to cost 1.6 billion dollars per year. Joining me now to analyze India’s poverty and the new healthcare plan is Professor Jayati Ghosh. She’s professor of economics at Jawaharlal Nehru University in New Delhi. Thanks for joining us today, Prof Ghosh.

JAYATI GHOSH: It’s a pleasure.

GREG WILPERT: So first of all, to understand what the UNDP really analyzed, what does UNDP mean with multi-dimensional poverty and why is this a better measurement than the more common international poverty line?

JAYATI GHOSH: Well, the international poverty line basically looks at incomes and it assesses whether you have an income that would allow you to meet certain basic necessities. Every country has their own poverty line. It’s not as if there’s one that is a standard across the world. But usually, it’s only based on income. And many people have argued that this actually leaves out a whole lot of the other important dimensions, such as health, education, schooling, nutrition, habitation, where you live, all kinds of things like that. So the Multidimensional Poverty Index, which was developed in fact in Oxford, is supposed to bring in all of those things; access to sanitation, access to water, access to food, access to healthcare, access to basic nutrition, all of these angles.

So definitely, yes, it’s a better measure. The difficulty is that it will rely on different datasets. And so you won’t always get necessarily a consistent time series, because you’re using time series from different variables and different statistical systems that are collecting them. So you may not get a sort of consistent result. The bigger problem is that we don’t really have too much of this data after 2011, 12. So I really don’t know how the UNDP has managed to give us information for the last ten years. It would be remarkable if they managed to do this, because nobody in India knows.

GREG WILPERT: Well let’s turn to the question of what is poverty doing. I mean, is it going up or down? I mean, according to the UNDP, it has been declining. And if that’s the case, first of all, I want to know if you would agree with that assessment. And then, if it has declined recently, what government policies have contributed to the reduction of poverty in India?

JAYATI GHOSH: Well to be completely honest, nobody knows whether it’s declined or not. It may well have declined, because after all, the Indian economy has been growing at seven to eight percent, and it would be remarkable if there had been no decline in poverty over this period. But all of our survey data that would allow us to even get a multidimensional poverty index, the last such survey was conducted in 2011, 12. So we really do not have good data after that. Everything has been based on guesstimates. So maybe the UNDP has a better system of guessing, we don’t know. But all I can say is that there are no hard data that would allow us to say definitively that it’s gone down by this much.

GREG WILPERT: And what would you say are some of the main problem areas in terms of poverty in India at the moment?

JAYATI GHOSH: The biggest area is clearly nutrition. It has been a very important issue in India. We still have very poor nutrition indicators, especially nutrition outcome indicators, which we do have data for more recently. Many of our states are down there with the worst of sub-Saharan African countries in terms of inadequate body mass index, anemia and a bunch of other things. But also, there is a range of other areas of multi-dimensional poverty; access to clean drinking water, access to … I already mentioned food, but access to healthcare, access to decent education for everybody and so on and so forth. So we are still way behind other economies at our similar level of per capita income in terms of providing these very basic goods and services. I would say that, yes, there must have been some improvement in terms of poverty reduction, but it’s nowhere near fast enough and we’re still nowhere near where we should be even at this level of development.

GREG WILPERT: Can you talk also about the relationship between what you mentioned, the nutritional problems, but also you said that apparently there’s a agricultural crisis in India still going on and how that impacts poverty, how it relates to poverty.

JAYATI GHOSH: Well in fact, there is at the moment a significant agrarian crisis and we have seen this erupt in a series of farmers protests and agitations over the last two years. Just yesterday, tens of thousands of farmers marched to Delhi, a ten-day march from various parts of North India, to demand certain things. And they were stopped at the border, there was tear gas and water cannons and the lathi charge, which is basically beating with batons. Several, especially elderly, farmers injured, a big crisis in terms of that. Last month there was a march of 150,000 workers and peasants from all over the country. Last year there was an enormous march in October, down the state of Maharashtra up to the city of Mumbai, of more than 300,000 farmers demanding land rights, demanding basic conditions.

There’s a real agrarian crisis because the prices of inputs have gone up much faster than the price of output, which is very volatile and very affected by global prices. The farmers are still having to access very expensive credit, which makes it almost impossible to run a profit. They still have to deal with worsening land productivity and a number of other concerns, and there’s been a lot of withdrawal of state protection because of public expenditure in agriculture falling. Now this really made farming unviable. And this has expressed itself in farmers taking out loans that they cannot repay.

In the last few years we’ve seen that this led to desperation that generated and farmers suicides and terrible things like that. But now, finally, farmers are beginning to protest. They’re beginning to come together, mobilize and protest. And this has become, I would say, a huge political issue as a run-up to general elections. But that is combined with the other huge macroeconomic problem in India, which is that there just isn’t enough employment generation. We’ve been growing at six to seven percent over the last ten years, and yet we don’t have any increase in formal employment, which is amazing. It’s ridiculous. It’s unheard of, actually.

So huge numbers of our workers, about 85 percent of them, work for the informal sector. And even in the organized sector, more than half the workers are informal. That is to say, they don’t have proper contracts, they don’t have any labor rights, they don’t have decent working conditions, they don’t get the minimum wage. So we’re not generating enough jobs, which is both remarkable and disturbing for an economy that’s supposed to be growing so fast. And so even if a lot of these people are not below the poverty line, which I have to tell you in India is a very, very low bar, to be below the poverty line basically means you’re starving, you’re destitute. A lot of these people are not absolutely destitute, but they are certainly poor by any standard globally, including in the rest of Asia. And we don’t seem to be able to provide enough productive employment.

GREG WILPERT: I just want to turn now to the other point that I mentioned in my introduction, which is that the government of Narendra Modi has introduced this health care plan which is supposed to deal with poverty as well, of course. But some say that it is a scam and that it will line the pockets of private health insurance companies. What is your take on this plan, and who would benefit from it?

JAYATI GHOSH: I would definitely go with the second version, that this is a scam that is going to benefit private healthcare companies, because it doesn’t actually provide healthcare. It provides healthcare insurance, which is a completely different thing. In other words, it’s kind of based on the U.S. model, which we all know is a broken model because the U.S. has very, very extensive healthcare, but it doesn’t give you good health outcomes. You get good health outcomes when you have public spending from publicly provided healthcare. It’s much more inclusive, it’s much more accessible, it’s much more affordable and it reduces inequalities in health.

What this is doing is to say that the government will allow individual families to take on a health insurance which will provide them up to 500,000 rupees totally for the entire family in the course of a year. Now, that’s the maximum you could get, but it would depend on whether you have a particular illness. And different illnesses, different kinds of treatment have a maximum amount. So if you have a cesarean section delivery, you get 20,000 rupees. If you have to have a bypass operation for your heart, you get maybe 80,000 rupees. It’s all defined in those terms. But these are just the rates that are nominally proposed. It doesn’t mean that individuals will necessarily get them, because it’s all being run by private insurance companies.

And so far, we know that the payment rate of these private insurance companies is pretty bad. It’s about 73 percent of the are actually settled. So there’s a lot of concern, and we also know that a private health insurance model will only work if you have really strong regulation and monitoring. In India, regulation and monitoring are non-existent. We just do them very, very badly. And so what we’re doing is exposing the poor to, I would say, a potentially disastrous system of relying on private healthcare, instead of expanding a public health system which could actually provide this much more cheaply, much more equitably and much more efficiently.

GREG WILPERT: Well, we’re going to have to leave it there for now. I’m speaking to Prof Jayati Ghosh, professor of economics at Jawaharlal Nehru University in New Delhi. Thanks again, Professor, for having joined us today.

JAYATI GHOSH: Thank you.

GREG WILPERT: And thank you for joining The Real News Network.

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  1. Venkatashiva prasad

    No one can deny that poverty levels have reduced. It is just different in different states. Likewise malnutrition is also varying across different states. On the whole there is progress though hairsplitting on percentages is not advised.

    1. False Solace

      Per capita income and GDP in India have risen hand in hand with increasing malnourishment, which was 25% in 1988 and rose to 34% by 2005. Calorie consumption has been on a downward trend for 30 years. That’s not true of China. Whatever is going on in India it doesn’t appear to be survival positive.

      In India’s villages, the figure has dropped from 2,266 calories eaten a day in 1972-73 to 2,020 a day in 2009-10. In towns and cities, there has also been a largely downward trend from 2,107 calories a day in 1972-73 to 1,946 in 2009-10. (WSJ, 2015)

  2. Alex

    “a private health insurance model will only work if you have really strong regulation and monitoring”

    Which is true but a good public health care system requires even stronger regulation and monitoring. I know very little about India but I grew up in a place with public health care and not much by way of effective oversight. While it is not uniformly awful and everyone can count on a certain basic level of medical care, there are lots of problems with it. Even this basic level of payments often requires unofficial “co-payments’ from the patients. The wealthy usually get preferential access via more or less official payments to doctors or administration, or just opt out of the system in favour of private alternatives. High and mid-level government officials usually don’t use the public system and have a separate system providing higher quality healthcare. The life expectancy is not stellar.

    This is not to say that the everything would be better with more private healthcare, it could have been worse. But building and maintaining a high-quality public healthcare system in a country with low trust, high level of corruption and a lot of inequality is definitely not easy.

    1. Collins

      What you’re saying is that a good healthcare system, public or private, correlates with whether a strong robust middle class is present or not.

  3. Pankaj Verma

    You get good health outcomes when you have public spending from publicly provided healthcare.

  4. TG

    The last report I read said that about 40% of Indian children under the age of 5 are so malnourished that they grow up ‘stunted.’ One can only imagine that if 40% of the population faces such extreme physical poverty, that a lot of the remaining 60% are not doing all that well either.

    Late medieval Europe was not this impoverished. Really.

    The statistics are rubbish. And yes, Matlhus was right. No amount of technological progress or nominal growth in GDP or tinkering-around-the-edges social programs can counteract massive rapid population growth.

  5. oh

    Modi learned well from the world class grifter Obama and is putting this knowledge to good use. Any healthcare system through for profit entities (insurance and private hospitals) is doomed, However, one could regulate the hospitals but it’s harder to do that with the insurance companies.

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