Is poverty the problem?

Posted on November 19, 2011 by Tara Thiagarajan in OpEds, Writing. Comments Off on Is poverty the problem?

We talk constantly of poverty in India as if it is our real problem. But I don’t think it is. It is a consequence of deeper underlying issues.

Global inequity among human beings has been framed and constructed in the context of money — the want of money and, therefore, the ability to acquire. The focus on poverty as the problem forces us to formulate solutions that involve redistribution of money, to give people the ability to acquire. But what were the original drivers of progress and wealth creation?


The potential of money comes from the interaction with the mind. Wealth is created from human ingenuity. Consider that we are a country where only approximately 10 per cent participate in the formal economy, and only approximately 4 per cent of our citizens meet the Rs 1.6 lakh income criteria to pay taxes. That implies two things: First, there isn’t enough money to go around and second, only 100 million people have participated in building most of the goods and services that we collectively describe as our country’s output.

And even with this, we are a country with a GDP that’s just equivalent to that of the city of Tokyo, which only has some 13 million people. So what if, instead, we were to frame the issue in the context of productivity — in terms of what you give, produce or create, and not what you take or acquire? Then instead of thinking why so many people are able to acquire so little, we would ask why so many are able to produce or create so little, and why we are so grossly lopsided in terms of productivity.


Instead of a poverty line, what if we had a productivity line?

For one thing, this would fundamentally change the way we formulated solutions. Take the much-celebrated Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which has been formulated with a goal to reduce ‘poverty’ by providing livelihood security. The government site that keeps account of this provides details on how many person-days of work was done, and how much was distributed in ‘ wages’. It is, however, extraordinarily difficult to actually find a list of what was created with this scheme — if there is one at all. The first link on the main page brings up a letter to the Principal Secretaries of all States from the Joint Secretary Mr D. K. Jain, asking them to take necessary action to produce photographs with latitude and longitude of ‘works’ done to ensure, no doubt, that wages weren’t handed out without some sweat. At least, wages should be given out for digging ditches, moving dirt from one place to another and other equally extraordinary things, even if they have no real purpose. Has it succeeded? If the measure is in wages — income — then, perhaps, it has.

If we were to evaluate this in terms of productivity, we would need to report first and foremost what was created with the money. What was produced and what was the per-person productivity? This means that we cannot get away easily by simply pointing to ‘wages’ and ‘income’ as measures of success. We would need to get in there and debate and figure out first how we would measure ‘productivity’ and ‘output’ and then keep account of this. And to get a decent outcome, we would have to work harder, to figure out how to drive productive output. We couldn’t just be lazy and let people do anything they can think of to work up a sweat, however useless. If we need people to cross a productivity line, it is a whole different ball game. But if they do, it’s far more powerful than crossing a ‘poverty line’. Just imagine, if the entire country was productively engaged with a per capita GDP equivalent to the average person from Tokyo. Then we would have a GDP of 129 Trillion USD!

Originally published in The Hindu Business Online

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