"Facts are meaningless. You could use facts to prove anything that's even remotely true!" - Homer Simpson (thats right folks, we're the only development blog that quotes the Simpsons)
A recent livemint Op-Ed on income inequality raises the idea that today's income inequality is not significantly out of line from historical measures of inequality in India. There are some serious flaws in this line of thinking. For one as my esteemed colleague Doug previously mentioned, cherry picking stats just dont tell the whole story. Looking the inequality figures in the 50s and 60s one can easily see this is not true. (also regional inequality was much lower then
Two, anyone who thinks income inequality can be solely represented by a simple GINI and a few stylied facts needs to go check their old economics textbooks. The message since liberalization is clear. Absolute poverty has decreased significantly. Though this magnitude had been debated, most agree it is in the low 20% headcount ratio range. And inequality since liberalization has increased significantly. Whether the statistic is polarization ration, GINI, etc they all tell similar stories.
Inequality is a major issue and should be high on the GoI priority list. To their credit it seems the Planning Commission keeps an eye towards this, and so-called inclusive growth strategies seem to conceptually place inequality at the center of the story.
If Indian inequality has a 'historical norm', then how would he explain the relatively low inequality in the years after independence upto the 80s? There is a rich literature on Poverty and Inequality in the various reform period and Plans. Sen and Himanshu do a nice job if you dont mind the analysis a bit technical. Before liberalization though growth was low, and poverty was high - inequality was low. This seems to have escaped the 'historical analysis'.
Also, our exalted chairman of the planning commission made some great remarks on the recent Human Development Report.
"He made it plain that only the non-prescriptive parts were acceptable to the government, and sounded downright sarcastic when, tongue-in-cheek, he praised the "coloured graphs"." -from article
Did the HDR last year not have colored graphs? But Mr. Ahluwalia raises some valid points about India and climate change that have yet to be addressed by the international community.
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Here's an interview with Montek Singh Ahluwalia where he clarifies his stand on climate change and elaborates on his main objections with the report:
http://www.indianexpress.com/story/245963.html
Ahluwalia's main problem with the report is its suggestion that developed countries reduce emissions by 80% and developing countries reduce the same by 20%. In spite of the fact that these cuts seem to take into consideration the fact that developing countries now contribute much more to the accumulation of greenhouse gases, what it means in practice is that on a per capita basis, developed countries will still produce four times as much as their developing counterparts. Clearly, a point that has been made before -- that developing countries should not have to bear the brunt for reducing the rate of carbon emissions. An interesting read all the same for those interested in the subject.
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