Indian Economy is Highly Unequal

Yes, I know, highly shocking :)

In an article in Business Standard, Pranab Bardhan, an extremely well known and influential political economist on India, takes on the idea that the Indian economy is less unequal than some other nonindustrialised countries, particularly China.  He argues that the measure of inequality usually used (the Gini Coefficient) is calculated by consumption in India, rather than by income, and this and other factors make the Indian economy appear less unequal than it actually is by skewing the way the number comes out.  I'm not qualified to evaluate his argument on the statistics, particularly in light of the lack of a similar analysis on the countries to which it is being compared.  However, I'd point out a more radical and potentially nihilistic critique - national statistical collection in any country is uncertain and therefore overrated in my opinion, particularly where state capacity is limited as in India.  However, the thrust of his argument - that inequality in India is undermphasised - is useful. 

His points about greater equality merging with industrialisation or other economic ends is something should be reflected on by most economists interested in India and probably all people interested in development everywhere - the importance of the effects of economic inequalities on industrialisation prospects are really, really neglected by mainstream economists on India, imo - the point of undermining their own class and policy outcome interests.  For example, Atul Kohli has argued that South Korea was able to industrialise in large part because Japanese colonialism had wiped out its landed class's power.  Similar arguments have been made about the influence of India's social structure (whether its fragmentation or Bardhan's own argument from the 1980s(?) about a deadlocked power struggle by the dominant classes).  Essentially the idea is a basic one - that if you have a class of land owners who are politically powerful, it gets in the way of capitalists.  One way around this is radical land reform - though once it happens, it becomes a contest between whether it is redistributive land reform (land to the poor, widespread and probably in small portions) or capitalism-oriented land reform (large farms that will allow mechanised agriculture, displace workesr, and imo establish more liberal and more formal property rights in the agricultural sector).  The latter is something that a pragmatic capitalist economist would support, but not an overly theoretically oriented neoclassical economist, but what it means for the poor (i.e. the vast majority of the population) is what's of more concern to a social democrat or a communist worth.

The liberal stuff he throws in about equality of opportunity rather than outcome mattering more I just ignored :) as I usually do these days.

You may also want to see the article in the New York Times linked above on the inequality angle of the drought.  Unsurprisingly, the financial crisis and the collapse of ideological legitimacy of neoliberalism has triggered more media interest in inequality, and this is extending into analyses of 'the Other.'  You can see extended commentary on the article in the comments thread of the drought tidbit.

By: on 6 Sep 2009


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Everyone seems to have their

Everyone seems to have their own opinions of what economies are really like in other countries. One would have to travel around the world to find out the real truth. casino

Yes, that is what news

Yes, that is what news outlets are supposed to do, particularly when they station people there.  Or preferably, let the people in those places produce information (like Pranab Bardhan, who is far more qualified and a better fit to have a global affairs column than Thomas Friedman, who does have one for the New York Times). 

In addition, you would have to go over statistics, other people's accounts, etc. look at the validity of the statistics.  Point being - yes, it's complicated, but it's not insurmountable.

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