Slumdogs vs. Billionaires / By P. Sainath

Print Friendly

The HDI Oscars—more meaningful than Hollywood’s

By P. SAINATH

Freida Pinto and Dev Patel, stars of Slumdog Millionaire

Freida Pinto and Dev Patel, stars of Slumdog Millionaire

It’s been the night of the long knives for India’s billionaire population. Their band has just been decimated, falling by more than half from 53 to 24. The latest Croesus Count, also known as the Forbes Billionaires list, makes that much clear. We also fell by two notches to sixth rank in the list of nations with the most billionaires. India’s earlier No. 4 slot being slyly usurped by the Chinese who clock in with 29. More mortifying, we are a rung below the Brits who’ve grabbed Perch 5, with 25.

The net asset worth of India’s richest has also shrunk by over a third from the time of the last Forbes scroll. By 2007, that worth had reached $ 335 billion. That is, 53 individuals in a population of one billion  held wealth equal to almost a third of their nation’s GDP at the time. This year, that worth plunged to $107 billion. (A moment’s respectful silence in memory of the dear, departed billions seems in order.)  But there is some comfort in that our team is still worth more than twice what their Chinese rivals are. And we even now have 8 billionaires more than all the Nordic nations put together  —  though they boast the highest living standards in the world.

“Four Indians were among the world’s top ten richest in 2008, worth a combined $160 billion,”  points out Forbes. Today, alas, “that same foursome is worth just $ 54 billion.”  But the 29 Indian tycoons reduced to the penury of mere millionairehood should not lose heart. Forbes offers us these words of reassurance. “The winds of wealth can change quickly…They may  yet again blow favorably in the direction of these tycoons.” So what if  the big balances fly at half mast briefly? There could be gales ahead.

Alongside this winnowing of India’s plutocrats runs a slightly longer-term and truly grim saga. India has fallen to 132 in the new rankings of the UN’s Human Development Index (HDI) for 179 nations. Each year since 1990, the UN  Development Programme  brings us this index, as a part of its Human Development Report. The HDI “looks beyond GDP to a broader definition of well-being.” It seeks to capture “three dimensions of human development: a long and healthy life (measured by life expectancy at birth). Being educated (measured by adult literacy and enrolment in primary, secondary and tertiary education). And third: GDP per capita measured in U.S. dollars at Purchasing Power Parity (PPP).” 

In the Index of 2007-08, India ranked a dismal 128. Now we’re at 132. That is our worst-ever grade on the Index in this decade. It means, among other things, that little Bhutan, never once in the Forbes hall of fame, has trumped us in the new HDI rankings. The tiny Himalayan nation clocks in at 131. That is, a notch above its “second-fastest-growing-economy-in the-world” neighbor. Bhutan once languished amongst the bottom 15 nations of the world in the UN’s HDI. It has never been amongst the world’s fastest growing economies.

At rank 132, India also lags behind the Republic of the Congo, Botswana, and Bolivia (this last often called Latin America’s poorest nation). The Occupied Territories of Palestine (torn by conflict for 60 years) are also ahead of us. Another neighbor —  Sri Lanka  —  has been devastated by war for over two decades and has slipped a few notches. They still log in at 104 —  28 rungs above India.  Vietnam suffered casualties in millions in the war waged against it by the United States. Decades after, its agriculture is yet to recover from planned destruction, lethal bombing, and the conscious use of deadly poisons. But Vietnam clocks in at 114. And China stands at 94 despite falling several places.

The bad news about the bad news is that these figures reflect the “good news” days. They relate to the year 2006. (The SENSEX was booming. It breached the 10,000  and even 14,000-mark for the first time ever. The Indian economy also grew at 9.6 per cent in 2006-07 and  9.4 per cent in 2005-06.) Those supposedly glory days when we churned out 53 dollar billionaires also  nourished India’s plummet to 132nd rank in human development. As so often in history, the rich grew fatter while the poor ate even less. he same period So the updated HDI  numbers do not begin to capture the economic downturn. The picture will be even less pretty when those factors kick in.

They do capture, though, the revised purchasing power parity (PPP) estimates that clocked in by late 2007. These columns foretold this problem at the time. It was clear  that if the Index was using the older PPP data, then “even our awful HDI performance could get worse” once those were revised. (India’s GDP per capita (PPP) fell from $3,452 to $2,489 with the new data.)

We’d be even lower down than rank 132 but for our showing on the GDP-per capita front.  Even now, our rank on that front is six notches higher than our HDI rank. It makes us look better than we are.  For instance, in making out the current rankings, UN researchers point out that GDP per capita data for 2006 “caused India to rise one place.” But “new data (for 2006) on life expectancy caused India to fall one place.”  India then also fell two more places as two more nations  —  Montenegro and Serbia —  joined the list. Both fared better than we did. We fell a further two places “as a result of revised PPP estimates.”  That’s how we ended up four slots below our last rank.

What does it mean to rank much better on GDP per capita than in the HDI, as we do? It means you have been less successful in converting income into human development. Our GDP per capita rank is six rungs higher than our HDI rank.  Vietnam’s HDI rank of 114 is 15 rungs higher than its GDP per capita rank. Unlike us, Vietnam – despite awful historic handicaps  —  has converted its wealth into human development far better.

Cuba logs in at 48, thus breaking into the top 50 nations in the HDI. (While India firms up its place in the bottom 50.) That’s seven places above wealthy Saudi Arabia whose per capita GDP is three times higher than Cuba’s. In that ranking, Saudi Arabia is No.35, towering above Cuba’s 88. But when it comes to human development, Saudi Arabia lags seven rungs below Cuba. Apart from lower income, Cuba has lived under crippling sanctions for decades. Sanctions that have imposed huge constraints and high prices on all essentials. Yet, life expectancy at birth in Cuba is now 77.9 years. That’s almost the same as the United States (78) and about 14 years better than India’s 64.1 years.

Meanwhile the USA has logged its worst rank ever, falling to 15 from number 12.  Between 1995-2000, the USA was always in the top 5, even staying at rank 2 for a couple of years.  Like with India, its decline in HDI has come in the very years seen as its best, the Golden Age of the Free Market, the Nirvana point of neo-liberalism. A year into the economic reforms, India in 1992 ranked 121 in 160 nations then covered by the Index. Today, India is at 132 amongst 179 nations. Straight comparisons across that time are hard as the Index has changed in numbers and methodology. But the trend is clearly not joyous.

The HDI figures since 2002 signal a steady decline in the nation’s conversion of wealth into human development  —   even as the numbers of its billionaires and millionaires doubled and trebled. Now the billionaires have shrunk in number, but not the slumdogs. There are at least 836 million Indians living on less than Rs. 20 a day, as the government’s own report told us in 2007. Over 200 million of those get by on less than Rs. 12 daily. And those are  pre-downturn numbers, too. Maybe we need  a new Forbes 500 list  —   naming the world’s 500 poorest citizens. Who could beat us on that one?

P. Sainath is the rural affairs editor of The Hindu, where this piece appears, and is the author of Everybody Loves a Good Drought. He can be reached at: psainath@vsnl.com.

2 comments on “Slumdogs vs. Billionaires / By P. Sainath
  1. India’s HDI Performance: Truth Vs. Myth

    —————————————

    It’s a serious question that the author has raised. There are countries which have a more ‘backward’ image but have faired well in Human Development rankings. And there is almost no country which has an ‘image’ of being a fast growing economy but has faired worse than India on HDI rankings. At least on the education front, there are a number of countries such as Vietnam, Uzbekistan, Kyrgyzstan and Moldova which have, even after having a lower GDP per capita (PPP) than that of India, have faired very well. Literacy rate in these countries is between 90-100%, compared to 65% of India.

    And this data for India is an averaged data of all the states. If seen state-wise, some of our states like Uttar Pradesh and Bihar, kind of nations in themselves, would bring the HDI rankings for them lower to perhaps the worst world standards.

    But, there’s other side of the analysis also.

    “India was the second fastest growing major economy of the world for the time the HDI report mentions. And yet, India’s rank of 132 is dismal compared to the oft-repeated media euphoria about the growth of Indian economy and the Sensex. India has failed.”

    Did you catch the blunder the in the argument given in above lines? No? Read again!

    Growth of economy doesn’t imply a decent HDI ranking. Further, both cannot be compared. A country like Sierra Leone, which fares very badly at HDI, can still clock a good economic growth and still for many years can remain at the bottom of the HDI rankings. All that can be compared is the ‘growth’ in economy and ‘growth’ in human development. So the things to compare are how much Human Development Index has ‘increased’ vis-à-vis the ‘increase’ in GDP. Apples should be compared with apples only, a very basic law of nature.

    Lets compare the growth in HDI. UNDP report measures the absolute progress in HDI made by all the countries under three time-periods. The most recent comparison, for the short-term of 2000-2006, places India at rank 10th among those 131 countries which are ahead of it in HDI. All in all, it places India 15th among all the nations of the world for that period. So though India had a low HDI, it improved its HDI quite fast compared to others. And remember, 2000-2006 wasn’t a rosy 8% growth period throughout, the first three years saw an average growth less than 5%.

    And now lets come to the most cursed years of Indian economic growth by the ‘analysts’. Lets see how India progressed in human development when it was marching ahead in economy. Data for 2003-2006 from the very same UNDP report shows that the ‘second-fastest-growing-economy-in-the-world’ was eighth fastest in the world on progress in Human Development. Yes, ranked 8 among over 175 nations. Shocking?

    But journalists won’t tell you that, you would have to actually download hundreds of pages about that report, take a break from office for two and a half days, and know it yourself. That is the curse you would have to bear.

    But even after such progress, India slipped from rank 128 to rank 132. How come that is possible? Well the author himself provides the answer; it is not a real shift (See 9th paragraph). 2 places since 2 better ranked countries were added, and 2 places because estimates of a data were revised. Nothing changed in the real world, these were only technical adjustments.

    Infact, the period 2003-2006 saw India’s one of the best ever improvement in HDI. The index improved from 0.576 to 0.609. This improvement is ‘one of the best in the decade’, isn’t it?

    This much for the people who say that India is growing at 8%+ and despite that it is at the rank 132, so the growth is useless.

    Now the question comes that despite India’s good growth on HDI, how come the rank has not actually improved? Well there’s a cluster of nations around it, all of which are moving pretty fast, and hence the relative speed is low. It is like having a few fast runners and all of almost equal speeds, so they are covering ground pretty fast but their relative position is changing slowly. But what importance does the rank has when the absolute progress rate is pretty fast? We are concerned here with real human development, and not the game of national ranks.

    Now coming to some other countries, lets take Bhutan first. “It has never been among the world’s fastest growing economies” is a completely false statement. World Bank and other data sources show that Bhutan has registered 8%+ growth during 1997-2007. GDP per capita (PPP) of Bhutan is 60% higher than that of India. And to one’s surprise, Bhutan was the real ‘second-fastest-grown-economy-in-the-world’ in 2007! India, by the way, has actually been the second fastest ‘major’ economy of the world these years. So Bhutan has progressed in economy also while progressing in HDI. It is not to say that HDI improvement is not possible without economic progress, but just to show that there are examples where economic growth has meant human development also. Economic theory suggests so, and many countries have demonstrated it.

    This is not to say that everything is well in India, we still lag behind many a countries which are even poorer than us. Our literacy rates are painfully low. Farmer suicides in some pockets of the country have not reduced, and perhaps even increased. But media has also to show, and that too without grave errors, that India is also making meaningful progress on the human development front.

    Squarely cursing with out a sound logic will only harm the national growth efforts. This in turn will completely ruin the poverty alleviation and human development momentum that we have gained in these years. The souls of the poor will never forgive the responsible for that.

  2. India and China will leave the USA in the dust by mid-century. Their talent, intelligence and steadfastness are not matched by many Americans. Having lived in India for a while I know this is a fact.

Leave a Reply

Your email address will not be published.

Categories

From Punto Press


PuntoPress_DisplayAd_REV

StatCounter

wordpress stats