by Arvind Subramanian, Peterson Institute for International Economics
Op-ed in the Business Standard, New Delhi
April 25, 2012
© Business Standard
The caricature of the economist as an unfeeling, callous being is captured in this story: When his wife asks, "Honey, do you love me?" he responds, "Relative to what?" But this predilection for comparisons is invaluable for understanding the world and formulating policy. And in an inward-focused country like India, international comparisons can help douse incendiary debates, especially on the performance of India's social sector and the role played by economic growth.
In order to facilitate such comparisons, consider international data on three noneconomic indicators: life expectancy, child malnutrition, and inequality. Each indicator is plotted on the vertical axis, with the horizontal axis showing the corresponding income level (measured as per capita GDP, in terms of purchasing power parity). For each indicator, the left-hand panel is for the early 1990s, and the right hand panel for the most recent period for which the data are available. In each figure, a few key countries are highlighted, and a line is drawn in each to show what the average relationship is between that indicator and income level.
These figures then allow a number of comparisons to be made: across countries, across time, and also critically on how a country fares relative to the average country. If the data point for India is well below the line, that suggests given India's level of income, it is faring much worse on the indicator than the typical country in the world. The choice of time periods is to facilitate understanding performance during the key post-reform period, starting in the early 1990s.
Life expectancy (figure 1 [pdf]): In 1990, India's life expectancy at birth was about 58 years, rising to about 64 in 2009. Several points are worth noting. India lies very close to the line in both periods, which suggests that in delivering a certain kind of health outcome, the nation has been faring exactly as a country at its level of development should be. Moreover, the improvements in life expectancy during the reform period were typical of what could be expected given India's growth during that period. But other comparisons, and conclusions, are possible.
China in 1990 was a positive outlier—it is well above the line in figure 1A. Its life expectancy was well above—nearly 15 additional years—what a country at that level of development exhibited. This must be interpreted as a resounding success of Chinese communism and the early Maoist emphasis on human capital development: Mao, who presided over the 20 million to 40 million famine deaths in the late 1950s and the Cultural Revolution a decade later, abolished the centuries-old practice of female footbinding as one of his first acts after the 1949 revolution. Bangladesh, already an outlier in 1990, became an even bigger outlier in 2009, a tribute to policy actions taken during this period.
So, in response to the question of how India fared on life expectancy, multiple answers are possible. No worse than the average country; inferior to China until 1990; and also inferior to Bangladesh's efforts in the last 20 years. (These answers are broadly also true for India's performance on child mortality.)
Child malnutrition (figure 2 [pdf]): Malnutrition is measured as the percentage of children under five whose height is significantly below (in a statistical sense) what might be expected from an international standard that relates height to age. Here the picture is quite different and damning. As figure 2A shows, in 1993 malnutrition in India was greater than what would be expected of a country at its level of development. Again, China fares much better—it is below the line in figure 2A. By the second half of the 2000s, malnutrition in India came down by about eight percentage points. But this improvement was actually much less than what India should have posted given its growth and was inferior to what Bangladesh achieved during this same period (Bangladesh was well above the line in the early 1990s and close to the line in the late 2000s).
Angus Deaton and Jean Dreze have a detailed and insightful discussion of the level of, and trends in, malnutrition in India, including the data problems and apparent anomalies (Economic and Political Weekly, February 2009). But the message seems inescapable: India treats its children poorly on health, a point that the late Myron Weiner made in the context of education.
Inequality (figure 3 [pdf]): On inequality, there is a surprise. India is a positive outlier: Its level of inequality in 1994 was relatively low, below China's and Brazil's, which was one of the world's most unequal countries. By 2005, inequality had gone up, but not by very much and by much less than that in China, and much less than that for the typical country in the world: India is as far below the line in 2005 (figure 3B [pdf]) as in 1994 (figure 3A [pdf]). Subject to the caveats that things may have changed since 2005 and that there are alternative measures of inequality, the popular perception that India has become an outrageously unequal country despite (or perhaps because of) its rapid economic growth is not borne out by international comparisons. (Of course, Mukesh Ambani should still donate his mega-mansion to charity.)
To be sure, there are other aspects of performance, such as education and dignity, as well as differentials across gender and states that need to be examined. No doubt, much remains to be done.
But it seems that for its level of economic development, India's achievements in the social sector are not unambiguously deficient. They are average in some areas (life expectancy), terrible in others (child malnutrition), and not so bad in yet others (inequality). And the growth years after 1991 do not seem to have been especially damaging or uplifting for India's social achievements. Neither doom-mongering nor triumphalism seems warranted. Or, perhaps, both are. In the famous words attributed to Joan Robinson, in India, "everything and its opposite is true."
PIIE Briefing 15-4: India's Rise: A Strategy for Trade-Led Growth September 2015
Working Paper 15-1: The Economic Scope and Future of US-India Labor Migration Issues February 2015
Testimony: US-India Intellectual Property Rights Issues: Comment on USTR Special 301 Review March 7, 2014
Testimony: Effects of Trade, Investment, and Industrial Policies in India February 12, 2014
Testimony: Assessing the Investment Climate in India and Improving Market Access in Financial Services in India September 25, 2013
Working Paper 11-17: India’s Growth in the 2000s: Four Facts November 2011
Book: Reintegrating India with the World Economy March 2003