In Order To Beat ‘Poverty Trap’, India Must Reassess its Strategy

Poverty alleviation is akin to solving a jigsaw puzzle, writes economics professor Siddhartha Mitra.

Jean Dreze, the altruistic economist, is quite right in his recent book Sense and Solidarity: Jholawala Economics for Everyone in pointing out that nature acts most decisively at birth. A phenomenon similar to the throw of dice determines whether an infant is born in the comfort of a mansion or the squalor of a destitute dwelling. Yet this accident of birth is, in most cases, the most important determinant of the trajectory of one’s fortunes.

Professor Dreze is a rare phenomenon as he lives the material life of a poor man, while campaigning for the rights of the poor at platforms membered by society’s elite. More common, but still in a minority, are some well-heeled people who acknowledge the almost insurmountable handicaps faced by the poor in life’s rat race.

Economic Inequality in India & Abroad

Guilt and a sense of fairness induce them to redistribute some of their income to the poor, but not beyond resisting the temptation of tax evasion, the occasional act of charity, or paying the people they employ a premium on the market wage. It would be impractical to expect even such people to do more.

More than 20 percent of the Indian population and 12.8 percent of the world’s population live below the international poverty line defined as Rs 10,475 or $695 per capita per year in 2011 currency (World Bank data and norms).

India’s ‘War’ on Poverty

We cannot rely majorly on the altruism of rich Good Samaritans to solve the problem of poverty, given its overwhelming magnitude; a hard-nosed approach would serve us better. While the Bill and Melinda Gates Foundation is contributing a lot financially to the war against poverty, it relies on governmental mechanisms to channelise their funds in this ‘war’.

There are three dimensions to this ‘war’:

1. Ensuring that people and businesses pay taxes commensurate with their income (this enhances revenues and thus total government expenditure and by implication, poverty alleviating expenditure which is often a predetermined fraction of the total);
2. Reducing corruption so that revenues are used to the maximum extent possible for enhancing social welfare and not for lining a small number of pockets (anti-corruption mechanisms need to be devised intelligently but prudently to ensure that related expenditures are much smaller in monetary terms than the corruption alleviated);
3. Ensuring that expenditures on poverty alleviation are (i) both adequate and (ii) spent in a manner that makes the best possible use of available scientific knowledge, deductive logic and common sense. Much has been said about (1) and (2).

Towards Better Times

While perfect solutions have not been worked out, the world is moving in the direction of improvement. With regard to point (3) (i), I can only make the rough proposal that a country with ‘x’ percent of its population below the poverty line should spend ‘x’ percent of its total government budget on poverty alleviation.

But this is just a prescription, not necessarily borne out of pragmatism. However, I wish to make a point about 3 (ii): it is time to fashion a strategy that is based on a collation of the research findings from various fields (neuroscience, nutritional science, economics, information technology and education) and develop an integrated approach which gives us the ‘biggest bang for the buck’ in this ‘war’.

Link Between Cognitive Development & Malnutrition

Let us look at some of these research findings.

Recent research by neuroscientists such as Kimberly G Noble published in reputed journals shows that children brought up in poor families tend to have brains characterised by a smaller hippocampus and lower surface area of the cerebral cortex than those in more affluent families.

These characteristics handicap both memory and cognitive skills, as revealed by tests. Around the turn of the century, nutrition scientists such as BP Leiva of the Universidad de Chile concluded that early child malnutrition is associated with suboptimal brain development, as indicated by low head circumference and associated low value of IQ, which they found to be a good predictor of scholastic achievement.

Research on India (which includes some work done by Paramita Bhattacharya and me at Jadavpur University) based on National Sample Survey data finds that much of the total incidence of malnutrition in India occurs among the poor. This can be deduced if one looks at the incidence of wasting (low weight for height) and stunting (low height for age) by expenditure class, proven correlates of malnutrition, or directly at the values of the Nutrition Deprivation Index (again by expenditure class) devised by us.

These three pieces of research tell us the following: children in poor families often suffer from malnutrition which limits their scholastic achievements and other benefits from attending school; lack of human capital formation keeps them poor as adults and the mentioned mechanism in turn makes their transmitting poverty to the next generation highly likely.

The ‘Poverty Trap’

Thus, generations can get caught in a ‘poverty trap’ from which they can only be rescued through governmental intervention. This mechanism, however, need not be the only channel through which a poverty trap might be generated.

The policy implications are direct: governments need to concentrate on providing young children in the age group of 1-6 in poor families with balanced nutrition (adequate amounts of proteins, carbohydrates, good fats and vitamins) as well as ensure access to clean drinking water and sanitation so that nutrition can be absorbed to generate brain power.

In India, early child nutrition is officially handled through aanganwadis but watchdogs need to focus on how far they provide what they claim to provide, and the improvements needed in the diet provided. When children in poor families receive balanced nutrition in their early years, their brains will be ready to soak up the education provided through free government schools.

Poor quality teaching in government schools is a problem, especially in rural and remote areas but mass online education can be a major game changer in this regard, especially when imparted to receptive brains.

While the outlined policy can enhance the likelihood of children in poor families getting the same opportunities as their richer contemporaries and thus escaping the poverty trap, the eradication of poverty also needs work on the supply side of the labour market.

Human Capital & Employment

Public and private sectors need to collaborate in catalysing the balanced generation of human capital (this is often a lengthy process as in the case of doctors, engineers and chartered accountants) through information collection and research so that excesses of and deficits in labour supply in different sectors of the economy are minimised.

This will help generate adequate employment and comfortable wages, both essential for ridding the human society of poverty. Some voluntary unemployment (such as that generated when one has given up a job to look for another) and involuntary unemployment will remain; a policy of providing basic incomes to the unemployed which are not high enough to deter them from looking for employment might be crucial.

Special attention needs to be given to the vexing problems caused by the migration of human capital across national boundaries (for example, mass migration of doctors can cripple the national health service and induce remaining private doctors to raise their fees, thereby impoverishing the common man) and the ever increasing use of human substituting artificial intelligence/robotics.

Poverty alleviation is akin to solving a jigsaw puzzle. Unfortunately, while much attention has been directed towards the construction of individual pieces, comparatively little has been given to prioritising and arranging these. This piece is a humble attempt in that direction.

(The author is a Professor of Economics, Jadavpur University, Kolkata. This is a personal blog and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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