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Angus Deaton and the great Indian poverty debate -Himanshu
-Livemint.com

Nobel to Deaton calls for a celebration of not just his own work but also the contributions of a number of Indian economists who have engaged with similar issues

The announcement of Angus Deaton winning the Nobel Prize in economics was unexpected but not surprising. His body of work over the years has influenced many of us who have worked on issues of poverty, nutrition and food security. It is a recognition of the kind of work that has often been derided in mainstream media as the “poverty industry”.

This award to Deaton calls for a celebration of not just his own work, which has indeed been very significant, but also the contributions of a number of Indian economists who have engaged with similar issues, as well as the robust data systems that we have managed to put in place over the years.

Deaton’s award is as much for his understanding of consumer behaviour and his contribution to developing the Almost Ideal Demand System (AIDS) with John Muellbauer as it is for his engagement with large-scale survey data, most notably that of India’s National Sample Survey Office (NSSO). While his work on poverty measurement and price indices is well known, he has also used NSSO data to estimate calorie demand functions (with S. Subramanian).

In India, his analysis of poverty and inequality data as well as data on nutrition calorie intakes (both done with the economist Jean Drèze) has been very influential.

Unlike the majority who use the NSSO data mindlessly, Deaton was careful in exposing the pitfalls of misreading the data in the presence of non-sampling errors. He introduced new techniques and contributed to the debate on measurement of poverty, price indices and nutrition in India.

The foundation for poverty and nutrition debates in India has been laid by a number of economists who tirelessly engaged with these issues in the early years of Indian independence. The debate surrounding the normative basis for poverty measurement has not only been an esoteric one among a small group of Indian economists but has also been fought vigorously in the corridors of the Planning Commission and on the pages of the Economic and Political Weekly. This is true of the 1970s and more recent times as well.

The outcry regarding the inadequacy of poverty lines when they were revised by the Tendulkar Committee in 2011-12 is the most recent instance when the debate around poverty lines almost became a media spectacle. India is certainly one of the few countries (especially in the developing world) where there is such critical engagement with measurement and data. In fact, India is also a pioneer on defining and measuring poverty based on absolute poverty lines. Relatively less known is the fact that the World Bank poverty lines, which are now globally used for tracking poverty reduction in most developing countries, also owe their genesis to the Indian poverty line in the early 1990s.

The debates surrounding measurement of poverty in India are widely respected within and outside the country in academic and policy circles. This body of work continues to push the frontiers on some of these issues, such as explaining the puzzle of declining calorie consumption or the widening gap between survey data and national accounts and poverty estimates and poverty lines.

Incidentally, many of these debates were generated by Indian economists—whether it is the puzzle of declining calorie intake (V.M. Dandekar, Nilakantha Rath, P.V. Sukhatme, Utsa Patnaik), the errors of measurement due to change in recall period (Abhijit Sen) or the debate on the discrepancy between survey aggregates and national accounts.

Deaton has for long been an influential voice and has participated in the debates, bringing in his own theoretical and technical rigour. Indian economists have always critically engaged with his suggestions, as was the case with the Tendulkar poverty lines, which adopted his suggestion of using Fisher price indices based on unit values from the survey data while also challenging him in other contexts.

This is also the time to congratulate the much maligned statistical system of the country. None of this would have been possible without the excellent data collected and made available to researchers all over the world by the NSSO. What is remarkable is that despite severe criticism, the NSSO has continued to maintain its integrity as far as data collection, sampling and analysis are concerned.

No wonder the NSSO data is like an essential armoury for anybody dealing with large-scale survey data and is a standard item in the repository of most universities in the world. Once again, much of this foundation was built by our own economists and statisticians who devoted considerable time and effort with almost no facilities, compared with economists in the developed world, to generate and sustain debate.

Ironically, at a time when the world of economics is celebrating the genius of Deaton and his contribution to the debates on poverty and nutrition, we in India are on our way to undermining the integrity and strength of the statistical system. Not only has the government been reluctant to share data collected on vital indicators such as nutrition but it has also been less than keen on even collecting the data.

The Rapid Survey on Children is a classic example of government interference in academic research with the release of the data being withheld for a long time on flimsy pretexts. Similarly, the delay in conducting the National Family Health Survey has meant that we have lost valuable time when the data, if available, could have helped in informing and designing better policies for reduction in malnutrition. The unwillingness of the government to come clean on the newly released national accounts series has already led to suspicion and doubts on the quality of our national accounts estimates, not only domestically but also among users of Indian data such as the International Monetary Fund. Sadly, even on poverty measurement, the NITI Aayog hasn’t shown any interest in deciding on the Rangarajan Committee report which was submitted almost a year and a half ago.

This is certainly a time to celebrate Deaton’s Nobel prize along with the contribution of our own economists and statistical system. Deaton’s work is not just about abstract theory or technical finesse; rather, his central message is of how theory and technique can together be used to answer real world questions.

Himanshu is an associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi.