Why does the world need SHG’s, just ask World Bank to perform the rope trick



For 60 years, India made a half-hearted attempt to reduce poverty. Why I say a half-hearted attempt is because the way the Planning Commission worked out a stringently low poverty line all these years, aimed more at ensuring a low budget outlay for fighting poverty, it lacked any meaningful commitment to make poverty history.

Let me explain why it didn’t work. Perhaps this story will better explain. A poor person fell down in a 100-feet deep village well. Listening to his cry for help, a number of villagers collected and were exploring the options of pulling him out. Meanwhile, an economist, who happened to be passing by, saw the crowd and walked it to know what was happening. He told the villagers to step aside as he could be of help. Looking at the depth of the well, he immediately worked out that the man in the well probably had to energy to climb the walls to about 50 feet. So he told villagers to bring a rope of 50 feet that can pull out the man to safety.

The poor man, who was crying for help, finally was drowned.

This story tells you how all these years a futile half-hearted attempt was made, despite substantial budgetary outlays, knowing well that the poverty eradication strategy will not work.

In the last three decades, policy makers found a still better way of removing poverty. Knowing that much of the half-attempts being made was going waste, they realized the best way to remove poverty is to sweep the number of poor under the carpet. I still remember when Pranab Mukherjee was the deputy chairman of the Planning Commission (1991-96), he brought down poverty in one shot from 37 per cent to 19 per cent. It was only after the next government took over, and replaced the Planning Commission members, that poverty was once again restored back to 37 per cent.

The business of poverty that actually extends to sweeping the poor under the carpet has now grown worldwide.

Over the years I find that while most governments across the world have failed to stem poverty (except in countries like China), the international financial institutions are bending backwards to demonstrate that economic liberalisation helps in reducing poverty, and often drastically. This is being achieved by tampering with statistics, and often providing social indicators that don’t actually measure up. One such classic example is the dollar a day measure adopted by the World Bank to define the percentage of the population living in extreme poverty.

Global empirical evidence is now emerging challenging the World Bank’s deliberate underestimation of poverty. Recent studies have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol concludes that the World Bank is painting a ‘rosy’ picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University’s School of Geographical Sciences is quoted as saying: “Our findings suggest that the current international poverty line of a dollar a day seriously underestimates global poverty.”

Not even caring for such voices, World Bank has found another magic rope trick to remove poverty. Using the Purchasing Power Parity (PPP) index, it has in its latest poverty vanishing trick reduced India’s poverty in one stroke from 400 million in 2005 to a very impressive 98 million in 2010. What Planning Commission could not do in 60 years, World Bank has done remarkably well in just five years – between 2005 and 2010.

I find the World Bank behaving like a pigeon when comes face to face with a cat. By closing it eyes, the pigeon fatally pays for its mistake thinking that the danger has gone away. Similarly, removing poverty by a statistical jugglery is a dangerous exercise. It’s therefore time for India not to bask in the glory of fake poverty reduction figures but to accept the dark reality.

Poverty in India is actually growing. If you raise the existing global poverty line from 1.25 dollars a day to just 1.5 dollars a day, as Asian Development Bank has shown, India’s poverty line swells to 584 million or 47.7 per cent of the population. In simple words, if the poverty line extends to Rs 90/day, which is a more realistic benchmark, the number of people below poverty line in India will be at least five times more than what the World Bank has estimated.

And makes me wonder. Why does the world need to move towards the next series of targets under the SHGs? Just ask World Bank to play around with statistics.