According to UN estimates, India has the largest number of hungry people. Over 200 million, or about one-fifth of India’s population, is chronically hungry. This is an apparent paradox in a country which is food-surplus on the aggregate. The Wall Street Journal of June 25th 2004 reports that according to Indian government sources, by 2001 India had a national stockpile of around 60 million tons of rice and wheat. It goes on to say:
But with inefficiency and local mismanagement plaguing distribution, it couldn’t move the grain fast enough through the system. Some even spoiled in warehouses. A 2002 government survey concluded that 48% of children under five years old are malnourished. That’s an improvement from three decades ago and even today, given rapid population growth, the proportion of chronically hungry Indians continues to fall. But in a sign that there are limits to the Green Revolution, the absolute number of hungry people in India began to rise again in the late 1990s, according to the U.N.
The paradox is easy to resolve if one understands one basic principle: that economic policies matter. The Indian economy has been chronically mismanaged by the Congress ever since India’s independence. And now the new Congress government could continue on the same failed path of socialism that led us to this sorry state. Vote-bank politics and the command and control license-permit-quota raj is responsible. Paul Samuelson could have been speaking about India when he wrote in April 2002 (HOW TO PROSPER IN THE TWENTY-FIRST CENTURY):
The good life does not come from dramatic speeches or boisterous parades. Where economics is concerned, so far, there is nothing in sight more promising than the limited welfare democracy where public laws harness and monitor the energies and efficiencies of the somewhat free marketplace.
It is a good time to review Amartya Sen’s book of 1982, Poverty and Famines: An Essay on Entitlement and Deprivation. Here is an excerpt from Ken Arrow’s review of the book:
In a free-enterprise economy every good or service has a price, and each economic agent starts out by owning some goods or services. The rice farmer owns some land, used for producing rice, which can then be sold on the market at the going price or reserved for use by the farmer and his family. The receipts from sales can be spent on other goods—different foods, spices, clothing, and so forth. The agricultural laborer has only his or her labor to sell; the proceeds can be spent on rice or other goods. Similarly the cities contain workers who sell labor for money to buy food, shelter, and clothing, and entrepreneurs who buy goods and labor, produce other goods, sell them, and have the proceeds for personal consumption and investment in business expansion.
People will starve, then, when their entitlement is not sufficient to buy the food necessary to keep them alive. The food available to them, in short, is a question of income distribution and, more fundamentally, of their ability to provide services that others in the economy are willing to pay for.
This, of course, does not mean that the supply of food is irrelevant. A decrease in the supply of food will usually increase its price, as people compete for the scarcer quantity. This will in turn decrease their ability to buy food by using their entitlement and, if they start close enough to the margin of hunger, may drive them to the point of starvation. Further, the entitlement approach, simple as it is, enables the analyst to say something about the distribution of the burden of starvation. Farm owners and, to a lesser extent, sharecroppers, should be less affected than others because the reduction in the amount they sell is at least partly offset by the higher prices. If the reduction in supply is caused by some factor, like flood, that reduces the amount to be harvested, farm laborers are thereby more likely to be seriously affected.
I am reminded of Oliver Goldsmith’s words from his poem The Deserted Village:
Ill fares the land, to hastening ills a prey
Where wealth accumulates and men decay
There is something rotten about India that so many people are so unconcerned about the true state of affairs. The communists are solely concerned with protecting a handful of jobs, the larger interests of the nation be damned. The government is concerned with blocking the liberalization of the economy and dragging it back to its insular autarkic pre-reform paralysis. The idiotic hype about India Shining and IT superpower crap has addled the brains of the already marginally stupid. One wonders where this is all going to lead to.
It is all karma, neh?