Sunday, October 9, 2011

Teekhi Baat_Montek Singh Aluwalia_Prabhu Chawla/October 08, 2011/IBN7

Interview with Montek Singh Ahluwalia, deputy chairman, planning commission on Teekhi Baat for IBN 7.


PC: Straight question, how do you decide the definition of poverty.

MA: The latest position on the poverty line is that about two years ago, we got to know that there is a lot of discussion, particularly about rural poverty line being low. That is why we set up an expert committee, under the chairmanship of Suresh Tendulkar, he gave report in 2009. He recommended that the earlier poverty line in rural areas should be adjusted a bit upwards. The latest numbers are the numbers of the Tendulkar committee.

PC: Tendulkar sahab decided, after that there was the Arjun Sengupta’s report, even he had defined poverty line, and how many people are below poverty line, he had not said Rs. 28 or Rs. 30, he had talked of numbers. After that Jairam Ramesh came to you, the question is every person has his own definition. Different definition of Montek, different of Tendulkar, one of Prabhu Chawla (smiles).

MA: Official poverty line is what Suresh Tendulkar’s committee has established, which has been accepted by the planning commission. What we say regarding the numbers of below poverty line population, they have all from Tendulkar sahab’s report. Arjun raised a point, he said, this is a poverty line, we agree anybody below this line is poor, but he also said that the people above this line too are vulnerable.

PC: You said poverty line, which means somebody below that line is even poorer.

MA: No, no, I am talking of cut off line.

PC: Then those people are in the condition that they can even perish, people who are below that level.

MA: Certainly, people who are below that line are known to be very poor. Arjun Sengupta said, poverty line is one thing, many people are above this line but that economic condition is not so good. Hence, he said vulnerable. He said that if the poverty line is doubled, then 77 per cent of the population would be below the poverty line. Actually there was some arithmetic errors in that but the it is right to say that if the poverty line is doubled, the old poverty line not the new one, then 65 per cent of the population will be below that line. Now Tendulkar sahab increased it but not that much.

PC: He says it is 32 per cent.

MA: Now the poverty line as said by Tendulkar sahab, if compared with year 2009 data, comes to around 32 per cent.

PC: That means 32 per cent of India’s population of below poverty line, which means their income is less than Rs. 28 per day.

MA: Correct

PC: Do you think a man can stay alive in Rs. 28, Tendulkar sahab thinks.

MA: The Rs. 28 number is a bit misleading, because the number which we gave in court, we had given details of family expenditure, which in rural areas is around Rs. 3900 and Rs. 4,800 in urban areas.

PC: Let’s say it is Rs. 100, Rs. 125 and you think in that amount, an average family in India, which comprises of four-five people, can sustain itself.

MA: No,no,no,no, that 32 per cent figure is per person, now when talking of a family then it should be multiplied by five.

PC: Hence I am saying that Rs. 125

MA: Around Rs. 125, Rs.150.

PC: Do, you think Montek, that Montek Ahluwalia, Tendulkar are qualified to define poor, and none of them experienced poverty.

MA: I clearly agree that I am not an expert in this.

PC: You are not expert in defining poverty.

MA: I myself say that we took recommendations of expert committee.

PC: Was Tendulkar an expert in defining poverty.

MA: In this area is has worked a lot. Whatever has been written, on poverty, the amount of research that he had done in this area, many few people would have done it. He was not himself poor, ordinary simple academic.

PC: I agree with you, you went to St. Stephen college, I didn’t, studied in Delhi School of Economics later, before that I studied in Deshbandhu College. So, do you think that doing research and measuring poverty by going in villages are different things?

MA: Yes, there is a difference.

PC: How many times, Tendulkar would have gone to villages, stayed there and measured poverty, do you think he would have gone in villages.

MA: He would have gone, if you compare him with other economists, actually he knows more.

PC: How many classes of people are there in India from rich to poor, if an eminent economist like you classifies. We keep on talking about castes, if you divide on economic criteria, then how many types will emerge.

MA: If you divide on economic criteria, then you have to distinguish many classes. One is Tendulkar’s poverty line, it is very low line, I don’t say

PC: Whom you will say poor.

MA: Poor and very poor. Ok, now many people who are above Tendulkar poverty line, it has to be estimated, but they can be said as vulnerable. They are living in difficult economic situations, they would have many problems, even if there is somebody takes ill in the family, and they are vulnerable. After which comes aam aadmi, which means that their basic needs are all being met but even they have problems during inflation. Now Tendulkar’s sahab’s line says 32 per cent.

PC: No, about aam aadmi

MA: I will tell you. Now in the food security bill draft, according to the numbers given by the government, 41 per cent population will get subsidised food. If you add 10 per cent over Tendulkar sahab’s line, they can be called vulnerable, hence it becomes 40 – 41 per cent. From 41 per cent , I will say till 80 per cent is aam aadmi. They are workers, have jobs, but are not rich. The 20 per cent above 80 per cent can be called upper income classes. But rich, really rich are only top one per cent.

PC: You spoke about four to types of people.

MA: officially there is only one line; you asked a question so I discussed my assessment with you.

PC: You are the deputy chairman of the planning commission; your work is to implement the manifesto of the government in power. Hence, you are working for the aam aadmi, being the centre of the whole budget. Hence, can I think that you don’t think about 40 per cent of the people who are below the aam aadmi level.

MA: No, certainly not. The 12 five year plan approach paper which we published recently and is on our website. In that poverty line has been given much importance, we have to do something to help these people. Other than them, economic policies should also help aam aadmi, they should get benefitted.

PC: People below them are left, you don’t talk about them.

MA: No, no, if you read our approach paper we have specially mentioned that poverty alleviation is very important.

PC: There is a separate ministry for that.

MA: The second point is that there are many schemes of the government, which is specially targeting this group.

PC: Montek, one Teekhi Baat there is no consensus on definition of poverty line. It is arbitrary, subjective.

MA: You are right, if somebody says Rs. 4800 is not right, make it Rs. 5500, there can be no scientific basis on this.

PC: There is no agreement on anything, on poverty line.

MA: Please see, Tendulkar committee report was published in 2009. In 2010, when midterm appraisal was published, it was written that this is the report, it has been accepted, these are the numbers. That time percentage of poverty was 27.50. We said that number of poor are more than this, Tendulkar sahab’s report says that it is 37 per cent, we agree it at 37 per cent. That time nobody said that Tendulkar line is wrong.

PC: No but when the figure of Rs. 28 was revealed, then the people came to know.

MA: Now there has been a controversy, people are observing, the line is Rs. 4800 plus but it seen as per person per day then it comes to Rs. 32.

PC: There can be one definition of poverty line in Montek Singh Ahluwalia and Dr. Manmohan Singh’s government, other in CPM government, in BJP, then there is no sanctity, it has no parameters, it is for academic discussion, otherwise it has no meaning.

MA: No, I would not say that. One thing you can say, what the level is, is the basic food requirement being met, basic.

PC: Even now you are agreeing that a person can stay alive in Rs. 28.

MA: You please read Tendulkar’s report, he has said.

PC: I am asking you, Tendulkar ..

MA: No, no

PC: I and you have read many books in Delhi.

MA: Whoever is below the poverty line, theoretically they should get benefit of BPL and PDS. Their education should be given free by the government; medical assistance should also be free. Problem is that this all is not happening. People below BPL are not getting cards.

PC: Put your hand on your heart and say, can a person in rural area stay alive in Rs. 28 per day.

MA: If they get medicines and rations free, if their education is free, then basically at that level survival is possible.

PC: That means if government subsidies are delivered, then Rs. 28 is fine. Otherwise it is not right.

MA: Please see, otherwise it is not right.

PC: You are the deputy chairman of the planning commission. I have seen you since college times, you had trust in planning, but now let us agree that you have to now.

MA: No, that is not the case.

PC: Have to now, now whatever policy is being made with regards to poverty line, now a technocrat like you, economist, even Dr. Manmohan Singh is an economist, don’t you think that politicians decide everything now. Like Jairam Ramesh forced you to change the line.

MA: In a democracy, politicians should decide. Technically, people support, but in this issue, as you would have seen on tv, we have said, Jairam also said, and this was the earlier policy too, which household should be identified in what manner. Earlier, the government policy was that BPL population would get subsidised food. But for the past one year we are discussing that it should not be limited to BPL. Hence, the food security draft which has been made, in which 41 per cent people should be getting entitlement , which we are not calling BPL, they are called by a new name, priority sector. That means there is BPL, vulnerable and priority sector.

PC: I talked about politicians because they have to garner votes. You have seen what has happened in the planning commission in the past five seven years. You are not reducing poverty, but distributing money to the poor in the name of schemes. How much money have you spent on the social sector in the name of MNREGA and other schemes.

MA: It is not right to say that people are getting no benefit from this.

PC: Votes are being garnered.

MA: No, not about votes. Now if you go anywhere, farmers are saying that they are facing a problem because wages have increased. Now keep the problems of the farmer separate, if the wages have increased then people who have no land may be getting benefitted.

PC: Have you assessed that since MRNEGA scheme started, how many tangible assets, productive assets have been created in villages. You have distributed money, what assets did you create in the name of MNREGA, have you don’t an audit.

MA: Many evaluations are being done, and we are clearly saying

PC: Are you not happy with them.

MA: No, no, not happy. There is a lot of scope to improve its implementation.

PC: There was an idea of creating employment, you will give minimum wage of 100 days.

MA: Many people used to think, leave the issue if assets, the idea is to give wage to poor people, many people used to think.

PC: In a way you gave bheek to them, the poor fellow takes Rs. 100, Rs. 120 from you.

MA: No, if you see the guidelines of the MNREGA programme, plan documents and even yourself ask Jairam Ramesh, giving money to a person is very important, but the program should be used for creating assets.

PC: That means, Montek, you are yourself and economist. Every year, inflation will rise, which means his DA would also have to be increased, from Rs. 120 to Rs. 150, from Rs. 150 to Rs. 175, you are creating an army of people who are just getting cash, work is not being done.

MA: No, I think in every scheme of the government there are some shortcomings.

PC: Dr. Saab cash is being distributed.

MA: See, just cash is not being distributed, people are working, they are making bunds, roads, check dams. Idea is that they make something like check dams, wells.

PC: Indian government is such that there is no estimate about unemployment. Unemployment is increasing, which is true, you don’t have an estimate.

MA: If you see the employment being generated through MNREGA, it is not so much that the poor is solely depending on that. He is getting a little extra support. If you go to farming area, people are saying two things, one is that wages..

PC: Those have increased because you have started doling out cash, then why will he go to work, he has to work in farms to get money.

MA: No, it means, by giving this little support, wages of others have increased. So, people who were working in farmers fields are getting more wages. If you see it from the point of view to labourer, then it is better, and the second point, if you go to Punjab, then they say that migration has stopped.

PC: Even people from Bihar say that migration has stopped. If you give me money at my house, why will I go anywhere to work

MA: Please see, what average employment is being given under MNREGA, 45 days.

PC: It is a fact that unemployment has increased in this country. Absolute unemployment has increased. Take NSS data.

MA: Everytime, unemployment is calculated in percentages. Please see latest data, percentage unemployment has decreased. If people are getting 45 days employment under MNREGA, then 100 days at 45 multiplied by 100, then he is earning Rs. 4500 through this. Now you will say that nobody can exist in Rs. 4500 a year. But people who are working there have benefitted as wages have increased.

PC: You are an economist, I have also studied a bit of economics, and you studied a bit more than me. I want to ask what kind of government is this which runs on loan, you are running these kinds of schemes, in 2004, you were taken loan of Rs. 200 crore per day from the market, in today’s date you are taking Rs. 1200 crore from market. Where is all this money going?

MA: You are talking of fiscal deficit.

PC: No, am talking of expenditure, there are expenditures that is why you are taking loan.

MA: Expenditure is happening, partly it is being financed through taxes, we are taking some credit.

PC: Do you think Rs. 1200 crore deficit is right, when technocrat is minister, then deficit is less, when a politician becomes..

MA: No, if you are talking of central government, the deficit is increased in the past two three years. But this happened because in the past two three years there globally economy had severely slowed down and not in India but in every country fiscal deficit increased. People said that there is a slowdown, the government should spend a little more, and form this year onwards, there is a plan to reduce fiscal deficit, now there is a target..

PC: You take a loan of Rs. 1200 crore every day, and secondly in your budget give concessions of Rs. 5 lakh crore to corporate sector, revenue forgone. Rs. 5 lakh crore, even when you were there, you have forgone capital gains, then rich got even richer by selling his shares. Is there any country where for so many years, no capital gains tax was imposed. You gave so many concessions to the rich..

MA: No if you are talking about tax concessions, then total effect has to be seen, you cannot pick up one thing and say. The thing is that if you think that tax concessions should be tightened, then it is a technical issue.

PC: You give concession of Rs. 5 lakh crore on one hand and tax the poor on the other. There is less interest on cars and more if a poor man wants to build a house.

MA: This you are picking one thing from here and there and giving a number.

PC: Am talking about policy.

MA: This may be the impression but it is not the reality. Policy is directed at helping ordinary persons, many things are being done. Many schemes are there, which directly help aam aadmi and poor people, rural areas. See the Pradhan Mantri Gram Sadak Yojna, I think it is an excellent scheme. Roads are being made in villages which had no connection to the road network, and the quality of those roads, if compared from the last time, are much better.

PC: Hope that you would have gone in vehicles to small cities, the prime minister would have gone, I have gone there and come back. The infrastructure, except of cities, is worst in the villages. In small towns there is problem, no water, no hospitals, no schools, there is nothing.

MA: From many years, there have been shortcomings. But if you see the latest data of the past three four years since the national rural health mission has started, infrastructure for health, infrastructure for schools, all this is improving. The percentage of children in schools is increasing, almost 100 per cent has happened. There is no doubt in this. The point is that earlier there were no schools, then schools were made, then there were no teachers, now children are coming, they are getting mid day meal. But now people are saying that they quality of teaching is not good, it will take time, there are many shortcomings. But we cannot say that nothing is happening.

PC: Do you think that there is a need of a planning commission in this country, of who you are the deputy chairperson. Earlier you used to believe there is no need.

MA: No, no I always used to believe; I used to think all the time that planning should of such which is right for the situation. Now there is no need for old fashioned planning. The economy of today..

PC: There has to be a direction.

MA: No direction per se, I will say the growth strategy we are following, from which people have benefitted a lot, high growth and all that. This dominantly is private sector led growth, this is correct, market led, private sector led. Hence, our assessment is that the private sector capability, and when I am saying private sector, I don’t mean the big ones, small businessman, everybody, they have a lot of capacity, hence we have to allow policies which support their initiatives. That is a framework. But secondly, our view is not that the government should not do anything. Our view is that the government would have to be many things, making infrastructure number one, number two is special schemes for poor, number three health, education and services like that for aam aadmi, till these would not be provided, they would not get the benefit of growth. This all has to be done.

PC: Dr. Manmohan Singh believes that good economics is good politics. But now good politics has become good economics, you people say that Singh darbar is running the government well. Singh darbar has made a view that we will do good politics, and put good economics in the wilderness.

MA: No, take the period of UPA 1 and UPA 2, seven years have passed, if you compare growth rate in this, then compared to the first time, growth rate of economy is better. The amount of high growth happened this time, has never happened before.

PC: Montek, I will stop you on this point. You have said a good thing, growth rate, you would have read list that comes in the Forbes, you must have read it. There are 50 people in the country, whom we call billionaires, they have wealth of 225 billion dollars of wealth, in the past 15 years, you have taken only Rs. 500 crore wealth tax from them, is this your growth of seven per cent. 50 people have wealth of 225 billion dollars according to Forbes, they give merely Rs.500 crore wealth tax in the whole year.

MA: I have not read the article which you have mentioned. I will dig it out and read it. If you talk of taxes, wealth tax, this tax, that tax, we must see how the total tax collections are going. And total tax in the past seven years has been going very good.

PC: You and we are giving taxes, not the big people, who sold their shares.

MA: No, no, yeh toh kehene ki baat hain

PC: One last question, personal, if you ever become finance minister, you might have been offered sometime, there might have been discussion, news appears in papers.

MA: You keep on writing, but it is not true.

PC: You never thought about it, not was there any talk of appointing you to the post.

MA: No, no.

PC: Will you try to go into politics, because since you know economics, there you will be able to implement it.

MA: Please see, I am of 69 years old, now where; there is time of venturing into politics.

PC: Dr. Saab became Prime Minister at 76, it is not late.

MA: I am quite happy, with the work I am doing, if I do it right, then I am very happy.

PC: What do you think politics should be dominant over the government or economics.

MA: In a democratic government it is wrong to think that politics is on the one side and economics on the other. Actually the name of game should be how to make good politics into good economics and good economics into good politics.

PC: First good politics, if there is good politics, then there can be good economics.

MA: You can also say this, this can also happen. If there is good politics, then economic policies will succeed and politics will also improve.

PC: If there would be good politics, then people like Montek Singh Ahluwalia would not have to defend ministers everytime.

MA: No, no, no, no this I am not saying.

PC: Sometimes you defend on telecom, sometimes on poverty line, hence your credibility is more than politician hence you are called every time.

MA: To run a democracy, a poor country, I mean India is not a high income country. What we are achieving, the country is achieving, I am not, is a major achievement. There is no other country at this income level, which is running a democratic system and performing so well. Earlier, we had democracy, but nobody was saying that India’s economic performance is good. Now it is being said second fastest growing market, emerging market, etc etc, hence something good might be happening.

PC: Something good is happening, even if the poor many be more, rich may be more, there is not much discussion on that. Poor is becoming poorer, rich is becoming richer.

MA: No, no I don’t believe that. Poor is not becoming more poor, but I agree that the poor are not getting the benefit that they should get.

PC: At least you agreed on something, thank you for coming to our studio.

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