I had to change plans and include an Amendment or Appendix or Annexure to the second part because I had received quite a bit of ‘feedback’ to my part 2. Quite why, I am still trying to figure out because the post did not endorse Piketty’s policy prescriptions and it noted with sarcasm that India did a far better job of distributing its poverty than of its prosperity and three, it accused the present government of giving India the worst of both worlds – neither growth nor healthy re-distribution. So, quite why the so-called ‘Economic Right’ had to be riled by the post is beyond me.
Let me clarify or reiterate one more time:
(1) I have no axe to grind and nor am I enamoured of inequality as a problem to be treated, in and of itself.
(2) I hold no brief for Piketty’s explicit or implicit policy recommendations or predilections. His bias for explicitly re-distributive policies does show through in the paper even though he does reiterate that it was purely a data exploration paper.
(3) Addressing crony capitalism is desirable in itself.
(4) There is no danger of this government being captured by Piketty because it has already been taken hostage by one line uttered by an Opposition politician.
(5) My own policy recommendation in the end is to make an omnibus case for administrative and governance reforms and accountability. There can be no disagreement over it, regardless of whether one believed in inequality as a problem in India or not.
Regardless of Piketty’s agenda, the issue merits a debate and then acceptance as serious or rejection as undeserving.
Credit Suisse which, probably, is happier to see wealth accrual in developing economies, has been putting out its own independent research every year (‘Annual Wealth Report’) and they have data on wealth distribution that align with Piketty’s data on income distribution. Credit Suisse would, if anything should be expected to be on the opposite side of Piketty.
While the inclination to oppose the man is understandable, it is not reasonable to oppose his matter if they are data based and if the data are made available, as he has. One can tweak it and show how sensitive his conclusions are to the assumptions one makes on the source of data (survey vs. fiscal) and to the demographic profile.
Also, in our earnestness to dismiss Piketty, we are also unwittingly dismissing the contribution that UPA’s ‘crony capitalism’ might have made to the issue of inequality.
It is actually inequality of opportunity for the scarce resources such as seats in colleges and beds in hospitals are bought with money while public institutions that are aimed at providing them for the ‘middle and bottom deciles’ are failing to do so.
That is where the interview of Devesh Kapur that I had linked in the blog post (Part 2) has salience.
The Asian Development Bank (ADB) brought out a volume in 2009 (“INDIA 2039: An affluent society in one generation’). It was written by the Centennial Group for ADB, including by my friend Manu Baskaran who is as far removed from Piketty as anyone can be, and the report had the following chart on page 35:
Second, recent work by Praveen Chakravarty and Vivek Dehejia – incidentally even the aforesaid report mentions it as far back as in 2009 – has comprehensively documented the spatial inequality in the country.
It is one thing to oppose Piketty’s agenda and it is another thing to dismiss the issue. Even worse is to be pursuing policies, as this government is doing, that are worsening the problem, in the guise of addressing it. ‘Growing the pie’ is important before distributing it. This government is not doing it.
Further, inequality need not be an explicit policy target. But, egregious inequality (not just in those dimensions that Piketty reports them) will be and is a problem.