Wednesday, July 23, 2008

77% of India below Rs 20 a day?

Mr. Budhadeb Acharya, a Marxist made this proclamation on the floor of the parliament. Frankly, this analysis scared me. I am quite comfortable with my "feel" of macroeconomic indicators of nations that "matter" (to me). This Rs 20 a day statement confounded me.

And here's why. India's nominal per-capita income is Rs 40,000 per year (and this is the average of multiple sources). This becomes Rs 110 per day, a far cry from Rs. 20 per day. So, if 80% of the country lives (as alleged) on Rs 20 per day, then the other 20% (220 million) must be living very, very prosperously.

So, I went ahead with some fact-checking.

Turns out, Mr. Acharya was quoting a very, very confused study. The sudy in question was conducted by National Commission for Enterprises in Unorganized Sector (NCEUS). This article from the Indian arm of Rupert Murdoch's WSJ put things in perspective. The study "accounted" for purchasing power parity. The reality is that 80% of India lives on less than $2 a day - or Rs 80 a day. (The corresponding income is 2400 per month - or Rs 10k per month for a familty of four).

The geniuses behind the study recognized that Each American dollar becomes Rs 10 in "purchasing power" - and went ahead and proclaimed that 80% of India earns Rs 20 a day. This statistic is true only if an Indian works in India, earns his Rs 80, somehow spontaneously materializes in the US, converts his Rs 80 to $2, goes grocery shopping in the US, dematerializes from the US and re-materializes in India to work again.

The study ought have said "80% of India earns $8 a day".

What disconcerts me is that there are absolutely no editorials, no comments about this blunder which was uttered in the parliament. For isntance, The Hindu carried his comments as if this were some factoid.

I think Mr. Acharya got carried away when he was trying to quote some "statistics" to butress his cause. I don't blame him - any statistic is a good statistic if you're trying to make a point.

This sadly proves to me that the best minds in India certainly don't go into mass media.


unicorn said...

Great observation RAP. Quintessential though!

Its little surprise that Hindu considered the statement as a factoid, its a known fact that Hindu has an inclination towards left. :)

Rap said...


I actually think that the Hindu is one of the few newspapers in India with and editorial conscience. TOI has sold out miserably to the "we care only about our clients - the rich" mentality.

Even I lean towards the left (Coummunism is a sad, archaic and more or less extinct ideology. I am a left libertarian - someone who recognizes that communism just can't help - it has not helped anyone except the powerful.)

unicorn said...

Yeah, but somehow I feel Stalinists are weird. They think that all history is a conspiracy and everything that happens against their principles is some sort of plot.

I have read a recent article by Karat where he linked the nuclear deal with Iran iraq war!!!

Leftism or communism makes more sense when people are more practical, even China adapted capitalist fundamentals to its markets. Anything rigid will extinct.