India — a country blighted by hunger
Last week, Abhijit Banerjee, an Indian-born economist, became one of three joint winners of the 2019 Nobel Prize in Economics for their work on alleviating poverty. The news was reported by the Indian media with much pride, as Banerjee was only the second Indian-born economist honored with a Nobel. Twenty years earlier, Amartya Sen was rewarded for his work on the same subject: Fighting poverty and famine.
A few days later, while Banerjee’s achievement was still being celebrated and he was pursued for interviews by every Indian media outlet, a report from Ireland noted that India had slipped to position
102 on a list of 117 countries on the Global Hunger List.
The most worrying aspect of the 2019 report is that wasting, or acute malnourishment, has increased sharply since 2014, when it affected 16.5 percent of children, and now affects 20.8 percent. Malnourishment has long been an issue in
India, even before independence, when famines were not so rare. In the past four decades, India has made sizable advances in addressing this problem through the reorganization of the public distribution system to ensure that every family receives a set minimum amount of food each week.
The free or heavily subsidized food-distribution system was strengthened in 2006 with the launch of the particularly impressive Mahatma Gandhi National
Rural Employment Guarantee Act (MGNREGA), which guaranteed at least 100 days of work each year to every adult or, if no jobs are available, that the government will pay the equivalent of the wages. In the first year of the scheme, more than 21 million households benefited.
The numbers rose sharply each year for the next five years, in 2011 reaching 55 million: Almost half of the country.
The scheme is credited as one of the key factors in the economic development of the rural poor in India. A recent UN Development Program report noted that more than 270 million Indians were lifted out of poverty between 2005 and 2015.
Unfortunately for the poor in particular, and the Indian economy in general, the change of government after the 2014 elections brought with it drastic cuts to MGNREGA.
Another big blow for the poor in India came in the form of demonetization in 2016, when the government withdrew the notes in circulation and replaced them with new ones. The exercise was so poorly planned and executed that it shaved more than 2.5 percent off the GDP growth. Hundreds of millions of people in the unorganized sector (accounting for almost 80 percent of the national economy) found themselves out of work as their employers no longer had cash to buy anything or pay salaries.
It took the banks more than a year to start functioning normally again and restore the ability to dispense cash from ATMs. The botched exercise was heavily criticized by many leading economists, including Sen and Banerjee, who called it a monumental mistake with longlasting repercussions.
If only the government had consulted leading economists, in particular the two Nobel winners, about its economic policies, the Indian growth story over the past four years would have been totally different.