ARAF KARSH HAMID v1.0 – August, 2013 v2.0 – June, 2021 Should we go for - Pro Poor, Pro Economic Growth? OR - Pro Economic Growth? I cannot teach anybody anything, I can only make them think. - Socrates

WORLD : From 1960 to 2011 • Education, Health, Living Standards, • World Economic Factors 1 2 INDIA • GDP: 1951-2013, Population, GDP and Food Grain production • Population and Poverty, Education, HDI 1980 – 2012 3 STATE OF STATES • HDI: 1980 – 2001, MPI 2007, MPI 2007 • GSDP for All States: 1981 – 2012 4 ANALYZING GUJARAT’S SOCIO ECONOMIC PROGRESS • HDR1980 – 2000, 2005 National Family Health Survey, • MPI 2007, HDI 2008, GSDP 1981-2012, • Education, Health, Poverty, IMR, State Debt, Employment, Investments 5 COMPARING DIFFERENT ECONOMIC MODELS • Mixed Economy, Welfare States, Neoliberalism, Laissez-faire • Human Development Approach Vs. Neoliberalism 6 KERALA • Understanding Caste System & Socio Economic Background • Kerala Development Model: Old and New What Economic Model should we follow? Pro Poor, Pro Growth Economy OR Pro Economic Growth? Understanding the progress made by other countries will help us to set our own goals. This section focuses on how the world progressed in the last 50 years, looking at the societal well being. (Source: World Bank)

Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it. Amartya Sen Professor of Economics, Harvard University Nobel Laureate in Economics, 1998 http://hdr.undp.org/en/humandev/ Joseph E Stiglitz Professor of Economics, Columbia University Nobel Laureate in Economics, 2001 In 2011 Time Magazine named him as one of the most 100 influential person in the world. GDP is not a barometer to measure Societal well being. http://www.youtube.com/watch?v=QUaJMNtW6GA

Concept Past Approaches New Approaches Individual Interests / Advantage / Well- being Income / Consumption / Utility (i.e., Individual Happiness and/or desire fulfillment) Human Capabilities and opportunities – with an explicit role for freedom, agency and rights Food Security National Food availability The food entitlements of individuals and groups. Poverty Deprivation in income / consumption / expenditure Deprivation in human capabilities such as knowledge, longevity, and living standards (e.g., access to water, and services) – more emphasis on self reporting, self esteem, participation and empowerment. Market outcome and Government actions should be judged in terms of valuable Human ends. To understand the Economy what matters most is NOT GDP per capita but Individual entitlements, capabilities and freedoms and rights. We will get into the economical models after we go through the state of World, India, and Indian States on Human Developmental aspects. Next: Capability Approach Blind growth model is 1980s neoliberalism and a very narrow approach, an approach which can result in huge disparity in various forms, and potentially lead developing nations into polarization of wealth and extreme poverty.

Aristotle 384-322 BC Adam Smith 1723-90 Karl Marx 1818-83 Amartya Sen 1933 – Martha Nussbaum 1947 – Source: Stanford University Capability Approach is a theoretical framework about • Well being • Development • Justice Roots of this framework can be traced back to Karl Marx to Adam Smith to Aristotle. However, Economist Philosopher Amartya Sen pioneered the approach and Philosopher Martha Nussbaum & others enhanced it further. Core Ideas Functioning Capabilities Beings Doings • Healthy • Educated • Illiterate • Under Nourished • Being depressed • Travelling • Caring for child • Voting in an election • Taking part in a debate • Donating money to charity Examples Capabilities are a person’s real freedoms or opportunities to achieve functionings. Thus while travelling is functioning, real opportunity to travel is the corresponding capability. Conversion Factors Another important idea in Capability Approach is the Conversion Factors. It’s the usability of a product to enhance the functioning. For E.g., a bicycle can enhance the mobility of a person to move around.

Source: Stanford University Conversion Factors Amartya Sen, uses “Capability” not to refer exclusively to a person’s abilities or other internal powers but to refer to an opportunity made feasible, and constrained by both • Internal (personal) • External (social & environmental) conversion factors. Next: Organization of this presentation Environmental Personal Social These are internal to a person, such as metabolism, physical condition, sex, reading skills or intelligence. If a person is disabled, is in bad physical condition, or has never learned to cycle, then the bicycle will be of limited help in enabling the function of mobility. These are factors from the society in which one lives, such as public places, social norms, practices that unfairly discriminate, societal hierarchies, or power relations to class, gender, race or caste. These factors emerge from the physical or built environment in which the person lives. Among aspects one’s geographical location are • Climate • Pollution • Proneness to earthquakes • Presence or absence of seas and oceans. Built Environment are • Stability of Buildings • Roads & Bridges • Means of transportation & communication Categories of Conversion Factors It’s the usability of a product to enhance the functioning. For E.g., a bicycle can enhance the mobility of a person to move around. 3 Human Development Initiative Multidimensional Poverty Index Both these models were derived from the Capability Approach. We will be using these models to evaluate the performance of Indian States. How much a bicycle contributes to a person’s mobility depends on that persons: • Physical Condition (Personal Factor) • Whether socially allowed to ride a bicycle (Social) • Availability of decent roads (Environmental)

Organization of this presentation 1. World 2. India 3. States 4. Specific States 5. Kerala Next: World 1960-2011 From the highest vantage points to the reality in Kerala. Kerala’s socio economic background will be analyzed using the Capability Approach Framework. So that, we will get a better understanding of Kerala’s ranking in Human Development Initiative. World Kerala

• Education • Health • Living Standards • Other Economic Factors 1

India is worse than most of the African countries That’s 526 million life 1

Source: World Bank Compare these world stats with Gujarat, Tamil Nadu & Kerala Mortality Rate 7.5Child Mortality Rate of USA (under 5 years / 1000) 12.0Child Mortality rate of Kerala With a population double the size of Kerala, Tamil Nadu did a good job in the Health segment. 62.7Child Mortality rate of India 1

Compare these world stats with Gujarat, Tamil Nadu & Kerala 3.9% Malnutrition (too short for age) USA 21% Malnutrition Kerala With a population double the size of Kerala, Tamil Nadu did a good job in the Health segment. 48% Malnutrition India Malnutrition Too Short for Age Source: World Bank 1

Compare these world stats with Gujarat, Tamil Nadu & Kerala 100% Improved Sanitation (% of population with access) USA 96.4% Improved Sanitation Kerala 71% Tamil Nadu 64%Gujarat 34% Improved Sanitation India Sanitation Source: World Bank 1

Compare these world stats with Gujarat, Tamil Nadu & Kerala Water 99% Improved Water source (% of population with access) USA 95% Tamil Nadu 92% Kerala 92% India 90%Gujarat Source: World Bank 1

Compare these world stats with Gujarat, Tamil Nadu & Kerala Literacy 100% Literacy Rate: South Korea 94% Kerala 80% Tamil Nadu 79% Gujarat 74% India Overall Tamil Nadu did an excellent job in Education and Health sectors in comparison to Gujarat. Source: World Bank 1

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Source: World Bank Expenditure (% of GDP) on Education & Health, GNI Per Capita, Poverty Head count 1

• Progress is not measured by how many billionaires produced by the country. It’s measured by the quality of life for the common man. • We are worst than most African countries on Child Malnutrition !?! And we expect to be an Economic Power in 2020 or 2030? • What we need: • ZERO Corruption + Lokpal • Good quality Education • Skill development programs in sync with Industry • Health Care System • Improving the Living Standards • Automating & Streamlining the agriculture sector. • Now it’s time to look deep into each Indian state and do an analysis on state of the states! Country % • Africa • South Africa 8.70 • Guinea 20.80 • Central African Republic 21.80 • Burkina Faso 26.00 • Nigeria 26.70 • Mali 27.90 • Congo 28.20 • Sudan 31.70 • Somalia 32.80 • Chad 33.90 • Ethiopia 34.69 • Niger 39.90 • Asia • Pakistan 31.30 • Afghanistan 32.90 • Bangladesh 41.30 • India 43.50 Malnutrition Prevalence, weight for age (% of children under 5) Source: World Bank 2006 1

Many people, especially ignorant people, want to punish you for speaking the truth, for being correct, for being you. Never apologize for being correct or for being years ahead of your time. If you are right, you know it, speak your mind. Even if you are minority of one, the truth is still the truth. - Mahatma Gandhi 2

2.1 GDP, LABOR FORCE & ECONOMY • GDP: 1951 – 2012 • India, China and USA – GDP, Labor Force & Economy Comparison • Labor Force mismatch • Agriculture & Industry – 2011 • Summary on GDP 2.2 POPULATION, RURAL & URBAN, POVERTY • Rural, Urban distribution – 1951 to 2011 • Urban India 1951 – 2011 • Population, GDP and Food grain Production • GDP of 100 large cities • Poverty: 1950 – 2013 2.3 EDUCATION • Top 400 Universities in the World • PISA 2010 High School Ranking • Education: High School Math and Science Ranking (1995 – 2007) • World’s most educated countries • Education Summary 2.4 HUMAN DEVELOPMENT INDEX • HDI: 1980 - 2012 • INDIA Population (Rural Urban Growth in 2031) • Summary (India & South Korea Comparison) Key Areas • GDP • Labor Force Mismatch • Economy • Population Rural & Urban • Poverty • Health of Education System in the Country • Human Development Index 2

Economic Reforms 1991 Sharp spikes & dips from 1950-90s is reduced after Economic reforms. 2.1

Source : http://mospi.nic.in/Mospi_New/upload/India_in_Figure_2013_28jun13.pdf • Compare the contributions of Service Industry to the overall GDP. • The almost negligible % of Agriculture Growth (towards GDP) in the last 5 years is alarming. • We will understand this in the next few slides, Why is it alarming? 2.1

④ Public Debt – The cumulative total of all government borrowings less repayments that is denominated in a country's home currency. It should not be confused with external debt, which reflects the foreign currency liabilities of both the private and public sector and must be financed out of foreign exchange earnings. ⑤ GDP Per Capita - GDP Per Capita on a Purchasing Power Parity basis divided by population. ⑥ GDP PPP – GDP based on Purchasing Power Parity. ⑦ GDP OER – GDP based on Official Exchange Rate ⑧ GDP RGR – Real Growth Rate - GDP growth on an annual basis adjusted for inflation and expressed as a percent $4.78 Trillion GDP PPP Public Debt 51.9% of GDP $3900per capita Income 9.9% Unemployment 6.5% GDP Growth Rate INDIA Source: CIA Web Site, USA 2.1

Compare the Labor Force distribution of US with India and China. 15% - China reduced their Agriculture labor force. 8%- China increased their Industrial Labor force compared to their 2004 figures. Now compare that with India you will get a shock! US Labor Force and GDP is proportionate. This is the case with every developed countries. Proportionate GDP and Labor Force. China is slowly catching up to that ratio. So, What’s happening with India? 2.1

90% of China’s GDP is equally distributed across Industry and Services and resulting from 65% of Labor force. 83% of India’s GDP is heavily focused on Services and resulting from 47% of Labor force. 53% of Agricultural Labor Force which accounts for 270 million people is the key for the country. 2.1

Checkout the disparity between the Labor force and GDP for Service and Agriculture. 65% of the GDP is produced by Services sector which is only 28% of Labor Force. 17% of the GDP is produced by Agriculture sector which is a whopping 53% of Labor Force. 2.1

2012 GDP Labor Agriculture 17% 53% Industry 18% 19% Services 65% 28% • To reduce the poverty and improve health we need to transfer atleast 150million from Agriculture (out of 270 million) to Industry / Manufacturing and automate & streamline (the goods transit to market) the agriculture sector. • To do that we need Good Quality Education system, skill development in sync with Industry. • Compare the growth, hardly any growth in Agriculture and checkout the Labor Force in Agriculture. • 53% Agriculture Labor Force is around 270million people. 2.1

• Agriculture accounts for nearly 17% of GDP, about 11% of exports and supports about half of the country’s population as its principal source of income. • During 2011-12 there was a record production of food grains at 259.32 million tones. • However, the Kharif production during 2012-13 declined about 5% due to late onset of monsoon and deficient rainfall in several states. • Significant improvement in rainfall during August-September 2012 has somewhat compensated by improving the prospects for Rabi crops. Central Statistics Office (CSO) Ministry of Statistics and Program Implementation India Source: http://mospi.gov.in • China beats us in every category. In Rice and Coarse Grains China and United States is far ahead of us. • The key question is how can we improve the production to 2-3 times of the current output using latest technologies (in house), and move ¾ of the Agriculture labor force into other Industries. • This will give us a huge man power in manufacturing and other Industries. In the previous slide we saw that China reduced their labor force, still they lead in Agriculture production. 2.1

Central Statistics Office (CSO) Ministry of Statistics and Program Implementation India Source: http://mospi.gov.in 2.1

 We have seen the issues with our Labor force. It’s very critical to understand that more than half of the Labor force is dependent on Agriculture and more than 500 million people is dependent on Agriculture.  Cost of the Vegetables, Rice, Wheat is going up. However, does that mean Farmers are getting rich? If the cost of iPhone or Samsung Galaxy S4 goes up, Apple and Samsung makes profit.  However over here, food prices are climbing and farmers are still in poverty! Why is that?  This is where we need to clean up our system. Just because the GDP is going up doesn’t mean that as a nation we are doing great.  To understand the problem in depth, we need to understand how the GDP has played in the Urban and Rural population. Lets have look at that in the next few slides – Population (Urban and Rural), GDP, Poverty and Education. 2.1

Population Density Source: Census India 2011 2.2

Source: IIHS 2012 Urban Area: All statutory places with a municipality, corporation, cantonment board or notified town area committee. A place satisfying the following three criteria simultaneously: A minimum population of 5000; at least 75% of male working population engaged in non-agricultural pursuits; and a density of population of at least 400 per sq. km. Census 2011. 2.2

Source: http://www.iihs.co.in/wp-content/themes/education/resources/IUC-Book.pdf India 1951 | 361 Million India 2011 | 1.21 Billion Source: IIHS 2012 • There were only 5 Indian cities with a population greater than 1 million and only 41 cities greater than 0.1 million population. • Much of India effectively lived in 0.56 million villages • So, that’s at the max 10 million people living in Urban Area. • There are 3 cities with population greater than 10 million and 53 cities with population greater 1 million. • Over 833 million Indians live in 0.64 million villages. • 377 million live in about 8000 Urban centres. 833 Million people in villages. Don’t you think the growth MUST start from the villages? 2.2

From 1950, the population went up 3.3 times, while the food grain production went up by 4.3 times. GDP went up by a whopping 20 times especially the exponential growth from 1991 onwards. Does this exponential growth in GDP resulted in accumulation of wealth in few areas or benefitted the whole country? 2.2

Source: IIHS 2012 16% of the population contributes to 41% of the GDP Rest of the 84% predominantly in agriculture produce 59% of GDP . 104 million in slums by 2017 Now is this inclusive growth? GDP Large Cities – 2013 2.2

Source: Planning Commission, 2013 We still have more poor people compared to 1951. Even with 21% poverty line in 2013 we still have 269million under poverty (216 million in 1951). 216million in Rural Area 52 million in Urban Area. Next: Education 2.2

111 Universities for USA 48for UK 25 for Germany 15for China 7for Taiwan 6for South Korea 3for India #50 Highest ranking for South Korea #226 for India Source: http://www.timeshighereducation.co.uk/world-university-rankings/2012-13/world-ranking 2.3

54 Universities for USA 30for UK 12 for Germany 12for China 11for Japan 5for South Korea 0for India #42 Highest ranking for South Korea #218 for India 0 Why no Indian Institutes in top 200? • IIT Delhi Rank #218 Are we poorer than these countries? • Taiwan - #87 • Malaysia - #167 • Mexico - #169 • Brazil - #169 • Thailand - #171 Competing neighbors • Singapore - #28 • South Korea - #42 • China - #186 Population • Singapore – 4 Million • South Korea – 50 Million • Gujarat – 60 Million • Tamil Nadu – 72 Million • Kerala – 33 Million Source: http://www.usnews.com/education/worlds-best-universities-rankings/top-400-universities-in-the-world 2.3

PISA Test 2010 India Ranks 72nd, SECOND LAST!!!! Finland • Finnish children don’t start school until they are 7 • They rarely take exams or do homework until they are well into their teens. • There is just one standardized test when the kids reach 16 • The children are not measured at all for the first 6 years of their education. Its about being ready to learn and finding your passion. • They are the topers in International test (OECD) for Math, Science and Language and India stands Second Last (72nd Rank). • Teachers are selected from the top 10% INDIA • The average 15-year-old Indian is over 200 points behind the global topper. • Comparing scores, experts estimate that an Indian eighth grader is at the level of a South Korean third grader in math abilities or a second-year student from Shanghai when it comes to reading skills. Source: Finland : http://news.bbc.co.uk/2/hi/8601207.stm 2.3

Source: Wikipedia: http://en.wikipedia.org/wiki/Trends_in_International_Mathematics_and_Science_Study We have very few universities in top 400. We are not doing good in High School Education. We rank very low in Math & Science in School. Look at South Korea, they are at the top. 2.3

Source: Wikipedia: http://en.wikipedia.org/wiki/Trends_in_International_Mathematics_and_Science_Study We have very few universities in top 400. We are not doing good in High School Education. We rank very low in Math & Science in School. Look at South Korea, they are at the top. 2.3

Rank Country % of Population with tertiary education GDP Per Capita Public spending on Education % of GDP 1 Canada 51% $39,050 6.1% 2 Israel 46% $26,531 7.2% 3 Japan 45% $33,785 5.2% 4 USA 42% $46,548 7.3% 5 New Zealand 41% $29,711 NA 6 South Korea 40% $28,797 8.0% 7 UK 38% $35,756 NA 8 Finland 38% $36,307 6.4% 9 Australia 38% $40,790 NA 10 Ireland 37% $40,478 NA Source: http://newsfeed.time.com/2012/09/27/and-the-worlds-most-educated-country-is/ http://247wallst.com/special-report/2012/09/21/the-most-educated-countries-in-the-world/3/ Source: Time & Wall St. #1 Canada spends less on GDP still no.1 #6 South Korea has a spectacular growth in Education in the last 4 decades. 120million in US has college degree, that’s the combined population of Gujarat and Karnataka. How long will it take us to reach within the top 10? • Canada is the only nation where more than half of all adults had a tertiary (college) education in 2010. This was up from 40% of the adult population in 2000, when the country also ranked as the world’s most educated. • Canada has managed to become a world leader in education without being a leader in education spending, which totaled just 6.1% of GDP in 2009, or less than the 6.3% average for the OECD. • A large amount of its spending went towards tertiary education, on which the country spent 2.5% of GDP, trailing only the United States and South Korea. • One of the few areas Canada did not perform well in was attracting international students, who made up just 6.6% of all tertiary students — lower than the OECD’s 8% average 2.3

 2nd last in the PISA high school test (2010) for Language, Science and Math.  http://www.oecd.org/pisa/46643496.pdf  http://www.acer.edu.au/media/acer-releases-results-of-pisa-2009- participant-economies/  https://timesofindia.indiatimes.com/home/education/news/Indian- students-rank-2nd-last-in-global-test/articleshow/11492508.cms  http://indianexpress.com/article/education/pisa-tests-india-to-take-part- in-global-teen-learning-test-in-2021-4537231/  Only 3 Universities in the top 400 (IIT Kharagpur, Mumbai and Delhi) as per the Ranking of Times Higher Education 2013.  http://www.timeshighereducation.co.uk/world-university-rankings/2012- 13/world-ranking 1 2 3 We can definitely do better than this…. Provided we accept that we got a sub standard education system. However, I don’t hear any politician talking about these issues. China, South Korea, Finland, Singapore leads in 2010 PISA Test ONLY ONLY LAST  Only one University (IISC, Bangalore) in the top 500 as per the Academic Ranking of World Universities 2013  http://www.shanghairanking.com/ARWU2013.html 2.3

Source: HDR 2013, UNDP India need to do a lot to catch up with medium human development. However, when we dive deep into state of states, we will find that some states HDI are at par with developed nations. Then the key is, what can we learn from those states to improve Education, Health & Societal well being. 2.4

Source: IIHS 2012 • In 2031, it is projected that there will be 6 cities with a population greater than 10 million. • In 2013, 100 large cities produce 41% of the GDP and that involves just 16% of the population. Now if you extrapolate that to 2031 what will be the scenario? 24% of the population will contribute to 65% of GDP? • Now is that really an inclusive growth? Look at the series of cities popping up in Kerala. End to end the entire state will become a big city. 2031 1951 2.4

1.21 Billion population 53% Depends on Agriculture 4.7 Trillion US$ - GDP PPP 3rd Largest Economy .554 HDI 2012 21% Below Poverty (2013) .909 HDI 2012 0.05 Billion population 1.6 Trillion US$ - GDP PPP 12th Largest Economy 6% Depends on Agriculture 16% Below Poverty (2011) In Population South Korea (50 Million) is smaller than Gujarat (60 Million), Tamil Nadu (70 Million) and Maharashtra (114 Million) . Still they have an economy 1/3 of Indian Economy! We can definitely do better than everyone, provided we understand what’s wrong with our system. ☺ I don’t think that’s rocket science!! (btw we are good with rockets!) Its time we realize our potential ! ☺ 2.4

1950 – 2013, Study based on Planning Commission, World Bank, UN Development Program 3

3.1 HUMAN DEVELOPMENT INDEX • HDI: 1980 - 2005 • MPI: 2007 • MPI: Across Hindu Caste and Tribe • HDI: 2008 3.2 EDUCATION & HEALTH • All States 2008 (HDI) • Changes in Education: 1998 – 2008 3.3 GROSS STATE DOMESTIC PRODUCT • All States: 1981 – 2013 (Planning Commission) • GSDP Growth Rate: 1981 – 2013 3.4 POVERTY • Percentage of Poor people based on various studies • Summary Key Areas • Human Development across all the states • Education • GSDP • Poverty State Population (Million) Uttar Pradesh 199 Andhra Pradesh 84 Tamil Nadu 72 Karnataka 61 Gujarat 60 Kerala 33 Punjab 27 3

Human Development Index • Human Development Index is based on averages of 3 indices in different dimensions: • Health Index • Education Index • Income Index • All the states in the country are measured on these different dimensions to measure the societal well being. Light color shows the states in good overall health (Health, Education, Income). Its interesting to note that Andhra Pradesh, Karnataka and Tamil Nadu were at par with most of the Northern states, while Gujarat is far better than these Southern states in 1980s. The entire progress in Southern states where much faster than the northern states. Kerala kept the No.1 ranking for the past 3 decades. 3.1

Source : http://planningcommission.nic.in/reports/genrep/index.php?repts=nhdcont.htm Human Development Report 1980 -1990s Planning Commission (Government of India) #1Kerala maintained the No.1 Rank from 1981 to 2001 #6 Gujarat Ranked No. 4 in 1980 and fell down to 6th Rank in 2001 #3 Tamil Nadu Improved its rank from No. 7 in 1981 to No. 3 in 2001 • Maharashtra the Business capital of India ranked No. 3 in 1981 and fell down to 4th Rank in 2001 3.1

Multidimensional Poverty across Indian States MPI Rank States Population (million) 2007 MPI Proportion of poor Average intensity Contribution to overall poverty Number of MPI poor (million) 1 Kerala 35 0.065 15.9% 40.9% 0.6% 5.6 2 Goa 1.6 0.094 21.7% 43.4% 0.0% 0.4 3 Punjab 27.1 0.120 26.2% 46.0% 1.0% 7.1 4 Himachal Pradesh 6.7 0.131 31.0% 42.3% 0.3% 2.1 5 Tamil Nadu 68 0.141 32.4% 43.6% 2.6% 22.0 6 Uttaranchal 9.6 0.189 40.3% 46.9% 0.5% 3.9 7 Maharashtra 108.7 0.193 40.1% 48.1% 6.0% 43.6 8 Haryana 24.1 0.199 41.6% 47.9% 1.3% 10.0 9 Gujarat 57.3 0.205 41.5% 49.2% 3.4% 23.8 10 Jammu and Kashmir 12.2 0.209 43.8% 47.7% 0.7% 5.4 11 Andhra Pradesh 83.9 0.211 44.7% 47.1% 5.1% 37.5 12 Karnataka 58.6 0.223 46.1% 48.3% 4.2% 27.0 13 Eastern Indian States 44.2 0.303 57.6% 52.5% 4.0% 25.5 14 West Bengal 89.5 0.317 58.3% 54.3% 8.5% 52.2 15 Orissa 40.7 0.345 64.0% 54.0% 4.3% 26.0 16 Rajasthan 65.4 0.351 64.2% 54.7% 7.0% 41.9 17 Uttar Pradesh 192.6 0.386 69.9% 55.2% 21.3% 134.7 18 Chhattisgarh 23.9 0.387 71.9% 53.9% 2.9% 17.2 19 Madhya Pradesh 70 0.389 69.5% 56.0% 8.5% 48.6 20 Jharkhand 30.5 0.463 77.0% 60.2% 4.2% 23.5 21 Bihar 95 0.499 81.4% 61.3% 13.5% 77.3 India 1,164.70 0.296 55.4% 53.5% - 645.0 15.9%MPI poor in Kerala and holds #1 rank in the MPI. 26.2% MPI poor in Punjab. 32.4% MPI Poor in Tamil Nadu 41.5% MPI Poor in Gujarat and holds #9 Rank. Source: http://www.ophi.org.uk/policy/multidimensional-poverty-index/ All States Multidimensional Poverty Index: 2007 MPI 3.1

Breakdown of Multidimensional Poverty across Hindu Castes and Tribes States MPI Percentage of MPI Poor Average Intensity Scheduled Caste 0.361 65.80% 54.80% Scheduled Tribe 0.482 81.40% 59.20% Other Backward Class 0.305 58.30% 52.30% General 0.157 33.30% 47.20% Source: http://www.ophi.org.uk/policy/multidimensional-poverty-index/ 60% of the population comprises of OBC, SC and ST. 81% are multi dimensionally poor in Bihar. 134.7million - The largest number of poor people (in India) live in Uttar Pradesh. • There are more MPI poor in eight Indian states (421 million in Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, Maharashtra, Gujarat, and West Bengal) than in the 26 poorest African countries combined (410 million). • Multidimensional poverty is lowest for Kerala. • The top five states have only 4.5% of the poor. • The five poorest states have more than 50% of the poor. 3.1

Source: Indian Human Development Report 2011, Planning Commission (GOI) Kerala’s HDI value is better than Russia 3.1

Source: Indian Human Development Report 2011, Planning Commission (GOI) • Income Index is calculated based on consumption expenditure. • Only three relatively more affluent states — Tamil Nadu, Karnataka, and Kerala have registered an improvement in the Income Index higher than the national average. • It is commendable that even in the relatively poorer states like Assam, Chhattisgarh, Orissa, Madhya Pradesh, and Uttarakhand the Education Index is above 0.5. • The north-eastern states have been good performers despite low levels of income. • With the best public health system in the country Kerala has the highest life expectancy at birth. • The demographic transition of Kerala is widely acclaimed because its mortality and fertility levels have reached those of the developed countries. 3.2

Poor States and North eastern states 75% change for Jharkhand from 1999-2008 in HDI Education Index, while 50% for Bihar & 12% for Gujarat Its surprising to see that one of the Rich state that lags in education has the least amount of changes in improving education. The poor states from North eastern part of the country did a much better job. This clearly shows you don’t need a huge economic growth to improve the education level of the people. Source: IHDR 2011, Planning Commission 3.2

#1 is Gujarat among the big states in GSDP. Other states lags way behind in terms investments when you compare them with Gujarat. #5 for Tamil Nadu. #7 for Andhra Pradesh #10for Karnataka Source: 2013 Planning Commission of India 3.3

2013 Planning Commission of India is Gujarat’s Economic Progress being reflected Societal well being? We will find that out that in the State of States! 3.3

% Studies 21.5% Planning Commission of India http://planningcommission.nic.in/news/pre_pov2307.pdf 29.0% World Bank $1.25. At PPP Rs 21.6 a day urban and Rs 14.3 rural. 37.0% Suresh Tendulkar Overall 37.2%, with 41.8% rural (below Rs 13.8 per day, Rs 446.68 per month) and 25.7% urban (Rs 578.80 per month). Expert Group on Methodology for Estimation of Poverty, Chair Prof. Suresh D. Tendulkar; http://www.planningcommission.gov.in/eg_poverty.htm 37.2% UN Development Program http://www.in.undp.org/content/india/en/home/countryinfo/ 41.0% Arjun Sengupta 41% below Rs 14.6 per day. Extremely Poor (6.4%, Rs 8.9), Poor (15.4%, Rs 11.6) Marginally Poor (19.0%, Rs 14.6). Vulnerable (36%, Rs 20) Total 77%, 836 million people, below Rs 20 per day. http://nceus.gov.in/Condition_of_workers_sep_2007.pdf 55.4% Multidimensional Poverty Index (MPI) Oxford University 3.4

4 State comparison based on - 1980 – 2000 National Human Development Report 2001 Planning Commission (GOI) - 2005 National Family Health Survey (Government of India) - 2007 Multidimensional Poverty Index (Oxford University) - 2008 Human Development Index (United Nations Development Program – UNDP) - 2011 Census data (Government of India) - 2012 NSSO data (Government of India)

4.1 NATIONAL HUMAN DEVELOPMENT REPORT: 1980 – 2001 • Gujarat Vs. Kerala : 1980 - 2001 • Other Rich States • Southern States & Other States • Summary: Gujarat Analysis HDI 1980 – 2000 4.2 NATIONAL FAMILY HEALTH SURVEY: 1990 – 2005 • Gujarat Vs. Tamil Nadu & Kerala : Health • Summary Gujarat Vs. Tamil Nadu and Kerala • Kerala Vs. Southern States & Northern States • Summary: Comparing Kerala in 1990s with Other States in 2005 4.3 MULTIDIMENSIONAL POVERTY INDEX: 2007 (OXFORD) • Gujarat Vs. Punjab & Tamil Nadu (Poverty, Education, Health, Living Standards) • Infant Mortality Rate: 1961 – 2008 • Poverty: 1973 – 2013 • Summary: Gujarat Analysis with HDI 2008 4.4 ECONOMY • Investor Friendly States & Gujarat Investments: 2003 – 2011 • Employment: 2005 – 2010 • Monthly Per Capita Expenditure • Gujarat Vs. Tamil Nadu & Kerala – GSDP • State Debt: 2002 – 2009 • Summary: Gujarat Analysis Key Areas • Human Development focusing on Gujarat, Tamil Nadu, Punjab and Kerala • Economy • GSDP • Investments • State Debt • Employment State Population (Million) Uttar Pradesh 199 Andhra Pradesh 84 Tamil Nadu 72 Karnataka 61 Gujarat 60 Kerala 33 Punjab 27 4

Check out the disparity between the Rural and the Urban areas in Gujarat. Let us see if this disparity changes after economic reforms in Gujarat! Kerala has already demonstrated that Quality of life can be improved even before the economic reforms. Most important, there is NO disparity in the development of Rural and Urban areas in Kerala. Compare 1980s and 1990s Radar of Kerala Source : http://planningcommission.nic.in/reports/genrep/index.php?repts=nhdcont.htm Scale 5 = Best Achievement 0 = Least Achievement Source: National Human Development Report 2001, Planning Commission (GOI) 4.1

Source : http://planningcommission.nic.in/reports/genrep/index.php?repts=nhdcont.htm Punjab and Haryana are two Economical well off state compared to other states in India. However, when you compare 1980s and 1990s, you will find that the focus on Education and Health care is very low. The growth of Rural and Urban population is different. Scale 5 = Best Achievement 0 = Least Achievement Source: National Human Development Report 2001, Planning Commission (GOI) 4.1

Source : http://planningcommission.nic.in/reports/genrep/index.php?repts=nhdcont.htm • Tamil Nadu and Karnataka are two Economic power house of South. • However, when you compare 1980s and 1990s, you will find that the focus on Education and Health care is very low. • The growth of Rural and Urban population is different. Scale 5 = Best Achievement 0 = Least Achievement Source: National Human Development Report 2001, Planning Commission (GOI) 4.1

Source : http://planningcommission.nic.in/reports/genrep/index.php?repts=nhdcont.htm Scale 5 = Best Achievement 0 = Least Achievement Source: National Human Development Report 2001, Planning Commission (GOI) 4.1

Source: National Human Development Report 2001, Planning Commission (GOI) #3 Tamil Nadu did a remarkable job in jumping from 7th rank in 1981 to 3rd in 2001. #1 & #2 Kerala and Punjab maintained their respective 1st and 2nd rank consistently for 2 decades. #6 Gujarat slipped two ranks from 1981. One of the remarkable achievement of Kerala is the symmetric growth of both Urban and Rural areas. While most of the other states development is happening predominantly in the Urban areas. This further increases the disparity between the rural population and the Urban population. In the next section we will focus on National Family Health Survey (Government of India) from 1990 to 2005. In Kerala rural households own private wells, however the census survey doesn’t recognize that for source of safe water. Even today (2013) when people buy land for house, the first priority is if there is water for a well. 4.1

Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Source: National Family Health Survey 2005 – Household Profile Comparison 4.2

• Comparing the data from 1991 to 2005 clearly shows that Tamil Nadu and Kerala did a far superior job in Education, Health and Living Standards. • Based on the per capita Income Punjab and Haryana is well ahead of Kerala. • However, Kerala still able to reduce poverty substantially compared to the rest of the states. • Now its time to compare the progress of Kerala with respect to other states. Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Post Reforms of 1991 – National Family Health Survey 1990 – 2005 (15 years) 4.2

Few Development Indicators to compare Kerala 1990 Gujarat 2005 Maharashtra 2005 Punjab 2005 Tamil Nadu 2005 • Health • Infant Mortality Rate 24 50 38 42 31 • Trends in Institutional Deliveries (%) 89 55 66 53 90 • Trends in Any Antenatal Care (%) 98 87 93 91 99 • Trends in Children’s Nutritional Status (in %, less is good) • Too Short for age 25 42 38 28 25 • Too thin for height 13 17 15 9 22 • Underweight 27 47 40 27 33 • Education • Literacy Rate 90 75 76 71 78 Now let us analyze the states using Multidimensional Poverty Index (developed by Oxford University), which is much more elaborate than Human Development Index. Most of the states are catching up with the standard Kerala achieved in the year 1990! 4.2

Source: http://www.ophi.org.uk/policy/multidimensional-poverty-index/ 4.3

# State % 1 Delhi 12.44 2 Kerala 12.66 5 Punjab 24.55 7 Tamil Nadu 30.46 14 Gujarat 41.04 15 Karnataka 43.20 29 Bihar 79.34 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html 4.3

# State % 1 Kerala 2.07 6 Tamil Nadu 8.74 7 Punjab 9.00 14 Gujarat 18.46 16 Karnataka 18.66 29 Bihar 53.54 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html 4.3

# State % 1 Kerala 3.54 6 Punjab 19.35 8 Tamil Nadu 29.10 15 Gujarat 35.62 17 Karnataka 39.66 29 Bihar 72.83 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html The household’s sanitation facility is not improved or it is improved but shared with other households. 4.3

# State % 1 Punjab 0.78 2 Delhi 3.31 3 Bihar 4.44 4 Tamil Nadu 5.01 5 Andhra Pradesh 6.18 9 Kerala 7.62 15 Gujarat 10.09 29 Jharkhand 41.58 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html The household does not have access to clean drinking water or clean drinking water is more than 30 minutes walk from home. Privately owned wells by most of households in rural Kerala is not accounted in Indian Census for clean drinking water. 4.3

# State % 1 Delhi 5.11 2 Kerala 12.37 6 Punjab 21.05 8 Tamil Nadu 28.68 15 Gujarat 36.12 20 Karnataka 40.04 21 Andhra Pradesh 41.61 29 Bihar 77.28 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html The household cooks with dung, wood or charcoal. 4.3

# State % 2 Delhi 1.78 3 Kerala 3.11 5 Tamil Nadu 11.91 7 Punjab 15.49 8 Karnataka 18.28 11 Andhra Pradesh 19.53 14 Gujarat 24.11 29 Bihar 68.59 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html The household has dirt, sand or dung floor. 4.3

Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html The household has no electricity. # State % 1 Delhi 0.26 4 Punjab 2.48 5 Kerala 4.34 9 Tamil Nadu 7.09 11 Karnataka 7.87 12 Andhra Pradesh 8.44 13 Gujarat 8.87 29 Bihar 64.08 4.3

# State % 1 Delhi 5.61 2 Kerala 9.58 3 Punjab 11.09 8 Tamil Nadu 23.46 14 Gujarat 28.98 15 Karnataka 30.96 16 Andhra Pradesh 34.85 29 Bihar 64.08 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html The house hold does not own more than one of: radio, TV, Telephone, bike, motorbike, or refrigerator, and does not own a car or truck. 4.3

# State % 1 Kerala 3.51 7 Punjab 9.15 8 Tamil Nadu 10.49 9 Maharashtra 13.40 15 Andhra Pradesh 15.50 16 Karnataka 16.40 17 Gujarat 17.03 28 Bihar 34.73 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html Any child has died in the family. 4.3

# State % 1 Delhi 7.64 2 Kerala 9.90 6 Punjab 15.87 7 Tamil Nadu 20.25 12 Andhra Pradesh 28.49 16 Karnataka 30.82 18 Gujarat 32.35 29 Bihar 60.23 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html Any adult or child for whom there is nutritional information is malnourished. 4.3

# State % 1 Kerala 1.30 8 Maharashtra 8.04 11 Punjab 8.25 12 Tamil Nadu 8.60 13 Gujarat 11.77 21 Rajasthan 20.62 29 Bihar 34.86 Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html No household member has completed five years of schooling. 4.3

Source : http://www.ophi.org.uk/wp-content/uploads/MPI2013/India/web/StatPlanet.html Any school aged child is not attending school in years 1 to 8. # State % 1 Kerala 2.36 2 Tamil Nadu 3.58 7 Punjab 10.35 8 Maharashtra 10.57 10 Gujarat 11.40 11 Andhra Pradesh 12.10 12 Karnataka 15.00 29 Bihar 42.86 4.3

1961 to 2008 : Economic Survey 2009-10 76.92% Kerala reduced (the Infant Mortality Rate) in the last 47 years. 54.65% by Tamil Nadu 40.47% by Gujarat To reduce the infant mortality rate what we require is a good health care system especially for the rural area. Now how do you define inclusive growth if you don’t have good health care system? 4.3

80.83% of poverty is reduced by Andhra Pradesh in the last 40 years compare to 65.41%for Gujarat and 79.49% for Tamil Nadu 88.33% for Kerala One factor which is consistent in these stats is the performance of Tamil Nadu & Kerala over Gujarat, you need to compare this with the heavy investments happened & still happening in Gujarat. What’s happening to those investments? Is it NOT translating into improving the basic necessities for the poor people? 4.3

Source: Planning Commission – 1973 – 2012 (40 Years of development) 4.3

21.92% people under poverty in India. There is a controversy surrounding this % saying it should be more. That ONLY makes Gujarat’s Growth Model case even worse. 16.63% of people in Gujarat is under poverty resulting in 102.23 lakhs of people. 7.05% of people in Kerala under poverty resulting in 23.95 lakh people. 3 times more poor people in rural area compare to Gujarat’s Urban population. Which means Growth is not trickling down to the Rural population. 4.3

Source: Indian Human Development Report 2011 Planning Commission, Government of India & Oxford University #1Kerala continued the No.1 position from 1980s. Punjab and Tamil Nadu consistently performed far better than Gujarat. #5Punjab #8Tamil Nadu #11Gujarat moved down 7places and ranked No. 11 in 2008 compared to 1981 (Rank No. 4) How do you explain this drop (7 places) in rankings for Gujarat? What caused it? 4.3

Source: Assocham, 2009 #1 Gujarat consistently topped the investment chart for more than two decades. Punjab is in the worst performers list in terms Investment plans of India Inc. Except Kerala all the other 3 states (from South) are in the front runner for investments. 4.4

Source: Socio Economic Review 2011-12, Government of Gujarat http://gujecostat.gujarat.gov.in/wp-content/uploads/Publication/ser1112e.pdf # Vibrant Gujarat Global Investors meet Projects Proposed Implemented Under Implementation MOU’s Signed / Announced No. of project Investment Rs. In Crores No. of Project Investment Rs. In Crores No. of Project Investment Rs. In Crores 1 2011 8380 8380 2,083,047.30 248 29,813.58 659 249,054.78 2 2009 8660 8888 1,239,562.00 1342 104,590.45 872 281,620.41 3 2007 363 454 465,309.80 160 107,897.34 152 184,245.06 4 2005 226 227 106,160.41 115 37,939.94 22 27,931.80 5 2003 76 80 66,086.50 42 37,746.00 5 10,710.00 Total 17705 18029 3,960,166.01 1907 317,987.31 1710 753,562.05 • That’s a total of Rs. 1,071,549.36 crore from 2003 to 2011. Far more than any other state achieved in the last 10 years. • When will the we see the fruits of all these investments? • Now, if these investments in the last 9 years is atleast 50% (definitely more than that) more than a state in comparable population size, shouldn’t we see a drastic rise in employment? So, Lets look at the employment scenario in 2005 to 2010. 4.4

Isn’t it surprising (or shocking), after all the pro growth investments and marketing blitz Gujarat lags in employment! Source: Census 2013 4.4

Why is Gujarat at the bottom? Where is the inclusive Growth? Years (1991-2012) of Pro Growth Economic Reforms in Gujarat. 21 4.4

2013 Planning Commission of India • Comparison of Growth between Gujarat, Tamil Nadu & Kerala clearly shows Gujarat had a better growth rate compared to Tamil Nadu & Kerala for the last 32 years. • However, on societal well being Gujarat lags far behind Kerala & Tamil Nadu and most of the other states. • So, as per Jagdish Bhagwati, if blind growth improves everything, then how do we explain the Education, Health & Living Standards disparity of Gujarat with others states? 4.4

States 2002-03 2003-04 2004-05 2005-06 2006-07 RE 2006-07 Pre-Act. 2007-08 RE 2008-09 BE 1. Andhra Pradesh 54831 64550 74288 79549 87474 86622 96126 105918 2. Arunachal Pradesh 1267 1525 1778 2488 2668 2336 2733 3049 3. Assam 13759 15089 17545 18628 20171 19853 21187 22405 4. Bihar* 35249 37453 42484 46495 50476 49089 51395 54669 5. Chattisgarh 8910 11144 12227 13273 14404 14113 15644 17506 6. Goa 3335 3838 4350 5018 5707 5694 6371 7170 7. Gujarat 52572 62876 71083 81367 87686 87971 94591 101482 8. Haryana 19227 22194 24255 27023 28433 28616 29477 31932 9. Himachal Pradesh 12393 14437 16533 17432 18710 18071 19426 21358 10. Jammu & Kashmir 12269 13027 14188 16790 18221 18591 21150 NA 11. Jharkhand 8923 10569 13512 17360 22000 19019 23073 24606 12. Karnataka 37234 41967 46940 52236 56472 57278 60182 67142 13. Kerala 33777 39227 43692 47832 54950 52161 58499 64638 14. Madhya Pradesh* 29993 37772 44235 49150 53326 53280 58001 62864 15. Maharashtra 85209 103419 119725 140673 155222 154522 156957 171663 16. Manipur 2225 2300 3082 3905 4050 4187 4345 4586 17. Meghalaya 1827 1952 2173 2566 2788 2762 2914 3107 18. Mizoram 2090 2389 2711 2953 3229 3096 3027 3201 19. Nagaland 2708 2515 2802 3174 3542 3557 3858 4048 20. Orissa 30735 34014 36093 38468 39531 39466 40483 43330 21. Punjab 38315 43197 47403 51364 55294 51035 55717 60150 22. Rajasthan 45871 53361 60134 66407 71039 71146 77089 82858 23. Sikkim 888 966 1107 1351 1551 1484 1750 2125 24. Tamil Nadu 43915 49445 55144 62310 67491 66095 73098 83144 25. Tripura 3156 3590 4181 4418 4669 4605 NA NA 26. Uttar Pradesh* 102485 119240 131401 131239 143997 144528 153682 168035 27. Uttarakhand 6003 8030 9909 11714 12824 13034 14430 15482 28. West Bengal 77543 89388 104334 112386 121753 120892 131897 143716 All States 766707 889476 1007311 1107569 1207678 1193102 1277101 1370182 Even after improving the Education and Health, Tamil Nadu’s debt is far below Gujarat. Tamil Nadu has 10 million more in population compare to Gujarat. So, What exactly is happening in Gujarat? • High GDP • High Debt • Poor in Education • Poor in Health Care • Poor in Living Standards Source: Ministry of Finance (GOI) 4.4

Source: Ministry of Finance (GOI) #1 Maharashtra has the highest debt #2 Uttar Pradesh #3 West Bengal #4 Andhra Pradesh #5Gujarat in debt Tamil Nadu did well in Education, Health and improving Living standards and still has a lower debt compare to Gujarat. Kerala has the highest per person debt among the big states. Per Person debt is: State Debt divided by the population of the State. 4.4

• Tamil Nadu state government has taken strong measures to ensure the effectiveness of the public health system and its health policies. • The Dravidian movement, which began in Tamil Nadu, aimed at providing opportunities to all, irrespective of the caste. With the dual objective of educating all and eradicating superstition, the movement proved to be one of the biggest achievements of the state government. • This was one of the main reasons for higher enrolment rates for SC and OBC children in the state. Thus, the real explanation for the better than average health, education, and nutritional status of the populace lies in the social movements and technical interventions initiated by the Government of Tamil Nadu. • The Dravidian movement in the state provided socio-political and cultural space for even the deprived sections, making the process of development more inclusive. (Mehrotra 2006 / Page 30 IHDR 2011, Planning Commission) 4.4

• What are the reasons for Kerala’s High standard of Living? • What happened to the Investments in Gujarat post 1990 reforms? • What kind of Economic Model should we follow? • Do we understand Economic Crisis in US in 1929 and 2008? • How do we address the Inequality in a growing Economy? • Should we follow Free market capitalism or Pro Poor Pro Growth Economy ? 4.4

• The enactment of the Constitutional 73rd Amendment Bill, 1992 has paved the way for the creation of statutory institutional structures for realizing the goals of self- governance under the Panchayath Raj system. • The explicit objective of this initiative for democratic decentralization of governance is to accelerate the socio-economic development of the rural areas within a participatory framework at the grass-root level. • The amendment has given statutory recognition to a three-tier system of governance with • Panchayath Raj Institutions (PRIs) at the District (Zilla Parishad) • Intermediary (Mandal Panchayats) • Village levels (Gram Sabha / Panchayats). 4.4

4.4

It’s not just Kerala which went beyond Gujarat, Punjab and Tamil Nadu were far ahead of Gujarat apart from that, other states also went beyond Gujarat in improving the quality of people’s life. MortalityRate is very High in Madhya Pradesh and Uttar Pradesh. GDPshows good for Maharashtra and Gujarat. Education & Health Tamil Nadu, Kerala, Punjab and surprisingly even the poor North Eastern states also did a better job compared to Gujarat. Even in the post reform period of 21 years Kerala (and other states) went far beyond Gujarat in the following areas • Education, Health care, Living Standards So, What is this Angel like Gujarat model of Economy? It’s time we look for different models of Economy, like mixed economy, free market capitalism, welfare based Economy. 4.4

• Mixed Economy • Welfare state • Neoliberalism • Laissez-faire • Income Inequality in USA • Taxation in USA • Comparing Human Development Approach Vs. Neoliberalism 5

5.1 ECONOMIC MODELS • Neoliberalism and Laissez-faire • Mixed Economy and Welfare States • Human Development Approach Vs. Neoliberalism 5.2 INEQUALITY • Income Inequality of USA • Taxation in USA • Summary on Economic Models 5.3 CONCLUSION • Issues we need to work on • Summary on Indian State Analysis • Highlighting the Key Issues Key Areas • Economic Models • Income Inequality • Issues the country is facing today. 5 Source: https://www.youtube.com/watch?v=myH3gg5o0t0

In political theory, or political philosophy, John Locke refuted the theory of the divine right of kings and argued that all persons are endowed with natural rights to life, liberty, and property and that rulers who fail to protect those rights may be removed by the people, by force if necessary. Much of what he advocated in the realm of politics was accepted in England after the Glorious Revolution of 1688–89 and in the United States after the country’s declaration of independence in 1776. Aug 29, 1632 – Oct 28, 1704 Source: https://www.britannica.com/biography/John-Locke

Understanding Deficit Spending The concept of deficit spending as economic stimulus is typically credited to the liberal British economist John Maynard Keynes. In his 1936 book The General Theory of Employment, Interest and Employment, Keynes argued that during a recession or depression, a decline in consumer spending could be balanced by an increase in government spending. Source: Sarwat Jahan, Ahmed Saber Mahmud, Chris Papageorgiou. "What Is Keynesian Economics?" Pages 53-54. International Monetary Fund, Finance & Development, September 2014. Embedded Liberalism – The Great Transformation – karl Polanyi

1. Society of rational individuals seeking to maximize their own utility. 2. Competition primary driver in human affairs. 3. Success of a nation = S of individuals utility (GDP) 4. Proper role of Government: Establish and Protech Free Markets Source: https://www.youtube.com/watch?v=2rbp6DMclMQ

 An Economic Philosophy emerged among European scholars in the 1930s as the third or middle way between the conflicting philosophies of classical liberalism and collectivist central planning.  As a policy framework, it’s a major shift from Keynesian welfarism towards a political agenda favoring the relatively unfettered operation of markets.  Neoliberalism suggests that governments reduce deficit spending, limit subsidies, reform tax law to broaden the tax base, remove fixed exchange rates, open up markets to trade by limiting protectionism, privatize state-run businesses, allow private property and back deregulation.  US, UK, Australia, New Zealand ▪ An Economic philosophy which creates an economic environment in which transactions between private parties are free from government restrictions, tariffs and subsidies with only enough restrictions to protect property rights. ▪ The phrase laissez-faire is French & literally meaning “let (them) do”, but it broadly implies “let it be”. ▪ The doctrine of Laissez-faire became an integral part of 19th century European liberalism. ▪ The most notable critics of Laissez- faire are Adam Smith, John Maynard Keynes (Keynesian Welfarism) Friedrich Hayek. ▪ This led to the depression and to the world wars & gave rise to Keynesian Welfarism. Stagnation of Economy in the 1970s gave rise to Neoliberalism (Regan in US and Thatcher in UK). Neoliberalism Laissez-faire / Classic Liberalism The single most comprehensive counter argument to both neoliberalism and laissez-faire theories by Nobel (2001) Laureate Joseph E Stiglitz. 6 generations of Walton family’s wealth is more than the combined wealth of bottom 40% of Americans. 5.1

 Means of production mainly under Private Ownership  Profit-seeking enterprises and the accumulation of capital remain the fundamental driving force behind economic activity.  Unlike a free-market economy, the government would wield considerable indirect influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism's tendency toward financial crises and unemployment.  Government will play a key role in social welfare.  Japan  Government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens.  The welfare state is funded through redistributionist taxation and is often referred to as a type of "mixed economy”. Such taxation usually includes a larger income tax for people with higher incomes, called a progressive tax.  It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life.  The welfare state involves a transfer of funds from the state, to the services provided (i.e., healthcare, education) as well as directly to individuals ("benefits").  Iceland, Sweden, Norway, Denmark, Finland 5.1

Human Development Neoliberalism Basic Needs Philosophical Underpinnings Normative assumptions Explicit Implicit Not fully specified Concept of Well-being Functioning's & Capabilities Utility Meeting basic needs Evaluative Aspect Leading criterion for evaluating development progress Human capabilities, equality of outcome, fairness and justice in institutional arrangements Economic well-being, economic growth, efficiency Poverty reduction in terms of income, access to basic social services Measurement tools favored Human outcomes, deprivational and distributional measures Economic activity and condition, averages and aggregate measures Access to material means, derivational measures Agency Aspect People in development as ends and/or means Ends: Beneficiaries Means: Agents Means: Human resources for economic activity Ends: Beneficiaries Mobilizing Agency Individual action and collective action Individual action Concern with political will and political base Development Strategy Key Operational Goals Expanding People’s choices (Social, Economic, Political) Economic growth Expanding basic social activities Distribution of benefits and costs Emphasis on equality and on the human rights of all individuals Concern with poverty Concern with poverty Links between development and human rights and freedom Human rights and freedom have intrinsic value and are development objectives. Current research on their instrumental role through links to economic and social progress No explicit connection. Current search for a link between political and civil freedoms and economic growth No Explicit connection Source: The Human Development Paradigm: Operationalizing Sen’s ideas on Capabilities By Sakiko Fakuda-Parr 5.1

#1 Norway ranks no.1 in Human Development Index and has the lowest Income Inequality in the world. Capital gain taxation in US is reduced in the last 30 years starting from 1970s. Capital gain taxation in India is one of the lowest in the world. 5.2

Low capital gain taxation results in Rich getting richer and poor remains poor generations after generations. $1.9 trillion – Wealth of world’s 100 richest people. Just a little less than the entire output of the UK. (Guardian, UK) 5.2

 We need to have a model where lot of emphasis is given on Good Quality affordable Education and Health Care system.  To build a nation we need an Educated and a healthy society.  After analyzing different models, what looks more promising is the model where: ▪ Human Development has the highest value. ▪ Participation of citizens in decision making process – Decentralization. ▪ All these points to a Pro Poor, Pro Growth Economy! 5.2

Key Areas • ZERO Corruption • Economic growth will stagnate without good Governance and streamlining the regulations. • We need more Ph.D.'s coming out of our Universities. • We can use technology (invented by us) to streamline and solve lot of issues across the country. For that research is the mantra. 1 GOOD GOVERNANCE • Effective delivery system • Transparency and Accountability • Implement Lokpal Bill without pruning it to benefit the ruling class • Implement Decentralization (Panchayat Raj) PROBLEMS • Accountability of the Politicians – there is no link between the votes and services (such as Quality Education, Health Care system, Infrastructure etc.) expected out of the political class. • Majority of the citizens don’t fight for better services. Organizational capabilities of citizens in Kerala is an exemption to this. • The role of the state is blurred in most cases in tune with services rendered and as a service provided. 2 EDUCATION • Affordable Good Quality Primary Education is a fundamental right • Increase Quantity and Quality of the Universities with good focus on research PROBLEMS • Today Primary Schooling (12yrs) is all about Quantity instead of Quality. Conceptual learning is more important and more choice for students to opt for the subjects they like. • Professional colleges are all about Engineering or Medicine and without any research focus. • For students to be interested in research, we need to have more research based study even in Primary Schools (Projects). 5.3

Key Areas • ZERO Corruption • Economic growth will stagnate without good Governance and streamlining the regulations. • We need to have more Ph.D’s coming out of our Universities. • We can use technology (invented by us) to streamline and solve lot of issues across the country. For that research is the mantra. 3 HEALTH CARE SYSTEM • Affordable Health Care for all PROBLEMS • Overall India Health Index if far below even compared to African countries. 4 AGRICULTURE SECTOR • Automate and streamline the agriculture sector • Increase production and we should strive for a major exporter of food products. PROBLEMS • 53% of the population depends on Agriculture for their livelihood. • Goods movements from Farmers to Families must be completely streamlined. Today middlemen decides the price and controls the supply chain, which is inefficient and increase the cost of production. 5 ENVIRONMENT • We need to protect our Environment PROBLEMS • Lack of awareness of Environmental issues among the common public. An exception to this will be Kerala (where it goes overboard sometimes). • Today environmental issues are ONLY brought up by intellectuals. 5.3

Key Areas • ZERO Corruption • Economic growth will stagnate without good Governance and streamlining the regulations. • We need to have more Ph.D’s coming out of our Universities. • We can use technology (invented by us) to streamline and solve lot of issues across the country. For that research is the mantra. 6 INFRASTRUCTURE • Need excellent Road Network, High Speed trains across major and minor metros, Metro Network for city commute • Easy access to Quality Electricity, Drinking water and Cooking gas • Plan for the future. PROBLEMS • Delays in Understanding the problem (itself), to design and implementation. • By the time the solution is ready, it is not enough to solve the problem as the intensity of the problem has gone up exponentially. 7 ECONOMY • Credible Fiscal Policy (by not denying the rights of the poor people) • Increase trade with neighbors and focus on exports • Economic growth should start from villages • Create an Investment Environment suitable for each state. • We need to be a Agriculture, Manufacturing and export power house for atleast two decades. PROBLEMS • Lack of focus in Agriculture and Industrial sectors • Corruption and bad governance is destroying our capability to extract the best out of the natural resources (E.g., Coal). Even we import Coal from Indonesia. • Always on firefighting mode rather than planning ahead of the curve. 5.3

• Punjab, Tamil Nadu, Himachal Pradesh etc., done exceedingly well compared to Gujarat. • North Eastern States (excluding Assam) has done a tremendous job in Education and improved the standard of living. These states are considered poor. • Stats, policies like Land Reforms Act, Decentralization (Panchayath Raj) and other factors shows that Kerala went with Pro Poor Pro Growth Economic strategy where emphasis on Human Development (approach) was at the top along with Economic growth compared to a Pro Growth Economic strategy. • Most of the East Asian countries like Japan, South Korea, Taiwan all went with Pro Poor Pro Growth Strategy. • ZERO Corruption + Lokpal Bill • Good Quality & affordable Education • Skill development in sync with Industry requirements • Affordable Health Care System • Improving Living Standards • Automating & Streamlining the Agriculture segment (goods transit to market) • Investment friendly environment based on socio-geographical background of the state. What we need: • Question we need to ask (especially when we have the largest population in the world under poverty) is: • What kind of economic model should we follow? – You be the judge! ☺ 53% Depends on Agriculture 4.7 Trillion US$ - GDP PPP 3rd Largest Economy .554 HDI 2012 21% Below Poverty (2013) 5.3

Labor force – 500 Million 1.21 Billion Pro Poor, Pro Growth Economy OR Pro Growth Economy Your decision matters Automation and Skill development for 120 Million in Agriculture Sector 150 Million Labor force in Agriculture Sector need to be transferred to Industry and they need skill development for Industry Sector 5.3

Population Density Work in progress 6

6.1 Understanding Kerala’s Socio Economic Background • India’s Caste System • Constraints on the Lower Castes in Kerala • Understanding the Class Structure in Kerala • Fight against discrimination and Untouchability : 1850 – 1950 • Literacy in Kerala – Cochin and Travancore 1901 – 2011 • Quality of Life Indicators – 1980s • Basic Services in villages – 1970s 6.2 KERALA DEVELOPMENT MODEL • Land Reforms Act • Decentralization • Focus on Social Welfare 6.3 CHALLENGES AHEAD • Focus on Economic Development • How Global Economy affects Kerala Key Areas • Understanding Kerala’s Socio Economic scenario prior to Independence • Kerala Development Model • Challenges Ahead 6

6.1  Caste System determines ▪ Whom you can marry ▪ What kind of work you do ▪ What religious rituals you can perform ▪ Which God(s) you worship ▪ To which people you owe special duties ▪ How others will treat you and think of you ▪ Even how your body will be dealt with after death  The Untouchables ▪ Lived in extreme poverty ▪ They had no political rights ▪ Were considered disgusting and immoral in their behavior by the higher castes  Kerala ▪ Kerala had the most elaborate and rigid caste system compared to all regions in India ▪ Swami Vivekananda in the 19th Century called Kerala “a mad house of caste” ▪ Enforcement of caste privileges went further than anywhere else in India. Major Functions • Sort people into wealth and status in a highly unequal way. • Provide social and religious justification for inequality.

Caste Rules for the Avarna Class They were tied or bonded to particular high castes households for whom they were always on call as laborers or servants. They lived on land owned by the master households and could be evicted at will if they displease them. The were forbidden entry into the main Hindu temples They were not allowed to bathe in the temple ponds. They were not allowed in the public markets. They were not allowed to put gate houses at the entrance to their plots. They were not allowed to have tile roofs on their houses. Neither men nor women were allowed to wear shirts, blouses or a covering cloth above the waist. They were forbidden to come physically within the prescribed distances of higher caste members and could be punished by death for violating this taboo. This “distance pollution” was more developed in Kerala than in any other part of India. They had to use extremely self-debasing forms of speech when talking to members of castes above them. They could not take water from wells belonging to other castes. 6.1 These data on traditional caste behaviors were derived from Fuller 1976, Krishna Iyer 1909, Mathew 1986, Mencher 1980 and Unni 1959. Source: Kerala: Development through radical reforms by Richard W Franke, Barbara H Chasin, Page 93 Redistribution as a Development Strategy in Nadur village, Kerala By Richard W Franke, Page 71 These issues persisted even after Indian independence and Kerala formation in 1957. However, consistent protests by the public & some outstanding leaders fought against these caste atrocities and eliminated these discriminations. Caste In ft. Mukkuvan & Kammalan 24 Ezhavas 32 Pulayas 64 Nayadis 72 Source: Mencher 1965:167, Fuller 1976:35

Source: Kerala development through radical reforms by Richard W Franke, Barbara H Chasin – Page 91 Percent of population data (1968) as estimated in the Kerala government sponsored Nettoor commission. The 4% not accounted for above are various other castes. Caste Categories Occupation Kerala Names Population % 1968 Brahmins Priests, Landlords Nambhudhiris Tamil Brahmins 2.00 Kshatriyas Soldiers, Administrators Upper Nairs 2.00 Vaisyas Artisans, Traders Kammalan 7.00 Christians 21.00 Muslims 19.00 Sudras Cultivators, Servants Coconut Tree Climbers Lower Nairs 14.00 Ezhavas 22.00 Untouchable s Farm and menial workers Pulayas Cherumas 8.00 Tribal people Farmers, workers 1.00 Avarna Class Savarna Class 45% 50% were considered as Avarna class 40% comprises of Christians and Muslims where mostly traders and artisans 5% population held majority of the land. 6.1 • We need to look at the Educational and Health care achievements of Kerala with this caste backdrop to understand exactly how bad was the situation in the first half of the 20th century. • Jagdish Bhagwati in his book “Why Growth Matters” says Kerala had a head start in 1950s on Education. However, he does not mention that, from 1901 to 1950s Kerala’s socio background was worst in the country and in 1901 Kerala was at par with India and rest of the states on Literacy.

6.1 The Shannar revolt refers to incidents surrounding the rebellion by Nadar climber women asserting their right to wear upper-body clothes against the caste restrictions sanctioned by the Travancore kingdom, a part of present-day Kerala, India. In Travancore, Cochin and Malabar, no female was allowed to cover their upper part of the body in front of Upper castes of Kerala until the 19th century. Under the support of Ayya Vaikundar, some communities fought for their right to wear upper clothes and the upper class resorted to attacking them in 1818. In 1819, the Rani of Travancore announced that the lower castes including the Nadar climber women have no right to wear upper clothes like lower non-Brahmin castes of Kerala. Violence against Nadar climber women who revolted against this continued and reached its peak in 1858 across the kingdom, notably in southern taluks of Neyyattinkara and Neyyur. On 26 July 1859, under pressure from the Madras Governor, the king of Travancore issued a proclamation announcing the right of Nadar climber women to wear upper clothes but on condition that they should not imitate the style of clothing worn by upper class women. References A Survey of Kerala History, p 314, By A Sreedhara Menon The Nadars of Tamil Nadu, By Robert Hardgrave The Spirituality of Basic Ecclesial Communities in the Socio-religious context of Trivandrum/Kerala, India, Silvester Ponnumuthan, p 108–110

6.1 Ayyankali 1863-1941 Sri Narayana Guru 1854-1928 Chattambi Swamikal 1853-1924 EMS Nambhoodhiripad 1909-1998 • A Hindu Sage and a social reformer. • He denounced the orthodox interpretation of Hindu texts citing sources from Vedas. • Along with Sri Narayana Guru, strived to reform the heavily ritualistic and caste ridden Hindu society of the late 19th century Kerala. • He believed that different religions are different paths leading to the same place. Swamikal • Born in an Ezhava family, at that time considered as Avarna. • Led reform movement in Kerala, revolted against casteism and worked on propagating new values of freedom in spirituality and of social equality. • He stressed the need for spiritual and social upliftment of the downtrodden by their own efforts through educational institutions. Narayana Guru • A Dalit & leader, pioneered many reforms to improve the lives of the Dalit's. • In 1937 Mahatma Gandhi praised him when he visited Venganoor, Ayyankali’s hometown. • Dalits were not allowed to walk along public roads, and Dalit women were not allowed to cover their breasts in public. Ayyankali organized Dalits against these discriminations. • He was in forefront of movements against Manusmrithi color system and casteism. • He passed through the public roads (Venganoor) on a Bullock cart which was not allowed. • He demanded right for Children to study in school. Ayyankali • Born to aristocratic upper caste Brahmin family, was the leader of the first democratically elected communist government in the world (1957 Kerala Chief Minister). • He fought for the rights of the downtrodden and pioneered the Land Reforms and Educational reforms in the state, which is followed in other states after 60 years. EMS 100years of fight against caste discrimination. 1st democratically elected communist government in the world. Kerala Velur Lakshmikutty Amma (1911-2013). At the forefront of the agitation in 1952 at Velur in the district where landlords traditionally insisted that women of lower caste should participate in 'Vela' (a festival) at a temple without their chests covered.

Year Kerala % India % General Literacy 1901 11.00 5.00 General Literacy 1951 47.18 18.13 General Literacy 1971 69.75 34.45 General Literacy 1981 75.00 47.00 • Rural Literacy 1981 69.00 30.00 • Female Literacy 1981 66.00 25.00 • SC Literacy 1981 56.00 21.00 General Literacy 1991 89.86 52.21 General Literacy 2001 90.36 64.84 General Literacy 2011 93.91 74.04 6.1 One of the fundamental principles of Capability Approach is defining equality and freedom. Some Historian says Aristocrat rulers of Travancore and Cochin started the Education initiatives in the late 1880s. However, how can that be objectively succeed, when you have the worst form of caste atrocities drenched deep inside the society? Do you expect teenage girls from Avarna Class will go to a school without having an upper body cloth? Source: Census (GOI)

6.1 Indicator Kerala India Percent Literate (all ages) • Males 75 47 • Females 66 25 • Urban 76 57 • Rural 69 30 • Lower Caste 56 21 • Tribal Groups 32 16 Life Expectancy in Years • Male 64 57 • Female 68 56 • Infant Mortality Rate (per 1000) • Urban 34 65 • Rural 41 124 Physical Quality of Life Indicators: 1981-82 Distribution Across various social groups. Source: Redistribution as a development Strategy in Nadur Village, Kerala, By Richard W Franke, Page 4 There is hardly any disparity between Rural and Urban areas in Kerala. The whole Kerala is developing rather than the city focused development model in the rest of the country. The line between Rural and Urban division is vanishing in Kerala

Feature Rank Kerala India Within 2 Kilometers • All weather roads 1 98 46 • Bus Stops 1 98 40 • Post Offices 1 100 53 • Primary Schools 1 100 90 • Secondary Schools 1 99 44 • Fair Price (Ration) Shops 1 99 35 • Health Dispensaries 1 91 25 • Health Centers 1 47 12 Within 5 Kilometers • Higher Education Facilities 1 97 21 • Hospitals 1 78 35 • Fertilizer depots 1 93 44 • Water Pump Repair Shops 1 65 19 • Veterinary Dispensaries 1 82 45 • Credit Cooperative Banks 1 96 61 • Other Banks 1 96 40 • Seed Stores 2 63 40 • Storage Warehouses 4 34 21 • Railway Stations 8 23 18 In the Villages • Drinking Water 5 96 93 • Electricity 5 97 33 Source: Kannan 1988:18-21, based on surveys of the Government of India, Central Statistical Organization Even before the reforms of 1990s Kerala was able to establish a good governance and improve the basic services of the citizens. This clearly shows that even with moderate growth rate a state can drastically improve the quality of life. 6.1

SDG3 – Good Health and Well being #1 #2 #14 #3

Kerala Karnataka Tamil Nadu Andhra Pradesh

Now its time for everyone to go through the references section. You will find some awesome books, good videos on various topics by top Professors across the world. I cannot teach anybody anything, I can only make them think. - Socrates

7.1  World Bank ▪ Data : http://data.worldbank.org/ ▪ India : http://data.worldbank.org/country/india ▪ World Map : http://datatopics.worldbank.org/hnp/HNP_Map/DVMap.html  University of Oxford – Multidimensional Poverty Index ▪ Home : http://www.ophi.org.uk/policy/multidimensional-poverty-index/ ▪ Indian States Map – http://www.ophi.org.uk/wp- content/uploads/MPI2013/India/web/StatPlanet.html ▪ Understanding MPI : http://www.ophi.org.uk/wp-content/uploads/ophi-wp38.pdf?7ff332 ▪ MPI Formula : http://www.ophi.org.uk/wp-content/uploads/MPI_2011_Methodology_Note_4-11- 2011_1500.pdf?7ff332  United Nations Development Program ▪ Data : http://hdr.undp.org/en/statistics/ ▪ World Map : http://hdr.undp.org/en/data/map/ ▪ India : http://www.in.undp.org/content/india/en/home/countryinfo/ ▪ HDI Calculator: http://hdr.undp.org/en/statistics/data/calculator/  OECD ▪ http://www.oecd.org/economy/indiaeconomicforecastsummary.htm  Government of India ▪ Ministry of Statistics and Programme Implementation: http://mospi.nic.in/Mospi_New/site/home.aspx ▪ NSSO – http://mospi.nic.in/Mospi_New/upload/KI-68th-HCE.pdf ▪ Planning Commission of India – http://planningcommission.nic.in/index.php ▪ Planning Commission of India – http://planningcommission.nic.in/plans/stateplan/sdr_pdf/shdr_kerala05.pdf ▪ Planning Commission of India – http://planningcommission.nic.in/data/datatable/0904/tab_169.pdf ▪ Census India – http://censusindia.gov.in/ | http://www.censusindia.gov.in/2011census/hlo/pca/pca_data.html ▪ Census India – http://www.censusindia.gov.in/2011-prov-results/prov_results_paper1_india.html ▪ Data Portal – http://data.gov.in/ ▪ Reserve Bank of India – http://www.rbi.org.in/home.aspx ▪ Literacy Rate : 1950 – 2001 : http://data.gov.in/dataset/state-wise-literacy-rates-1951-2001 ▪ http://cpsindia.org/dl/religious/ppt-eng.pdf ▪ Assocham: http://www.assocham.org/arb/aim/Investment_StudyJan09-Dec09.pdf

7.1  Gujarat Government ▪ http://gujaratindia.com/ ▪ http://gujaratindia.com/state-profile/socio-eco-review.htm ▪ Census India : http://censusgujarat.gov.in/Census2001Data.htm ▪ Census India : http://www.censusindia.gov.in/2011census/hlo/District_Tables/HLO_Distt_Table_Gujarat.ht ml  Kerala Government ▪ http://www.spb.kerala.gov.in/images/pdf/er12/index.html ▪ http://www.kerala.gov.in/index.php?option=com_content&view=article&id=2853&Itemid=2 559 ▪ http://www.spb.kerala.gov.in/images/pdf/er12/Chapter3/chapter03.html ▪ Stats : http://www.spb.kerala.gov.in/old/html/eco_2008/2008_ap_11.1,2.pdf ▪ Stats : http://spb.kerala.gov.in/~spbuser/images/pdf/er2011/pdf/Chapter14.pdf ▪ NSSO : http://www.ecostat.kerala.gov.in/index.php/national-sample-survey.html ▪ NSSO : http://www.ecostat.kerala.gov.in/docs/pdf/reports/nss/nss64.pdf ▪ NSSO : http://www.ecostat.kerala.gov.in/docs/pdf/reports/nss/nss65%20housing%20condtion.pdf

Capability Approach Human Development Report On GDP and Societal Well being Health, Education & Food 7.2 http://www.youtube.com/watch?v=QUaJMNtW6G A • Prof. Amartya Sen on Health, Education, Food and Water • Joseph E Stiglitz on GDP • Dr. Jeni Klugman on Human Development Report • Prof. Martha Nussbaum (Harvard University) on GDP and Capabilities Approach & Kerala Development. http://www.youtube.com/watch?v=TxuuWbrwLuc http://www.youtube.com/watch?v=AoD-cjduM40 http://www.youtube.com/watch?v=cV-xMg5qzh4

Authors: • Amartya Sen • John Rawls • Joseph E Stiglitz • Richard W Franke • Arundhati Roy • Martha Nussbaum • EMS Nambhoodhiripad • John Kenneth Galbraith 7.3

GDP – Gross Domestic Product is the standard way of measuring the economic progress of a country, in the case of state it is known as GSDP – Gross State Domestic Product. However, as per most of the economists GDP doesn’t reflect the well being of the society - Nobel Prize-winning economist Joseph Stiglitz clearly articulates this in his articles and speech. GDP is the economic indicator, which measures the country’s total output, which includes everything produced by all the people and all the companies in the country. The components of GDP are Standard formula: GDP = C + I + G + (X-M) 7.4 GDP C + I + G + (X-M) C Personal consumption expenditures I Business Investments G Government Spending NX Net Exports (X-M), X = Exports, M = Imports

7.4 Product Spices Value Rs. 1440 Price Rs. 120 Kg Quantity Value / Price = 12 Value 2 Rs. 1200 Product Spices Value Rs. 1000 Price Rs. 100 Kg Quantity Value / Price = 10 Value 2 NA Product Rubber Value Rs. 2000 Price Rs. 200 Kg Quantity Value / Price = 10 Value 2 NA Product Rubber Value Rs. 2860 Price Rs. 220 Kg Quantity Value / Price = 13 Value 2 Rs. 2600 Year Year 1 Year 2 Year 3 GDP Rs. 3000 Rs. 4300 Rs. 5010 Nominal GDP % 43% 16% Real Growth Rs. 3800 Rs. 4740 Real GDP % 26% 24% Product Spices Value Rs. 1560 Price Rs. 130 Kg Quantity Value / Price = 12 Value 2 Rs. 1440 Product Rubber Value Rs. 3450 Price Rs. 230 Kg Quantity Value / Price = 15 Value 2 Rs. 3300 Value 2 is calculated based on last years price

Purchasing power parity is used in many situations. The most common is to adjust for the price differences between countries. For example, China produced $8.25 trillion in goods and services in 2012. The U.S. produced $15.66 trillion. However, you cannot compare the two without taking into account the fact that the cost of living in China is much lower than in the U.S. For example, a McDonald's Big Mac costs $4.37. In China, you can get the same thing for only $2.57. People in China don't need as much income because it costs less to live. That's because China artificially sets the value of its currency to be lower than the U.S. dollar. It intentionally wants its cost of living to be lower, so it can pay its workers less. As a result, its exports cost less, making it more competitive on the global market. Purchasing power parity solves the problem of comparing countries with different standards of living. It recalculates the value of a country's goods and services as if they were being sold at U.S. prices. Under PPP, a Chinese Big Mac costs $4.37, the same as it does in the U.S. As a result, China's GDP is $12.38 trillion, which makes it the world's third largest economy, after the U.S. and the EU. That's why the CIA provides GDP estimates on both an official exchange rate and a purchasing power parity basis. Similar methods are applied to convert India’s GDP Official Exchange Rate of $1.947 Trillion to $4.784 Trillion making India the world’s fourth largest economy after EU, USA and China. Without purchasing power parity, China's GDP per capita would only be $6,297, lower than the standard of living in Ukraine, Algeria or Kosovo. With PPP, each of the 1.3 trillion people will receive (on average) the benefit of $9,100 in economic production. This is better, but still only on the level of Jamaica and worse than Cuba. It's far less than the U.S. GDP per capita of $47,400. That's because the U.S. can divide its GDP among only 330 million people. 7.4

7.4

 3 Dimensions ▪ Education (2 Indicators, each weighted 1/6) ▪ Health (2 Indicators, each weighted 1/6) ▪ Standard of Living (6 Indicators, each weighted 1/18)  Equal weight to 3 Dimensions (1/3) Oxford University 7.4

7.4

 A Household is Multi – Dimensionally Poor if ▪ Weighted sum exceeds 30% of deprivations (a score of 3/10 or more) ▪ Can be in any combination of Indicators  Half of the world’s poor as measure by the MPI live in South Asia (51%, 844 million)  Quarter in Africa (28%, 458 million) 7.4

 Simple Yes / No can be self administered  Reflects both ▪ The Incidence of Poverty ▪ The Average Intensity of their deprivation  Reveals the combination of deprivations suffered  Makes focused intervention possible in terms of: ▪ Policies ▪ Programs 7.4