SUSTAINABLE DEVELOPMENT GOALS: PATHWAY TO EQUITY?

SUSTAINABLE DEVELOPMENT GOALS: PATHWAY TO EQUITY?

Prof. K. Seeta Prabhu Tata Chair Professor

Tata Institute of Social Sciences Mumbai

Presented at 99th Annual Conference of the Indian Economic Association, Tirupati, 28 December 2016

THE GLOBAL SCENARIO

1990 Millennium Declaration - grand vision ‘to free people from extreme poverty and want’ truncated in translation

▪ MDG indicators conceptual insights of Millennium Declaration not translated in action

▪ Narrow tunnel vision on indicators ▪ Developed countries did not deliver on commitments for

Goal 8 affected resource flows for MDG achievement ▪ Uneven progress – poverty goal in sub-Saharan Africa not

reached, high proportion of undernourished children in South Asia and Africa

In 2015 - 800 million in extreme poverty 850 hungry people globally

Conflict led to displacement of 60 million people by end 2014 2

Mixed performance on MDGs - huge unmet agenda

SDGs not mere extension of MDGs: Paradigm shift for ‘Sustainable, inclusive and sustained economic growth, shared prosperity and decent work for all’ ▪ Wider range of dimensions: 17 Goals and 169 targets ▪ Unprecedented participatory process: CSOs,

Academics, think tanks, Open Working Group, Inter governmental committee

▪ Focus on distribution: ‘Leave no one behind’, ‘Reach the farthest first’

▪ More integrated and interlinked: based on 3 pillars of economic, social and environmental dimensions to end poverty, protect the planet and ensure prosperity for all

Separate SDG Goal 10 ‘Reducing Inequality’ included to address rising inequality within countries During 1990 and 2012 ▪ Within country income inequality in disposable income

increased in 65/130 countries accounting for two thirds of world population

▪ Income share of top 20% increased in 61/111 countries ▪ Between country gini coefficient in 2010 at 58% higher than 45% in 1990 despite decline in 2000s Source: UNDESA 2013

Inequality a concern also for developed countries

▪ Financial crisis 2007-08 crisis led to increase in inequalities – recovery phase benefited rich disproportionately

▪ PEW research Centre analysis - between 2009-11 aggregate net worth of top 7% rose by 28% whereas for bottom 93% it declined by 4% in the USA

▪ Milanovic 2016 – famous elephant shaped curve depicts between 1988-2008, no gain in real incomes for bottom percentile and 70-90 percentile in global distribution of income

Milanovic Elephant curve

Change in real income 1988-2008 at various percentiles of global income distribution (in 2005 international dollars)

120 national suveys

High inequality constrains growth, affects intergenerational mobility and can trigger conflict ▪ For middle income countries rising inequality poses

danger of ‘middle income trap’ ▪ If income share of top 20% increases by 1 percentage

point, GDP growth is lower in next 5 years by 0.08 percentage point (IMF 2015)

▪ Increase in income share of bottom 20% by 1 percentage point, GDP growth higher in next 5 years by 0.38 percentage point (IMF 2015) (159 countries 1980-2012)

▪ Countries with higher inequality have lower inter-generational mobility – leads to social exclusion and durable inequality , triggers conflict (Kabeer, Stewart)

High inequality affects sustainability of growth

IMF data from 1950-2006 for 15 developed and developing countries – higher the inequality, lesser the number of years of growth - Gini coefficient on X axis, growth spells on Y axis

SDG 10: Reduce Inequality within and among countries • Broad interpretation of inequality • Interlinked with education, health, water, poverty,

hunger, energy, infrastructure, gender, employment ….

Goal 10: of seven targets to be achieved by 2030 4 within national realm

▪ 10.1: Bottom 40% of population to achieve higher growth rates than national average

▪ 10.2: Empower and promote the social, economic and political inclusion of all

▪ 10.3: Ensure equal opportunity and reduce inequalities of outcome

▪ 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality

Goal 10: 3 targets require global cooperaton

▪ 10.5: Improve regulation, monitoring and implementation of global financial markets and institutions

▪ 10.6: Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial

▪ 10.7: Facilitate orderly, safe, regular and responsible migration and mobility of people

▪ 10.a, 10.b. 10.c on international dimensions

INDIAN SITUATION

Fast growth in income - But

▪ India moved from low income to middle income category in 2007 in per capita terms

▪ Despite this growth India home to over one fourth of world’s extremely poor people (below 1.90$ a day in 2012)

–India has 270 million extremely poor ▪ If $ 3.10 $ a day moderately poor definition adopted 700

million Indians moderately poor Source: The Economist: Economic Intelligence Unit, 2016

India’s rising gini coefficient

▪ Poverty levels high as benefits of growth has not benefited all sections of population

▪Between 1993-94 and 2011-12 •Consumption increased faster for top two deciles particularly in in urban areas

•Salaried white collar workers income grew 10 fold •Rural economy growth affected by frequent droughts and agrarian crises

•Agricultural workers incomes grew by 4-5 fold

Inequality rising faster in India’s urban areas

India: Consumption by Deciles (Average in constant 2011 PPP USD) Rural Urban

Source: IMF 2015 Sharing the Growth Dividend: Analysis of Inequality in Asia

Share of profits in NVA rises steadily

Source: Himanshu 20165 Inequality in India

Gini coefficient of consumption expenditure at 0.36 in 2012 considered low by international standards

Source: Vanneman, R and Dubey, A. 2011. Horizontal and Veritcal Inequalities in India

But… Myth of low inequality broken when income used as measure – inequality in income equal to/higher than in Brazil, Colombia, Mexico

Benefits of growth accruing to top deciles reflected in rising wealth inequality to very high levels

Source: Anand, I. and Thampi, A. 2016. Recent Trends in Wealth Inequality in India

Emerging Crisis: intertwining of income-wealth-gender-caste inequalities

▪ Caste inequalities: • 43% of Scheduled tribes poor as compared to one fifth of

non-ST people • Only 68% of SC children complete Grade 10 compared to

87% of non SC children ▪ Gender inequalities:

• Between 2001 and 2011 girls in 0-6 age group declined from 927 to 914 per thousand boys

• Risk of dying between 1-5 years 75% higher for girls than for boys in 2000s

Source: EIU 2016, Patel et al Lancet 2015

Intergenerational transmission leads to persistent inequality – occupational mobility very low for SCs and STs ▪ Study of 40000 households in 282 Indian districts 2004-05

finds considerable occupational persistence across all occupational categories (Motiram and Singh 2012) • Probability that a son would fall in father’s occupational

category is higher for low skilled, low paying occupations ▪ Persistence of SCs and STs in low paid occupations –

probability of downward mobility as high as 10% ▪ Same data used to study educational mobility

• Educational mobility high for recent cohorts particularly in States with higher public spending on education (Azam and Bhatt, 2012)

India- 2015 HDI value 0.609- rank 130/185 countries

▪ India’s 2015 HDI value lower than the 1990 HDI value

of Brazil, Mexico, Sri Lanka, Philippines and South

Africa

▪ China’s life expectancy in 1990 – 68.3 years

India’s life expectancy in 2015 – 68 years

▪ Unequal attainments across people – high inequalities

in human development attainments

India’s loss due to inequality in education and health higher than in income

▪ Inequality adjusted HDI points to high inequality in India

▪ 29% loss in HDI value due to inequality : value slumps from 0.609 to 0.435 when adjusted for inequality • Loss in Life Expectancy Index : 25% • Loss in Education Index: 42.1% • Loss in Income index: 16.1 %

Goal 10: Reduce Inequality

▪ Related Interventions • Grants from Central Pool of Resources for North

Eastern Region and Sikkim • Udaan Scheme for youth of Jammu & Kashmir • PAHAL- Direct Benefit s Transfer for LPG(DBTL)

consumers scheme • Give it Up Campaign (for LPG subsidy) • Mudra Yojana

Nodal Ministry: Social Justice and Empowerment

• How prepared is India to implement Goal 10?

‘Government’s ‘Sab ka Saath Sab ka Vikas’ approach resonates with SDG philosophy of ‘Leave no one Behind’

▪ Flagship programmes such as ‘Beti Bachao Beti Padhao, Jan Dhan Yojana foster inclusion

▪ But main sectoral programmes still focused on raising average outcome levels – not enough attention to reducing inequalities

▪ Welfare orientation and incremental approach permeates policies

▪ Niti Aayog assigned Social Welfare and Justice Ministry as nodal for Goal 10

▪ More ministries need to be included for integrated and powerful policies that can reverse inequality trends

Other concerned Ministries/Department Social Justice & Empowerment, Minority Affairs, Tribal Affairs, Development of North Eastern Region Law & Justice

Goa

l 10

Redu

ce In

equa

lity

Nodal Ministry Social Justice and Empowerment

Goal 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 % of the population at a higher rate than the national average

Goal 10.2: By 2030, empower and promote the social, economic and political inclusion of all irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or social status

Other concerned Ministries/Department Finance, RD, HUPA, Urban Development, MSME, Tribal Affairs, Skill Development & Entrepreneurship

Related Interventions 1) Grants from

Central Pool of Resources for North Eastern Region and Sikkim

2) Udaan Scheme for youth of Jammu & Kashmir

3) PAHAL- Direct Benefit s Transfer for LPG(DBTL) consumers scheme

4) Give it Up Campaign (for LPG subsidy)

5) Mudra Yojana

Other concerned Ministries/Department Social Justice and Empowerment, Tribal Affairs

Goa

l 10

Redu

ce In

equa

lity

Nodal Ministry Social Justice and Empowerment

Goal 10.3: Ensure equal opportunities and reduce inequalities of outcome including by eliminating discrimatiory laws, policies, practicies and promoting appropriate legislation, policies and action in this regard

Goal 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality

Other concerned Ministries/Department Social Justice and Empowerment Law and Justice, Tribal Affairs

Related Interventions 1) Grants from

Central Pool of Resources for North Eastern Region and Sikkim

2) Udaan Scheme for youth of Jammu & Kashmir

3) PAHAL- Direct Benefit s Transfer for LPG(DBTL) consumers scheme

4) Give it Up Campaign (for LPG subsidy)

5) Mudra Yojana

Social Justice & Empowerment Law & Justice, Tribal Affairs

High deprivation levels imply core policies will need to focus on reducing magnitude of deprivation ▪ Adult illiterates in 2011 – 287 million -equivalent to total

population of Indonesia (247 mn) + Canada (35 mn) ▪ Undernourished 194.6 million in 2014-16 - one in 3 of world’s

malnourished children in India- 24.5% of the world hungry reside in India

▪ If growth process skewed benefits will continue to elude the weaker sections

▪ Core policies – monetary, fiscal, employment and incomes policies need to address inequality seriously

▪ Policies need to be integrated, and powerful in terms of policy thrust and resources to reap synergies and be effective

▪ Urgency as demographic window already closing

▪ ‘Open window’ states: Invest in widely available, high-quality FP services to enable voluntary acceptance of family planning

▪ ‘Closing window’ states: Accelerate development through skills and opportunities for young people, especially women

▪ ‘Closed window’ states: Prepare for the demands of an ageing population, with small families and working women

* Demographic Window is period in which the working-age population is growing and the dependent population (children & older persons) is small.

Why has India performed below its potential?

6. Sufficient attention has not been paid to state differentials and decentralized planning Illustration

Understanding India’s Demographic Advantage vis-à-vis states’ Demographic Window (UNFPA)

India’s holds key to success on SDGs during 2017-2026 - transformative policies required

Requires data collection and convergence of actions by ministries – state level action holds the key

▪What gets measured gets done ▪India’s data system at district level needs to gear up for SDG requirements ▪Crucial dimensions require constant monitoring ▪New indicators require new data collection systems to be developed ▪Action at State level is imperative

THANK YOU