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Inclusion & Growth in India: Some Facts, Some Conclusions Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010 Surjit.

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Presentation on theme: "Inclusion & Growth in India: Some Facts, Some Conclusions Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010 Surjit."— Presentation transcript:

1 Inclusion & Growth in India: Some Facts, Some Conclusions Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010 Surjit S Bhalla Workshop on Employment World Bank - ICRIER New York, Sept 27, 2011 Sept 2011 Surjit Bhalla1 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

2 Inclusion & Growth in India: Some Facts, Some Conclusions Overview Work in progress Major focus: Inclusion and growth; Indian experience – lends itself to myriad of explanations – hence, the Rashomon effect Official view: Poverty has been declining at only 1 percentage point year, despite a tripling of per capita GDP growth To accelerate this decline, government needs to provide both direct subsidies (food, diesel, fertilizer) and large scale “digging” ditches employment program. All of these programs were in effect in 1983, and are in effect in equal and greater force today. Sept 2011 2Surjit Bhalla Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

3 Inclusion & Growth in India: Some Facts, Some Conclusions continued… Alternate view – the above perspective, and policies, are hugely outdated, most likely wrong, and most likely pernicious for the Indian economy Reality – globalization a major force, India benefitted hugely, and is today a transformed place; Poverty less than 10 percent of the population (not 32 percent), middle class close to 50 percent Need different employment and poverty reduction policies Sept 2011 3Surjit Bhalla Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

4 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 2011 4Surjit Bhalla Table 1: Discreet Creep of the World Bank Poverty Lines Poverty Line Ratios in Local Currency RegionPL05/PL93PL93/PL85PL05/PL85 Developed Economies0.670.790.54 East Asia1.540.861.33 China1.650.861.42 Russia & Eastern Europe0.890.650.56 Latin America0.950.790.71 Middle East & North Africa0.740.790.6 South Asia1.430.981.41 India1.420.911.29 Sub-Saharan Africa1.20.830.82 Total1.210.861.04 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

5 Inclusion & Growth in India: Some Facts, Some Conclusions Problems in Measurements – Sharp Decline in NSS Estimates 5Surjit Bhalla Sept 2011 Survey to National Accounts Ratio in India YearSurveyNational AccountsSurvey/NA Ratio 1983123.4152.980.7 1993/94333.5539.661.8 1999/00586.91057.555.5 2004/05728.81472.349.5 2007/08976.62068.747.2 2009/101197264945.2 Notes: The survey and national accounts estimates are in current rupees per capita per month; the NA estimate is for the base year prevailing at the time of the survey. Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

6 Inclusion & Growth in India: Some Facts, Some Conclusions Poverty – Sharp Decline 6Surjit Bhalla Sept 2011 Poverty and poverty gap in states of India, 1983 - 2009/10 Poverty - Tendulkar linePoverty gap Social categoryPercentage of populationPercentage distance from line 1983 1993 /94 2004 /052007/082009/1019831993200420072009 Dis-privileged72.162.450.638.738.232.826.623.619.921.5 - SC72.663.75139.938.833.926.823.120.221.5 - ST80.668.962.745.344.036.32826.519.723.1 - SCST75.265.354.141.540.434.827.22419.922.1 - Muslims64.855.643.632.633.228.425.422.920.320.2 Privileged51.939.829.320.420.327.822.319.916.818.9 All groups 58.547.837.127.932.529.824.121.518.520.3 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

7 Inclusion & Growth in India: Some Facts, Some Conclusions Poverty – MDG reached a decade earlier 7Surjit Bhalla Sept 2011 Poverty and poverty gap in states of India, 1983 - 2009/10 Poverty - Official linePoverty gap Social categoryPercentage of populationPercentage distance from line 1983 1993/ 94 2004/ 052007/082009/101983 1993/ 942004/052007/08 2009/10 Dis-privileged55.64331.721.922.128.823.623.920.518.9 - SC56.14330.622.522.429.524.223.320.518.4 - ST62.846.33923.423.930.523.725.319.520.4 - SCST58.34432.822.8 29.92423.82019 - Muslims49.240.729.519.620.326.422.824.421.918.7 Privileged34.723.5169.810.524.721.42118.617.1 All groups41.630.421.814.815.326.522.422.319.718.2 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

8 Inclusion & Growth in India: Some Facts, Some Conclusions With perfect targeting only 0.4% of GDP needed for Zero Absolute Poverty (Tendulkar Line) Cost of Poverty Removal 8Surjit Bhalla Sept 2011 Cost of poverty removal in India, 1983 - 2011/12 1983/841993/942004/52007/82009/102011/12 Population (in mil)7238921089113811901200 Percentage poor (Tendulkar line)58.547.837.127.927.519 Poor Population (in mil)423426404318327228 Poverty line (Rs. Per month)114271488591727886 Percent poor gap29.824.121.518.520.316 Cost of removal of poverty with perfect targeting (000 cr)173351425739 Nominal GDP (000 cr)2218663130470060398974 Perfect targeting (% of GDP)7.803.861.630.890.900.43 Notes: All data for 2011 are estimates Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

9 Inclusion & Growth in India: Some Facts, Some Conclusions Consumption Inequality – Increase in last five years 9Surjit Bhalla Sept 2011 NSS Consumption Inequality (Gini) in India 1983-2009/10 Year19831993/941999/002004/052007-082009-10 Measure,Nominal Uniform Recall (30 days)32.632.732.336.8 Mixed Recall (30/365 days)30.430.332.335.134.836.4 Modified Mixed Recall (7/30/365)35.4 Adjusted to National Accts3637.836.543.442.446.6 Measure,Real Uniform Recall (30 days)31.930.42932.8 Mixed Recall (30/365 days)29.527.82930.830.732.8 Modified Mixed Recall (7/30/365)32.0 Adjusted to National Accts35.435.533.239.837.842.8 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

10 Inclusion & Growth in India: Some Facts, Some Conclusions Income Inequality 10Surjit Bhalla Sept 2011 Income Inequality in India - 1983-2009 Year Wage Income Per Person Wage Income Per Household NominalRealNominalReal 19830.53 0.50 19930.510.490.480.46 19990.550.530.510.49 20040.560.53 0.50 20070.540.500.520.49 20090.530.500.520.49 % change 1983/09 0-5.64-2 Source: NSSO employment-unemployment data, different years Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

11 Inclusion & Growth in India: Some Facts, Some Conclusions Real Consumption Growth, by percentiles, 1983-2009/10 11Surjit Bhalla Sept 2011 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

12 Inclusion & Growth in India: Some Facts, Some Conclusions Real Consumption Growth, Difference percentiles, 1983-2009/10 12Surjit Bhalla Sept 2011 Notes: Each percentile represents the difference in growth rates of the poor and rich percentile e.g. the first percentile represents the difference in growth of the 1 st and 100 th percentile; second the difference in growth of the 2 nd and 99 th etc. Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

13 Inclusion & Growth in India: Some Facts, Some Conclusions Real Wage Income Per Person Growth, by percentiles, 1983-2009/10 13Surjit Bhalla Sept 2011 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

14 Inclusion & Growth in India: Some Facts, Some Conclusions Real Wage Income Per Person Growth, Difference percentiles, 1983-2009/10 14Surjit Bhalla Sept 2011 Notes: Each percentile represents the difference in growth rates of the poor and rich percentile e.g. the first percentile represents the difference in growth of the 1 st and 100 th percentile; second the difference in growth of the 2 nd and 99 th etc. Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

15 Inclusion & Growth in India: Some Facts, Some Conclusions Sharp Decline in Education Inequality 15Surjit Bhalla Sept 2011 Education Inequality in India - 1983-2009 YearIndiaRuralUrbanFemaleMale 19830.710.760.560.790.63 1993/940.660.690.530.730.59 2004/050.580.620.470.640.52 2007/080.520.540.420.580.46 2009/100.490.520.410.550.43 % change 1983/09 -31-31.6-26.8-30.4-31.7 Source: NSSO employment-unemployment data, different years Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

16 Inclusion & Growth in India: Some Facts, Some Conclusions Education – Girl Catch-up 16Surjit Bhalla Sept 2011 Progress of Youth Education in India, 1983 - 2009/10 Years of Education (ages 8-24) Literacy (% of population of age 8-24) State1983 2009 % change Female/ Male1983 2009 % changeFemale/Male Andhra Pradesh3 7.1 1369051 91 7894 Bihar2.6 5.1 967843 80 8685 HP4.7 7.8 6610478 99 2799 Madhya Pradesh2.9 6.2 1148952 89 7191 Maharashtra4.6 7.8 699773 97 3398 Orissa3 6.7 1239354 92 7094 Rajasthan2.6 6.1 1357845 97 11586 Tamil Nadu4.4 8.1 8410173 99 3699 Uttar Pradesh3.1 6 939251 87 7091 West Bengal3.7 6.3 709763 93 4897 All India 3.6 6.7 869360 91 5294 Bimaru states2.9 5.9 1038749 87 7890 Small states5.1 7.4 459877 98 2798 North East4.5 7 55100 78 99 1599 Notes: Bimaru states refers to the aggregate of the poor states - Bihar, Madhya Pradesh, Rajasthan and UP. Literacy is defined as greater than or equal to two years of education Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

17 Inclusion & Growth in India: Some Facts, Some Conclusions Education – the Poor Catch-up 17Surjit Bhalla Sept 2011 Youth Educational Attainment, 1983 - 2009/10 Social categoryAverage years of schoolingRelative female/male education (in %) 1983 1993/ 94 2004/ 052007/082009/1019831993/942004/052007/082009/10 Dis-privileged2.53.45.45.56.051.964.782.888.190.3 - SC2.53.45.55.76.146.560.480.888.389 - ST234.95.35.843.657.57980.884.1 - SCST2.33.35.35.66.045.459.480.28688.9 - Muslims2.93.75.4 5.964.475.888.992.291.8 Privileged4.35.26.96.87.266.877.287.692.794.6 All groups3.64.56.3 6.7 62.873.485.890.892.7 Notes: Youth defined as those between 8 and 24 years. Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

18 Inclusion & Growth in India: Some Facts, Some Conclusions Evolution of Middle Class in India, 1980 – 2010 18Surjit Bhalla Sept 2011 Notes: Middle Class line defined to be the poverty line in developed economies - PPP $8.2 per capita per day 1996 prices or PPP$ 4000 in 2010 prices. In 2010 rupees, the middle class line for India is Rs. 3840 per capita per month or for a family of four, Rs. 1.8 lakhs a year. On a per capita per day basis, the Tendulkar poverty line in 2010 would be approximately Rs. 25; the middle class line, Rs. 121 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

19 Inclusion & Growth in India: Some Facts, Some Conclusions  LFPR for age group 15-59 declined from 62.1% to 56.6%  However if we take school/college going into account, LFPR(adj) decline from 71.2% to 68.9%  Thus some decline can be explained by movement from labor force into education  Most of the decline in LFPR is contributed by females in age 25-59 (43.6% to 34.4%), especially rural females (50.7% to 39.9%)  Sharp decline in rural women of age 25-59 self-employed in agriculture (27.2% to 18%)  The poor show a larger decline, but result preliminary Employment Trends 2004/5-2009/10 19Surjit BhallaSept 2011 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

20 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201120Surjit Bhalla 15-2425-5915-59 TotalMaleFemaleTotalMaleFemaleTotalMaleFemale 198350.372.227.766.094.337.060.786.833.8 1993/9448.4662968.795.141.662.185.437.6 2004/0546.063.227.269.595.343.362.184.938.4 2009/1036.351.818.865.596.334.456.682.229.8 Labor Force Participation Rates in India, 1983-2010 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

21 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201121Surjit Bhalla Decline for females, 25-59 15-2425-5915-59 TotalMaleFemaleTotalMaleFemaleTotalMaleFemale 198366.595.236.766.294.537.166.394.836.9 1993/9471.195.045.068.995.441.769.695.242.8 2004/0574.195.850.569.895.643.571.295.745.7 2009/1075.796.252.666.096.834.768.996.640.0 Adjusted for Education: Labor Force Participation Rates *Adjusted labor force includes persons reporting to attend educational institution Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

22 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201122Surjit Bhalla Consumption Percentiles MaleFemale 0-2020-4040-6060-8080-1000-2020-4040-6060-8080-100 2004/0517.220.622.122.517.620.421.7 2115.3 2009/1019.721.221.820.716.421.32219.620.616.1 Labor Force Participation Rate by Consumption Levels Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

23 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201123Surjit Bhalla MaleFemale 0-2020-4040-6060-8080-1000-2020-4040-6060-8080-100 2004/0516.418.319.621.324.219.720.4 20.618.8 2009/1016.818.419.721.523.518.618.920.621.620.2 Labor Force Participation Rates (25-59 years) Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

24 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201124Surjit Bhalla Real Wage per day per person OverallRegular SalariedCasual Labor TotalMaleFemaleTotalMaleFemaleTotalMaleFemale 1983465426778055283220 1993/9458673610310877364127 1999/00768748141147114445032 2004/05839453138146101495535 2007/08869753155163117465232 2009/1010411473177185140636948 Growth 1983-199326%24%38%34%35%40%28% 35% Growth 1993-201079%70%102%72%71%82%75%68%77% Real Wage *Wage was deflated using rural price index of 2004/05 as deflator Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

25 Inclusion & Growth in India: Some Facts, Some Conclusions 25Surjit Bhalla Real Monthly Per Capita Wage Income Real Monthly Per Capita Consumption of those reporting wage income Overall Real Monthly Per Capita Consumption TotalRuralUrbanTotalRuralUrbanTotalRuralUrban 198312218762166503414746486442642 1993/94156111592563554474757546497698 1999/00207514763466554465761540482693 2004/05226116253547719602958703618911 2007/08257118264075659539902636554831 2009/10292720804517724585985700602910 Growth 1983-19932832181014112 9 Growth 1993-2009877976302330282130 Wage Income Vs Consumption *Wage was deflated using rural price index of 2004/05 as deflator Sept 2011 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

26 Inclusion & Growth in India: Some Facts, Some Conclusions 26Surjit Bhalla Real Monthly Per Capita Wage Income Real Monthly Per Capita Consumption of those reporting wage income Overall Real Monthly Per Capita Consumption TotalRuralUrbanTotalRuralUrbanTotalRuralUrban 198312218762166503414746486442642 1993/94156111592563554474757546497698 2004/05226116253547719602958703618911 2009/10292720804517724585985700602910 Growth 1983-19932.3%2.6%1.6%0.9%1.20.091.1 0.8 Growth 1993-20093.9%3.6%3.5%1.61.31.61.51.21.6 Wage Income Vs Consumption *Wage was deflated using rural price index of 2004/05 as deflator Sept 2011 Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

27 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201127Surjit Bhalla Casual Worker workdays in a week (Mn) Total Workdays in a week (Mn)Ratio (a/b) Total (a)RuralUrbanTotal (b)RuralUrban 198339034446154612552910.25 1993/9458750780215016485020.27 1999/0064555590225316935600.29 2004/0564555887275120467050.23 2007/08944802142300021768240.31 2009/10812684128275719238340.29 Workdays: Casual Vs Total Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

28 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201128Surjit Bhalla LFPR 15-2425-5915-59 TotalMaleFemaleTotalMaleFemaleTotalMaleFemale 198350.372.227.766.094.337.060.786.833.8 1993/9448.4662968.795.141.662.185.437.6 1999/0044.662.225.667.594.639.860.28435.3 2004/0546.063.227.269.595.343.362.184.938.4 2007/0840.859.620.466.495.837.058.584.332.0 2009/1036.351.818.865.596.334.456.682.229.8 Labor Force Participation Rate Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

29 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 201129Surjit Bhalla LFPR Adj 15-2425-5915-59 TotalMaleFemaleTotalMaleFemaleTotalMaleFemale 198366.595.236.766.294.537.166.394.836.9 1993/9471.195.045.068.995.441.769.695.242.8 1999/0070.393.345.567.894.940.068.694.441.7 2004/0574.195.850.569.895.643.571.295.745.7 2007/0873.496.148.666.796.137.268.896.140.7 2009/1075.796.252.666.096.834.768.996.640.0 Adjusted Labor Force Participation Rate *Adjusted labor force includes persons reporting to attend educational institution Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010

30 Inclusion & Growth in India: Some Facts, Some Conclusions Sept 2011 30Surjit Bhalla Education, Wages and Per Capita Income, India - China, 1993 - 2010 IndiaChina 199320072010199320072010 Education (Mean Years) Males4.96.16.36.98.99.3 Females2.64.14.46.38.18.4 Average3.85.15.46.68.58.9 Wages (Monthly, PPP $) NH Survey (urban areas only) Male7519465247 Female5914855184 All7318661220 Economist Intelligence Unit, EIU (Monthly, US $) 11537545349273449 Per Capita Income (PCI): US $26829743169347 PPP $1394045041937261152 Relative Education Based Wages - China:India (in %) Average100 133.6140.8142 Relative Wages - China:India (in %) NH Survey100 83.6118.3 EIU100 42.672.899.1 PCI US $100 165.4206.1357.7 PCI PPP $100 138.8179.7228.6 Notes: NH Survey - National Household Survey; Survey wages are for wage and salaried workers in urban areas; Economist Intelligence Unit (Monthly, US $) wage data for India and China are for the Manufacturing/Business Sector; Wages PPP $ are with a 2000 base; Per Capita Income PPP $ are with a 1996 base; For every 1 year of education, wages increase by 12%. Therefore, relative education based wages are calculated as - (mean education years for China - mean education years for India)*12 Sources: India - NSS Surveys 1993/94, 2007/08 and 2009/10; China - Urban Household Survey, 1992 & 2006 see Bargain et al.(2008); Economist Intelligence Unit (EIU);; Education data from Barro - Lee Dataset, 2010. Avoiding Rashomon: The Reality of Education, Employment and Earnings in India, 1983-2010


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