IIn my last column I had expressed the view that economic growth since 1997-98 has not only been low, it was also jobless growth. There is another way to look at the quality of economic growth, and that is to ask what the impact of growth on poverty is.

Poverty ought not to be measured in terms of not having enough food or clothing. The true measures of poverty are illiteracy, disease, infant mortality, low life expectancy, gender inequality and class exploitation. India has the largest concentration of poor people in the world. Over 300 million Indians currently survive on, to use an international benchmark, less than one dollar a day. We are the most illiterate nation in the world. About 35 million or a third of our children between the ages of six and 10 do not get to school; of the ones that do, a good number drop out well before they can acquire the skills needed to pull themselves above the poverty line. Less than half the children from poor households enrol, and when they do, only one out of five complete the eight-year cycle of basic education. A substantial number of our people do not receive basic healthcare and do not have access to amenities like drinking water, shelter and toilets. The death rate for infants under five remains one of the highest in the world. Communicable diseases and prenatal and maternal mortality cause 470 deaths per 1,00,000 persons in India.

There are two measures of poverty. One is the proportion of people below the poverty line and the second is the absolute number of people who are below the poverty line. Both are inadequate because they measure only income poverty and ignore many of the demographic characteristics that I have listed above.

Towards the end of 2000, the Planning Commission released the estimates of poverty based on full NSS data. There has been a 10 percentage-points reduction to 26 per cent in the proportion of people below the poverty line. Assuming this to be correct, the absolute number of people below the poverty line is still over 260 million. No doubt this is a reduction from the number of 300 million in 1993, but it is still too shamefully large. Assuming that the annual growth rate of population over the next 10 years is 1.6 per cent and the decline in poverty is of the same order as it was in the 1990s, there will still be over 200 million Indians living in abject poverty 10 years hence.

Why is this so? It is because the growth rate in the agriculture sector has been low. During the three years ending 1999-2000, the average GDP growth of around 6 per cent was not the result of a robust performance in agriculture. Agriculture grew by only 2.7 per cent. (Manufacturing also languished at an average of 4.9 per cent.) Agriculture, together with manufacturing, forms the backbone of the economy and its performance is crucial in the battle against poverty. The Chinese experience is revealing. During the 1980s, China's agriculture clocked an average growth rate of over 6 per cent per annum and the sustained rise in rural incomes played a crucial role in China achieving a steep fall in poverty.

Our approach to poverty alleviation is illogical and perverse. We attack poverty through subsidies and through too many anti-poverty schemes. It has been calculated that the total subsidy bill of the Centre and the states combined stands at 14-15 per cent of GDP. Assuming that at least one-third of these subsidies, or about 5 per cent of GDP, was aimed at providing relief to the poor, at the current level of GDP of Rs 25,00,000 crore, the value of poverty-alleviating subsidies would come to a whopping Rs 1,25,000 crore. Add to that Central and state budgetary allocations for anti-poverty programmes of about Rs 25,000 crore. The total spending that we "devote" to the cause of the poor is around Rs 1,50,000 crore per annum. Taking the estimate of the poor at 300 million, the per capita expenditure comes to a little over Rs 5,000 per annum or Rs 25,000 per household of five persons. This means that on a village with a population of 1,000 poor households, we could spend Rs 2.5 crore per annum. If this amount was invested in public works such as irrigation canals or wells, small dams, water-harvesting projects, desilting water bodies, rural roads and, above all, houses for the rural poor, it will trigger a multiplier effect and transform the economic landscape of the country.

Alas, we do not invest the money. We simply spend it. Public investment in agriculture has been stagnant (at constant prices) at 1.5 per cent of GDP or Rs 4,000-5,000 crore per annum during the period 1993-94 to 1999-2000.

India and a large number of Indians are poor not because the nation does not have enough money to fight poverty. We have the money. We lack the wisdom.

(The author is a former Indian finance minister.)