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Appropriate Budget


Issn 0012-9976


Issn 0012-9976

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A Discordant Note

n his reply to critics (“The Left in Decline: A Response”, EPW, 10 March 2012), Prabhat Patnaik, before embarking on a long prescription for the communists on what is to be done, opines that “20th century revolutions” failed because the “post-revolutionary” states became oneparty dictatorships. The two key expressions here – “revolution” and “post-revolution” – deserve careful scrutiny. As regards the first expression, from the context we may assume that he is speaking of socialist revolution. Now, in the absence of any further explanation, most likely he, we could assume, means by this term the seizure of political power (supposedly) by the working class. Given that the author is known as a Marxist, we may be allowed to take the liberty to recall the meaning of this term in Marx himself for whom this particular term has a very different significance. For Marx a social (including, of course, socialist) revolution is the “dissolution of the old society” (Anti-Ruge 1844), “a change in society’s economic foundation” (1859 Preface). Further, a social(ist) revolution is not a momentary event – a simple seizure of power. It is “epochal”. Marx speaks of the “beginning of an epoch of social revolution” (1859 Preface). Secondly, particularly for the working class, the seizure of power – raising the class to the position of the ruling class – is nothing but only the “first step in the workers’ revolution” (1848 Manifesto), which continues to traverse a more or less long “revolutionary transformation period” required for the capitalist mode of production to disappear at the end of which – after capital’s disappearance – appears the “Association of Free Individuals” (socialism or, equivalently, communism) (Capital I; Gotha critique 1875). Contrary to Patnaik’s view we have found no evidence that there was any socialist revolution in this profoundly (self-)emancipatory sense (the only sense in Marx) in the 20th century.

As to the expression “post-revolutionary”, we could safely assume that Patnaik means thereby the period following the seizure of power, equated to revolution itself, that is, the period after the victory of

april 7, 2012

the revolution. Now, if our reading of Marx regarding revolution (based on his texts) as given above is correct, then the “postrevolutionary” period would precisely be the period of communism (=socialism) where, in the supposed absence of classes, there is no state (clearly indicated in Anti-Proudhon 1847 and the 1848 Manifesto) just as there is no question of commodity production and hired waged/salaried labour in that free Association (Manuscripts 1857-58, 1861-63, Capital, Gotha critique). There was, of course, no socialist revolution to fail – leaving aside the question of failure of any “socialist state” – a contradictio in adjecto.

Paresh Chattopadhyay

Quebec, Canada

Appropriate Budget

ith reference to the editorial “Once Again without Credibility” (EPW, 24 March 2012), I would like to make some observations. It is true that the Union Budget has merely become an accounting exercise. But it is also true that budgets are now presented amidst growing challenges of all types that were not present before. The deepening of the market economy, increasing literacy and education levels, media proliferation and international institutions acting as watchdogs, all these changes bring the fi nance minister under greater scrutiny than before. It is in this context that I would like to applaud aloud Pranab Mukherjee for the bold budget that he has presented against the backdrop of turbulent times that the Indian and global economies are passing through and the compulsions of coalition politics. Decelerating growth, high inflation and increasing inequality are the chief concerns apart from problems of governance that the present government is infl icted with.

At this juncture it would have been highly inhumane and mercenary to expect reforms of the sort that benefit the richer section of the society. Mukherjee’s focus on fiscal consolidation by increasing the revenue generated through changes in tax provisions, assuming they will be continued in future budgets too, will, in the long run, save Indian economy from

vol xlviI no 14

Economic & Political Weekly


falling into the trap of the vicious circle of high fi scal defi cit-infl ation-higher real interest rates-higher fi scal defi cit.

Profits of service providers have soared, given the kind of structural change that has taken place on the demand side. Buyers of services too have experienced a rise in their income making it easy for them to pay the quoted price for services. For quite a long time the service sector remained under-taxed even as its contribution to gross domestic product was on the rise. The move to bring all services, except a small negative list, under the tax net will rectify this imbalance and bring about horizontal sectoral equity in the sharing of the tax burden. Again, during the last half a decade or so, there has been a remarkable increase in incomes, especially of the middle and upper classes, facilitating the purchase of goods of a higher order. By making branded products costlier, an attempt has been made to not only curtail such unnecessary demand but also to ensure equity and justice in tax matters. This has long-term implications for redressing severe inequalities which have the potential to destabilise social and economic life.

Ketan K Shah


Relative Poverty

he recent media and public outrage on the issue of poverty lines manifests the gap between academic/policy debates on poverty and the perceptions of people about what constitutes poverty. Most of the academic research on poverty in India centres on the poverty line (PL) and the headcount ratio. Policymaking has been informed by this academic discourse and therefore plans, policies and schemes to reduce poverty also use the PL methodology. But sociologists have cautioned that this highly statistical/numerical approach to the understanding of poverty precludes us from locating poverty in a society’s cultural, economic and political contexts within which it is articulated. Most “economistic” definitions of poverty centre on a set of basic (minimum) needs. Sociologists argue that a definition of poverty in terms of insufficient satisfaction of basic needs begs other questions like “What are basic needs?” and “What level of satisfaction of such needs is suffi cient?”. These questions obviously cannot be answered without taking into account the social construction of well-being and poverty characterising a particular society.

My doctoral research “The Social Construction of Poverty: Discourses of Poverty and the Practice of Poverty Alleviation in India” (IIT Delhi, 2005, unpublished) on the perception of poverty brings out this mismatch between academic/policy discourse on the one hand and the perceptions of development workers and the common person on the other. During my fieldwork I found that people use various criteria to label someone as poor.

When asked to identify the poor in their village, villagers in Haryana included someone as poor for not having a house of his own and living on rent. This may come as a shock to a city dweller since many rich persons in the cities do not own a house. The fact is that every adult is entitled to land for a house from the common (panchayat) land and since selflabour and cheap material can be used to construct a kuchha house, it is rare that a person is without a house in the rural parts of the state. On the other hand, persons belonging to the middle class in cities thought of a person without footwear and those wearing old and dirty clothes as poor. However, it is quite common to find many children in rural areas (belonging to relatively rich households) barefoot and attired in old, dirty clothes.

The purpose of these examples is to bring out the differences in perceptions of people living in different areas (rural/ urban). Though inability to get foodgrains was accepted as the universal criteria for identification of extreme poverty everywhere, it was found that social norms sometimes dictate forgoing food for some sociological needs. For example, women in Haryana villages seem to value glass bangles on their arms as a signifi er of respectability and well-being and therefore this researcher found that they would be willing to forgo a meal rather than be seen in public without bangles on their arms.

In fact, Adam Smith was aware of the importance of this dimension and noted that customary standards also determine what a necessity is. He wrote, “Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them.” Sociologists generally agree that the general perception of the level that defines poverty in a particular society bears a direct relationship to the perception of average living standards in that society. While economists are concerned mainly with absolute poverty, society views poverty as relative deprivation and the absolute also changes with time and geographical location.

If we accept the argument that the common perception of poverty is that of relative deprivation, it is easy to understand the public outrage about the latest poverty lines. The present poverty lines of Rs 22.40 per capita per day for rural and Rs 28.65 for urban India works out to 17.63% (in case of rural) and 22.55% (in case of urban) of the average income (per capita income at current prices) for 2009-10. The corresponding percentages for 1993-94 were 32% for rural and 41.12% for urban PL and that for 1973-74 was as high as 61.46% for rural areas (with PL being pegged at Rs 595.56 while the per capita income was only Rs 969).

Peter Townsend too has emphasised the importance of the “endeavour to define the style of living which is generally shared or approved in each society and find whether there is…a point in the scale of the distribution of resources below which families find it increasingly diffi cult …to share in the customs, activities and diets comprising that style of living”. Therefore, though it is correct that for measuring the progress on incidence of poverty we have to take comparable poverty lines, measures of absolute poverty need to incorporate some degree of relative poverty in order to take into account the changing socio-economic reality of a fast-growing economy like India. I see the public outrage to the Planning Commission’s new poverty lines as a vote in favour of an upward revision of PL in the light of growing prosperity reflected in rising per capita incomes.

Ameeta Motwani

Jesus and Mary College, University of Delhi


Economic & Political Weekly

april 7, 2012 vol xlviI no 14

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