This article was written by an eminent economist ; it highlights the human tragedy caused by socialist policies followed by India till the early 1990s.

Delayed economic reform killed 14.5 mn children

S A Aiyar,
15 November 2009

The 20th anniversary of Communism’s fall is a good time to estimate the costs borne by countries like India that did not become Communist but drew heavily on the Soviet model. For three decades after Independence, India levied sky-high taxes, strove for self-sufficiency, and gave the state an ever-increasing role in controlling the means of production. These socialist policies yielded economic growth averaging 3.5% per year, just half of that in export-oriented Asian countries, and yielded poor social indicators too.


Growth accelerated with tentative reforms in 1980, and shot up to 9% after reforms deepened in the current decade. How much lower would infant mortality, illiteracy and poverty have been had India commenced reform a decade earlier, and enjoyed correspondingly faster growth and human development? I have published estimates in a paper for the Cato Institute (see http://www.cato.org/pubs/dbp/dbp4.pdf). This shows that the delay in reforms led to an additional 14.5 million infant deaths, an additional 261 million illiterates, and an additional 109 million poor people. Indian socialism delivered a monumental tragedy, lacking both growth and social justice.


Economists frequently estimate what would have happened had policies been different. The assumptions on which such estimates are based can always be questioned.


For instance, Nobel Laureate Amartya Sen has popularized the notion of 100 million missing women on account of gender discrimination in China, South Asia, West Asia and North Africa. These regions have 94 females per 100 males, against 105 females per 100 males in other countries with equal gender treatment. Sen assumed that without gender discrimination, the female:male ratio in the four developing regions would also have been 105:100. On this basis, he estimated that gender discrimination had caused a shortfall of over 100 million females — what he called ‘‘missing women’’.


Sen’s model was so simplistic that he did not send his paper to an economic journal: he published these estimates in the New York Review of Books. Various economists complained that he had neglected other causes of gender differences, and some came out with alternative estimates.


Despite these objections, Sen’s estimate of 100 million became world famous, and his phrase, ‘‘missing women’’, became standard lexicon in gender debates. What mattered was not the precision of his estimates, but the magnitude of the social disaster he was able to highlight.


In the same spirit (but without implicating Sen), i have sought to estimate the number of missing children, missing literates, and missing non-poor arising from the delay in economic reforms. Had reforms started in 1970 rather than 1980, India would have grown faster. In this fast-growth scenario, i assume that per capita income growth in the 1970s would have been what was actually achieved in the 1980s: growth in the 1980s would have been what was actually achieved in the 1990s: and growth in the 1990s would have been what was achieved in 2001-08.


I calculate the rate of change of infant mortality, literacy and poverty with GDP since 1971. I then apply this rate of change to the fast-growth scenario. This reveals what infant mortality, literacy and poverty would have been with faster growth.


In a fast-growth scenario, infant mortality would have been less every year, and in 2008 would have been 27 deaths per thousand births, against the actual 54 per thousand. The cumulative number of ‘‘missing children’’ turns out to be a massive 14.5 million. This is two-and-a-half times the number of Jews killed by Hitler.


I use trends from the latest surveys to calculate actual literacy and poverty levels in 2008, and compare these with literacy and poverty levels in a fast-growth scenario. With faster growth, literacy would have been virtually 100% by 2008, and 261 million more people would have been literate. Again, faster growth would have reduced the number of poor people in 2008 from 282 million to 174 million. This means we have 109 million ‘‘missing non-poor’’ on account of delayed reform.



Doubtless critics will object, as they did after Sen’s exercise, that i have used a simple model that neglects other factors affecting infant mortality, literacy and poverty. Demographer Ansley Coale reworked Sen’s calculations to show that the number of missing women was probably 60 million, not 100 million. That did not dent public horror at the social tragedy that Sen unveiled.


I invite critics to produce more sophisticated models on the impact of delayed reform, as Coale did in the case of missing women. If these more sophisticated models conclude that Indian socialism killed only 10 million children and not 14.5 million, i will shrug. My point about the magnitude of the social tragedy will stand.

Courtesy Times Of India.


another informative article by the same author..


India's great escape from the socialist zoo

S A Aiyar, 18 April 2010, 01:12 AM IST

I view myself as a freedom fighter, who for 45 years has sought to promote every kind of freedom — economic, political and social. "Escape from the Benevolent Zookeepers", a 2008 collection of Swaminomics columns, emphasized that the socialists who led our Independence movement, and then shackled us for decades through the licence-permit Raj, were not evil. Rather, they were golden-hearted leaders determined to banish the poverty they associated with British colonialism.


However, 200 years of colonial subjugation gave them a serious inferiority complex. Lacking confidence in India's ability to export its way to prosperity, Jawaharlal Nehru sought economic independence by retreating from international trade into a cocoon of self-sufficiency, forgetting completely that international trade had made India a world power for centuries before the British Raj.


Critics pointed out that other developing countries like Korea and Taiwan had opted for export-oriented growth rather than self-sufficiency, and been rewarded with 10% GDP growth, thrice as fast as the Hindu rate of growth in India. The socialists smiled condescendingly and said that these countries were neo-colonial puppets falling into an imperialist trap, and had no future. In fact, the supposed puppets soon became richer in per capita income than their colonial master, Britain. India, alas, remained mired in poverty.


Apart from self-sufficiency, golden-hearted socialism sought to protect Indians from the rapacity of businessmen, and promote prosperity as in the Soviet Union through planning and government domination of the economy. So, they made India the land of a million controls. Everything was forbidden unless specifically allowed. Government bureaucrats with no business experience were supposed to know better than any businessmen what should be produced, where, and how. They were supposed to know better than consumers what was good for the consumers themselves. No citizen had free choice in buying anything; the government chose on his behalf the list of goods that could be produced or imported.


Entrepreneurs were forbidden to start a business without a licence, forbidden to import raw materials or machinery without a licence, and forbidden to close a business if it was unprofitable. If any businessman was innovative enough to produce more than the listed capacity of his machinery, he faced a jail sentence for the terrible sin of having dared to be productive. (Narayana) Murthy of Infosys recalls that it took him almost two years to get a licence to import a computer and another two years to get a telephone when he was setting up Infosys in the 1980s.


All in the public interest, you understand.


Insane though it sounds today, golden-hearted socialism held that prosperity would be best achieved when nobody had the freedom to do anything other than what they were told. Citizens were told that the world was a dangerous place, full of predators. So, said the leaders, the licence-permit Raj does not really put you in cages; it puts you in protected enclosures for your own security. In these enclosures we will ensure your basic needs.


They failed even in this. Literacy, infant mortality, life expectancy, poverty and every other social indicator was always far worse in socialist India than in Asian miracle economies (and even in some poor African countries). Vast sums spent on health and education were wasted; teachers and health staff had an absenteeism rate of 18% to 58%, but were protected from disciplinary action by strong trade unions (supposedly the vanguard of socialism). So, the socialist cage gave Indians neither economic growth nor social justice. This remains an area of grave concern: opening the cages will not solve problems of basic education and health, so public-private partnerships may be needed.


The leaders themselves were not caged, of course. Indeed, many zookeepers became incredibly wealthy by using controls imposed in the holy name of socialism to line their pockets and create patronage networks.


R K Laxman had a brilliant cartoon about a journalist interviewing a minister in a palatial mansion. The politician says, "Of course, socialism is applicable to us also. But we have promised it to the people and so must give it to them first."


Everybody agrees we need democracy. Why? Because democracy empowers citizens with the freedom to choose, and this remains invaluable even if it is constantly eroded or manipulated away by politicians. Democracy, warts and all, is far better than a system where supposedly benevolent dictators decide everything.


For the same reason, we need freedom of choice in the economic marketplace. The case for democracy and the case for liberal economic policies is the same: both are flawed systems that are nevertheless better than the alternatives. Both empower citizens through the freedom to choose. No matter how tattered at the edges, freedom to choose is nevertheless better than being put in cages by benevolent zookeepers.


After 20 years of economic reform, the cages have been opened and the enclosures have been destroyed one by one. Have Indians been swallowed by predators, as predicted by the socialists? Have our companies been killed by foreign multinationals or become neo-colonial slaves? Not at all. Indian companies have become multinationals in their own right.


Indian liberalization has created more billionaires than exist in Japan or China. These are mainly people of middle class origins like Narayana Murthy and Nandan Nilekani of Infosys. Shiv Nadar of HCL was once an employee of DCM, but is now a hundred times bigger than DCM.


These self-made men have beaten hollow Indian business families and multinationals. Prime Minister Manmohan Singh once said these newcomers are not the children of the wealthy; they are the children of economic liberalization. Having escaped from the socialist zoo, they have proved that Indians can roam the global jungle proud and fearless. Let us celebrate that escape, that new freedom.

Courtesy TOI.

Was communism equally irrational and silly as religion ?

I was often fascinated by the ( erstwhile ) communist regimes ( like the former Soviet Union )for many reasons, among which was the fact that they were among the very few in human history that have dared to defy religion, and also the fact that they provided an " alternative " setup to the now ubiqutous free-market system. But when i decide to read more about this system, i was amazed how such a ridiculous, weird and irrational belief system had influenced or even dominated the policy-making of so many countries. I was forced to draw parallels with religion, an equally irrational and ridiculous belief system, that , unfortunately, continues to brainwash people's minds even today..

As far as i could understand , communism is just brainwashing.. there is no sound rational or logical basis for its claims, most of which seem outlandish.. consider the communist dictum " from each according to their abilities, to each according to their needs " .This eliminates the incentive for people to work hard , since they will continue to get the same reward , no matter how hard they work. Without a profit motive, firms had no incentive or need to provide quality services, and no need to innovate and adapt new technology to satisfy the customer, as they were monopolies , and the customer was forced to buy whatever crap they had produced.. Neither there was any incentive for individuals to work hard -- there was similar pay for both specialized and unspecialized jobs ; and in any case there was guaranteed employment,free housing and medical care ( ..and there was hardly any desirabe consumer product available to buy )* ,Neither there was any incentive for firms to produce quality goods . And there was no market mechanism of knowing which goods are in demand and hence need to be produced.. the managers had no idea of public demand , and the result was both surpluses and shortages ( the latter mostly of consumer goods and food ). And since the State decided what goods to be produced on its own whims and fancies rather than public demand, it diverted a lion's share of the economy to military expenditure.**

This belief system ignores the basic tenets of psychology-- to motivate a person to work hard, it is necessary to provide some incentive -people cannot be forced to work hard for " collective good ". People work hard for their own material prosperity, and performance-based pay serves as an incentive for putting in more effort. And since wokers pooled in their effort for a collective goal, there was no way to identify individual effort ,and hence workers did not bother with productivity as individual contribution could not be measured anyways.

And since there was hardly any attractive consumer products to lure the people, they had few aspirations in life ( compare that to the present day situation ,where one thinks " i will work harder, get a pay raise and buy that new laptop/cellphone/car/dress " )--Consequently , the only collective aspiration of the nation's people was military glorification of the country - hostility toward USA and other western countries. The communist nation avoided trade with foreign countries, since they emphasized " self-sufficiency "--this lack of trade only accentuated Cold War hostilities, and resulted in lots of money being spent in nuclear bombs and missiles.

One can easliy see similarities between religion and communism- both are irrational, unfounded beliefs -- Both promise an ideal state- religion promises " heaven " to the religious and communism promises an utopian world of " guaranteed employment, housing and free healthcare " . In reality , both heaven and the socialist utopia are nonexistent . Both recruit new members to their beliefs by luring them with false promises of heaven or socialist utopia. And they both deride other irrational belief systems ( the different religions deride each other ,claiming themselves to be the "true relgion" of the " true god " , similarly communism was intolerant of any religion -irrational belief systems just like itself )



* " They pretend to pay us , and we pretend to work " -- an ex-soviet citizen succintly sums up the situation.

* " The reason why the Soviet System doesn't work is that the workers dont work " - was the finding of an economist.

** One KGB spy who defected to Britain revealed that 50 % of the economy was devoted to the military . A huge amount of government's money was spent in providing subsidies ( free healthcare, education etc ), leaving nothing for innovation.

Indian State promises the moon, but cannot deliver even basic services.

I have always wondered about the priorities of the Indian State. The Indian State is notorious for its failure to ensure that even the most basic needs of its citizens are met. The government healthcare and education infrastructure in even the largest cities is apalling. Virtually no one who can afford treatment at a private hospital would ever visit a government run hospital. ( The only time when i visited AIIMS in Delhi was when i was severely mentally ill and was deluded that i was pennyless ) The rural population has virtually no access to proper healthcare or education services, so the poor folks are forced to board a train to Delhi and seek treatment at the already overcrowded AIIMS. With due respect for India's premier state medical institution, my experience with AIIMS have been pretty bad- the psychiatrist i was sent to, did not seem to be familiar with even the most routine treatments. **

Whats more, even the private healthcare infrastructure doesnt seem to be adequate, atleast for mental health. The GOI website prouldy proclaims that India has the lowest ratio of mental health professional to population, at about 1 in a million. What it means at the ground level , is that even if you live in a posh upmarket colony of a state capital, you are not likely to find a psychiatrist in your vicinity. Thats because the Indian government doesn't consider healthcare to be a priority; as an example , consider the fact that the Indian State funds and patronises homeopathy ; which is a comprehensively disproven theory-- Scientists have conclusively established that homeopathic remedies are no more effective than placebos, , its not plausible that such remedies are effective-- But the huge amount of accumulated evidence against homeopathy is not sufficient for the Indian Government to withdraw its support to homeopathy; it has instead sought to promote homeopathy by providing false information to the public. ( Advertisements proclaiming the " benefits " of homeopathy have been erected all along Delhi Metro ) Shameful !

Yet the same Indian government which doesn't have funds for hospitals and schools, cannot ensure even the most basic services to its citizens , finds it convenient and necessary to launch a mission to the Moon. Although its true that providing inspiration and motivation to the younger generation , especially science students,is necessary, wouldn't the money be better spent if it was used for improving government hospitals , schools and colleges--or for that matter, improving public transport in congested Indian cities by constructing more Metro rails throughout the country? Its no secret that urban infrastructure is inadequate for the largely growing population , yet the government considers it necessary to launch a mission to the moon rather than improving basic services. Recently , a person from Delhi remarked that although Indian scientists have discovered water on the Moon, water supply to homes still remains erratic,insufficient and contaminated.

The urban middle class can afford Water Purifiers to protect themselves from water-borne diseases, but the poor have to suffer from periodic episodes of diarrhea,and worse hepatitis* and cholera. The Indian State can fund a program to find water on the Moon, but apparently its unable to find money to provide clean drinking water to its denizens. And where do the hepatitis-infested patients go ? To government hospitals, where services are , well, less said, the better...

.. This for a country, whose Constitution declares it to be a " Welfare State " . If Public Welfare was Space Missions to the Moon, nuclear submarines, large statues and memorials, Indians would have been the most prosperous of people.



**- the AIIMS doc prescribed an anti-epilepsy drug , along with an antidepressant. I fail to understand why would an anti-epilepsy drug be needed for treating a fairly routine case of major depression, when there was no reason to believe that the patient would not respond to standard antidepressant medication. moral of the story-- use google to verify any prescription by a goverment doctor.

* -what is commonly referred to " jaundice " in india , is termed " acute hepatitis " in medicine.

I just came to know that Australia ( which has #2 ranking in the Human Development Index ) , still doesn't have a Space Agency.

How religion creates the most irrational of prejudices and customs, yet escapes criticism & rational scrutiny .

It's amazing how religion creates and promotes the most irrational of prejudices and yet considers itself to be immune from any rational scrutiny or criticism. And followers of religion ( brainwashed individuals ) give all sorts of absurd reasoning to justify their sticking tenaciously to their prejudices , in the face of growing evidence that the prejudice is not only irrational and unwarranted, but also harmful.

The classical example of such a irrational prejudice would be vegetarianism among many hindus. Despite the common knowledge that plant foods lack the essential nutrient Vitamin B12, India's scientific and medical community has largely overlooked and ignored the implications and consequences of widespread vegetarianism . Anyone having some knowledge of nutritional science would instantly realise the grave danger in such a situation-- what happens if an individual is lactose intolerant ( meaning s/he cannot digest lactose, the sugar in milk, and hence cannot drink milk )--such a person would depend upon yogurt* as the sole source of an essential nutrient in their diet . And if due to any reason , if this sole source of B12-yogurt is absent for long periods of time-- in my case, the consequences manifested in decline in memory and cognitive abilities, leading to poor academic performance and humiliation, ultimately culminating in full-blown mental illness.

I am sure, this situation is not rare in India-- India's public health authorities and the medical community has completely overlooked the issue and not even bothered to create awareness in the public about the dangers of B12 deficiency ( and the absolute need for including yogurt in diet ) . Indeed , despite the alarming figure that 81 % of urban middle class residents of Pune are atleast slightly deficient , India's scientific and medical establishment continues to overlook the issue. **

But what is even more amazing is the fact that some of the most voracious supporters of hindu-vegetarianism would leave no stone unturned in criticising the practice of muslim women compelled to wear veils ( " burqa " ) . What an amazing hypocrisy, upholding one's own irrational prejudice but criticising another's irrational social custom.





Vegetarianism among hindus and the practice of wearing veils among muslim women are both symptoms of a disease called religion.

**- the fact that India's scientific and medical community has largely ignored this alarming situation can be explained invoking the concept of SELECTIVE EXPOSURE-human beings have the tendency to ignore or discredit information which is highly inconsistent with our strongly-held attitudes and prejudices.

*- yogurt refers to what is known as " curd " in india.