Economic Exclusion and Economic Exclusion and Poverty Linkages –Poverty Linkages –

Concept, Consequence and Concept, Consequence and Remedies in the Asian Remedies in the Asian

ContextContextSukhadeo Thorat Sukhadeo Thorat

Professor, Jawaharlal Nehru Professor, Jawaharlal Nehru University and Chairman University Grant and Chairman University Grant

Commission, India Commission, India

PurposePurpose

Discuss Concept of Economic Exclusion,Discuss Concept of Economic Exclusion,

Its consequences on poverty and growth,Its consequences on poverty and growth,

Policies - Insight from theories,Policies - Insight from theories,

Economic Discrimination - Indian Context,Economic Discrimination - Indian Context,

Situation of the Excluded Groups,Situation of the Excluded Groups,

Policies against Economic Discrimination in the Asian Policies against Economic Discrimination in the Asian context .context .

Conceptualising Economic ExclusionConceptualising Economic Exclusion

Economic exclusion is denial of equal Economic exclusion is denial of equal opportunity in markets and non-market opportunity in markets and non-market exchange to individuals due to their group exchange to individuals due to their group identity .identity .

Features –Features – a) Exclusion imbedded in social relations, a) Exclusion imbedded in social relations,

whose out come is exclusion,whose out come is exclusion, b) Outcome is denial of access to sources of b) Outcome is denial of access to sources of

income and education,income and education, c) It operate through market and non market c) It operate through market and non market

transactions.transactions.

Conceptualising Economic ExclusionConceptualising Economic Exclusion continued….continued….

Consequences of economic exclusion thus Consequences of economic exclusion thus depends on functioning of economic institutions depends on functioning of economic institutions and degree to which they are exclusionary in and degree to which they are exclusionary in outcome .outcome .

Market discrimination –denial of access to Market discrimination –denial of access to market and or access with differential treatment, market and or access with differential treatment, in prices ( wage and input price )and term of in prices ( wage and input price )and term of condition of exchange- both sale and purchase condition of exchange- both sale and purchase

Consequences-Growth and Poverty Consequences-Growth and Poverty

Economic growth, inequality/poverty and inter-Economic growth, inequality/poverty and inter-group conflict. group conflict.

• On Economic Growth: Market discrimination adversely On Economic Growth: Market discrimination adversely affect resource allocation, affect resource allocation,

• Less than optimal allocation of labour and investment Less than optimal allocation of labour and investment among firms. Imperfect market situation.among firms. Imperfect market situation.

On Poverty: denial of access to market and or On Poverty: denial of access to market and or differential treatment ,leads to unemployment, differential treatment ,leads to unemployment, low wage earning, higher price for inputs and low wage earning, higher price for inputs and lower price for products bring low income. lower price for products bring low income.

Caste and Economic Discrimination:Caste and Economic Discrimination:

In Caste based Economy, occupation (or property In Caste based Economy, occupation (or property rights), are fixed hereditary, and endogamous. (Akerlof, rights), are fixed hereditary, and endogamous. (Akerlof, Scoville, Lal and Ambedkar) Scoville, Lal and Ambedkar)

Entitlement of rights across caste is unequal and Entitlement of rights across caste is unequal and hierarchal,hierarchal,

Some occupations are considered socially inferior with Some occupations are considered socially inferior with low social status for those engaged in them,low social status for those engaged in them,

Caste Economy is maintained through instrument of Caste Economy is maintained through instrument of social ostracismsocial ostracism

Caste and Economic ExclusionCaste and Economic Exclusion

The caste system's fundamental characteristics The caste system's fundamental characteristics of fixed economic rights for each caste, with of fixed economic rights for each caste, with restrictions for change implies "forced exclusion" restrictions for change implies "forced exclusion" of one caste from the rights of other caste, or of one caste from the rights of other caste, or from undertaking the occupations of other from undertaking the occupations of other castes. castes.

Economic Exclusion in occupation and Economic Exclusion in occupation and employment, is therefore, internal to the system, employment, is therefore, internal to the system, and a necessary outcome of its governing and a necessary outcome of its governing principles. principles.

Asian context Asian context

Studies indicate identification of groups. Studies indicate identification of groups.

Facing exclusion based on religion, ethnic and Facing exclusion based on religion, ethnic and social origin, colour, race in Asia-Specific. social origin, colour, race in Asia-Specific.

Countries developed equal opportunity policies, Countries developed equal opportunity policies, Known example include, Known example include,

Malaysia, Japan, China, Pakistan, India, New Malaysia, Japan, China, Pakistan, India, New Zealand, Nepal, Srilanka, and othersZealand, Nepal, Srilanka, and others

Consequence on growthConsequence on growth

On Economic Growth:On Economic Growth: Fixed property rights means factor immobility,Fixed property rights means factor immobility,

Imperfect market situation, segregate market Imperfect market situation, segregate market

Economic outcome less than optimum ,Economic outcome less than optimum ,

Unemployment consequences,Unemployment consequences,

Disincentive for efficiency. Disincentive for efficiency.

Consequences on povertyConsequences on poverty

Unequal assignment of rights, economic and Unequal assignment of rights, economic and education and denial, lead to lower access to education and denial, lead to lower access to income earning assets, skill, education, income earning assets, skill, education, employment, wage earning,employment, wage earning,

All leads to lower income and high poverty, All leads to lower income and high poverty,

Civil and political rights – lack of participation Civil and political rights – lack of participation and governance.and governance.

Consequences on Poverty: Indicators (1999-Consequences on Poverty: Indicators (1999-2000)2000)

Poverty Rates (2004/05) ST SC Others All

Percentage of Poor (Rural) 47.54 36.8 22.69 28.3

Percentage of Poor (Urban) 33.92 39.81 22.59 25.5

Consequences on Poverty (99/00) Consequences on Poverty (99/00) continued…..continued…..

Mal-Nutrition and Under Nutrition SC ST Non SC/ST AllInfant Mortality 83 84 62 NAChild Mortality 39 46 22 NAPercentage of Children with Anameia 78 79 72 NAUnder weight Children 21 26 14 NA

Consequences on Poverty (99/00) Consequences on Poverty (99/00) continued…..continued…..

Asset, Employment, Wages SC ST Non SC/ST AllAccess to Agricultural Land and Capital Assets Percentage of Self-Employed Cultivators 16 48 41 NAPercentage of Wage Labour 61 48.6 25 NAUnemployment Rate (Current Daily Status) 5.5 3.0 3.4 NANon-Agricultural Wages of Rural Poor (Rs) 61.06 54.38 64.9 NAPercentage of Non-Agriculture Workers (Job Diversification) 27.07 15.8 32.2 NA

Consequences on Poverty (2001) Consequences on Poverty (2001) continued…..continued…..

Literacy Rates ST SCNon

SC/ST All

Literacy Rate (Rural) 51.16 45.02 62.55 58.74

Literacy Rate (Urban) 68.12 69.09 81.8 79.92

Market Discrimination (Data: 2002, 550 Market Discrimination (Data: 2002, 550 villages & 11 states)villages & 11 states)

(a) Labour MarketDenied work as agricultural labour 35.5 -158No touching when paying wages 37.1 -174Paid lower wages for the same work 24.5 -119SC not employed in house construction 28.7 -152(b ) Input MarketDenied access to irrigation facilities 32.6 -152(c) Common Properties ResourcesDenied access to grazing/fishing grounds 20.9 -76(d) Consumer Market – Sale & PurchaseNot allowed to sell milk to cooperatives 46.7 -162Prevented from selling in local markets 35.4 -165Not allowed to buy from milk cooperatives 27.8 -100

Forms of Market Discrimination Percentage of Villages where

Form is Practiced

Muslims: Well Being Indicators (NSS 61Muslims: Well Being Indicators (NSS 61stst round) round)

Indicator of Well Being (2004/05)   MuslimsNon-Muslims

Poverty (%) Urban  41.37 22.52 

  Rural  29.22 28.16 

Literacy Rates (2001) Urban 70.00 85.00

  Rural 53.00 77.00

  All India 59.10 70.80

MPCE (Rs) Urban 804 1485

  Rural 553 823

    Muslims Hindus Only

Work Population Ratio (Age group 15-64 years) Urban 51.10 53.10

  Rural 57.00 70.30

  All India 54.90 65.80

Mortality (IMR) Urban 40 53

  Rural 68 83

  All India 59 77

Government PolicyGovernment Policy

Strategy of Economic, Educational and Social Strategy of Economic, Educational and Social Empowerment: Compensatory measures: Empowerment: Compensatory measures:

• Income earning assets-land and capital, Income earning assets-land and capital, • Redistribution of surplus land from land Redistribution of surplus land from land

ceiling and government land,ceiling and government land,• Capital, skill for entrepreneur-for business Capital, skill for entrepreneur-for business • Educational Development, Educational Development, • Housing, Social amenities etc. Housing, Social amenities etc.

Equal Opportunity Policy -ReservationEqual Opportunity Policy -Reservation

Fair share in Employment, education, housing, Fair share in Employment, education, housing, In executive and governance-public spheres, In executive and governance-public spheres, Civil spheres: Anti-Discrimination law, Civil spheres: Anti-Discrimination law, Administrative set up -ministry, Administrative set up -ministry, Special institutions,Special institutions, Special economic plan. Special economic plan.

Agenda for Research and PolicyAgenda for Research and Policy

Exclusion in Asia takes multiple forms Exclusion in Asia takes multiple forms Social origin, ethnicity, religion, colour, race Social origin, ethnicity, religion, colour, race

Need to study the forms and nature of EE,Need to study the forms and nature of EE, Study consequences on economic growth and poverty Study consequences on economic growth and poverty Study present equal opportunity policies and best Study present equal opportunity policies and best

practices.practices. Suggest policies for market discrimination and of equal Suggest policies for market discrimination and of equal

access to discriminated groups. access to discriminated groups.