Poverty estimates in India

We (I alongwith my co-author, Prof. Srijit Mishra) worked on the poverty estimates for India. This article is published in Poverty and Public Policy and provides estimates of poverty and inequality across states as well as for different subgroups of the population for 2004–2005 by using the old and new methods of the Planning Commission. The new method is critically evaluated with the help of some existing literature, and its limitations are discussed with regard to doing away with calorie norm, use of median expenditure as a norm for education when the distribution is positively skewed, difficulty in reproducing results for earlier rounds acting as a constraint on comparisons, and using urban poverty ratio of the old method as a starting point to decide a consumption basket. More importantly, it discusses the implications on financial transfers across states if the share of poor is only taken into account without accounting for an increase in the total number of poor. Despite these limitations, on grounds of parsimony and prudence, the state-specific poverty lines suggested in the new method, as also in the old method, are used to discuss implications on poverty for different subgroups of the population (i.e., NSS regions, social groups, and occupation groups). It also raises concerns on reducing a complex social phenomenon such as poverty to a narrow set of parameters and also its implications on policymaking.
Following are some figures from the same paper:

Find it here: Poverty Estimates in India 

Poverty in India and it's Decompositions: A Critical Appraisal of the New Method

This work was motivates by the report on new poverty lines submitted by the Tendulkar committee.
The Planning Commission recently released poverty estimates across states for rural and urban areas of India for 2009–10 (GoI 2012). A matter of concern raised in the media is low poverty lines leading to a social experiment of living by spending 32 rupees only per day by young persons. There have been discussions in the academia also. This has revived the need to critically evaluate the Report of the Expert Group to Review the Methodology for Estimation of Poverty (GoI 2009). The purpose of this chapter is two-fold. First, we raise some issues with regard to the new method, which also borrows from existing literature, including some earlier work of ours (Pathak and Mishra 2011; also see Mishra 2012).
Second, we use the poverty lines provided by the Planning Commission for rural and urban areas separately to compute the incidence, depth, and severity of poverty and inequality
at the aggregate all-India level as also across states, social groups, religious groups, occupational groups, educationwise, and gender-wise. We also analyse poverty reduction
between 2004–5 and 2009–10 at the aggregate all-India level as also for some sub-groups of the population by looking into sectoral and growth-inequality decompositions. The
differential impact of the growth process between these two time points on poorer and richer sections of society is also visualized through growth incidence curves for rural
and urban India.
The complete paper can be accessed in the Human Development Report, 2012-13, published by the Oxford University Press, India.
Find it here: Poverty in India and Its Decompositions: A Critical Appraisal of the New Method

Poverty and Inequality in Uttar Pradesh: A Decomposition Analysis

Front Cover

Back Cover

Dedicated to my Mentor

My new year started with getting my first monograph published by Lambert Academic Publishing, Germany. This is a revised version of my first working paper written at IGIDR during my post doctoral days. 
My facination with NSS data has an interesting story. When I was pursuing my PhD, I saw some people doing analysis with NSS data and I thought that I should learn this. requested them to initiate me also. People promised and as usual they never kept their promises! And to add a pinch of salt to the story, someone challenged me to work with NSS data when he came to know that I'm going to pursue Post-doctoral research. I requested so many people to initiate me in 'occult science' of NSS data extraction and use but no one buzzed as if they have taken oath not to divulge the secrets of the tread! So, as always, I embarked on this expedition alone and somehow deciphered the hieroglyphs. Seeing my insane zeal toward NSS data, my mentor Srijit later on bestowed me with some insights. Prof. Shovan Ray also encouraged me whenever I was sinking in sea of my self-doubts. Thus came out my first working paper at IGIDR and believe me, it was in such a bad shape that I didn't know what to do with it. But thanks again to my mentor Srijit and another person with a sterling heart, Prof. M.H.Suryanarayana I could improve it considerably. I'm indebted to these people.
I have dedicated this work to Srjit, a very small gesture from my part.
https://www.lap-publishing.com/catalog/details/store/gb/book/978-3-8465-5807-2/poverty-and-inequality-in-uttar-pradesh:-a-decomposition-analysis

Poverty Estimates in India: Old and New Methods, 2004-05

This is a working paper dealing with poverty estimates for India using the Old and New (Tendulkar Committee's) methods and is co-authored with Dr. Srijit Mishra. The Planning Commission has accepted the recommendations of the Tendulkar Committee, though it leaves a lot of questions unanswered. The present paper critically discusses these issues. It also presents poverty incidences, depth and severity estimates at various levels of disaggregation like state-region, social group and occupation group for 2004-05 using the 61st round of NSS data. Someone working on 2004-05 poverty estimates for India (61st round of NSS data) may get references from this paper. I started this paper with two quotes: one is from the Discorsi Politici authored by Francesco Giucciardini, one of the leading writers of the Italian Renaissance. He said, "The poor are a part of necessary furniture of the earth, a sort of perpetual gymnasium where the rich can practice virtue when they are so inclined". The other one is from W. B. Yeats, a great poet. "But I, being poor, have only my dreams; I have spread my dreams beneath your feet; Tread softly because you tread on my dreams..." These quotes were kept purposefully and while reading the paper, one should get it. It can be downloaded from:

http://www.igidr.ac.in/pdf/publication/WP-2011-015.pdf
An alternative link for download is:
http://works.bepress.com/durgesh_chandra_pathak/19/

happy reading...

Union Budget of India 2009: A Tale of Missed Opportunities and Some Gains

The Budget-2009 has struck some right cords but have mostly gone wrong as the player failed to recognise all correct cords in the harp.
Good points:
1. The budget has focussed on rural development, thanks to the belief that NREGA is behind poll-success of UPA. It has hiked allocations to NREGA in an unbelievable manner. I remember when NREGA was being drafted and being discussed for resource allocation, everyone was frowning that it would cost 1% of GDP...! Really, nothing sells in India like poll-success.
2. The abolition of FBT.
3. Rs. 300 crore for Drainage system in Mumbai. When Mumbai comes to satnd still due to waterlogging, India makes substantial economic loses as Mumbai is the financial capital of India.

Weak points:
1. NREGA is widely infested with corruption. So, where would the bumper hike in allocation would reach really...the poor’s pocket (if they have one!) or in accounts of government officials? Also, the government is forgetting that NREGA is just a ‘famine relief’ kind of model and it must be linked with other self-employment schemes to make the poor out of poverty.
2. The government should have raised the tax-exemption limit up to at least Rs. 3 lakhs per annum. The middle class in India is the most populous and prominent consumer class in India that has lot of unfulfilled demand. Tax exemption to this class would have given a big fillip to the aggregate demand in the economy. Does the Finance Minister have any idea how a family of five with monthly income of Rs. 25,000 struggles to make ends meet in a market where pulses are Rs. 75 a kg, Potato is Rs. 15 a kg and so on...!
3. Government should have increased tax rates slightly for the Upper and Upper-middle class. This would have raised enough revenue to more than offset the decrease in tax collections due to tax exemption of the middle classes.
4. Further, the abolition of Tax-surcharge on income more than Rs. 10 lakh is ridiculous. This class spends mostly on foreign-made goods so the Finance Minister is going to boost demand for foreign goods in India...! One more thing, what is more helpful to revive demand in economy: 10 middle class households purchasing washing machines, TV, fridges, AC or one super rich buying a Mercedes...?
5. What is logic behind putting custom duty on Gold and Silver on the one hand and on the other, totally exempting Branded jwellary from production duty...May be the finance ministry wants everyone in India to go for branded items...! Rural households would now find purchase of Gold and Silver costlier. They can't always forego such expenditures as it is customary in weddings. May be finance minister wants to give some more relief to those who are earning in or above bracket of Rs. 10 lakhs.
6. It is really great that the finance ministry has finally recognised the power and need of rural development but from where they are going to meet the expenditure out. Keeping a fiscal deficit as high as 6.8% is going to prove detrimental in time. Government borrowing in market would crowd out the private investment by hiking the rate of interest.
So, the budget-2009 is very good on the part of development of rural India but fails to take some harsh steps in order not to attract wrath of urban rich. This may stand in realisation of the true potential of an otherwise good budget.

Nanoing the way to change

Nano is finally on the scene, thanks to grit of Tata. One day, actually last year, I was traveling in an auto in Mumbai. I started chatting with the driver both to pass time and to get some idea of their thinking. It was just a few months after Tata had unveiled the Nano in Auto-expo. I asked him what do he think about Nano. He said that Tata is doing real good but it would hurt people like him. I asked and he told that now more and more people would shift to buying cars so the people opting for travel in auto would decrease. I was astonished with his sheer calculations but suddenly a thought came to me and I shared it with him also. I wondered if the Government of India can start a scheme under which they provide some loan to the auto-drivers to buy nano and they can repay the loan in installments. Also, the government can give some exchange-value for their auto. This could have following benefits:

1. First and foremost, it would increase the dignity and self-respect of the auto-drivers as they would then become proud owner of a Taxi,
2. It would reduce the emission-problems up to a great extent and thus the air-quality would improve,
3. The Nano project could also become economically viable and sustainable by the bulk purchases from the government. Nano could be seen as something of which India can feel proud (as the world's cheapest car).
4. The aesthetic looks of the cities would improve as the brand-new Nanos would replace the old autos.

So planner! are you listening...?

Countering the Economic Recession: Impact of the Sixth Pay Commission

The economic recession has resulted in pay-cuts and job-cuts also. One of the driving force behind the previous boom was hefty pay-packets of the private sector. Now, since private sector is gripped by a fear psychosis. People are not only forced to accept substantial cut in salary, they're also under constant fear of losing there job any day. This uncertanity has put reins to their habit of extravagant spending . This could've deepened the crisis further due to shrinking demand. But a countervailing force in form of the Sixth Pay Commission came and the government employees got a sudden surge in their purchasing power. They had unsatieated demand and the Sixth Pay Commission made funds available to saturate this demand. This is one of major reasons why India is comparatively less severely affected with the global recession

Job Cut vs. Pay cut: The Prudent Choice

Job Cut vs. Pay Cut: The Prudent Choice[1]
: D. C. Pathak[2]

The world is facing a grave financial crisis these days. Varied responses/opinions have come to deal with this crisis; from extensive bailout plans to job cuts and pay cuts. As this crisis has put a question on the credibility of all economic thinking[i], debate is on over its various implications and the future course of action. Like other countries, India is not immune to this crisis. A decision to cut jobs by the Jet Airways due to the present financial crisis fueled a debate. Though the decision has been reversed, the debate is yet to settle. An issue has come up with Jet’s employees accepting a pay cut in lieu of job cut about the reparability of the two. An article at the website ‘Knowledge@Wharton’ presents varied view on the issue of job cut vs. pay cut in details. The article mainly contemplates the issue from HR point of view. The present article has tried to deal with the economic aspect of the issue.

Before proceeding on to make arguments, it would be better to discuss the assumptions behind the arguments.
Workers from one sector/industry can’t be employed in some other sector/industry due to specialized skills needed. It means, inter-sector/industry mobility of labour is zero.
Job cut implies a zero income, i.e., .
Pay cut implies that the new income stream would be less than the original income stream but would be significantly greater than the . It implies that
4. All workers have some accumulated savings.
5. Savings are a function of income , i.e.,
6. All savings are invested.

Suppose a firm was paying its employees Rs. 100/month. Now it wants to downsize by Rs. 1000. It has two choices: either it go for a job cut of 10 employees or it can go far a pay cut of say, 100 employees, cutting Rs. 10 from each employee’s salary. Other firms in the industry would face the similar choice. Though both options look alike but they affect the employee and the economy differently. In the first case of job cut, the income streams accruing to employees would become zero. So, now they will have recourse to only there accumulated savings. Though number wise the job cut would seem insignificant, but when one considers the hefty pay packets these employees get, it would be quite significant financially. Being a rational consumer, the out-of-job employees would cut his expenditures drastically as he would not want to finish up his all savings. Cut in expenditures would lead to fall in demand. Since the supply would take some time to fall, the result would be a general oversupply of goods leading to a price fall. Falling prices would create a panic among the producers and they would reduce their inventories and may also resort to job cuts if they feel the low demand condition to continue. This situation if left to feed on itself unchecked, would lead to depression in the economy. Also the out-of-job people would not make any saving so that part of money supply would reduce which depend on savings by these people. A fall is money supply means a high rate of interest. A high rate of interest would lead to a fall in investment decision. This chain of events would again lead to depression in the economy.
One can safely assume that the people with pay cut would expect even the worst and therefore wouldn’t draw heavily on their accumulated savings. They will, instead, go far a reduction in consumption expenditure. Even this reduction should be less than that for the out-of-job people. The people with pay cuts would also reduce or in some extreme cases stop making new savings. This would reduce the money supply but by much less extent than for the case of out-of-job people. A comparatively less reduction in money supply implies that the increase in the rate of interest would be comparatively less in case of pay cut. Thus, if all the firms in the economy opt for a general pay cut rather than a general job cut, the chances of the economy falling in grip of depression would reduce. As the employees can’t move across industries owing to specialized skills requirements, a general job cut would create an unused skill-pool. A drawback of specialization is that one loses touch with other common tasks which fall outside the gambit of this sector/industry. Such employees feel the punch the hardest as they found it very hard to get and do well in some other sector/industry. Though they're good at what they know, they're worthless in such a situation, a kind of paradox. Thus, from an economic point of view, a general pay cut is preferable to a general job cut. An across the board pay cut would even motivate the employees by instilling a feeling of oneness and kinship in the firm. This may work miracles as the collective will can attain anything.
Apart from above economic arguments, there are also some other arguments[ii] against job cut. To list a few,
1. As rightly pointed out by an article in Knowledge at Wharton by title 'Job Cut vs. Pay Cut: In a Slowing Economy, What is Better for India?'[iii], losing a job creates an image of incompetence in the mind of family and friends. Even more dangerous is that it would lower the self-esteem of an individual and that can lead to further decline/irreparable damage to his/her self-image and efficiency.
Losing a lucrative job would plunge the person in a quagmire of depression, affecting the mental health of the person and his family/friends.
As an extreme step, the employee may commit suicide also. News about suicide by people due to loss in the stock-market has come recently.




[1] The motivation for this write up came from Roberta Shell’s article in ‘Knowledge@Wharton’.
[2] The author is a Senior Research Fellow at the OKD Institute of Social Change and Development, Guwahati (India).
[i] See “Economics needs a scientific revolution”, an essay by Jean-Philippe Bouchaud in NATURE, Vol 455, 30 October 2008. Also see the blog posting: http://misplacedemphasis.blogspot.com/2008/11/economics-needs-scientific-revolution.html

[ii] Can be assessed at http://durgeshonomics.blogspot.com/2008/11/should-we-cut-jobs-or-downsize-pay.html
[iii] This article can assessed at http://knowledge.wharton.upenn.edu/article.cfm?articleid=4333 and presents varied opinions by several persons.

Who saved us...?

Ever wondered what/who saved India from the global financial turmoil? Our Prime Minister and company would say, it was our strict regulation on banking/financial system. Well said but what were these restriction doing when some people played spoil-sport with our financial system some years ago via share-scams...!
Sorry to say but I've entirely different thinking on the rather safe plight of India in the global financial crisis. India has a vast non-monetaized sector and a staggering army of poor or not-so-rich who could invest in our miraculous innovations in financial sector. How can those who barely meet to square meals, should invest in these. And it was this fact that saved India. If Indian would also have large investment in financial market, they would also have been facing the same crisis even more severely. This is a naked truth whether anyone would like to accept it or not. So, dear fellow economists and dear PM (alongwith your hugh army of think-tanks) your regulation has not saved us but government's failure to erradicate poverty has. Doesn't feel good...sorry, can't help it.

Choosing Among Unequals...! A Solution for Vishisht BTC

In Uttar Pradesh, a new tradition has been started of selecting B.Ed degree holders for a job in Primary Schools and it has been named "Vishisht BTC". Applying their own logic, the ruling governments use variuos criterion to select the candidates. The basic problem is that they have to choose candidates on the basis of merit of their marks in various exams. Now, it is well-established fact that marking is not similar in all universities/colleges. So for a same exam, there can be much inter-university as well as intra-university variation in marks given to students. The point is that student from a college/university where marking is very strict, would always lag behind in the merit and so would have very sparse chances of getting the job. This would lead to adverse selection.
Normalization of scores can be an elegant solution to this problem. For more detailed analysis of the problem, one can refer to the following link:
http://works.bepress.com/durgesh_chandra_pathak/8/

Development...really...!

I was enjoying a stroll after lunch when I visited him in Shillong. I was enjoying the beauty of nature. I told him, appreciating in my heart, that the only here could I see real hill-type house...houses with sloping roofs. I missed them in Guwahati, which has become like any other metro, boasting of its glittering malls and other hallmarks of prosperity. He told me, smiling, that when these people would earn some money, they would go for the renovation of these houses and then you would not find your poetic kind of houses with sloping roof. He showed me some newly constructed houses for proof. They were exactly alike houses at normal towns. He quipped that these people would love to make houses of modern type as a symbol of their development. A sudden rush of gloom engulfed me far I was not sure that the transition of people from old-style houses to modern ones would be a development or not. It is prosperity accepted but losing ones identity does not appeal me. I don't believe that it is 'development'. I told my friend that I'm constantly in argument, since my College days, with people who see these changes as 'development'. Is it necessary that 'development' must entail losing ones identity, values...! The crisis of values which our society is facing is the outcome of the same 'development'-philosophy. But then I stopped as I realised who am I to decide what constitutes people's identity...!

Should we cut jobs or downsize the pay-packets...?

Firing someone from job owing to the recent financial crisis would have several undesired aftereffects. To list a few of them,

1. As rightly pointed out by an article in Knowledge at Wharton by title 'Job Cut vs. Pay Cut: In a Slowing Economy, What is Better for India?', losing a job creates an image of incompetence in the mind of family and friends. Even more dangerous is that it would lower the self-esteem of an individual and that can lead to further decline/irreparable damage to his/her self-image and efficiency.
2. Losing a lucrative job would plunge the person in a quagmire of depression, affecting the mental health of the person and his family/friends.
3. As an extreme step, the employee may commit suicide also. Several news about suicide by people due to loss in the stock-market has come recently.
4. Now the economic aspect: losing a job means losing the purchasing power which means low level of effective demand. This would translate into a glut in the economy and ultimately will deepen the depression.
5. When employees from a particular industry/sector lose job at a large scale, it creates a problem of unused skill. These employees have specialised a particular job. A drawback of specialisation is that one loses touch with other common tasks which fall outside the gambit of this sector/industry. Such employee feel the punch the hardest as they found it very hard to get and do well in some other sector/industry. Though they're good at what they know, they're worthless in such a situation, a kind of paradox.

Bravo...!

I've been observing the public reaction since the Oct. 30 blasts. I'm mesmerised by the way people of Assam are reacting. The solidarity they're showing to the blast-victims, their angst towards the blasts and their protest of the politicians who always try to use such situations for getting a political mileage, is worth praising. The public has shown, both to the terror-mongers and to the politicians, that they can't divided on lines of caste and religion. In fact, the grief has cemented the souls together. Bravo! the brave people of Assam.

p.s.: One can read an article over Assam-blasts on my another blog:

http://durgesh-the-dreamer.blogspot.com/2008/11/blog-post.html

Demi-Gods...!

Those of you who’ve read the ‘Kitne Pakistan’ by late kamleshwar would be musing over the secessionist cries India is facing. Which part of the country is left untouched with the venom of regionalism, secessionism. It was and still there is in Kashmir, it was in Panjab, it was in North-East and now the latest to join the fray had been the Maharashtra, thanks to its self-proclaimed messiah. He is standing tall (sic) for the cause of the Marathi people; at least he and some of others like him think so. He can challenge the Government of India: catch me and the Maharashtra would burn…oho! What a great show of power. And then his intelligent followers just missed to ask, “But why should Maharashtra burn? Isn’t it the Marathi people who would also suffer…!” But who cares. Messiah ji! You’re really great. You can make the ‘star of the millennium’ bend on his knuckles, you would justify the beating of youth from Bihar and UP when they go to Mumbai for appearing in exams; who cares if one of them died and was the sole hope of his family…! One question Messiah ji, have you ever appeared in any competitive exam to get a job…oho, don’t frown please, let me ask another question: are you educated enough to sit in a competitive exam. If yes, then please do come to any part of India for appearing in an exam and we would treat you with utmost honour not because we’re afraid of you but because we Indian still believe in ‘atithi devo bhav’. And you know why we’re not afraid of your appearing in a competitive exam…very simple, we believe that the talent should be rewarded. Those of you who have been born with silver spoon in mouth can't understand the hardship with which a middle class family arranges for the staudy of its wards and waht hopes they pin on them.
These youths should have been even beaten more, anyone who speaks against you must be crushed. How dare they forget that you’re ‘Maratha Bhagya-Vidhata’. You can use vituperative language against any one. You can spit fire against the Film Actors, claiming that they have earned all their fame and wealth in Mumbai. Should I remind you that Mumbai would have benefited more economically by the work of these actors. Don’t believe me…go to Economics department of Mumbai university and some professor would explain it.
If you’re really well-wisher of marathi people, you wouldn’t have created all this mayhem on ‘outsiders’ coming to Maharashtra and getting jobs. Doing so is simply reducing the competition in the job market and everyone knows what happens when competition is removed from a market. You’ll be left with lesser choice; jobs wouldn’t go to the most efficient but to some one who is less deserving. It is very easy to guess that the overall economic efficiency would be affected adversely and the actual output of the state would be less than its potential output. So, your ‘save Mumbai’ campaign would, in fact, go hurting Mumbai’s interest.
Ok, you may accuse that we’re using economic jargons to frame you. So, you must have gone through, or at least heard of the Constitution of India. You would also be aware that it guarantees every Indian a freedom to live and get job at any part of the country. Now, don’t tell me that you’re an extra-constitutional being…!
I appeal to all the Maharashtrians not to fall pray to such secessionist campaigns. Ask the Messiah what he has actually in his mind. It is not the interest of the Maharashtra-people but a burning desire to carve a niche for him in Maharashtra politics, a la-Thakre mode. He is pursuing the path to political power and finally to economic power. He knows it very well, like all other politicians, that in India, people can be fooled in name of religion, regions etc. damn easily and he is simply playing the region-card.
There is still time. Indian government should take stern actions to check all such voices lest every state would start behaving in the same manner and the national interest, economic as well as political, would be seriously undermined.

He Raam...!

I'm watching, with grief, what is happening in the surrounding...blasts rocked the city, people lay crippled, dead; blood and gore every where...I was shocked with news as I visited the place Ganeshguri only the previous evening to buy some medicines. It was my first visit to the place as I've shifted to Guwahati only on Oct.22, 2008. I was aghast with the news not because what would have happened if the blasts would have took place on the evening I went there but by the thought that the place whose beauty I 'd adored only few hours ago, was now painted with warm blood spilled out of crying humanity. All the beautiful faces reeled before my eyes whom I'd adored the previous evening seeing their jest for life...no way to know who among them is still alive...!
Why...the only thing came to me was a big, painful "why": why this has happened...I don't care, unlike the politicians of my country who are busy blaming each-other for it, who has done it...what is troubling me is why they have done this...! Whom they're trying to kill...their own countrymen...oh Humanity! I'm sorry for your slow demise...Are we reaching the end of the world in Elliot's way...not with a bang, but in a whimper...
Only person whom I could think of this time was Gandhi ji and I was surprised why I'm thinking of him...I'm not blind admirer of him though I liked several aspects of his struggle. My heart gave me the answer: we're moving away from his path; every struggle, every oppose must have a moral heart behind it otherwise it would only play havoc the way we are witnessing all this mayhem...!
Sorry to start this blog on a sad note, but there was no way out...!
There are some inescapable points worthy of an inquiry from an economist’s view in all such mayhems and also in the non-violence philosophy of Gandhi. It is often baffling why the politicians don’t show the determination to deal with such acts of terrorism. They often claim that we don’t have enough resources to beef up the intelligence and security. To me it is more a matter of ‘intention’ than of ‘scarcity of means’. I feel the politicians don’t have any intention of preventing these events as strict measures taken would displease some groups and that would affect adversely their ‘vote bank’. The political power, something which they want to grab at all cost, to too priceless to them to be squandered for curbing such extremist groups. They don’t want the political power for its own sake but for the economic power it brings with it. Bare political power would be worth less and I think that if there would be some such provision that those with political power wouldn’t have any control over the economic power and its agents then very few people (only those driven by power and prestige motive solely) would opt for the political power. The political power in country opens the floodgates of opportunities: of corruption, of nepotism, to name a few.
The politicians are aware of the fact that the people with separatist/extremist ideology don’t have any affection for them. They would vote for a party/politician who would seem to protect their interest the most as they don’t have their own political clout to such an extent to come to power on their own alone. The politician knows this and he is also aware of the fact that these votes could be decisive in election so he would not want to take any stern action which would make these votes shift away from him. Losing an election is losing an opportunity for corruption, nepotism and making easy money, something which the politician don’t want to forgo. As far as the victims of such violent/extremist activities are concerned, they don’t have much choice to make: all the politicians are of made from the same cast. Therefore, it is this access to economic power which detains the politicians to take stern actions and deal with extremist ideologies.
Now, let’s have a look at the Gandhian philosophy and the economics behind it. Adhering to non-violence reduces the economic losses to a minimum. Both, the violent events by extremists and the following protest of it by irate masses causes economic losses. Whether it is an immediate and direct loss in form of loss of public property due to blasts etc. or it is not-so-direct economic loss ensuing form the ‘band’ organized in protest of violent events. Some times protest events themselves turn violent and incur huge loss of public/private property, an example can be found in the violent protest by public after the October 30 blasts in Guwahati. This loss to public property would cast the public itself as they have lost some public goods which were created from the money which they paid as taxes. Also, this loss would drag the economy a bit, howsoever small this drag be. So, ultimately the loser is the public itself and not these politicians. The beauty of the Gandhian philosophy is that it leads to no loss of public/private property.