Umpiring’s dirty secrets

In a pained appeal for a non-ideological approach to questions of growth and equity, Anil Padmanabhan, editor at a leading financial newspaper, Mint, states: "The good news is that increasingly the issues that the critics have sought to highlight are getting traction internationally and, hence, the attention of multilateral institutions such as the International Labour Organisation (ILO) and the World Bank. Given their third umpire status, the arguments are couched in reason and devoid of rhetoric and, hence, more acceptable." ('Growthwallahs need to pause and reflect', Mint, December 10, 2012).

What Padmanabhan emphasises, and correctly echoes, is that the economic debate in India is largely couched in patriotic fervour, us versus them, the left versus the right, etc. Reasoned arguments, like the invisible hand, are nowhere to be found. I could not agree more — which is why my column has been titled "No Proof Required" for almost the last decade, and why the previous titles of my column were "Looking for Logic", "Beyond Logic", etc.

But do the international organisations qualify as umpires, let alone neutral umpires? The short answer is no. Indeed, let me state that organisations like the ILO and the World Bank, along with the UN and the OECD, are prime examples of organisations indulging in politically correct rhetoric, non-logic and suspect evidence. You might consider this assertion a bit extreme if not wrong. But please see the evidence I cite before making your conclusion.

ILO Wage Report 2012-13: According to this popularly tweeted report, "India's real wages fell 1 per cent between 2008 and 2011, while labour productivity grew 7.6 per cent in the same period". The straightforward conclusion — workers were being heavily exploited in market-economy India. The decline in real wages must be news to many, especially the maker of monetary policy, the RBI, which has been claiming that rural wages have been rising most rapidly during the populist period 2008-2011. It turns out that the RBI is quite right. Rural wages rose at a 7.5 per cent annual rate during this period. The ILO report itself notes that all-India workers (salaried and casual) nearly doubled their real wages between 2004-05 and 2009-10, NSS data (page 23, ILO report). So we have the ILO conclusion that real wages increased sharply at least for part of the period 2008-2011; we have the RBI data conclusion on real wages of rural agricultural workers increasing by more than 30 per cent, and yet the final ILO conclusion is that real wages in India declined at an annual 1 per cent pace. Ideology, anyone?

... contd.

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