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India’s disadvantaged are better off but not nearly enough

Affirmative action aimed at bringing disadvantaged groups at par with others has been the hallmark of India’s public policy since independence. The disadvantaged groups for the majority of India’s affirmative-action policies, such as favourable treatment in employment and education opportunities, have been largely identified based on caste and sometimes on gender and domicile, and more recently, on economic backwardness.

While affirmative action sparks widespread debate and divisiveness in society, it is important to evaluate the policy outcomes based on evidence. One of the ways that economic progress can be measured and compared across various groups—Scheduled Castes (SCs) and Scheduled Tribes (STs), Other Backward Classes (OBCs) and General Castes (GCs)—is based on their ownership of assets. In 2015-16, OBCs were the country’s largest group, comprising 43% of India’s population, followed by SC/STs at around 30%, with GCs around 27% of the total.

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A scorecard of disparities

We have constructed a consumer durable asset index, using household-level data from the National Family Health Survey (NFHS) for 2005-06 and 2015-16, and taking into account 16 durable assets, including electric fans, television sets, refrigerators, mobile phones, computers and vehicles, and compared movements across the main caste groups. Since only those assets which are available in both rounds of the survey can be used for the purpose of comparison, this method leaves out some high-end durables such as air-conditioners and washing machines.

Our asset index may not be able to capture inequality signified by the ownership of real estate and some high-end durables, and cannot directly establish the causal relationship between affirmative action and economic progress. It nonetheless offers crucial clues about changes in the absolute level of asset-poverty over time and how the distribution of basic durables and vehicles has shifted among different groups. We look at two statistics to compare the change over time in the asset index score—the median and the mean.

Why is it important to look at both indicators? If observations are ordered by value, then the median is the value of the mid-point observation, while the mean is the average value of all. If the median is lower than the mean—that is, a person who is in the middle of the group has a lower asset score than the average—then it would imply that the mean is influenced by high asset scores at the upper end of the group. In other words, there is higher inequality compared to a case where the mean and median are closer. In contrast, if the median is higher than the mean, then the proportion of the extreme asset-poor would be less.

First, the asset ownership scores are highest for GCs followed by OBCs, SCs and lastly STs in both years. Second, at the all-India level, the mean durable asset index value increased to 0.0 in 2015-16 from -1.53 a decade earlier (Table 1). Third, the gap between the mean asset scores of different castes narrowed significantly over that decade. The largest improvement in the mean asset ownership scores was seen among SCs and OBCs. Fourth, the improvements in median values for all groups are higher than the mean values, implying that the asset-poor in every group have seen a notable decline.

While overall there has been an improvement in asset scores over time, only for GCs and OBCs was the median higher than the mean in 2015-16, a reversal of the finding for 2005-06, indicating an improvement in the distribution of asset ownership. Among SCs and STs, however, the mean continued to be higher than the median in 2015-16 as well. In short, a larger proportion of SCs and STs continue to be asset-poor. At the same time, at the top end as well, a smaller proportion of SC/STs are as asset-rich as GCs and OBCs. In 2015-16, the top 5% asset-rich among SCs and top 3% asset-rich among STs were at the same level as the top 20% asset-rich among GCs.

If we look at the underlying ownership of durables that is behind the asset scores, improvements in ownership rates can be seen over time across all caste groups. Asset ownership among the disadvantaged groups of SCs and STs, however, continues to be significantly below that of GCs in 2015-16, except for mobile phones (Table 2). While the gap between OBCs and GCs in terms of asset ownership has narrowed the most, that between STs and GCs is the widest for almost all assets.

The next article in this series will explore state-wide differences in durable asset ownership among different caste groups over time.

Vidya Mahambare and Sowmya Dhanaraj are, respectively, professor of economics at Great Lakes Institute of Management, Chennai, and assistant professor at Madras School of Economics

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Written by NEWZ HAWKER

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