This is a book by two distinguished economists, each of whom has spent a number of years working on the issue of poverty and deprivation. Both have in-depth knowledge and understanding of the complexities of the Indian economy and society, and are outstanding development economists. Sen won the Nobel Prize in Economics in 1998 for his fundamental contributions to welfare economics. Dreze has dedicated all his professional life so far to the fight against poverty, hunger, and deprivation.

This book is on the “New India,” which, according to the authors, is growing rapidly, yet has a very high incidence of poverty, deprivation, malnutrition, illiteracy, squalor, and disease. The authors provide data on economic and social indicators to show that, in many aspects, India performs worse than much poorer countries. In particular, these indicators are life expectancy at birth, infant mortality, access to improved sanitation, female literacy, the proportion of children below age five who are underweight and stunted, and child immunization rates; along these dimensions, countries such as Vietnam, Laos, Papua New Guinea, Bangladesh, and Nepal are doing better. For example, even though Bangladesh’s per capita income (at purchasing power parity) is less than half of India’s ($1,569 compared with $3,203 in 2011), its life expectancy is higher by four years (69 in Bangladesh versus 65 in India), its child immunization rate is 96 percent compared with India’s 73 percent, and its access to improved sanitation is 56 percent compared with India’s 34 percent. The infant mortality rate in Bangladesh is also much lower than that in India. The authors argue that India performs poorly with respect to these indicators in comparison with many other developing countries, the other BRICS countries, and most other South Asian nations.^{Footnote 1} Regarding public health, their main illustration is how poorly India fares relative to other developing countries with regard to immunization against major diseases. The most alarming comparison is the immunization rate against hepatitis B: Only 37 percent of one-year-old children in India have been immunized, whereas the corresponding figure for Bangladesh is 95 percent and the average for “least developed countries” is 78 percent. The authors also provide comparative numbers for the deficiencies in various macronutrients.

Although India can be proud of excellent institutions of higher learning, elementary education, according to the authors, is in pathetic shape. They provide numbers to show this. Only 50 percent of the children ages eight to eleven who attend government schools can read a simple paragraph with three sentences, 64 percent can write a simple sentence with a maximum of two mistakes, and 43 percent can subtract one two-digit number from another. The authors blame this failure on the lack of government spending on elementary education right from the beginning. I think this criticism is a little unfair, because when India became independent its per capita income, in real terms, was a fifth of what it is today, so higher public spending on elementary education in a populous country such as India would be difficult. However, over time there is no doubt that this spending, as a proportion of national income, should have gone up.

The poor social indicators in the presence of rapid economic growth form the main motivation for the book: Why are they so and what can, and should, be done about them? According to the authors, the reason for India’s poor performance in education and health is the lack of accountability and high levels of corruption in the public sector. For standard economic reasons based on externalities that drive a wedge between private and social benefits and asymmetric information between buyers and sellers, the authors argue against the takeover by the private sector of health, education, electricity and power, and the like. They argue in favor of finding ways to solve the problems of accountability and corruption of the public sector. Public sector enterprises, according to the authors, are loss making because too many powerful consumers are subsidized. The relatively well-to-do consumers should not be paying subsidized prices for public services. This, the authors argue, leads not only to loss-making public enterprises, but also to severe shortages, as a result of which the less-privileged consumers are often rationed out. Things are made worse by serious leakages in public delivery systems caused by widespread corruption at every level. The authors praise recent efforts in this regard by the media and the government. The recently passed Right to Information Act and the Lokpal Bill (to create a national ombudsman) are steps that will help with reducing corruption and increasing accountability. The authors also call for a change in social norms and behavior through legislation and with the help of the media.

The authors also discuss the poverty situation, which, in their opinion, is much worse than what is inferred from the data on the proportion of people below the poverty line. To attack the problem of poverty, the authors are in favor of using the public distribution system (PDS) and public works programs. They do not seem to be big fans of cash transfer programs. However, the arguments they make in this regard do not sound too convincing. The authors also emphasize that India is a very unequal society and that the inequality in India is multidimensional—based on economic status, caste, social class, gender, and so on. This inequality leads to policies biased in favor of the well-to-do, with very little attention paid to the problems of the poor, such as lack of nutrition and sanitation, public education, and public health. This reinforces the multidimensional inequality that we see in India.

The value of the book lies in making people aware and instilling in them a sense of urgency about some very pressing problems in India. However, the authors only briefly touch upon growth. From the mid-1980s to about 2012, the proportion of people in India below the World Bank’s $1.25-a-day poverty line has declined from over 50 percent to about 30 percent. Most of this has happened during the post-reform period, in which India experienced very high rates of growth. For example, during the period 2005 through 2010 (barring one year), growth rates were in the range of 8 to 10 percent and the poverty rate declined from 43 percent to 32 percent. Such achievements have been downplayed by the book. Furthermore, although the authors provide plenty of suggestions on how to fix public education, public health, PDS, and so on, there is no discussion of what kind of reforms are needed to speed up growth. Growth has been important in reducing poverty. Jagdish Bhagwati and Arvind Panagariya, in Why Growth Matters (2013), argue that when comparing countries with regard to the various social and economic indicators, Dreze and Sen have not taken into account the initial handicap India had when it started in the 1950s. For example, Bangladesh was always (from the very beginning) ahead of India in their life expectancy and actually in this regard India has narrowed its gap relative to China. They also argue that although Dreze and Sen have made comparisons with regard to indicators in which India does poorly, India fares much better than Bangladesh in many other indicators.

Despite these problems, the book is an excellent read and draws our attention to many important issues. The analysis of problems and their solutions go beyond economics.