Economic reforms, initiated by Manmohan Singh’s team in 1991, is no longer news. All the Finance Ministers, and their political patrons, have jumped on the bandwagon. Differences between the men and the boys is in their zeal and implementation – intentions are unquestioned.

Meanwhile, there are the nattering types. They have raised various objections against the reforms; most importantly, that such reforms have largely bypassed the poor. Bis- mil-muflis, or "I begin in the name of the poor" is their rallying cry, and official government data, in the form of the National Sample Surveys (NSS), is their thinly concealed weapon. These surveys have a distinguished history in India. Started in the early fifties, the NSS surveys have provided useful updates on the status of the poor in India. Most recently, the 1999 NSS data showed that poverty declined by as much as 10 percentage points, from 36 to 26 percent, during the economic reform period, 1993 to 1999. But the nattering nabobs are not satisfied; there are mumblings about how the survey methodology was questionable, and other reasons best, and only, understood by rarefied statisticians.

Application of first principles leads one to ask the simple question - what is the usefulness of economic reforms i.e. why should we want the reforms? The 80's decade was distinguished by an acceleration of economic growth to about 3 percent per capita, from about 1.5 percent per capita in the previous three decades. Surely a healthy rate - why fix if it ain't broke? The most important reason for desiring economic reforms is often missed by the economists, perhaps because the thinking belongs to philosophers and concerns freedom, economic freedom. Economic reforms are desirable because such reforms increase economic freedom by decreasing government control over economic activity.

India has been notable in its dedication to that other freedom - political, except when such freedom was snatched away by Mrs. Indira Gandhi in the mid-seventies. The noble socialists, a.k.a the nattering nabobs of negativism (NNN), objected vehemently, and rightly so, when their freedom to assemble was taken away. But they, and several other misguided liberals, did not raise a whimper when banks were nationalized, or industrial licensing was introduced, or small scale reservations were mandated, or foreign exchange was controlled. Indeed, under Mrs. Gandhi one could not hold the proverbial "piss party" without first obtaining Stalinist permission. Not only did the socialist liberals not object, they applauded, and indeed drafted, several of these interventions. Government babus at the commanding heights was their motto, let economic freedom be banned. That this is not a straw ass being whipped is revealed by the fact that the former Prime Minister, Mr. Narasimha Rao, alleged mistakenly by some to have started economic reforms, recently wrote how the Congress party's view was that government should retain at least 50 percent ownership of manufacturing enterprises i.e. privatization is okay, as long as private individuals, and firms, only get a few straws to chew on. It needs emphasis that reforms are primarily desirable for the reasons opposite to that of mistaken and misguided reformers like Mr. Rao i.e. because such reforms decrease government control in the daily lives of the citizens.

Theoretically, removal of distortions (government control) should increase the economic growth rate of an economy; and most often, practically, it does. Thus, an economic reason for desirability of reforms is that such reforms raise the long-run growth rate of the economy. This leads one to the third reason for desiring reforms - economic reforms lead to a higher economic growth rate, which leads to a faster reduction in poverty.

But several scholars question the link between economic growth and poverty reduction. Indeed, the World Bank has a new growth industry oriented along "quality of growth", and its accouterments like empowerment etc. This industry was launched because surveys like NSS had shown that despite economic growth, poverty had not declined in India, (circa 1998) and indeed may even have increased. This conclusion was based on the bad logic of using Peter's income to derive Paul's poverty. How? Because the data on poverty was taken from sample surveys, but the data on economic growth was taken from the national accounts i.e. a separate source of information on Peter's poverty, and an unrelated source for Paul's income. Any conclusion is possible - including that favored by 3N's that economic growth did not lead to a decline in poverty in India.

Why not use the same source i.e. NSS data, for both income and poverty trends? The table does this exercise using survey data for fifteen major states in India, with the rural and urban sectors treated as separate economies. So there are 60 growth poverty relationships for the pre-reforms decade (1977 to 1983 and 1983 to 1987), and an equal number for the post-reforms decade, (1987 to 1993, and 1993 to 1999).

The conclusion (wonder why no one has calculated these simple numbers?) is a ringing endorsement for the view that economic growth is necessary, and sufficient, for poverty reduction. (As it should be since what is being discussed is income based poverty, and not mumbo-jumbo intractables like empowerment). Over 80 percent of the economy- year observations show a one to one relationship between growth and poverty reduction; only 4 cases (3.3 percent of the total of 120 cases) yields the outcome emphasized by the 3N's - positive economic growth leading to an increase in poverty. And there is not a single such bad case in the reform nineties! And on this flimsy basis are ideologically correct conclusions reached?