Friday, 1 March 2013

The illusion of Growth since 1991...

The question asked by AAP and Arvind Kejriwal deals with the devolution of power to the bottom of the pyramid...  why is he advocating this? Especially when India is growing great guns right now? In this concluding section on AAP policies, let us go into the backdrop and try and understand. I shall also attempt an alternative solution and its analysis, although in very short. I welcome any suggestions as to alternatives that I could not think of...

Please remember - India resides more in its villages than in towns and cities; when we talk of development, you have to look at the entire picture - that is what determines sustainability... Urban India, it is high time you woke up to this reality...

Backdrop of the question

Before I answer this question, It becomes necessary to understand the real problems facing India. It is important that we undestand from what realities is this question emanating: We have, since 1991, been growing at an average of 7-9% on GDP terms. Our Per Capita Income has increased; our exports have increased; the value of brand India has gone up; sectoral competitiveness of Infotech/Space/Pharmaceutical Generics/Automobiles/Telecommunications have increased to global standards (to name a few sectors) - judging from exports, or from Indian companies expanding abroad, or from Indigenous designs capturing world attention being adapted for international use; The BPL numbers suggest a trend of increasing prosperity in the underprivileged; The stock markets have deepened; Dollar reserves have gone up by a huge amount.... in short, we are experiencing an economic boom, recent recessionary trends notwithstanding.

This sounds great, doesnt it? Makes your heart swell with pride to read this heady stuff. Look around you: you will find examples of economic success everywhere - in professionals, in entrepreneurs, in the consumer goods in homes and shops, in the variety on display. These are all visible and tangible results of our economic progress...

Well, I strongly suggest that all of you park that misplaced pride somewhere for the time being. There is another side to the coin: one that is extremely worrisome, and points to impending disaster. . The per capita income of the bottom 20% of India's population has not changed (as a percentage share) since 1978. That means, the bottom 20% of our population has not benefited at all from our economic boom. This is also confirmed by consumption patterns: with the consumption by the bottom 20% of the population being static @ between 0 - 1 growth%, in complete variance with the 3% growth registered by the top layers. While in the 1990s, India's Gini Coefficient was 0.32, it has now gone up to 0.38. The top 10% now make 12 time the bottom 10% - as opposed to 6 times in the 1990s.

As per

"But looking at contemporary India from another angle, one could equally tell the following—more critical and more censorious—story: “The progress of living standards for common people, as opposed to a favoured minority, has been dreadfully slow—so slow that India’s social indicators are still abysmal.” For instance, according to World Bank data, only five countries outside Africa (Afghanistan, Bhutan, Pakistan, Papua New Guinea and Yemen) have a lower “youth female literacy rate” than India (World Development Indicators 2011, online). To take some other examples, only four countries (Afghanistan, Cambodia, Haiti, Myanmar and Pakistan) do worse than India in child mortality rate; only three have lower levels of “access to improved sanitation” (Bolivia, Cambodia and Haiti); and none (anywhere—not even in Africa) have a higher proportion of underweight children. Almost any composite index of these and related indicators of health, education and nutrition would place India very close to the bottom in a ranking of all countries outside Africa."

And the numbers are not too different if you consider even the bottom 40%... think about that! BPL numbers do not mean we have pulled people out of poverty!

Are these numbers indicative of an economic boom? Dont these sections of our society have the right to participate in the growth? What nonsense are we talking about? Gender Equality, Primary Schooling, Life Expectancy, Infant Mortality, Nutrition, Literacy are all basic indices that indicate quality of life and governance. We look at economic indices and worry... perhaps it is high time that we looked at these basic indices - for the very simple economic reason that a healthy, literate, Well-schooled and taken care of population will be more productive.

What is the quality of governance that we are giving our people? More to the point, how sustainable is our model of growth if the basic needs of the majority of the population are not addressed? This is indicative of a deeper problem within us: unless the changes initiated in the past 20 years are not drilled till the grass-roots levels, the figures are not going to be very different. We are creating an urban rural divide within us wherein the rural population will lag behind. And unless literacy levels go up & mortality goes down you cannot expect productivity to significantly improve

The Problem

First read The Mahatma (bear with me, this is extremely relevant): I came reluctantly to the conclusion that the British connection had made India more helpless than she ever was before, politically and economically.. . . Before the British advent, India spun and wove in her millions of cottages just the supplement she needed for adding to her meager agricultural resources. This cottage industry, so vital for India's existence, has been ruined by incredibly heartless and inhuman processes as described by English witnesses. Little do town dwellers know how the semi-starved masses of India are slowly sinking to lifelessness. Little do they know that their miserable comfort represents the brokerage they get for the work they do for the foreign exploiter, that the profits and the brokerage are sucked from the masses. Little do they realize that the Government established by law in British India is carried on for this exploitation of the masses. No sophistry, no jugglery in figures can explain away the evidence that the skeletons in many villages present to the naked eye.
    I have no doubt whatsoever that both England and the town dwellers of India will have to answer, if there is a God above, for this crime against humanity which is perhaps unequalled in history

Substitute British Empire for the GOI, and these words still hold true in every letter, word and in spirit. And let me place this on record: the current trend is a sure-fire recipe for unmitigated disaster. Disaster in staring us in the face - if the numbers quoted above are anywhere near accurate. The current trend will only heighten anti-government stances, increase disaffection with the centre (perhaps even the state), fuel militant anger and create a divide that will be the cause of downfall. We dont have a choice about this: not anymore. Governance has to improve.

The problems can be identified as:

  1. Absent or inappropriate Health Services in Rural India
  2. Lack of even basic educational facilities in Rural India
  3. Leakage in funds allocation to the priority sector and villages
  4. Lack of even basic amenities in certain villages
  5. Resultant continuing Urban Migration
  6. Severe shortage of needed infrastructure in the hinterland
  7. Very low knowledge transfer from universities to Rural farmers, entrepreneurs etc; this has nothing to do with the internet: here I am talking about upgrading farmers with latest techniques; awareness of opportunities that arise with economic growth; awareness of technological developments that can be used to generate business etc

I could go on, but these will suffice.


Now look at the problems in the backdrop outlined above. The central - state approach has failed to deliver results, What changes can be brought in to make it more responsive? Even a cursory glance at a newspaper will tell you that the entire system is top-driven, with deep systemic malaise. Changing that requires changing just about everyone in the entire political spectrum and top bureaucracy; even that will not have a total impact, as the middle and lower segments - the people who actually implement the programmes designed in the central and state capitals - are also taking a part of the pie home. Further, the government's latest solution: The Direct Cash Transfer Scheme will not precisely zero impact on any of the problems given above. How will that ensure that doctors turn up at PHC's, medicines reach on time, agricultural innovations reach the farmer, the teachers turn up to teach - and are good at teaching? It wont. Therein lies the rub. I respectfully submit that anyone who thinks that real change in the HDI factors can be brought about by current methods - or any refinements - is totally off the mark.

At the same time,one cannot ignore the pitfalls along the path of total devolution of power to the people - the chances of anarchy, as most other answerers have been quick to point out, are there, The only solution is limited devolution: to ensure implementation of programnmes, make the bureaucracy truly accountable to the people, Increase the power the Gram Sabhas -and other local self governments - and give them the power to take action against the primary school teachers, agricultural researchers, PHC doctors and medical staff, anganwadi staff, central program scheme implentors, PDS staff - all those people who come in daily contact with the people. Let the decision making reside in the centrel and the states; but put in place a system that says if a majority of the people want "x" to be implemented, then it will have to do be done. Place restrictions on what such decisions can be - allow only intervention from the people in the primary areas, like education etc. That is, local issues. Issues extending beyond a village or a tehsil, cannot be devolved.

In place of central and state schemes, place the money directly in the people' hands: the Gram Sabha; let them decide on how to use the money. Since decision will be taken based on majority votes from the people, there is little chance of skullduggery. And before you start objecting - this is precisely how Kerala does it. 40% of funds are decided by the Gram Sabhas. And look at its HDI numbers! This is not a communist viewpoint - I am talking pure economic sense. I am just advocating a limited devolution of powers to the people to ensure targeted schemes and proper implentation. I am not advocating touching the capitalist framework; just a modification that ensures implementation. If the people can do something about lack of implementation, it stands to reason that fear of a loss of salary and job will propel an increase in effectivity as well as help control corruption.

Hence, to answer your question - yes, limited devolution is the only answer...

Just take a look at these very same parameters for any of our competing nations- from China to Brazil, and from Russia to Turkey. Remember: The Demographic dividend we have can turn into a demographic disaster if we dont give attention to it. It is high time we realised that India resides in the villages; Cities and Towns are still in the minority.

And in conclusion, read Nandan Nilekani  - Imagining India - Ideas For The 21st Century. For those not too keen on reading, I shall be reviewing the book on my blog @Reflections.

"The green revolution, the white revolution and the IT revolution have, to a greaty extent, passed them by. The politics of revenge has obscured development. 

The challange now is that many voters, or rather interest groups within our electorate, view the solution to such inequalities as the problem. The policies that would address our inequalities and emancipate our farmers, our illiterate and our rural poor are precisely the ones that are now politically volatile and locked in debate... without these reforms in place, we will again have a system that promotes the sharing of elite power.... as before, the elite will close themselves in... and the others out"  - Nandan Nilekani

And read this:

Wake up, India...

As I always say in such posts...

Jaago, Sonewaalon!

or rather, this time, it is rural India that is calling out to us:

Jaago, Sonewaalon - Suno Meri Kahaani!

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