Growth, employment and equity issues: Part-I
The recent economic development has widened the economic inequality across the country. Despite sustained high economic growth rate, approximately 80 per cent of its population lives on less than two dollar a day (PPP).
DESPITE ROBUST economic growth, India continues to face many major problems. The recent economic development has widened the economic inequality across the country. Despite sustained high economic growth rate, approximately 80 per cent of its population lives on less than two dollar a day (PPP). Even though the arrival of Green Revolution brought an end to famines in India, 40 per cent of children under the age of three are underweight and a third of all men and women suffer from chronic energy deficiency.
However, this interim report of the given committee as submitted to the Planning Commission has not yet been accepted. But once it is accepted, it will resolve disparities in urban and rural poverty and make poverty estimation more equitable. Earlier, a family was called poor if it lacked the income to buy food containing a minimum number of calories per day- 2100 calories for urban areas and 2400 for rural areas. It is now proposed that the estimation shall also include expenditure on education, health and sanitation apart from food. No distinction will be made between urban and rural households as far as calorie intake is concerned.
Unlike China, there is no governing elite or a ruling establishment in India and there is no reversal of human capital in politics. It appears that the capacity to provide good governance in India has virtually collapsed. We have reached a stage where the impediments to good governance spring not so much from the quality of the people entrusted with it, as much as from fundamental flaws in the very structure of governance itself. These flaws are:
According to the Global Hunger Index for 2009, India is ranked 65th in battling hunger. This index ranks 84 nations on undernourishment, child malnutrition and child mortality. It is reported that 21 per cent of the Indian population was undernourished (between 2003 and 2005), 43.5 per cent Indian children under the age of five were underweight (between 2002 and 2007) and the under five-years of age, infant mortality rate in 2007 was 7.2 per cent. In terms of this index, India ranks lower than its neighbouring countries. However, it is better than Bangladesh (67), Timor-Leste (70), Niger (78), Ethiopia (79) and Congo (84).This index combines three equally weighted indicators:
- The population of undernourished as a percentage of population;
- The prevalence of underweight children under the age of five (indicating weight loss); and
- The mortality rate of children under the age of five (partially reflecting the synergy between inadequate dietary intake and unhealthy environment).
There is another disheartening fact that relates to the poverty bar, which will soon be raised. With it 38 per cent of India’s population will fall below the poverty line, instead of 28.5 per cent, as at present. A family of five with an income of less than Rs 3000 a month in urban and Rs 2250 in rural areas would be considered poor to formulate fresh criteria for determining how poverty should be defined. At present, using standards laid down in 1998, an urban family earning Rs 2000 per month or less and a rural family earning Rs 1650 or less is poor. The raised bar will lead to many more people being classified poor. While urban poverty will increase slightly from 26 per cent to 28 per cent, rural poverty will jump from 30 per cent to 46 per cent.
However, this interim report of the given committee as submitted to the Planning Commission has not yet been accepted. But once it is accepted, it will resolve disparities in urban and rural poverty and make poverty estimation more equitable. Earlier, a family was called poor if it lacked the income to buy food containing a minimum number of calories per day- 2100 calories for urban areas and 2400 for rural areas. It is now proposed that the estimation shall also include expenditure on education, health and sanitation apart from food. No distinction will be made between urban and rural households as far as calorie intake is concerned.
In order to meet the various challenges of the various equity issues and the related economic and social problems, India must adhere to the following 10 prescriptions to achieve its potential and grow 40 times by 2050. These are:
- Improve governance;
- Raise educational achievement;
- Increase quality and quantity of universities;
- Control inflation;
- Introduce a credible fiscal policy;
- Liberalise financial markets;
- Increase trade with neighbours;
- Increase agricultural productivity;
- Improve infrastructure; and
- Improve environmental quality.
The most important prescription is that of governance. Let us dwell on this issue.
Unlike China, there is no governing elite or a ruling establishment in India and there is no reversal of human capital in politics. It appears that the capacity to provide good governance in India has virtually collapsed. We have reached a stage where the impediments to good governance spring not so much from the quality of the people entrusted with it, as much as from fundamental flaws in the very structure of governance itself. These flaws are:
- The nature of electoral system based on first-past-the-post principle that has accentuated fragmentation and led to marginalisation of national parties in several states;
- The lack of separation of powers between the executive and judiciary that has led to virtual paralysis of the executive and the emasculation of the legislative pillar of democracy;
- The absence of transparent and legitimate system of election financing that leads to wide-spread corruption and rent-seeking;
- The completely dysfunctional administrative apparatus that no longer has any incentive for performance and penalty for failure;
- The adversarial nature of public debate and the lack of institutionalised forums to sustain a consensus on national issues;
- The total collapse of the fiscal system at the Centre and in the states has severely eroded any capacity to provide public goods and services.
- The gap between the officialdom and the citizens has to be narrowed down and the relationship of the ‘ruler and the subject’ has to converted to one of a cooperative, integrated, service-oriented structure;
we have to begin at the top. The first step in good governance in the states have to come from the top levels of the state administration- the posting of right officers at right places, giving them the freedom to act as per the law of the land, making their responsibility clear to them and then formally holding them accountable for what happens in their respective areas. There is nothing new in what has been said here, but it requires honesty of purpose and commitment to public service.
According to a Hindustan Times, CNN-IBN, C Fore Leadership Survey (that covered more than 2000 respondents spread across 10 major Indian cities), held in October 2009, it is said that poor governance is what is holding India back; an overwhelming 81 per cent of the respondents said that they found standards of governance in the country falling short of their expectations; 59 per cent blamed the politicians, while 80 per cent held bureaucrats and 67 per cent said either they or their relatives had paid bribe to get work done at a government department; poor governance, the respondents said, was coming in the way of building infrastructure to fuel rapid economic growth and affected the quality education and health that is vital to turn our youth bulge into a demographic dividend; about 73 per cent of the respondents blamed bureaucratic red tape and political interference for tardy progress on the infrastructure front; a majority of the respondents want the government to boost spending on education and health, with a focus on teacher training, universal immunisation and essential medication.
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