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Is Bharat wilting?

April 30, 2004

I argued last week that India is indeed shining. But is Bharat that lives in villages, wilting? Some concerns that throw a shadow are the slow-down in the growth rate of employment and the rising inequities.

Employment growth in rural areas has slowed to 1.3 per cent per annum over 1993-94 to 1999-2000, compared to 1.8 per cent over 1983 to 1993-94.

In urban areas too the rate has slowed to 2.4 per cent from 2.6 per cent. Thus reforms do not seem to have led to labour-intensive development.

This is not surprising as the overstaffed public sector expansion slowed down during the 1990s, many voluntary retirement schemes were introduced. And as we still have not carried out labour law reforms and abolished small-scale reservation, employment expansion in the private sector has not been as fast as could have been expected.

Yet the poverty indicators do show improvement. From 1993-94 to 1999-2000 the percentage of very poor (defined as those below 75 per cent of state-specific poverty line) fell from 14.7 per cent to 8.2 per cent. In almost all states except Assam and Orissa, there have been significant reductions. Even Bihar and UP show more than 50 per cent reduction.

There is also some reduction in under-nutrition in rural areas, from 56.2 per cent in 1991-92 to 50.5 per cent in 2000-01. Under-nutrition is defined in terms for weight for age, which is below two standard deviations from the median. While the reduction is welcome, the high incidence is shameful.

The feeling of inequity also seems to be growing. If we look at the rate of growth of per capita consumption expenditure, we find that in rural areas it was higher in the 1990s for the bottom 30 per cent than the higher income groups.

This means that rural inequity has gone down. However the growth rate of per capita urban consumption expenditure was 2.27 per cent per year, much higher compared to 1.40 per cent for rural people.

Within the urban population too the growth rate of the top 30 per cent was 2.55 per cent compared to 1.49 per cent for the bottom 30 per cent. The inequity between rural and urban areas and within the urban population has indeed increased.

Bharat is not wilting as the improvement in poverty figures show, but if we do not take care it may. With the growing inequity Bharat may look lustreless. We may also lose the shine off India.

We have yet to overcome many obstacles to ensure broad-based growth. Among these are labour laws, small-scale industry reservation, the slow judicial system, a large educational backlog, poor human development, the fiscal deficit and the political problems of Ram Mandir and Kashmir.

Labour laws and small-scale industries' reservation: Protection of organised labour had been carried to extremes in the past and stifled growth of employment. A much better sense prevails now. Yet we have some ways to go to provide flexibility to entrepreneurs while protecting reasonable rights of workers.

Slow judicial system: The person who wins a civil suit in India loses and one who loses is ruined, goes a popular saying. Justice delayed is justice that is expensive. The right to information and civil society vigilance could be made effective.

A proposal to limit the number of adjournments granted in a case was resisted by lawyers who charge fees based on the number of appearances. The proposal ought to be adopted immediately.

Educational backlog: The literacy level of only 65 per cent after 57 years of independence is a shame. For an economy that aspires to grow rapidly in today's global knowledge economy, it is a handicap.

It is not enough to see that all children get quality education for at least eight years, they need to be educated till Class 12. Education till then must be made free and compulsory. We also need a drive for near 100 per cent adult literacy.

Poor human development: With all the shine of the economic growth, poverty still persists in India. India spends large amount of resources on anti-poverty programmes.

Unfortunately, the targeting effectiveness is low and efficiency poor. A whole new approach is needed. The poor also suffer from poor access to health facilities, poor sanitation and unsafe drinking water.

Fiscal deficit: The high fiscal deficit persists. The high growth of the economy should have brought down the deficit and the government could have used the surplus to retire some debt or make much needed investments. Instead this is being used to enlarge expenditure in the light of the elections. Unless the growth momentum is continued and more jobs are created, Bharat may wilt.

Following Ram's example of raj dharma or Just Worshipping Him Blindly: To me, the biggest uncertainty is political. How we resolve the mandir-masjid problem and how we maintain the secular fabric of society are critical.

The recent moves for peace in Kashmir and with Pakistan are thus most welcome. How fruitful these moves become and whether our rulers at the central and state levels follow raj dharma (ruler's ethics) as practised by Ram or get swayed by those hung up on building a Ram temple at any cost will determine if India remains a shining star or fades away like a passing comet, and if Bharat also shines or wilts.

The author is professor emeritus and former director, Indira Gandhi Institute of Development Research, Mumbai and chairman, Integrated Research and Action for Development, Delhi

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