The Telegraph
Since 1st March, 1999
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- Different Indian states adopt different approaches to reform

The World Bank has produced an excellent document titled, India, Inclusive Growth and Service Delivery: Building on Indiaís Success. As the title of this report suggests, the focus is on service delivery, which still largely remains public-sector. The issue is simple enough. Increasing prosperity and awareness have triggered citizens into demanding more, meaning both quality and quantity of services, especially because private-sector services are often available and affordable. Simultaneously, large investments in asset-creation have meant the problem is no longer one of physical access. For instance, sheer geographical proximity to roads, clinics, schools or markets is no longer an issue. The problem is a gap between access and satisfaction, despite physical access.

While this is an extremely important issue and is indeed the thrust of the report, I wish to focus on what the document has to say about growth performance alone, drawing particular attention to West Bengal, because even this deserves dissemination and there may be an awareness deficit. First, in the Nineties, India had been a star performer on growth, notwithstanding legitimate unfavourable comparisons with China. In the Sixties, Indiaís average annual per capitagrowth in gross domestic product was 2.2 per cent, compared to Japanís 9.0 per cent. In the Seventies, India clocked 1.0 per cent, compared to Indonesiaís 5.5 per cent.

The Sixties and the Seventies were lost development decades for India. However, the growth began to accelerate in the Eighties, when the Indian per capita GDP growth was 3.8 per cent, compared to Chinaís 5.4 per cent. And in the Nineties, the Indian per capita GDP growth was 4.4 per cent, compared to Chinaís 7.0 per cent. (One must remember that this is per capita growth, so rate of growth in population is deducted from GDP growth.) Second, Indian growth has been accompanied by low volatility, low inflation and no signs of increased inequality. For instance, the proposition that growth only benefited the elite is false. The 50th percentile is the middle of the income distribution. In the Nineties, one out of every three households in the 50th percentile bought a bicycle, a fan or moved away from wood as cooking fuel.

There has been considerable debate about the reliability of the 1999-2000 National Sample Survey data on poverty. But consider the following. Some reforms are dated to the Eighties. In 1979, the percentage below the poverty line (head count ratio) was around 50 per cent, higher than for 1951. In almost 30 years, there was no poverty reduction. But, even if ďcorrectedĒ figures are taken, in 1999-2000, the head count ratio was around 25 per cent.

Third, the base remains low. So there is a lot of catching up to do, despite euphoria over growth. People in the 90th percentile of income distribution (top 10 per cent) in rural India earn less than 25 per cent of the income earned by the poor in Denmark. Average monthly income in rural India is lower than in Ethiopia. At current growth rates, it will take India 40 years to catch up with the per capita GDP of the United States of America in 1950, 60 years to catch up with the current US per capita GDP.

Fourth, there is the matter of inequality, despite what was said earlier about there being no evidence of inequality in India having increased. Inequality depends on the variable used to measure it and income inequality is not the same as inequality in social-sector indicators like access to education or health. That apart, does one mean inequality in personal distributions, across geographical regions or across gender, caste, religion and ethnicity' The answers are not the same. Even if the unit is geographical, does one mean rural or urban, between states or within states' Till the Eighties, growth rates were low (2 per cent) everywhere, except Punjab, Haryana and Maharashtra.

Fifth, growth rates picked up in the Eighties, particularly in backward states, so that dispersion across states (measured by income) declined. However, this was reversed in the Nineties, because there was acceleration of growth in some states, but deceleration in others. Among star performers in the Nineties were rich states like Gujarat and Maharashtra and middle-income states like Karnataka, Kerala and West Bengal. While growth slowed down in Punjab and Haryana, they still had a high base level of income. But growth did not pick up in poor states like Bihar, Orissa and Uttar Pradesh.

Sixth, this increased disparities across states. However, this was a success of reforms rather than a failure. Disparities increased not because poor states did not grow, but because middle-income states grew faster. Seventh, despite the increase in disparities, regional inequality in India (judged by the income or output criterion) is lower than in large countries like Brazil, China and Indonesia. But Indian regional inequality is larger than in the US or European Union. Eighth, regional disparities in social indicators like education or health are more than in per capita income. Of 13 major states ranked in 2001, Maharashtra had the highest per capita income, followed by Punjab and Gujarat and UP, Orissa and Bihar were at the bottom, in that order. West Bengal was ranked 8th in the lower half of this lot of 13.

Once one moves to the human development index, which includes health and education in addition to per capita income, Kerala moves to the first place, followed by Tamil Nadu and Maharashtra. The bottom three now are Madhya Pradesh, UP and Bihar. West Bengalís HDI rank is 7th, marginally above the per capita income rank of 8th. However, that is because HDI also includes per capita income. Once one takes that out, West Bengal performs better on social-sector indicators. For instance, West Bengalís rank is 5th in literacy, 3rd in infant mortality, 7th in under-weight children and second in the sex ratio (0-6 years).

Ninth, there are significant disparities within states, the rural-urban divide not being the only one. For example, the infant mortality rate in Murshidabad is far higher than the figure in many districts of Bihar, UP or Orissa. West Bengal is not Calcutta, or the 24 Parganas for that matter. Consider the head-count ratio. In urban West Bengal, the percentage of population below the poverty line is more-or-less the same as that in urban Tamil Nadu. But there is little difference between the percentage of population below the poverty line in rural West Bengal and rural UP or Bangladesh.

Poverty, employment and income growth are correlated with the delivery of public services, which is the thrust of the World Bank report. In 2003, a nation-wide survey (based on random visits) was undertaken on teachers who were present in school and engaged in classroom activity. In West Bengal, less than half the teachers were present and teaching. It is small consolation that the figure was far less in Chhattisgarh. Only 49 per cent of West Bengalís villages are connected by roads (because of a time lag, this is 1997 data). The figure is 100 per cent in Karnataka and Chhattisgarh and 99 per cent in Punjab, Haryana and Kerala. Sixty nine per cent of West Bengalís habitations (as opposed to villages) are not connected by road. Chhattisgarh is the only state that has a higher figure of 82 per cent. Even in Bihar and Orissa, the figure is lower at 58 per cent.

In an infrastructure index constructed by the 12th finance commission, West Bengal was in the lower-middle category, bracketed with Himachal, MP, Orissa, UP and Uttaranchal. Different Indian states have adopted different approaches to reforms and, except for states that are truly the back of beyond, it is not quite true that Indian states have not attempted to liberalize. It is a separate matter that some chief ministers have proved to be more media-savvy in Davos.

From what has been stated above, West Bengalís real problem seems to be physical infrastructure, less than social infrastructure. If one looks at surveys that document what attracts or deters investments, infrastructure usually comes right at the top of the list, much more than perceptions about labour militancy and rigidity of labour laws. And infrastructure is not about shopping malls in Calcutta alone.

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