S. Mahendra Dev is the director of the Centre for Economic and Social Studies, Hyderabad. The Bharatiya Janata Party may have toned down its India Shining campaign, and after travelling through parts of India, the deputy prime minister may finally have realized that all of India hasn’t yet become a developed economy. Notwithstanding forecasts of a good monsoon, the heat makes you a bit more aware about non-availability of power or water. Even if you happen to belong to the urban English-speaking middle class segment, which is where feel good is supposed to be at its shining best. Given the state of agriculture and employment, there hasn’t been much feel good in the rural sector and Mahendra Dev has just published a paper (based on an earlier talk) titled, “Is Rural India Shining'”
This is a rhetorical question and here is the thrust of the argument. “Our assessment shows that although there were improvements in some indicators, rural India is, after all, not shining. Growth rates in foodgrains and all crops declined significantly in the Nineties. Public investment in agriculture and credit-deposit ratios in rural areas declined in the Nineties. Also, farmers’ suicides have increased in recent years. Poverty declined, but there is a debate about the rate of decline. Rural poverty is high among scheduled castes, scheduled tribes and agricultural labour households. Reduction in the poverty of STs is very low as compared to general population. Employment growth was much lower in the Nineties as compared to that of the Eighties. Growth in agricultural employment was almost zero. Migration has increased during the reform period from rural-urban areas.”
Not a single statement there that can be factually contested. Since the mid-Nineties, agriculture has been in bad shape. Public investments in agriculture have flagged. Notwithstanding the London-based figure of 17 million job creation that the finance minister sometimes talks about and the Planning Commission-based figure of 8.4 million job creation that he always talks about, the only reliable poverty and employment data we have are from the National Sample Survey large samples for 1993-94 and 1999-2000. Nothing reliable after that.
And contrasting the 1983-84 to 1993-94 pre-reform period with the 1993-94 to 1999-2000 post-reform period, the conclusions are unambiguous. The rate of growth in employment has slowed down in the post-reform period. Unlike the pre-reform period, agriculture has failed to absorb unorganized sector employment. Indeed, most unorganized sector job creation has been in sectors like construction and trade. Hence, it is not surprising that the employment elasticity of growth has dropped in the post-reform period. After all, the composition of growth is just as important as the growth itself.
From the India Shining campaigns, one forms the impression that poverty has disappeared from India. The 1999-2000 NSS large sample gives an all-India poverty ratio of 26.1 per cent. Let’s ignore the methodological issue of non-comparability between NSS 1993-94 and 1999-2000. Among major states, the conventional identification of backwardness was in terms of BIMARU (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh). In addition to undivided Bihar, Madhya Pradesh and Uttar Pradesh, one should also include Assam, Orissa and West Bengal. Even Maharashtra. Perhaps ABIMAROUW as an acronym, “A” standing for Assam, “O” for Orissa and “W” for West Bengal. In 1999-2000, poverty ratios were 36.09 per cent in Assam, 42.6 per cent in Bihar, 37.43 per cent in Madhya Pradesh, 25.02 per cent in Maharashtra, 47.15 per cent in Orissa, 31.15 per cent in Uttar Pradesh and 27.02 per cent in West Bengal. Poverty has many dimensions and income poverty is only one of these. Hunger and access to health and education are other manifestations.
As a generalization, poverty and backwardness characterize the central and eastern parts of the country. Before reforms, industrial location policy ensured that jobs could be created where the workforce was. Reforms have turned that attitude upside down. Jobs are now created where facilitating environments exist. And these jobs will increasingly be private sector jobs, notwithstanding fights over a few measly jobs in the railways. Sick public sector units that will be closed down are often in the east. And job creation is virtually zero in the centre and the east, although most new entrants to the labour force are concentrated in these areas. Lucknow is not exactly the back of beyond. And it is symptomatic that lives should be lost over a few measly saris in Lucknow.
Broadly, there are two approaches to poverty alleviation. First, there is the indirect trickle down effect of growth, provided there is some growth to trickle down. Arguably, the poverty reductions of the Nineties were primarily due to this growth effect. Second, there are direct poverty eradication programmes and Planning Commission studies document their doubtful efficacy. Arguably again, the Nineties have failed to improve the efficiency of these programmes. Reductions in public sector expenditure on education and health are symptomatic. Manifestoes may promise 6 per cent of gross domestic product on education and 4 per cent on health. But without the efficiency of public expenditure increasing and without refocusing of government expenditure, such promises are unlikely to be implemented, regardless of the political composition of the incoming government. Nor can the promised 10 million jobs per year be created without reforming the agriculture sector. That too requires public sector investments, impossible as long as the Centre and state governments are bankrupt. Effectively, because of fiscal constraints, the Nineties represent an abdication by the state. However, not even the most ardent of reformers can advocate such an abdication. Other than law and order, the state does have a role to play in physical and social infrastructure and in direct anti-poverty programmes.
India is a heterogeneous country and so are India’s states. Therefore, focusing on backward districts is more important than focusing on deprived states. Using the objective criteria, it is not very difficult to figure out which are India’s worst districts. For instance, in Assam one would pick Dhubri. In Bihar, one would pick Araria, Deoghar, Kishangunj, Palamu, Purnia, Sahibganj and Sitamarhi. In Madhya Pradesh, one would pick Bastar, Betul, Chhattarpur, Damoh, Datia, East Nimar, Guna, Jhabua, Mandla, Panna, Raisen, Rajgarh, Rajandgaor, Ratlam, Rewa, Sagar, Satna, Sehore, Shahdol, Shajapur, Shivpuri, Sidhi, Surguja, Tikamgarh and West Nimar. In Orissa, one would pick Ganjam, Kalahandi, Koraput and Phulbani. In Rajasthan, one would pick Banswara, Barmer, Bhilwara, Dholpur, Dungarpur, Jaisalmer, Jalor, Jhalawar, Nagaur, Pali, Sirohi and Tonk. In UP, one would pick Bahraich, Banda, Basti, Budaun, Gonda, Hardoi, Lalitpur, Shahjahanpur, Siddrathnagar and Sitapur.
The objective of such an identification is the following. India doesn’t become developed until these backward districts are also mainstreamed into the development process. Can one direct specific attention to these backward districts' Such as in health, primary education, drinking water, electricity, sanitation and rural road connectivity' Can centrally-sponsored schemes only be directed towards these districts' Can local area development funds granted to members of parliament be restricted to these districts in areas like physical and social infrastructure' It is by no means obvious that such targeting violates the constitutional provisions of equality before the law, especially if one remembers that many of these backward districts have significant ST populations. What it does violate is the perennial problem of populism, whereby one fails to target state intervention because one fears a backlash from the existing beneficiaries of unwarranted subsidies. Therefore, the resistance to such targeted intervention will be from state governments. However, if India is to shine all around and not just selectively, this problem of mainstreaming backward areas into the growth process will have to be addressed. If Mahendra Dev doesn’t have to write another such paper 10 years down the line, I am sure he will be extremely happy.