With great fanfare, India set off to liberalise its economy in 1991. Everyone was very excited - India was going to be liberalised, privatised and globalised and there was going to be an end of the licence permit raj. Twenty two years later, the positive outcomes of that objective can be seen in the growing number of dollar billionaires and millionaires among Indians, fancy cars, an abundance of imported goods in shops, a big middle class, a number of posh malls in big cities, stylish men and women travelling all over the world and crowded cities with gleaming buildings and luxury hotels. There can be many more items that can be added to the list. Above all, India also became a top emerging economy and President Obama remarked in the Indian Parliament in November 2010 'India is not simply emerging, India has emerged'.
Indian GDP growth reached its zenith in 2010 attaining 10.4 per cent before the decline began. From over 10 per cent growth, in the next three years, GDP growth plummeted to 5.3 per cent. Whatever eminent economists may say about the economy and that it has "bottomed out" now, the fact remains that liberalisation has not delivered its promised "trickle-down effect". There is a still a big gap between India's potential of becoming another China and what it is today.
Take the first indicator of success of Chinese growth - its poverty level has been reduced to 1 per cent . Most villages have 24 hours of power and water supply. All villagers have five types of social insurance and the infrastructure is modern. Its cities are comparable to New York and Toronto. China has become a world power on the basis of its high GDP growth and its rapid globalisation. Behind it lies efficient implementation of policies and good governance. In India on the other hand, the latest NSSO data reveal that for the period 2011-12(July-June), the bottom 5 per cent of the population had to survive on Rs 521.44 a month in rural areas or Rs 17 a day. In urban areas, people have had to survive on Rs 27 a day. More than half of that meagre amount was spent on food in rural areas and 42 per cent was spent on food in urban areas. How have they managed to educate their children or how much was left over for healthcare?
Clearly liberalisation's objective of lifting the underprivileged out of poverty and deprivation has not been achieved. It has led to an increase in inequality of incomes and has favoured the privileged and the well connected. A series of corruption scandals have surfaced specially in the last five years of the UPA government showing how people in power misused their office and made unimaginable gains. The Swiss Bank accounts conundrum remains unresolved. One is not surprised that the Gini coefficient has risen from 0.35 in 2005 to 0.65 in 2012.
Malnutrition, which has been termed a 'national shame' by the Prime Minister is still hovering around 42 per cent. Healthcare for the poor is still not universal and Indians have one of the highest 'Out of pocket expenditure' for their health care in the world, thanks to the exorbitant prices charged by private health care centres/hospitals which have mushroomed in big cities. Education, especially primary school education needs reforms especially in tackling absenteeism of teachers and poor infrastructure. The rural transport system is still inadequate and connectivity is absent in many villages during monsoons.
According to the World Bank, 33 per cent of the world's poor live in India. Yet, according to the data from the Planning Commission, absolute poverty in India has gone down by 12.5 per cent between 2004-2005 and 2009-2011. Official poverty level is now at 29.8 per cent of the population and close to 350 million. Even so, it is a huge number and if you add the 'not so poor' to the list, it is still a shame.
Inflation has been a long term feature for around three years. Private consumption expenditure as a result has shrunk from 61 per cent of GDP to 54 per cent in the last quarter of the current fiscal year. No wonder industrial growth has slowed down. Manufacturing growth has been low at 2.6 per cent which means employment generation has slowed down. India needs to grow at least by 8 per cent to absorb all the youth joining the labour force every year.
How has liberalisation failed in India and not in China? It is because of the quality of governance in the two countries. In China all schemes are properly implemented and all the leaders have had actual rural administrative experience unlike our leaders. They know the problems of rural China whereas our rural
economy remains neglected and cities are the hub of action. Ministers travel abroad all the time to "learn more"- especially from developed countries. The urban rural divide has led to massive migration to cities that have not been able to cope with this influx. More than half of Mumbai for example lives in slums because the housing is just not affordable for low-income families.
Inclusive growth has been the slogan for quite a few years but the poor have remained alienated/marginalised because of poor delivery of the social schemes. A large number of poverty alleviation schemes were started with great fanfare but the benefits did not reach most of the poor. The latest gesture of a munificent government has been the Food Security Bill which will actually exclude 33 per cent of the population from accessing PDS as a right and will provide only 5 Kg of grain as against the ICMR norm of 14 Kg for an adult and 7 Kg for a child.
So after 65 years of Independence, if the poor remain starkly poor, and if liberalisation policies have not enabled every citizen to live in human dignity, the blame should go to the poor
governance and the prevalence of high and petty corruption. It is lack of strong leadership that we are in this state of affairs. Also the absence of accountability for those who are guilty of corruption and misuse of power,is making people blasé. Seeing that there are no prospects for their future, people in the lowest 5 per cent income bracket are turning despondent and taking to crime and armed struggle.
The recent violent actions of the Maoists have made big news. It will not be easy to resolve this problem because these are the people who have been deprived of their land and development, and they form the core of the movement. Only better distribution of the growth story can bring peace to these people. More jobs, better standard of living, education and health will normalise these areas.Liberalisation cannot be successful without putting in place social safety nets for the poor. Only then would the poor and vulnerable be able to avail the benefits of liberalisation and the opportunities that it throws up. Otherwise such policies can create mass discontent that cannot be appeased by giving more sops especially with the approaching general elections in 2014.
(The writer is a Senior Fellow with Observer Research Foundation, Delhi)
Courtesy : The Pioneer, July 6, 2013
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