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India's inclusive growth
Publication Date : 19-08-2013
Things came to a pass in 1991 when India had to send gold reserve to London as collateral to get foreign currency for buying essential supplies from abroad. The liberalisation forced by IMF did open up some parts of our economy to competition. This led to quite impressive growth rate until this year. This neoliberal prescription bypassed the poor, as expected.
The ruling BJP (India People's Party), with the “Shining India” slogan, was caught off-guard by the lower middle class/poor voters during the 2004 general election and Congress formed a coalition government, with support from the CPI-M (Communist Party of India-Marxist), based on a Common Minimum Programme (CMP).
We just mention three points of that programme in different order to facilitate our subsequent analysis. They were: 1) Public spending on health would rise to at least 2-3 per cent of GDP over the next five years with focus on primary health care; 2) Public spending in education would rise in a phased manner to at least 6 per cent of the GDP, with at least half that amount spent on primary and secondary sector; 3) A National Employment Guarantee Act that “will provide a legal guarantee for at least 100 days of employment to begin with on asset-creating public works for at least one able-bodied person in every rural, urban poor and lower middle-class household”.
These and other similar measures were formalised in the policy objective of the 11th Five Year Plan under the banner of inclusive growth. World Bank soon picked up the term in its reports on development. This is not surprising, given the symbiosis between Indian economic advisors and IMF/World Bank economists in Washington.
Nine years is a sufficiently long period to assess our government’s true commitment to the goals mentioned above. Let us start with health.
Our spending on health is still about 1.2 per cent of the GDP. The 12th Plan projects a mere 1.9 per cent spending on health at the end of the Plan period! In fact, our neoliberal economists want the government to distance itself from public health in order for private players to exploit the vulnerability of the sick and make enormous profit in the bargain. SSKM (formerly PG) hospital was once the pride of Calcutta, especially in heart-related ailments.
I recently heard a joke that our culture conscious former chief minister of West Bengal would rush to the home of any intellectual suffering a heart attack to personally arrange for his/her treatment at the SSKM hospital, while the family of the patient would desperately try to find excuses to take him to a private hospital. The situation with education is no different.
The public expenditure on education as percentage of the GDP has actually gone down from 4.2 per cent of the GDP in 2000 to 3.1 per cent today. At the level of higher education, the fraud around “deemed universities” is well known. This is going to be exacerbated with the arrival of foreign capital in the near future. More and more government resources will be handed over to the private players in the name of Public Private Partnerships (PPP). One may discount this by arguing that those duped in this process are (upper) middle class parents.
A far worse problem affecting the poor and vulnerable is the mushrooming of private schools all across our land in the name of providing English medium instruction. Everyone rushing to enroll their kids in those schools helps our government to shirk from its responsibility of providing equal educational opportunity at the school level to all of our children. The chaos will be complete once the Right to Education (RTE) Act becomes fully operational. India’s Human Development Index and the performance of our school children in international tests both place us near the bottom of World rankings.
Finally, let us discuss the National Employment Guarantee scheme. Mahatma Gandhi National Rural Employment Guarantee Act has been a modest success and was instrumental in the United Progressive Alliance’s victory in the 2009 general election.
In a country with hardly any organisational skill, the economic goal of the scheme of asset formation has virtually remained on paper. It has become the proverbial Keynesian scheme of digging up trenches and filling them up. It is effectively a dole, a large part of which has also been siphoned of by lumpen collaborators of local politicians. The plan to extend it to urban poor and lower middle class is not even being discussed.
A genuine form of pro-poor growth is being implemented in the backyard of the United States, in the far away Latin America. There, the emphasis between “growth” and “development” has been reversed.
While in India the primary purpose is on growth at all costs, with its fruits finally trickling down to the poor, in Brazil, Venezuela and some other countries in South America, governments are formulating concrete goals of pro-poor growth and devising measures to achieve these goals without sacrificing macroeconomic stability and economic growth. Recent boom in commodity prices clearly helped in this process, but it opened up a new paradigm in economic development.
The slogan “inclusive growth” has become a mantra for our Congress politicians, currently used to divert attention from the Gujarat “success story”. When I was young, we were told that if we utter a mantra numerous times, it is bound to yield results. We need not understand what the mantra says!
In those days, mantras were in Sanskrit. Now, of course, mantras have to be in English. But we do not have to understand them either, just repeat them hoping that this would be enough to win elections. Let us see whether chanting English mantra is as effective as a Sanskrit one.
The writer is ex-dean and professor of applied mathematics at the University of Twente, The Netherlands.