The Hindu Business Line : Human Development Index — Conundrum of rising income, growing poverty

Successive governments have stressed reforms with a human face but the country's report card on human development indicates that the policies have failed to improve the living conditions of the poor. Worse, the growth post-reforms has been characterised by a further widening of inter-State disparities and the growing urban-rural divide. The disparities are in respect of both per capita income and social indicators, says S. D. Naik.

THE HUMAN Development Report 2005 released recently by the United Nations Development Programme (UNDP) once again refers to India's disappointing performance in improving its Human Development Index (HDI). India ranked 127th out of 177 countries in 2003 for the third year running.

India may be among the fastest-growing economies, but the HDR 2005 says the country's record in human development continues to remain less than impressive. The report notes that the incidence of poverty in India has fallen from 36 per cent in 1990 to 25-30 per cent and appears to be on track to achieve the Millennium Development Goal (MDG) of reducing by half the proportion of people living on less than a dollar a day by 2015. However, on most other indicators, especially health (reducing child and maternal mortality), achieving universal primary education and gender equality, it may reach the MDG goals only some time between 2015 and 2040. Painting a grim picture, the HDR points out that one in every 11 children dies in the first five years of life and that India alone accounts for 2.5 million child deaths annually, one-fifth of the world total.

India: Successes and failures

The HDR says: India has been heralded as a success story of globalisation. Over the past two decades the country has moved into the premier league of world economic growth; high technology exports are booming and India's emerging middle-class consumers have become a magnet for foreign investors. However, as the Indian Prime Minister has candidly admitted, the country's record on human development has been less impressive. The deeper problem facing India, it says, is its human development legacy. In particular, pervasive gender inequalities, rural poverty and inequalities among States, are undermining the potential for converting growth into human development.

Perhaps the starkest gender inequality is revealed by this simple fact: Girls aged 1-5 are 50 per cent more likely to die than boys. This fact translates into 130,000 missing girls.

Inadequate public health provision exacerbates vulnerability. Fifteen years after universal childhood immunisation was introduced, National Health Surveys suggest that only 42 per cent of children are fully immunised. The coverage is lowest in States with highest child death rates and less than 20 per cent in Bihar and Uttar Pradesh. This is indeed a sorry state of affairs and needs urgent attention.

There is a chronic under-provisioning of health services in high-mortality northern States, which is linked to unaccountable State-level governance structures. Not surprisingly, four States — Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh — account for more than half the child deaths. These States are also marked by some of the deepest gender inequalities.

Explaining the conundrum of why accelerated income growth has not propelled India into a faster poverty reduction track, the HDR says that extreme poverty is concentrated in the rural areas of the northern poverty-belt States including Bihar, Madhya Pradesh, Uttar Pradesh and West Bengal, while income growth has been most dynamic in other States, urban areas and service sectors. At a national level, rural unemployment is rising, agricultural output is increasing at less than two per cent a year, farm incomes are stagnating and growth is virtually "jobless".

Shortcomings of past strategies

The findings of the HDR are not new. Similar observations were made by earlier editions of the report and also brought out by National Sample Surveys and other studies from time to time. The persistence and widening of such inequalities in the post-reform period only point to the inadequacies and shortcomings in our development strategies.

Successive governments have stressed reforms with a human face but the country's report card on human development indicates that the policies have failed to improve the living conditions of the poor. Worse, the growth post-reforms has been characterised by a further widening of inter-state disparities and the growing urban-rural divide in India. The disparities are in respect of both per capita income and social indicators.

In this context a World Bank Report published in 2003 — India (Sustaining Reform, Reducing poverty) — had stated: More than half of India's poor live in just four States, over two-thirds of the poor live in the rural areas and depend largely on agriculture. The highest incidence of poverty is among people belonging to Scheduled Castes and Tribes, who face major social barriers that exclude them from opportunity.

The recent Asian experience also suggests that to accelerate economic growth and social welfare, the major thrust will have to be on the development of human capital through education, health and nutrition. To ensure this, the role of state intervention would be crucial, at least in the medium-term till the market can start playing its role.

As the Nobel Laureate, Prof Amartya Sen, has been advocating all along, what is important is the empowerment of the poor and weaker sections and bringing them into the mainstream of national life.

According to Prof Sen, the major weaknesses of Indian social policies are those relating to education, health care, land reforms and gender equity. He laments the under-activity of the government in social sectors such as primary education and public health.

Challenges to Bharat Nirman

Against this backdrop, the UPA Government's decision to increase the spending on rural infrastructure, health and education under the ambitious "Bharat Nirman" project announced by the Finance Minister, Mr P. Chidambaram, in the 2005-06 Budget is a welcome development.

Also, more recently, the Government announced the launching of a National Rural Employment Guarantee (NREG) Scheme seeking to provide 100 days of assured employment annually to every rural household to provide livelihood security.

While these initiatives are no doubt laudable, the real challenge is that of effective implementation and ensuring that there are no large-scale leakages. The experience and outcome of the plethora of employment generation and poverty alleviation programmes over the past decades under different names do not inspire confidence. Serious efforts would be needed to ensure democracy and accountability of the service providers and the State authorities to ensure that the benefits do reach the target groups.

Unfortunately, the situation in many States is pathetic insofar as the quality of service delivery to the poor is concerned.

For instance, the largest number of hospitals and dispensaries without doctors or medicines, primary schools without proper buildings, regular teachers or even black-boards are in Bihar, Uttar Pradesh, Madhya Pradesh and Orissa. The situation is only marginally better in many other States.

Hence, in the ultimate analysis, the crucial factor for ensuring the success of the schemes would be the standards of governance rather than the financial resources that could be allocated. Hopefully, the `Outcome Budget' presented to Parliament by Mr Chidambaram will help improve delivery of public services as it is intended to periodically monitor the achievement of physical targets rather than the funds allocated and spent on various schemes.

At the same time, the policy-makers would do well to remember that employment guarantee and poverty alleviation schemes cannot be regarded as long-term solutions for livelihood security and human development. These are, at best, temporary relief measures till such time as the real employment growth in the economy picks up.

Along with increased expenditure on education and public health, a developing economy like India needs to pursue labour-intensive, or job-oriented, growth.

Had the agricultural sector grown at a minimum rate of 4 per cent per annum as targeted by successive Five Year Plans and had it diversified into horticulture, dairying, fisheries and agro-processing, the resulting growth in rural employment would have been sufficient to absorb the bulk of the growing labour force.

The large-scale and persisting poverty, and the resulting setback to human development efforts in the rural areas, are largely due to the sharp decline in agricultural growth post reforms, mainly because of a sharp decline in public investment.

At least now the policy-makers should wake up to the challenge and make all efforts to initiate measures to step up both public and private investment in the farm sector to achieve the targeted growth rates.

This would require a course correction in the development strategy aimed at increasing the share of agriculture and allied activities in GDP and promoting employment-oriented growth.

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