The Hindu Business Line : Growing disparity

If the media is to be believed, India is rapidly becoming a country of the rich people, with poverty all but banished. Hopefully, this indeed happens, especially as the Prime Minister focusses on the mechanism to eliminate poverty.

Long persisting poverty, as in India, tends to assume complex dimensions, such as low income, low literacy, ill health, environmental degradation, low productivity, high crime rate, depressed expectations and despair. But what spawns so many ills? Unfair distribution of the fruits of development and growth.

Bitter facts

It is a bitter fact that have-nots account for 72 per cent of the rural and 15 per cent of the urban population. The country may have a large industrial base, cities of world standards, a large railway network, a large number of universities and educational institutions, and range of hospitals, yet 70 per cent of the population has no access to even the basic amenities.

Governments over the last several decades have been making large allocations for poverty alleviation but have failed to achieve the goal.

All State governments have no doubt set up primary schools in villages, and hospitals from the taluk level, but the former do not have teachers and the latter doctors, nurses and medicines.

No teacher or doctor wants to go to the rural areas, and even those who are all but forced to go are rarely at their posts. In this they are often aided by politicians. Indian villages suffer from the absence of drinking water supply, poor and erratic electricity supply and transport means.

The economic growth in India has failed to generate adequate employment in Bharat. In Asia, India had the lowest employment elasticity at 0.28 in the 1980s, and 0.31 in the 1990s.

According to the latest NSSO survey, only 42 per cent of the employable population got work in 2004-05. According to the survey, Rural India faced 56 per cent unemployment, and Urban India 63 per cent.

Bypassed poor

All the high GDP growth and the improved global ranking of India, supported by high technology, have bypassed large segments of poor in the rural and semi-rural areas. The robust economic growth has not generated employment due to the increasing capital intensity of production, and the restructuring of the industrial sector. The other obvious factor for the high unemployment rate is the rapid increase in population and the country's demographic profile with a large segment in the employable age.

The people are poor, not just in terms of their abysmal per capita income but also by the absolute deprivation of social and economic infrastructure. In several regions if starvation does not kill, the abysmal living conditions does.

The political response has been at best indifferent. Several studies and evaluations of poverty alleviation schemes by multilateral agencies have concluded that the public expenditure has often ended up helping the non-poor.

To set the system right people have to empower themselves by forming pressure groups across the country. The country needs to create NGO/citizen groups to monitor the performance of members of Parliament, ministers and government executives. MLAs, MPs and Ministers must perforce file performance reports, detailing the targets set for their constituency and the achievement level. Those failing to achieve their targets must explain the reasons through Parliament/legislatures.

Policy re-think

Alongside, certain policies too may need re-think. For instance, the Special Economic Zones. Surely, the country needs such enclaves of development, but it must be realised that they also have the potential to aggravate the uneven distribution of wealth.

Can we think of rural industrialisation involving local entrepreneurs? Can we make policies to enhance economic growth which can be enjoyed by all?

(The author is a former Economic Adviser to SEBI.)