The Hindu Business Line : For real inclusive growth, get rid of corruption

If all these years of Planning have not created significant infrastructure, corruption and lack of accountability are to blame. Eliminating corruption should also be a chief target of the Budget if the aim is to correct the uneven economic growth and make GDP growth truly inclusive.

The United Progressive Alliance Government's agenda to accelerate growth and development of the economy by involving the poor is well-reflected in Budget 2008. It is a glaring fact that more than 60 per cent of the population earns its livelihood from 20 per cent of GDP.

The crux of the problem lies with the poor performance of the agricultural sector due to inadequate investments, and lack of rural infrastructure. The Budget has tried to address issues of agriculture development and rural social infrastructure.

A major problem of farmers is their poor access to bank credit. To address this, the Budget has targeted a credit flow of Rs 22,500 crore compared to the Rs 17,500 crore last year. The other important item is fertiliser subsidy that has been given Rs 22,452 crore.

Interest subventions and insurance outlay will go a long way in protecting the income or cash flow of the farmers. Not overlooking long-term investments, the Budget provides for accelerated irrigation, rural infrastructure and rural road construction about Rs 35,000 crore.

Other schemes such as Bharat Nirman, special plans for distressed districts and groundwater recharge are to get Rs 45,582 crore. The Budget has also allocated funds for training farmers in water management, rain water harvesting management, and so on. The Extension and Visit Programme is sought to be revived; this was instrumental in making a success of the Green Revolution.

Framework for investment

All this forms a massive framework of investment in the rural sector. This, it is hoped, would induce private investment by individual households.

For a growing economy in the milieu of enhanced competition at home and globally, it is imperative that India has a large contingent of skilled work force. For this, the Government must have a plan for education and training, as East Asian countries do.

Development and growth are predicated on high labour productivity and good health of the population. The Budget has significant allocations for school education, Prarambhik Shiksha and for schemes to prevent and reduce drop-outs. The Government is also striving to improve middle-level education.

The Budget also has higher allocations for drinking water and sanitation, HIV/AIDS prevention and the Integrated Child Development Scheme.

Health is crucial

As much as Rs 9,947 crore will be made available for the National Rural Health Mission (Rs 8,207 crore in 2006-07). This is recognition of the correlation between health and income; good health is one route to improve the incomes.

The Government could have been more proactive and set up rural hospitals staffed by good doctors and with proper medical infrastructure.

In certain semi-urban centres, the private sector can be induced to set up hospitals and medical facilities through tax exemptions and other incentives.

The Government is persisting with the National Rural Employment Guarantee Scheme and the Swarnajayanti Gram Swarozgar Yojana to provide employment and to encourage self-employment through the Self-Help Group model.

Well-implemented, these programmes can bring many thousand families above the poverty line. The Government can think up schemes that not only provide employment but also create permanent social assets.

It cannot sustain the employment guarantee schemes and the right course will be to encourage self-employment. The key to this is bank credit; it will have to flow to a segment that has to create an earnings stream and may not have a collateral to offer. This could be tricky.

The UPA Government has made an effort to pull up Rural India in terms of allocations and schemes. But the key is implementation. If all these years of Planning have not created a significant infrastructure, corruption and lack of accountability are to blame.

In the absence of the latter and the presence of the former, roads last barely one monsoon, village wells can be seen only on drawing boards and schools may provide mid-day meals only on paper.

Thus seldom do the targeted benefit. Sans medical attention, excluded from jobs and bank credit, is it any surprise that a large section of the rural population is poor? At the root is corruption and its elimination should also be a target of the Budget.

The Government must aim to correct the imbalanced economic growth; the 9 per cent GDP growth must be inclusive.

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

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