India on the cusp of change: States must shun exclusive growth policies,opt for inclusion
Posted by ramblinginthecity
With the election fever on in Gujarat and the hugely pro-Modi mood in the state, from what little I have heard from family and acquaintance living an visiting the state, an editorial that questions the Gujarat growth model certainly gets attention! Atul Sood’s piece in The Hindu today points out that the state’s growth path is exclusionary. He argues that compared to other states with similar growth rates- Maharashtra, Haryana, Tamil Nadu, Gujarat has not done well in the traditional indicators for development. Employment has remained stagnant, including manufacturing employment. The manufacturing sector is also showing a slow growth of wages (less than the other three States) and increasing use of contract workers. Sood points out that “the worsening condition of workers in the manufacturing sector is accompanied by increasing profitability and growing investment in the sector.” Both rural and urban per capital monthly consumption expenditure in Gujarat has grown at lower rates these past five years than before that and is also lower than the other three States.
The author, who is one of ten independent researchers who have been published in a recent study ‘Poverty Amidst Prosperity: Essays on the Trajectory of Development in Gujarat’ cites Gujarat’s experience as a window to really understand the limitations of market-led growth without a policy vision that equally works to mitigate the negative impacts of this development model.
For those of us who work in the development sector, or are aware of the issues associated with it, this is an essential dilemma. How will the trickle-down effect happen? Or the trickle-up for that matter, for those who believe the demand will be led by Bottom of the Pyramid customers, who would need a certain amount of disposable income and a fairly stable quality of life to actually spend, right?
How do you reconcile situations where enormous economic growth is concurrent with rising levels of incoe disparity, and we see this in other developing economies as well. For instance, Brazil is 85% urbanized, has a hugely social emphasis on city planning and governance but has a Gini coeffieicent of 0.54 in 2009, where 1 indicates absolute inequality. That is considered fairly unpalatable and there is a fair amount of literature on how Brazil’s tax system in pro-rich, how the urban-rural divide is too stark and certainly there is now considerable focus on improving this figure.
As per economists Laveesh Bhandari and Suryakant Yadav, the urban Gini coefficient in India went from 0.35 in 2005 to 0.65 today (taken from Pratap Bhanu Mehta’s article on ‘How India Stumbled-Can New Delhi get its groove back?’ in Foreign Affairs, July/August 2012). Now this is really worrying, to me. And I tend to agree that we really need to look beyond purely pro-market moves to a more balanced vision of growth, even if it means bringing GDP down a few notches but actually ensuring a slightly more equitable distribution of that wealth.
I know that is a very socialist view and not appreciated by many (esp in the bourgeois wealth-driven mindset that we currently inhabit), but we must not forget that India was established, as per our Constitution as a “sovereign, socialist, secular, democratic Republic.” Along with compromising on democracy (ref: FB arrests and the PIL filed by Shreya Singhal against Section 66A), and of course now and then questioning whether secular is really how we feel about ourselves, we are also moving away from our socialist intent as a people. I agree with many experts, who believe that India is at that place where it can choose its development path, and we can actually opt for a more inclusive, longer term vision of growth. Unfortunately, the political compulsions do not allow for that sort of decision making. And it falls on civil society, NGOs and other sorts of practitioners in the development space to find innovative ways to include the poor into the process of growth; and to constantly clamor for better policy, better implementation, better political will!
Posted in Politics & Citizenship
Tags: Brazil, employment, GDP, growth, Gujarat, inclusive, India, industry, mrket-led, socialist, wages