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High Growth Rate: Does It Benefit the people?,by Dhurjati Mukherjee, 16 February 2006 Print E-mail


New Delhi, 16 February 2006

 High Growth Rate

Does It Benefit the people?

By Dhurjati Mukherjee

The growth rate mania has gripped the country.  Along with India, economists the world over have been unanimously proclaiming the emergence of China as economic super-powers in the not-too-distant past.  According to a recent book by Prestowitz, India is expected to overtake Japan in dollar terms (not purchase parity) by the year 2030 and in the second half of the century it will be the largest economy.  But though growth rate in India has witnessed a remarkable upward trend since the start of the new millennium, the question arises, has this impressive growth rate translated into a better quality of life for all its citizens or for the majority?

The answer is obviously in the negative as analysts have pointed out that the benefits of a higher growth rate of 7+ has reached only around 20 per cent of the population.  It is observed that the switchover from welfare-oriented statism to profit-oriented liberalization and privatization, the range of beneficiaries become narrower and narrower, even if a higher rate of growth is achieved.  The beneficiaries, apart from being the business houses, would be the middle class and those in the organized sector. Thus, there is bound to be inequality in a highly uneven and stratified society in a country like ours.

Inequality in opportunities and outcomes has many dimensions–interpersonal, inter-regional, inter-gender, inter-caste etc.  Further inequality has manifested in terms of unequal distribution of wealth, income, consumption, expenditure.  This has accentuated over time. Liberalization has opened up opportunities for the rich and given them a chance to exploit the market but the conditions of the poorer segments have not improved in any way.

In such a scenario, the perspective of development has to be people-oriented, so that the lower tiers of society benefit.  The neglect of the rural sector and the increasing consumerism in the big cities with shopping malls, booming share prices and real estate do not augur well for the country.  This imbalance is accentuated by the enormous loss of livelihood and withdrawal of people from the workforce in the name of modernization.  Moreover, land of poor people, especially tribals and other backward castes, is being forcibly taken away at very nominal prices to meet the demands of industrialization and urbanization without any scheme of rehabilitation of the affected families.

This has resulted in widespread social chaos and violence in Orissa, West Bengal, Jharkhand and many other places in the country. The crime, alienation and violence of disequalising growth may not find a mention in neo-classical economics but is very much an integral part of the living reality in India.

The focus of any development strategy has to be both economic and social and aimed at the welfare of the people.  This means that while economic factors for boosting growth have to be given importance, simultaneous attention has to be accorded to social concerns which affect the masses.  Around 70 per cent of the country live in villages and any effective strategy of real development has to keep in mind their upliftment.  But, unfortunately, very little has been done to upgrade their quality of life. As such, 31 per cent still live on less than a dollar a day and India’s poverty shows no sign of coming down from 30 per cent.

On the contrary, landlessness has increased, agriculture has become non-remunerative because of various factors, including continuous division of land holdings and poor returns, and rural infrastructure has not developed except for some attempts in the last few years.  The bias in our development strategy has obviously been on the urban sector and on industrial growth rather on rural regeneration and agricultural growth.

Both social and physical infrastructure, till the beginning of the new millennium, was quite poor in most of the States and has not benefited the majority of the population.  In the realm of social infrastructure, the appalling conditions of health of children has been a worldwide concern, while the inadequate spread of education, specially among women, has not generated the necessary awareness and population growth has remained unhindered.

A country aspiring to become a world power through high growth rate has to give optimum emphasis on education which can make people socially conscious and generate awareness about the emerging reality. Even the United Nations has designated the d decade 2005-2014 as ‘Education for Sustainable Development’, necessitating increase in education among the people which, in turn, ensures good governance, a better quality of life and a balanced ecological system.

The need for decentralization and for giving more powers to the panchayats has been emphasized for quite some time and with the passing of the 73rd and 74th Constitutional amendments, a lot of hope was generate.  But the decentralization has yet to become a reality as the panchayats in most States merely execute plans formulated by the State Governments.  People’s involvement in the planning process is virtually absent.  Planning from below, as visualized by Gandhiji long ago, is a pre-condition for development to become people-centred and  reach the grassroots.

Rural regeneration is obviously the answer and the Government’s initiative in launching the Bharat Nirman and the National Rural Employment Guarantee Programme have been steps in the right direction.  As huge resources would be needed, it has to be ensured that top priority has to be accorded for these two programmes.

Already, the employment programme has just started in only 200 districts, instead of the 593 ones of the country and it is not known when all the districts would be covered.  The involvement of the people in all possible ways has to be ensured as these programmes are very significant in that they are expected to perform the dual task of employment generation and rural upliftment, so very essential at such a juncture.

India needs massive dose of investment in infrastructure as also in the social sector.  The disagreement arises on where such large funds would come from.  One answer could be foreign direct investment (FDI) in these sectors but the restrictions imposed by the Left parties make these unattractive to foreign investors. 

The second source is the selling of minority stake in profitable public sector companies in such a manner that the Government continues to retain majority holding.  With the Common Minimum Programme (CMP) of the UPA ruling out such an option, there is need to seriously look at other options of funding the above two programmes in all urgency.

True, development is necessary at this juncture for the country’s emergence as a strong global power.  One is reminded here of the report of the Dag Hammarskjold Foundation way back in 1975, wherein it was pointed out that development ought to rest on five pillars: it ought to be indigenous, self-reliant, need-oriented, environment friendly and open to institutional change.  To achieve this, it is necessary to empower the people and solicit the cooperation of all stakeholders in the planning and development process. ---INFA

 (Copyright, India News and Feature Alliance)



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