February 23, 2014

An uncertain glory by Jean Dreze and Amartya Sen

An uncertain glory by Jean Dreze and Amartya Sen
India and its contradictions

Growth rates of India’s GDP at constant prices (% of year)

Colonial period 0.9 GDP & 0.1 Per capita GDP
1950-60         3.5 GDP & 1.8 per Capita GDP
2000 - 2010     7.6 GDP & 6.0 per Capita GDP

Life expectancy in India today (about 66 years) is more than twice what it was in 1951 (32 years)
Infant mortality is about one fourth of what is used to be
Female literacy rate has gone from 9 per cent to 65 percent

Indian can be proud of its huge circulation of newspapers 9the largest in the world) and a vast lively stream, of radio and TV coverage, presenting many different analysis of ongoing politics

The failing of the media, concern a lack of serious involvement in the diagnosis of significant injustice and inefficiencies in the economic and social lives of people and also the absence of high quality journalism. By enriching the content of the coverage and analysis of news, the Indian media could certainly be turned into a major asset in the pursuit of justice, equity and efficiency in democratic India

Fast economic growth is often celebrated, it is extremely important to point to the fact that the societal reach of economic progress in India has been remarkably limited. India has relatively stagnant wages and no less importantly the public revenue generated by rapid economic growth has not been used to expand the social and physical infrastructure in a determined and well-planned way. There is a also a continued lack of essential social services (from schooling to health care to the provision of safe water and drainage) for a huge part of the population.

20 years ago India has the second best social indicators among 6 south Asian countries (India, Pakistan, Bangladesh, Sri Lanka, Nepal and Bhutan), it now looks second worst (ahead only of Pakistan)

Nearly a third of population is not connected with electricity

At the risk of oversimplification, it can be argued that the main respects in which the agenda for ‘political, economic and social democracy’ remains unfinished related to two areas:
1. Continued disparity between the lives of privileges and the rest,
2. Persistent and ineptitude and unaccountability in the way the Indian economy and society are organized.

  1. Even after two decades of rapid growth, India is still one of the poorest countries in the world. India’s real income per head is still lower than most of countries outside sub-Saharan Africa. The picture is even worse if we focus on the quality of life of the underprivileged part of the Indian population, hundreds of millions of whom continue to lack the essential requirements of satisfactory living, from nutritious food to health care, decent work conditions and warm clothes in the winter.

Adam Smith thought India in general, particularly Bengal, was one of the most prosperous regions on the globe and he devoted sometime in the Wealth of nations to explaining mostly its flourishing system of trade, utilizing its navigable rivers.

When the East India Company initiated through the battle of Plessey in Bengal, in 1757, the region was famous for its industrial exports, particularly of textiles of various kinds. Comparison of wage rates and prices seem to indicate that the real wages of Indian labor (skilled artisans) in economically active regions were not lower, indeed sometimes higher than those then enjoyed by corresponding groups in many European countries. Long periods during the epochal British rule per capita real income of India actually declined.

India's recent growth improved living standards of the ‘middle class (which tends to mean the top 20% or so of the population by income) have improved well beyond expected. But the story is more complex for many others such as the rickshaw puller, domestic worker or brick-kiln laborer. For them, and other underprivileged groups, the reform period has not been so exciting. Not only, it did not improve at all, but the pace of change has been excruciatingly slow and has barely altered their abysmal living conditions.

head count ratio of rural poverty declined from about 50% in 1993-3 to 34% in 2009-10. However, it is not actually so. The clue lies in the so called ‘density effect: the fact that many people are just a little below the official poverty line, so that a small increase in per capita expenditure is enough to lift them above the line.

there has been little improvement in India’s nutrition indicators during the last twenty years or so.
China devotes 2.7% of GDP to gov. expenditure on healthcare, compared to India's relatively miserable 1.2%.

Looking ahead, two major problems facing the Indian economy can be summed up as follows
1. Removing the sharp disparities that divide the country into the privileged and the rest, while continuing to encourage overall economic growth and expansion
2. Bringing more accountability to the running of the economy, particularly in the delivery of public services and the operation of the public sector.

A number of Indian states (Kerala & Tamil Nadu for example) would be at the top of the South Asian comparison if they were treated as separate countries and others (UP, MP for example) would do enormously worse. Multi-dimensional index (MPI) places states like Bihar, and Jharkhand in the same group as some of the poorest African Countries. In terms of MPI, the seven states (Bihar, Chhattisgarh, Jharkhand, MP, Orissa, Rajasthan and UP) are more or less on a par with the 27 poorest countries of Africa. And have roughly the same population. What is interesting is that Kerala continues to make rapid progress on many fronts and that its lead over the other states shows no sign of diminishing over time. In fact it has even accelerated with help from rapid economic growth, which in turn has been assisted by Kerala’s focus on elementary education and other basic capabilities. Tamil Nadu has some of the best public services among all Indian states and many of them are accessible to all on a non-discriminatory basis.

Pricing policies of many other sources of power, such as petrol and diesel with the same implicit priority being given to the relatively affluent, rather than those who have little means to make significant use of artificially cheapened fuel. Attempted reduction of petrol or diesel subsidies tend to generate a huge outcry from the powerful lobbies of the biggest consumers and are often abandoned within a few days. Populist policies are actually of little use to the bulk of population.

A similar point applied again to the fertilizer subsidy which has been enormous drain on India’s public finance for a long time, costing about 1.5% of GDP whereas public health was less than 1.5% of GDP.  While the fertilizer subsidy possibly played a useful role when it was introduced in the late 1970s, it would hard to justify today - esp. given its distributional regressive nature as well as its adverse environmental impact.

The case against regressive subsidies rests partly on the possibility of making much better use of the same resources for the benefits of underprivileged. For instance, very confusing use is often made of terms such as ‘middle class or aadm aadmi to protect relatively privileged groups as underdogs. The real underdogs, meanwhile hardly figure in the entire debate.

The ‘Revenue Forgone’ statement by the Finance Ministry remains it to be an astounding 5% of the GDP.

Three different issues are central to the prevalence of corruption in public services. First, corruption flourishes in informational darkness: by nature, it is secretive affair. The second issue (that of social leniency) is also indirectly helped by greater transparency of information,. For use of ‘naming and shaming’ demands naming before shaming can be attempted. The third is effective prosecution that very little has been done so far (conviction rates are so ‘ridiculously low’).

When Britishers left, adult literacy rate was only around 18%. Around 20% of Indian children between ages of 6 & 14 years were not attending school even in 2005 -6. When the oldest European university, Bologna, was found in 1088, Nalanda was already more than 600 years old. Nalanda (Buddhist foundation) was an ancient center of advanced learning that attracted students from world over (Japan, China, Korea, Thailand, Indonesia and rest of Asia as well as few from Turkey. Nalanda, a residential university had ten thousand students in its dormitories, in the 7th century.(Another Buddhist Takshila (now in Pakistan) another such institute, but offered religious studies on Buddhism)

Even with long history of education, the fact remains that the achievement of higher education of contemporary Indian universities are rather limited. None of Indian institutions listed under 200 (http://www.timeshighereducation.co.uk/world-university-rankings/2013-14/world-ranking)
Even though Indian authorities have resisted the country’s inclusion in international comparisons of pupil achievements, some recent studies make it possible to compare Indian students with others such as PISA Plus survey conducted in 2009. Indian performance comes out very much at the bottom of the 74 countries or economies included in this survey. And this is the case even though the two Indian states that participate in PISA Plus happened to be two of the better schooled states (Tamil Nadu & Himachal Pradesh) and this is for all categories - reading, math, science.

The classic problem of school education in India has been underfunding by the state. Accountability is the other main problems in the delivery of school education. Absenteeism by teachers, reluctant to teach, Salaries of Gov. Teachers in India are now well out of line with private sector norms as well as with International patterns. Consider primary-school teacher salaries as a ratio per capita of GDP. In 2001, China teacher’s salary was around same (1) same as Bangladesh (in 2012). UP teacher’s salary is 6.4 times and Bihar teachers salary is 5.9 times in 2012.

India’s best newspapers with a creditable record of coverage of social issues in general, issues of health were rarely discussed. India’s immunization rates are uniformly lower than the corresponding averages for sub-Saharan Africa or the least developed countries at the same time, Bangladesh has achieved immunization rates of around 85 % for each vaccine.

Public expenditure on health in India has hovered around 1% of GDP for most of the last 20 years and only 9 countries in the world spend a lower ratio of public expenditure on health to GDP when compared with India (China spends 2.7, Latin America spends 3.8 and world average is 6.5 % of GDP).

Indian is estimated to have some 86,000 newspapers and periodicals with a circulation of more than 370 million - significantly more than any other country in the world. It is also a country in which newspapers are growing in number and in circulation, contrast with the worldwide trend of decreasing newspaper circulation and revenue.  Perhaps the biggest barrier to the free operation of the media in democratic India lies in its partiality in favor of the rich and the powerful, which is widespread in its coverage of news and analysis from across the country. There are complex biases can be detected, but the obvious is a serious lack of interest in the lives of the Indian poor. Media is a advertisement-driven business (MD of Times of India said, we are not in newspaper business, but in advertisement business).

One of the leading magazine editors commented, “Mainstream media is reluctant to investigate corporate because of their advertising potential. Proliferation of paid news - the phenomenon of paying newspapers or TV channels to report certain facts has also brought out some deeply disturbing aspects of news coverage’s in India.

The privileged group in India includes not only businessmen and the professional classes, but also the bulk of the country’s relatively affluent, including educated classes.  Among the relatively affluent, some are more so and some far less. Entire group of the relatively privileged stand well above the lot of the underprivileged majority of the Indians.

National Food security Bill (right to eat) tabled by the gov in the parliament in 2011 was immediately attacked and withdrawn. It would cost 0.3 % of the GDP, but would have helped 2 third of the population (in 2013, it passed).  Petroleum and fertilizer subsidies is around 1.7 % of GDP and 5.7% of the GDP was lost by withdrawing tax on imported gold and gems (due to business and media influence).

The fog of obscurity has been so strong about the incidence and intensity of extreme suffering that the very idea of common people- the object of immediate support from vocal political leaders - has undergone a vast redefinition. The relatively affluent who are not yet less affluent than the really rich very often tend to see themselves as ‘ ordinary people’ - Aam Aadmi in Hindi- whose self-vision places them as a underdogs of society which can be a fitting description only if we compare them with the top layer of the really prosperous.

In an insightful remark, George Lindsay Johnstone, one of the early East Indian Company officials, said in London Parliament in 1801, that British’s Indian empire was ‘an empire of opinion’ and it was founded on the disinclination of ‘the natives to reflect upon their own strength. The reluctance of Indians in general to reflect upon their own strength was a big factor in the continuing submission of India to Britain in Johnstone’s time, but the particular failure disappeared long time ago from India. What remains true, partly because of the circumstance of Indian politics, is that underprivileged Indians are relect5acnt to rise and demand a rapid and definitive remove of their extraordinarily deprivation. The complaints of the ‘comparatively privileged but not more privileges, which constitutes the category of the so-called ‘ordinary people; are powerfully aired, and perspectives of this easily mobilize group get the lion’s share of the championing by major political parties. This is in sharp contrast with the relative lack of attention paid to the massive - long standing - deprivations of the underdogs of Indian society.

[Corruption and caste system issues are covered in the book; however, since it is well known facts, I did not add them in my review]

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