A year is a good time to take stock. When I started writing Beyond Business last August, the idea was to give a glimpse of the non-business (rather, political) overtones of economic issues in India. It was soon apparent that there were few events that could be called fully economic in nature. In India now, from SEZs to budgets to job quotas to WTO, all overtly economic issues are covertly political. In spite of what corporate hotshots and Chidambaram Inc like to — or would have you — believe, the wheels of the economy barely turn on their own; they’re taken forward or moved back or juggernauted by complex behind-the-scene political maneuvers. When the economy moves (or not moves) at 8 or 10 per cent, many people are affected, either profoundly or mildly. And every time we grow a point more, the number of affected people increases.
Before this magazine/website’s old critics start hitting on my middle-aged, upper-caste and upper class idiosyncrasies, let me clarify that this is not a mere defense of the growth-trickle-down theory. While high economic growth is a surefire way to eliminate poverty, the speed depends on the country (and the people who run it and in the way they run it). As long as there are groups of politicians/babus who don’t give a damn for anything else other than lining their own pocket and winning the next coveted term/posting, the number of the dispossessed and underprivileged will diminish slowly. I strongly maintain that there is no Dull India outside the Shining India, poor India outside the rich India, or producing India outside the consuming India. They all exist side by side with palpable interlinkages. Wherever the linkages get strengthened, growth percolates faster. And if it is not happening, know it for sure that there are forces at work to keep the linkages weak.
Frankly, there are two interesting figures that triggered off this philosophical bout—Rs 63000 crore and 2.7 per cent. The second is the average annual employment growth between 1999-2000 and 2004-2005 according to the latest thick-sample NSS data, which, interestingly, is much higher than our population growth of 1.7 per cent. Compared to the 1.2 per cent recorded between 1993-1994 and 1999-2000, this has to be very good news indeed, enough to shut up at least those who have been shouting "jobless growth" from the rooftops. Of course, it is another matter that this sharp rise in job growth, especially in this century, hasn’t managed to make any significant dent in poverty, which the NSS says is still stuck at 22 per cent (of the population) in 2004-05. There could be many explanations for this: lower actual wages, asset depreciation (loss of land or crops), higher actual consumption (costlier household budgets), and so on.
But what this figure does is to shake the foundation of the National Rural Employment Guarantee programme, one of the biggest components of the government of India’s total centrally sponsored schemes that eat up a whopping Rs 63000 crore every year. Do we really need this programme if, even without this gigantic prod, employment is growing so rapidly? More important, if the poverty rate is anyway going down at one per cent a year, it would take two decades to just eliminate the backlog, in which scenario would an NREG make a palpable difference to overall poverty or justify its enormous cost of Rs 11300 crore in this year’s budget?
Compare this hand-held anti-poverty schemes to general price reform, which is a logical corollary of general economic policy reform or even tax reform. I’ll take a few examples that cut across age, class and caste and that I have personally sampled. Consider biscuits. The price of a glucose biscuit pack has stayed at Rs 5 for such a long time that nearly all the urban poor I’ve seen have no trouble consuming one. Lest critics accuse me of selling western junkfood to kids and not healthier alternatives, I’ll take another example, of Marie biscuits. The most expensive brand of Marie costs Rs 13 for 33 biscuits. Even here, the price has probably inched up by a rupee in the past few years.
With some trepidation, I take another example, of sanitary napkins. I take this example because this product’s contribution to women’s health is salutary and vital. Competition and tax-breaks now allow a leading company to offer the best-technology (max absorption-max dry) brand at Rs 49 for 8, while the cheapest branded product is available for Rs 22, bringing it within easy reach of women who work as household help.
The third example is apparel and shoes. It is still possible to get rubber sandals for Rs 15, adult-size sneakers for Rs 100 and shirts for Rs 80 even in the capital city. They are all perfectly new, usable and durable.
Of course, all this could still go on to prove that the urban poor is a mile better off than its rural counterpart, but the climbing success of rural provisions chain stores selling everything from fertiliser to toothpaste proves that the situation is not very different in much of rural India. The time has come for some suspension of disbelief. A ten per cent growth rate, believe me, is not a joke. It can create wonders for those who are interested in taking part in this growth process.
But it is imperative to get the market in order first, be it in eatables or in jobs or education. The last two don’t exist. Some others, like in houses, exist in a lopsided fashion. Unless we change that, the milk of human kindness in the form of giveaway schemes will reach nowhere. When we change that, we won’t need even any internal aid.