Corrective to Dominant Discourse on Growth and Development

08 Enero 2013

Bookreview of Growth, Inequality and Social Development in India: Is Inclusive Growth Possible?

R. Nagaraj (Editor), Growth, Inequality and Social Development in India: Is Inclusive Growth Possible?, UN Research Institute for Social Development, Palgrave, Macmillan, UK, 2012, pp.238; Hardback, Price not marked.

At a time when establishing the highest possible growth rate is widely seen as the single most important key to eliminating poverty and to bringing about rapid and cumulative improvements in social development, this book edited by R, Nagaraj with chapter contributions by other scholars stands out as an important corrective to this dominant and misleading discourse.

It is not often that edited books have an overall coherence. This one does even as there is a certain division of labour in this collective effort at providing a historical overview as to why India despite being one of the very few countries which over the last 65 years has had positive annual growth rates has performed so badly comparatively and absolutely when it comes to social development as measured by standard indicators of health, education, inequalities, steady wages and other forms of social security and protection.

Over the course of the three policy regimes (whose rough periodisation is common to all the contributors) namely, 1950-65, 1966-80, 1980 onwards, there has been some variation in the rates at which poverty declined just as there is considerable geographical variation in the performance of different states regarding social development.

But these variations tend to rebut rather than confirm the neoliberal claim that high growth rates in GDP are the most vital element for bringing about rapid poverty decline and general social improvement. The latest version of this mantra is not so much ‘trickle-down theory’ as the view that high growth rates greatly enhance state coffers thereby enabling much greater social welfare spending. Even though social sector spending by the Centre and state governments more than doubled from Rs. 141,740 crores in 2002/3 to Rs. 294,312 crores in 2007/8, not only was this, compared to say, other BRIC countries much lower, but as is well known, Indian expenditure on education and health as a percentage of GDP puts it way down in global rankings.

What is more, the quantitative emphasis on the growth outcome of more state funds serves to divert attention from the quantitative and qualitative aspects of the neoliberal growth processes themselves such as rising inequalities of all kinds and growing privatization of welfare provision.

The first five chapters are empirically rich descriptive-analytical pieces about the Indian situation, the thrust and impact of the three policy regimes and what should be done to reduce inequalities and generate social development. The last two chapters by Vivek Chibber and Atul Kohli are theoretical-analytical pieces seeking to explain more fundamental reasons for the Indian state’s failure.

In a reversal of the book’s own layout one starts here with these two chapters. For Chibber, the central argument is lucid and persuasive. The Indian state operating in a capitalist setting must prioritise the interests of private asset owners (rural and urban) to profitably invest and grow, thereby enabling the capitalist economy to continuously grow thus providing the steady flow of taxes whereby the state can financially reproduce itself and maintain or expand its functions. There is and has to be a structural bias reflected in state policies.

Moreover these dominant classes are also relatively stronger and more organized than other social layers below them and lobby the government more effectively. Social welfare policies for the masses of poor are a secondary matter and influenced by the prevailing ideology held by state managers which changes and adapts depending on the ‘social balance of forces’ internally and externally in a given conjuncture. “India was never not pro-rich”, says Chibber, who also reminds us that even in the Nehru years of statism/state capitalism (decked up as socialism), the public sector was always kept in bounds acceptable to business houses with “,,,every major body set up to design policy and new state institutions……dominated by business leaders.”

In the organized sector, the tripartite system for industrial relations with government arbitration of disputes worked against collective bargaining and meant inordinate delays in arriving at settlements. This favoured employers with greater capacities to wait out labour. Limited land reforms created a new layer of rich peasants with agrarian policy seeking to raise supply rather than wage demands for basic consumption goods.

In the 1970s because of Congress break-up and growing inter-elite competition rather than great popular pressure, the Indira Gandhi years saw some positive anti-poverty schemes like the PDS and IRDP, bank nationalizations with credit expansion to smaller capitals. But her last phase of rule followed by the Rajiv era witnessed the beginnings of the liberalization programme.

The groundwork for the 1991 reforms were laid down by the rise of new business houses more keen on liberalization and largely coalescing around the CII to counter FICCI which was controlled by the older established big business houses.

Kohli’s chapter complements Chibber’s. Yes, the social character of the Indian state is the main reason for the policy priorities set or ignored by it. But Indian democracy has provided at times and in places a partial counterweight. Kohli suggests that where “effective governmental power rests on a broad political base…..rulers have minimized the hold of upper classes on the state, successfully organized the middle and lower strata into an effective power bloc and then used this power to channel resources to the poor.” So Southern state governments because of the anti-Brahmin movements have had a broader base and have performed better at poverty alleviation.

The other key factor in preventing better welfare service delivery, he says, is that the lower bureaucracy is much less professional than the upper echelons and all too often subordinated to local power elites. The PRIs, with exceptions, have not performed well. But since state governments are closer and more receptive to pressures below than a Centre more in hock to corporate interests, the growing regionalization of the Indian polity may improve matters.

Nagaraj in his two chapters points out that though poverty levels have declined, nutrition levels especially of women and children remain poor and per capita intake not improved. Germane to this finding, though not mentioned in the book, is that everywhere in the world a rise in per capita incomes is associated with a rise in per capita calorie intake.

The Indian anomaly has been argued away by neoliberal devotees as reflecting better protein-based diets and health. In fact, Nagaraj is clearly right to explain this by reference to the terrible state of public health with poor sanitation and lack of access to decent drinking water being a major factor. India after the mid-twentieth century discovery of antibiotics went in for an elitist curative approach not the preventive and hygiene route partly because, as pointed out by V. Shanker and M. Shah in their chapter on “Rethinking Reform”, of upper caste contempt for those below. This duo point out that government data on expanding water availability via hand pump installations and extended piping is deeply misleading because it ignores the issue of water quality, while 20% of existing toilets are non-functioning and practices of waste disposal and management in so many villages is absent or abysmal.

As Gita Sen and D. Rajasekhar state in their contribution on “Social Protection Policies, Experiences and Challenges”, today over 80% of all health care is provided privately; 75% of hospital beds and 70% of hospitals are urban-based; but 40% of all hospitalised treatment is in public hospitals since the poorest strata depend on this. Leaving aside matters concerning how well-stocked by medicines and personnel PHCs are, in Kerala there is one PHC for 2 villages, in TN one for 14 villages, MP one for 48, Orissa one for 73 and Jharkhand one for 99 villages.

Yet the dominant trend today is for further privatization relative to public health provisioning. Government plans for a universal health insurance scheme initiated in 2004 ignores the need to greatly improve the public health system.

Both Nagaraj and Shanker/Shah highlight educational inequality as well as the dismal state, quality-wise, of elementary schooling overwhelmingly the responsibility of governments/municipalities/local authorities. Again, is it caste elitism that best explains this historical disregard? Two-thirds of out-of-school children are in UP, Bihar, MP, W. Bengal with 22% STs and SCs and 20% of Muslim children not attending. Relying on para-teachers (a growing trend) means giving up on quality instruction while other problems of overcrowding, single-teacher schools, not enough space, sub-standard facilities, are well known.

The suggestion to concentrate reform not on districts but on the 1000 (out of the total 3000) blocks in the country is well taken but surprisingly there is no reference to what other studies have shown – that land reform and educational reform go hand-in-hand because the key lies in breaking the existing caste and power relations in the poorest parts of rural India.

Important work that is referred to include the Dreze/Sen distinction between “growth-led” and “support-led” human development which when applied to examine cross-country and intra-country comparisons has shown considerable successes in inclusivity when there is low growth because of equitable distribution of assets and incomes (and therefore of power) and more effective welfare provisioning by governments.

The claim that high growth rate in GDP (as distinct from it happening in agriculture) is the single most important input into poverty reduction and social development, is simply not merited. Faster growing states like Maharashtra and Gujarat do not fare better in social development than slower growing ones like Kerala, W. Bengal, TN, AP

The chapter by Suryanarayana on “Economic Development and Inequalities” through a wealth of data analysis confirms that in the post-liberalization period inequalities of all kinds have grown. In fact, the poorest decile of the population have seen a decline in their proportional consumption share while the top decile in rural and urban India have seen a rise in their proportionate share of consumption. Family subdivision of plots in rural India has promoted more concentration and greater landlessness. Operational landholdings rose from 51 million in 1960/1 to 101m. in @002/3 and average area operated fell from 2.63ha to 1.06ha. Unsurprisingly, Suryanarayana calls for governmental support to small entrepreneurs and physical regulation to curb concentration of assets.

One of the more interesting parallels drawn by Sen/Rajasekhar is between Latin America and India in respect of policy evolution regarding social protection passing through four phases. In Latin America the first phase focused on organized workers and import substitution. The second in the 1970s saw anti-poverty schemes. The third in the 1980s and 90s saw neoliberal cost-cutting and targeting. In the current fourth phase there is the emergence in certain countries of strong rights-based and universal-solidarity approaches to welfare provision.

In India in the 2000s alongside the neoliberal thrust there emerged partial and universal rights-based approaches – RTI, RTE, Food Security legislation, NREGA. The book does not really take up this recent development or discuss where this might be heading. But there is the recognition that the Latin American experience of using conditional cash transfers if applied in India will not have as positive an impact.

The per capita income is much lower in India, its proportion of the poor is much larger and some rights-based schemes are meant to be targeted not universal and cash transfers are more likely to be used as a substitute rather than as a complement to wider public welfare provision.

At the very least full social protection of all kinds should be extended to all families dependent on the workforce (92%) in the unorganized sector. That adopting cash transfers and recusing itself more from public provision is the likely direction that the Indian state is going to take no matter who its political overseers will be after the next general elections, is not really registered in this study.

Finally, a few of the chapters seem to suggest that one saving grace that can promote social development in the future is the ‘deepening’ of Indian democracy. This is to mistake durability of a proceduralist system of liberal democracy (which will have some substantive pay-offs) for its deepening. This is a category mistake abetted by the discourse of a “second democratic upsurge” and the more general liberal discourse that despite criticisms essentially celebrates the ‘great virtues’ of Indian democracy when in fact the centre of gravity of the polity and society has over the last two decades and more, shifted firmly to the right making this Indian state more authoritarian and less substantivist in its democratic character.

Not registering this reality tends to promote the belief that it is still possible to establish a more humane, social democratic version of Indian capitalism. Is it perhaps time to think more radically than this?