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Perspectives on growth

Print edition : Feb 27, 2009 T+T-

THE Centre for Economic and Social Studies in Hyderabad celebrated its silver jubilee in 2005-06. A series of public lectures by eminent scholars and administrators formed a major part of the celebration. This volume consists of the text (in some instances revised subsequently) of those lectures.

Andre Beteille writes on Universities as public institutions; Bhanoji Rao on Inequality and human development; Jayaprakash Narayan on Governance and growth. Jayati Ghoshs piece is on Comparison of recent development strategies of China and India and Govinda Raos is on Emerging changes in fiscal federalism in India. T.N. Srinivasan looks into the trends in Employment and wages in India since the early seventies. K. Subba Rao examines the International experience of anti-poverty programmes and Gerry Rodgers deals with the Social dimension of globalisation. Deepak Nayyar analyses Indias growth and development performance in the half century before and the half century after Independence. Prabhu Pingali and Terry Raney discuss the shift from the Green Revolution to the Gene Revolution and Ashok Gulati examines the prospects for small holders in the context of Indias changing food system.

The pieces are very diverse indeed; some are analytical, many are descriptive and reflective. The shortest is seven pages and the longest is 70 pages (including many tables and appendices). But then it is not surprising that there is no common theme in the topics, independently selected by the speakers, or a common style in their approach. Even the editors in their introduction do not make an attempt to provide any kind of connecting link, and rightly so. They just pool together the main issues contained in the texts. Actually, the lectures are a testimony to the diversity and heterogeneity of Indias economic and social conditions and the perceptions of scholars about them.

I shall comment on a few selected issues gathered from the pieces in the volume starting with economic aspects, which form the subject of the majority of the presentations.

Two of our leading economists, T.N. Srinivasan and Deepak Nayyar, take very divergent positions about the past growth performance of the country. According to Srinivasan, the heavy industry strategy of the early planning era did not sustain the growth of the manufacturing sector because of the reach of the control system and the crippling effects on incentives. In turn, it meant that employment in the organised sector of the economy remained virtually stagnant. Even the overall performance of the Indian economy under more than three decades of planning, state control and direction is described at best as modest.

Deepak Nayyar, commenting on the same period, says that ones assessment of it will depend on an understanding of what happened before it as also of the performance after it. According to him, if we consider the 20th century in its entirety, the turning point in economic performance, or the structural change in economic growth, is 1951-52. During the first half of the century, the national income of (undivided) India increased in constant prices by 60 per cent and per capita income by a mere 11 per cent, whereas between 1950-51 and 2004-05, again at constant prices, gross domestic product increased by 1,000 per cent and per capita GDP by 250 per cent in spite of a substantial increase in population during the second period.

A second point that Nayyar makes is that if we focus on the performance of the economy since Independence, the turning point in economic growth is around 1980, and not 1991 with economic reforms as it has now become quite common to assert. Taking the two together, Nayyar claims that the pace of economic growth during the period from 1950 to 1980 constituted a striking departure from the colonial past and whatever has happened since 1980 (or 1991 as the case may be) is not as significant as what happened between 1950 and 1980.

During these 30 years what was essentially a stagnant economy for at least half a century prior to it burst out into growth: that growth has been accelerated from 1980 onwards. According to Nayyar, the real issue is not the quantum of growth but its content: It is essential to recognise that the economic growth in independent India, respectable in the first phase and impressive in the second phase, was not transformed into development, for it did not bring about an improvement in the well-being of people.

In comparing the development strategies of China and India, Jayati Ghosh concentrates on the differences between the two emerging giant economies of Asia. Apart from the basic difference in their socio-economic and political systems, China has had a much higher rate of investment fluctuating between 35 and 44 per cent of GDP from the early 1980s compared to Indias 22 to 26 per cent. Chinas pattern of investment also has been different, as reflected in the change in the structural composition of the economy with the share of the workforce doubling in the manufacturing sector, while in India that share has increased only marginally. A factor favouring the manufacturing sector in China has been the provision of subsidised basic goods to workers in terms of housing, food and transport facilities thereby reducing labour cost for employers. Above all, while the financial system in India became greatly deregulated since 1991, it has remained heavily under the control of the state in China.

Anti-poverty programmes are not novelties any more, but what do we know of these programmes in other parts of the world? Subba Rao provides information on a variety of these programmes in different parts of the world. Bangladesh, for instance, took a Food for Education programme making the in-kind (food) transfer to poor families conditional upon the recipient household accepting responsibility for guaranteeing childrens schooling. The programme administered by a committee of representatives at the district level had a large measure of success. Mexico has a similar Conditional Cash Transfer programme linking cash subsidies to poor households with regular attendance of the entire family at health clinics and school attendance by children of school-going age.

When the Korean economy was destabilised by the financial crisis of the late 1990s, the government expanded unemployment insurance to workers of small enterprises who lost their jobs and also introduced a Livelihood Protection Programme covering over 4 per cent of the population. Uzbekistan, during its transition to the market economy, started a cash assistance programme for vulnerable groups through mahallas, traditional local committees operating in villages. In practically all these instances, success depended on having appropriate administrative agencies to identify target groups and to ensure that the assistance meant for them indeed reached them.

Of the two pieces dealing with agriculture, Prabhu Pingali and Terry Raney show that while the Green Revolution in many parts of the world was sponsored largely by United Nations agencies and governments, multinational corporations are the active sponsors of the ongoing Gene Revolution. This shift is the result of strengthening intellectual property rights in plant innovations, the rapid pace of growth of molecular biology and genetic engineering and the growing markets for agricultural inputs and outputs. The scholars suggest that if the public sector purchases the right to use private sector technologies and use them on behalf of the poor, they can also benefit by the Gene Revolution.

Ashok Gulati points out that small holdings of below two hectares will continue to play an important role in Indian agriculture, but they must move out of foodgrains into high value crops such as fruits and vegetables and also into food processing wherever it is possible; that is, small agricultural producers must move out of cultivation for own consumption to cultivation for marketing.

The papers by Andre Beteille and Bhanoji Rao are distinctly different though both deal with social inclusion. Writing on Universities as Public Institutions, Beteille points out a major difference between European and Indian universities. European universities for long remained exclusive and were symbols of privilege, favouring the nobility and select religious groups and almost completely for men. It took centuries for the democratic spirit of inclusion to enter in these portals of learning. On the other hand, modern Indian universities and colleges from their very inception were much more inclusive, particularly as far as women were concerned. Says Beteille: In India, the university and college have played a more significant part in the social emancipation of women than any other public institution. He goes on to say: The modern university provides a setting for a new kind of interchange not only between men and women but also among persons belonging to different castes and communities.

But this inclusion, this openness, has also meant a relaxation of academic standards, laments Beteille. So the question is how to ensure that merit is not sacrificed for the sake of inclusion. Beteille concedes that when universities become socially more inclusive that may also gain academically, at least in the long run. But his anxiety is how to deal with the short run where rigorous academic selection will affect members from some sections of society more adversely than those from others. And this academic discrimination is bound to be (mis)interpreted as social discrimination, says Beteille, concluding that it is not wise to wish out of existence the deep and pervasive tensions between the demands for social inclusion and those of academic discrimination. True, no problem should be wished out of existence, but is there no way out?

On the basis of his vast personal experience with a variety of social issues, Bhanoji Rao offers a different way of dealing with the same problem. His basic premise is that inequalities in opportunities contribute to economic inefficiency, political conflict and institutional frailty. If, then, inequality in opportunities of the past is a major cause of todays differences in academic performance, protection of academic standards cannot be ensured by academic discrimination alone, however objectively administered. Those who suffer from the cumulative effect of denial of opportunities in the past must be provided opportunities now. Academic discrimination must become sensitive to this crucial issue. Bhanoji Rao understands this, and Beteille probably does not. Bhanoji Rao says: I have no doubt on the importance attached to address inequalities by caste and community. We all know that our brothers and sisters from the erstwhile deprived castes and communities should be provided with best education from KG to PG [kindergarten to postgraduation]. There is thus ample justification for reservation of places for them in education.

For the discerning reader this volume offers much valuable information and diverse perspectives on many of the socio-economic problems that the country has to deal with today.