Reforms and poverty

Poverty and Economic Reforms - The Social Concerns, edited by G.S. Aurora; Academic Foundation in association with Institute for Social and Economic Change, New Delhi, 2004; pages 338, Rs.595.

IN one of the earliest documents on the economic reforms started in 1991 - the Finance Ministry's 1993 publication Economic Reforms: Two Years After and the Task Ahead - it was stated that the aim of the reforms was "to put the economy on a sustainable path of 6 to 7 per cent growth - and it is essential if we are to break the age-old bonds of poverty which continue to afflict so many millions of our people". Thus, like the planned economy initiated four decades prior to it, the market-oriented reforms were also dedicated to the millions of poor people in our country. Since then several studies have been conducted, official and non-official, making assessments of the impact of the reforms on poverty.

This attractively got up volume, as its title explicitly states, is one such study. But it is a study with some important differences. Hence a word about its background may be useful. Soon after the reforms were launched, the faculty of the Institute for Social and Economic Change (ISEC), Bangalore, organised a number of seminars to discuss them. One of these seminars in 1992 brought together, apart from academics, administrators, voluntary organisations and some leading funding agencies. One of the recommendations of the seminar was that the ISEC take the lead and play the central role in carrying out a policy-oriented research in collaboration with voluntary organisations and create basic data to assess the effect of structural adjustment policies of the reforms on the rural poor. The research, therefore, was to be multidisciplinary, done in collaboration between academics and activists and clearly focussed on policy issues. The volume deals with that unusual and rather ambitious project designated PRAVA or Policy Research and Voluntary Action.

According to the coordinator of the project, Prof. G.S. Aurora, the project was designed to act as a stimulant to encourage deeper understanding of the problems of the economy and the place of policy-making directed towards poverty alleviation. The involvement of the voluntary agencies, in particular, was meant to gather information that might escape the attention of the survey method of the academics as well as to adopt effective strategies to empower the rural poor. The key areas of concern were employment, education, gender discrimination, food security, health, indebtedness, environment and asset distribution. The impact of marketisation on each of these among the rural poor was to be assessed. Of equal concern was the efficacy of social support programmes, especially the public distribution system (PDS) and primary health centres (PHC).

The study was confined to the four southern States. In order to assess the impact of agro-climatic variations, dry regions, wet regions, coastal regions and plantation areas (districts in the four States) were initially identified and villages in these geographical regions were selected, some where the voluntary agencies were present and others where they were not. Within the villages, households were selected giving special consideration to the Scheduled Caste/Scheduled Tribe (S.C./S.T.) population. A sample survey of 1,500 households in all was conducted in 1994 and a re-survey was done in 1995.

THE volume consists of three complementary sets of material. The first, of course, is material directly related to the surveys, the most direct being two chapters dealing with the findings. One of them is a statistical exercise discussing levels and intensity of poverty in the southern States and in the study villages. It deals with the usual headcount ratio (HCR), poverty gap index (PGI) and other more sophisticated measures of poverty. More will be said later about the second chapter dealing with the findings. The second set of material consists of attempts to give some social interpretations to the findings, as for instance the chapters on the social dimension of deprivation and the one on food security. Thirdly, there are chapters of more general interest such as the one surveying the literature on economic reforms and poverty, a chapter indicating the need to take into account those aspects of cultural and civic life, including the functioning of political parties, pressure groups, professional institutions and community networks in addition to state and markets to understand the conditions of the poor. There is a chapter on the growing activities of multinational corporations in the rural economy since the launching of the reforms and a very perceptive one on "Where the Reforms do not Reach: Rural Poor in the Vicinity of Bangalore". These chapters, authored by some of the leading social scientists in the country, contain very valuable information and insights.

But the crucial question is what PRAVA found on the impact of economic reforms on poverty and the lives of the poor. The answer has to be that in spite of the many special features of the project it did not provide the kind of information that the sponsors were looking for. This is not surprising. For one, the surveys were conducted just three or four years after the reforms were started. True, in those early days supporters of the reform had talked about how the reforms would radically alter the economic processes in the country as the markets replaced the state, and opponents of the reforms were equally shrill about the market's lack of social concerns. But the Indian economy prior to the reforms was not a centrally planned one where the entire economy was under the fiat of the state, nor did the reforms rule out all social considerations, specially the variety of provisions for the poor. It was, therefore, rather too ambitious to expect to see perceptible micro-level changes just a couple of years after macro-level policies were initiated.

The secondary aspects of the project also did not yield clear-cut conclusions. The agro-climatic sensibility built into the study by the choice of the regions did not yield any new insights into the bearing of geophysical factors on poverty. A major interest of the project was to see whether the activity of voluntary organisations makes any difference in the villages concerned. On that also the findings are not conclusive. The chapter analysing poverty in the studied villages says that in 60 per cent of the villages where the voluntary organisations were active poverty was less, but in the remaining 40 per cent the estimate of poverty was higher than their neighbouring villages where these organisations were not active.

In the concluding chapter the coordinator of the project makes his own appraisal, a "bitter-sweet" one according to him. One thing that the socio-economic study convinced him is that "in the ultimate analysis `the poverty eradication' can only be achieved not through temporary `poverty alleviation' measures, but mainly through the empowerment of the poor and deprived backward communities". And he feels that voluntary agencies can play a crucial role in this regard. He sees hopeful signs that poverty associated with lack of employment opportunities is likely to be reduced by the emergence of agro-processing units. He also feels that the economic pressure on the state to improve the transport and communication infrastructure will lead to new styles of political performance that will tone up the administrative system.

The coordinator also frankly admits the many failures of the project. Its multi-disciplinary thrust did not quite materialise for a variety of institutional reasons. It was too much to expect the activists of the voluntary organisations to be intensely involved in field research. The academics, even those with field experience, had rather naive notions about the nature of village societies and their dynamics.

Despite the apologetic admissions of the coordinator, the project was not a wash-out. The second of the chapters dealing with the findings of the surveys by the noted economist V.M. Rao is a brilliant and insightful one that shows how inferences can be drawn even from information that may not be as adequate and as thorough as one would desire. Using the information gathered from the field, he proposes a three-phase approach to poverty eradication. The first phase is that of poverty alleviation and the indicators are the programmes to provide relief and support to the poor such as access to PDS, PHC and public schools and other relief measures. Some counter-indicators are also necessary to make an appraisal of the effectiveness of the first phase and these are the extent of child labour, borrowing for consumption from informal agencies, and sale of assets due to financial problems.

The second phase is one of growth opportunities indicated by borrowing from institutional agencies, extent of land holding, allied activities such as poultry or dairy enterprises, educational qualifications of secondary level and above, jobs outside the village and so on. The third set of indicators help in understanding the lifestyle of the poor and include schooling, specially of girls, deliveries taking place in hospitals as against home, quality of diet, hardware housing, consumer durables and so on.

V.M. Rao uses the indicators of the three phases to "map the periphery where the poor communities live and struggle", as he puts it. Where poverty eradication is the objective, one would expect to see the poor moving upward from the first phase to the third. The data collected do not give evidence of such upward mobility of the poor. For instance, "despite a good record in education and removal of hard-core poverty, the S.C. subcastes of Tamil Nadu and Kerala do not seem to have a single subcaste with housing and consumer durable indicators typical of upwardly mobile groups". Further, "it is a functional characteristic of the mainstream system that it marginalises the poor and keeps them on the periphery.... The mainstream is generous enough to provide some relief to the poor but resists their entry into the system encroaching on the privileges of those who are already there." Even government policies do not depart much from this approach. The variety of anti-poverty programmes attempt, and possibly succeed, in pulling up the poor above the rather low-level poverty line, but once they cross the poverty line, "the government tells them that they are no more eligible for anti-poverty programmes", not even foodgrains through the PDS, in some instances.

That being the case, V.M. Rao does not feel that policies to accelerate growth would make adequate provisions to protect the poor and enable them to grow. Growth is for those who can afford it; the poor are entitled only to poverty alleviation! V.M. Rao's verdict on economic reforms is also sharp and clear. "The situation in India is complicated by the fact that economic liberalisation - more correctly, a truncated version of it - coexists with populist politics lacking the ideology and the organisation to lead the poor along the political route of mobilisation and empowerment."

V.M. Rao's analysis is one of the most incisive treatments of the relationship between economic reforms and poverty eradication as they unfold themselves. What a pity it is that usually poverty eradication is dealt with as a sophisticated game of numbers.

In the light of the kind of road map given by V.M. Rao, what needs to be done is to have PRAVA II - a resurvey using the benchmark data of 1994-95 to find out whether a decade and a half of economic reforms and the many efforts by a large number of agencies have enabled those who were poor in the early 1990s not merely to cross the poverty line but to enter systematically on to the path of upward economic mobility and dignity of life.