Economic Progress, Poverty and Equity

Economic Progress, Poverty and Equity

Narendra M Apte

When in 1971, for the first time in our history, late Prime Minister Smt. Indira Gandhi gave a call for removal of poverty (‘garibi hatao’ was her famous slogan), the word ‘poverty’ got a political and economic meaning. Economic disparity and poverty were till then not regarded as matters of major concern as accelerating economic growth was considered more important.

We have just celebrated India’s 73rd Independence Day. I think this is the appropriate time to ask whether during the last decades we have succeeded in dealing with mass poverty and whether a vast majority of ordinary Indians have got a fair deal.

Even after seven decades if we are still struggling to deal with mass poverty, though we call ourselves a developing country, is it not time to give vent to concerns of the common man? My query is simple: is the common man better-off today? I do not wish to quote here figures of industrial and agricultural growth or any other statistics in support of or against government’s claims on the economy front.

As I see it, even as we have made rapid economic progress, our fundamental problem continues to be inequitable growth: there are a billion people (some 300 million below the poverty line), who have not really benefited from economic growth that the country has achieved under the Five Year Plans and subsequently after liberalization of the economy from 1991 onwards. Yes, there are some 200 million Indians who are better off today, as they have benefited from the growth of sectors like automobiles, information technology, pharmaceuticals, power generation, banking, insurance, mutual funds and the booming service sector.

Despite impressive industrial growth, farming still remains the occupation of a vast majority of Indians. However, the fact is that agriculture and small farmers’ welfare have not received the attention they deserve. This observation holds good with respect to functions of and Constitutional role played by both the Central and State governments, as agriculture is on what is called ‘concurrent list’. Since agriculture is a subject to be taken care of by both the Centre and the States, perhaps it has not received enough attention of either!

How do we ensure that the fruits of economic growth reach the common man who lives in lakhs of our villages and also who lives in slums and shanties in urban areas? This, I suppose, is a huge challenge before every government in the Centre and the States. As we all know, for implementing various welfare policies and undertaking development programmes the Central and State governments are required to take political and administrative decisions in the fields of public finance and economics. The question that we have to answer in this context is rather simple: did our political system and government deliver?

Our bureaucracy at the top, middle and lower level has a very crucial role in implementation of government’s economic policies and programmes. It is here that the first hurdle was faced in early sixties and later. Though the government claimed to have incurred expenditure on welfare programmes, the bureaucracy unfortunately did not do its duty efficiently and honestly. Though for record’s sake and on paper, government funds were spent, the expected positive impact of such spending was never felt. This was because rampant corruption became a regular happening. Thus, we just threw away a golden opportunity of ensuring that benefits of whatever we spent on welfare reached the poor.

Under the Five Year Plans, the public sector was considered an important vehicle of the government’s investment initiative. Unfortunately, however, the bureaucracy was the culprit here too as it allowed government inefficiencies and corruption to make public sector enterprises vulnerable to usual problems of over-staffing and consequent financial mismanagement.

By its very nature, the private sector is not geared to address issues of socio-economic disparities. However of late efforts are being made to involve the private sector in reducing inequality through what are called “corporate social responsibility’ initiatives.

Even as we discuss this, the need for making efforts to ensure fair distribution of the fruits of economic growth and reducing inequality of income and wealth, there is more and more recognition that advancement of technology and increasing automation of industry and agriculture will lead to more inequality.

There are also a growing number of economists who wish that the governments would pay attention to implement programmes of what they call ‘sustainable development’ (development model which, to put it in simple terms, is environment-friendly). These economists argue that in years to come, when we will be increasingly exposed to adverse impact of climate change, etc., it is the poor who will suffer more as compared with the rich and well-to-do. Thus, as I see it, growth versus equity debate will continue as there is possibly no easy solution to reduce inequality.

(Narendra M. Apte, a qualified chartered accountant, is a freelancer.)