India needs vision realignment

India is now poised at a critical junction in its development history, and needs a new vision for the emerging challenges. Gloria Arroyo, former President of the Philippines, in a scintillating address to her countrymen, once said: “We have to be bold in our national ambitions. First, we must win the fight against poverty within the next decade.

Second, we must improve moral standards in government and society to provide a strong foundation for good governance. Third, we must change the character of our politics to promote fertile ground for reforms.”

We need to renew our commitment to all these three issues underlined by the Philippine statesman. Her clarion call to her nation is quite relevant to our own society in the present times.

Nobel Laureate and India’s most accomplished economist Amartya Sen has consistently struck with his stand that “growth rate is a very daft —and a deeply alienated — way of judging economic progress.”

Sen and Jean Drèze, a Belgian born Indian economist, had warned as early as 1995 that reforms that boost growth, though important, were not enough to improve the living conditions of the poorest, let alone dismantle caste and gender hierarchies and generate employment.

They “have to be supplemented by a radical shift in public policy in education and health.” they wrote. Bangladesh, which is only half as rich as India measured by per capita income, now exceeds India in, among other social indicators, life expectancy, child mortality, and immunisation.

For human development to reach everyone, growth has to be inclusive, with four mutually supporting pillars — formulating an employment-led growth strategy, enhancing financial inclusion, investing in human development priorities and undertaking high-impact multidimensional interventions (win-win strategies).

The growing inequality in India is very stark. According to the Credit Suisse Global Wealth Databook 2014, the share of wealth of the richest 1% in the country has been rising, in contrast to the rest of the world, and it now owns nearly half the country’s wealth.

The wealth share of the top 10% has increased by a tenth since 2000. The CEO of Oxfam India has pointed out that just a 1.5% wealth tax on 65 of India’s super-rich could lift an astounding 90 million out of poverty.

If the country could reduce inequality by just over a third, it could eliminate extreme poverty. According to the National Council for Applied Economic Research (NCAER), which incidentally doesn’t subscribe to socialist ideology, only 12% of the population can comprise the middle class.

Impoverished populations desperately require lighting, fuel for cooking, affordable and accessible health care, clean water, elementary education, housing and sanitation, and financial services. Government programmes to supply these needs are plagued with corruption (by some estimates 50-70% of all welfare spending in India is soaked by the administrators in the form of bribes).

It is estimated that up to 85% of government water subsidies go to private taps, yet 60% of poor households collect water from public taps. Or electricity subsidies — 67.2 % of Indian households are connected to the electric grid, most likely representing some of the wealthiest households in the country.

Out of the population with connectivity to the electric grid, the top income quintile consumes 121 kWh per month on average (37% of the subsidy) while the bottom quintile consumes only 45 kWh on average (10% of the electricity subsidy).

Many of India’s anti-poverty programmes end up feeding the rich more than the needy. India has eliminated a raft of bureaucratic middlemen by depositing government pension and scholarship payments directly into the bank accounts, in a bid to prevent corrupt State and local officials from diverting much of the money to their own pockets.

A whopping Rs 36,000 crore (Rs 360 bn or $5.5bn) have been saved by the government through cash transfers through the Direct Benefit Transfer (DBT) scheme. More than 1,200 government schemes were examined for coverage and about 550 of them could be immediately taken up. More than 320 million beneficiaries are being provided various aids by direct credits to their accounts.

A full coverage has been achieved in 84 schemes, including Pradhan Mantri Jan Dhan Yojana and Mahatma Gandhi National Rural Employment Guarantee Act where wages are being paid into accounts without the intervention of the administration. Similarly, subsidies for liquid petroleum gas (LPG) are also going directly into the account of beneficiaries.

Now these programmes have the potential for making a serious dent in poverty in India. Under the acronym JAM – Jan Dhan, Aadhaar, Mobile – a quiet revolution of social welfare policy is unfolding. Jan Dhan is Modi’s flagship programme to give poor people access to financial services, including bank accounts, credit and insurance.

Aadhaar is the initiative to issue unique biometric identification cards to all Indians. Together with mobile money platforms, they will enable the State to transfer cash directly to those in need – without the money going through intermediaries that might take a cut.

The government will also take a radical relook at grassroots development apparatuses. The current approach of India seems to miss the holistic nature of sustainable development, allowing the goals and targets to be divided up between different ministries and departments without identifying the inter-linkages that exist between the different goals, and this risks working in silos – which is unlikely to deliver.

The best approach to local development is to tap into the knowledge already available and think of ways it can be leveraged to achieve a more appropriate, locally useful and sustainable development. Approaches to rural development that respect the inherent capabilities and native of rural people and that systematically build on experience have a reasonable chance of making significant advances in improving those people’s lives.

A critical success factor is creating organisational capabilities at local levels that can mobilise and manage resources effectively for the benefit of the many rather than just the few.

It is important to reaffirm that significant advances are attainable for the hundreds of millions of households who constitute “the rural poor.” They are a potential source of great knowledge, wisdom and creativity that have to seek first and foremost their own survival.

Their poverty deprives not only them but also the rest of us of the greater value they could generate under more supportive and enabling circumstances.

In a country as large and diverse as India, it makes sense to connect those who live in similar climates and by tracking the effectiveness of the projects they manage and making appropriate, informed changes to those that aren't working.

People who pioneered successful social programmes recognised this potential and sought to evoke. It is possible if we imbibe the true spirit of Modi’s oft repeated mantra: “Sabka saath, sabka vikas” (partnership of all, development for all).

By Moin Qazi