Aam aadmi is a favourite expression among political classes and is used indiscriminately. It figures prominently in the interim budget too. However, it is not a term that can be pinned down. The aam aadmi (or aurat) electronic media catches hold of is hardly the average Indian. Denizens of urban India are relatively rich, disproportionate beneficiaries of subsidies and have privileged access to physical and social infrastructure. How can one claim to be aam aadmi if one is a retail investor and pays income taxes? That?s not to suggest denizens of backward Bharat are invariably deprived. There are rich farmers there too, beneficiaries of assorted input subsidies and Bharat doesn?t pay income taxes, even if two-thirds of India?s filthy rich are in rural India and two-thirds of consumption expenditure also occurs there. In understanding economic geography of post-1991 India, this urban/rural divide is rarely useful, even though interpretations of 2004 general elections continue to harp on Shining and Dining India contrasted with Whining and Pining Bharat. The proposition that Parliamentary elections are fought on economic issues is doubtful, unless inflation goes through the roof (interpreted as double digit in the Indian context). With a younger generation entering the voting category and greater urbanisation, this may change.

It is possibly true that citizen demands for good governance and development are articulated more in urban India. But is that true of State-level elections or those for Parliament? Was it true in 2004 and is it likely to be manifested in 2009? Or was it simply the case, despite PR overkill on the India Shining campaign, in 2004 UPA simply managed coalition allies better than NDA? To get back to urban/rural, there is rural and rural. There are 125,000 villages virtually integrated into urban India. 7% of Delhi is rural for Census purposes. There is irrigated rural, growing rice and wheat and gaining from higher procurement prices. And there is dry-land rural, attempting to commercialise and diversify and squeezed because of high input prices and low output prices, not to speak of counterfeit seeds, fertilisers and pesticides, since extension services have collapsed. There is large farmer rural, small farmer rural and agricultural labour rural. In states that have grown fast, post-1991, differences between rural and urban have blurred and rural has ceased to mean only conventional crop agriculture. However, in central and eastern India, rural means backward.

Within urban and semi-urban, there is a young generation, usually employed in private sector. If not shining now, it dreams of shining and has aspirations towards a better future, triggered also by satellite television and globalisation. However, there is also a post-middle age generation, usually employed in the public and quasi-public sector, threatened by competition, privatisation and job losses. It?s also true each of these individuals typically wears two hats, the consumer hat supporting competition and liberalisation and the producer hat opposing it. Having said this, everyone wants growth, because that increases size of the cake. Growth reduces poverty and increases employment. The best current employment elasticities we have are those worked out by Dr Rangarajan when he was Chairman of Prime Minister?s Economic Advisory Council. These are for the period 1999-2000 to 2004-05, spanning two large sample NSS surveys and have sectoral employment elasticities too. That is, job growth also depends on sectoral composition of growth. However, at the aggregate level, these elasticities mean 9% growth results in roughly 20 million new jobs a year. It is difficult to correlate growth with NDA or UPA coalitions, since growth doesn?t follow such neat compartments. There are time-lags and one government reaps what another has sowed.

The Ninth Plan (1997-2001) showed 5.5% annual average real GDP growth, while Tenth Plan (2002-06) exhibited 7.7%. UPA election managers will no doubt correlate Ninth Plan with NDA rule and Tenth Plan with UPA rule and argue UPA?s growth record is better, even if this is unfair correlation. On average, UPA?s growth record will be better even if one compares 1999-2004 with 2004-09. However, the catapulting into a higher growth trajectory is directly attributable to a reduction in interest rates NDA brought in 2002 and growth slowdown in 2008 is directly attributable (before the external financial crisis) to hike in interest rates UPA brought from 2007. In that sense, NDA?s growth record is better and hikes in investment and savings rates followed. With the proposition that reforms fuel future growth, NDA?s reform record is also better ? unification of sales tax (VAT), rationalisation of excise, privatisation of PSUs, road programme (NHDP and even better PMGSY procedures), telecom, automobile policy and fiscal consolidation. But there were three problems. First, agriculture didn?t do well, including capital formation (public and private). Second, not just rural India, but 45 million employed in public and quasi-public sectors, mostly in urban India, also felt threatened. Third, there was a perception (facts are different), SCs/STs, Muslims didn?t gain much.

Other than a better agricultural performance, UPA produced a diluted RTI Act, social security for unorganised sector, NREGA and several flagship programmes, 6th Pay Commission and farmers? debt relief. Substantive reforms went missing in action, assorted commissions are only meant to convey impression of movement. Despite warts and blemishes and leakage, this inclusive agenda did broad-base gains. Outside rural Bharat, 45 million urban Indians benefited from pay hikes. However, in the process, havoc was wrought with public finance and the external sector financial crisis is a convenient scapegoat. The trouble with fiscal havoc is that opportunity costs of lost growth aren?t immediately obvious. Stated differently, costs NDA imposed amounted to stabbing from the front. Costs UPA imposed amounted to stabbing from the back. With a tradition of treachery, we may well be more attuned to stabbing from the back and regard stabbing from the front as unpardonable. In more serious vein and at the risk of being simplistic, do we want 9% growth that increases inequality (but reduces poverty), or do we want 7% growth that increases inequality less (but reduces poverty less)? In the absence of global slowdown, that?s the kind of choice UPA and NDA offer and it is more than a choice between Pepsi and Coke.

Building blocks

Project Bharat Nirman

Launched December 16, 2005

Scope Strengthening the country?s rural infrastructure including water supply, power, housing and roads.

Plan expenditure Rs 1,74,000-crore

Area covered Across India

Impact

Time-bound plan for rural infrastructure by the government in partnership with the state governments and Panchayat Raj institutions. The budgetary support for Bharat Nirman is Rs 1,74,000 crore, of that Rs 18,696 crore has been sanctioned in 2006-07. A separate window is to be opened this fiscal under the Rural Infrastructure Development Fund, with a corpus of Rs 4,000 crore for construction of rural roads. But the programme has drawn flak from experts for being unsustainable.

Experts are also of the view that the scheme is offering short-term opportunities to a few contractors and may get stuck in a low-development trap. It also received criticism from Infrastructure Development Finance Company?s (IDFC) India Infrastructure Report 2007, for not having tangible plans for public-private participation (PPP), even as the government is looking for private investments for the development of the infrastructure sector. Currently, different segments under the programme like construction of rural roads, rural electrification, telephony and irrigation projects are being done through a contractor-client relationship and not through a partnership for development.

Bitter pill in a shiny wrapper?

Project Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

Launched December 3, 2005

Scope A massive city modernisation scheme. It focusses on efficiency in urban infrastructure and service delivery mechanisms, community participation, and accountability.

Plan expenditure $20 bn over 5 years.

Area covered 63 urban centres in India

Impact

The rationale is that cities are currently inefficient in raising resources to meet their growing needs. Hence the Centre proposes to bail out cities with funds to meet their infrastructure needs, however, on condition that cities carry out certain governance reforms (some mandatory and some optional) which will make them self-sustaining and efficient in the future. The Centre also has to ensure that the ?Millennium Development Goals?, with regard to halving hunger, reducing poverty and ensuring water and sewerage to all are reached. With 23.6% of the urban population in the country below the poverty line and 14.12% living in slums, providing ?Basic Services? to the Urban Poor (BSUP) is another objective under the JNNURM. Hence, the Centre has set up two sub-missions, one on Urban Infrastructure and Governance and the second on BSUP. Critics fear that JNNURM is a bitter pill being packaged in a shiny wrapper. The wrapper consists of the promise of 1 lakh crore, cursory and tokenistic consultations with stakeholders in the name of people?s participation; the lip service to the 74th CAA, the benign language of security of tenure to slumdwellers and the promise of 25% land in all housing projects. Interestingly, the JNNURM document nowhere gives an assurance that evictions and demolitions will be stopped.

Food for thought

Project Mid-day meal scheme

Launched August 15, 1995

Scope The programme intends to give a boost to universalisation of primary education, by increasing enrollment, retention and attendance and simultaneously impacting nutrition of students.

Plan expenditure Allocation for this programme has been enhanced from Rs 3,010 crore to Rs 4,813 crore across India for 2006-07.

Area covered In a phased manner, commencing from 1995-96, all government, local body and government-aided primary schools in all the States and Union Territories (UTs).

Impact

Foodgrains (wheat and rice) are supplied free of cost @ 100 gram per child per school day where cooked/processed hot meal is being served with a minimum content of 300 calories and 8-12 gms of protein each day of school for a minimum of 200 days and 3 kgs per student per month for 9-11 months in a year, where foodgrains are distributed in raw form. In drought affected areas the mid-day meal is distributed in summer vacations also. But observers point out that the mid-day meal scheme has succeeded in bringing poor children to school. But the scheme has become an end in itself and there are no sign of these children learning anything in the classroom. Various scams involving mid-day meal scheme have been unearthed since it was started. Also they prove to be a health hazard, as they are not prepared in hygienic conditions. Another common argument against mid-day meals is that they disrupt classroom processes. Some media reports even suggest that teachers spend their precious time cooking instead of teaching.