At the National University of Singapore, as visiting senior re-search fellow, there has been an opportunity to look at issues relating to governance, economic development and investment climate in different states in India. At the National Academy of Administration at Mussoorie last week, there was an occasion to present the findings before a large group of administrative officers, several with six to nine years? service. The questioning from the field officers was, to a substantial extent, predictable?they wanted explanations about what was happening in their states.
At a macro level, the pick-up of growth in the last quarter has been quite satisfactory, and the year has ended with a year-on-year growth of 6.9%. For, perhaps, the first time, the share of agriculture in GDP has fallen to 20.5%, lower than the share of industry at 21.9%. Services continue to grow, albeit at a slightly lower pace last year, and are now at 57.6% of GDP.
The aggregate picture of compounded GDP growth of 5.7% over the last 20 years conceals the diversity in income among different states. Gujarat, with per capita income of Rs 19,673, is far ahead of Bihar with per capita income of Rs 4,088. The hierarchy of Gujarat, Maharashtra, Haryana, Punjab, Tamil Nadu, Karnataka, as the better performing states, and of Bihar, Uttar Pradesh, Orissa, as the poorer performing states, has remained un-changed for the last 30 years.
However, while Orissa and Bihar had per capita incomes 40% to 50% of that of Punjab in the 70s and the 80s, it fell to 34% for Orissa and 22% for Bihar by 2001. The ratios have been deteriorating rapidly ever since, with per capita income of the highest and lowest states being over 4.8 times now. There are also significant differences in income within the states, with Gini coefficients in several states over 0.3.
The Twelfth Finance Commission developed an indicator of rural deprivation in terms of access of rural households to drinking water and sanitation, and except in Punjab, Haryana and Kerala, the picture is quite dismal. Rural indebtedness indicators in all the high agriculture states, like Punjab, Haryana and Andhra Pradesh, are very high, and correspondingly, the health of the rural credit institutions, including cooperatives, is poor. Other human development indicators show a strong congruence with literacy, especially female literacy para- meters, with Kerala in the lead.
• Inequalities in income are growing within and among different states • Agriculture?s share in GDP is falling and rural poverty is on the rise • Urban economic transformation and globalisation alone are not enough |
These findings are not new. The cause for worry is that over 40% of the population is still dependent on agriculture, and its share in GDP is falling. Then, there is definitely a rise in rural poverty, as evidenced by the increasing inequalities in income, both within the states as well as among different states. The grim evidence of growing naxalism points to a simmering discontent about the way things are.
That these concerns worry the highest levels in government is evidenced by the speeches at the National Development Council, the reviews of the coordination committee and the outpourings of the learned and the powerful at the Centre. It is indeed the helplessness of the governance and implementation machineries to do anything about it that is frightening. There are some states that have been able to record unbroken growth over three decades, with several changes in government. There is a common thread linking these states. They have a tradition of administrative capability that has remained intact despite repeated structural changes. They share a high level of literacy, social awareness and public participation in governance. Most imp- ortantly, they have been fortunate, by and large, in having political leadership with a common governing philosophy with consistent attributes that has made them responsible for performance.
In states where the growing ranks of the literate, urbanised, educated, better-informed electorate have articulated and expected development, states have had to try hard to deliver. In low literacy and low social indicator states, factionalism and casteism in politics has exacerbated the distance between performance criteria and election winning strategies, where parties have offered not an ideology or strategy of transformation, but merely a way of winning elections. In both categories of states, the civil service has become just an implementer of policies, and not an innovator or a strategist. A combination of expectant citizenry, capable administration and a governing philosophy appear to be the ingredients for development and change.
States that have a cohesive organisational structure of conceptualisation and delivery, an integration of the political and administrative decision-making process, and a closer response to articulated needs, could be considered candidates for future growth opportunities. At the other end, states that lack one or other of these attributes would not be able to progress.
The Mid-term review of the Tenth Plan, at the recent conclave of chief ministers, has brought several of these issues to the fore. The Prime Minister focused on implementation and monitoring progress, with a clear focus on development. States were to report action taken under various aspects of the CMP. But, at the end, there was an impression of a sense of futility in dinning the message that inclusive transformation, not populism, should become an election-winning strategy.
The alienation of the poor from the processes of development appears to be accelerating. Lack of credit, technology, inputs and markets is making small farming unviable. The Employment Guarantee programme can, at best, be a temporary embankment to the floods of rural disenchantment that may spread across the country. Urban economic transformation and globalisation strategies alone will not solve this problem.
The writer is a former finance secretary and economic advisor to the PM
