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New Delhi, 09
January 2003
Continuing
the analysis of the Indian Economy in the New Year we present below
the second part of Mohan Guruswamy’s treatise which makes
interesting if somewhat alarming reading!
A
Burdensome Beast!
By
Mohan Guruswamy
Agriculture
Under
the weight of a system of government that now costs the people Rs.9
for every Rs.1 of capital expenditure, development as an integral
activity of the State has practically ceased. Take irrigation for
instance. In 1990–91 government canals provided irrigation to 17
million hectares or 34.5% of all irrigated lands. In 1997–98 these
were 16.6 million hectares or 30.4% respectively. On the other hand
wells and tubewells, which are mostly privately owned, which
irrigated 24.7 million hectares or 51.5% in 1990–91, irrigated
30.9 million hectares or 56.6% in 1997–98. During the same period
the net irrigated area grew from 48 million hectares to 54.6 million
hectares. The inference is only too obvious. The State has
effectively ceased to make any new investments in providing
irrigation and has abdicated this responsibility to individual
landowners who accounted for 6.2 million of the 6.4 million hectares
added to the irrigated acreage.
Railways
Network
If
this does not convince you, lets take a look at another parameter.
In 1980–81 the railway network spanned 61,200 kilometers. Twenty
years later in 1999–2000 it grew by a mere 1600 kilometers. When
the British left India, the truncated India had a network of nearly
53,600 kilometers making it very clear that the major expansion of
the rail network took place in the Nehruvian era. On the other hand
in 1980–81 the Indian Railways carried 220 million tons of
freight; 209 billion passenger/kilometers; and earned Rs.828 crores.
In 1999–2000 these were 478 million tons; 431 billion
passenger/kilometers; and Rs.9,581 crores respectively. Very clearly
not only was the Indian Railways hauling more than twice as much
freight and carrying twice as many paying passengers, it was earning
twelve times more. Despite this only a negligible length of new
track was added. We know how unsafe and obsolete the railway system
has become with train accidents occurring with monotonous frequency.
At a time when average train speeds have increased dramatically even
in much of the developing world, the increase in the average speeds
of our trains seems only matched by the increase in the length of
the network! One can go on and on in this manner citing figures from
different sectors.
Cost
of Government
The
reality is staring at us in the face. As our government is expanding
it is becoming increasingly inconsequential to the well being of the
people. To this extent the state is truly withering away!
Take
a look at the cost of government. Last year the Revenue Expenditure
of the Central and State Governments together was Rs.5,35,000 crores
of which salaries alone accounted for Rs.1,10,000 crores. The total
Capital Expenditure was a mere Rs.60,000 crores. As if this were not
bad enough the Revenue to Capital Expenditure ratio that was 31% in
1990–91 dropped to a mere 13% in 2001–02. It has become
fashionable now to decry even government capital expenditures as
wasteful and even more fashionable to keep prattling about how
private capital and efforts will meet not just the growing needs but
also the increasing aspirations of the Indian people. It would seem
that the reality of the Indian nation eludes these people.
The
Stark Reality
This
consequently is the reality of the Indian nation. Call it the
profile of its human misery if you will. The richest 10% of the
population accounts for 46% of the national income: the poorest 10%
a mere 8% of the national income; those living in poverty i.e.
earning less than US$1 per day at purchasing power parity (PPP)
terms, account for 44%; while using the GOI’s more self serving
index, 35% are below the poverty level (BPL); 17% of the population
cannot expect to live beyond the age of 40 years; while 44% are
illiterate. By comparison even Pakistan and Bangladesh do better in
terms of income inequality, while China is well ahead in the social
parameters –– with
19% of the population in poverty with US$1 in terms of PPP, 5% BPL,
8% not living beyond 40 years, and 17% illiterate.
National
Income Profile
While
the profile of our human misery remains largely unchanged the
profile of our national income is changing dramatically. The GDP (at
1993–94 prices) that was Rs. 1,48,503 crores in 1950–51 has
grown to Rs.1,266,723 crores in 1999–2000 with the annual per
capita income almost trebling from Rs. 4,121 to Rs. 12,665. Even
more dramatic has been the change in sectoral shares. The
Agricultural sector that contributed 55.4% in 1950–51 now accounts
for only 27.5%; while the industrial sector’s share has grown from
16.1% to 24.6%; and the contribution of the services sector has
gained impressively from 28.5% to 47.6% for the same period. But the
sad truth that makes a mockery of these achievements is that the
number of persons employed in agriculture, either as cultivators or
laborers has remained static at almost 70% of the total workforce.
The rural areas today account for an infinitesimal percentage of the
households with annual incomes of over Rs.45,000 suggesting that the
impoverishment of the rural population is almost absolute. If one
factors in the fact that even today over two-thirds of the
agricultural areas are dependent on the monsoons, the disparities
within the rural sector are also quite great. The notion that direct
taxes can be extracted from the agricultural sector not only betrays
enormous ignorance but also extreme callousness. It has a quality
akin to Marie Antoinette’s suggestion that the poor should
consider eating cake if bread was not available!
Corruption
At
the macro level these facts testify to the brutality of the reality.
The huge government, the huge inequalities and worse of all the
unthinking and uncaring debates might even somehow become more
tolerable if the micro reality was not even more brutal. I cannot
find any words that can as compellingly state this as the figures
extracted from the Report of Mr. Banna Lal, Deputy Secretary
(Audits), Department of Finance, Government of Rajasthan. The
Rajasthan Government constituted a committee under Banna Lal to
investigate allegations of fraud in the development works done in
the Kumbalgarh Panchayat Samiti in the Rajsamand District of
Rajasthan. Between 1994 and 2000, 141 works with a total expenditure
of Rs.12, 764,400 were sanctioned. The Banna Lal Committee’s
investigations disclosed that only 21 works were found on the sites,
while 49 did not exist at all. Of the rest 56 were incomplete and in
20, expenditures were made violating norms. Of the Rs.1.27 crores
spent as much as Rs.70.43 lakhs or 55% of the funds were
misappropriated. This period spanned the heydays of the BJP
government of Bhairon Singh Shekhawat, now Vice-President, and the
current Congress government.
When
the Mazdoor Kisan Shakti Sanghatan (MKSS) headed by Aruna Roy a
former IAS officer and Magsaysay Prize winner demanded transparency
in rural development expenditures, the Bhairon Singh Shekhawat
government fought the MKSS’s efforts tooth and nail. It was the
succeeding Congress government of Ashok Gehlot that accepted the
citizens Right to Information and enacted a path breaking
legislation in that state. Now all over Rajasthan, government
offices list details of the developmental works being undertaken by
various departments. Not only this they have to show on demand to
the people employment registers and details of persons to whom
contracts have been awarded. A beginning has been made but even so
in Rajasthan things are not very much better. Indian ingenuity honed
by centuries of survival under alien and exploitative regimes has
elevated the act of looting the public exchequer into a fine art
with few peers elsewhere in the world. Registers can be falsified,
benami contractors can always be found and as a last resort the
courts can be relied upon to stall the process of investigation.
Corruption
Perception Index
Transparency
International, a NGO based in Germany, has evolved a corruption
perception index (CPI), which has now become a popular yardstick to
measure the corruptibility of a state. On a scale of 0–10, with
the higher the better, Finland comes best in the world with 9.7 and
Singapore comes best in Asia with 9.3. Of the nearly one hundred
countries evaluated India comes with a score of 2.7 giving it the 71st
rank, just ahead of Pakistan which scores 2.6 and ranks 76th. India
is tied in the 71st position with Honduras, Ivory Coast,
Russia and Tanzania. Any wonder then why India gets the rank of 124
out of 173 countries evaluated by the UNDP for its Human Development
Index? On a scale of 0–1 India gets 0.5777 as opposed to Norway,
which scores 0.942 to give it the first place.
The
Burdensome Beast!
Our
condition is increasingly paradoxical. While it does seem that the
ability of the state to do any good is fast withering away, the
state is far from withering away and the nation is now groaning
under its dead weight. Our founding fathers had the notion of a
public administration system that would be the beast of burden that
would carry the nation forward towards all round well-being and
prosperity. It now seems that the beast of burden has become a
burdensome beast!
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