India's tryst with destiny, as expounded by Jawaharlal Nehru on August 15, 1947, is yet to happen. In fact, the track record of managing the social sector comprising health, education, food and nutrition security has been quite pathetic. Thus, India languishes at the bottom half of the Human Development Index (HDI), wedged among underdeveloped countries such as Namibia, Sao Tome and Principe, Solomon Islands. Even countries endowed with less natural resources and lower calibre human capital have performed better, due perhaps to responsive and effective governance.
The performance of the social sector assumes centre-stage as the ongoing reform process both internal liberalisation programmes as well as globalisation does not seem to have benefited the underprivileged sections. Effectively, the current economic model seems inadequate to deal with this difficult issue.
Simultaneously, fiscal orthodoxy practised by the government post-reforms (where state intervention, especially in poverty alleviation programmes and rural infrastructure, has been reduced ostensibly to meet fiscal targets) and the continued mis-governance have kept the deprived sections away from the purview of developmental programmes. Thus, comparing the past decade with the previous ones, on every index of social sector performance, India has slipped. While the most important challenge for India today is to sustain growth, the issue of equity cannot be ignored.
One is naturally concerned at this `(non)development'. The issue is not simply about the disadvantaged sections and the government. Rather, it affects all of us. Social sector performance has a direct impact on the India brand value, which in turn affects trade, commerce and industry.
Given the pace of alleviation, the goal of poverty eradication appears quite distant. In the last decade, the poverty ratio declined at a mere 0.75 percentage point a year. At this rate, it will take over 35 years to eradicate poverty, as we know it today.
Significantly, the current definition of poverty is inadequate. It is defined on the premise of whether a person in rural India can afford to consume 2,400 calories of food and his urban counterpart 2,100 calories. Naturally, this limited definition ignores other basic necessities required for a certain quality of life. Obviously, if one were to consider a more realistic definition of poverty, the number of poor would be far in excess of the 30 crore, as officially claimed. Surely, India needs to gradually adopt a more widely accepted norm describing poverty.
The current debate again centres on whether there is need for an increased role for the government. But that may not be a good idea given the experience with state intervention since Independence. If the extent of poverty makes the task complex, the failure to identify an appropriate delivery mechanism would make the task of rooting out poverty virtually impossible.
It is in this context one has to realise that in no economy where the market occupies the commanding heights has the state abdicated its role in addressing the challenges posed by the social sector. If global experience is any pointer, this sector can never be privatised.
So what needs to be done? In this context, it may be appropriate to recall the Manesar Declaration, which states: "The process of development is inherently political and if it is inequitable and non-participatory, it can actually create poverty. The objective of eradicating poverty can only be achieved through a struggle in which people living in poverty are empowered to take control of their own lives and resources. People living in poverty, the majority of whom are women, are best able to identify the structural obstacles that perpetuate and accentuate poverty. In consequence, they are also best placed to set the agenda, to address these obstacles and to define solutions that can eradicate poverty."
But how to make governance participatory? This can be done by involving Panchayati Raj institutions (PRIs) as a delivery mechanism. These institutions need to be leveraged, making development projects the responsibility of these local bodies and "un-bundling" the State and Central governments. Unfortunately, under the present three-tier Constitutional dispensation, responsibilities are mostly vested with the Centre or the State, with very little functional mandate extended to PRIs.
Panchayati Raj Institutions
The coming Budget must, therefore, allocate , say, Rs 5,000 crore (completely de-linked from other expenditure programmes) to be distributed directly amongst the duly constituted district-level panchayats. Roughly, each would get Rs 9-10 crore. This money can help meet certain specified expenditure, such as for building primary schools and healthcare centres, deepening water bodies, building roads and other local infrastructure, as may be determined by the PRIs.
These transfers would be broadly in line with the recommendations of the Twelfth Finance Commission, the National Advisory Council and the National Common Minimum Programme. Apparently, there is sufficient political consensus on this idea. If successful, over the next few years, poverty alleviation and rural development programmes can be transferred in their entirety to PRIs.
Also, PRIs must be assisted in generating power through small and medium-size plants, from the natural resources available locally. This calls for certain financial grants through the Budget to the PRIs and leveraging the allocation. This has found acceptability at the highest level and can be tested on the ground. Scale-neutral technological advancements make it feasible to generate power and distribute it locally at competitive rates. Apart from generating direct and indirect employment, this can revolutionise the rural sector, creating infrastructure as also revenue streams for the PRIs.
The spirit of Part IX of the Constitution, which deals with the PRIs, goes beyond the concept of political empowerment;. it is about self-governance. The time for unleashing the power of PRIs has come. Direct fund transfers will automatically trigger a movement towards grassroots democracy and with it give a boost to developmental economics.
Resistance to change is why PRIs remain essentially non-starters even after a decade of being on the statute book. Involving PRIs seems to be the best way to meet India's social sector needs. One hopes Budget 2007 will take a decisive, even if small, step towards this.Published at: http://www.blonnet.com/2007/02/09/stories/2007020900480800.htm