Updated: October 27, 2009 13:18 IST

Is growth equitable?

V. K. Natraj
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Is equity an add-on to a growth-centred strategy?

This volume, published in commemoration of the silver jubilee of the Hyderabad-based Centre for Economic and Social Studies, is dedicated most appropriately to one of its pillars, Professor C.H. Hanumantha Rao. The papers that are uniformly of high professional standards have been authored by established social scientists. They are grouped under six heads: macroeconomic performance and policies; employment, food security and poverty; physical and social infrastructure; agriculture and rural industrialisation; FDI in manufacturing and services; and socio-political issues in the reform process.

In their comprehensive introduction, the editors say that the “approach of growth with equity has been followed in India since Independence” and, subsequently, make the point that “exclusion problems have not been seriously addressed.” Prima facie, these two statements appear to contradict each other. Moreover, the statement that India always attempted to blend growth with equity is open to criticism; there is the view that ‘equity’ was an add-on to an essentially growth-centred strategy rather than a core element. This point is missing from the discussion. Again, it is suggested that ‘growth spread across all sections of the people’ has now been agreed upon as a policy goal. But then India’s development strategy has always emphasised this, leave aside the question of the effectiveness of its implementation. The ‘compulsions’ that drove the country towards economic reforms find no place in the overview. This is significant because the overview pointedly discusses the influence the initial ground situation had on the reform process and draws useful comparisons between India and China.

Valuable findings

Some papers present extremely valuable findings. For example, Nachane, who deals with financial liberalisation, urges a cautious approach, and this should emphasise the hitherto neglected issues such as sequencing of reforms and a diminished emphasis on property rights as collateral in rural credit, to name just two from his list. The editors sound a salutary warning — that micro credit is not a substitute for bank-provided agricultural credit.

The paper on ‘trade’ argues that the question is not about having controls or not having them. It is about hitting a combination of controls, regulation, and liberalisation that is optimal in a given context. This note of sobriety and balance is found in many of the papers. Equally, it is refreshing to see in the overview a critical assessment of the Chinese experience which draws attention to what India has to learn from China. In his critical analysis of the supposed inflexibility of Indian labour laws, Alakh Sharma looks closely at the way in which Indian industry has made adjustments after liberalisation. He pleads for caution while promoting flexibility and for the simplification and consolidation of existing laws.

Another important contribution is from Mahendra Dev et al, who, inter alia, point out how, in India, all debate and effort at creating ‘safety nets’ hardly address a group that is at the most pervasive risk on the health front, namely the poor households. In a short but interesting paper, Errol D’Souza shows how tax evasion is regarded by citizens as compensation for ‘unequal and inefficient benefits’ from public sector activity. This is a strong argument in favour of improving governance and, in particular, the delivery of services.

Health and education

The papers on health care (Jayapraksh Narayan) and education (Jandhyala Tilak) discuss the inequalities in the spread of benefits and their delivery across income groups. Narayan speaks about the neglect of preventive and primary care and the promotion of curative medicine, which is becoming more and more sophisticated. He also bemoans the lack of accountability among care providers, both in the private and the public sectors. Tilak makes a persuasive case for increasing public expenditure on education which, he argues, matters significantly for the development of the sector as a whole and ends by referring to the possible harmful effects of reforms on public spending on education.

K. Srinivasulu makes an attempt to break new ground by positing the view that economic reforms are not the cause of the shift in the role of the state and that institutional and ideological processes are critical for the smooth implementation of reforms. While this may be valid, it is necessary to look at how the two relate to one another in a dialectical fashion. There is no doubt that the papers are solid and truly professional. But there seems to be hardly any sparkling contribution, something that lifts the debate to a new high.

INDIA — Perspectives on Equitable Development: Edited by S. Mahendra Dev, N. Chandrasekhara Rao; Academic Foundation, 4772-72/23 Bharat Ram Road (23 Ansari Road), Daryaganj, New Delhi-110002. Rs. 1295.

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