Prof.
Jagdish Bhagwati, eminent economist and a strong advocate
of free trade, delivered a lecture on ''Debunking Populist
Myths that Undermine Prosperity – Lessons from and for
Gujarat'' in the last week of December 2011 at Gandhinagar.
The main message of the lecture was that Gujarat economy
is doing very well, not only in terms of economic growth
(with the highest rate of growth of per capita income
during 2000-2010 among the states in India) but also
in social sectors. He also gave his certificate that
Gujarat is on the right track and its economic growth
will (and has) automatically lead to social development.
He stated that Gujarat’s achievements in human development
have been better than many other states in the recent
years: Gujarat has experienced 57.5 percent increase
in literacy between 1951-2011 – higher than what has
been achieved by Maharashtra or Kerala; the rate of
decline in IMR between 1971-2009 was again better in
Gujarat than in these two states; and the increase in
the life expectancy at birth since 1970 also has been
higher in Gujarat than in Kerala or Maharashtra. Falling
back on his favorite argument, he stated that in the
first phase of development it is important to raise
the rate of growth of SDP to generate revenues for promoting
social sector in the subsequent phase. Gujarat has generated
revenues and now it is promoting its social sectors.
One
major point we have with Prof. Bhagwati’s lecture is
his use of the data. Though Gujarat did experience a
higher rate of growth in literacy during 1951-2011 than
Kerala (which started at a higher level than Gujarat)
and Maharashtra (marginally higher), 7 other states
have seen a much higher rate of growth in literacy during
this period. The decadal growth rates in literacy show
that the increase in literacy in Gujarat was of 18.02
percentage points during 1991-2011 (during the period
of the new growth model), with the state ranking 16th
among the major 20 states in India in the rate of growth.
The state that ranked 4th in literacy in 1981, slipped
to 5th rank in 2001 and to 6th in 2011. Similarly, 7
other states are ahead of Gujarat in the decline of
IMR since 1970. When one analyzes the periodical data
of the SRS, one finds that the decline in IMR in the
state during 1991-2009 was 30 points with the state
ranking 10th among the major 20 states in India; and
the rank of the state in IMR slipped from 8 1n 1981
to 11 in 2001 and 2011. Again, in the case of the life
expectancy at birth also the rank of the state slipped
from 9th in 1992 to 10th in 2006, and with the LEB of
65.2 years, the state ranked 10th among the major 20
states in India. In short, this fastest growing state
has experienced a deceleration in the rates of achievements
as well as in its rank among the major states in the
fields of health and education. As per the latest report
of the Planning Commission, Government of India, the
state has slipped in its HDI rank from 4th in 1981 to
7th in 2001 to 8th in 2008, and the value of its HDI
increased by 0.061 during 2000-2008, putting the state
on the 18th rank in improvement in the HDI. The recent
reports of NFHS, Global Hunger (ICRISAT), and other
NSSO data also show miserable performance of the state
in human development sectors.
Under the present growth model (i.e. the neo-liberal
policy framework), growth is expected to trickle down
to the lower levels firstly through generation of large
scale productive and remunerative employment and secondly
through redistribution of the increased revenues of
the government on social sectors for the masses and
on infrastructure development, particularly in lagging
areas to enable them to grow. In the first phase the
focus is on raising the growth of SDP while the second
phase focuses on distribution of the increased government
revenue on social policies including cash transfers,
poverty alleviation, social protection etc, ultimately
leading to poverty reduction and human development.
Our recent study however shows that Gujarat’s performance
has been far from satisfactory in raising quantity and
particularly quality of employment in the recent decades.
Gujarat has a high percentage of informal workers (and
casual workers) who receive repressed wages (according
to the latest NSSO data, Gujarat ranks 10th and 14th
in casual as well as in regular wage rates in rural
and urban areas) and poor social protection. Trickling
down of benefits of growth to the masses through productive
employment has not happened in the state.
The main burden of including the excluded therefore
falls on redistribution of the revenues earned through
the high rate of growth. This has again proven to be
a difficult task, firstly because redistribution does
not change the basic process of growth that is responsible
for exclusion and marginalization, making redistribution
efforts increasingly weaker. Secondly, the strong vested
interests that developed during the first phase of growth
are not likely to permit the required level of redistribution
in the second phase. The unholy alliance between the
capitalist class and the state has made the state less
pro-labour or even anti-labour. Thirdly, by gifting
all kinds of favours to the corporate sector to promote
rapid growth, the state seems to have promoted crony
capitalism, under which the corporate sector has flourished
in the state. Instead of free market forces, allocation
of resources in the state is frequently influenced by
the distorted prices of factors of production. This
has promoted high capital intensity of growth with lower
employment elasticity, and high inequalities in incomes
and assets. It has also left relatively less funds for
social sectors.
To sum up, the growth model in the state seems to have
discouraged inclusion of the excluded in the growth
process as well as in the redistribution process. Clearly,
the model is not adequate to reach development goals
like full employment with decent work conditions, rapid
poverty reduction or rapid human development. It does
not seem to have the capacity or the vision for including
the excluded.
|
