The socioeconomic diversities of
Bharat, with highly pluralistic techno-economic profiles and vast multiplicity
of occupations, spread across an area exceeding over 5259 times the size of
entire singapore, need well customized interventions for development, focused
at inclusive growth. On reviewing the pluralistic techno-economic profiles of
the country, we find the high profile Non-Resident Indians (NRIs), drawing as high
as up to Rs. 525 crores p.a. as the chief executive officers (CEOs) of large
MNCs, as well as the traditional tribal communities,solely or largely dependent
over collection of minor forest produce as their sole means of livehood with an
income as low as Rs 5000 p.m. or Rs 166 per day . Geographically, there are
most sparsely populated blocks in the districts of Barmer, Jaisalmer or Leh-Laddakh,
characterised by acute water scarcities, occupational hardships and highly
under-developed infrastructure, including paucity of all civic amenities. To
the contrary, there are metros with best possible infrastructural support, high
comfort generating civic amenities and very advanced commercial and financial architecture
to facilitate and sustain the best state of the art IT and commercial services
of all kinds. India needs to harness there pluralistic capabilities, comprising
a sprawling core sector; vast heritage of agriculture, allied activities and various
crafts; one of the most developed service sector of the world; and an elaborate
manufacturing sector spread across 400 industry clusters and manifold industrial
estates, though mostly characterised by assembly lines, based largely on
outsourced original equipments and sub-assemblies. Besides, Bharat is home to
17.5% of global population and 20% of the world’s youth. But, it has the second
highest rate of youth idleness, after South Africa, where 30.8% of our youth
between 15-29 years of age are with “no employment, education or training”
(NEET) status. To the contrary, there are countries like the Singapore,
Sweeden, Switzerland, Germany etc., finding paucity of working age youth to man
various positions in the knowledge based sectors, falling vacant on account of
superannuation, and finding it difficult to sustain their present state of
manufacturing and exports. On the other hand India has been finding it next to
impossible, to generate requisite investment in the domestically owned
manufacturing capacities, necessary to generate employment for atleast a
million of the youth per month or 1.20 core youth in aggregate per annum, acquiring
working age per month or per annum respectively. India also has to bridge the vast
gap in its contribution towards world manufacturing, as it has a paltry share
of 2.1% in world manufacturing vis a vis 22 % share of China in the world
manufacturing, which has even pushed the US at number two with just 17.6 %. Now
Japan has just 1.6% of world population, but has a 7% contribution in world
manufacturing. China too had 2.4% of contribution in world manufacturing in
1991. But, by virtue of acquiring a robust share in the world manufacturing,
China could succeed in having highest ratio of middle income group in its total
population, vis a vis all other countries of the world, by generating quality
employment in manufacturing and allied activities.
Danger of Neo-Liberalism
Rampant unemployment and lack of quality
employment in our economy, leading to poor nutrition as well as malnourishment
has led India to 100th place in the world hunger index with highest rate of
child death rate in the world comprising 4.8% for the children, dying below the
age of 5. There are 77% families in the country, which do not have a single
regular wage earner and 60.6 of the workers are such who also do not even get a
casual job throughout the year. There are only 17% workers who are on regular
wage or salary and 71.2% of the workers do not have any kind social security,
related to their jobs.
The data from socioeconomic caste
census(SECC), released by the government on July 4, 2015, further reveal that the rural India accounts for 73
per cent of households and 74 per cent of these rural households survive on a
monthly income of less than Rs 5,000 (Rs. 166 per day) for its highest earner. The largest number of such
households is in Chhattisgarh — over 90 per cent., which is reflective of
almost a nightmarish life of such a vast number of households even after six
and half decades of Independence, Moreover, according to these data, 51 per
cent of the households are engaged in casual, manual labour subjecting them to
dark and random forces of uncertainty for their survival and subsistence. Now
only 30 per cent in cultivation, revealing that now agriculture is also not in
a position to support more that a third of rural households. According to the
SECC data, still, after 24 years of economic reforms, 31.26 per cent of the
total rural households as are in the category of "Poorest of the poor”
where the main earner of the family has an “insecure and uncertain” source of
income and these households too live in a “one room house with kutcha walls and
kutcha roof”. Among the SCs and STs only 17.70 per cent of SC and 10.50 per
cent of ST households have their own houses. The miseries of rural India do not
end here, as 44.5% of rural households live in kuccha houses.
The neo-liberal economic policies in
last 26 years largely aimed at liberalising foreign direct investments (FDI) in
trade, commerce and Industry; leading to erosion of tax-GDP ratio, especially
via reducing indirect tax to GDP; trimming the welfare and social security net,
rendering the massed over dependent over Public-Private-Partnership (PPP) for
delivery of publicly funded services appear to be counterproductive to our
developmental goals.
The automatically excluded households
devoid of any tangible variable of inclusiveness as per the SECC found to constitute
39.4 per cent of the total rural population and constitute households with none
of the following: motorised vehicles, mechanised agricultural equipment, kisan
credit card with credit limit of Rs 50,000 and above, households with any
member as a government employee, households with non-agricultural enterprises
registered with the government, any family member earning more than Rs 10,000 a
month, those paying income/professional tax, living in houses with three or
more rooms with all having pucca walls and roof, owning a refrigerator,
landline phone, possessing irrigated land etc. Thus almost 40% of the rural
population falls below the poverty line on the basis of this automatic
exclusion. How long should these families wait to get at least one of these
tangible variables of inclusiveness is not certain. Whether in the same
generation or in their next generation.
Diversities in Bharat
The big surprise in the SECC was that,
even after the preliminary results are out, there does not appear any tangible
progress in rural as well as urban India even after a quarter century of the
reforms process started in 1991, to take economy on a new growth trajectory
with its focus on farmers, agriculture industry and commerce, the SECC shows
that over 51% of rural India survives on manual casual labour, while only 30%
lives on cultivation. Thus, now agriculture is no more able to sustain the
rural households as well, after a level, it was believed to be doing so till
yet. Of the rest, 1.61% are non-agricultural enterprise owners, while less than
1% are either beggars or ragpickers. But their number is also above one crore
in number almost 157 countries in the world have a population of less than 1
crore. Besides on a rational analysis one finds that the poorer working class
is regressing back.
Between 1990 and 2015 India's per
capita income is reported to have gone up 3 times with an average annual growth
in per capita income by more than 5%. But, the annual wage growth for the
industrial workers had been only 1% during the same period, as revealed from
the annual survey of industries. To the contrary, the corporate profits in the
net value added have grown from 20% to 45%. The share of wages in the net value
added of the corporate sector has gone down from 32% to 12% between 1983-2013
the number of dollar billionaires from India in the Forbes' list rose from 1 to
49 by 2010 and 90 in 2014 almost third largest number in the world.
This fast growing income divide between India's rich
and poor can be
largely attributed to the dismal rate at which real wages of industrial workers
have grown over the past three decades. It is clearly evident from the data
from Annual Survey of Industries, published by Mint, whereby the real
wages have grew by just 1% per annum between 1983 and 2013! In fact, the
real wages appears to have grown or far less than the growth in per capita
income or productivity leading to worst miseries for the wage earners. This
completely overrules the trickle down theory based on western economic
assumption that the two (growth rate and wages) move in tandem. Moreover the
rise in corporate profitability, particularly 1991 onwards is phenomenal and
the wage rise has kept on lagging far more and more behind. Share of net
corporate profits as percentage of net value added in corporate sector has more
than doubled. To the contrary the share of wages has gone down to less than
half in the net value added in corporate sector.
The ensuing labour reforms if
undertaken are further likely to considerably erode the bargaining power of
workers and their unions for having better terms of employment including better
wages. In such a case the divide would be much wide leading to stagnation in
the purchasing power of the workers and demand necessary for sustainable
growth.
For the policy
makers and economic planners as well as investors it is important to bear in
mind that the ensuing 8-10% GDP growth will be meaningful only if people have
disposable income to spend which would happen if the income divide can be
bridged to some extent and real wages grow in tandem with growth and per capita
income. Without substantial rise in per capita real wages, India's growth
story will hardly take off to generate turnovers and growth. The proposed
labour reforms likely to take out wind from the sails of bargaining power of
labour would further strangulate growth in wages eluding the economy of
requisite rise in income, demand, output, investment and employment to
facilitate sustained growth.
Bharat, therefore has to move on a
multipronged approach to incorporate all of the multiple economic profiles and
occupation including agriculture, industry, commerce and services to place
increased disposable income in the hands of all the sections, enough for a
descent living. Agriculture: Agriculture needs to get precedence over all
sectors, as more than half of our population is solely dependent over
agriculture. Moreover India has world’s highest arable area of 189 million
hectares and second highest irrigated area of 67 million hectares. Almost 20
crore hectare meters of water going in ocean without being utilized, can raise
our irrigation potential to 165-170 million hectare, that can help us, feed two
third of the world’s population. Our yield in the unirrigated area is 700 kg
cereals per ha, while for the irrigated area, it is 3000 kg per ha. The
countries like Netherland, largely dependent over organic manures reap 9 tonnes
food grains per ha. Therefore, enhanced public investment in agriculture can
revolutionaries agriculture even if we can raise our average yield of cereals
to 7 Tonnes per ha, by raising our irrigation potential and productivity. It
would be discussed in the concluding article. (To be concluded)
