9P a g e | 9Economic Reforms, Human Capital Formation, and Economic Growth in India

THESIS SUBMITTED TO THE CMJ UNIVERSITY, SHILLONG FOR THE AWARD OF THE DEGREE OF DOCTOR OF PHILOSOPHY IN MANAGEMENT (2012)

Submitted by

Supervised By Dr. K. G. Arora Professor,Deptt of Management

Pathankot, Distt. Pathankot 145001 (Pb) S.D.Institute of Professional Studies Email : manindersingh3266@hotmail.com Regn no. 80187710101679 MuzaffarNagar

CERTIFICATE This is to certify that thesis entitled Economic Reforms and Its Effects on Employment in India submitted to CMJ University, Shillong for the requirement of the Degree of Doctor of Philosophy in Management by Raman Deep embodies the results of bonafide research work carried out by him under my guidance and supervision. No part or full this study, reported here, has so far been submitted anywhere for publication or for any other degree or diploma in any form to any university/ institution.

It is further certified that the assistance for the sources of information have been availed during the course of investigation and indebtness to other works on the related subject have duly been acknowledged at relevant places by her.

The candidate has completed all the requirements laid down by the CMJ University statutes for the award of Ph.D. degree

DR. K.G. ARORA Professor Dept. Of Management S.D. Institute of Professional Studies Muzaffarnagar

ACKNOWLEDGEMENT The present work entitled Economic Reforms and Its Effects on Employment in India has been completed under the supervision of Dr. K. G. ARORA, Professor, Dept. of

Management, S.D. Institute of Professional Studies, Muzaffarnagar for his enlightening guidance, valuable suggestions and critical comments for the successful accomplishment of this study.

I express my great feelings to my respected Sir Dr. K.G.Arora, for his benevolent favour which I would like wish to so. Without his untiring assistance and co-operation, my present work would not have been in its existing shape. I express my debt of gratitude to my father and mother . and for their co-operation while doing research work at home. They always encourage me for the successful completion of this study. It is due to their blessings that it has become possible for me to complete this research work.

Raman Deep

LIST OF TABLES Table Number Page(s)

T-1.1

Changing Shares of Private and Public Sectors in Seed Production in India

12

T-1.2

WTO Bound Rates And Actual Rates Of Import Duties On Various Agricultural Products In India (Percent)

38

T-1.3 T-1.4 T- 4.1

Procurement, Off-take, stocks and Food Security Central Food grains stocks and minimum buffer norms Cumulative Storage Capacity Constricted by Various Organisation by The end of 2000

58 60 105

T-5.1 T- 6.1 T- 6.2 T- 6.3 T- 6.4 T- 6.5 T- 6.6 T- 6.7 T- 6.8 T- 6.9

Successive Series of WPI

125

Share of agriculture sector in total Gross Domestic Product (At 151 1999-00 Prices) Population and Agricultural Workers Agricultural export as a percentage of total exports Pattern of Government outlay on Agriculture and Allied Sectors Achievements in the Agricultural Sector in the various plans Tenth Plan allocation on agriculture Crop Production during Ninth and Tenth plans Some key Indicators of Agricultural Progress Growth of the agricultural sector since 1950-51

153 156 161 165 172 174 175 177 178

T- 6.10 Per Hectare Yield of Principal Crops since 1950-51

T- 6.11 Actual Yield per hectare in quintals during 2006 T- 6.12 Gross Investment in Agriculture T- 6.13 Progress in foodgrain Production T 6.14 Production of Rice and Wheat T- 6.15 Production of Cash Crops in India T- 6.16 Percentage distribution of cereals output T- 6.17 Trend in the production of food grains in India T- 6.18 Average Food grain Yield T- 6.19 Nature of Crop Distribution of Area Since 1951 T- 6.20 State-wise Storage Facilities in India T- 6.21 State-wise Cold Storage Facilities in India T- 6.22 State-wise Grading Facilities in India T- 6.23 State-wise Other Marketing Facilities in India T- 6.24 State-wise Agmark Nodes in India

181 185 193 194 196 197 199 213 226 244 246 247 248 249

T- 6.25 Settlement & Trading System in National and Regional 252 Commodity Exchanges in India T- 6.26 State-wise Cooperatives in India A1 A2 A3 A4 A5 Divisionwise, Districtwise Space Requirement (Sq.m)
Categorywise Space Requirement Number of whole sale, rural primary & regulated markets in India Progress of Reforms in Agricultural Markets (APMCAct) as on 30.09.2011

255 281 281 313 313 317

Progress of Market Reforms as per major areas identified in Model APMCACT

CONTENTS

Certificate Acknowledgement List of Tables

CHAPTER

DESCRIPTION

PAGE(S)

CHAPTER I
1 .1 Introduction 1.1.1 Role of Agricultural in Indian Economy 1.1.2 Agriculture and Allied Activities: Post-1991initiatives 1.1.3 Model act for state agricultural produce marketing development and regulation) act, 2003: 1.2 Agricultural Export and Imports 1

1.3Vishesh Krishi Upaj Yojana 1.4 Agricultural Marketing 1.5 Buffer Stock

CHAPTER II
2.1 Review of literature

62 84

CHAPTER III
3.1 Objectives of the study 3.2 Research methodology

CHAPTER IV 4.1 Problems Of Agricultural Marketing

4.1.1 Constraints Of Present Markets 4.2 The Present Standing Of Agricultural Marketing In India 4.2.1 Basic Facilities Needed For Agricultural Marketing

86

4.2.2 Cooperative Marketing 4.3 Government and Agricultural Marketing 4.4 Warehousing In India

CHAPTER V Strategies for the Agricultural Marketing and Its Impact on Its Productivity 106
5.1 Main Characteristics Of Marketing
5.2 Agricultural Price Policy 5.2.1 Administered Prices 5.2.2 Price Support Policy 5.2.3 Wholesale Prices 5.2.4 Retail Prices 5.2.5 Export Prices 5.2.6 Marketable surplus and post-harvest losses 5.3 Agicultural Market Intelligence Current Status

5.4.Agricultural Marketing in Madhya Pradesh

5.5Agricultural Marketing Reforms

CHAPTER VI

Agricultural Marketing and Its Impact on Productivity 151

6.1

The Place Of Agriculture National Economy

6.2 Present Status of Indian Agriculture: Looming Agricultural Crisis

6.3 Implementation of Agricultural Marketing Reforms 6.4 Basic Concepts of Standardisation and Grading

CHAPTER VII
Conclusion and Recommendations

290

CHAPTER I

This chapter consists of three sections. Section one explains the economic reforms initiated in India.

India has been experiencing a consistently high growth rate during the post-liberalisation period following the implementation of economic reforms in early 1990s. It has achieved excellence in several core areas ranging from information technology and pharmaceuticals to automotive parts, and is now considered as one of the fastest growing economies of the world. Despite these positive developments, India is still among the countries with some of the lowest indicators of human development. Its levels of malnutrition, illiteracy, unemployment and poverty are highly questionable. The rise in income inequalities and regional disparities are also a matter of concern. Employment has grown, but the jobs created are not of high quality and sufficient. Although there has been an expansion in social services like health, nutrition and

education, the quality of most of these services remains poor in most of the rural areas. And above all, an overwhelming majority of the population is deprived of basic social goods. Policymakers are thus faced with a paradoxthe persistence of deprivations and increasing insecurities among a large section of the population amidst growing affluence and prosperity for some. The Eleventh Five-Year Plan has also reflected upon these concerns and has highlighted the need for balanced and inclusive growth (World Bank Consultation Report, 2011) For the economic development of an economy, we need physical resources like land, buildings, etc. and also human capital like engineers, doctors, teachers, managers etc. Societies need good human resources to generate human capital. An improvement in skills and physical capacity of the people constitute an increase in human capital, as it enables them to produce more as well as efficiently. The economic growth rate of a country would be meaningful only if it is accompanied by an improvement in the quality of human life, no matter what the level of growth (8 or 9%) is? To quote J.R.D. Tata I do not want India to be an economic power. I want India to be a happy country Finance Minister P. Chidambram quoted in his budgetary speech on 29th March, 2008. That Education and Health are the twin pillars on which rest the edifice of social sector reforms. Human development is development of the people, development for the people, and development by the people. Development of the people involves building human capabilities through the development of human resources. Development for the people implies that the benefits of growth must be translated into the lives of people, and development by the people emphasizes that people must be able to participate actively in influencing the processes that shape their lives

Recent models of economic growth such as Romer (1986) and Lucas (1998) emphasize that investment in human capital is an important factor contribution to economic growth. These models generate persistent growth endogenously from the actions of the individuals in the economy. An additional role for human capital may as engine for attracting other factors such as physical investment, which also contributes measurably to per capita income growth. Recent experience with attempts to accumulate physical capital at a rapid rate

in poor counties bears out the necessity of due attention to human capital because it has become evident that the effective use of physical capital itself is dependent on human capital. If there is under- investment in human capital, the rate at which additional physical capital can be productively utilized is limited since technical, professional, and administrative people are needed for the effective use of physical capital. Lucas (1990) suggested that physical capital fails to flow to poor countries because of their relatively poor endowments of complementary human capital. The first Human Development Report in 1990 opened with the premise that People are the real wealth of a nation. In the Words of Prof. Amartya Sen: Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it." Mahbubul Haq in the Human Development Report says "The basic purpose of development is to enlarge people's choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secured livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community

activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives. Human development implies the development of abilities and skill among the population of the country. Present study is two variables v.i.z. education Index and health Index to measure human development. The Education Index is measured by the adult literacy rate (with two-third weighting) and the combined primary, secondary, and tertiary gross enrollment ratio (with one-third weighting). Education is a major component of well-being and is used in the measure of economic development and quality of life, which is a key factor determining whether a country is a developed, developing, or underdeveloped. Health Index is measured by life expectancy rate besides others.

Two Decades of Neo liberalisation Growth and Development Experience I. The Performance In seeking to establish turning points in the performance of the economy, or structural breaks in the pace of economic growth, most studies focus on the period since 1950. However, according to Deepak Nayyar, any meaningful assessment of economic performance in independent India must situate it is a long-term historical perspective to provide at least some comparison with the colonial era. Therefore, it would be logical to consider the performance of the economy before and after independence during the 20th century. During the first half of the 20th century, there was a near stagnation in per capita income while the growth in national income was minimal. There was steady growth in both GDP and GDP per capital during the second half of

the 20th century (table 3.1). There are two sets of growth rates for the period 1999-01 to 1946-47 based on two different estimates of national income. The Sivasubramonian estimates suggest that, in real terms, the growth in national income was 1 percent per annum, whereas the growth in per capita income was 0.2 percent per annum. The Madison estimates suggest that the growth in national income was 0.8 percent per annum, whereas the growth in per capital income was almost negligible at 0.04 percent per annum, the growth rates for the period for 1950-51 to 2004-05 provide a share contrast. In real terms, the growth in GDP was 4.2 percent per annum while the growth in per capita income was 2.1 percent per annum. The magnitude of the increase over the entire period is also revealing, between 1900-01 and 1946-47, at constant 1938-39 prices, national income for the undivided India increased from Rs. 15.4 billion to Rs. 24.9 billion by 60 percent whereas per capita income increased from Rs. 54 to Rs. 60 by mere 11 percent. Between 1950-51 and 2004-05, at constant 1993-94 price GDP increased by 1,000 per cent, while GDP per capita increased 250 per cent (Nayyar, 2006). Table 3.1 Rates of Economic Growth in India during the 20 th Century (per cent per annum) Sivasubramonian Estimates A. 1900-01 to 1946-47 Primary sector Secondary sector Tertiary sector National income 0.4 1.7 1.7 1.0 0.8 1.1 0.8 0.8 Maddison Estimate

Per capita income B. 1950-51 to 2004-05 Primary sector Secondary sector Tertiary sector GDP total GDP per capita

0.2

0.04

2.5 5.3 5.4 4.2 2.1

Notes: The average annual rates of growth. Sectoral and aggregate. For the period 51 to 2004-05, have been calculated by fitting a semi-long liner regression equation Ln Y=a+bt and estimating the values of b. Source: for 1900-01 to 1946-47, Sivasubramonian (2000) and Maddison (1985). 1950-51 to 2004-05, national accounts statistics of India, CSO and EPW research foundation. Two Phases of Growth There are two discernible phase of economic growth in India since independence: 1950-1980 and 1980-2005 (Nayyar, 2006). During the period from 1950-51 to 1979-80, growth in GDP was 3.5 percent per annum while growth in GDP per capita was 1.4 percent per annum. During the period from 1980-81 to 2004-05, growth in GDP was 5.6 percent per annum while growth in GDP per capital was 3.5 percent per annum. The sharp step-up in growth rates, not only aggregate but also sectoral, suggests that 1980-81 was the gunning point. This conclusion is reinforced by comparison of growth rates, aggregate and sectoral, during the sub periods 1980-81 to 199091 and 1991-92 to 2004-05. The growth rates were almost the same. In fact, during the period from 1991-92 to 2004-05, growth in the primary sector and

the secondary sector was somewhat slower while growth in the tertiary sector was somewhat faster in comparison with the period from 1980-81 to 1990-91. Growth in GDP was 5.9 percent per annum as compared per cent per annum, as compared with 3.2 percent per annum. There was some acceleration in the rate of growth of GDP per capita which was largely attributable to the slowdown in population growth. Econometric analysis of time series data on DDP and GDP per capital for the period from the early 1950s to the early 2000s establishes that the structural break in economic growth since independence, which is statistically the most significant, occurred around 1980. Assessment of Performance An assessment of performance, in terms of economic growth, sold address two questions. First, how does this performance compare with performance in the past? Second how does this performance compare with the performance of other countries? It is clear that the pace of economic growth during the period from 1950 to 1980 constituted a radical departure from the colonial past. For the period 1900 to 1947, there are two sets of growth rates based on alternative estimates of national income. If the economy had continued to grow at the rate based on the Sivasubramonian estimates, national income would have doubled in 70 years whereas per capita income would have doubled in 350 years. If the economy had continued to grow at the lower rate, based on the Maddison estimates, national income would have doubled in 87.5 years whereas per capital income would have doubled in 1,750 years. The reality in independent India turned out has doubled in 1,750 years. The reality in independent India turned out to be different the growth rates achieved during the period from 1950 to 1980 Many that GDP doubled in 20 years while GDP per capita would have doubled in 50 years. In fact, between 1950 and 1980, GDP multiplied by 2.86 while GDP per capita multiplied by 1.5 (Nayyar 2006).

Growth matters because it is cumulative. If GDP growth, in real terms, is 3.5 per cent per annum income doubles over 20 years, if it is 5 percent per annum income doubles over 14 years, if it is 7 percent per annum income doubles over 10 years, and if it is 10 percent per annum income doubles over seven years. Of course, the complexity of economy growth cannot be reduced to a simple arithmetic of compound growth rates, for there is nothing automatic about growth. In retrospect, however the cumulative impact of growth on output is a fact (Nayyar, 2006). Obviously, this growth was impressive with reference to the near. Stagnation during the colonial era. It was also much better than the performance of the now industrialised countries at comparable stages of their development. However, this growth was not enough to meet the needs of a country where the initial level of income was so low. For this reason, perhaps, it was described as the Hindu rate of growth by Raj Krishna. This phrase, which became larger than life with the passage time, meant different things to different people. For some, it meat performance that was disappointing but not bad. It has been whom that, during this period, Indias performance terms of economic growth was about the same as in most countries the world. It was certainly not as good as East Asia. But it was definitely not as bad as Africa. It was average. In fact, the actual rate of growth of output per worker in India was very close to the average across the world. What is more, the rate of growth predicted for India, based on its initial output per worker, its share of investment in GDP and population growth rate, was also very close to the worlds average (Nayyar, 2006). It is clear that there was sharp acceleration in the rate of growth since 1980. It went almost unnoticed and India grew almost by stealth. It came into the limelight in the early 2000s. Some analysts, as also many casual observers. Attributed this performance to economic liberalisation which began in the early

1990s. However, according to Deepak Nayyar, discerning scholars recognised the reality that structural break, which was a second truing point in the economy performance of independent India, occurred around 1980. In comparison with the preceding 30 years, there was distinct an up in rates of growth for GDP and GDP per capita. The growth rates achieved on an average, during the period from 1980 to 2005, Meany that GDP doubled in 12.5 years where GDP per capita doubled in 20 years. In fact, between 1980-81 and 2004-05, GDP multiplied by 3.81 while GDP per capita multiplied by 2.37. This growth was impressive, not only in comparison with the past in India but also in comparison with the performance of most countries in the world. Indeed, in terms of which experienced a slowdown in growth, the transition economies which did badly, and much of the developing world. And it was only East Asia, particularly China, which performed better (Nayyar, 2006). Causal Factors There is an emerging literature on the subject which seeks to analyse this rapid economic growth in India that has been sustained for 25 years. According to Deepak Nayyar, a convincing explanation must recognise that the acceleration in economic growth, since 1980, was attributable to several factors. Second, beginning in the late 1970s there was a significant increase in the investment-GDP ratio which was sustained through the 1980s. Unless there was decline in the productivity of investment, which was not the case, this would also have contributed to the step-up in economic growth during the 1980s. Third, starting in the late 1970, there was also a significant increase in public investment which was sustained through the 1980s. Obviously, this contributed to the increase in aggregate demand. However, insofar as such public investment created new infrastructure or improved as such public

investment create new infrastructure or improved existing infrastructure, it could have stimulated growth in output by alleviating supply constraints. Froth, trade liberalisation beginning in the late 1970s, combined with some deregulation in industrial policies introduced in the early 1980, also probably contributed to productivity increase and economic growth. In particular liberalisation of the regime for the import of capital goods and broadbanding which reduced industrial licensing could have played a contributory role. The cumulative impact of economic policies or public actions over the preceding 30 years possibly played an important role in the turnaround. Institutional capacities were created. The social institutions and the legal framework for a market economy were put in place. A system of higher education was developed. Entrepreneurial talents and managerial capabilities were fostered. Science and technology was accorded a priority. The capital goods sector was established. Much of this did not exist in colonial India. But it was in place by 1980. All this provided the essential foundation (Nayyar, 2006). According to Dreze and Sen (2005) the fact that the reasonable growth rates of the 1980s have been sustained and surpassed in the 1990s is a noteworthy achievement. This is all the more so in international perspective, considering that the 1990s have been a period of relatively slow economic growth in many other countries. I the international comparative league. India has recently been among the fast growers. The important pattern to recognise is not so much the acceleration of economic growth in the 1990s, compared with the 1980 (that acceleration is quite marginal). But the respectable rates of growth of the Indian economy, by international standards, in both decades combined. Indeed, fees countries have such a good record of sustained rapid growth over that combined period.

Looking at the average annual growth of per-capita GDP in the 1980s and 1990s together, India ranks among the ten fastest-growing countries in the world. Along with China, Vietnam, South Korea, Malaysia, Thailand, Singapore, among others. This achievement is primarily a reflection f the fundamental growth potential of the Indian economy reforms undertaken so far have helped to enhance that potential in some sectors, but they have notat least not yetradically altered it. What Next? International agencies and independent scholars agree that the economy can achieve growth rates of 8 percent or so provided supportive steps are taken. A much quoted recent study by Goldman such identified Brazil, Russia, India and China as the set of large emerging market countries projected to grow rapidly over the next thirty years. Within the group, Indias potential growth rate was projected to be the fastestaround 8 percent per yearfaster even than China which is currently, and has been for many years, the fastest growing economy but is expected to slow down in future. According to this study, by 2040 India will become the third largest economy after the USA and China (Montek Ahluwalia, 2005). K.B.L. Mathur in his paper (growth rate mystery) remarks, economists are at their best while making projections particularly o macroeconomic variables. Rodrik and Subramanian (April, 2004), in their study came out with explanations on why India can grow at 7 per cent a year or more and based on simple growth accenting framework projected Indias future potential output growth rate close to 7 percent through 2025. It was around the same time (march-April, 2004) that there was an upbeat mood to make growth rate projections for the Indian economy partly because advance estimates of GDP growth rate for the third quarter (October-December) of 2003-04 were at 10.4 per cent and for the full year the advance estimate of GDP growth rate during 2003-04 was placed at 8.1 per cent. Severally economists and of course

politicians (particularly that the election period) started projecting 8 to 10 percent GDP growth rate for next several years. To find the seriousness of all these claims Acharya (April, 2004) came out with a reality check and asked a straight question: has the Indian economy really attained the new trajectory of sustained 8 percent growth? Through the major reasons indicated in brief in the study, he replied rather convincingly why Indias medium term (five years) growth is far more likely to be constrained to 6 percent or below than to rip along at 8 percent. However, Kalka (April, 2004) in his study on India: on the growth Turnpike found India at the threshold of a golden age of growth and concluded that India-riding the wave of growth fundamentals such as demographic transition, human capital accumulation, improved incentive structures, diffusion of new technologies such at IT, total factor productivity accelerators through network industries and an improved security

environment-will be growing at growth rates which can be above 10 percent per annum, i.e., double digit growth rates. Apart from the logically established factors likely to contribute towards a double-digit growth in the next two decades, it would appear as if it was more a result of Kelkars deep rooted conviction and wish for the Indian economy to achieve double digit growth. In his earlier (Kelkar 1999) paper he had illustrated for the need of it by saying that when a satellite is put into orbit, it requires high velocity to ensure exit from the earths, gravitational force; similarly, if our economy is to exit from the gravitational pull of poverty, it requires an exit velocity of double-digit growth rate over the next two decades. Interestingly, Kelkar in his paper (April, 2004) includes amongst the non-economic factors Indias democratic framework as a key growth fundamental. But even on such fundamentals there are caveats. In the context of credibility of reforms as an important factor impacting the growth rate. Virmani finds that the enormous growth potential of the Indian economy is not being realised because of the constraints placed on it by the Indian political system. Basu (2004), has the following to say on the contradictions, if not mysteries of a democratic system: advisers from

Washington, DC, and many economists recommend that third world nations must have democracy and must open up their economy and privatise, oblivious to the fact that to ask for a democracy and then to insist what the democracy should choose amounts to a contradiction. It is perhaps under such contradictions that the real mystery of Indias economic growth would remain. The central issue, however, is not the overall growth rate of the economy. Rather, it is a question of achieving widely-shared development, of a king that has not really happened in the 1990s (or for that matter earlier). Indeed, there are many reasons for concern about growth patterns in the 1990s, ranging from the near-stagnation of agriculture in per-capita terms to the dismal growth performance some of the poorer states (e.g. Bihar and Uttar Pradesh). Further the accelerating of overall economic growth in the 1990s, such as it is, does not appear to have led to a corresponding transformation of living conditions for the poor. The growth rates of GNP and GDP can, quite possibly, increase further than they have already done in the 1990s, but the country remains handicapped economically and socially by its overwhelming illiteracy backwardness in health. Debilitating social inequalities, and other crucial failures. These limitations also continue to restrain the participatory possibilities of the growth process. While India has highly developed higher education sector, it remain one of the most backward countries in the world in terms of elementary education. The economic success of the east Asian tigers and more recently of China, has been based on a much higher level of literacy and basic education than India has. The overall growth rate can certainly be pushed up by rapid expansion of some favourably placed sector. Some sectors of the economy especially those that rely on high skills of the king that India already has plentifully (such as basic computer proficiency), have been growing fast in recent years and can

expand even father. However to have an impact on Indias widespread poverty. What is needed is an expansion on a much broader and more equitable basis (as has happened in, say South Korea or China). And this would be extremely difficult to achieve wit hose giving much greater priority to the removal of illiteracy. Under nutrition. Ill health, economic insecurity and other barriers to participatory growth. The central issue, as has already been stated, is not just the overall we needed to emphasize is participatory growth, which is not the same s high achievement in some particular sectors (oriented to more specializedand more middleclassskills), nor the same as high and seventies, the Brazilian economy grew very fast but achieved rather little reduction of poverty, particularly in terms of social backwardness and sectional deprivation. The lack of participatory nature of that growth with patterns of more inclusive growth processes in East Asia tends to bring out the bit difference made by widely share, participatory growth, and the specific role of side spread basic education in fostering growth of this kind. There is something quite important in this choice. India cannot afford to go Brazils way. The lessons of East Asia and china and to some extent also of the more successful states within India) is not just about growth, but about widely-shared growth, assisted by positive state initiatives. The concentration on participatory growth calls for an integrated view of t he process of economic expansioncaucusing on the significance of economic growth, on the one hand, and on the importance of the participatory character of that growth, on the other. In India, while the neglect of social opportunities through the lack of adequate progress in basic education, health care, social security, land reforms, and similar fields has been detrimental to economic and social development in the country, so has been the neglect of appropriate incentives for economic efficiency and expansion.

There has been much talk, in recent years, about the importance of basic education and the eyed to give it a high priority but the overall picture of elementary education in India remains dismal. In particular, schooling facilities remain completely out of line with the constitutional goal of universal education to the age of 14. In the field of health care, there are even fewer signs of any determination to address the tragic inadequacies of current policy. Public expenditure of health care is lower in India than in most other countries (as a proportion of GDP). Father, public health services in rural India have often been extensively displaced by family planning programmes (mainly based on female sterilization). For other services, most citizens are compelled to turn to the private sector, with its high costs and pervasive hazards. These patterns continue in the 1990s. In fact, the share of public expenditure on health as proportion of GDP has, it anything, declined during this period. Human Development The UNDP human development report (1994) focuses on the new paradigm of development that puts people at the centre of development regards economic growth as a means and not an end, protects the life opportunities of future generations as well as the present generations and respects the natural systems on which all life depends. Such a paradigm of development enables all individuals to enlarge their human capabilities to the full and to put these capabilities to their protects the options of the unborn generations. It does not run down the natural resource base needed for sustaining development in the future. Sustainable Human Development Sustainable human development addresses both inter-generational and intra generational equityenabling all generations, present and future to make the best use of their potential capabilities. In the final analysis s, sustainable

human development is pro-people, pro-jobs and pro-nature it gives the highest priority to poverty reduction, productive employment social integration and environmental regeneration. It accelerates without destroying the natural capital needed to protect the opportunities of future generations. The strongest argument for protecting the environment is the ethical need to guarantee the future generations opportunities similar to the ones previous generations have enjoyed. This guarantee is the foundation of sustainable development. The principal goal of development policy is to create sustainable improvements in the quality of life for all people. Sustainable development has many objectives. Insofar as raining per capita income improves peoples living standers. It is one among man development objectives. The aim of lifting giving standards encompasses a number of more specific goals, bettering peoples health and educational opportunities, giving every one the chance to participate in public life. Helping to ensure a clean environment, promoting inter-generations equity and much more. What makes Development Unsustainable? When increase in GNP a brought about through depletion of resources under unhealthy environmental conditions by the present generation, the future generations will be left with much depleted resource to produce output under polluted environmental conditions adversely affecting their health and efficiency. Under such circumstances the rate of economic development in future is bound to fall. Thus, when we are producing more at the cost of future generations the present level of development more at the cost of future generations the present level of development is not sustainable i.e. we will not be able to maintain it in future. Policy for Sustainable Development

Even if scarcity of natural resources increases, natural resources and environments can be adequately preserved by investment in conservation and anti-pollution activities such as reforestation, soil erosion prevention (such as terracing), and purification of gas emission. In order to promote these activities, institutional innovations are required, such as setting property rights where applicable, regulating and taxing natural resource utilisation, and organizing government and non-governmental bodies for environmental monitoring. Human Development Index HDI is a quality of life index prepared by UNDP and published in Human development reports since 1990. It takes into account the three most basic human capabilities. I. II. Longevity measured by life expectancy at birth. Educational attainment as measured by adult literacy rate and gross enrolment ratio GER (primary, secondary and tertiary level combined). III. Adjusted real GDP per capita---PPP stands for purchasing power parity. PPP GDP is calculated after eliminating price differences among countries. The HDI value indicates how far a country has gone to attain certain defined goals: an average life span of 85 years, access to education for all and a decent standard of living. The maximum and minimum values for each variable, which are fixed, are reduced to scale between 0 and 1. Countries are classified into three groups: 1. High human development countriescountries with HDI values of 0.800 and above. 2. Medium human development countriescountries with HDI values of 0.500 to 0.799. 3. Low human development countriescountries with HDI value below 0.500.

Human development report 2005 states, fifteen years after the launch of the first human development report, this years report starts by looking at the state of human development. Writing in that first the 1990s he wrote, are shaping up as the decade for human development, for rarely has there been such a consensus on the real objectives of development strategies. Since those words were written a great deal has been achieved. Much of the developing world has experienced rapid social progress and rising living standards. Millions have benefited from globalisation. Yet the human development advance fall short of those anticipated in Human development report 1990 and far short of what was possible. The HDR (2005) further states, viewed from the perspective of 2015, there is a growing danger that the next 10 yearslike the past 10will go down in history not as a decade of accelerated human and failed international cooperation. Progress and Setbacks in Human Development Human development is about freedom. It is about building human capabilitiesthe range of things that people can do and what they can be. Individual freedoms and rights matter a great deal, but people are restricted in what they can do with that freedom if they are poor, ill illiterate, discriminated against, threatened by violent conflict or denied a political voice. That is why the lager freedom proclaimed in the UN charter is at the heart of human development. The most basic capabilities for human development areleading a long and healthy life, being decade and having adequate resources for a d decent standard of living. Other capabilities include social and political participation in society. The era of globalisation has been marked by dramatic advances in technology, trade and investmentand an impressive increase in prosperity.

Gains in human development have been less impressive. Large parts of the developing world are being left being. Human development gaps between rich and poor countries, already large, are widening. Meanwhile, some of the countrys most widely cited as examples of globalisation success stories are finding it harder to covert rising prosperity into human development. Links between the Growth and Human Development World economic and social survey report 2006 states, countries with a successful economic growth performance all had relatively high levels of human development at the beginning of their sustained growth process and showed substantial improvements in education and health as average incomes improved. Conversely, however, not all countries with relatively higher levels of human development managed to achieve high long-term economic growth rates. The links between the growth and human development are complex. Human development is of course, an objective in its own right, which has been enshrined in the global agenda by United Nations conferences and summits. However, it seems that it is a necessary but not a sufficient condition for sustained economic growth. Lifting other constraints on economic growth and structural change will be necessary to create opportunities for a better-educated population. The dynamic creation of decent and productive employments is the crucial link in this regard. Advances in Human DevelopmentA Global Snapshot Quoting from the human development report (2005) looking back over the past decade the long-run trend towards progress in human development has continued. On average, people born in a developing country today can anticipate being wealthier, healthier and better educated than their parents generation. They are also more likely to live in a multiparty democracy and less likely to be affected by conflict.

Life Expectancy In a little more than a decade, average life expectancy in developing countries has increased by two years. On this indicator human development is converging: poor countries are catching up with rich ones. Increased life expectancy is partly a product of falling child death rates. Education Literacy levels in developing countries have increased from 70 per cent to 76 percent over the past decade, and the gender gap is narrowing. Illiteracy today reflects past deficits in access to education. These deficits are shrinking. There are still 800 million people in the world lacking basic literacy skills. Women account disproportionately for two thirds of the total. Poverty Extreme income poverty has been falling. Extreme poverty fell from 28 per cent in 1990 to 21 percent todaya reduction in absolute numbers of about 130 million people. Economic growth is one of the obvious requirements for accelerated income poverty reduction and sustained human development. Here, too, the report is encouraging. Average per capita income growth in developing countries in the 1990s was 1.5 per cent. Almost three times the rate in the 1980s. Since 2000 average per capita income growth in developing countries has increased to 3.4 per centdoubles the average for high income countries. Conflicts Violent conflicts pose one of the greatest barriers to accelerated human development. Since 1990 the world has witnessed genocide in Rwanda, violent civil wars in the heart of Europe, wars in Afghanistan and Iraq and setbacks in the Middle East. New threats to collective security have emerged. Yet despite the challenges posed for human development by violent conflict there is some

positive news. The number of conflicts has fallen since 1990. The last 15 years have seen many civil wars ended through negotiation under UN auspices. Democracy Progress towards democracy also has been mixed. Democracy is a fundamental aspect of human development. It is both intrinsically valuable, and therefore a human development indicator in its own right, and a means towards wider human development goals. Multiparty electionsnow the worlds preferred from of governanceare one condition. The share of the worlds countries with multiparty electoral systems that meet wider criteria for democracy has risen since 1990 from 39 per cent to 55 per cent. Of the worlds two most populous countries, India is a thriving democracy, but in China political reforms have lagged behind economic reforms. However, the scale of human development gains registered over the past decade should not be underestimatednor should it be exaggerated. Part of the problem with global snapshots is that they obscure large variations across and within regions. They also hide differences across dimensions of human development. Progress towards human development has been uneven across and within regions and across different dimensions. In a world of already extreme inequalities, human development gaps between rich and poor countries are in some cases widening and in others narrowing very slowly. The process is uneven, with large variations across regions and countries. We may live in a world where universal rights proclaim that all people are of equal worthbut where you are born in the world dictates your life chances. Indiaa Globalisation Success Story with a mixed Record on Human Development

India has been widely heralded as a success story for globalisation. Over the past two decades the country has moved into the premier league of world economic growth: high technology exports are booming and Indias emerging middle-class consumers have become a magnet for foreign investors. Than the record on global integration as prime minister, Cr. Manmohan Singh remarked. The slow improvement in the health status of our people has been a matter of great concern. We have paid inadequate attention to public health (April 2005). The incidence of income poverty has fallen from about 36 percent in the early 1990s to somewhere between 25 percent and 30 percent today. Precise figures are widely disputed because of problems with survey data. But overall the evidence suggests that the pick-up in growth has not related into a commensurate decline in poverty. More worryingly, improvements in child and infant mortality are slowing downIndia is now off track for these MDG (Millennium Development Goals) targets. Some of Indias southern cities may be in the midst of a technology boom, but 1 in every 11 Indian children dies in the first five years of life. Malnutrition, which has barely improved over the past decade, affects half the countrys children. About 1 in 4 girls and more than 1 in 10 boys do not attend primary school. Why has accelerated income growth not moved India onto a faster poverty reduction path? Extreme poverty is concentrated in rural Ares of the northern poverty-belt states, including Bihar, Madhya Pradesh, Uttar Pradesh and West Bengal, while income growth has been most dynamic in other states, urban areas and the service sectors. While rural poverty has fallen rapidly in some states, such as Gujarat and Tamil Nadu, less progress has been achieved in the northern states. At a national level, rural unemployment is rising, agricultural output is increasing at less than 2 percent a year, agricultural wages are stagnating, and growth is virtually jobless. Every 1 percent of national income growth generated three times as many jobs in the 1980s as in the 1990s.

Table 3.2 Differences among States in India Indicator All India Female shares of population (%) Under-five mortality rate (per 1,000 live births) Total fertility rate (Births per woman) Birth attended by Health professional (%) Children receiving all vaccinations (%) Source: Human Development Report, 2005. The deeper problem facing India is its human development legacy. In particular, pervasive gender inequalities, rural privet and inequalities between states, is undermining the potential for converting growth into human development. Perhaps the starkest gender inequality is revealed by these simple facts girls aged 1-5 are 50 per cent more likely to die than boys. This fact translates into 130,000 mission girls. Female mortality rates rain higher than male motility rates through age 30, reversing the typical demographic pattern. These gender differences reflect a widespread preference for sons. Particularly in northern states. Girls less valued than their brothers. Are often brought to health facilities in more advanced stages of illness, taken to less qualify doctors and have less money spent on their health care. The low status and educational 42 80 11 17 21 42 94 23 36 22 2.9 2.0 3.5 3.8 4.0 48 95 52 19 49 105 48 115 Kerala Bihar Rajasthan Uttar Pradesh 48 123

disadvantage suffered by women have a direct bearing on their health and their childrens. About one-third of Indias children are underweight at birth, reflecting poor maternal health. Inadequate public health provision exacerbates vulnerability. Fifteen years after universal childhood immunization was introduced national health surveys suggest that only 42 percent f children are fully immunized. Converge is lowest in the states with the highest child death rebates, and less than 20 percent in Bihar and Uttar Pradesh. India may be a world leader in computer software services, but when it comes to basic immunization services for children in poor rural Ares, the record is less impressive. Translating economic success into human development advances will require public policies aimed explicitly at broadening the distribution of benefits from growth and global integration, increased public investment in rural areas and services andabove allpolitical leadership to end poor governance and address the underlying causes of gender inequality. There are encouraging signs. In 2005 the government of India launched a $ 1.5 billion national rural health mission, a programme targeting some 300,000 villages with an initial focus on the poorest states in the north and north east. Commitments have been made to raise public health spending from 0.9 per cent of national income to 2.3 percent. Spending on education has also been increased. In an effort to create the conditions for accelerated rural growth and poverty reduction, ambitious public investment programmes have been put in place to expand rural infrastructure, including the provision of drinking water and roads. Translating increased financial commitment into improved outcomes will require a stronger focus on effective delivery and measures to improve the quality of public services. There is no shortage of innovative models t draw upon. States such Himachal Pradesh and Tamil Nadu have sustained rapid progress in education, not just by increasing budget provision but by increasing

the accountability of service providers and creating incentivessuch as free school meals, scholarships and free textbooksaimed at increasing the participation of poor households. Overcoming the legacy of decades of underinvestment in human development and deep rooted gender inequalities poses immense challenges. Failure to extend health and education opportunities for all regardless of wealth and gender will ultimately act as a constraint on Indis future prospects in the global economy. India has moved from the group of low human development countries to medium human development countries during the last decade or so. HDI value improved from 0.439 in 1992 to 0.590 in 2001 and 0.602 in 2003. However, Indias rank still rains 127 out of 177 countries. Indeed it is a long way before we can catch up with developed countries. It may be mentioned here that HD cannot be treated as a comprehensive index because it is based on only three variables. There are many other variables which affect welfare. National Human Development Report2001 Releasing the national human development report 2001 (April 23, 2002) the deputy chairman, planning commission, Shri K.C. Pant remarked, For any approach or development framework to be meaningful and effective in directing public policies and programmes, it has to be anchored in a specific social context. More importantly, it should reflect the values and development priorities of the society where it is applied. It is this concern that has led us to work on developing a contextually revenant approach to human development and identify and devise appropriate indicators to help formulate and monitor public policy for India. Such a policy must, of course, dip in view the many unique concerns and development priorities of the country. As well as her

social and economic diversity. The national human development report has addressed these concerns. The report has broken fresh ground in quite a few areas in presenting the status of human development at the state level in India. It has, for the first time, put together an extensive database for at least two, and in some cases three points of time covering the period from 1980 to 2001. Indicators In India, there is a considerable difference in the level of attainments of people depending on their place of residence, whether it is in rural or urban areas, and on the sex of the person. The report highlights these inequalities by estimating the gender gap and the rural urban gap in all indicators where the data are available. A number of carefully selected indicators have been combined to develop three composite indices. It may be noted that the indices developed in this report are not identical to the UNDP indices, which are designed for inter country comparisons. Our focus is not the same and, therefore, though the names may be similar the substance is different. While the human development index presents a quantitative estimate of attainments of the society as a whole, the human poverty index measures the extent of deprivation in the society. In addition, for the first time, a gender equality index has also been constructed to capture the relative attainments of women as against men. For each of these indices, critical indicators of well beingcapturing the ability to live a long and healthy life; the ability to read, wire and acquire knowledge; and command over resourceshave been identified keeping in view the context, societal values and development priorities of the country. One of the factors dept in mind while conceptualizing this report was the need to evolve indices that could adequately reflect inters temporal changes and policy sensitivity in various dimensions of human well being.

The compilation of indicators in this report extends beyond the economic education, health and demographic concerns of society. It also includes indicators on various aspects of the social environment, like the state of the elderly, the working children the disabled and violence and crime against women. Besides, aspects of the physical environment having direct bearing on the well being of people have also been highlighted. In a sense, the report marks a beginning and is a frit step towards monitoring the process of development in manner that directly captures the level of well being and the quality of life of our people. Also, a beginning has been made in the tenth plan by explicitly specifying monitor able targets covering economic social and environmental dimensions of human development State of Human Development in India Over the years, India has made substantial progress in human development. Sustained and high economic growth in the post reform period reduced number the of poverty illiterates. ratio significantly. Indias There viral was also noteworthy on human

improvement in the literacy rates over time leading to a decline in the absolute However, performance

development has been mixed in the last decade. Improvements in health indicators like life expectancy and infant mortality rates have been much slower than expected. There is widespread under nutrition among women and children and maternal and child health still remains areas of concern. UNDPs global human development report (HDR) for 2005 ranks India at 127 out of 177 countries of the world in terms of a composite human development index (HDI) for 2003 (TABLE 3.3) between 2000 and 2003, while the absolute values of HDI and gender development index (GDI) consistently improved for India, its ranking remained invariant at 127 consecutively for three years in a row. On the other hand, some of Indias

neighbors not only improved their HDI and GDI values, but also improved their relative ranks. Overall human development as reflected in the HDI has improved significantly between 1980 and 2001. At the national level, during the eighties the index has improved by nearly 26 percent and by another 24 per cent during the nineties. There has been an improvement both in rural, as well as in urban areas, though the rural-urban gap in the level of human development continues to be significant, it has declined during the period. Inequalities across states on the HDI are less than the income inequality as reflected in the per capita state domestic product. State level At the state level, there are wide disparities in the level of human development. Progress of social development has varied across states. While Kerala stood apart from the rest and achieved high levels of human development comparable to the rich developed countries, the so called BIMARU states (viz Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) fared particularly badly. In the early eighties states like Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan and Orissa had HDI close to just half that of Keralas. The situation has impeded since then. Besides Kerala, among the major states, Punjab, Tamil Nadu, Maharashtra and Haryana have done well on the HDI. In general, HDI is better in smaller states and union territories. In terms of the pace of development. Tamil Nadu, Rajasthan, Madhya Pradesh, West Bengal and Bihar improved their HDI significantly in the eighties. However, in the nineties the momentum was maintained, from along these states only in case of Rajasthan, Madhya Pradesh and Uttar Pradesh. Table 3.3 Indias Global Position on Human and Gender Development

Country

Human development index HDI 2000 2003 0.963 0.955 0.751 0.755 0.697 0.602 0.527 0.520 0.526 0.379 0.281

HDI Rank

Gender Development index GDI

GDI Rank

2000 1 5 89 96 110 124 138 145 142 170 172

2003 1 3 93 85 110 127 135 139 136 168 177

2000 0.941 0.956 0.737 0.724 0.678 0.560 0.468 0.468 0.470 0.307 0.263

2003 0.960 0.954 0.747 0.754 0.691 0.586 0.508 0.514 0.511 0.365 0.271

2000 2003 3 1 70 77 91 105 120 121 119 144 146 1 2 66 64 87 98 107 105 106 133 140

Norway Australia Sri Lanka China Indonesia India Pakistan Bangladesh Nepal Mozambique Niger

0.942 0.939 0.741 0.726 0.684 0.577 0.499 0.478 0.490 0.322 0.277

Source: UNDP Human development report (HDR) 2002 & 2005. State Level At the state level, there are wide disparities in the level of human development. Progress of social development has varied across states. While Kerala stood apart from the rest and achieved high levels of human development comparable to the rich developed countries, the so called BIMARU states (viz, Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) fared particularly badly. In the hardly eighties, states like Bihar, Uttar Pradesh, Madhya Pradesh , Rajasthan and Orissa had HDI close to just half that of Keralas the situation has

improved since then. Besides Kerala, among the major states, Punjab, Tamil Nadu, Maharashtra and Haryana have done well on the HDI. In general, HID is better in smaller states and Union Territories. In arms of the pace of development, Tamil Nadu, Rajasthan, Madhya Pradesh, West Bengal and Bihar improved their HDI significantly in the eighties. However, in the nineties the momentum was maintained, from among these states, only case of Rajasthan, Madhya Pradesh and Uttar Pradesh. It turns out that the economically less developed states are also the states with low HDI. Similarly, the economically better-off states are also the ones with relatively better performance on HDI. However the relation between the HDI and the level of development does not show any correspondence among the middle-income states in the country. In this category of states. Some states like Kerala have high attainments on HDI, at the same time; there are states like Andhra Pradesh or even west Bengal where HDI values are not sass high. Allocation of adequate public resources for furthering human development alone is not enough. It is equally important to use them efficiently and effectively. Human attainments appear to be better and more sustained in those parts of the country where there is social mobilization for human development, and where female literacy and empowerment encourages women to have a say in the decision making process at the household level. Economic Growth and Poverty It should be obvious enough that economic growth can be extremely helpful in removing poverty. This is both because the poor can directly share in the increases wealth and income generated by economic growth, and also because the overall increase in national prosperity can help in the financing of public services (inclosing health care and education), which in turn can be particularly useful for the poor and the deprived. This does not, however, make economic growth the only meansnot necessarily even the principal means of poverty removal. This is so for at least three reasons.

First, poverty need not take the form only of low income; there are other kinds of deprivation reflecting various unfreedoms; varying from prevalence of preventable or curable illness to social exclusion and the denial of political liberty. Second, in particular the enabling roles of basic education, good health, microcredit facilities, land reforms, social security arrangements,

environmental sustainability, legal provision, and related factors. Third, the fruits of economic growth may not be automatically utilised t expand basic social services. For example, south Korea did much better in channeling resources to education and health care than, Brazil did, which too had fast economic growth with equity, compared with the arrangements for social security thereby remaining vulnerable to downside-risks, and in fact paid a heavy price for this when the economic crisis of 1997 came. Removal of poverty and deprivation requires a great deal more than relying on on e simple associative connection between economic growth and the incomes of the poor. This broader picture of social progress also contains a useful reminder that eliminating deprivation is as much a matter of public action as one merely of economic growth. As rightly stated by Jagdish Bhagwati growth requires complimentary policies where necessary to prevent hurtful outcomes or better still since it is often difficult to foresee where problems may arise to effect them as and when they materialise. There has been a big statistical debate whether poverty has declined during the period of higher growth rates. It is clear now that it has; the necessary corrections to the data confirm this. Also, regional disaggregation confirms that the more rapidly growing states have had better impact on poverty.

Jagdish Bhagwati emphasizes that it is not only poverty that will fall with sustained growth but also we well improve literacy and health, even other social agendas because a growing economy will garter resources, at given tax rates, for the government to spend on schools and public health. Without such revenues, you can profess, but not deliver on, your good intentions. Taking a longer view, there is much evidence that the reduction of poverty has typically been faster (other things given) in regions with betterdeveloped social opportunities. Since the role of social opportunities in fostering the reduction of poverty and deprivation is not conditional on liberalisation, we can look at a longer time series to see how that story emerges. What is particularly interesting and from the policy point of view especially relevant is the fact that in the long haul (between the 1950s and early 1990s) there is a clear connection between initial social achievements on the one hand, and the subsequent reduction of income poverty on the other. The experience of the 990s brings out that states with a better level of social preparedness (particularly in the southern and western regions) have done quite well, while much of the northern region continued with high poverty ratios. What is perhaps particularly important at this time is to give adequate recognition to the complementarity between economic progress and social opportunities. India has done reasonably well in the former respect in the 1990s, but the continued neglect of the latter (despite some positive change in the specific field of elementary education) has seriously compromised the gains that might otherwise have been derived from the countrys renewed economic dynamism. The course of Indian development in the coming decade depends a great deal on the extent to which this imbalance is corrected in the near future. The neglect of social opportunities in India in the nineties is primarily a continuation of earlier distortions of public priorities. These biases, in turn, relate to long-standing inequalities so political power, and in particular to the political marginalization of the poor.

While there have been no cuts in real public expenditure per capita on education, health and related sectors, the declining share of these expenditures in GDP (especially in the first half of the 1990s) is a serious issue. Also, expenditure increase have been overwhelmingly absorbed in salary increase, reflecting, inter alia, the growing aspirations and demands of the middle classes as well as the need for public-sector salaries at the top to dip up with the growth of income earning opportunities in the liberalised private sector. As a result, there has often been little improvement in the delivery of actual services. In view of the above, there is urgent need to go beyond the present reform agenda, with its narrow focus on liberalisation, towards a broader agenda of participatory growth. It is possible, in principle, to combine greater room for economic incentives with a stronger commitment to social policy. Growth and Structural Change In developed and mature economies, the industrial and services sectors contribute a major share in GDP, with agriculture accounting for a relatively lower share. During the process of growth over the years, the Indian economy too experienced an improvement in the shares of industry and services sectors in overall GDP. The sectoral composition of real GDP at 1980-81 prices shows that the share of the agricultural sector in GDP gradually declined from 36.4 per cent in the eighties to 28.6 per can in the nineties (1990-91 to 2000-01) (Table 3.4). In contrast, the shares of industry and services increased from 25.0 percent, respectively during the same period. Thus, there was surge in the growth of the services sector since the early eighties, with the trend rate of growth being more pronounced in recent years. The growth of the services sector has imparted much of the resilience to the economy, particularly in times of adverse agricultural shocks. Table 3.4 Sector-wise Average Shares, Growth Rates and Contribution to GDP Growth

(Per Cent) Services Share Period in GDP Gro wth rate Contri bution to GDP growth 1 1950-51 to 1959-60 1960-61 to 1969-70 1970-71 to 1979-80 1980-81 to 1989-90 1990-91 to 2000-01 1999-00 2000-01 2001-02 53.2 53.7 54.1 9.4 5.0 6.2 79.2 67.4 61.1 21.6 22.1 21.6 4.2 6.2 3.3 15.1 34.1 13.6 25.2 24.2 24.4 1.3 -0.2 5.7 5.7 -1.4 25.4 44.3 7.6 57.6 27.1 5.9 27.6 28.6 2.9 14.8 38.6 6.6 43.6 25.0 6.8 28.9 36.4 4.4 27.5 34.4 4.5 52.7 22.8 3.7 28.7 42.8 1.3 18.6 31.4 4.9 38.1 21.1 6.5 32..9 47.8 2.5 29.2 2 28.2 3 4.1 4 32.2 5 16.0 6 5.7 Share in GDP Industry Grow th rate Contri bution to GDP growth 7 25.3 8 56.0 9 2.3 Agriculture Share in GDP Gro wth rate Contri bution to GDP growth 10 42.5

Note: Inclusive of construction.

: 9 year data for growth and weighted contribution since data may not up to 100. Source: national accounts statistics, CSO. The RBI report on currency and fianc (2000-01) states, that the compositional shift in favour of services has been brought about by accelerated expansion in the services sector output at a rate of 7.6 percent in the period 1990-91 to 2000-01 compared with 6.6 percent during 1980-81 to 1989-90. While the growing contribution of the services sector to GDP is in line with the development experiences of a number of countries of the world, it is, however, not yet clear whether it is the comparative advantage what is driving up the share of the services sector in GDP or whether the sector also derives strength from the policies that are being pursued since the early nineties. There has been a relative deceleration in the performance of agriculture during the nineties despite favourable monsoons, increase in net irrigated area and positive terms of trade. The decline in public investment and the limited infusion of new technologies may have contributed to the poor performance of agriculture. However, Indian economy attained and maintained a high GDP growth in the nineties despite substantial deceleration in agricultural growth. For example in 1995-96 when the economy achieved a record 8.6 percent growth in GDP, the agricultural sector witnessed a negligible 0.2 percent growth over the previous year. In fact, as the RBI report on currency and finance states, the recent years experience shows that the growth of services sector has imparted much of resilience to the economy particularly in times of adverse agricultural shocks. Thus, economic growth is becoming less vulnerable to agricultural performance and to vagaries of monsoon while the improvement in growth has emerged from both the industrial and services sectors; there is a marked difference in the sectoral composition of growth as between these two major

sectors. Within the industrial sector, the major impetus to growth has come from manufacturing. While mining and quarrying, and electricity, gas and water supply, registered lower rates of growth. The services sector, on the other hand experienced higher growth in a more uniform and consistent manner with sectors like trade, hotels, restaurants, storage and communication, whereas, financing, insurance, real estate, and business services, are

experiencing high trend growth rates. A possible interpretation of this phenomenon could be an upsurge of industry related services sector in recent years. The phenomenal expansion of services worldwide led to services being regarded as an engine of the growth and even as a necessary concomitant of economic growth. Development is a three stage process. The dominance of the services sector in the growth process is usually associated with the third stage of growth. During the 1980s and 1990s services accounted for a share of close to or above 70 percent of GDP in industrialised countries and about 50 percent in developing countries. In India, services accounted for 38.6 percent of the GDP in the 1980 and 44.3 percent in the 1990s. Since the 1980s growth process in India has been marked by a robust performance of services sector. While this is partially in line with the experience of developed countries, the Indian experience is somewhat unique in the sense that the sectoral shift in favour of services sector accompanied almost stagnant share of industry and reduced share of agriculture. The momentum continued during the 1990s in fact, it was the growth performance of the services sector that provided a modicum of resilience to the overall growth of the economy, particularly in times of adverse agriculture shocks and industrial slowdown. The set of economic reform measures initiated since 1991 also impacted on the performance of the services sector. First, reforms in the domestic industrial environment which resulted in rising manufacturing growth provided

synergies to the services sector in the form of increased demand for producer services. Second, the liberalisation of the financial services. Third, reforms in certain segments of infrastructure services also contributed to the growth of services. Consequently, the services sector posted much higher growth during the reform period as compared with the pre reform period with its share touching nearly the 50 percent mark. Finally, the rapid growth in services sector appears to have benefited from external demand; the typical example of which is the software industry and call centres. Interestingly, the decelerating trend in manufacturing and overall GDP seems to have been much less pronounced in case f services. Nevertheless, there are apprehensions about its sustainability in view of the contribution of public administration and defence to growth in services. Structural Change in terms of Industrial Distribution of Work Force and Occupational Structure The structural change in Indian economy is also reflected in the industrial distribution of work force and occupational structure over the period 19611999-2000. A recent study by K. Sundaram brings out that for the total work force, there is a 16 percentage point decline in the share of the agriculture, forestry and fishing sector. This decline is greater than the 10 percentage point decline in the share of this sector in the rural work force and reflects the effect of a shift in the rural urban composition of the work force towards the latter. Of this 16 percentage point decline in the share of the agricultural sector, less than 3 percentage points represent the gain in the share of the manufacturing a 3 percentage point gain in its share in the work force. It is the services sector, as group, that recorded a 10 percentage point gain in its (collective) share in the work forcewith half of this being accounted for by the trade, hotels & restaurants sector. The transport, storage

and communications, and the community, social and personal services sectors each gained 2 percentage points in their (respective) shares in the work force. Focusing on the 1990s, the 1990s the pace of decline in the share of the agriculture sector in the total work force has been faster: nearly twice as fast as that realised over the 33 year period between 1961 and taken place at an equally accelerated pace during the 1990sexcept that, In the case of the manufacturing (and repair services sector), this acceleration, though present, has been much less market (from 0.6 percent per annum between 1961 and 1994 to 0.8 percent per annum in the 1990s). Within the broad agriculture and allied activities sector, crop production has recorded a reduction in the size of its work force of 1.5 million in the aggregate but not in the rural areaswhere, in fact, there has been marginal increase in the number of workers in crop production. Significantly, the reduction in the number of female workers, both in the broader agricultural and allied activities sector and in the crop-production sub sector, has been much greater than in the total work force. The reduction in the size of the work force in the livestock sector is almost totally among female workers but is somewhat more evenly split across the rural urban divide. Moderating the decline in the size of the work force in the agriculture and allied activities sector in the total work force and among female workers (and contributing to the increase in the rural work force in this sector) is the increase of about 2 million workers engaged in providing agricultural support services in the aggregate which is concentrated, almost exclusively, in the rural areas. The addition of a little over 5 million to the work force of the manufacturing and repair services sector between 1994 and 2000 is more or less evenly split across the rural urban divide. However, across the gender divide, only 20 percent of the additional work force in this sector is female workers.

In contrast to the rising share of the manufacturing sector as a whole, a major sub-sector namely textiles and textile products has suffered a sizeable decline in its share in the total, rural and the female work force over the entire period. In the case of the total work force, the share of this sector has declined from 35 per 1000 in 1961 to 26 per 1000 in 2000. In terms of absolute number of workers, between 1994 and 2000 less than 1.5 lakh workers have been added in the Table 3.5 Industrial Distribution of Total (Rural plus Urban) Work Force: All India: 1961, 1993-94 and 1999-2000 1961 Industry division/Group No. of Workers (000) Agriculture, forestry & fishing 00-01 crop production & plantations 02. livestock 03. agricultural services 04-06. Logging, forestry & fishing 1. mining & quarrying 2+3+97 mfrg+repair services Of which:Food products 2,126 11 4843 13 5,409 14 919 17,906 5 95 2,676 43,218 7 116 2,263 48,296 6 122 3,684 NIL 952 20 NIL 5 16,939 1,850 2,696 45 5 7 16,141 3,769 2,125 41 9 5 138,637 735 217,220 581 215,751 543 143,282 Share (per 1000) 759 1993-94 No. of Workers (000) 238,682 Share per (1000) 638 1999-2000 No. of Workers (000) 237,786 Share (per 1000) 599

Beverages & tobacco Textiles & products Wood, products & furniture Leather, fur & products Non-metallic mineral products Metal products & parts Repair services 4. electricity, gas & water 5. Construction 6. trade, hotels & restaurants Retail trade Hotels & restaurants 7. transport storage communication 8. finance, insurance, real estate & business services 9. COMMUNITY, SOCIAL & PERSONAL SERVICES

1,124 6,553 2,175

6 35 12

4,410 10,335 4,295

12 28 11

4,925 10,480 5,367

12 26 14

704 1,504

4 8

730 3,134

2 8

1,081 3,485

3 9

366 366 257

2 2 1

3,362 3,362 1,394

9 9 4

4,203 4,203 1,048

11 11 44

2,768 8,171

15 43

12,127 28,459

32 76

17,618 37,128

44 94

6871 805 3,262

36 4 17

21,384 3,436 10,757

57 9 29

28,887 4,600 14,757

73 12 37

542

3,653

10

4,924

12

11,571

61

32,866

88

33,200

84

Of which: public admn+defence Education + research Medical & health Community services Personal services Total Work Force

3,394

18

10,349

28

10,589

27

1,811 645 593 4,490 188,676

10 3 3 24 1000

6,513 1,966 1,125 10,654 373,832

17 5 3 28 1000

8,554 2,522 1,055 9,429 397,018

22 6 3 24 1000

Reproduced from K. Sundaram, CDE Working Paper no. 95 July 2001, p. 27, Table 4. Textile and products sector. Further all the increase in employment in this sub-sector has taken place in the rural areas with the employment in urban areas in this sector actually declining by about 93,000. Also, taking both the rural and urban areas together, employment of women workers in the textile and products sector has declined by 143,000 between 1994 and 2000. Two other non-agricultural sectors where the absolute number of workers has actually declined over the 1990s are the mining & quarrying (over 400,000) and the electricity, gas and water (over 300,000) sectors. Construction is one of the sectors that have shown a sizeable addition to its work force-by close to 5.5 million. Of this increase, over 60 percent has been in the rural areas. However, less than 10 percent of the incremental work force in this sector was women workers. The expansion f the work force in the construction sector outstripped the growth in gross value added originating n the construction sector resulting in an absolute reduction in labour productivity or gross value-added per worker. The changes in the size of the work force in the construction sector relative to the changes in GDP originating in that sector highlight a more general point: elasticity of employment with productivity (in this case a reduction in the absolute size of value added per worker) are

obverse sides of the same phenomenon. Focusing exclusively on employment elasticity one can easily lose sight of the consequences for labour productivity. O comparable basis, the number of workers in the Hotels and Restaurants sector has grown from 3.4 million in 1993-94 to 4.6 million in 1999-2000. Compared to this, the work force in the manufacturing and repair services has grown by a little over 5 million broader industry division, trade, hotels and restaurants, the hotels and restaurants sub sector accounted for less than 15 percent of the incremental work force in this industry divines. Among women workers too, the hotels and restaurants subsector has added less than 3 lakh workers over the six year period. So than, while Cobs have indeed the incremental work force. And, assuredly, with a share of little over one percent in the total work force and about half that in the rural work force and the female work force for the hotels and restaurants sub-sector. India is in no imminent danger of becoming a restaurant and bas economy, remarks Sundaram! With 4 million works added to its work force. Transport, storage and communication are another sector which has absorbed over 15 percent of the increase in the total work force between 1993-94 and 1999.-2000. Of this addition of 4 million workers in the TCS sector a little over half has taken place in the rural areas. However, women workers have contributed only marginally (0.2 million) to the additions to the work force in this sector. Community, social and personal services is another sector which has suffered erosion in its share in the total work force and in the rural work forcebut not in the female work forcebetween 1994 and 2000. Within the broader group of community, social and personal services (industry division 9 as per NIC 1987) two developments are noteworthy. First, there has been a rise in both the absolute number of workers and of the share in work force in the two social sectors: education and employment in both the social sectors has taken place in rural India also.

Another significant change over the 1990s is the reduction in the absolute number of workers in personal services by over 1.2 million in the aggregate with a decline of over half a million for women workers given that this segment has been traditionally a low productivity-low income-per-worker sector, a reduction in the size and share of the personal services sector must be viewed as a positive development the employment situation in the nineteen nineties. Occupation Structure

Table 3.6 Occupation Distribution of Work Force by Rural-Urban Residence: All India, 1961-1999-2000 (In 000s) 1961 NCO 1958 Division Rural 0-1 Professional & Technical And Related Workers 2. Administrative, Executive & Managerial Workers 3. Clerical & Related Workers 1989 (10) 764 (5) 1046 (6) 4. Sales Workers 3244 (20) 5. Service Workers 2815 (17) 6. Farmers, Fisherman, Hunters, Loggers & Related Workers 134329 (830) Urban 1547 (59) 1048 (40) 2810 (107) 3632 (138) 2743 (104) 3261 (124) Total 3236 (17) 1812 (10) 3866 (21) 6876 (37) 5558 (30) 137590 (731) Rural 6516 (22) 2415 (8) 3497 (12) 11635 (40) 5331 (18) 227763 (781) Urban 7191 (87) 4717 (57) 7573 (92) 13681 (166) 7421 (90) 10152 (123) Total 13707 (37) 7132 (19) 11070 (30) 25316 (68) 12752 (34) 237915 (636) Rural 5984 (20) 4179 (14) 4053 (13) 11716 (39) 7117 (24) 226762 (753) Urban 8590 (89) 8039 (84) 8480 (88) 15856 (165) 9219 (96) 8885 (92) Total 14574 (37) 12218 (31) 12533 (32) 27752 (69) 16336 (41) 235647 (594) 1993-94 1999-2000

7,8,9: Production And Related Workers, Trspt. Eqpt. Operators And Labourers All occupation

18052 (111)

11234 (427)

29286 (156)

34370 (118)

31564 (384)

65934 176)

4118 (137)

36993 (385)

78141 (197)

161,939

26,285 188,224

29,159

82,299 373,826 300,959 96,061 397,021

Figure within brackets relate to share (per 1000) of the occupation group to the corresponding total workers in all occupations reproduced from K. Sundarams working paper no. 95, p. 29, Table 6. Table 3.7 Number of Workers in Identified 2-digit Occupation-groups by location: all-India: 1961-1999-2000 (In 000s) NCO 1968: OCCUPATION GROUPS 08: Nursing & Other Medical & Health Technicians 15: Teachers 30-35 Clerical Workers & Supervisor, Stenographers, 959 738 623 2459 1582 3197 3258 2831 3082 680 6340 9631 3717 3265 3729 7539 7456 10804 Rural 143 1961 Urban 180 Total 323 Rural 298 1993-94 Urban 469 Total 767 Rural 414 1999-2000 Urban 728 Total 1142

Bookkeepers Etc. 40: Merchants & Shopkeepers 51-54 House Keepers, Cooks, Maids Etc. 55-56 Launders, Hair Dressers, Beauticians Etc. 60-61: Cultivators 63: Agricultural Labourers 64: Plantation Workers 71: Miners, Quarrymen Etc. 72: Metal Processors 75: Spinners, Weavers, Knitters, Dyers Etc. 77: Food & Beverage Processors 79: Tailors, Dressmakers Etc. 82-89: Machines & Workers, Tool Makers & Operator 1346 634 1828 491 574 2043 1837 1208 3871 1458 2625 5333 1070 2824 6480 2528 5449 11813 1918 2720 3472 1269 3247 7707 3187 5967 13179 97,889 30,603 990 546 46 3002 1732 919 67 126 103 1959 99621 117,669 31522 1057 672 149 4961 86413 3106 960 189 3723 3895 3535 299 360 07 3409 121564 111,701 89948 3405 1320 596 7132 91,947 3115 802 198 3136 3343 115,044 3029 249 327 405 2710 94,776 3364 1129 603 5846 1352 476 1828 2124 1105 3229 2906 1278 4184 2449 1000 2241 1590 4690 2590 8493 1687 8424 3813 16919 5500 8244 1632 9313 2338 17449 5970

95: Brick Layers & Other Construction Workers 98: Trspt. Eqpt, Operators 99: Labourers Not Elsewhere Classified Reproduced from K. Sundarams Working Paper No. 95, P. 30 Table 5 375 6020 832 2621 1207 8641

3910

2707

6617

6276

4177

10,453

2641 5351

3608 4028

6249 9379

4160 7182

4973 4676

9133 11858

Estimates of the occupational distribution of the work force, separately for the rural, urban and the total work force, for three time points: 1961, 1993-94 and 1999-2000 are presented at the broader occupation division level in table 3.6 and for indentified 2-digit occupation groups in table 3.7. Reflecting the declines in the share of the agriculture and allied activities in the industrial distribution of the work force, the share of the occupation category: famers, fishermen, hunters, loggers and related workers also falls from 73 per cent in 1961 to a little under 60 percent of workers in this category has declinedby over 2 million workers, equally divided between the urban and the rural areas. Also during the 1990s, while the number of cultivators has declined sharply-by over 6.5 million-this has been partially offset by an over 3 million increase in the number of agricultural labourers. Over the entire period 1961-2000, the share of the two top-end occupation categories (professional & technical and related workers; and administrative, executive and material works) has increased by about 2 percentage points in each case. Over the 1990s however, while the share of the first category has stagnated that of division two has increase from 19 per 1000. In the professional and technical workers category, the two identified twodigit groups are: cursing and other medical and health technicians: and, teachers. In the former category, (i.e. nursing & medical), the growth in the number of workers ahs sharply accelerated over the 1990s: from about 2.7 per cent per annul between 1961-1994 to 6.9 per cent per annum between 1994 and 2000. In contrast, there has been a slow down in the growth of teachers from 4.3 percent per annum (19611994) to 2.7 percent per annum between 1994 & 2000. It is significant that the share of clerical and related workers in the urban work force has fallen over the entire period as also over the two sub-periods. The share of sales workers has decreased in both rural and urban work forcealbeit marginallyand the equally marginal rise in its share in the total work force merely reflects a rise in the share of urban work force in the total. Also noteworthy is the significant rise in the share of production and related workers in the rural work force between 1994 and 2000 with close to 7 million additional workers, the share of this mixed category has risen by 19 points (per 1000) over the six years of the 1990s compared to a 19 point rise over the 33 years between 1961 and 1994.

At the two-digit detail, three developments are noteworthy. First, is the decline over the 1990s, in the absolute number of workers in the category, Spinners, Weavers, Knitters, dyers etc. from 7.1 million in 1994 to 5.8 million in 2000. This decline is partially offset by a rise of about half a million workers in the category of tailors, dress-makers etc. The second, is the decline over the 1990s in the absolute number of workers in the occupation category 82-89 in the real work forcefrom 5.3 million in 1994 to 3.5 million in 2000. Thirdly, we have a sharp increase in rural India, in the number of construction related workers (from 3.9 million in 1994 to 6.3 million in 2000) and of transport equipment operators (from 2.6 to 4.2 million between 1993-94 and 1999-00). The broad conclusion of Sundarams study is that overall, despite a sizeable reduction in the share of such workers in the total work force. India still remains a land of farmers, fisherman, hunters and loggers. At the other end of the skill spectrum, professional and technical workers and administrative, executive and managerial workers together formed less than 7 percent of the total work force at the beginning of the year 2000. Production process workers too accounted for less than 20 percent of the workers in 1999-2000. Environment and Development In recent years, economists have become increasingly aware of the implications of environmental issues for the success of development efforts. Communities may inadvertently destroy or exhaust the resources on which they depend for survival. Rising pressures on environmental resources in developing countries can have severe consequences, for self-sufficiency, income distribution, and future growth potential in the developing world. It is the poorest 20 percent of the worlds population that will experience the consequences of environmental ills most acutely. Server environmental degradation. Due to population pressures on marginal land, has led to falling from productivity and per capita food production. Since the cultivation of marginal land is largely the domain of lower-income groups, the losses are suffered by those who can least afford them. Similarly, the inaccessibility of sanitation and clean water mainly affects the poor and is believed to be responsible for 80 percent of diseases worldwide. Because the solutions to these and many other environmental problems involve enhancing the productivity

of resources and improving living conditions among the poor, achieving environmental sustainable growth is synonymous with the widely accepted definition of economic development. Growth versus the Environment Evidence indicates that the worst perpetrators of environmental destruction are the billion richest and billion poorest people on earth. It has ever been suggested that the bottom billion are more destructive than all four billion people in between. It follow that increasing the economic status of the poorest group would provide an environmental windfall. However, as the income and consumption levels of everyone environmental destruction. Meeting increasing consumption demand while keeping environmental degradation at a minimum is no doubt a challenging task. The record of economic and social development in India since independence, though highly uneven and far from exemplary, includes substantial overall pro gress in many fields. The same periods, however, has also been one of formidable environmental plunderdeforestation, falling groundwater tables, polluted rivers and ponds as well as polluted air that we breathe. In view of these contrary trends, there has been a temptation in public discussions to think of development and environment in antagonistic terms. Many of these deteriorating environmental trends are clearly linked with heightened economic activity, e.g. industrial growth, increased energy consumption more intensive irrigation, commercial failing of trees, and other such activities that tend to be linked with economic expansion. Development is, thus, held responsible, for the damage. On the other side, environmental activists are often accused of being anti development since the advocates of accelerated growth often see environmentalists as being unwelcoming (If not obstructive) of economic progress for fear of its adverse environmental impact. Dreze and Sen do not agree with the confrontational view, which places development and environment on a coalitional path. According to them many human freedoms and components of the quality of life are dependent on the integrity of the environment (involving the air we breathe, the water we drink, the epidemiological surroundings in which we live, and so on), development cannot but be sensitive to the quality of the environment. The opportunity to live the kind of lives that people value-and have reason to value

depends inter alia on the nature and robustness of the environment. In this sense, development has to be environment inclusive. Environment is often understood to refer simply to the state of nature e.g. the extent of forest cover, the depth of the groundwater table, the number of living species, and so on. In so far as it is assumed that this pre-existing nature will stay intact unless we add impurities and pollutants to it, it might appear superficially plausible that the environment is best protected if we interfere with it as little as possible. Environmental sustainability has typically been defined in terms of the prospects of preserving and enhancing the quality of human lives. The Braundtland report, published in 1987, defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This rather general formulation has been sharpened by Robert Solow as the requirement that the next generation must be left with whatever it takes to achieve a standard of living at least as good as our own and to look after their next generation similarly. While human activities that accompany the process of development may have destructive consequences, it is also within human power to enhance and improve the environment in which we live. For example, greater female education and womens employment can help to reduce population growth and the pressure on environmental resources. Similarly, the spread of school education and improvements in its quality can make us more environments conscious. Better communication and a richer medical can also make us more aware of the need for environment oriented thinking. It is easy to find many other examples of such interconnections. In general, seeing development in terms of increasing the effective freedom of human beings brings the constructive agency of people in environment friendly activities directly within the domain of developmental achievements. Development is empowering and that power can be used to preserve and enrich the environment. The assessment of development should be inclusive of environmental concerns. We must also take note of the various ways in which the process of development may influence the nature of the environment and the values that are invoked in assessing it. This recognition does not, in any way, change the basic fact that the process of economic development can also have very destructive

environmental

consequences,

sometimes

even

swamping

the

constructive

perspective. But it is important to see the relationship between development and the environment in an adequately broad way, taking note of the constructive prospects as well as destructive possibilities. Consequences of Environmental Plunder What then are the main reasons for being concerned about environmental degradation in India and its relation with current patterns of development? Are there real reasons for disquiet? There, certainly, are overwhelming reasons for this concern. First, environmental degradation has compromised or undone many of the improvements that were otherwise made possible by greater economic prosperity. For instance, it is arguable that, due to rising congestion and pollution, the quality of life in some of Indias larger cities is lower today than it was twenty years ago, in spite of a larger increase in per-capita incomes. In rural areas, too, environmental degradation had often considerably diluted if not defeated the gains of economic development. In districts such as Kalahandi in Orissa for instance, the collapse of the environmental base-especially forests-has undermined peoples traditional livelihoods and forced a large proportion of the workforce into seasonal or permanent migration extreme cases of starvation (if not famine), there is a much larger story being the headlines, in which environmental degradation plays a major role as a causal antecedent of chronic hunger and deprivation (Dreze and Sen, 2005). Second, the present trends of environmental decline are not only intolerable already; they are also incompatible with the basic requirements of sustainable development. To illustrate, air pollution of motorized vehicles-which account for the bulk of the problem continues to grow at more than 10 percent per year (table 3.8), clearly, something needs to be done, and has to be done soon, given the cumulative effects of this growth. Similarly, present trends of rapid decline of groundwater tables in large parts of the country are utterly unsustainable, and call for urgent attention. Table 3.8 Selected Indicators of Indias Urban Environment

Delhi

India (major cities)b

Proportion of households living in slums, 1991 (%) Proportion of households with access to safe drinking water, 19991 Proportion of households using open spaces as toilets, 1990a (%) Proportion of households disposing of garbage on the street or outside the house; 1990a (%) Proportion of population served by a sewage system, 1986-87 (%) Annual growth of vehicle population, 1983-95 (%)

27 86

27 81

41

61

67

68

n/a

46

11

10b

Notes: a based on an all India sample survey of 23,263 households in urban areas (including 4,073 households in Delhi). b. Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Mumbai combined. Source: centre for science and environment (1999), vol. II, pp. 113, 115, 121, 124, 125, 127. Third, in many cases environmental plunder is an infringement of distributive justice and the based rights of the underprivileged. In urban area, for instance, a minority of car owners cause massive pollution, congestion, noise, tension and accidentsall at the expense of the public at large. The people whose lives are impoverished and shattered in this way are often among the poorest in the society, from street vendors to pavement dwellers. The distribution aspects of environmental plunder have a gender dimension, too. The well being and freedom of many rural Indian women depend vitally on environmental resources, including convenient access to water, fodder, and fuel and this connection is often far closer than those that linked men to these environmental resources. As a result, women frequently suffer disproportionately from environmental degradation.

State intervention to halt environmental degradation in India has been so far rather weak in comparison with the magnitude of the problem. In fact, not only has public policy tolerated environmental plunder for a long time, it has even, in many cases, actively encouraged it. For one thing, government projects (from dams and mines to firing ranges and nuclear tests) are themselves a major cause of environmental damage. For another, public policy has often subsidized or otherwise encouraged the destruction of the environment by private parties. For instance the depletion of groundwater resources (especially by large farmers) has been accelerated by electricity subsidies, sugarcane subsidies, and plentiful credit for energized water attraction devices. Environmental irresponsibility in public policy has both political and ideological roots. To start with, environmental irresponsibility frequently draws on the oftenrespected prejudice that a little bit of environmental vandalism is the price one has to pay for economic development, at least in its early stages. Some have van argued that environmental protection is a bourgeois or western concern, best addressed after economic prosperity has been achieved. This carries with it the suggestion that meanwhile environmental degradation should be tolerated. Public policy in India has tended to be heavily influenced by powerful lobbies that thrive on the private appropriation of environmental resources: mining companies, timber contractors, sugarcane mills, car manufacturers, and the plastic industry, to name a few. Sugarcane subsidies, for instance, have far more to do with the political influence of large farmers and mill owners than with the merits of the case. Similarly, public regulation of the polybag has been fiercely opposed by the plastic industry. Against this background of irresponsibility and apathy, environmental activists have tended to see help from the judiciary. The nineties have seen an unprecedented wave of public interest litigations on environmental matters. In some cases (e.g. relating to pollution in Delhi) judgments favourable to the environmental cause have been obtained. Judicial activism however, has important limitations as a means of environmental protection. Judicial activism has played a fruitful role in generating public awareness of, and media interest in, environmental problems, and in giving some strength (indeed a much needed strength) to environmental pressure groups. However, judicial activism on its own is not an adequate and sustainable basis for environmental

protection a more comprehensive approach is needed, which must also incorporate other ways of giving environmental problems the attention they deserve. We still have a long way to go, but environmental activating has gained some considerable gourd in India today, and shows promise of advancing more.

II Disparities in Growth and Development A study by Montek Ahluwalia on Economic performance of the states in the post reform period brigs out that there is considerable variation in the performance of individual states, with some states growing faster than the average and others slower. What is important is that the degree of dispersion in growth rates of SDP (state domestic product) across states increases significantly in the 1990s. The range of variation in the growth rate of SDP in the 1980s was from a low of 3.6 per cent per year in Kerala to a high of 6.6 percent in Rajasthan. In the 1990s the variation was much larger, from a low of 2.7 per cent per year for Bihar to a high of 9, 6 percent for Gujarat. The difference in performance across states become even more marked when we allow for the differences in the rates of growth of population and evaluate the performance in terms of growth rates of per capita SD (Table 3.9). the variation in growth rates in the 1980sranged from a low of 2.1 percent for Madhya Pradesh to a high of 4.0 for Rajasthan, a factor of 1:2 in the 1990s it ranged from a low of 1.1 percent year in Bihar and 1.2 percent in U.P., to a high of 7.6 percent per year in Gujarat, with Maharashtra coming next at 6.1 per cent. The ratio between the lowest (Bihar) and the highest (Gujarat) is as much as 1:7. Table 3.9

Annual Rates of Growth of Gross State Domestic Product (SDP) 1980-81 States 1990-91 % p.a. Bihar Rajasthan Uttar Pradesh Orissa Madhya Pradesh Andhra Pradesh Tamil Nadu Kerala Karnataka West Bengal Gujarat Haryana Maharashtra Punjab Combined SDP of 14 States Source: SDP and population data obtained from the CSO. The increased variation in growth performance across states in the 1990s reelects the fact that whereas growth accelerated for the economy as a whole, it actually decelerated sharply in Bihar, Uttar Pradesh and Orissa, all of which had relatively low rates of growth to begin with and were also the poorest states. There was also a deceleration in Haryana and Punjab, but the deceleration was from relatively higher levels of growth in the 1980s, and these states were also the richest. 2.45 3.96 2.60 2.38 2.08 3.34 3.87 2.19 3.28 2.39 3.08 3.86 3.58 3.33 3.03 1991-92 1997-98 % p.a. 1.12 3.96 1.24 1.64 3.87 3.45 4.95 4.52 3.45 5.04 7.57 2.66 6.13 2.80 4.02

Six states wowed accelerating in growth of SDP in the 1990s. The acceleration was particularly marked in Maharashtra and Gujarat, both of which were among the richer states, but there was also acceleration in west Bengal, Kerala, Tamil Nadu and Madhya Pradesh all belonging to the middle group of states in terms of per capita SDP. It is important to note that the high growth performers in the 1990s were not concentrated in one part of the country. The six states with growth rates of SDP in the 1990s above 6.0 percent per year are fairly well distributed regionally i.e. Gujarat (9.6 percent) and Maharashtra (8.0 percent) in the West, west Bengal (6.9 percent) in the east, Tamil Nadu (6.2 percent) in the South and Madhya Pradesh (6.2 percent) and Rajasthan (6.5 percent) in the north. The performance of Kerala deserves special attention. Kerala as justly celebrated for its achievements in human development but it has also been criticized for under performance in economic growth. It is important to note that its performance in the 1990s showed a marked improvement compared with the 1980s. From an SDP growth rate much below the 14 states average in the 1980 it accelerated to a growth rate only marginally below the average in the 1990s. However, because of the low population growth, its performance in per capita SDP growth in the 1990s was actually much better than the average. The fact that Gujarat and Maharashtra grew at rates normally associated with miracle growth economies also deserves special most in the post reforms period, their superior performance was not the result of any conscious policy of limiting the benefits of liberalisation to these states, as was the case for example in China, where liberalisation was deliberately limited to designated coastal zones. The superior the fact that the states were able to proved an environment most conducive to benefiting from the new policies. Implications of Inter-State Inequality The difference in per capita income and other indicators of social development across states have long attracted attention and for good reasons. Punjab, the richest state has per capita SDP which is five times that of Bihar at the other end of the spectrum and although our plans have never explicitly fixed targets for reducing these differences, there has always been an unstated assumption that inter-state differences would narrow with development. This can only happen if the poorer growth witnessed in the 1990s has been quite different, generating concern

that we may be witnessing an increase in regional inequality, with the poorer states being left further behind. According to Montek Ahluwalia, while inter-state inequality as measured by the gini-coefficient has clearly increased, the common perception that the rich states got richer and the poor states got poorer is not entirely accurate. I. It is not true that all the richest states got richer relative to poorer states. Punjab and Haryana were the two richest of the 14 states in 1990-91. The growth rates of per capita SDP of these two states in the 1990s were not only lower than in the 1980s, but in both cases actually fell below the national average. Except for Bihar, UP and Orissa, all the other states therefore narrowed the per capita income gap with the two richest states. II. Maharashtra and Gujarat, which were just below Punjab and Haryana in terms f per capita income levels and therefore in the richer group, accelerated very significantly in the 1990s and grew at rates much higher than the national average. III. It is important to note that not all the poorer states lagged behind. Rajasthan, which was also one of the poorer states, experienced much stronger growth in per capita SDP, more than double the of the other poor states. Rajasthans performance in terms of SDP growth is actually better than the average of the 14 states but it slips below the average in per capita SDP growth because of higher rates of population growth. IV. Performance of sex middle income states (Tamil Nadu, Kerala, West Bengal, Madhya Pradesh, Andhra Pradesh and Karnataka) was clustered around the average rate. All six of these states grew faster in terms of per capita GDP than they did in the 1980s though in some cases the difference was very marginal. It is now well established that the interstate disparities in the growth of gross state domestic product (GSDP) have increased in the post economic reform period beginning from the early nineties when compared to the eighties. In general, the richer states have grown faster than the poorer states (Ahluwalia, 2000; Dev and Ravi, 2003; Bhattacharya and Sakthivel, 2004). The regional disparities in per capita GSDP growth are even greater because the poorer states in general have experienced a faster growth in population. (Rao 2006).

According to Rao, although these disparities have accentuated in the post reform period, they have been building up in the pre reform period itself. For example, in the early 1960s the per capital GSDP of the richer states like Punjab, Maharashtra and Gujarat was on an average, about 80 percent higher than the average per capita SDP of the bottom four states viz., Bihar, Uttar Pradesh, Orissa and Madhya Pradesh, this contained at a little over 100 per cent during the eighties; and escalated steeply to 200 per cent towards the end of the nineties. States whos per capita GSDP is below the national average together account for over 60 percent of the countrys population and as high as 75 percent to the countrys population below the poverty line. Further, these states account for nearly 60 percent of the population belonging to the socio economically disadvantaged sections like scheduled castes and scheduled tribes. There is thus a large potential for growth which long period. This is necessary for improving regional and social equity and for strengthening national integration. Sectoral Composition of Growth How does one explain the accentuation in inter-state disparities in development in the post reform period in the country and, indeed the tendency of a gradual build up in these disparities over the plan period? One way to s tudy is decomposing by looking at the emerging regional disparities with respect to the individual sectors, i.e. the primary the secondary and the tertiary (Rao, 2006). The interstate variation in per capita GSDP originating from the primary sector, measured by the coefficient of variation, has always been lower than that from the secondary sector GSDP. There is also no evidence of an increase in its variability across regions in the post reform period when compared to the eighties. This is understandable because agriculture is based essentially on land and labour which are widely distributed across the county. There are, no doubt, significant disparities in the availability of physical and institutional infrastructure for agriculture like irrigation, rural electricity and institutional credit. However, despite these constraints, technological changes in Indian agriculture represented by green revolution were adopted widely in the country, including especially the eastern region, by the end of the eighties. The GSDP per capita from the secondary sector on the other hand, shows much higher variability across regions and this variability rose significantly in the post reform period. The tertiary sector which has been the prime mover of GDP

growth in the post reform period has generally grown faster in the industrially advanced states and shows a significant rise in its variability across states during this period. We know that there has been a steep reduction in the share of the primary sector in the overall GDP, a modest rise in that of the secondary sector and a big rise in the share of the tertiary sector. Thus, the decline in the relative importance of the primary sectorwhich shows lower disparitiesand the rise in the importance of the other two sectors showing higher variability explain, at the compositional level, the rise in inter-state disparities in per capita GSDP in the post reform period. Causal Factors Investment in physical and human capital technical change and institutions, including those of governance, are the three key variables usually invoked for understanding the growth performance. A. Investment (i) Planning and Public Investment A glaring feature of the investment scene in the post reform period is the steady decline in the rate of public investment and a steep rise in the share of private investment with stagnation in the rate of total investment. The decline in public investment is even more glaring at the state level share bulk of the public expenditure on irrigation, power and social sector is incurred. This is indicated by the fact that the share of the states declined from around 50 percent of total plan expenditure in the country in the eighties to 40 percent towards the close of the nineties (Rao, 2006). Within the states, the per capita plan outlays of the poorer states have always been much lower than those of the better-off states. These disparities have widened in the post reform period. For instance, during the sixth plan period (1980 -85) the actual per capita plan expenditure for the poorest four states, on an average was a little over half of the average per capita plans expenditure of the better-off states like Gujarat, Maharashtra and Punjab. But during the ninth plan period (19972002) this proportion came down to around 40 percent (Rao, 2006). The poorer states have been handicapped basically by their own weaker resource position. The per capita own plan resources of the poorer states, including

market borrowing, constituted around 40 percent of own per capita land resources of some of the better off states, viz., Punjab, Maharashtra, Haryana, Kerala during the sixth plan period. This ratio deteriorated to 28 percent in 2003-04 and further to less than 20 percent in 2004-05. An important factor responsible for this deterioration in the financial position of the poorer states is the decline in the tax GDP ratio of the centre in the post reform period and the consequent decline in the transfers to the states through devolution as recommended by the finance commissions. The loss to the states, that is, the difference between be devolution estimated by the finance commissions and the actual devolution, amounts to Rs. 100,000 cores for the decade 1985 to 2005 (Reddy, 2005). The decline in per capita transfers to the poorer states was even greater because the formula for devolution by the finance commissions is quite progressive. Therefore the 12 th fianc commission has done well by raising the tax devolution by 1 percentage point (government of India, report of the twelfth finance commission, 2004). As expected, among states, there is a strong positive correlation between the per capita income and tax GDP ratio. For richer states, because of their higher tax GDP ratio their own tax revenues per capita are much higher than those for the poorer states. The debt-GDP ratios of the poorer states are higher. Because of their lower creditworthiness they have not been able to access borrowings from the market borrowings of the four poorest states which were almost equal to the market borrowings of certain better-off states, viz., Punjab, Maharashtra, Haryana and Kerala during the sixth five year plan declined to 72 per cent of such borrowings by these states in 2004-05. The inability of the less developed states to access sufficient resources for the development of infrastructure through higher plan outlays has thus emerged as a critical constraint in redressing regional imbalances in development. Among states, the correlation between per capita GSDP growth rate in the post reform period of nineties and the index of social and economic infrastructure in 1995 as well as 2000 is positive and significant. Clearly, the state whose initial or pre-reform conditions were favourable in respect of infrastructure could benefit more from the opportunities opened up, especially in the service sector, by economic reforms and register higher growth rates in GSDO (Rao and Dev, 2003). (ii) Private Investment

Private investment has been flowing basically to the high income states where per capita plan outlays have been higher a where, therefore, infrastructure is well developed. For example, according to the IDBI data, the per capita cumulative disbursements by the all India financial institutions up to March, 2004, war Rs. 15 lakh for Maharashtra, 14 lakh for Gujarat and 7 lakhs for Tamil Nadu, as against less than 3 lakhs for Madhya Pradesh, less than 2 lakhs for Uttar Pradesh, and less than half a lakh for Bihar. Similarly, in 2003, investment plus credit deposit ratios of scheduled commercial banks were high for the Western (75%) and southern regions (79%) and quite low for the eastern (54%) and central regions (50 %). As to the amount of foreign direct investment & FTC (foreign technical collaboration) approved from august 1991 to December 2000 a few advanced states, viz., Maharashtra, Gujarat, Tamil Nadu, Karnataka and Delhi together accounted for half the share as against the combined share of less than 10 percent by the four poorest states (Government of India, 2001). B. Technical Change The issue of technical change does not seem to figure prominently in the debate on regional disparities in development in India. This could be partly because much of the technology is embodied in capital equipment and hence is highly correlated with such investment. Also this may be attributed to the speedy diffusion of frontier technologies like bio-technology and information technology across regions and even among income groups with large differences in asset endowments, when adequate support services are provided. The success of green revolution in India provides a classic illustration of this process. The experience so far with information technology is equally encouraging and holds the prospect for raising productivity enormously in millions of farms and factories of varying sizes and the government offices throughout the country. This experience underlines the need to exploit the potential offered by these emerging technologies as well as human development for giving a fillip to the catching-up process in the less developed areas of the country (Rao, 2006). C. institutions and Governance Historically, the developed states are, in general, characterized by

progressive land tenures like the Ryotwari or the Mahalwari systems, where most of the less developed states were under the exploitative tenures like the Zamindars and the Jagirdari systems. The social structure evolved under progressive lad

tenures has been conducive to social structure perpetuated by the exploitive land tenures has been inimical to enterprise. Also, historically, the developed states have had relatively more efficient systems of governance in terms of skills,

responsiveness and the quality of delivery systems. Unlike capitalwhich is highly mobile across regions and continentsgood governance cannot be transplanted in an area, as it evolves basically within the prevailing socio political structure over a long period. The Way Ahead It is clear from the foreign discussion that for reducing regional disparities in development improving social and economic infrastructure in the backward regions through greater public investment needs to be given the highest priority in the development strategy. The other two areas of priority action for these regions are: speeding up social transformation through the empowerment of the common people and measures for good governance. The mid-term appraisal of the tenth five year plan. By the planning commission, recognizes the growing regional disparities, and states that the objective of bringing about greater regional balance must be the flow as central assistance to state plans (government of India, 2005, p. 512). The commission notes the inadequacy of the existing pattern of centre assonance for state plans, through the Gadgil Formula, for making progress towards mitigating these imbalances and suggests that the actual flow of funds to backward areas resulting from the operation of the formula till date needs to be analysed and the formula may need to be revisited in the present day context (p. 508). But with the acceptance of the formula of the recommendation of the 12 th finance commission to dispense with the loan component of plan assistance, there is not much left for revisiting, except the grant component! At the same time, the commission expresses helplessness in modifying the formula and given up any hope when it says that the recent proposals for modification have not been able to generate the required consensus among states. It appears that the normal central assistance is likely to continue in its present form in the near term (p. 512). The approach paper to the 11 th five year plan prepared by the planning commission (June 14, 2006) has addressed the challenge of disparities and divides and that the 11the plan must seek the bridge these divides as an overarching priority.

Regional backwardness is another issue of concern. While the differences across states have long been a cause of concern but increasingly there is recognition of the problem of severe imbalances within states. Backward districts of otherwise will perfume states, present a dismal picture of intra-state imbalance and neglect. The centre and the states together must deal with this problem on a priority basis; we cannot let large parts of the country by trapped in a prison of discontent, injustice and frustration that will only breed extremism. The spread of Naxalism in more than 100 districts in the country is a warning sign. Pockets of despair where communalism has left scars are also festering with anger. In all areas despair is the result of visible failures of the state apparatus to ensure good governance and create an environment where the bulk of the people experience the benefit of development. Special efforts must but made to remove the discontent, dispense justice, instill sense of fairness among the people and give them dignity and hope. Otherwise not only will the growth momentum in the rest of the country be disrupted, but we will not attain the dignity and pride of good society.

III Indian Development Experience in International Perspective The developing world has witnessed remarkeable improvmet of living conditions during the last four decades. Between 1960-1999 life expectancy at birth has increased from 46 years to 65 years infant mortality has declined by 60 percent (HDR 2001). However, absolute level of deprivation remains intolerably high in large parts of the world. The recent decades have also witnessed striking diversities within the developing world. Infect some of the leading countries in the developing world are now, in many ways, much closer to the industrialised market economies than to the poor developing countries. For example, capita income is now as high in Singapore or Hong Kong is in Sweden or the United Kingdom, similarly adult literacy rates are two very different in Uruguay and Italyabout 98 percept each as

compared to 14 percent in Niger and 19 percent in Mali. The expectation of life at birth is about the same in Costa Rica as in Denamrk76 years or in Cuba as in the United States77 years each while a person born in Malawi has a life expectancy of less than 40 years (Dreze and Sen, 2005). Dreze and Sen point out that elementary deprivation in the word in now heavily concentrated in two specific regions: south Asia and Sub-Saharan Africa. If we consider countries where infant mortality rate is above 60 percent 1,000 live births, according to world development indicators 2001, there are 51 such countries with a combined population of two billion, only seven of these countries (Afghanistan, Cambodia, Haiti, Iraq, Lao, Myanmar and Yemen) are outside South Asia and sub-Saharan and their combined population is less than 7 percent of the total population of this set of 51 countries. The raining 44 countries belong to whole of south Asia except Sri Lanka and whole of sub0Saharan Africa except Botswana, Ghana and Mauritius. India sloe accounts for more than half the combined population of these 51 developing countries. Of course, India is not the worst case by any means. Although Indias infant mortality rate is around 70 per thousand live births. But one must keep in mind that within India, there are large variations in living conditions. While India is doing significantly better than say Ethiopia or Congo in terms of most development indicators, there are large areas within India where living conditions are not very different from those prevailing in these countries. Even entire states like Uttar Pradesh are not doing much better than the least developed among sub-Saharan African countries in terms of basic development indicators. Altogether, in terms of infant mortality rates India and sub-Saharan Africa as a whole appear to be of a similar order (71 and 92 per 1,000 live births respectively but they are not in the same boat as air as development is concerned. In many respects, living standards are now distinctively better in India than in sub-Saharan Africa. Life expectancy is around 63 years in India as against 47 years in sub-Saharan Africa. Also, since independence, India has been relatively free of problems of famine and large-scale civil war that periodically wreck various countries of sub-Saharan Africa. First the two regions share a common problem of endemic illiteracy and low educational achievement. If anything, India comes out worse in comparison mainly because of low female literacy rates (Table 3.10). Second, the incidence of under nutrition is considerably higher in India (and south

Asia) than in sub Saharan Africa. As table 3.10 indicates, more than half of all Indian children are under nourished and the incidence of anemia among pregnant women is estimated to be as high as 88 per cent. These are catastrophic failures, with wide ranging generations to be born in the near future. (Dreze and Sen, 2002) third, economic and social inequalities are sharper in India than in sub Saharan Africa. This applies in particular to gender inequality which is reflected in low female male ratio in the population (933 women per 1,000 men). In this respect, India is at the rock bottom of the internatinoal scale together with Pakistan. Table 3.10 India and sub-Saharan Africa: Development Indicators, 1999 India Sub-Saharan Africa Estimated per-capita income (purchasing power parity $) Health related indicators Infant mortality rate (Per 1,000 live births) Life expectancy at birth (years) Nutrition related indicators Proportion (%) of undernourished children, 1995-2000 (weight-for-age criterion, age below 5) Proportion (%) of low-birth weight babies, 1995-96 Proportion (%) of pregnant women with anemic 1985-99 Literacy related indicators Adult literacy rate (age 15+) (%) Female Male Youth literacy rate (age 15-24) (%) Female Male 64 79 73 82 44 68 53 69 34 88 15 45 53 30 63 47 71 92 2,230 1,500

Gender-related indicators Female-Male ratio in the population (women per 1,000 men) Ratio of female to male child mortality rates 1998-99 Female participation in gainful employment (womens share in the labour force) Notes: a Latest year for which data are available within the specified period. b Population weighted average based on the 35 sub-Saharan countries for which estimates are available; this figure should be takes as indicative. Source: Dreze, Jean and Amartya Sen, (2002). India development and participation, ch. 3, Table 3.1. In fact, no country in the world has a wider female-male literacy gap than Rajasthan. 1.55 0.32 0.9 0.42 933 1,015

We have further evidence of extreme gender inequality and female deprivation in India relating for instance to womens participation in gainful employment, schooling opportunities, pattern of property rights and decision making within the family. Illiteracy, under nutrition and social inequality (including gender inequality) also have far reaching effects on wide range of human freedoms the fact that India is especially deprived in these respects imposes a heavy burden on many aspects of Indian development. (Dreze and Sen, 2002). Learning from the Experiences of Other Countries The cases of successful economic development in other developing countries are often cited in Indian policy debates. Many countries have done much better than India, and it is natural to learn from the accomplishments of these countries. However, in learning from the experiences of other countries, Dreze and Sen what it is that the other have done, or identifying the relevant others from an over narrow perspective. First, it would be great mistake to assumeas is often done,-that all that the successful experiences, of, say the four so-called tigers (South

Korea, Hong Kong, Singapore, Taiwan) teach us is the importance of freeing the markets. Much else happened in these countries other than freeing the markets, such as educational expansion, public health programmes, extensive land reforms, determined governmanenatl leadership in promoting economic growth, and so on. These countriesand also post reform Chinahave all been well ahead of India in many social respects that have helped them to make use of the economic opportunities offered by the expansion of markets, and they were in fact, in that better prepared position even at the inception of their market-based leap forward. Second, the others to learn from are not just the countries that have experienced high economic growth (such as the four tigers or Thailand, of post reform China), but also those that have managed to raise the quality of life through other means (even in the absence of fast economic growth), such as public support for health care and basic education. It is worth remembering that life expectance is higher in, say, Sri Lanka than in Thailand, or in Jamaica than south Korea, Despite large income difference in the opposite direction, while lower middle income Costa Rica is in the same league as Singapore (one of the richest countries in the world) in this respect. Chinas remarkable success in transforming many aspects of the quality of life during the pre-reform period, at a time of relatively slow economic growth, is also relevant here. These and other experiences of rapid improvement in living conditions despite slow economic growth are full of important lessons about the feasibility of achieving radical social progress at an early stage of economic programmes in the fields of health and education, about the relatively inexpensive nature of labour intensive public provisions such as primary education in a low wage economy. It is just as important to identify these lessons an s to learn from countries that have achieved rapid economic growth, and succeeded in using rapid growth an s a basis for improving the quality of life. Third, it must be remembered that not all countries with high growth rates have succeeded in corresponding transformation of living conditions for broad sections of the population. If fact, the development experience of some fast growing countries during the last few decades has resembled one of what is termed as unaided opulence, combining high rate of economic growth with the persistence of widespread poverty, illiteracy, ill health, child labour. Criminal violence and related social failures. Brazil is one such example. In many cases (including Brazil itself), the roots of this failure to use economic growth as a basis for transforming the quality of life lies in high levels of economic and social

inequality as well as entitlements.

a lack of public involvement in the provision of basic

Fourth, given Indias heterogeneity, lessons from other countries have to be integrated with the possibility of learning from India itself. We cannot, for example, altogether ignore the fact that Kerala, despite its low income level and poor record of economic growth, has done very well in terms of some social indicators of development. Kerala has achieved as high a life expectancy at birth (about 74 years) as South Korea (73 years). Similarly, Himachal radishs experience of rapid improvement in the quality of life during the last fifty years is of no less interest to other Indian stets than that of East Asia. We have to learn from the experiences within India itself. This applies to failure as well as successes. The relevant failures include not only the continued social awkwardness of many states (such as Uttar Pradesh), but also Keralas failure to achieve rapid economic growth, despite a remarkably high performance in terms of many aspects of the quality of life. The lessons of successful growth-mediated progress in east Asia include the importance of various areas of state action, iclding basic education, health care, and land refor. Along with the part played by governments in directly prootiong and guiding industrial expansion and export growth. It would be quite bizarre to read the east Asian success stories as simple results of liberalisation and of the freeingn of markets (Dreze and Sen, 2002). Indias Internal Diversities: A Rich Source of Insights India is characterized by enormous variations in reginal experiences and acheements. These regional variations are a rich source of insights on the interconnections between economic development,, public action and social progress. The internal diversities within, say, Uttar Pradesh (which has a population of 175 million) are of much interest in themselves, and cannot be fully captured in the broad inter-state comparisions. At finer levels of disaggregation, the contrasts are even sharper, for instance, district-levels female literacy rates in 1991 varying from 8 percent to 94 per cent. Further inter-regional contrasits ae re only one aspect of the internal diversities that characterize Indias literacy achievements. A detailed analysis of the literacy situation would also have to take note of other types of disparities, e.g. related to gender and case. In 1991, for instance, 94 per cent of

males in Kerlaa were literate, while literacy rates were still well below 10 percentn (even as low as 2 or 3 percent in some districts) among scheduled caste women in Bihar or Rajasthan. There are striking contrasts between different states in terms of viarioius indicators of well being. Life expectane at birth varies from 55 to 73 years between different staes; female school attendance ranges from just about 50 percent in Bihar to nearly universal in Kerala and Himachal Pradesh, the child death rate is nearly ten times as high in Madhya Pradesh as in Kerala; the proportion of the rural population below the poverty line is close to 50 percent in Bihar, but only 6 percentin Punjab; the number of women per 1,000 men varies from 861 in Haryana (a level typical of advanced industrial economies); to 1058 in Kerala. There is almost as much diversity within India, in terms of these indicators. As in the rest of the developing world. In interpreting the picture of internal diversities within India, it is also important to remember that human deprivation thas different aspects, involving failures of different kinds of capabilities. The relative intensity of deprivation in different parts of the country dpends on which aspects of deprivation we are

particualry concerned with. Theincidence of rural poverty as measured by the conventional head-count ratio, for instance, is highest in the eastern states of Bihar and Orissa. But child death rates follow quite a different regional pattern. With the cetral and northern states of Uttar Pradesh, Madhya Pradesh, and Rajasthan doing worse than all other states (including Bihar andn Orissa) in this respects. And the female-male ratio figures suggest that gender discrimination is particularly pronounced in the north western region, including the relatively prosperous states of Punjab and haryaa. There is, thus, no single problem region within India, and public policy has to be alive to the different kinds of challenges that arise in different parts of the country. In so far as any broad pattern can be identified, it is mainy one of deprivation being endemic in most of north India (except in Punjab and Haryana, where there is a specific problem of geneder inequality despite other indicators being relatively facourable), with the south Indian states doing significantly better in most respects, especially in matters of mortality, fertility, literacy, and geneder equity. It may be states that differences in well being between different states are not matter of income poverty alone. A broad association can be observed between the two variables. Child mortality tends to be higher in states with levels of poverty.

However, the association is far from tight, to say the least. The contrast between Tamil Nadu and Uttar Pradesh is no less striking child mortality is more than twice as high in Uttar Pradesh as in Tamil Nadu despite poverty (in terms of the head count index) being lower in Uttar Pradesh. There is plenty of evidence that health achievements in different countries improve with higher incomes, andn this pattern applies within india as well. The point is that many other factors are involved, some of which may be no less important than income in improving longevity and health. One such factore is basic education. In fact, female literacy is a much better predictor of child mortality in different states than per-capita expenditure. The provision of health services is another influential facto. In the present case, differences in child mortality between (say) Tamil Nadu on the one hand, and Uttar Pradesh and Madhya Pradesh on the other, reflect not only higher levels of education in Tamil Nadu (especially in the younger age groups), but also better access to maternal and child health services. Tamil Nadu, for instance, has Indias highest levels of child immunization: in 1998-99 about 90 percent of children aged 12-23 months in Taml Nadu were fully immunised, compared with barely 20 percent in Madhya Pradesh and Uttar Pradesh. In the same year, 99 percent of recent births in Tamil Nadu had been preceded by an anttenated check-up, compared with only 61 percent in Uttar Pradesh and an abysmal 35 percent in Madhya Pradesh (Dreze and Sen 2002). Thus, while Indias overall development record leaves much to be desired, there are positive lessons of one sort or another to learn from the difernet states. We have examples of states of Tamil Nadu and Andhra Pradesh for rapid demographic transitions: West Bengal, Himachal Pradesh and Kashmir for land reforms; Maharashtra for the empowerment of disadvantaged castes; Karanataka, West Bengal and Madhya Pradesh for democratic decentralization; Gujarat for rapid innovative education programmes. Then there are smaller states like Goa with excellent social indicators and also northenastern states which are doing quite well in eterms of many aspects of social development. Kerala in International Perspective The significance of Keralas experience is often underestimated in

international discussions. One reason for this is that Kerala, not being an independent country, is often missed in policy analyses based on international comparisions. Yet Kerala, with its 32 million people, has a larger population than

most countries in the world (even Canada), including many from which comparative lessons are often drawn for India, such as Sri Lanka (19 million) or Malaysia (23 million), not to speak of tiney costa rica or Singapore (less than 4 million each). Even south Korea, which receives a great deal of attention in the development literature, had about the same population size in the early sixties (when its rapid transformation began) as Kerala has today. To achieve as much as Kerala has done for a population of its size is no mean record in world history. Keralas approach is sometimes also called a model, viz., the so-called Kerala model. It is, however, quite misleading to view Kerala as a model, implying (1) that Keralas experience is an all-round success, and (2) that this experience can somehow be copied elsewhere irrespective of historical and social conditions. An integrated perspective is important in interpreting limitation of Keralas development experience, namely, it relatively low rates of domestic economic growth. This failure, which is real enough, has also been widely cited (like Keralas high suicide rate) as proof of the failure of the so-called Kerala model. It is important, however, not to view the low growth of the domestic economy in isolation from related economic ternds. In particular, it has to be seen together with the fact that Kerala has achieved the fastest rate of pverty reduction among all major states during the last fifty years. Keralss overall success in reducing poverty is a far more significant feature of its recent development experience than the slow growth of its domestic economy, even though the latterdoes have imp ortant social penalities, especially in the form of high unemployment. Kerala has also been fortunate in having strong social movements that concerntrated on educational advancementalong with general emancipationof the power castes, and this has been a special feature of left-wing and radical political movements in Kerlaa. Kerala has had a tradition of openness to the world, which thas included welcoming early Christians (at least from the fourth century) Jews (from shrtly after the fall of Jerusalem),a nd Muslims (from the days of early Arab trading with sttelers coming as economic particiapants rather than as military conquerors). The extensive educational efforts of Christian missionaries

particularly in the nineteenth century. Fitted comfortablyinto this raer open and receptive environment.

It is also worth noting that while Kerala was already quite advanced copared with British India at the time of independence, much of the great achievement of Keral that are so admired now are the results of post-independence public policies. In fact, in the fities Kerlaas adult literacy rate was around 50 per cent compared with over 90 percent now, its life expectancy at birth was 44 years vis--vis 74 now, and its birth rate was 32 as compared to 18 now, kerala no doubt had a good start, but the policies that have made its achievements so extraordinary today are, to great extent, the products of post independence political decisions and public action. (Dreze and Sen, 2002). IV Conclusion As regard the growth performace of Indian economy, the following conclusions emerge from the available evidence and the precending discussion. First it we consider the 20th century in its entirety, the turning point in economic performance, or the structural break in economic growth, is 1951-52. Second if we consider India since independence, during the second half of the 20the century, the turning point in economic performance or structural break in economi growth, is 1980-81. Also the tuning point in the early 1950s was much more significant than the structural break during the early 1980s. this proposition is validated by econometric analysis. It is also worth noting that the proportionate change in growth rates, both aggreagate and sectoral, was much larger in the period between 1950 and 1980 than it was in the period after 1980. Economic growth in India, as Deepak Nayar says, was respectable during the period 1950-80. It was a radical departure from the colonial past. And it was o worse than the growth performance of most countries during that period. But it was simply not enough in relation to Indias needs. Economic growth in idnia was impressive during the period 1980-2005 indeed, it was much better than in most countries. Although independent India did make significant progress during the second half of the 20th century, particularly in comparison with the colonial past, but poverty and deprivation persist, for at least one-fourth, possibly one-third, of Indias one billion people. In fact, there are more poor people in India now than the

total population at the time of independence. And, in terms of social development, India has miles to go. The real failure, throughout the second half of the 20 th century, was Indias inability to transform its growth into development, which would have brought about an improvement in the living conditions of ordinary people. Indias unfinished journey in development would not be complete so long as pverty., deprivation and exclusion persist. The destination, then is clear. India must provide all its citizens with the capabilities, opportunities and rights they need to exericese their own choice for a decent life. In the pursuit of this objective, economic growth is essential. But it cannot be sufficient. What is more, it is neither feasible nor desirable to separate economic growth from distributional outcomes because they are inextricably linked with ech other. This link is provided by employment creation. As Deepak Nayyar says, jobless growth is not sustainable either in economics or in politics. The creation of employment would only reinforce economic growth through a virtuous circle of cumulative causation. Regional backwardness/disparities is another issue of concern. The

differences across states have long been a cause of concern but increasingly there is recognition of th problem of server imbalances within states. Backward districts of otherwise well performing states, present a dismal picture of intra state imbalance and neglect. The center and the sates together must deal with this problem on a priority basis we cannot let large parts of the country be trapped in a prison of discontent. Injustice and frustration that wil only breed extremism. Special efforts must be made to remove the discontent dispense justice, instill a sense of fairness among the people and give them dignity and hope. India is characterized by enormous variations in regional experiences and achievements. These variations are a rich source of insights on the interconnections between economic development, public action and social progress. While Indias overall development record leaves much to be desired, there are positive lessons of one sort or another to learn from the different states. We have examples of states of Tamil Nadu and Andhra Pradesh for rapid demographic transitions; west Bengal, Himachal Pradesh and Kashmir for land reforms; Maharashtra for the empowerment of disadvantaged castes; Karnataka, West Bengal and Madhya Pradesh for democratic decentralization; Gujarat for rapid economic growth; Madhya Pradesh, Tamil Nadu and Rajasthan for innovative

education programmes. Then there are smaller states like Goa with excellent social indicators and also northeastern states which are doing quite well in terms of many aspects of social development. The cases of successful economic development in other developing countries are often cited in Indian policy debates. Many countries have done much better than India, and it is natural to learn from the accomplishments of these countries. Given Indias heterogeneity, lessons from other countries have to be integrated with the possibility of learning from India itself. We cannot, for example, altogether ignore the fact that Kerala, despite its low income level and poor record of economic growth, has done very well in terms of some social indicators of development.

TWO DECADES OF NEOLIBERALISM Introduction While the neoliberal development theory as practiced by the Indian policy establishment is based on the premise that a high rate of growth is an essential precondition for making a dent into the major, chronic problems facing the economy including those faced by the common citizens one has not come across any substantiation of this claim for the Indian experience, except treating such growth to be a vindication by itself. In order to examine the performance of the Indian economy during the past two decades, it becomes essential first of all to show the irrelevance and on balance the negative character of the growth of GDP as the objective, as the prime policy instrument as well as indicator of development, given its present form and content, and its likely accentuation under the neoliberal policy package. Actually, the emphasis on the growth of GDP becomes an endorsement of the accentuation of the existing market determined, social, exclusionary, and essentially perverse patter of development which is simply incapable of addressing the major problem facing India, including multifaceted social exclusion of the majority of her citizens while contributing greatly to the income, wealth and power of a verity small minority of those who are already at the top of the social pyramid. As no one is, and is not likely to be interested in GDP growth purse. Including those who are at the helm of

affairs under the neoliberal dispensation we try to explain the reasons that make it such a preferred objective and criterion of development and hope to bring out the negativities and dys-functional outcomes inherent in its pursuit. This is something that leads us to explore the political and ideological roots of GDP centric approaches. However, the justification for the neoliberal approach goes much further and is elaborated in terms of a highly abstract model of the make believe market economy and the role of the government. The nightly snag that it faces is that the really existing markets are totally different from the utopian market model assumed by the proponents of the neoliberal creed. We consider it essential to introduce the major elements, such as market created monopolies, informational asymmetries, incentives distortions, growing if moralization of many parts and processes of the economy and the deep seated cronyism, moving from its creeping inception to a state of near ubiquity as the neoliberal changes gather steam. These factors highlight the fictional character of neoliberal theorizing and expose the illusions on which the advocacy of these policies is based. A large number of such factors that differentiate the assumed market structure, processes and social forces associated with the neoliberal model from the really existing markets and market public policy interface have been brought out in bold relief. However, given the limitation of space and large number of really fragmental changes experienced by India, or most of the Indians rather, during these two disappointing decades, we briefly touch upon some of the key elements of the emerging socio economic scene and go on to examine how and why the growth and market fundamentalisms try to avoid confronting these changes, especially the changes that have umbilical links with the growth of the GDP. From the foregoing comments it is a logical next step to infer that it is the pattern of development that is the crux of the matte as far as policy mediated socio economic changes or development exercise are concerned, and that it is the pattern really delivered by the neoliberal policies that has brought with it the worsening of the lot of the common people. In this background we go on to examine some key aspects of the changes experienced in India during the last two decades. These concrete glimpses concern the major chronic problems that seal the fate of millions and millions of Indians, who are denied their basic constitutional and human rights, while a tiny minority of people catapulted into commanding positions, mainly those organized as private corporate

conglomerates, enjoy both market power and state patronage in numerous hidden and open ways and in extremely generous amounts. At this stage, it becomes essential to exposit the illogical and anti democratic nature of widely popularized practice by the neoliberal ideological and academic establishment: they treat and deal with the problems of mass scale chronic and abysmal poverty, inadequacy and insecurity of livelihood opportunities and the deeply embedded, multifaceted inequalities as independent problems to be dealt with separately and without co-ordination of the individual approaches. More particularly they emphasize dealing with poverty by means of some discretionary flower pot schemes and hope that even with persistent and rising unemployment and inequalities, poverty can e reduced. Our position is to show how the three are closely and organically inter linked, though of course, they are distinct problems and have to be dealt with as a part and parcel of a joint, loosely inter linked strategy the simultaneously attacks all the three in a logically and operationally co-ordinate manner. Thus, what fleeting and limited gains are made on one score (say, poverty reduction), by some limited reach, often token policies would not go far in a sustained manner and indeed would get lost on account of unabated or worsened unemployment and inequalities. The facts garnered by the national commission on enterprise sin the unorganized sector (NCEUS) have been cited to show how the neoliberal policy regime has worsened the policies. These policies give a new lease of life to the asocial structure and process that cause, and expand, social exclusion, and hence the processes of administrative action to help and support the poor cannot undo the effects produced y the primary thrust of the system and its public policies. Our conclusion holds good even in the face of some breakthrough that is likely to emerge owing to the introduction of MNREGA. Let it e a appreciated that it is not guaranteed employment and minimum livelihood right universalisation programme but poverty alleviation programme that is qualitatively deferent from everything that has preceded it insofar as, at a legal level, it index to grant to the rural people a nondiscretionary access to locally administered manual work opportunities for a predetermined rate of remuneration. True in some ways it is demand driven though within the constraint of the union government allocation of funds, restriction of the entitlement to just 100 days and the unchanged bureaucratic callousness and highhandedness. The fact nonetheless remains that to date it is surely the best foot forward for the poor rural masses. Even the legal

enactment regarding the right to education and the proposed right to food bill are not endowed with the capability to ensure a minimum rights based access to adequate and secure means of livelihood to everyone: the restriction of the MNREGA to rural India and the denial of the right to education to under six children are among the openly visible factors that show the restricted nature of these interventions. These steps, good insofar as they go,, would continue to fall short of a real breakthrough or cannot really take off the ground so along as the process of continued enrichment of tiny upper crust of society including by means of making them both directly and indirectly the greatest beneficiaries of public policy and public exchequer support continue unabated and prevent the capability to make a dent in the adverse social structure are persisted with.

GDP Growth: The Prime Element of Disinformation To being with, we examine the appropriateness of high GDP growth as the major, if not the sole, criterion for judging the outcomes, as maintained by the policy establishment. Naturally, this exercise demands that we examine first how far, and if at all, under what kind of assumptions. We can find that the GDP growth criterions consistent with the satisfaction of the primary needs of the overwhelming majority of Indians, the needs which for long have remained unfulfilled or neglected. Then, we also try to see how far the growth criterion, even if not advancing, is at least compatible with the basic values of India as a democratic nation. The first as response to the acute and chronic problems that make the lives of millions of Indians full of avoidable miseries, let alone capable of enjoying the fruits of progress and civilization, and the letters as enshrined in our constitution. Obviously, mere quantitative expansion of GDP cannot produce the conditions and outcomes critical for dealing with the problems whose solution is sought of means of envelopment. Hence emerges our critique of the GDP primacy for its emphasis on the given pattern of development as the really relevant concern. The prevailing neoliberal, almost exclusive, concerns with the GDP growth amounts, in effect, to a tacit acceptance of the accentuation of the existing pattern of market determine, private corporate sector led, highly concentrated control over the and the dysfunctional and social exclusion enhancing level and composition of GDP.

The neoliberal establishment continues to flaunt the high rate of growth as a big step towards development. Thus, one comes across the claim that during the 18 years from 1991-93 to 2009-10 India nearly doubled her earlier, long-period average annual rate of growth to 6.2 percent. It is stated that it was the urge to move to a higher growth path that led to the transition of the Indian policy regime from the earlier paradigm of excessive government control, s suspicion of market forces and an excessive reliance on protection of domestic industry to an economy with much greater acceptance of the beneficial role of the market and greater role of openness to trade and foreign capital (Manmohan Singh, address at the 92nd conference of the Indian economic association at Bhubaneswar). One need not refer to the well known scientifically established and recently powerfully projected views that rubbish the claims on ether the intrinsic value of growth or the validity adequacy and utility of relating social and economic development to high and rising GDP. These analyses have shown how distorted and misleading is the use of per capita national product either as an indicator or the objective or as an instrument for achieving the major socio-economic objectives for content of development. Actually, the stubborn adherence to the discredited and false indicator of GDP as the star policy and planning variable by the neoliberal school continues to remain the darling of the preset corporatist power structure as it is a pointed manifestation of other, absolute and comparative volume of market opportunities (the economist 15 march 2008) that are crucial for continued high profit yielding capital accumulation by the big organized corporate sector. Thus, while the public face of the objective of and precondition for the broader social economic development is projected as GDP growth, the stark an well defined preferences about the pattern of growth are kept unstated or implicit owing to the entrusting of the primary agency and leadership function of economic growth to big organized or corporate private capital working on the basis of its own interpretation of market signals and incentives; i.e., without interference or guidance by any exogenous agency such as the state or any other institutional mechanism of the civil society. This choice less to a pattern of economic growth that results in enhanced market deepens with little, if any, market widening and is crucial for serving many critical objectives of organized big capital at the national level and of the early industrialized rich countries at the global level. For one, it facilitates their continued exercise of dominance over the economy by ensuring unchallenged continuance of corporate capital as the main agency and leading influence over the economy and its vital processes of

growth, investment innovations and government economic activities... then, the choice of GDP growth as the star variable of development combines the pursuit of increasing volume of output (i.e. extended command over exchange values and surpluses) with the particular forms of use values (i.e. the high income goods and services for consumption and various forms of personal wealth) chosen by the resource-rich sections of the society. In the course of its pursuit of GDP growth under the market dispensation, it is also ensured that all the qualitative aspects of growth such as what, where how and for whom and so on of the production along with the terms of their exchange in the commodities, financial and labour markets and investment processes remain compatible with the essentials of the marketwise GDP growth processes under the overall leadership of corporate capital. Thus, while assigning primacy to quantitative growth of the national product; it is not indifferent towards non-quantitative pattern related aspects of growth. The pursuit of accelerated growth under the given set of arrangements has implicit in the qualitative choices comparable with the given set of institutional arrangements; in fact, a certain degree of institutional laissez faire (wiles 1966) is also flexibly exercised in order to smoothen the rough edge confronted in the process of historical evolution of these arrangements. Thus, the accelerated rate of growth along with the reproduction of the given or status quo pattern of growth reflects the preferences, agenda and long term interests of the increasingly narrowly concentrated big capital, i.e., market created monopolies. These are built in part of the GDP centric, neoliberal approaches to growth and development. But the significance of centering these processes on GDP growth does not stop with what we have discussed so far. Additionally, and simultaneously, it serves a major social purpose of winning social and political legitimacy for rather narrowly focused development processes based on and specified in terms of the growth of national product and the ranking of different countries based on their level of GDP (generally, GDP per capita) that continues to be used for determining the ranking of the countries of the world on a comparative development scale. In other words, while all that the pre-fix national denotes is that the output flows originate in the national territory, this either has any necessary implication that it must accrue to the nationals nor that the fact of citizenship of a national would entitle or

privilege anyone to have any kind of claim over it or the processes associated with it owing to shred national origins of the production process or the resulting output flows. In follows from the discussion so far that the song and drama over high rate of growth of GDP seem to be used for concealing the real status of the major problems such as poverty, unemployment, inequalities, ecological imbalances, and the level and rate of change of human and social welfare by creating the smokescreen of a national achievement. Thus, even when the situation of a country worsens in terms of the above critical issues (as has happened during the last 20 years), the neoliberal establishment continues to flaunt the high rate of growth as a big step towards national development! We have quoted one such official claim above that was used for staging a policy coup in India. A little reflection would show that the neoliberal policy choices mentioned above are too far reaching in their consequences, costs and implication, both for the immediate run well being and quality of life of the Indian people as well as the long term future of India, to be justified in terms of accelerated growth. Thus, in practice, Neoliberalisation is mainly aimed at, and influences, the pattern of growth in a manner that advances the interests and agenda of the top echelons of private, mainly corporate, businesses while creating the smokescreen of national achievements as is done by the number of Olympic gold medals won by ones nationals. However, it is packed as, and sold basically as a GP acceleration recipe. The reason is not far to seek. At the cutting edge lev3el, the neoliberal or the Washington consensus policy package divorces the rate and pattern of growth taken together from the needs and aspiration of the majority of Indians who for long have remained socially excluded by the processes and outcomes of speeded up rate of growth and higher levels of the GDP and the pattern of growth that has umbilical links with it. After all, the long period of such growth seen during the post independence era has neither been able to prevent the number of the excluded from increasing not to reduce the pain, deprivation and discrimination that arises on account of this exclusion. This policy transformation is exerting deep and decisive impact on the future of India that simply cannot be appreciated in terms of the exponential arithmetic of growth rates and the closely inter connected desisting pattern of growth that is not responsive to popular needs or the nationally accepted goals. Actually, with a clear moderation in the rate of growth of population seen during recent times, it is no longer possible to make a scapegoat of the demographic dynamics in terms of unmanageable huge annual

additional to the labour race. Thus, one can see that the unending recitation of the GDP mantra its Akhand Paath is an inescapable necessity, a major element of democratic deceit that is deployed to mage elections while persisting to obtain a pattern of growth that is increasingly divorced from the needs and rights of the common citizens. Actually, the macroeconomic variable called GDP is too narrow, even in economic matters; it is exclusively market centric and ignores most of the structural and qualitative aspects of the economic and market spheres compared to the elements that constitute development, especially development of all as a normative concept embodying the civilization preferences of a society. Hence, it is neither meant to not can capture most of the development related matters that are of critical significance to every human being and any really existing national with its own history, culture, peoples aspiration and their constitutionally mandated and protected rights or the historical backlog of accumulated problems and currently multiplying frustrations and challenges. National social life, and an individuals quest for a fulfilling and satisfying social existence, whatever is her or his present position in a highly divisive and unjust world, is surely much more than the amount of per person production the nation is able to churn out over any chosen time period. Certainly, Rising production is necessary and no nation can do without it, but it is some specific nature of production that a nation looks forward to and not anything and everything that somehow or the other gets produced; moreover, the prices needed to be paid for converting physical production into common and comparable value terms are regally far from rational and distortion free. Thus, estimating its magnitude, i.e., the outcome of market mediated production activity fails to capture most of what is significant and critical from the point of view of satisfying the knees that living creates both for an individual and for most of the members of a community at a certain level of aggregation or on the basis of any criteria of grouping the people together. The simple point is: a normal limited focus macroeconomic variable that the GDP of a nation is, ironically it has been overburdened with tasks much beyond the meanings it can either contain, capture convey or deliver. A simple hypothetical illustration can help a great deal to clarify the simple concept that has been obfuscated and made controversial owing to its overloading for carrying unreasonably excessive baggage of representing the level of economic development of a nation, suppose there are two countries with exactly equal size and rate of growth of GDP.

Can on this basis the two nations, any really existing nations, be taken to be at the same level of development, unless economic development is tautologically treated as nothing but the level and rate of growth of per capital national product? If not, one would encounter enormous problems and would be obliged to make numerous unrealistic assumptions to be able to go with the proposition that equates the level of economic development of these two nations because they are equal in terms of GDP. It hardly, needs reiteration that development in any realistic sense of the term is a multi dimensional normatively understood social national phenomenon whose content, processes agencies, quality, contributing factors, direct and indirect, intended and unintended costs and benefits as well as their intra and inner generational, and intra national and international sharing present a great deal of diversity. For example, even in the economic sphere, development would depend on the composition of output, its distribution, level, structure and terms of labour absorption in the production process, spheres of activities that are beyond the market but form a part of living and impact the quality of life, social relations, scope and opportunities for enterprise and the quality of life, social relations, scope and opportunities for enterprise and excisions relating to future, social services and public goods, approach toward merit and demerit goods, nature of technology and its externalities, and so on, especially those having a bearing on civilization legacies and choices. None, of these, and numerous other aspects of economic development especial when viewed holistically, are either captured by the GDP measure or related factors and processes can be found to coexist in a large variety of combinations and permutations of the elements of social existence which have very close and far going implications for the social well being and other highly valued aspects of social tapestry, including the allimportant question of sustainability of development, none of these qualitative aspects, structural relationships, value choices, technological and product mix preferences and so on are necessarily connected with the growth of GDP per se in the sense that on are necessarily connected with the growth of GDP per se in the sense that at a higher level of GDP everything, or even most of these matters will show definite and unequivocal improvement. Most of the things that really matter to community, or even to an individual, have little direct, positive and one to tone straight relationship with the rate of growth and level of GDP. In fact, owing to more or less exclusively quantitative character of the GDP under the tutelage of the market, status quo and similar such factors, the process of

growth of GDP and quite a few of its related variable and components generally tend to involve some serious negative externalities for development, environment, social harmony and so on. If one were to bring into play the institutional, ecological, moral and inter generational dimensions left out by the GDP centric concepts and theories of development, i.e., the aspects that no living, democratic society can afford to ignore, the GDP development equation under a status quo framework of an Indian kind of market economy tends to degenerate into what has come to be treated as mal-development. Thus, let alone the question of taking the countries comparable in GDP terms as equally developed nations, even the same country with the same level and rate of growth of GDP over different historical periods is quite unlikely to be considered equally developed or developing during these periods of time unless, of course, if one causes to close ones eyes to the most elementary and well established distinction between growth and development. In other words, the predominant concern of fundamentalist growth pundits is to increase the volume of productions demanded by the market forces and any departure from it is considered ipso facto anti-development (independent of the nature of the market structure and the motives and muds opera din of the market entities). They do not concern themselves with the social priorities of production that may demand consideration of the economic, social and ecological implications of these choices. The real face of Indias high growth rate Hence, there arises the need to question the value, relevance and validity of the claim in terms of Indias GDP growth. As the income of the nation grows, several of its dimensions or features undergo inevitable changes and without grows, several of its dimensions or features undergo inevitable changes and without factoring them fully and properly, how can one judge whether such growth can be considered a positive and desirable change (as development is not just growth but a net desirable and positive societal change)? After all, even in economic terms, how can the growth of the GDP be appreciated without taking note of the underlying capital output and labour output ratios and the iconological costs? The so called development policies of the past two decades have as we see in the following passages not been able to prevent exacerbation of the closely inter related problems of poverty, unemployment, inequalities and ecological imbalances and degradation and make any dent in to massy and multi faceted social exclusion o the majority of Indians.

The growth of GDP seen in India these days has entailed increased capital output ratio and has not shown commensurate changes in the capability to productively and remuneratively deploy labour. Actually, there are powerful theoretical arguments to show that the kind of growth India has been experiencing under the neoliberal dispensations by its very nature simply incapable of bringing about any real, substantial and sustained improvement in terms of poverty elimination, livelihood adequacy and security as an inviolable human right of all the citizens, enhancement of distributive social justice and preservation of ecological balance. Actually, our reasoning above about the preferred and built in pattern of development under the neoliberal dispensation shows that any serious attempt towards ushering in changes consistent with broader national objectives is not even compatible with its essentials. Actually, the small sections at the top of the social pyramid are enormously and disproportionately cornering the near gains of the growth seen during the period 19902010 (a small part of the population that is not more than 23 percent of the population as shown by the report of the NCEUS) and a mammoth majority continues to face growing exclusion. As a result, while the former manage to add to their initial endowment of social prestige, influence and political solute to make the policy establishment increasingly persist with more of the same, the latter are left to remain content with some postures of pro-people leanings. Given the basic incompatibility between the agenda of the people and that of the top echelons, some tendentious concepts and irrelevant claims are propagated as their achievements. Thus, one can hear them admiringly speak of the most trendy telecom revolution that makes the possession f some 65 crore phones and their greatly increasing umber every day a major gain of their policies. Similarly, much is made of certain structural changes in the economy as reflected, for instance, in the impending structural changes in the economy as reflected, for instance, in the impending increase in the contribution of the automobile sector that would make it equal to about 10 percent of the GDP of India by 2016. Given the continuing decline in the share of crop agriculture to GDP that is presently marginally above that of the officially projected level of automobiles, one can see how distant and divorced the changes are from the popular needs and interests of the poor masses, especially in view of the decline in per capita availability of food grains we have seen over the last two decades.

Similar conclusion follows from the fact that telephone possessing persons outnumber the number of houses with toilets in the country. Such incongruous changes, like the distinct possibility that the share of cereals in the GDP may well be lower than that of the automobiles sector by 2015, indicate how the increasing economic strength of the better off sections is related to socio economic exclusion of the masses. How far such a structural change is consistent with the proposed move to make the right to food statutorily guaranteed rights of the Indian citizens remains an open question. Even if the law for the right to food is enacted, can it become a reality unless a minimum income one regular basis is guaranteed to everyone? One may not give specific examples of the relative shares of the rich mans goods versus the share of the poor mans consumption basket in the changing composition of manufactured goods. The point is that in the process of examining the growth trends one has to focus on the choice of the product as well along with other relate choices such as that of location of production, technology and so on that are crucial for determining the pattern or content of growth. The increasing output flow is not of course neutral regarding the product mix choice. Without specific interventions, the relative and absolute amounts of the rich man goods and services go up and hence growth is divorced from popular needs and aspirations. This is indicated by the simple fact that the weight of the consumer durable goods in the manufacturing sector value added doubled from 2.55 to 5.37 between 198081 and 1993-94 (not all consumer non-durable goods are mass consumption goods and the overall weight of the non durable consumer goods in total industrial production is just 23.30 only) moreover, even the per capita availability of food grains has declined during these two decades. Three yearly average daily availability of cereals during the block of three years ending in 2008 at a little below 400 grams was lower than the level that was reached (at a little below 450 grams) for the block of three years ending in 1992. We need not reiterate that effective, real employment is critically dependent on the availability of wage goods in sufficient quantities to enable the workers to convert their money income into real income at relatively stable prices. Direct evidence also shows that the employment situation has deteriorated both quantitatively and qualitatively over the last two decades (NCEUS report, cited elsewhere in this chapter). Over 90 percent of the work force contributes something like 57 percent of the net

domestic product (NDP) whiles the share of fewer than 10 percent of the workforce remains as high as 43 percent of the NDP. Ignoring such plain fact, acceptance of the much beneficial role of the market and greater openness to trade and foreign capital for accelerating the rate of growth, as stated in the quotation above gives a clear message that the rebate and pattern of growth that India has obtained during these two decades are treated as satisfactory, though in some respects (such as for poverty reduction) it is admitted at the official level that there is need to do more and better. The self congratulatory mood over these achievements finds another reason insofar as the G-8 establishment and the mainstream media, both Indian and foreign, acclaim the India story, particularly the fact that the emerging economy of India has lately been recording the second highest rate of growth in the world and helped the rich economies to overcome the great recession. But, at more substantive level what may well matter the most to the liberalizing regimes is that it is one political group or the other drawn from among them who have been enabled to control the reins of the government by the electorate after every general election for the last two decades. If, along with growing cronyism, there is another notable constant in the Indian scene over the last two decades, it is the growing adherence to the neoliberal creed as the key feature of the policy processes. As we see in the following pages, such exuberance over growth and some select aspects of the economy, have their roots in an artificial, make believe view of the development process, centered almost exclusively in the text book model of the market economy, without recognizing the real life processes of cronyism, informality and closely inter twined problems of poverty, unemployment, inequalities and ecological disruption. What it means is that the myths over neoliberal processes, structures and their trumpeted efficiency are strongly disconnected with the reality. Hence, there is a clear need to explore at least some of the bases of such a strong commitment to these policies and go beyond simple reductionism that the policy choices have a one-to-one direct relationship with the existing power structure. Political and ideological underpinnings of growth fundamentalism

In retrospect, it seems plausible to old that the adoption of the rate of growth of GDP as the sole or the single most critical yardstick for assessing the effectiveness of the transition to the neoliberal policy package could well be regarded as a part of defensive rearguard action by the Indian supporters of neoliberal structural adjustment policies. As far as the use of the GDP indicator is concerned, in India, this required no change as even the earlier policy regime, called embedded liberalism (Harvey 2010: 1112), equated development with the rate of growth of GDP (Kabra 2009). Actually this was only the tip of the iceberg as many elements of the full fledged neoliberals, contrary to the stated official position, popular perception and pointed distortion by the neoliberal pundits (see for a latest instance, Rajan 2010: 238, where the pre 1990 policies and the role of the state are described as socialist rhetoric were, in effect, operating at the cutting edge level even before the 1990-91 policy package was introduced. No doubt, generally speaking, the power structure and the hegemonic position of the elite sections cutting across different spheres are among the decisive influences on, and the largest beneficiaries of, the policy choices made by any regime. There is no reason to believe that this proposition does not hold well in India. Hence, it stands to reason to hold that the pre-1990s policies created the political and economic conditions that went long way to make the openly declared policy transformation a reality, though the ideological and theoretical underpinnings of the interventionist regime were not openly discarded. However, it would be too simplistic to assume that such policy choices are made so shamefacedly as the naked assertion concentrated and multifaceted power as to obviate the need for any social, economic and moral justification in ideological and theoretical terms for these choices. Such a blatantly partisan and openly declared pursuit of self interest by any group or set of individuals does not go well with any really meaningful concept of democracy. This seems to be so especially because such a perverted pattern and content of democracy amounts to going back to the domination of the ideologies and their theoretic that led to the present division of the world between the poor and the rich nations; let us not forget that it is these trends that led to the reversal of the historical global relative position of many TWCs such as India and china. This appears to be a remote passivity in an electoral democracy such as India where intense policy debates and political struggles over them have been witness over the past six decades. Clearly, there was a

great need for a theoretical justification for the transition backed at least by some anecdotal, selectively picked up, evidence and assiduously built popular myths, for example, as reflected in fairly ill-informed references to the so-called miraculous success stories of south Korea and Japan (van Der Hoeven 2008 and Wade 2009). We do not want to speculate whether there was something deeper underlying the timing of the policy change in India or whether it was simple fortuitous coincidence that the Washington consensus based on the neoliberal principles and the associated value system was proclaimed at that time as poised to conquer the policy space all over the globe. This may be treated as poised to conquer the policy space all over the globe. This may be treated as a factor that evidently came handy to those staging the policycoup in India. At the international level, the advocacy of the dominant role of the self regulating, self propelled, free market forces disregarding national boundaries carried with it an unmistakable ring of triumphalism. As a matter of fact, the theoretical debates regarding Indias development policies and economic management formed a rich part of the international debates over these issues from the very beginning of the revival of academic concern with the issues of national development (Byres 1994). These debates and international interventions became increasingly direct and influential in Indian policy making processes. India had, on the one hand a large presence of economic experts in government and to a lesser extent in the acidizing field as well, whose own personal understanding and ideological orientation bore close affinity with the dominant western positions. Moreover, the increasingly tightening grip of the agencies and institutions from the western market economies that were called upon to support in various ways the huge and increasing financial, technological and material supplies required for sustaining the frequently jammed and disrupted growth path followed by India, facilitate the maturing of a sense of disenchantment with the state centric policies. True, the interventionist policies were rooted in a deeply ingrained sense of suspicion over the social commitments and effective capabilities of the large private businesses dominating the Indias essentially market economy, especially owing to the emergence of strong symbiotic linkages between businesses, bureaucracy and the presiding political elites. Similar suspicious attitude towers foreign, read western, capital was also present in ample measure.

Thus, there was a clear and sharp need for a theoretical model that could be used to demonstrate the need for, to design the nifty gritty of and to demonstrate the successes of the market and foreign trade and capital friendly policy package. Obviously, this required no real and fresh intellectual exercise. Many critiques of the Indian interventionist model were available and as its policy debates and the lobbying circles. Actually, it was difficult to decipher where the academic discourse ended and the lobbyists entered the fray. All the encapsulated into the Washington consensus and its many versions from time to time as so many different generations of so-called refers. Thus, it was no herculean task at an intellectual level to bid good bye to the prevailing model and opt for the model of self regulating borderless market mechanism in order to rescue the Indian economy from the discomfiture of what was described as the most severe post independence economic crisis. Market Utopia versus the really existing markets: A ploy to make the transition from the state centric model What was adopted was a text book version the supply side, market determined, open door economy that was expected to deliver the gods on the strength of the encaged, self motivated and self regulated competitive market model of the kind the Chicago school has been advocating for long. In simple terms, it was process of reverting to the days of 19th century laissez faire free market, free trade unrestrained factor mobility (read capital mobility) capitalism. As it happened in the past, even nowadays the stated hands off policies of the state were in effect a mask for extremely pro-private business partisan policies for granting opportunities and transferring resources from wherever possible to facilitate the creation of monopolies and oligopolies under the smokescreen of letting free competition play out its economic game. The public posture for selling these change was to ensure a high and rising national product per person/ All this growth seems to be justified in order to preserve and strengthen the status quo but the status quo has little resemblance with the free, competitive rational markets. While the state processes are supposed to enable free and equal competition in an even handed manner, the ground reality is the very opposite of the postulated model: the state processes and power become a partisan handmaiden of the huge monopolistic conglomerates, even some handpicked ones for some underhand reasons, irrespective of the country of origin of the controllers of these expanding empires. It has been

maintained by a votary of the neoliberal policies that, proximity to government is an enormous source of profitability in India, and is reflected in the huge disparities of wealth that are emerging (Rajan 2010: 234). It is a neoliberal postulate that the state has to act as system preserving force and ensure that the economy continues to remain one high growth path along with the intensification of the existing socio economic pattern in order to ensure that the underlying dominant active forces are able to preserve their position. For one, the state must create and maintain the conditions for ongoing and accelerated capital accumulation by the concentrated market players. This necessitates, on the one hand, increasing national income for supporting the process of capital accumulation by enabling the state to do things that the market processes are either not capable of or interested in. most public and quasi public goods and social services belong to these categories. Then the state must devote at least a part of the rising national product to some amount of social security and social assistance, as is being done in the pioneer industrialized countries. In fact, this is the promise that is made to the people in India as well by the neoliberal establishment in the form of a special version of inclusive growth that would be attained by allocating sums that appear to be large in order to help the poor and the excluded to survive. This apparently proper turn also at the same time helps to create a reserve army of labour necessary for the extended reproduction of the economy. This process also helps serve the objective of providing some home market for the products though their value for proving the market for expanding output flows is limited owing to a small part of the GDP going to these sections. This is so owing to deteriorating effective employment situation, predominance of the services sector in GDP as well as in the corporate sectors domain of activities. The promised free or unhindered interplay of the market forces remains a nonstarter as the majority is kept out of the agency function (actually the function gets increasingly vested in fewer hands as market created monopolies spread their tentacles) and are dependent on the decision of a small minority of oligarchic forces for finding a toehold in the economy to be able to meet their livelihood needs. It is the investment and related decision by the business people, organized as companies, that is the major source of demand for labour and indirectly for sustaining

the informal sector, except the part in which the poor become each others economic buyers and sellers. Thus, one comes to the conclusion that the free and self regulating market models are a utopian construct. The reality is its polar o opposite. For instance, in highly oligopolistic markets, the pries become in effect, a market imposed tax on the consumers and collected by the centralized and concentrated market forces. The Indian economy has experienced an uninterrupted process of rising prices all along the neoliberal period, a process that reduced the real purchasing power of the rupee to just 29 paisa by April 2010 on the base of 1990-91 (Upadhyay in this volume), and to just about 3 paisa for the entire period since 1959-51. Inadequate employment generation, rising prices, and as we see later, galloping imports of manufactured adequate replenishment by way of expanding expert to be able to finance the imports and compensate for the job opportunities exported through purchase of imports. The resulting distortions n resource allocation away from mass consumption wage goods an accentuation of inequalities restrict the scope for the operation of the market mechanism to reduce social exclusion. From creeping cronyism towards its Ubiquity With the acceptance of the role of the state to stand for the active and organized market forces in general for accelerating economic growth (a class centric role, so to say), general pro business policies applicable to all are an openly admitted postulate of the neoliberal creed. Thus, in practice, such a pro business role has to use both the carrot ( to stimulate and encourage growth) and the stick to ensure that the unregulated market forces do not become such a free for all mess such that the social considerations and macroeconomic discipline remain nobodys concern and the general objectives are sacrificed in the bargain. Remain nobodys concern and the general objectives are sacrificed in the bargain. The post 2007 global experience has reminded us once again that there is growing appreciation of the regulatory role (the stick wielding whistle blowing role) of the government and cries are heard for saving the capitalism from the capital is its) Rajan 2010). This is easier said than done as concentrated economic power starts developing non systemic, hidden, personal and company level links with regulating business based on the principle of level playing field for all, applied on the basis of arms length relationship between state and specific businesses. Special lobbies and close liaison between the umpire and the players work for special treatment to specific interests. This is how cronyism starts taking roots as an

episodic phenomenon. In countries share state activism was frustrated and made counterproductive by such subterranean, aberrant links between the political, administrative (including judicial) and business interests, leading to the evolution and regular large scale operation of the black economy (an outcome of the symbiotic relationships between the state personnel and businessmen), the legacies of the past and opportunities created by open embrace of pro-business/market role for accelerating the growth of the economy with acceptance of its market driven composition does not take long to degenerate into widespread cronyism. Given the dynamics of the political administrative huskiness and corporate behaviors in a context bereft of the sublime cultural, civilization and moral values, the episodic occurrences of cronyism become in course on time an integral part of the very processes of the political economy during the era of Neoliberalisation. By now one can count hundreds of discovered and many times more suspected prime facie otherwise inexplicable routinely observable instances of inter mingled business and government actions where fair play and level playing field have become the exceptions that underscore the real rampant cronyism. Thus, there came into play in India the introduction of a major element of lack of realism in the abstract pure theoretical model of the neoliberal orthodoxy; it woes itself to the large size of the illegal, black economy that was given fresh a fresh lease of life and unprecedented avenues and opportunities for expansion by turning hitherto illegal activities into open and legal ones by way f deregulation and opening up. It is well known that huge hoards of black incomes and wealth were accumulated during the interventionist stage of public policies in India. True, often concern is expressed over the huge rents of authority collected by the administrative apparatus by bending the rules to suit the needs of individual market players, but without questioning the sources and quid pro quo business practices for which, and for which, such gratification is paid moreover, these equations were used to gram ample scope to these illegal accumulations to multiple. Thus the translation to free and liberally supportive state polices began with the business people having funds they neither can disown nor use through legitimate channels. The political and business classes became increasingly intermingled and undistinguishable in practice, as huge private fortunes seek to diversify their investment from politics into business and the other way round by the business personnel. Thus, both the big organized business classes, on the hand, and the well entrenched political

bosses and their lackeys in bureaucracy, on the other, had their motives and mechanisms for forging new crony linkages to bypass both the legitimate market processes and state laws. This process has been described as the privatization of the Indian state by stealth (Rajan 2010: 238). Thus, tax evasion, stashing away of the funds abroad in tax havens, easy and lucrative use in the overgrown financial speculative sectors, for taking up huge monopolistic business opportunities vacated by retreating state, are among several processes that gave a massive boost to the black economy. Frequent disclosures of ever new scams involving mind boggling sums have become the popular face of really operating neoliberal dispensation in India. Despite a very soft, light and friendly policy and tax regime, the absolute sums available, through tax evasion seem to have become very irresistible. The actual modus operandi with ever deepening cronyism and their socio economic outcomes cannot be understood in terms of the formal modals of the competitive market economy still used by the neoliberals in their public postures and debates over their performance. Indias Informal Economy: Major Safety Valve and Survival Mechanism Another material factor that must be factored n for understanding the actual operation of the post 1990 model of the Indian economy is that a large number of people who are excluded from the livelihood activities in the formal market economy, including petty unorganized capital in different branches of the economy, people who have to eke out their living outside the neoliberal monopolistic processes of growth, free trade and adoption of new technological advancements. The unorganized/informal sector becomes the primary source of livelihood and participation in small time local markets for a very large part of the labour force by way mainly of their own account work in the form of small commodity production. These markets contribute a substantial part of the national income, too. Even under Neoliberalisation, the share of the unorganized sector has declined only marginally, from 58.48 percent in 2001-02 to 57.10 in 2007-08. However, the neoliberal policies hardly take on board their interests and capabilities as these remain outside the formal but cronyism lined economy dominated by the monopolies and oligarchies with a voice and participation in the state processes. The level of wealth and extensive business linkages of the political class for whom politics has become family business to quite some extent are indications of the way the state processes have been high jacked by a tiny, self perpetuating minority, the

way bureaucracy was supposed to operate in terms of the theories of Max Weber. So much in hiring labour sub contracting activities, dealing with public agencies and so on. The point is that the official assessment of the neoliberal policies on the basis of the motives and modus operandi of the economy in terms of abstract formal competitive market economy norms and mode of functioning are not realistic as they exclude from their theoretical purview cronyism, informal activities, actually, while the polices discriminate against the informal economy, credit is taken in the official assessments for the livelihood opportunities and safety net role of the elemental growth of the informal economy spawned by the people, the excluded people themselves, in order to survive. As a result the operation and analyses of the really existing market economies have little in common with the abstract theoretical model used for designing and defending the neoliberal policies and their outcomes. Their universe of discourse and concerns aware so totally different, especially because the neoliberal discourse is wholly economist and narrowly focused on the interest of the corporate conglomerates while real life is multifaceted, exists and exist and operates primarily outside the corporate framework and no artificial barriers can make the different spheres of social existence immune from each other. It has been shown that restricting analyses to the economic sphere, and that too what is considered on a priori basis as national action, leaves out most of the really significant aspects from the analytical purview (Akerlof and Shiller 2009). This limitation of the neoliberal thinking becomes a particularly limiting factor in countries such as India for whom all round development going beyond the economic sphere is the major national challenge. The economics of development as a counterpart of the neo classical and neoliberal supply side economics fails to address the major development challenge facing India, viz. social exclusion that manifests itself concretely in the form of mass endemic poverty, widespread and sticky unemployment, multifaceted inequalities and constantly ongoing ecological disruption and so on. No attempts to deal with each of them separately and without an integrated common line of attack on them can be really fruitful for any of this issue. Indias emerging socio-economic scene under Neoliberalisation In order to move out of the artificial and narrow confines of the neoliberal world and see how the living and struggling real India operates, let us examine how some of these critical problems facing India fared under the impact of these polices. It may be clarified that we do not consider it appropriate to compare the outcomes obtained during

the last two decades against what happened during the preceding four decades as the actually operating policies and socio economic forces during these two periods are not much different from each other. The differences between neoliberals and embedded liberalism cannot be basic. We have tried to demonstrate the misleading character of and serious negative implications of what is concealed by the GDP figures and reiterate their inherent vacuity, except acknowledging that a certain rate of growth of GDP is an investable ex post outcome of any including the people centric pattern of development. Hence we now attempt a realistic assessment of the socio economic changes that took place in India during the last two decades in terms of major problems that prevent the overwhelmingly large number of her people move towards their normatively preferred future. Moreover, comparing the 1990-2010 periods against the four preceding decades is irrelevant as moving back to that past is not a real or purposeful alternative. Moreover the policies followed as distinct from the announced polices, during the first few decades after independence prepared the socio economic and political conditions that facilitated the transition to the recently adopted neoliberal policies that are to be seen all around us these days. This, however, is nor to undermine either the difficulties and special circumstances that prevailed during that period not to undervalue some very significance differences and path breaking achievement of the earlier period which can justly be credited with imparting a high degree of resilience, strength and limited but significant democratic, and some solid nationalistic, content to the socio economic and technological changes witnessed during the 1950-1990 period. One simply shudders to visulaised what a colossal disaster would have been our national fate if fully fledged neoliberals had had a field day right from the 1950. X-raying GDP growth: what the growth fundamentalist curtain hides We have so far taken at their face value the claims regarding the rate of growth achieved during the period. However, the highly eulogized growth performance of this period was not roses, roses all the way and even without raising questions regarding the qualitative and social and environmental aspects there is a lot that should have made anyone take a wakeup call. Growth during these two decades has certainly been higher than the rate that has been clocked during the preceding four decades. However, its volatility, uncertainty owing, among other things, to the behavior of the monsoon rains, changing global economic situation, erratic and unpredictable business or market behavior with respect to practically every significant variable (as we seen terms of the savings and investment behavior of the private corporate sector and the

performance of the factories sector as reflected in the annual survey of industries (ASI) data, uninterrupted inflation (meaning repression of the household sector in favour of the producers) with varying speed, and so on are mattes that cannot be brushed Asia a s normal parts of the capitalist growth process but emerged as necessary concomitants of the eking of growth we experience. India has entered the superfast and largely market determined phases of growth, subject to the usual market-led cyclical behavior, a bit too late in the day because the experience of the forerunners has clearly shown the underbelly and unsavory side of the growth story. Then we have the overlapping area of the quantitative and qualitative aspects in the form of growing imbalances sin the sectoral shares of GDP and its mismatch with the occupational structure, particularly declining share of agriculture in GDP while its continuing predominance in the occupational structure. The implications of this for the size of the home market and hence for the sustainability of growth in world in which the external market remains highly uncertain are too serious to be overlooked. Moreover, the diversion of resources for export market owing to the magnetic, pull of the extremely incompatible purchasing power of the foreign buyers vis--vis the large number of Indian who are victims of social exclusion, entails a heavy socio economic cost as well, more so when foreign sale is encouraged at huge direct financial costs to the exchequer as the resources get diverted from potentially pro people, home market expanding uses. The pre eminence of the eservices sector in GDP while the share of the good entering the consumption basket of the masses remain low (see the data in the economic survey, various issues that regularly give information about some key goods) whose growing divergence between use value and exchange value of the output flows generated in the economy. Moreover, the low levels of investment in the informal sectors producing wage goods. Also shows the loss of potential output as it has been argued that higher capital investment in these sectors would lead to very high levels of returns (Lucas 1990). Actually, overemphasis on growth per se without conscious choice of its pattern an without expansion of the home market by means of remunerative employment opportunities, or taming the processes that worsen inequalities, contributes to imbalances between the intermediate, capital and consumer goods sectors vis--vis the growth of services that are by definition, consumer simultaneously and are not so

constrained by the growth of demand owing to the place of non market segment of community and government sectors, along it the proliferation of civil society institutions (the number of NGOs now, according to some reports, is around 3 crore). In organizational institutional terms, the declining share of the most broad based agricultural sector along with steady increase in the share of GDP originating in the corporate sector, and similar expanding share of external trade, are among the features of the emerging economic pattern that put serous question marks on the rationale of the single track pursuit of high and rising GDP, sans any meaningful impact in terms of a desirable ad sustainable pattern in order to make a dent into the seriousness of the age old social problems afflicting the masses. No less disturbing and unhealthy is the regional concentration of the masses. No less disturbing and unhealthy is the regional concentration of growth in the western and southern regions as well as the wizening rural urban in the preceding sentences arena less marked in the relatively fast moving areas. What is most perturbing is that except occasional expression of concern as an afterthought or as a routine ritual, these ominous traits are glossed over in the face of the exuberance over the high growth drama. As mentioned above, any achievement like a high rate of growth can make sense only when it is viewed against the costs incurred, the foregone alternatives and the pattern of sharing the gains. For instance, it is certainly true that such high rates of growth would not have been possible without spectacular growth of savings and investment rates, notwithstanding the role of existing excess capacities and unused manpower (the resulting colossal loss of growth of output involved in it has never bothered the neoliberal pundits) or technological change. What the economy has see during this period is quite a remarkable increase in the rate of net domestic savings from about 15 percent of GDP in early 1990s to the current levels in the vicinity of over 35 percent, generally keeping pace with the growth of investment. This spectacular jump in the savings rate obviously helped finance notable increase in the rate of gross capital formation, taking it from about a quarter o the GDP to about two-fifth during this period, notwithstanding the dips seen occasionally and the shock waves emanating from the great recession of later years of this decade. Both in the savings and investment spheres, one can see that the role of the private corporate sector has grown considerably as natural corollary of the leading agency role, political clout under openly right wing ideological domination, sizzling cronyism and enormous expansion of profits typical of the neoliberal dispensation.

The household sector retains its prime positions as the biggest saver that meets the deficit let over by the internal resources of the corporate sector. From its own savings rate of about 2 percent prior to 1990-91, the corporate savings of 8 percent of GDP now reflects a quantum jump in the corporate surpluses from which the savings arise. Its relative pre eminence in making investment a very sharp increase from about 4 percent of GDP in the early years of 1990s to between 12 to 16 percent level during recent years shows how the freedom of the market and the liberal, multifaceted public policy support, conducive global market trends and so on enable organized bit capital to assume the leadership of the growth proceeds and its pattern. But just as the growth rate has remained unsteady, so has been the case with investment behavior of the corporate sector, notwithstanding the steady support from public policies. Paradoxically, it seems the weaker the private corporate investment, the greater are the incentives and public policy allurements provided to the corporate houses by the government (SEZs being the most notable example) as according to the neoliberal recipe book for growth, rising investment is the best bet for clocking a high rate of growth. Given our extremely high concentration income, wealth and existing production and financial facilities under the control of the private corporate sector as also the ideological choices by the neoliberal power structure, it is the private corporate sector and its investment decisions that are the most critical determinants of the rate and pattern of the growth of the economy. Hence we devote a good deal of space to examine various aspects of the private corporate sector that seem to have a direct bearing on the rate and pattern of growth the Neoliberalisation process has obtained. In order to maintain the continuity of the present narrative, we take our analysis of the private corporate sectors agency function and growth leadership roles in an annexure as the end of the chapter. The point that emerges from this analysis shows how the outcomes emerging from the leading corporate role are deeply rooted in its character history and interaction mechanics, particularly owing to its crony behavior vis--vis the government leaders, mimetic preferences and partnerships with the global hegemonic centers and agents and weak and narrow focus, myopic and one sided self seeking relationships with the compatriots and the home economy. As a result it is futile to expect the private corporate sector to become either the harbinger of a sustained, healthy growth or of a pattern of development that serves the larger social/national agenda.

In theirs context a related aspect of the neoliberalixzed Indian economy and the state structure and processes can be seen in the scant respect it has for the rights of the poor and the advises. This is seen most dramatically and tragically in the dispossession of the lands, forests and water resources largely by coercion and on administratively fixed unfair terms in a regime swearing by the freedom of the market. The fact that even for the eight states for which data could be obtained, the loss of long term livelihood for several generations cussed by such forcible and often fraudulent land acquisitions exceeds the total private corporate sector generated organized labour market. Employment several times over shows the real face of the corporate sector led growth. It has gone to the extent of privatization of common property resources like rivers and the policy processes in general. The frequency of the scams, the mind boggling size of the illegal wealth unearthed and the involvement of the top rungs of the political, bureaucratic and corporate personnel in the scams are simply overt and partial manifestations of a disease that has gone deep in the Indian economy and policy both during statist policy phase as also during the current neoliberal dispensation. The hidden and open linkages between the corporate sector players, on the one hand and the political and administrative structures, institutions and processes, on the other, also cast ether shadow on the academic and cultural spheres and the judicial processes. True, such changes began taking shape soon after independence, if not earlier, and snowballed into major forces over time, particularly after 1990. Needless to say, in these structures and processes, both the causes and consequences are mutually dependent on each other: so much so that even some public enterprises tend to get tempted to follow these private corporate business models and are even admired for it as an example of management autonomy. It may be clarified that the detected and successfully prosecuted cases of the twilight zone underworld of Indias political economy cannot be too many as the culprits and the agencies that are entrusted with the task of detecting and prosecuting such actions are too close to each other to spill the beans, let alone penalize them in a an exemplary manner. Actually, among these three major structures, the shared understanding of the generally accepted practices considerably diluted the concern over these happenings. Of course, at the apex level of these three pillars, one saw little evidence of preventive action and moral indignation. Thus, the entire phenomenon of the illegal and back economy, with its deep symbiotic linkages with the political bureaucratic spheres and as an integral part of the

behavioural code of the ruling elites, both in the state and private sectors, becomes major influence on the pattern of economic growth and social mores and morals. At least, over the medium term, such perversions form the social angle do not seem to hamper the pursuit of growth and may even give a positive push to the rate of growth and a pattern of growth that reflects the values and preferences of the elites. Take, for example, the ballooning of the foreign travel bill of Indians over the last about Rs. 703 crore in 1990-91 to about Rs. 94,425 crore in 2008-09, an incredible increase of the order of nearly 134 times. It is well known that a good part of such travel is shown as business tour and the expenses become tax deductible. One also comes across reports regarding international participation in shady deals, cutting across national boundaries, for obtaining undue favours. At a practical on-going level, these global ties take the form of increasing use of the global tax havens for sheltering and launching illicit wealth, often collected in matter relating to defense deals, drug and human trafficking and now increasingly in the form of huge dealings in toxic financial assets (i.e., internationalization of the phenomenon of the underground, became and mafia economy). It does not mean that the gigantic magnitude, extensive spread and range of such activities can forever remain shrouded in the dark and undetected zone of the black, hidden economy without any risk or even some stray cases of detection. Actually, any functioning state has to an extent curb, and more particularly seem to be cubing, some of these activities lest it is left with too little of the growing incomes to cripple its functioning and lest it loses the fig leaf of legitimacy in the eyes of the public. And the state has also to ensure that its legitimacy does not eclipse in its totality on account of undetected black income and wealth that has a built in tendency to enlarge itself relentlessly. After all, the anti evasion agencies cannot be treated as sinecure agencies. If the state has to survive, seen to be legitimate and have a public face as per scripture or statutes and garner resources for carrying out the tasks that even the neoliberal agenda cannot take away from the state, it is necessary that the black economy and partisan activities and policies must be limited within the tolerance limit of the system, especially in country sphere periodic renewal of the mandate to rule is a constitutional requirement. However, it is difficult to determine such a limit of tolerance ex-ante. But operationally one does see the state moving in these matters, though over a long period the trend of gradual increase in the size and influence of the hidden and unsanctioned

economy my accepted pattern of behavior, as, for example, the practice of collecting corporate contribution and enormous spending on election and huge legally collected wealth in the form of pay and perks by the political class. Here it may be noted that by means of marketisation and deregulation a number of activities that were hitherto illegal are admitted into the fold of legality by way of economic and market reforms. No example would be better than the permission to import bullion and thus putting a virtual end to a very extensive underground business of smuggling. The same applies to many other imports particularly imports of luxury consumption goods, after the removal of quantitative restrictions on import and reducing the duties on these imports, such as those of swanky cars, yachts and private aero planes. One suspects that many such illegalities may get condoned by way of discretionary decisions or under the cover of legal wrangling or by attempts to describe patent wrong doing as error of judgment! These may well be among the factors that make a sharp demarcation between the black and white economy either at the theoretical or at the practical level, a rather difficult exercise as the actually operating arrangements are largely in the twilight zone. Our point is that these twilight zone economic activities are significant from the point of their contributions to increase output flows and higher growth, but at the same time they are also major influences on the perversion f the pattern of growth exacerbating poverty, unemployment, inequalities and so on while encouraging crass consumerism. These are mattes that call for normative judgment and the economics that certifies itself as positive science apparently sees little reason to give any place to these issues. Is it for such reasons that the positive economics pretending to be neutral between the happiness and pleasure of few vis--vis mass miseries is legitimately considered a dismal science? Actually, even with the elimination of detailed and discretionary controls and licensing accompanied by generalized free had given as a care blanche but the largest segment, in order to use the growth machine according to the needs and wishes of the oligarchies by ensuring that the excluded sections proved labour supply to them as and when required and on the terms they condescend to grant. They have mobilized or can mobiles, huge funds and they use them for the purposes of their choice. What is the great fun in owning when one cannot control the use of resources and wealth one is supposed to own? Do they not argue that property

rights are the major institutional prop for growth and its sustainability? Remember Douglas north? He was given the Nobel Prize for showing this. On the contrary, there are attempts to enlarge the compass of private property rights and smoothen its rough edges to make it an instrument for serving some limited social ends at least. It is suggested that this can be done to an extent by enlarging the scope of the conventional corporate social responsibility (CSR) in the direction of social enterprise. An essential point of these attempts is to influence the pattern of development so and to reduce its exclusive fixation with market demand and display greater responsiveness to social needs. Of course, development policies have to certain extent to be recalibrated for this purpose as demanded by enlightened self interest of the present power holders as well. Such counteracting decisions tend to become important as the real social requirements are not able to attract investments owing to incessant concentration of wealth and income in the hands of the crony capitalists. Take the case of huge outlays India has spent on hosting an international sports event, with huge leakages from her highly porous and leaky system (see Aiyar, Manishankar, Mainstream, 9 august 2010, for briefly and brilliantly exposing through the commonwealth games case the true nature of what is the state of affairs of Indias public spending system, including the decision making processes, criteria and values that matter with the planning commission and the union finance minister). The relative rates of expected returns and even adequate market demand for such frivolous and exclusionary investments may not be comparatively strong. Actually, it has been suggested by a member of the planning commission that even the loud talk about inclusive growth seems to be an afterthought made feasible by high rates of growth and the consequent surge in resource availability. Hence, the diversion of their surpluses for financialisation (use of funds for buying, selling and speculation in financial assets without any real sector counterpart, that is use of money for making more money without producing even a blade of grass), that is used for trade in shares, derivatives, commodity futures, and other new fancy financial instruments. How big and hyper growing these dealings have become is reflected in, for example, the combined annual turnover of the stock markets and commodity futures exceeding Rs. 196 lakh crore and Rs. 70 crore respectively in 2009,

that is nearly five times the GDP. This fact is of enormous criticality for the real character of the emerging economic pattern in India. The national stock exchange (NSE) is a major part of the predominance of the speculative and financialisation processes of the Indian economy. Its real character is not just the enormous expansion of its run over: what makes it even sharper and pointed instrument for the dominance of oligopolies is that in its cash segment the number of clients in the first quarter of 2010 was just 30.9 lakh only and in the futures and options segment 5.57 lakh. That is not enough to tell the full story of its narrowness: in its cash segment 451 clients accounted for 50 percent of its total turnover while in the futures and options segment. The number of dilates was 105 only (the Hindu, 10 September 2010). How these handful of persons carry out business, equivalent to a large and reckonable part of the GDP and make quick gains, treated very lightly or even exempted from taxation and the impact via wealth effect and diversion to other speculative markets, usury consumption, perversion of the democratic political process tell the story of the India that is the hard and unpalatable reality. In addition to the above, socially perverse use in the form of import of bullion for non-industrial purposes generally estimated to be in excess of about 800 tonnes per annum i.e. for personal wealth, accounted for 4 percent of domestic gross capital formation in 2008-09. One can add to such uses/misuses: real estate speculation, speculative purchase of land in prime urban locations as well as urban peripheries by the crony capitalists, so called real estate developers (owing to mix up of these spheres with the black economy, hardly any realistic estimates are available), mushrooming of about three crore NGOs many of them dependent on manipulated donations from the companies and private trusts, ostentatious spending on marriages, religious celebration under the banner of various Babas, Sadhus, so-called saints and modern Gods, vulgar birthday parties, pernicious activities of various types under the patronage of all kinds of clubs and sky is the limit kind of gigantic funding of elections and political parties and personnel, super luxurious virtually obsess, levels of extravagant lifestyle and so on are a few randomly picked up diversion of funds that show the unrealized and formant investment potential of the Indian business classes, mostly companies. Add to the above they became sums of the political and bureaucratic classes parked with these section (even without these underhand acts, data about the declared

assists of the parliamentarians and other election candidates arising from the probability of getting caught in some Satyam kind of scandal. The seriousness of the crony phenomenon can be gauged from the queries the PM raised in 2007: are we encouraging crony capitalism? Is this a necessary but transient phase on our development of early modern capitalism in our country? Are we doing enough to protect the consumers and small businesses from the consequences of cronyism? Do we have genuine level playing field for businesses? What should be done to inject a greater degree of competition in the industrial sector? (Quoted from a radical by Amit Verma, Beware of other cronies in viewfinder on Yahoo.com) can one not infer from competition, as is big government when big business and big government work in tandem with each other? The resulting cronyism is deadly for small businesses, consumer and, of course, the workers. It increases the divorce between growth and well being of the common citizen. Sometimes, it is suggested that marketisation, ending of public sector monopoly deregulation etc. are among the policy initiatives that have yielded rich dividends in arena such as civil aviation, telecom automobiles, urban housing boom and electronic media. How poor services, neglect of the poor and rural areas, misallocation of scarce resources to non priority activities by duplication of services, poor safety standards and frequently occurring scams have disfigured the record of privatization of these activities is store that is known but has yet to end its long waiting to be documented. The fact that hardly any other success stories are mentioned except the above shows by itself what little is there to show up. More particularly, by and large, the richer segments getting served by the above shows how verity many areas that need investment from the overall national needs, ad more specifically for meeting the needs of the masses, still remain starved of resources, including the elements of infrastructure in rural and even urban areas. What has happened to the telecom is a distortion par excellence in so far as, notwithstanding the usefulness of the mobile phone even for the casual laborers, its deep penetration in the economy turned the expenditure pattern and relative prices ropsyturvy: such as the strange fact that while 46 percent families have children who suffer malnutrition but nearly 700 milling person have acquired mobile phones with low tariff; one liter of milk costs more than a STD/ISD call for 25 minutes on a mobile phone! At the macro level, while the nation goes all the way to attract foreign exchange flows on capital account to meet the chronic and rising current account deficit, India is the largest importer of gold and such accumulation of personal wealth is now officially counted as part of national savings. Any number of examples, such as investment of

billions of rupees in spectator sports as big entertainment business, or as means to phony national prestige says as seen in the case of Indian premier league (IPL) and the commonwealth Games respectively fall in the same category. Another distortion of the pattern can be seen in transport services. The airlines and airports have proliferated but large areas in rural and semi urban areas have poor connectivity and have to make do with overcrowded and unsafe buses. Among the factors cited for the growth of left extremism by the price minister, physical isolation of the poor in general, and tribal people in particular, finds pointed mention. Even more striking is the projection that by 2016, the automobile sector is expected to contribute 10 percent of GDP and would almost equal by that time the share of cereals production, as a proportion of GDP. Given the sharing of some of these features with the richer countries (while India is placed at 134th place in the human development index, it is the 11th largest manufacturer of automobiles and auto components and is expected to climb up to the seventh place by 2016 with big global companies and Indian corporate giants contributing to the stellar achievement), it seems we have started acquiring some features of senility that is sign of mature, late capitalist economies (that is in relatively early stages of capitalism when over 90 percent of labour is still non commoditized)! The transfer of valuable land including forest land and the most fertile lands from the Yamuna-Ganga regions and at the cost of the farmers and small rural and urban people for airports, expressways and mining is something that has to be highlighted as aspects of the emerging pattern of growth that not only distances itself from the needs and aspirations of the people but deprives them of what little they have. We do not go in to the entire question of jobless and job destroying growth here all over again as it has been discussed separately in the chapter on employment in this volume. Thus, it is clear from the foregoing that the pattern of development is the most crucial and significant consideration for the people who have been socially excluded, because growth with the accentuation of other who have been socially excluded, because growth with the accentuation of the existing pattern leaves the majority high and dry, if one ignores the direct and indirect costs caused by such exclusion. Also, the pattern is no less critical for the ones who are commanding the economy and reaping a rich harvest by mean of the pursuit of GDP growth without letting anyone touch matters that can change the pattern in popularly desired directions. The deep and fare aching impact of all round liberalization, privatization and globalization, especially in financial and capital markets, commodity futures, partial capital account

convertibility and a very investor friendly and corporate sector friendly tax and public

spending fiscal policy regime have changed the leaders, beneficiaries and decisive influences guiding, running and enjoying the goodies of the economic growth acceleration seen during the last two decades. Thanks to these policies, as the NCEUS has pointed out we see a clear pattern of the included and the excluded. Actually, the two small top quintile groups have come to dominate the economy and policy as neoliberal orientating has given them the lead roles, unprecedented opportunities and all the conditions that facilitate the making associates in partnership with the global capital and involving the state processes and personnel as wiling patterns in ways that did not bother to draw too fine a line between legal and illegal when it came to accelerating growth under the triopoly. Little wonder some Indian companies, including some giant maharatna public sector companies have become global players, giving rise to the phenomenon of Indian origin MNCs. The limited evidence presented above too shows HW hollow and misleading is the use of GDP categories by the neoliberal school in order to appraise the outcomes of the process of Neoliberalisation. Table: Population in different expenditure classes In million S.no 1 2 3 4 5 6 7 8 9 10 11 Expenditure class 1993-94 Extremely poor (up to 0.75 PL) Poor (0.75 PL to PL) Marginally poor (PL to 1.25 PL to 2 PL) Vulnerable (1.25 PL to 2 PL) Middle income (2PL to 4PL) High income (>4PL) Extremely poor and poor (1+2) Marginal and vulnerable (3+4) Poor and vulnerable (7+8) Middle and high income (5+6) Total 103 172 168 290 139 24 274 458 732 162 894 1999-00 87 174 200 349 167 26 262 549 811 193 1004 2004-05 70 167 207 393 210 44 237 596 836 253 1090

Percentage share average Expenditure class consumer expenditure per capita per day in Rs. (pcpd) 1 2 3 4 5 6 7 8 9 10 11 Extremely poor (up to 0.75 PL) Poor (0.75 PL to PL) Marginally poor (PL to 1.25 PL) Vulnerable (1.25 PL to 2 PL) Middle income (2 PL to 4 PL) High income (>4 PL) Extremely poor and poor (1+2) Marginal and vulnerable (3+4) Poor and vulnerable (7+8) Middle and high income (5+6) Total 11.5 19.2 18.8 32.4 15.5 2.7 30.7 51.2 81.8 18.2 100.00 8.7 17.3 19.9 34.8 16.7 2.6 26.1 54.7 80.7 19.3 100.00 6.4 (9) 15.4 (12) 10.0 (15) 36.0 (20) 19.3 (37) 4.0 (93) 21.8 (11) 55.0 (18) 76.7 (16) 23.3 (46) 100.00

Notes: 1. Figure in bracket denote average consumer expenditure per capita per day in Rs. 2. PL refers to poverty line. Source: NCEUS. 2007 report on condition of work and promotion of livelihood to the unorganized sector.6

Table: percentage distribution of expenditure classes by social identity informal work Social categories (percent share in own total) STs /SC s All OBCs excep t All Muslim except STs/SCs Other* without STs/SC s, OBC Percent age of unorga nized worker s Illitr ates Primary and below primary

Education

S Economic n status o

Musli ms 1 Economy poor 2 Poor 3 Marginally poor 4 Vulnerable 5 Middle income 6 High income 7 Extremely poor and poor(1+2) 8 Marginal and vulnerable (3-4) 9 Poor and vulnerable (7+8) 1 Middle and 0 high income (5+6) All All (million) 302 391 138 12.2 100 20.1 100 15.5 100 87.8 79.9 84.5 55.4 59.6 57.1 32.4 20.3 27.4 1 2.4 2.2 11.1 17.8 13.3 22.4 33 20.4 39.2 22.3 34.8 10.9 21.5 5.1 15.1 8.2 19.2

& Muslim

2.1 6.4

5.8 15.

8.1 19

5.0 14.2

11.1 35.2

19.6 38.4

22.2 36.9

19.4 40.0

34.2

18.7

12.8

18.9

11

2.7

1.0

2.5

8.5

20.8

27.1

19.2

46.3

57.9

59.1

59.4

54.8

78.7

86.2

78.6

45.2 100

21.3 100

13.8 1001

21.4 100

258

423

270

164

Note: refers to persons aged 15 and above.

Source: NECUS. 2007, report on conditions of work and promotion of livelihood to the unorganized sector.7 Failing to succeed in the pre-designed role of returning a positive report card their capability to make a case for carrying forward the neoliberal agenda seems too weak to carry conviction. Among the elements that are fondly pursued by the neoliberal establishment mention may be made of de-controlling prices of the petroleum products, preparing grounds for selling to the people the rush into the Cancun process, allowing FDI in retail trade, fast moves to complete the process of capital account convertibility of the rupee, disinvestment of the shares of a large number of public sector undertakings, including some of the countrys best public sector banks, allowing private capital to start new banks (while the need is to curb the growth of corpulent financial sector), freeing of interest rates and so on. Apparently, the GDP centric criteria has been adopted for a further neoliberal push as it seems able to kills two birds with a single stone. While ensuring a failsafe return o far positive verdict on neoliberal processes an outcomes, it is also designed to deep at an arms length the things that can undo their game plan and enable people to move towards the assertion of their rights, particularly in a democratic polity such as ours. Hence, the attempts to ensure that any pattern other than that emerging under the neoliberal aegis simply disappear from the radar of public opinion. It is for such reasons that they adopt per capital GDP as it seems consistent with viewing poverty in absolute terms and as a substitute for social equality, or rather for denying the relevance and salience of equality, and it can view unemployment in subjective terms and divorced from livelihood adequacy and security and denude development of its core content. It seems to be obsessed with subjectively perceived ideas of do ability or pragmatism or comparative justice as these intellectual choices amount in effect to soft pedal the interests and rights of the majority of human beings and privilege and strengthen the position of that tiny section of global society that is enjoying, or either seems to be or is believed to be enjoying, the best of all the possible worlds presently. We have discussed some of the critical methodological special features of the neoliberal dispensation in order to adopt a different set of criteria than those related to gap alone as the be all and end all of development the GDP centric approached de link the question of poverty, unemployment and inequalities as distinct problems and give top priority to poverty alleviation as the key component of the drive towers inclusive

growth. It is inclusive growth understood as poverty alleviation (with poverty defined as per the neoliberal norms and quite undemocratically insofar as it is made consistent with growing inequalities and livelihood inadequacy and uncertainty). It is poverty alleviation that is hoped to pave the way in the airy-fairy long run for tackling unemployment and inequalities that are in any case not considered much relevant after the hump of poverty is crossed clearly, the problems other than poverty are apparently given lower or vague priority and are sought to be achieved essentially by reposing faith in the hitherto ineffective trickle down nun pull up processes. These approaches effectively reinforce the power and positing of the top echelons and in many versions treat inequalities and rights based effective employment for everyone as irrelevant (as Jadish Bhagwati puts it quite clearly, inequality had, in view no political salience. And so, even if inequality has increased in turn this increase is to be attributed to globalization, it is irrelevant and dispensable in the interest of strong incentives for growth and wealth creation. We consider it artificial and anti-development to treat the three issues of poverty in the manner in which the currently emerging neoliberal inclusive growth theory approaches it. Glimpses of the Growing Triad of Poverty, Unemployment and Inequalities Given strong inter relationship between poverty, unemployment and inequalities it would be misleading to pick up poverty data alone, especially the data relating to absolute poverty determined on the basis of a perverse poverty line fixed nearly two decades earlier than the onset of the neoliberal era. More particularly, it would be misleading and incorrect to depend on official poverty data owing to the fixation of the poverty line at a sub unmade level, indefensible both in its absolute as also relative sense. Hence, the inappropriateness of the inferences about the nature and magnitude f social change and the present position f the Indian masses under the neoliberal processes on the basis of the official poverty data alone. More specifically, let us see some evidence on the question of poverty, unemployment and inequalities, along with examination of some select aspects of Indias manufacturing sector and external economic relations that seem to be able to show how did industrialization and globalization as the key processes impact the key questions facing the country. Though the question of employment has been dealt with separately at some length in the chapter on employment for the sake of showing how the changes in poverty, inequality and unemployment are closely interrelated, we have to make some reference to the impact on employment as well.

We have seen above the division of Indias population in various monthly expenditure classes. These NSSO data can be used to indicate the extent of poverty unemployment and inequalities in India during the period 1993-94 to 2004-05; that is roughly coinciding with the era of Neoliberalisation. The first four expenditure classes have per capita per day average consumption ranging between Rs. 8.9, Rs. 11.6, Rs. 14.6 and Rs. 20.3. It does not require much expertise to discover that in India of early 21st century per capita daily expenditure range of Rs. 9 to Rs. 20 is clearly grossly inadequate to give a human level of living. But the fact is that as many as 81.8 percent, i.e., 73.2 crore Indians in 1993-94 and about 77 percent amounting to 83.6 crore Indianans in 2003-04 had just this level of living! It is also clear that the number of persons with such abysmally low level of living increased while GDP continued to grow at a faster than the usual historically experienced rate. In addition to the NCEUS data cited above, it is possible to fall back upon a whole host of sources, macro, micro, regional and sectional to further corroborate these trends. It is not surprising but is indeed shocking that during the last two decades there occurred such a huge increase in the extent and depth of deprivation and social exclusion. Since no commitment was made to make any visible difference to the

hitherto non-available guarantee of the basic and closely inner connected rights to participate in labour market democratic processes and civil society along with most critically the capability to enforce these rights, just as neither any commitment nor any efforts were made to privet a high level of personalization concentration corporate power and its inimical effects such as social exclusion owing to the cornering of the gains of the GDP growth, there hardly exists any reasonable basis to look for such results. As seen above, at least some planners admit that the growth was not meant to be inclusive and it was an exposit exercise to float certain ideas/programmes about inclusive growth. It is also clear that the so called poverty alleviation measures, supposed to be funded far plentifully out of increase revenues from higher GDP and also by the promised use of the funds mobilized by means of disinvestment of the public sector enterprises (the total over these years amounted to nearly Rs. 57.68 lakh crore for details see R.K. Mishra and J. Kiranmai the present volume) could not make any departure from their customary low levels. In fact, it has been maintained that Indias public spending on the social sectors, taking central and state governments expenditure together as a percentage of GDP, has not increased from the 1990s (Ravi shrivastiva, in forbs India, 5 march 2010:53).

It is the grossly inadequate allocations and the partial and discretionary coverage of the needy and deserving people on terms that were far from fair and just and the rootedness of such designs in the pro market and pro capital commitments of the process of Neoliberalisation that can made one understand the worsening of the basic problems during these years. Actually, the agency function in the market framework of the existing institutions and resource holding positions along with all the needed and demanded public policy support were bestowed one microscopic minority for obtaining the gains in terms of aggregate output produced in the country. It is simply unrealistic to presume that these processes would have delivered the good for the left outs and the discriminated even though they and their socio economic situation were kept out of it at every stage. The above account of normally what is considered the poverty phenomenon is also a graphic account of the manifold failures of the rate of growth to get translated into effective employment for the outcastes of economic development. Hence, the relative position of the marginalized groups at the bottom of the social pyramid worsens. We have argued the triad of the three basic social problems moves together. Thus, given the large scale prevalence of low and inadequate wage rates, inadequate and uncertain hiring and that too at wages that are far from adequate for a minimum level of living in most cases, especially as it downgrade the priority to the production of wage goods by means of technologies that incorporate the labour force productively and effectively, one can infer that in the Indian conditions poverty, unemployment and worsening of the relative position of the poor and unemployed and ineffectively employed people go hand in hand. What is called total open unemployment, that is total wordlessness and a complete lack of any income flows is clearly an absolutely rate, if not an impossible, situation say for vagabonds or freaks and is not consistent with human beings living in society as they exercise the option of moving into own account low income informal survival activities. Thus, what the per capital daily consumption expenditure data above show is that a large number of people in India remain deprived of even the minimum essential wherewithal for human existence. This situation has worsened with the years of neoliberal pursuit of economic growth. One has just to compare and contrast these levels of expenditure for an overwhelming part of our people with the startlingly high and but high visibility vulgar spending spree by a very small section of society and it becomes clear who has devoured all the gains of high growth.

See the glitzy magazines, high end shopping arcades, all star rated hotels and resorts, sale of luxury villas for prices that are at par with the highest in the world, stores of the police or tax authorities raids on corrupt officials from the lowly police station head to the highest ranking top guns in bureaucracy, business and politics that unearth simply stupefying sums of stinking wealth and the advertisements of super deluxe residential condominiums professing to create the ambience of the richest countries in the midst of one of the most poverty dominated societies that is India, the list can go on, and one wonders if the casual empiricism of such observations it not more telling than the results of systematic nationwide sample surveys? This then becomes the story of huge inequalities that have no functional justification and does not seem to disturb the placid tranquility of the top brass guiding the democratic governance of the worlds biggest democracy. Thus, the inescapable conclusion is that not only poverty and unemployment but growing inequalities have been increasing during the era of neoliberal twist to the public policies. Their concurrent and mutually reinforcing growth are built in into the basic model of the functioning of the economy and polity, especially when the moral dimension has been so completely washed out under neoliberals blind pursuit of individual greed as rational action that valuelessness seems to region supreme. The mismatch between occupational structure of the workforce and the sectoral shares in GDP and its increasing spread provide irrefutable macro level evidence of these disturbing socio economic trends. The neoliberal regime, with all its sins of commission and omission, must be held responsible for the simultaneous worsening of poverty, unemployment and inequalities over these 20 years, of course, deepening and widening all the iniquity causing processes that were bequeathed to this policy regime by the preceding one. These emerging traits also suggest that various schemes of poverty alleviation by providing some ad hoc work for a predetermined nominal wage at the local level on some temporary make-do activities and construction of some common facilities can hardly be considered employment or make a deep and lasting impact on reducing poverty so long as there are not enough regular employment opportunities in a fully fledged sense for every adult willing to work and growing inequalities persist and intensify. There are serious flaws in the use of consumption data based on country wide sample surveys to be able to capture the prevailing pattern of resource holdings and the

resulting income flows (the essence of economic inequalities in wealth, income flows, social and economic influence and power along with things). It is these issues that contribute to inequalities in the level and pattern the social well being and position of the people. For example, increased privatization and commercialization of education and health services is another relatively new factor that has severely compromised the role that education as a great leveler this been performing, particularly for the middle income groups during the pre neoliberal era, while costly and unevenly distributed health services and frequent eruption of epidemics drive an increasing number into the clutches of money lending shylocks. But owing to our infamous inequalities, medical and health services get disproportionately allocated for the rich and get commercialized including in the form of medical tourism for the foreigners. However, relatively more serious consequence of such socio eco nomic structure and neoliberal policies is the fate that befell our manufacturing sector during these two decades. Stunted and Dysfunctional growth of the manufacturing sector Among the major growth leaders on which a great deal of hope is pinned for accelerating growth under neoliberals is the resurgence of the manufacturing sector by the state supported corporate sector, increasing inflows of foreign direct investment (FDI), enlarged export opportunities under free multilateral trade regime and overall higher rates of investment in infrastructure facilities. The chosen leader of the marketwise globalised privatized growth process was as seen above, the private corporate sector; It controlled and operated a major part of the organized manufacturing sector. Lately, the share of organized manufacturing GDP in the total manufacturing GDP has been on the rise, going up from 65.10 percent in 200102 to 67.45 percent in 2007-08 with a corresponding decline in the share of unorganized manufacturing. The neoliberal policies lined up a litany of measures to support the manufacturing sector leadership of the corporate conglomerates. To mention a fees: de reservation of the industries reserved for the public sector and the small industries sector, de-licensing and deregulation of the micro level decision making areas, including location, technology, pricing and hefty reduction in various taxes applicable to industrial ventures, 25 percent depreciation rate for tax purposes, freer import of capital and other goods needed as inputs and components, easy and incentivized access to capital markets, banks, development financial institutions, external commercial borrowing, financial

liberalization and soft interest rate regime setting up of SEZs, easy land acquisition for setting up industries maintenance of an inflationary macroeconomic environment so that the resulting distributional changes increase the relative shares going as operating surpluses vis--vis the compensation of employees and the list can go on. It is a different matter that the wish list of the corporate sector, whether routed through the lobby organizations or through private crony channels, is never ending. The simple point is that the emerging policy regime has hardy left any stone unturned to create conditions akin to those seen during the phase of early modern capitalism dominated by robber barons in the pioneer industrial countries. Both in absolute and relative terms, the stage was set for private corporate sector directed growth in a framework that is best described as market led state processes for increasing the rate of growth of manufacturing industries? What has been the outcome of all these changes? We have seen initial years growth of other manufacturing sector was followed by a slow down and then it pick up again until 2007 when signs of another round of slowdown preceded the great recession. The alacrity with which a liberal stimulus package for warding off the slowdown was initiated did help to save the manufacturing sector from falling a victim of the global economic crisis. We present in here a few select aspects of the performance of the manufacturing sector based on the annual survey of industries (ASI) data for this period. These data go beyond showing the increase in number of factories, value of invested capital, and value of output, number of employees, their emoluments, and profits and so on. They also show certain other aspects of other changes taking place in the manufacturing sector. For one, it can be seen that the number of factories was changing from year to year, indicating an ongoing process of entry and exit. Though overall the number of factories went up during the period by some thirty thousand, something like by 25 percent of the 1990-91 number, the fluctuations in the number of factories was also quite marked and has unsettling implications for all the stakeholders. Naturally, these changes in the number of factories lead to fluctuations in the number of employees and person engaged. It increases the vulnerability of labour, particularly in our king of labour market conditions of huge excess supply and the growing proportion of informally hired labour in the organized factories sector. It is owing to such factors that informal and casual labour hiring increase and labour has

little capability to resist these practices. An overall picture for the period shows that while invested capital increased 4.62 times during the period, output went up by over seven times. Total number of employees was a fluctuating quantity; reached a peak of over one crore employees in 1995-96, then slumped and again rose to over 90 lakh in 2005-06. During the following period, the level of employment worsened owing to the global recession of 2007-08 as the stimulation package focused directly on sales and profits with little positive outcome so far for the retrenched workers. Table: Performance of the factories sector (some select years) 1990-91 Number of factories Number of employees Number of persons engaged Total emoluments Volume of output Invested capital Profits 110179 8162504 1995-96 134571 10044697 2003-04 129074 7803395 2005-06 140180 9038523 Change 30001 876019

8279403 20586 270564 194913 11389

10222169 45116 670514 221234 44047

7870081 58337 1287401 679598 92366

9111880 74008 1908355 901579 184463

832477 3.59 7.05 4.62 16.2

Note: value in Rs. Crore, others absolute numbers. Source: ASI data, as given in RBI handbook of statistics on Indian economy: 2008-09: 76 77. The number of employees just tells an incomplete story unless combined with total emoluments story. Against over 7 times increase over the period 1990-91 to 2005-06 in output value, total emoluments increased by 3.59 times, only. The real heart of the story unfolds itself when we confront the fact that over this period the profits increased by 16.2 times. Thus, it is clear that the manufacturing sector growth meant little for the working people especially as it forced them to either continue their precarious and frustrating dependence on agriculture or worm their way into existing or innovated informal activities but remained a virtual bonanza for the corporate

bosses, though even they either moved to the tertiary activities or adopted the acquaints and mergers or other green field investment routes out of the country. Actually, there is another source for organized employment sector data to supplement our conclusions. The regular employment monitoring done with statutory backing by the labour ministry of the GoI shows that private organized manufacturing sector employment was at an abysmally low level of 47.50 lakh persons in 2007 in a country with over 45 crore workforce. Compare these factory sector data against the 1990 level of 44.81 lakh and one notices extremely low employment growth compared to either investment or output or profits or the needs of the young persons entering the workforce and passing out of the portals of the institutes of higher learning. Actually, it is futile to face of prevailing excess supply of labour. The prospects for reasonably increasing wages in tandem with the other variables is polite further owing to technological choices, large and growing use of imported capital goods, relatively low rates of interest, extremely liberal depreciation allowance and the pattern of demand weighing in favour of high income goods that make liberal use of capital. Moreover, large year to year changes in the level of total employment expos the falsity of the claim that the Indian employers face a rigid or inflexible labour market. On the contrary it is the workers who face the axe all the time, notwithstanding the legal protection for the employees of the large units. The range of fluctuations from the peak of 52 lakh in 1998 reached the low of a little above 44 lakh in 2003 bring out the real life flexibility in the hiring and firing practices of the industrial employers in India. Let it also does over the unprecedented high levels of FDI inflows mean next to nothing to the common people who look for more job opportunities from such inflows than anything else. The ASI data on the performance of the factory sector includes the employment in the FDI based manufacturing units as well. Hence, the low and fluctuating level of employment fails to credit the FDI inflows with pulling up the overall employment level. It employment may well have been lower than what is reported in the table because the FDI could have been to an extent, displacing local investment. However, this is something that needs investigation. Table: Organized sector employment public and private sector (Lakh)

Public sector 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 187.72 190.57 192.10 193.26 194.45 194.45 194.29 195.59 194.18 194.15 193.14 191.38 187.73 185.80 181.07 180.07 181.88 180.02

Private sector 75.82 76.76 78.76 78.51 79.51 79.30 85.12 86.86 87.48 86.98 86.46 86.52 84.32 84.52 84.52 84.52 87.71 92.40

Private manufacturing 44.57 44.81 45.66 45.45 46.30 46.30 50.49 52.39 52.33 51.78 51.85 50.13 48.67 44.89 44.89 44.89 45.49 47.50

Private trade 2.91 3.00 2.96 3.01 3.02 3.02 3.17 3.17 3.21 3.23 3.30 3.39 3.35 3.51 3.51 3.75 3.87 4.10

Total 263.53 267.33 270.33 271.77 273.75 275.25 279.41 282.45 281.66 281.13 279.60 277.89 272.06 264.43 264.43 248.58 269.23 272.76

Source: Gol, Economic survey. (Various issues) Coming back to the divergence between the performance in terms of emoluments of the employees and the profits generated for the investors and controllers of industrial units, its implications for the product mix and size and growth of the home market and stable and gowning demand to sustain manufacturing growth are not very positive and tend to restrict the overall position of the sector in the GDP and occupational structure of the workforce. Thus, we see the uncomfortable fact that despite so much brace talk of the drive to industrialize, the GDP and workforce absorption share of the manufacturing sector both are stagnating around 16 percent.

This is a major indicator of the inappropriate pattern of industrial growth. One may ask another question: what for are we aiming at increasing the rate of growth without concerning ourselves with the patter or content of doctrinal growth, particularly what is the promise that is holds for the common people, especially considering to the displacement form land, frosts and access to water resources that these investments impost on the people. Do we, at the end of the day, ask ourselves questions in terms of fair play and social objectives? What happens to employment availability of the goods of mass consumption and purchasing power in the hands of the people? Whiteout a plentiful supply of such goods and equipping the potential consumers with the means to buy what is produced, neither poverty nor inequalities or unemployment can be reduced. As industrialization under the control of Indian big business and its external counterparts makes a heavy draft on our natural resources and investment resources (through e.g. working capital drawn from our commercial banks and capital from our stock exchanges after listing of these companies on our bourses) and creates and unequal playing field for the small micro and medium enterprises, it is not the total output growth but its sharing between different sectors that influences the well being and welfare effects of growth hence, it is imperative to relate it to the needs and aspirations of the people who are deprived of the alternative uses of these sources for sake of manufacturing sectors growth in the beaten track. With a small base of 25.3 crore persons who constitute what the NCEUS call middle and high income groups whose per capita daily average consumption expenditure amounted to rs. 46 in the year 2004-05 (i.e. double the national average consumption spending and over 5 times that of the lowest expenditure group) and also factoring in the massive consumption and spending level inequalities within the middle and high income groups, it is not clear that by persisting with the present trends how far is it possible to make the manufacturing sector the leading sector of our economy and absorb our massive labour force growing by about 1.2 crore personas annually. Another major snag making the going thought of r the manufacturing activities is the competition emerging from freed and low duties based imports, as we see in the next section. It seems the failure to create a massive and expanding home market by enabling the common people to have a meaningful life with dignity and also privilege the other qualitative aspects of development is endemic to the neoliberal path hence, its fixation with the rate of growth of GDP and the all our efforts to create large and growing export markets to fill the void left by a small and slow growing domestic market.

De-industrialization of India: a little noticed outcome of the Present wave of globalization-led tsunami of imports Enthusiasm and self congratulation over high rates of growth may well be misleading for another set of relatively little noticed reasons. No yardstick or standard is set against which the rate actually attained is to be compared, except year on year or average create of growth calculations: the immediate past experience seems to prove an adequate basis to be satisfied or dissatisfied with the actual growth rate. Even international comparison may well put one of the actual growth rates. Event international comparisons may well put one off the track insofar as the comparability of the chosen countries is taken to be axiomatic. A complex and many sided analysis is needed to show what the growth rates tell, conceal and misrepresent about the health of the economy. Of course, these statements are commonplace but it is owing to the omnibus use of the GDP and industrial growth rates as such that it becomes essential to draw attention to such an elementary methodological issue. At this stage, our purpose is to seen the external trade context. Relationships of the growth of the economy in general and of the manufacturing sector in particular. The point is that a notable surge in external trade has been witnessed following Indias joining the WTO and opening up of the economy. We saw some 23.4 times growth of imports and over 23 times in exports over the period 1990-91 to 2007-08 compared to current prices GDP growth of two and half times greater than the growth of GDP. Apart from removal of quantitative restrictions, the average import duty collected as percent of imports was successively brought down from 21 percent in 1999-00 to as low as 7.4 percent in 2008-09 (economic survey 2009-10: 172). It is clear that even with the local level exercise of sovereignty a country in the era of asymmetric globalization can, and sometimes does, drastically reduce the levy of duties on freely permitted imports. Thus, the expansion of the imports. Thus, the expansion of the imports of manufactured goods from the rest of the world into India has gone so far as to catch up with and become equal to the total volume of manufacturing sectors GDP and in the year 2008-09 actually came to exceed the latter by as much has over 18 or 18 percent.

The pursuit of industrialization as the key instrument and essence of economic development, including a long phase of import substitution has all along been considered as the defining element of our industrial policy. Major public policy and fiscal support was provided to this objective. But the opening up to the economy simultaneously with the freeing of domestic big. Organized industry from what were described as crippling controls and regulations could not reduce our reliance on imports of manufactured goods and their rapid growth, both in absolute terms (leading to enormous and growing trade deficit as a near permanent feature of Indias external account) and relative to both our growth of manufactured exports and total manufacturing sector GDP. Clearly, the trend of growing imports of manufactured products became a virtual tsunami of imports. It is well known that a large number of factors worsened the prospects of rapid and consistently rising industrial growth, its sustainable performance and capability to buy our import requirements on the basis of our exports of manufactured goods. Among such pro import measures of manufactured goods that turned out to be ipso facto negative to the growth of domestic industries, mention may be made of joining of WTO and becoming a part of the restriction free multilateral global trading system among countries with vastly disparate productive competitive strength, the comparatively short period of learning by doing experience of Indian manufacturing activities vis--vis most of her trading partners especially in the case of industries that came up in the wake of the Mahalanobis pattern of industrial structure, low effective consideration given to the vast needs of productive absorption of our huge unused work force in high productivity industrial activities and thereby expand the home market and so on. All these queered the pitch for our domestic manufacturing sector. Instead we went in for WTO compatible policies by removing quantitative restrictions on imports, reduction in average rate of duties on imports, not even bothering about the relativities of excise imposts and import duties in many cases from the point of encouraging domestic industrial growth. Little wonder today our manufactured goods imports have come to exceed d our domestic production of such goods by nearly one fifth of the latter and have been nearly on par with our home production during the preceding few years. Such a high proportion of imports particularly of manufactured goods and thus export of employment

generating work can hardly be considered a sign of healthy and structurally robust growth process. It is a major factor debilitating our drive to industrialize. True, a part of our imports of energy sources and some part of our import of manufactured goods also enters our exports production. But given our domestic potential in the field of energy, including the need for a variety of reasons to be somewhat conservative in the dependence on modern means of energy and the global cut throat competition for such energy supplies, it s both a public policy and entrepreneurial failure and myopia that our dependence on energy imports is getting translated in to import dependence of manufactured goods as well. Bring out that for the last few years India is using more imported manufactured goods than domestically produced ones and the margin between the two is disturbingly large and growing and is direct consequence of the policies we have adopted. For a country of Indias size, diversity long history of industrial growth, entrepreneurial classes, capable labor and diversity of natural resources and, more importantly, a s serious employment opportunities deficit, such a huge export of our demand is a serious matter; all its costs and benefits need to be thoroughly investigated. More so when we see how so many WTO compatible measures to curb the growth of imports are in use by a number of countries and blatant discriminatory policies are followed by the countries such as the USA against Indias IT and BPO sectors as reflected in the recent U.S. moves. Of course, one would like to place the import scenario vis--vis what happened on the export side f our foreign trade as globalization is in principle a two way street. As mentioned above Indias exports too showed robust growth and the ratio of manufactured goods exports to Indias total domestic output of manufactured goods also increased along with the increase in share of Indias manufactured goods exports in her total exports. The ratio saw comparatively speaking, limited improvement and hovered in a narrow range of 8 to 10 percent of our manufacturing sector output right until 199091. But opening up of the Indian economy, WTO-led multilateral trade liberalization and vigorous export promotion saw the ratio going up and by 2007-08 it reached the height of 31 percent of our domestic production of manufactured output. However, it is clear that the good growth of exports could not come anywhere near the tsunami of import. The share of manufacturing exports as percent of manufacturing.

What is critical to the socio economic and long term development impact of these far reaching facts (surprisingly hardly receiving the notice they deserve) are that the share of manufacturing sector in the overall GDP and in workforce remain stuck at around 16 percent. Moreover, given the extremely low level of total formal employment in originated manufacturing as seen above the large-scale export of job opportunities entailed by the massive surge of imports that have swamped domestic manufactured output is something that should make one raise a few hard questions about the real intention and motive force in walking the neoliberal, globalised growth path. It seems unlikely that even during the first wave of de-industrialization imposed on India by the colonial rulers the share of home produced manufactured goods could have shrunk to such a low level, indicating how India is losing her manufacturing sector edge. It is clear that most of the hopefuls in the army of young entrants who are waiting for new work and income opportunities in the dynamic manufacturing sector may have to continue waiting for long as India enters in to free trade agreements (FTAs) with the United States, European Union countries and ASEAN countries. Can India afford to be so generous towards her trading partners mostly the highly industrialized rich countries? It is nice to hear that the growth of the Indian economy is driving the revival of the recession hit economies of the USA and EU countries. But let us not forget that the price for this generosity on the global plane is paid not by the rich owners, and CEOs of the Indian corporate sector. Many of them are now importers, re-packagers and traders of manufactured imported goods and are making investments and taking over companies abroad. Many stalwarts of Indias big business houses are now major players in the global financial markets as also in the market for corporate control. Even with partial convertibility of the rupee, legal capital outflows are increasing parallel to the illegal stashing away of huge hoard of black incomes and wealth in various tax havens. Myopic and costly management of the external account: What price for averting a replay of the foreign exchange crisis of early 1990s? Actually, the price surging imports and ballooning current account deficit by the short term focused methods of managing the external accounts and payments position is going to be very heavy.

True, the country has avoided facing a balance of payments (BoP) crisis of the kind that was used to precipitate the neoliberal transition. But the questions: do we have a healthy and viable foreign exchange position? Presently, our huge and increasing current account defect is financed by drawing form our overflowing foreign exchange reserves. But these reserves have been accumulated by means other than our weaning or trade surplus. Our chronic deficit on this account has risen sharply from Rs. 17,366 crore in 1990-91 to Rs. 1, 32,271 in 2008-09, i.e., a more than 7.6 fold increase. Thanks to substantial increase in our net positive earnings on the invisibles account, a change from the negative figure in 1990-91 to almost Rs. 41,00,000 crore, the growth of our current account deficit has been somewhat moderated. A summary table of some select items of the balance of payments account over the period of globalization gives the information to highlight short term patchwork arrangements that impose huge direct costs and indirect costs in many different directions. Let us highlight some features. Trade deific is partly covered up by the earnings from the export of services, mainly BPO and IT related services which are given liberal incentives for growth. The growth of these activities has turned India into virtually a backroom office of the world. The invisible earnings are more or less half of the merchandise experts earnings and are heavily backed up by tax brads and the seated labour of an army of young persons with expertise in spoken English for whom a bleak future stares in the face as they hardly have any job security. The companies providing these services have been called body shops. The financing of the current account deficit by enticing short terms capital and other financial inflows are also used for building the reserves of foreign exchange. However, though the country is spared the responsibility of serving and repaying debts, both the process of building up and holding these reserves required India to stick to policies that please and find approval of the international financial community. The capital inflow and outflow controls are getting relaxed and flight capital is given a red carpet welcome. The black wealth takes advantage of these openings and gatecrashes in the form of round trip paring. The eagerness to permit FDI in retail at the cost of small and unorganized retail sectors largely own account workers, whose numbers are equal to the entire workforce this has been given some livelihood opportunities by the entire organized sector over its

existence of over one and a half centuries, is a latest example of how there is an increasing divorce between the peoples interests and the pro-big capital, organized foreign and Indian capital. This is how a foreign exchange crisis of the kind that plagued the Indian economy in early 1990s is being avoided by sacrificing Indian employment opportunities and allowing foreign financial and interests to dominate the Indian policy space, stock exchanges and make huge speculative gains in them. Table: Indias balance of payments (select features for select years) 1990-91 to 2008-09 S.no. 1 2 3 4 5 6 7 8 9 10 11 Item/year Imports Exports Trade balance Net invisibles Current account Capital inflows Capital outflows Net capital inflow Loans Overall balance Foreign exchange reserves 4388 184482 836597 1230066 1990-91 50086 33153 (-)16934 (-)433 (-)17366 202 19 183 9929 (-)4471 2000-01 264589 207852 2006-07 862833 582871 2008-09 1341069 798956 (-)542113 409842 (-)132271 74485 731725 11760 19284 (-)9705

(-)9438 (-)279962 45139 (-)11598 80824 54080 26744 24459 27643 23579 (-)44383 600951 534160 66791 110434 163634

Source: economic survey, Gol, various issues.

The fact that such inflows lead to excessive growth of money supply (M3 increasing on an average at the rate of 18 percent per annum over the last 20 years) has been a factor behind intense inflationary pressures in the economy during the period and has reduced the purchasing power of the rupee to just 29 paisa compared to 1990-91. The intensification of inequalities by the inflation task imposed on the masses and pocketed by the well off business classes are also a part of the social and economic cost

of the emerging trends both in the home economy and in the balance of payments account to the integration of the Indian economy into the current wave of G-7 countries led globalization. These are the methods that have been adopted to win and retain the confidence the international financial community, including the highly partisan and suspect credit rating agencies. The direct financial scoff these foreign exchange reserves, invested largely in low interest bearing U.S. government securities (under 3.5 percent) which involves, it is believed, around 7 to 8 percent outgo, is also substantial. The cost in the form of lost employment opportunities owing to a part of the imports being displacement imports is also huge and is imposed on those who share not a single paisa of the benefits from the grand game of globalization. The cost of ballooning imports age borne by the denial of decent work opportunities to millions of Indias youth who are made to pay through the nose for the costly, indifferent quality of education that has become one of the most lucrative businesses, at times even carrying the tag of philanthropy, for all kinds of generally shady capital. A swanky campus and all kinds of physical facilities advertise education (mainly, higher and professional education) the way cosmetics, toothpastes,

aphrodisiacs, quick fix quack medicines and films are advertise@ any moneybag can fool to the young hopefuls by alluring advertisements and capitalize on the legitimate lure of getting higher education degree of spurious value in a highly competitive job market. The worst part of the story is that most of these young persons are made to pay through the nose for what is marketed as world class education for whatever it may mean. With most uncertain prospects of regular job, these young persons have been turned into indentured labour whose education loan liabilities were as high as Rs. 35,000 crore in 2009. This is symbolic of the false creams entertained by the middle income groups, mostly urbanities, who look at some visible clue about the incredible number of frustrated dreams for each story that finds its way to the third page of the English newspapers. An overview of the emerging social landscape Thus, in various inter connected ways the story is clear and the evidence for it is strewn everywhere: more at the ground level than in the cold statistic.

The last two decades have seen the suicides of millions of farmers (remember the early British period statement by a governor general to the effect that the bones of the farmers are bleaching the plains of north India around the time the first deindustrialization was forced on India and most tragically a number of innocent lives were lost in the armed struggle of the tribal people and poor rural population in hundreds of districts) as if these are not powerful enough signs of the way things are going from bad to worse for the common citizen, with two signs of a better dawn around the horizon, we see the eruption of millions of minor mutinies that so frequently and largely aimlessly break out with or without pretext throughout the length and breadth of the country. These eruptions are marked by street violence and public anger that cause a huge damage to public property, social tranquility and faith in orderly functioning of the nation. Most tragic is the fact that often these acts of street violence take away innocent lives. Not that the neoliberal establishment can, or does, close its eyes to the hard fat s strewn everywhere around us. The reality is so omnipresent, stark and compelling that at least some enlightened proponents of neoliberals gives vent to its disturbing features that increase the cost of maintaining the present order. Take the case of side spread and violent upsurge the country is witnessing over a very large part of the country with growing intensity (at least, so far) and has been going on over the better part of the present crony capitalist era (the counterpart of early modern capitalism with co-existence of certain features of late, decaying capitalism). In April 2006, the prime minister of India explained to the chief ministers of the states the causes of left extremist violence in terms of seven factors: exploitation, artificially depressed wages, iniquitous socio economic circumstances, lack of access to resources, under-developed agriculture, geographical isolation and lack of land reforms (PMOs website, also reported in the Hindu, April 2006). A statement of this kind is striking for its validity, clarity and forthrightness. Obviously, it is an unexceptionable diagnosis and can be faulted at a great cost only. Our examination of the 20 years of the main thrust of social and economic change in India indicates that most of what all has gone wrong as disclosed in the statement quote above can be traced to the devastating effects organized big capital policies dominated by narrow interests and imposed by crony and self seeking politics run increasingly as family businesses of respective party supermoms and high commands.

Though these trends are out in the open for the last 20 years or so as never before their beginnings and roots do go back in the past, including the immediate past. It is also clear that these seven ills are neither confined to the regions that are presently going through such volcanic upheavals not can they be tackled by flower pot palliatives such as a better delivery of the inadequate and unsuitable schemes of development. However, the medium to long term role of the latter in building up the social, economic and democratic muscles of the people are undeniable. Thus, what is called for is a through re-examination of the payoff and costs of the experiment with thoroughgoing marketisation and globalization privatization and continued efforts to push more and more in this directing. Once made unviable owing to the entry of both big desi and foreign capital in retailing, the desperation of the masses, especially the young would reach a new crescendo. Obviously, the up gradation of the market from the position of a servant to its enthronement to the position of the master of the social and economic processes amounts in effect to ever growing polarization reflected in the marginalization of those at the social periphery and increasing hegemony of those at the top slots. The net result of all these changes in the policy matrix (their ends, instruments and specific forms and areas of operations), some of which have been long terms considerations have been given up in favour of all that the artificially assumed individual rationality and motivation dictate and the state positions itself to facilitate and protect the turf and domain of these elite, cocooned economic and financial decision makers in the economy. True, like Margaret Thatcher, our policy makers do not say there is no society but while acknowledging its existence and value, and even giving lip service to social objectives and concerns (recall the rhetoric of reforms with human face and inclusive growth phraseology) utter neglect of social concerns are writ large on the decision of the agencies operating in the public domain. An exercise to start listing the instances of sacrificing or bypassing social concerns and privileging personal/private and at the most highly partisan/narrow cancers of the better off groups, are visible at every step of the public sphere and of course extends beyond government activities. The decision to blow up an estimate sum of something like Rs. 60,000 to Rs. 80,000 crore (a more realistic estimate concerning direct expenses would possibly not exceed Rs. 30 thousand crore or so) on hosting commonwealth games 2010 in Delhi for some false and vainglorious notion of national prestige easily belongs to this category,

as has been motioned earlier. After all, the whole world knows where do we, that is, we the overwhelming majority of Indian people, stand. A recent UNDP and oxford project on human development indicators, reported all over the world and based on a multidimensional poverty index that is far more comprehensive than the human development index, shows that eight states of India is home to some 41 crore poor and this number exceeds the number of poor in as many as 26 poorest African countries (times of India, 12 July 2010). One is struck by the megalomania of those who claim to be world power with such a sorrowful state of affairs as our daily existence. We do not want to go on listing even the most atrocious of such daily happenings lest our account becomes a sob story. The essential point that emerges from

dispassionate examination f the current Indian social landscape is t evaporation of social and communitarian ethic and pursuit of private profit as the hallmark of civilization. True, instant social justice in the face of centuries of accumulated backlog of injustice another delivered but the change must move at least directional in the desired order of things and more critically abjure change stat intensify the negative features our history, early, and recent, has burdened us with. Even if we are set on the pragmatic pursuit of comparative improvements, these must be pursued in such manner that the presently introduced improvements have chance to build on themselves or, more appropriately, enable the worse off to move towards realization of their rights. To think that such a change can be costless or would go on adding to the processes of concentration and centralization in the hands of a narrow stratum while the poor have to remain content with what little they are able to get in order to survive, and is either desirable, just and fair or democratic and sustainable is a feat illusion. Actually, some of the proponents of Neoliberalisation make a straight forward statement that inequalities are the price of growth and growth led poverty alleviation just as the Chicago school maintained that some 6 to 8 percent rate of unemployment is the price of freedom of private enterprise. The worst part of the story is that such references to moral issues are dismissed as so much emotional outburst by the present elites and celebrities. The Gandhian talisman is all but forgotten by the neoliberal establishment: even their best public face, the rhetoric of inclusive growth, is a sham because it seeks to combine growing social exclusion of over three fourths of the population with superfast accretion of limitless wealth in the hands of a fraction of one percent of the population who are ensconced in the corporate sector and its cronies secure ivory towers. Annexure: The Private Corporate Sector: Major on the Pattern of Growth

A few key aspects of the private corporate sector the main agency and prime determining force seem to be closely related to its savings investment and growth roles seen during the last two decades. Next to the government sector, this sector of some 8 lakh companies, with half of them not even reporting as per statutory requirements, is the biggest concentration of economic, financial resources and physical capital stock of the nation, as also of the managerial technical personnel. In fact, over two thirds of the companies are in the services sector and la large number of them is too small earners even to presence of the unregistered sector is reckonable, accounting for 30 percent of output and much more than proportionate share of employment. The corporate sectors share in investment and capital stock is inversely related to its share in employment in the manufacturing sector, displaying the technology and product mix preferences of the corporate. Given the present trends of destatisation and state supported growth of corporatization of the economy (in the proposed company law it is provided that even a single person may float a company) and agriculture and retail trade are getting increasingly exposed to the forays by the corporate sector) before long, the companies sector may well leave the government sector behind at least in some key respects, whose share in GDP is hovering around 25 percent for some time now. A little less than a quarter (around 23 percent) of the GDP of India is under the direct control of the private corporate sector. Is supports as owners/controllers/managers and even as coupon clipping shareholders a very tiny part of the population (roughly speaking a fraction of one percent at the most). The effective rate of corporation taxes collected by the government are a small part of the nominal tax rate imposed on it and does not exceed 20 percent. One must place this figure against the huge tax expenditure, that is loss of a part of the leally ordained revenue that is sacrificed on account of the tax exemptions and incentives incorporated in the tax laws (amounting to a total of about Rs. 12 lakh crore over the last three fiscal years taken together) incurred for providing exemption, concessions, and other encouragements to the corporate sector (the sum budgeted for other fiscal 2010-11 alone amounts to over Rs. 5 lakh crore that is, bout 45 percent of the total size of the union budget by far the largest expenditure item for the wealthiest sectioned the economy). And, in these times of outcome budgets, nobody has cared to provide any justification in terms of the quid pro quo or returns from this expenditure.

It must be pointed out that the resource based and resource raising capacity or control over investment resources of the Indian corporate sector and its promoters is large enough to sustain higher rates of investment with their own internal resources, with their active participation in the international market for corporate control by means of mergers and acquisitions and the availability of the option of external commercial borrowing, the financial constraint on corporate investment is no longer a serious limiting factor recent evidence in the form of huge bids and payments for 2-G and 3-G spectrum licenses of shows that availability of finance does not seem to hold back corporate investment. Actually, the government and the public financial institutions seem all too willing to hold the hand of the companies willing to make investments. The state governments, who often complain of resource crunch, are often found competing against each other in wooing private investment by offering competitive financial support and tax write offs. More seriously, one can see how, even with partial convertibility on capital account, the corporate sector and its promoters are busy investing abroad. The investment needs of the informal economy providing livelihood to over 90percent of our workforce are indeed mammoth. But instead of taking care of this national well to do sections, with naturally a large representation of the companies and their promoter groups, are finding foreign countries, especially the rich countries, irresistible destination. Last year, Indian firms were the third largest investors in the U.S. economy. And saved some 40 thousand jobs by takeover of their companies. The capital outflows from India in recent years have been growing and it is a safe bet to assume that a greater part of it came from Indian companies, their promoters and the financial institutions. The role of the companies sector in the process of growth specifically as the major influence both on the rate and pattern of growth, demands an examination of its functioning and the motivation having a bearing on the issues after all, a growth process led by the corporate sector is likely to reproduce and strengthen its existing features or at least show their reflection. Its highly concentrated nature with a narrow controlling upper crust with several open and hidden linkages with the government at the centre and states are among the key self reinforcing features that exert direct influence on the pattern of growth in terms of the product mix, location choices, technological choices, employment practices, energy use pattern, funding and orientation of the political and civil society institution

and somewhat imperceptibly but surely in no less critical a manner on the values and civilisational choices that arise from the catching up processes of growth and industrialization. The indirect effect of all these on urbanization, regional disparities, distribution of income and wealth, control over media and its dominant themes, education and health services, consumerism and so on can neither be under estimated nor can be considered a positive gain from the point of view the excluded masses. Many resultant aspects of the structure and processes of corporate mode of organization, functioning and government business interface have emerged overtime to bond together Indias three major powerful but numerically relatively small social groups, viz., the business classes, bureaucracy and political classes, and make active cronyism a big and bold feature of the Indian political economy. Foreign counterparts of the three social groups too became partners of these structures and processes when the doors of the economy were flung open in early 1990s. the unseen omnipresence of the corporate angle in the decision making processes of the estate, the corporate penetration in to the day to day administrative functioning leading to phenomena such as rampant tax evasion, umpteen business malpractices and fudging of accounts of the kind symbolized by the Styam scam characterize the operations of the organized private capital. The daily exposure of political and administrative corruption (one of its most horrible and less than human manifestation is seen lately in the denial of , delays in and cuts from the wages of the MNREGA workers, to name one, by the babus who have managed to wrangle six hefty pay revisions after independence) the way of conduction politics, elections, the working of the legislatures and panchayats and the atrociously vulgar display of wealth in the name of social celebrations, religious rituals and modern gala living styles of the rich (with generous moisture of outright non white crimes) are nothing but cruel manifestations of the way the GDP centric marketwise greed motivated corporate led growth has dehumanized the country. In addition to sharing the power and authority of governance without any commensurate social and public accountability, let alone the question of public choice of such personnel and agencies, it is inherent in these institutions and structures that the corporate entities become the major beneficiaries of the growth they are leading by actively partnership the process with the government of the day, irrespective of any qualms of conscience over the human rights track record of any government. It is clear

that these corporate decisions have become major determinants of the rate and pattern of growth and the shares between compensation received by employees (wage and salary incomes) and operating surpluses going to the management and controllers of the companies. It has been pointed out by Mazumdar (2010) that the share of operating surpluses in the private organized sector NDP increased from the level of a little more than 45 percent during the period 1980s to a little less than 71 percent between 1991 and 2007-08. What they give to themselves by way of the remuneration packages of the CEOs (whose vulgarity and non-functional, non-market determined character are universally criticized, including by the prime minister of India) and the profits made by the companies and their promoters and transfers or direct and indirect financial support from the pubic exchequer budgeted to exceed Rs. 5 lakh crore current fiscal (over and above the normal business dealings) amount to mammoth sums. Some randomly picked up information the dividend income of the promoters of 99 big companies for the fiscal ending march 2010 amounted to Rs. 14,945 crore (economic times, 8 July 2010). It included a princely amount of Rs. 3,833.2 crore for the Tata group Rs. 1215.6 crore for the hero group, Rs. 935.5 crore for the reliance and so on. Even without adding the CEO salaries and perks, the Tata groups promoters dividend income is over 70 thousand times higher than the poverty line consumption (that is a paltry sum of Rs. 5,475 per poor person annually) that about 44 crore Indians fail to attain. Add to the CEO pay and perks of the corporate sector units their widely believed unaccounted collections (out of which they buy political favours, leading to widely reported phenomenon like the huge amassing of illegal wealth by Madhu Koda, where the mining and steel and aluminum interests buy favours from the chief minister leading to amassing of something like Rs. 4,000 crore in a short period of less than three years) and the story of inclusion looks absolutely hollow. A World Bank study pointed out that in India the share of wage cost in the total cost of production of the formal manufacturing firms was only 8 percent! It says that the formal sector did not pass on the growth in value addition during the late 1990s in the form of higher wages and more employment the way it was done by the informal entities (world bank. 2010 Indias employment challenge: creaking jobs, helping workers, OUP: 8 and 9). But the formal account books are not the only sources that show how income and wealth flow in torrential streams to the coffers of the controllers of the corporate empires as the euphemism of creative accounting has become common place.

We have shown above how the speculative fianc has grown to astronomical figures during the last few years. In brief, the entire edifice of cronyism that has become the alter ego of Indias beg and organized businesses are also the conduits for massive primitive accumulation (that is accumulation by the well to do by eroding the real purchasing power of the people by steadily pushed up prices left unchecked owing to the unrestrained micro level freedom of the market forces to determine prices. Then we saw innumerable instances of takeover of or outright eviction from land and other natural resources or denial of access to common property resources destruction of the livelihoods of the poor and informal workers by entry into domains that have so far been the preserve of the poor).

Human capital defines people as a capital asset who yield a stream of economic benefits over their working life. For the economic development of an economy, we need physical resources like land, buildings, etc. and also human capital like engineers, doctors, teacher, managers etc. Societies need good human resources to generate human capital. An improvement in skills and physical capacity of the people constitute an increase in human capital, as it enables them to produce more as well as efficiently. Human capital formation implies the development of abilities and skill among the population of the country. It is believed that the Third Nation World countries have remained underdeveloped due to the under development of its human resources. The constitution of India gives importance to human resources.

Human capital formation is the outcome of investments in education, health, on-the-job training, migration and information. Out of these, education and health are very important sources of human capital formation. As Finance Minister P.Chidambram quoted in his budgetary speech 29th March, 2008. Education and Health are the twin pillars on which rate the edifice of social sector reforms.

The main sources of human capital formation are education and health. Investment in health and education are two important inputs for the development of a nation.

1.

Expenditure on Education: Investments made in education can accelerate economic growth.

A more than double the investment in education from the current level of 3.2-4.4 percent of GNP is the soundest policy for quadrupling the countrys GNP per capita (India vision 2020 report, p-6, summary and overview, planning commission 2002). The proper utilization of man-power depends on the system of education, training and information. In order to raise the general living standards of the people, investment in human capital so as to make provisions for education and training is very

much required. Moreover, adult education and training is also another integral part of man power planning. In order to remove the backwardness associated with underdeveloped countries, it is necessary to increase the level of knowledge and skills of the people by imparting technical education. This help to attain the desired rate of progress. 2. Expenditure on Health: Health represents a state of physical and mental well-being. Health

is also considered as an important input for the development of an economy just as it is important for the development of an individual. Investment in health takes the form of investment in medical knowledge in the prevention and treatment of a disease and also rehabilitation. Health services include preventive medicine (vaccination), curative medicine (medicinal intervention during illness), social medicine (spread of health literacy) and provision of clean drinking water and good sanitation.

A vast network of medical and health-centers throughout the country is an absolute necessity to make people healthier, stronger and live longer. According to world Development Report 1993, improved health contributes to economic growth in four ways.

(i) (ii)

It reduces production loss cause by worker illness. It permits the use of natural resources that had been totally or nearly inaccessible because of

disease. (iii) (iv) It increases the enrolment of children in schools and makes them able to learn better. It frees resources for alternative uses that would otherwise have been spent on treating illness.

Role of Human Capital in Economic Growth

Human capital can be defined as the body of knowledge possessed by the population and the capacity of the population to use knowledge effectively. Investment in education and health is considered the main sources of human capital. Education is considered akin to capital goods that provide human capital in the form of a better equipped workforce. We need investment in human capital to enhance human resources.

Economic growth refers to a rise in national income or per capital income in a period of time, says a year. There is a direct relationship between human capital formation and economic growth. Educated population is an asset for the country. Similarly, it can be said healthy people in a society contribute to raises the efficiency and productivity. Human capital helps in accelerating economic growth in the following ways:

Knowledgeable and skilled workers make better use of existing resources of a

country.

This increases the level of output. A person with sound health can produce person. Good health a sick person. Good health reduces the loss of resulted from the illness of workers, in the absence of

more than a sick output which would have

medical facilities.

Education contributes a lot towards raising the capacity of a country to produce. It leads to higher productivity levels of the labour force as they are endowed with knowledge

and skills. Educated and skilled workers can also increase the productivity adapting superior-imported technology, particularly in the context of (liberalization, privatization and globalization). adding to the physical stock of capital new

by adopting and economic policy

Educated/skilled worers can help in growth by

of the country.

Similarly, good health of the people leads to higher productivity levels of the labour force. Other factors remaning unchanged, healthier workers are more productive and efficient. Thus, health is also an important factor for economic growth.

ECONOMIC REFORMS: BACKGROUND

Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. Capital was flying out of the country and we were close to defaulting on loans. Along with these bottlenecks at home, many unforeseeable changes swept the economies of nations in Western and Eastern Europe, South East Asia, Latin America and elsewhere, around the same time. These were the economic compulsions at home and abroad that called for a complete overhauling of our economic policies and programs. India initiated the reforms in 1991, after financial crisis. In this process, India liberalized the industrial sector from license-permit raj which has accelerated the growth of Indian economy. Indeed economic reforms, aided by the rapid diffusion of technology, have enabled individuals, groups and companies to tap talent to not only create new businesses but set off a virtuous cycle of growth and entrepreneurship but on the other side agriculture sector adversely affected. After pursuing an inward-looking development strategy with the state assuming an important role for more than four decades, India decided to take a historic step of changing tracks in 1991. It embarked on a comprehensive reform of the economy to widen and deepen its integration with the world economy as a part of structural adjustment. There seems to be a general consensus on the desirability of reforms to dismantle the bureaucratic regulatory apparatus evolved over the years that may have outlived its utility. However, there has been considerable debate on the contents of the reform package, their sequencing and the pace, their implementation and their impact.

The new economic reforms, popularly known as, Liberalisation, Privatisation and Globalisation (LPG model) aimed at making the Indian economy as fastest growing economy and

globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient. With the onset of reforms to liberalize the Indian economy in July 1991, a new chapter has dawned for India and her billion plus population. This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy, and its effects over the last decade can hardly be overlooked. Besides, it also marks the advent of the real integration of the Indian economy into the global economy.

Now that India is in the process of restructuring her economy, with aspirations of elevating herself from her present desolate position in the world, the need to speed up her economic development is even more imperative. And having witnessed the positive role that Foreign Direct Investment (FDI) has played in the rapid economic growth of most of the Southeast Asian countries and most notably China, India has embarked on an ambitious plan to emulate the successes of her neighbors to the east and is trying to sell herself as a safe and profitable destination for FDI.

Two decades of economic reforms in India had a favorable impact on the overall growth rate of the economy. This is major improvement given that Indias growth rate in the1970s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though Indias average annual growth rate almost doubled in the eighties to 5.9%, it was still lower than the growth rate in China, Korea and Indonesia. The pickup in GDP growth has helped improve Indias global position. Consequently Indias position in the global economy has improved from the 8th position in1991 to 4th place in2001; when GDP is calculated on a purchasing powerparity basis. During 1991-92 the first year of Raos reforms program, The Indian economy grew by 0.9% only. However, the Gross Domestic Product (GDP) growth accelerated to 5.3% in 1992-93, and 6.2% 1993-94. While it touches to 9% in later years but after global meltdown in 2008 & in 2011 it is projected to around to 6.5% in 2012.

The economic growth rate of a country would be meaningful only if it is accompanied by an improvement in the quality of human capital formation , no matter what the level of growth (8 or 9%) is. To quote J.R.D. Tata I do not want India to be an economic power. I want India to be a happy country. Enhancing the quality of human capital formation has been the subject matter of much academic study and public debate in India, but the focus has largely been on the performance of the economy as a whole and not on the level of enhancement on the quality of human capital formation. An understanding of growth and the rationale for People Centered Development (PCD) is imperative before examining the impact of the economic reform programme on enhancing the quality of human life.

Is creating wealth growth? For many years, since the birth of industrial capitalism, growth has been a major economic goal of policy makers and political leaders - based on the deeply ingrained view that delivering larger and larger quantity of goods and services is the best way to improve the quality of human life. The revolutionary methods of production used by this system did generate fabulous new wealth and the policy makers saw this increase in wealth as a way to eliminate scarcity and poverty.

But in reality this wealth was concentrated in the hands of small elite groups in a few rich countries. For many other people it was in the form of enslavement. However the focus of philosophers such as Aristotle and the political economists such as Adam Smith, Karl Marx, John Stewart Mill and Alfred Marshall argued that human beings should be the ends of development rather than mere means. It was only after the World War II, the world community adopted the universal declaration of Human Rights, celebrating the victory of human freedom and reasserting strongly and clearly that the principle objective of development was human well-being. In subsequent years there followed a series of UN conventions and conferences establishing the contention that improvement in the quality of human life as growth.

In India, it is often claimed that the current upsurge in the growth rate is the resultant factor of the reform programme initiated by the government two decades ago. Besides this, the rationale of the various economic reform initiatives at the national level was that they would increase efficiency and lead to higher factor productivity. Since these policies are generally applicable to all states, there is a natural presumption that they would provide efficiency gains that increases the growth potential.So with the above back ground of improving the quality of human life as growth and the rationale for examining it in the backdrop of economic reform programme, this paper examines the impact of the economic reform programme in improving the quality of human life in India.

Developing human capital through education

As India moves towards being a world economic power, despite the economic slowdown, the low standards of education raise a legitimate concern about the means through which India will manage to sustain this growth without developing its human capital. With its 357 million illiterates, India is home of a third of the total number of illiterates in the world. This is a statistic in which not many Indian would take pride.

The investment in human capital, through quality education, holds the key to inclusive development in the burgeoning Indian economy. The education system, despite its considerable achievements in the last 60 years, is still marred by shortcomings, both at the elementary and higher levels, which inhibit the country from becoming a knowledge society. Converting India into a knowledge society shall require, inter alia, addressing the issue of expansion, excellence and inclusion in education while formulating policies for achieving the same.

Before discussing the challenges before the Indian education system it is imperative to be cognizant of the fact that expansion, excellence and inclusion cannot be pursued independent of each other if a meaningful shift is to be made in the system. The overall impact that education can make in the Indian society depends on the dialectics operating between these three factors. The validity of this assertion can be appreciated from the fact that a unilateral focus on any three shall leave the others

unaddressed, thereby affecting the state of education and hence human capital in the country. With this caution in hindsight, I explore below the challenges before the Indian education system. . The Indian education system has hitherto constantly strived to become inclusive in the broadest sense of the term. It has tried to include within its ambit rural and urban poor, cut across caste divisions, strived to overcome gender bias and provide equitable opportunities for the physically challenged. India, by ratifying the UN Convention on the Rights of the Child, has agreed to be bound to provide for inclusive education. However, there remains a lot more to be done in this sphere. The education system needs to be reformed further to meet the needs of all students regardless of their gender, class or disability.

One prominent aspect of inclusive education, as conceived by the ministry of Human Resource Development (MoHRD), is the inclusion of the people with disabilities into the education system through a common curricula and study space. There are about 30 million children in India suffering from disability. Their educational needs are not any less than any of the mainstream children. However, the gross enrolment ratio amongst this group is less than five percent as against 90% for the nation. The monumental challenge before India is to include these excluded masses into the education system. However, the programs launched hitherto have had little impact in this sphere.

The Action Plan on Inclusive Education of the MoHRD is indeed a commendable step towards the objective of inclusion. Speculations have, however, surfaced at times about the financial viability and manpower investment practicability in the sector. Nevertheless, the success of Mali, a poor country in Africa, in providing inclusive education undermines all claims to such an impediment. The action plan for inclusive education must be implemented with vigour by taking an inspiration from Mali in this arena. Further, the syllabus must be made available in the form which is accessible and convenient to the physically challenged. This task has already been taken up by various NGOs in the country. However, there is an earnest need for the government to get involved in these efforts in a larger way to boost the enrolment ratio of the excluded groups.

Apart from addressing the needs of the special and physically challenged students, the term inclusive education has acquired a wider meaning in a developing country like India. Inclusion has to be achieved also for the girls, the socially excluded and the marginalized. The drop-out rate for students from scheduled caste and scheduled tribes is as high as 70.57 and 78.52 percent respectively at the secondary level as against a national average of 61.62 percent. An important step towards total inclusion of the marginalized communities is to modify the syllabus so as to teach things that increase their employability due to the knowledge acquired and not merely due to a certificate or degree. Students must not be made to wait till college to specialize in a field. The school syllabus must provide an opportunity for the students to specialize after their middle school examinations. This will make sure that students get to pursue their interests pretty early in their school lives. Such a change is must towards ensuring inclusion of every strata of the society.

The challenges before the Indian education system are grave indeed. A part of the solution to the problem lies in realizing that the numerous children who fail to receive quality education or education in general might not be able to live up to their potential in the future. This is a cost that will retard not only our economic and social growth but also take away a large chunk from the fruits produced by the economic growth. Indias education reforms present a vivid drama, the final act of which will culminate into Indias entry into the developed world. The only way forward for us in the 21st century is to convert India into a knowledge society which is capable of utilizing its human potential to its fullest. This requires reinforcing the education sector by addressing the issues of expansion, excellence and inclusion as mentioned above. It is only then that links can be developed between various areas of the society which will work towards improving the social and economic indicators of the country. That day might seem to be hidden in the vagaries of the future. However, by debating and adopting appropriate policies like the ones mentioned in the essay we can ascertain that sooner or later that day will witness a dawn.

CHAPTER II

REVIEW OF LITERATURE

Economists, Academicians and Development experts have devised several indices based on health and education indicators to measure the quality of human life. Using cross-country data, Steve Dowrick, Yvonne Dunlop and John Quiggin (1998) estimated an equation that explains that a cost reduction in age-specific mortality rates is sufficient to save the life of one person in terms of the prices of specific goods and services.

Shirley Cereseto and Howard Waitzkin (1988) compared the Physical Quality of Life (PQL) of 123 capitalist and socialist countries (97 percent of the world's population) taking into account the level of economic development.

Gary S. Becker, Tomas J. Philipson and Rodrigo R. Soares (2005) computed a "full" growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000.

For a long time there prevailed an assumption amongst economist that the Per capita GNP is the best index of economic well being of a country and the basic needs such as health and education would be taken care as a by-product of the growth in GNP. But the outcomes of many studies (Morris 1979, Ram 1982, Burket 1985) have showed that this was not the case.

According to Brundtland Repor the economic growth rate that is forceful and at the same time socially and environmentally sustainable as an indicator of the quality of human life. Daniel J. Slotjee devised an index that measures and compares the quality of life as comprehensively as possible using 20 attributes of the quality of life for 123 countries.

The above literature shows that the indices developed are better indicators of the quality of human life in a country as compared to economic growth.

There are not many studies that link Economic reform programme with the quality of human life due to the following reasons:-

a)

Many economists are of the view that reform programme is only a tool to correct the macro economic instability in the economy and has no link with the quality of human life. there are no direct studies of the poverty effects of trade and trade liberalization and no general comparative static results about the level of influence (increase or decrease) of trade liberalization on poverty;

b)

c)

there are no historical instances in which liberalization could be identified as the main economic shock.

Despite the above reasons there are several highly visible and well-promoted cross-country studies (David dollar,1992, Jeffrey Sachs and Andrew Warner, 1995 and Sebastian Edwards,1998) that foster the 1990s conviction that openness is good for economic growth. But Rodriguez and Rodrik (2001) contradict that the above conviction rest on very weak empirical foundations such as faulty measures of openness and serious econometric short comings. Moreover liberal trade is usually only one of several indicators of openness used that often weighs rather lightly in the overall result (Ann Harrison, 1996). Besides this, economists like L.Alan Winters, Neil McCulloch and Andre McKay, 2004 are also of the view that trade liberalization harms poorer actors in the economy in the short and even in the successful long run open regimes.

Though the reform programme in the last 20 years around the world has more or less enhanced the economy stronger and delivered a huge change, it has not resulted in enhancing the quality of human life. This is reflected in a study (Michael Pussey,2003) that validate from 1980 onwards (when most of the economies around the world have opened their economies) to the turn of the millennium, the total wages share has fallen down from 60 per cent to 54 per cent despite an increase in the profit share (17% to 24%).

This was due to the fact that the demands of the capitalist classes for higher rates of remuneration, especially higher dividends, force down the added value distributed to wage earners as direct wages and social welfare benefits. The government share has stayed at about the same low level, comparing with other OECD countries, for a long time government spending had been at the low levels and a small public sector.

The UNCTAD report of the UN conference on trade and development also shows that the poor countries least open to globalisation have progressed most in per capita income, whereas the most
6

open countries have been victims of their openness . Karl Marx, in his critique of merchandise in the first chapter of Das Kapital, predicted that Liberalization is incapable of giving any meaning to life other than consumerism, waste, hijacking natural resources and economic income and worsening inequality.

A study titled Politics of Economic Reform in India points out that the changes introduced in the reform programme of the 90s were dramatic by the past standards in India, but quite unremarkable by the standards of many other developing countries, particularly in East Asia and Latin America.

Several earlier studies have attempted to analyze the impact of the economic reforms of 1991 on the economy and industrial sector of India. In one of the earlier studies Nambiar et al. (1999) started from the expectation that trade liberalization encourages economic activity and hence raises production and employment; he then asked whether this was also true in the Indian case. Although

this expectation may be justified in the longer run, it seems somewhat unrealistic to expect immediate benefits since trade liberalization always implies increased foreign competition, which in turn may lead to the closure of less competitive firms and therefore job losses and income reduction in the initial phase following trade liberalization. One may argue, however, that by 1999 it was possible to expect the longer-run impact of increased productivity, competitiveness and accelerated growth. This raises questions about the timing of the reforms and about the time lags necessary to achieve the longer-run changes. In spite of the accelerated growth figures of the mid-1990s being already available, Nambiar et al. (1999) concluded that trade has over the years shrunk Indias manufacturing base, both in terms of value addition and employment. Although the authors admit that this high protection-high cost-poor quality syndrome needed to be corrected by import liberalisation, their assessment of the reform impact is rather pessimistic.

Chauduri (2002) also reported that the expectations of rapid and sustained growth of output and employment have not materialized. The author concluded that value added growth in the 1990s was inferior to that in the 1980s, that the industrial base had become shallower, that employment growth in the 1990s was negative in five out of nine years and that the labour productivity stagnated after 1995/96, after having increased 4 in the early 1990s. Here again no attention is paid to the changes in protection, prices and costs that resulted from the reforms.

A much more positive picture was drawn by Panagariya (2004), who argued that growth in the 1990s was more robust than that of the 1980s and that it was achieved through important policy changes. The main policy changes held responsible for accelerated growth are the liberalization of foreign trade, the reduction in industrial licensing and opening to foreign direct investment. Balasubramanyam and Mahambre (2001) attempted to relate different aspects of the reforms with changes in industry performance, in particular with productivity change. The literature on human capital formation is abound with partial equilibrium analyses of production and cost functions of education (see Shri Prakash and Chowdhury (1994), Tilak (1985) and Tilak (1988), as well as of determinants of household expenditure on education (see Tilak (2001a), Tilak (2001b)), Tilak (2001c) , Tilak (2002), and Shri Prakash and Chowdhury (1994) ). The studies dealing with the production function of education (say, for example, Shri Prakash and Chowdhury (1994)) measure output in terms of enrolments and inputs in terms of number of teachers employed and value of non-teaching inputs. Such production functions are obviously useful in determining whether the production of education is subject to increasing, constant or diminishing returns and the relationships between the marginal productivities of the teaching and non-teaching inputs. (The cost functions of education are essentially a dual of the production function and serve the purpose of merely confirming the results obtained from the production functions). However, from these essentially technical descriptions of the production of education no policy conclusion of consequence is derivable. In other words, in so far as these studies determine neither the private nor social returns to education, their policy significance is limited. The studies concerned with the determinants of household expenditure on education (for example, Tilak (2002) also treat education

as an end in itself and fall short of explaining expenditure on education in terms of the expected private returns on education. Using state-wise cross-sectional state level data for his regressions,

Tilak (2002) explains household expenditure on education in terms of household incomes, and other household characteristics such as educational level of the head of the household, occupation, caste, religion. The general equilibrium studies on educational capital formation have a broader objective, namely, assessing the impact of investment on education on productivity (growth) and/or equity (wage-inequality). All these studies are based on the underlying assumption that public investment in education is a powerful policy instrument for inducing faster economic growth with an improved or a worsening income distribution. It needs to be stressed that a priori it cannot be known whether investment in education leads to growth with more or less wage inequality. Not surprisingly then, most of these studies are concerned with the impact of investment in education on changes in wage inequality over time. In a general equilibrium framework, there is multi-directional causation between investment in education and changes in the relative wages of skilled labor. On one hand, the increased investments in education lead to an increase in the relative supply of skilled labor, which in turn exerts a downward pressure on the relative wages of skilled labor. On the other hand, the technological changes and the changes in international terms of trade in favor of skill intensive goods, that necessarily accompany the growth process, push upwards the skilled wage rate relative to the unskilled wage rate by creating more demand for skilled labor. In short, relative factor supply and relative product price changes are both important in explaining the change in the relative return to skilled labor, and a general equilibrium model effectively captures the net impact of these factors on the relative wages. Pradhan (2002) finds an interesting paradox in the growth process of the Indian economy, namely, that there is not much change in income inequality even though there are large changes in the educational levels of the population over time. He tries to resolve this paradox by using an applied general equilibrium model to simulate the impact of large changes in access to education on wage inequality. The model results clearly show that even for very large increases in access to education the wage inequality remains unchanged. Apparently, the dominant effect on the skilled labor wage rate is that of the changes in the relative product prices in the world market (i.e., the trade effect), rather than that of increased relative supply of educated labor ensuing from enhanced access to education. The trade effect on the relative demand for skilled labor has been shown to be very important for India by Wood and Calandrino (2000) also in a SAM (Social Accounting Matrix) based comparative analysis of the impact of trade liberalization on human resources in India and China. Gidling and Robbins (2001) analyze the patterns and sources of changing wage inequality in Chile and Costa Rica during structural adjustment, using an econometric decomposition technique which splits the effects of enhancement of human capital into the

education price and education quantity effects. Their exercise shows that the education price effects varied across sectors on account of the variation in the sectoral rates of growth in the demand for educated workers, and this lead to an increase in inequality in Chile despite a large equalizing education quantity effect. Duflo (2002) in his paper on the effects of educational expansion in Indonesia shows a different impact on the relative wages of skilled labor. Using a two sector - formal and informal econometric model, he shows that the skilled labor, employed exclusively in the formal sector, suffers a downward revision of relative wages, because the faster increase in human capital is not matched by a corresponding increase in physical capital in this sector. Interestingly, this paper indicates the possibility of there being competing demands of physical and human capital on the investible resources of the government for a mixed economy like India. That is to say, the public sector, which bases its investment decisions on long-term growth rather than on short-term profitability considerations, needs to define a trade-off between augmenting physical and human capital. Most other general equilibrium studies on the shifts in the relative wages pertain to the U.S.A. Goldin and Katz (1999), Francois and Nelson (1998), Harrigan and Balaban (1999) and Baldwin and Cain (1997) are all concerned with explaining the paradoxical effect of educational expansion on the wage inequality i.e., increased availability of education increases rather than decrease the relative wages for skilled labor. And, in fact, the paradox is resolved in almost all the cases by incorporating the effects of trade and technological changes on the relative demand for skilled labor.

1.2 Education and economic growth in India

The link between public spending on education and economic growth is by now well-established in the literature. Staring with the work of Schultz (1961) education has been viewed as investment in human capital rather than considered to be a consumption good under Keynes influence. Subsequently, Blaug et al (1969), Tilak (1987) and Psacharopoulos (1993) show that investment in education yields a higher rate of return than investment in physical capital. Romer (1986) and Lucas (1988) have propounded the new growth theories in which sustained long-run growth of per capita income is explained by the likelihood of investment in human capital generating constant or increasing returns. Empirical studies in the literature on education and economic growth also find compelling evidence for the hypothesis that a substantial proportion of the growth of the economies is attributable to the rise in the educational levels of the workforce. Lau et al (1993) attribute almost 25 percent of the economic growth in Brazil to the increase in the average education of the

workforce. The success stories of the East Asian miracle economies are also replete with references to mass primary education programmes pursued by their governments (World Bank, 1993). In India, Mathur (1993) has shown that a positive association exists between stocks of human capital and economic development and that the association becomes stronger at higher levels of education. Mathur and Mamgain (2002) find the influence of both technical and general education on per capita income to be positive with that of the former being more powerful. In agriculture, Chaudhri (1979) finds that primary schooling affects productivity positively, particularly in times of rapid technological change. While the link between the spread of education and economic growth is regarded as undisputable, the preceding link between public education expenditure and the spreading of education has become a bit of a controversial area, especially in India. Empirical evidence in India in this regard is diverse differing hugely across the states and does not seem to corroborate the assumed positive linkage between public spending on education and the spread of education (Pradhan, Tripathy and Rajan (2000)). Various explanations are offered for the absence of a strong positive association between public education expenditure and educational outcome leakages from the amount spent due to corruption, teacher absenteeism, non-motivated and discouraging teachers, ill-equipped schools and unwillingness of parents to send their children to schools due to economic or non-economic constraints. The conclusion sometimes drawn from all this is that public spending is not really instrumental in promoting education, and therefore should not be overdone. This is unfortunate especially because the diverse empirical evidence does not warrant this rather straightforward conclusion. A detailed examination of the question of the impact of public education expenditure on the quality of education and educational outcome, particularly enrolment, has been done by Pradhan and Singh (2004). Pradhan and Singh (2004) also do not find a strong influence of pubic expenditure per child and the rate of growth of expenditure on the enrolment rate for 16 major states of India. However, this is because the varying degrees of efficiency of expenditure across states are not taken into account. The efficiency of expenditure is defined as the technical efficiency of the inputs the number of schools and the number of teachers in generating educational output, such as enrolment. Using Data Envelopment analysis (DEA), they rank the states by their levels of technical efficiency. Having thus ranked the states by their levels of technical efficiency, they a find stronger positive association between publc education expenditure and enrolment for the relatively efficient states as compared to the relatively inefficient states. In other words, once the efficiency of expenditure is taken into account, the effect of public education expenditure on enrolment is seen to be stronger. In general, it is arguable that states which employ better educational processes also demonstrate a stronger link between education

expenditure and educational outcome. By implication, the states in which the link between education expenditure and educational outcome is weak have to find ways and means to strengthen this link i.e., control the leakage from the education expenditure, prevent teacher absenteeism improve infrastrucutre in schools, and, above all, take care of the economic and non-economic factors which are responsible for the lack of interest shown by households in providing education to their children. In short, the picture which emerges from the analysis of Pradhan and Singh (2004) is hardly the one which would undermine the importance of increasing public spending on education in India. The share of expenditure on education in GDP in India has been continuously increasing from 1.19 percent in 1951 (not shown in table 1) to 3.98 percent in 1990-91, after which it suffered a decline till 1997-98. In 1998-99 it was restored to 3.90 percent, and in 1999-2000 it crossed the 4.0 percent mark. However, it may be noted that although education has always been given high priority by the government of India since independence, the public expenditure target of 6 percent of GDP is still nowhere in sight. Not surprisingly, even after 50 years of independence, the enrolment rates remain low in this country, particularly in case of poor and the inhabitants of rural areas. It follows that the role of public spending on education, though not complete per se, remains important in accelerating the growth in school enrolment. Besides, an expansion of public

education expenditure is all the more desirable because of the externalities associated with education, such as, reduced population growth and better health care. The sources of finance for education India are the central and the state governments, local bodies, consumers of education (fees etc.) and foreign aid. Primary among these are the state governments. However, as argued by Mehrotra (2004), given the serious fiscal deficits of the poorest states and the limited scope of inter-sectoral reallocation of expenditure towards education from other sectors and of intra-sectoral allocation within the education sector (from higher levels of education to lower levels), the only remaining option for financing further increases in public education expenditure is earmarked taxes for education, a source employed effectively by many countries, such as, Korea, China, Botswana and Brazil. Mehrotra (2004) also finds the successful example of Brazil, worth emulating for India. In Brazil, an education fund, FUNDEF, created by federal taxation, helps in the equalisation of expenditure capacity in education between poorer and richer states. He further recommends that in India, much like in Brazil, the central government, and not the state governments, should levy additional taxes and dedicate the revenue thus raised to the cause of education. The dedicated fund for education could then allocate resources to the states that are in greatest need and those that show the best performance. The initiative for additional taxation and the subsequent creation of the dedicated fund needs to be taken by the central government

because many of the state governments have been seen to be lacking in their commitment to elemenatry education.

RESEARCH GAP

Many studies on Growth, Globalisation and Economic reform programme (Levitt, 1983, Xabier, 1995, Wade, 2001) focused on the financial management aspect and very little on the social aspect that will improve the quality of human life. Majority of the studies on the social aspect deal with the educational aspect and relatively very few studies focus on the health aspect of improving the quality of human life. This is evident from the observation that a search on Quality of human life in the JSTOR search engine listed out many articles on education and very few on health. Even here the analysis was on the construction of new quality of life index or a comparative analysis of quality of life across countries in the world and not on examining the impact of any reform programme on the quality of human life. This study focuses on human capital formation aspect despite the fact that educational and poverty indicators also determine the quality of human life. The study relies on a time series data that requires availability of data on a continuous basis, while the health indicators fulfil this criterion, the educational indicators fails on this as they (literacy rate) are decennial in nature. This study fulfils this research gap.

CHAPTER III

OBJECTIVES OF THE STUDY The proposed study aims to examine the initial impact of Gross Domestic Product (GDP) of India on Education, Health and overall Human Development Index (as prepared by the UNDP) for domestic economy. Similar kind of impact is also viewed by incorporating Gross Fixed Capital Formation (GFCF) with GDP, and by using Education and Health as interdependent variables. Key hypothesis seems to state that Education and heath are interdependent factors influencing each other in turn. Notwithstanding. Education and health and overall human development seem to depend on the levels of GDP and GFCF in the economy over the years. Study uses three important health indicators, viz., life expectancy at birth (in years), many years of schooling and the level of influence by the government expenditure on health. Other prominent indicators of education are also included in the analysis. Basic objective of the study is to find out the contribution of rising GDP and GFCF over the years on educational achievements, health standards and overall human development status of the people in India. In addition to it, it is also tried here as to how education influences the health and vice versa.

Data and Methodology

The proposed paper is based on secondary data, mainly compiled with from economic Survey, Government of India, and Ministry of Finance, United Nation Development Programme Report 2011 (UNDP), and domestic product and gross fixed capital formation (both at constant prices of 2005 in USD), and for education, health and human development

indices. These are taken for the entire reference term 2000-01 through 20111-2012 for the Indian economy. Alternative simple and multiple regression models are estimated. Education, health and human indices are considered as the endogenous variables while gross domestic product (GDP) and gross fixed capital formation (GFCF) at constant prices in USD (at 2005 prices) are considered as the exogenous variables in alternative multiple regression models as given in the model formulation. Test-statistic includes t-values, adjusted R-square, F-values and Durbin Watson (DW) coefficients.

Model 1: Simple Regression Model. (a) It is used to estimate the impact of GDP on Education Index as given below: E = a1 + a2 GDP + e1

(b) It is used to estimate the impact of GDP on Health Index as given below: H = a1 +a2 GDP + e1

(c) It is used to estimate the impact of GDP on Human Development Index of India (prepared by UNDP) as given below: HDI = a1 + a2 GDP + e1

Model 2: Multiple Regression Model It is used to estimate the impact of GDP, GFCF and Health Index simultaneously on Education Index as given below:

E = a1 + a2 GDP + a3 GFCF + a4 H + e1

Model 3: Multiple Regression Model: It is used to estimate the impact of GDP, GFCF and Education Index simultaneously on Health Index as given below: H = a1 +a2 GDP + e1

where, a1 is the respective intercept in different regression formulations a2 a3 a4 are respective regression coefficients in different regression models accordingly e1 is the disturbance-term accordingly E H is the Education Index is the Health Index (both E and H are used as endogenous as well as exogenous variables in alternative regression equations) (Prepared by UNDP) (2005) (2005)

HDI GDP

is the Human Development Index for India

is the Gross Domestic Product at constant prices in US $

GFCF is the Gross Fixed Capital Formation at constant prices in US $

DATA AND METHODOLOGY

The Proposed paper is based on secondary data collected from Economic survey, Government of India, Ministry of Finance, UNDP report 2011, and world development report 2011. The data includes the GDP (constant 2005 US$), Gross fixed capital formation of India during the study period. The dependent variable is taken as education index and health index GDP and independent variables are taken to GDP (constant 2005 US$), and gross fixed capital formation

HYPOTHESIS The hypotheses framed for the proposed research proposal are as followed:

1. H0 2. H1

There is a significant impact of two decades of economic reforms on growth of

education and health and economic development. Two decades of economic reforms in India has not significant impact on education

and health and its development.

OBJECTIVES OF THE STUDY The objectives of the study are to examine the impact of the economic reform programme in enhancing the human capital formation. The focus is mainly on examining the structural changes in the three important health indicators (Life Expectancy at Birth (years), Child and Infant Mortality rate and to find out the level of influence by the expenditures made by the GOI on health and important education indicators. The study also identifies the factors responsible for the changes. The proposed research aims to attain the following objectives; 1. To analyses the impact of economic reforms on its development. 2. To study the impact of two decades of economic reforms on Health and education. 3. To study the impact of two decades of economic reforms on development of a country. . socio-economic

CHAPTERIV Chapter 4: Reforms, Human capital Formation and Economic Growth

Social overhead Indicators

Present Study uses health and education as the prominent indicators for measuring the human development in India. Health index and education index are used in the regression exercises as endogenous variables. Such indices are based on the relevant social data as given

in succeeding tables; such tables are either self explanatory or followed by brief explanation. Table 1: Indias HDI Trends (1980-2011) Years 1980 1985 1990 1995 2000 2005 2010 2011
Life expectancy Expected years at birth of schooling Mean years of schooling GNI per capita HDI value (2005 PPP$)

55.3 57.0 58.3 59.8 61.6 63.3 65.1 65.4

6.5 7.3 7.7 8.3 8.4 9.9 10.3 10.3

1.9 2.4 3.0 3.3 3.6 4.0 4.4 4.4

896 1,043 1,229 1,453 1,747 2,280 3,248 3,468

0.344 0.380 0.410 0.437 0.461 0.504 0.542 0.547

Source: UNDP Report 2011

Table 1 reveals the Indias HDI trends during 1980-2011, showing progress of HDI components.

Figure 1 below shows the contribution of each component index to Indias HDI since 1980.

Figure 1: component

Trends in Indias HDI indices 1980-2011

Table 2: Indias HDI Indicators For 2011 Relative To Selected Countries And Groups

HDI value

HDI rank

Life expectanc y at birth

Expecte d years of schooling 10.3 8.1 6.9 9.8 11.2

Mean years of schooling

GNI per capita (PPP US$)

India Bangladesh Pakistan South Asia Medium HDI

Source: UNDP Report 2011

0.547 0.500 0.504 0.548 0.630

134 146 145

65.4 68.9 65.4 65.9 69.7

4.4 4.8 4.9 4.6 6.3

3,468 1,529 2,550 3,435 5,276

Indias 2011 HDI of 0.547 is below the average of 0.630 for countries in the medium human development group and below the average of 0.548 for countries in South Asia. Table 3 Indias Global position in Human Development Index 2011
Country HDI 2011 HDI rank 2011 Gross national (GNI) per capita 2005 PPS$) 2011 Life expectancy at birth (years) 2011 a 81.1 Mean years of schooling (years) 2011 a 12.6 Expected years of schooling (years) 2011 a 17.3

Norway

0.943

47,557

Australia Poland Malaysia Russian Fed. Brazil Turkey China Sri Lanka Thailand Philippines Egypt Indonesia South Africa Vietnam India Pakistan Kenya Bangladesh World

0.929 0.813 0.761 0.755 0.718 0.699 0.687 0.691 0.682 0.644 0.644 0.617 0.619 0.593 0.547 0.504 0.509 0.5 .682

2 39 61 66 84 92 101 97 103 112 113 124 123 128 134 145 143 146 10,082

34,431 17,451 13,685 14,561 10,162 12,246 7,476 4943 7694 3478 5269 3716 9469 2805 3468 2550 1492 1529

81.9 76.1 74.2 68.8 73.5 74.0 73.5 74.9 74.1 68.7 73.2 69.4 52.8 75.2 65.4 65.4 57.1 68.9 69.8

12.0 10.0 9.5 9.8 7.2 6.5 7.5 8.2 6.6 8.9 6.4 5.8 8.5 5.5 4.4 4.9 7.0 4.8

18 15.3 12.6 14.1 13.8 11.8 11.6 12.7 12.3 11.9 11.0 13.2 13.1 10.4 10.3 6.9 11.0 8.1 7.4

Source Economic Survey 2011-12

Table 3 highlights Indias Global Position in Social Development Indicators, which indicates the existing gap in health and education indicators as compared to developed countries and also many of the developing countries indicates the need for much faster and wider spread of basic health and education. Life expectancy at birth in India was 65.4 years in 2011 as against 81.1 years in Norway, 81.9 years in Australia, 74.9 years in Sri Lanka, 73.5 years in China, and the global average of 69.8 years. However, it has increased by one percentage points from 64.4 in 2010 to 65.4 in 2011. The other countries referred to are almost stagnant during this period. Similarly, the performance of India in terms of mean years

of schooling is not only much below that of countries like Sri Lanka, China, and Egypt which have higher per capita incomes but also below that of Pakistan, Bangladesh, and Vietnam which have lower per capita incomes. It is also much lower than the global average (Table 3). The National Human Development Report (NHDR) 2011 of the Institute of Applied Manpower Research and Planning Commission states that Indias HDI between 1999-2000 and 2007-8 has increased by 21 per cent, with an improvement of over 28 per cent in education being the main driver. The increase in HDI in the poorest states of India has been much sharper than the national average and hence the convergence in HDI across states.

Table 4 Trends in Indias Social-Sector Expenditures

as percent of total expenditure) Item
2006-07 2007-08 2008-09 2009-10 20010-11 2011-12

actual 1. social services a. education, sports, youth affairs b. health & family welfare c. information & broadcasting d. water supply, housing, etc. e. welfare of SCs/STs and OBCs f. labour & employment g. social welfare & nutrition h. north-eastern areas i. other social services total 2. rural development 4.28 1.87 0.25 1.72 0.34 0.32 0.85 0 -0.17 9.47 2.84

actual

actual

RE

RE

BE

4.02 2.05 0.22 2.02 0.36 0.27 0.82 0 1.29 11.06 2.8

4.27 2.09 0.23 2.54 0.41 0.28 1.15 0 1.55 12.52 4.56

4.15 2 0.2 2.39 0.43 0.22 0.87 0.02 1.67 11.94 3.77

4.24 1.83 0.21 2.13 0.57 0.24 0.9 1.68 1.56 13.36 3.79

4.63 2.15 0.2 2.1 0.67 0.24 1.02 1.86 0.32 13.2 3.68

3. Pradhan Mantri gram Sadak Yojana (PMGSY) 4. social services, rural dev. & PMGSY 5. total central government expenditure source: Budget documents,

1.08 13.36 100

0.91 14.77 100

0.88 17.95 100

1.11 16.82 100

1.81 18.96 100

1.59 18.47 100

note: PMGSY-Pradhan Mantri Gram Sadak Yojana; Re-Revised Estimates; BE is Budget Estimates. Source: Economic Survey 2011-12

Central government expenditure on social services and rural development (Plan and nonPlan) has consistently gone up over the years (Table 4). It has increased from 13.36 per cent in 2006-7 to 18.47 per cent in 2011-12. Central support for social programmes has continued to expand in various forms although most social-sector subjects fall within the purview of the states. Major programme specific funding is available to states through centrally sponsored schemes. Expenditure on social services (which include education, sports, art and culture, medical and public health, family welfare, water supply and sanitation, housing, urban development, welfare of SCs, STs and OBCs, labour and labour welfare, social security, nutrition, and relief for natural calamities,) by the general government has also shown an increase in recent years (Table 4) reflecting the higher priority given to this sector.
Table5: Trends in Social Services Expenditure by General Government

items

2006-07

2007-08

2008-09

2009-10

2010-11 RE

2011-12 BE

total expenditure expenditure on social services of which i) education ii) health

1109174

1316246 1599533 1852296 2256369 2403348

239340 116933 53557

294584 127547 60868

380628 161360 73898

446382 197070 88050

562970 249343 103742

600516 276866 115426

iii) others

68850

106168

145370

161262

209885

208224

as percent of GDP total expenditure expenditure on social services of which i) education ii) health iii) others 5.57 5.57 2.72 1.6 5.91 5.91 2.56 2.13 6.76 6.76 2.87 2.58 6.91 6.91 3.05 2.5 7.34 7.34 3.25 2.73 6.74 6.74 3.11 2.34 25.83 26.39 28.41 28.69 29.4 26.97

as percent of total expenditure expenditure on social services of which i) education ii) health iii) others 21.6 10.5 4.8 6.2 22.4 9.7 4.6 8.1 23.8 10.1 4.6 9.1 24.1 10.6 4.8 8.7 25 11.1 4.6 9.3 25 11.5 4.8 8.7

as per cent of social services expenditure i) education ii) health iii) others 48.9 22.4 28.8 43.3 20.7 36 42.4 19.4 38.2 44.1 19.7 36.1 44.3 18.4 37.3 46.1 19.2 34.7

source: RBI as obtained from budget documents of union and state governments. BE: budget estimates; RE: revised estimates.

Source: Economic Survey 2011-12 Expenditure on social services as a proportion of total expenditure increased from 21.6 per cent in 2006-7 to 24.1 per cent in 2009-10 and further to 25 per cent in 2011-12 (BE). As a proportion of the gross domestic product (GDP), its share increased from5.57 per cent in 2006-7 to 6.76 per cent, 6.91 per cent, and 7.34 per cent in 2008-09, 2009-10, and 2010-11

respectively, helping India face the global crisis without much adverse impact on the social sector. In 2011-12 it is expected to be 6.74 per cent as per the BE. While expenditure on education as a proportion of GDP has increased from 2.72 per cent in 2006-7 to 3.11 per cent in 2011-12 (BE), that on health has increased from 1.25 per cent in 2006-7 to 1.30 per cent in 2011-12 (BE). Of total social services expenditure, that on Others has fallen in 2011-12 BE).

CHAPTER V

IMPACT OF REFORMS ON EDUCATION

Education Policy:The Landmark RTE Act, 2009

Education has been a thrust sector ever since India attained independence in 1947. Right from the inception of planning, the crucial role of education in economic and social development has been recognised and emphasised. Efforts to increase peoples participation in education and to diversify educational programmes in order to promote knowledge and skills required for nation-building have characterized successive five year plans. Despite a series of problems that the country faced soon after independence, it has been possible to create a vast educational infrastructure in terms of large enrolments and teaching force and massive capabilities for management, research and development. Constitutional Provisions Regarding Education Vide Entry 25 of list III (concurrent list) in the seventh schedule of the constitution of India, education is a concurrent subject and hence a subject of common interest to both the central state government. In a historic move, the constitution (eighty-sixth amendment) act 2002, amended the constitution by inserting article 21 A which reads as follows: the state shall provide free and compulsory education to all children of the age of six to fourteen years in such manner as the state may, by law, determine. This was a significant measure for achieving the goal of education for all (EFA) by making free and compulsory elementary education a fundamental right for all children in the age group of 6-14 years. Again, the year 2010 was a landmark for education in India as the right of children to free and compulsory education (RTE), act 2009, representing the consequential legislation to the constitution (eighty-sixth amendment) act, 2002, secures the right of children to free and compulsory education till completion of elementary education in a neighborhood school. RTE act, 2009 lays down norms and standards relating to pupil teacher ratios, buildings and infrastructure, school working days and working hours of teachers. In order to fulfill the constitutional obligation, Sarva Shiksha Abhiyan was launched in partnership with the states. The programme is an effort towards recognition of the need for improving the performance of the school system through a community owned approach and ensuring quality elementary education in a mission mode to all children in the age group of 6-14 years by 2010. It also seeks to bridge gender and social gaps. This programme subsumed all existing programmes (except mahila samakhya and mid-day meal schemes) including externally-aided programmes with its overall framework with district as the unit of programmes implementation. Trends in Literacy Rates

Though the level and quality of education can be measured in a number of ways, literacy figures are essential in any measurement of educational attainment. The level of literacy is an important and the most basic index of the educational achievements of an economy. Literacy levels in a country are a measure of its degree of commitment to social justice. Alliterate environment is essential for ensuring universal elementary education, reducing child mortality, curbing population growth, ensuring gender equality and acquiring essential livelihood skills. Over the decades literacy rates in India have shown a substantial improvement (Table). Table: Literacy Rates in India (1951-2011) Census year Persons Males Females Male-Female gap in literacy Rate 18.30 25.05 23.98 26.62 24.84 21.70 16.7

1951 1961 1971 1981 1991 2001 2011

18.33 28.30 34.45 43.57 52.21 65.38 74.00

27.16 40.40 45.96 56.38 64.13 75.85 82.2

8.66 15.35 21.97 29.76 39.29 54.16 65.5

Source: Census Reports. To enlist the support of all concerned and to mobilize extra budgetary resources for the education sector, Bharat Shiksha Kosh, a registered society has been set up for receiving contributions, donations or endowments from individuals, central and state governments, and non-resident Indians (NRIs) for various educational purposes. Emphasizing the role of education, eleventh five year plan (2007-12) observed. The role of education in facilitating social and economic progress is well recognized. It opens up opportunities leading to both individual and group entitlements. Education in its broadest sense of development of youth is the most crucial input for empowering people with skills and knowledge and giving them access to productive employment in future. Improvements in education are not only expected to enhance efficiency but also augment the overall quality of life. Elementary Education

From the stand point of priorities within the field of education, importance should be attached, in terms of converge, to children in the school going age groups and those among the socially under-privileged groups. This early childhood stage is the period of maximum learning and intellectual development of the child and hence of great potential educational significance. In India, within the education sector, elementary education has been given the highest priority in terms of sub-sectoral allocations and the number of schemes launched by the central government to meet the needs of the educationally disadvantaged. Elementary education, i.e. classes I-VIII consisting of primary (I-V) and upper primary (VI-VIII) is the foundation of the structure of the structure of the education system. Elementary Education in the Eleventh Five Year Plan (2007-12) Eleventh plan set the following targets for elementary education during its duration: Universal enrolment of 6-14 age group children including the hard to reach segment. Substantial improvement in quality and standards with the ultimate objective to achieve standards of kendriya vidyalayas (KVs) under the central board of secondary education (CBSE) pattern. All gender, social and regional gaps in enrolments to be eliminated by 201112. One year pre-school education for children entering primary school. Dropout at primary level to be eliminated and the dropout rate at the elementary level to be reduced from over 50 percent to 20 percent by 201112. Universal coverage of information and communication technology (ICT) at upper primary schools by 2011-12. Significant improvement in leering conditions with emphasis on learning basic skills, verbal and quantitative. All education guarantees scheme (EGS) centres to be converted into regular primary schools. All states/union territories to adopt national council of educational research and training (NCERT) quality monitoring tools. Select Programme for Elementary Education A. Sarva Shiksha Abhiyan (SSA) Launched in November 2000, SSA is a comprehensive programme and the main vehicle for providing elementary education to all children. The goals of SSA are the following.

1. All children in school, education guarantee centre, alternate school, and backto-school camp by 2005. 2. Bridge all gender and social category gaps at the primary stage by 2007 and at elementary education level by 2010. 3. Universal retention by 2010. 4. Focus on elementary education of satisfactory quality with emphasis on education for life. SSA, implemented in partnership with the states, addresses the needs of 209 million children in the age group of 6-14 years. It covers 9.72 lakh existing primary and upper primary schools and 36.95 lakh teachers. SSA is the culmination of all previous endeavors and experiences in implementing various education programmes; SSA has been the single largest holistic programme addressing all aspects of elementary education. SSA has brought primary education to the doorstep of million s of children and enrolled them, including first generation learners, through successive fast track initiatives in hitherto unserved and underserved habitations. According to eleventh plan, SSA interventions have brought down the number of out of school children from 32 million in 2001-02 to 7.1 million in 2005-06. Forty eight districts in 10 states accounted for over 50,000 out of school children each. The number of such districts declined to 29 in 2005-06. Strong efforts are needed to address the systems issues of regular functioning of schools, teacher attendance and competence, accountability of educational administrators, pragmatic teacher transfer and promotion policies, effective decentralization of school management and transfer of powers to panchayati Raj institutions (PRIs) to build upon the gains of SSA. B. Kasturba Gandhi Balika Vidyalaya Scheme (KGBVS) KGBVS was launched in July 2004 to set up 750 residential schools at elementary level for girls belonging predominantly to the scheduled castes, scheduled tribes, other backward classes and minorities in educationally backward blocks (EBBs). All 750 KGBVS have now been sectioned by the government of India, with 117 KGBVs (15.6 percent) allocated to blocks with substantial minority population. A minimum of 75 percent of the enrolment in KGBVs is reserved for girls from the target groups and the remaining 25 percent is open for girls belonging to the below poverty line (BPL) category. C. District Primary Education Programme (DPEP) Started in 1994, DPEP, an externally aided project aimed at the holistic development of primary education covering classes I to V. it had specific objectives of reducing the dropout rate to less than 10 percent, reducing disparities among

gender and social groups in the enrolment to less than 5 percent and improving the level of leering achievement compared to the baseline surveys. However, these ambitious targets implementation of school education programme with its decentralized approach and focus on community participation. At its peak, DPEP covered 273 districts in 17 states. D. National Programme of Nutritional Support to Primary Education (NPNSPE) NP-NSPE, popularly known as mid-day meal scheme (MDMS), was launched on august 15, 1995 with the objective to boost the universalisation of primary education by impacting upon enrolment, attendance, retention and nutritional needs of children studying in class I-V. Under this programme more than 10 crore children are being targeted for overage. At present, Gujarat, Kerala, Tamil Nadu, Madhya Pradesh, Chhattisgarh, Orissa, Karnataka and Delhi are providing cooked meals. The remaining states and Uts are distributing foodgrains (wheat/rice). NP-NSPE is the worlds largest school feeding programme involving preparation of a hot meal every day. It provides free foodgrains, cooking cost, transport subsidy and other facilities. The scheme was revised and universalized in September 2004 and central assistance was provided @ Rs. 1 per child/per school day for converting foodgrains into hot cooked meals for children in classes IV in government local body and government aided schools, and education guarantee scheme (EGS) and alternate and innovative education (AIE) centres. The maximum permissible transport subsidy was revised for special category states from Rs. 50 to Rs. 100 per quintal and for other states to Rs. 75 per quintal. The scheme was further revised in June 2006 to enhance the minimum cooking cost to Rs. 2.00 per child/per school day to provide 450 calories and 12 grams of protein. The revised scheme also provided assistance for construction of kitchen-cum stores @ Rs. 60,000 per unit in a phased manner in primary schools and procurement of kitchen devices (utensils etc) @ Rs. 5000 per school 94,500 schools were also sanctioned kitchen sheds and 2.6 lakh schools were sanctioned kitchen equipment. The number of children covered under the programme has risen from 3.34 crore in 3.22 lakh schools in 1995 to 12 crore in 9.5 lakh primary schools/EGS centres in 2006-07. E. Pradhan Mantri Gramodaya Yojana (PMGY) This programme was launched during 2000-01 and envisages additional central assistance (ACA) for basic minimum services in certain priority areas. The scheme has six components covering elementary education, primary health, rural shelter, rural drinking water, nutrition and rural electrification. A minim of 10 percent of ACA for all components except nutrition (for which it is 15 percent) has been fixed. The allocation for the remaining 35 percent of ACA would be decided by

the states and Uts among the components of the scheme, as per their priorities. Funds for elementary education sector under PMGY are utilized to further the goal of universalisation of elementary education. F. National Programme for Education of Girls at Elementary level (NPEGEL) It is an important component of SSA. Launched in July 2003, NPEGEL provides additional support by way of girl-child friendly schools, stationery, uniforms etc. for girls education in educationally backward blocks (EBB). And in other areas for elementary education of under privileged and disadvantaged sections. EBBs are blocks with female literacy below, and gender gap above the national average. Apart from EBBs, NPEGEL is also implemented in blocks of districts which are not covered under EBBs but have at least 5 percent SC/ST populations and where SC/ST female literacy is below 10 percent and also in select urban slums. In the tenth five year plan, an amount of Rs. 1064.80 crore was earmarked for this programme. NPEGEL provides for development of a model school in every cluster with more intense community mobilization and supervision of girls enrolment in schools. Gender-sensitization of teachers, development of gender sensitive learning materials and provision of need based incentives like stationery. Workbooks and uniforms are some of the objectives under NPEGEL. It is being implemented in about 3,164 educationally backward blocks in 25 states. G. Education Guarantee Scheme and Alternative and innovative Education (EGS&AIE) Another important component of SSA is the EGS&AIE. It is specially designed to provide access to elementary education to children in school less habitations and out of school children. It supports flexible strategies for out-ofschool children through bridge courses, residential camps, drop-in centres, summer camps, remedial coaching etc. H. Mahila Samakhya (MS) MS, an externally aided project for womens an environment for women to learn at their own pace set their own priorities and seek knowledge and information to make informed choices. It has strengthened womens abilities to effectively participate in village level education programmes. The programme is implemented in 9 states covering 83 districts. Madhya Pradesh and Chhattisgarh have registered MS societies through which the programme is initiated. It provides for vocational and skill development as well as educational development of adolescent girls and women in rural areas. I Prarambhik Shiksha Kosh (PSK)

PSK was constituted on November 14, 2005 to receive the process of the education cess imposed through finance (no. 2) act. 2004. PSK is a separate, dedicated non-lapsable fund to be maintained by the ministry of human resource development. In education, the elementary sector is besieged by numerous systemic problems such as inadequate school infrastructure., presence of single-teacher schools, high teacher absenteeism (especially in rural areas), large scale teacher vacancies, inadequate equipment etc. this brings into focus the role of decentralization and peoples participation in the provision of basic services. It is essential that control over schools and teachers should be transferred to local bodies, having a direct interest in teacher performance. In view of the shortage of funds government can accept only limited responsibility in this field, confined to research in evolving methods suited to needs, training of teachers, helping private agencies who take up this work in the rural areas by grants-in-aid and running a few model balwadis or nursery schools in each state. In labour areas, it should be the responsibility of industry to make provision for such schools in other areas, the major burden of organizing and running balwadis should be borne by local bodies. Where resources do not allow the opening of fulltime institutions, day nurseries, working for a few hours in mornings and evenings, should be organised by voluntary workers. Where buildings are not available seasonable open-air nurseries may be organised. The quality of teaching in elementary schools is also not what it should be teacher absenteeism is widespread, teachers are not adequately trained and the quality of pedagogy is poor. These deficiencies need to be corrected to improve the quality of education at the elementary level, especially in rural areas. Secondary and Vocational Education A sound system of secondary education, which offers openings in a large number of different directions, is an essential foundation for economic development on modern lines. With the expansion of elementary education an increasing number of students reach the secondary stage. The year 2008-09 was a momentous year for secondary education in India when a new centrally sponsored scheme to universalize education at secondary stage was launched. Secondary Education Secondary education sector prepares students in the age group of 14-18 years for entry into higher education as well as for the world of work. The success of Sarva shiksha abhiyan (SSA) in achieving large scale enrolment of children in regular and alternate schools has thrown open the challenge of expanding access to secondary education. Rapid changes in technology and the demand for skills also make it

necessary that young people acquire more than eight years of elementary education to acquire the necessary skills to compete successfully in the labour market. Moreover, secondary education serves as a bridge between elementary and higher education. A. Targets for the Eleventh Five Year Plan (2007-12) Following are the goals of the eleventh plan as regards secondary education. To raise the minimum level of education to class X level and accordingly universalize access to secondary education. To ensure good quality secondary education with focus on science, mathematics and English. To reduce gender, social and regional gaps in enrolments, dropouts and schools retention. The norm will be to provide a secondary school within 5 kilometers and a higher secondary school within 7-8 kilometers of every habitation. The gross enrolment ratio (GER) in secondary education is targeted to increase from 52 percent in 2004-05 to 75 percent by 2011-12 and the combined secondary and senior secondary GER from 40 percent to 65 percent in the same period. Vocational Education Vocational training is broadly defined as training that prepares an individual for a specific vocation or occupation. Vocational education remains within the broader school curriculum and involves provision of specific skills to increase the employability of the students on completion of formal education. Vocational training is especially for a particular trade or economic activity and is conducted outside the schooling system. There are three categories of vocational education prevalent in India today: at the lower school stage, at the class 10+2 stage and at the specialized level. Secondary education must be closely related to the psychological needs of the adolescents for whom it is being designed. In order to equip the youth adequately for the needs of the existing socio-economic situation, it is necessary to give secondary education a vocational bias. At present this education is mainly academic and does not provide sufficient scope for adolescents with varying aptitudes especially those with a marked practical bent of mind. One of the important links between education and development is provided by manpower development through vocationalisation of secondary education related to employment. This has to be carefully designed, based on detailed surveys of existing and potential work opportunities and of available educational and training facilities. It should also keep in view the specific roles and responsibilities of the different

agencies and ensure co-ordination at the operational level between the developmental programmes and the educational system. Such as differentiation should normally commence after the secondary stage and may cover varying periods depending upon the vocational area, groups of occupations and the nature and level of skills needed. It envisages deepening of practical bias in the school education to be supplemented by appropriate apprenticeship in actual field, farm or factory situations. Vocational education and training system needs to cover more trades. Qualitatively is suffers from disabilities such as poor infrastructure, ill equipped classrooms/laboratories/workshops, non-performing faculty, absence of measurement of performance and outcomes etc. placements are not tracked, training institutions are not rated and accreditation systems are archaic. The centrally-sponsored scheme of vocationalisation of secondary education at+2 levels is being implemented since 1988. The revised scheme is in operation since 1992-93. The scheme provides financial assistances to states for setting up administrative structures, carrying out area-vocational surveys, preparing curriculum guides training manuals, organizing teacher training programmes, provides financial assistance to NGOs and voluntary organisations for implementation of specific innovative projects for conducting short term courses. Under the scheme, an enrolment capacity of over 10 lakh students in 9,583 schools has been created so far. As reported in the eleventh five year plan (2007-12), the national skill development mission is on the anvil. It is envisaged to evolve a comprehensive scheme for creating a diverse and wide range of skills for youth that would enable the country to reap the scientific and demographic dividend. The emphases will be on demand driven vocational education programmes in partnership with employers. The current programmes will be restructured with emphasis on hands on training/exposure, vertical mobility and flexibility. Furthermore, a national vocational qualification (NVQ) system, in which public and private system of vocational education collaboratively meet the needs of industry and individuals, will be developed. Under this, modular competency based vocational courses will be offered along with a mechanism of testing skills. Bridge courses to facilitate people without any formal education to get enrolled in the regular system of courses will also be developed through NVQ system. A. Formal Training Programmes Formal vocational training system demands a minimum level of education, generally higher secondary in the case of the systems co-ordinate by the ministry of human resources development coordinated by the ministry of labour and employment (MOLE), which polytechnics, under MHRD, offer diploma-level courses to meet training needs of manpower for industry at the supervisory level.

The all India Council of technical education (AICTE) approves diploma programmes in engineering and architecture, hotel management and catering technology and pharmacy. There are 1,244 polytechnics run by MHRD ministry with a capacity of over 2.95 lakh offering three-year diploma courses in various branches of engineering with an entry qualification of secondary education. Besides, there are 415 institutions for diploma in pharmacy, 63 for hotel management and 25 for architecture. The two flagship schemes of directorate general for employment and training under ministry of labour and employment are the craftsmen training scheme (CTS) and the apprenticeship training scheme (ATS). The CTS provides institutional training whereas ATS is a combination of institutional as well as on the job training in which trainees are exposed to real life industrial environment. The CTS is implemented through 1987 industrial training institutes (ITIs) run by the state governments. In addition, 4,847 industrial training centres (ITCs) in the private domain implement the CTS on the same pattern as ITIs. Higher and Technical Education Higher education is of vital importance for the country in consolidating its comparative advantage in skill and knowledge-intensive services and in building a knowledge based society. Higher Education A. Expansion of Higher Education At the time of independence in 1947, the number of universities was no more than 20, of colleges around 500 and the total enrolment was less than 1 lakh. The investment made in higher education over the year has given the country a strong knowledge base in many fields and contributed significantly to economic development, social progress and political democracy in independent India. By the end of the tenth five year plan (2202-07), the Indian higher education system had grown into one of the largest in the world with 378 universities, 18,064 colleges, faculty strength of 4.92 lakh and an estimated enrolment of 140 lakh students. The higher education institutions include 23 central universities, 216 state universities, 110 deemed universities, 111 private universities and 33 institutions of national importance established through central legislation and another 5 institutions established through state legislations. Despite the expansion that has occurred, it is evident that the system is under stress to provide a sufficient volume of skilled human power, which is equipped with the required knowledge and technical skills to cater to the demands of the economy. The accelerated growth of Indian economy has already created shortages of high quality technical manpower. It underscores the need to expand opportunities for

youth on a massive scale and in diverse fields of basic science, engineering and technology healthcare architecture, management etc this is possible only if there is rapid expansion along with long overdue reforms, in the higher technical and professional education sectors. Though the recent emergence of the private sector in higher education has helped expand capacity, it is characterized by some imbalances. Private institutions have improved access in a few selected areas like engineering, management, medicine and it etc. where students are willing to pay substantial fees. However, the distribution across country is uneven with some state receiving most of the growth in private institutions. B. Important Bodies for Higher Education (a) University Grants Commission (UGC) The UGC, a statutory body, established in 1956, pirates over 100 schemesproviding a wide range of development grants to institutions, travel grants for researchers, area studies, cultural exchanges, and adult education and women studies. The main instruments used by the UGC to obtain improvement in the standards of teaching in institutions of higher education is to require them to adhere to minimum standards in infrastructure and physical facilities and human resources as a condition for financial assistance. However, what is needed is to induce them for striving to undertake self-improvement on a voluntary basis to obtain better standards. With this end in view, UGC in 1994 established the national assessment and accreditation council (NAAC) to undertake necessary to promote the process of accreditation by making available additional discretionary funds to the funding agencies to be utilised for the purpose. (b) National Assessment and Accreditation Council (NAAC) It was set up in 1994 to make quality an essential element through a combination of internal and external quality assessment and accreditation. During the tenth five year plan (2002-07), NAAC was strengthened with the opening of 4 regional centres so as to speed up the accreditation process. (c) Academic Staff Colleges (ASCs) At present there are 55 ASCs which conduct orientation programmes of 4weeks for newly appointed teachers and refresher courses of 3-weeks for in-service teacher. The refresher courses provide opportunities for serving teacher to learn from each other and serve as a forum for keeping abreast with the latest advances in various subjects. (d) All India Council for Technical Education (AICTE)

Following are the key elements of the higher education agenda of the eleventh plan: Admission, Curriculum and Assessment Common calibration and admission based on CET and/other relevant criteria for at least professional and post graduate courses in central universities in the first phase. Universalizing the semester system. Continuous internal evaluation and assessment to eventually replace annual examinations. Introducing credit system to provide students with the possibility of spatial and temporal flexibility/mobility. Curriculum revision at least once every three years or earlier to keep syllabi in tune with job market dynamics and research advances. Accreditation and Ratings Introduction of mandatory accreditation system for all educational institutions. Creation of multiple rating agencies with a body to rate these rating agencies. Departmental ratings in additional to institutional rating. Teachers Competence and Motivation Restructuring of NET/SET with greater emphasis on recruitment of adequate and good quality teachers. Revamping academic staff colleges (ASCs) and upgrading capabilities of teachers through short and long term courses. Expansion of research programmes/projects and incentivizing search faculty through funded projects/research. Miscellaneous UGC in consultation with stakeholders to arrive at optimum size of universities and the number of college affiliations. Setting up of a new inter university centre on higher education to undertake specialized research for policy formulation. Technical Education Educational programmes in the field of engineering and technology and craftsmen trainingwhich are designed to help in building up the trained technical personnel required for schemes of industrial development, teaching and research are immensely important. In formulating these programmes. It should be recognised

that advances in the field of science and technology will call, from time to time, for changes in patters of training and for improvements in the system of education. A. Growth of Technical Education Institutions Technical and professional education in the country has played a significant role in economic and technical development by producing quality manpower. Strong linkages have developed between technical institutions and the industry. For strengthening technical education and improving the quality of polytechnic pass outs. Various steps have been taken through technical education development programmes. There is a widespread network of technical education institutions in India. The major among them are the following: 1. 7 Indian institutes of technology (IITs) and 6 Indian Institutes of management (IIMs), which are institutions of national importance. 2. 1,617 engineering and technology colleges, 1,292 polytechnics. 3. 525 institutions for diploma in pharmacy. 4. 91 schools for hotel management and 4 institutions for architecture. 5. For post-graduate courses, there are 1,147 educational institution for MBA/PGDM and 953 for MCA. 6. Deemed universities namely: Indian Institute of science (IISc), Bangalore. Indian School of mines (ISM), Dhanbad. School of planning and architecture (SPA), New Delhi. Indian institute of information technology and management (IIITM), Gwalior. Indian Institute of information technology (IIIT), Allahabad. Indian institute of information technology, design and manufacturing Jabalpur. 7. 20 national institutes of technology (NITs) which are institutions of national importance. Tenth five year plan (2002-07) saw a big increase in the number of technical and management institutions, mainly due t private initiative. During the tenth plan, the number of AICTE approved degree engineering/technology institutions increased from 1,057 to 1,522 and the annual intake from 2.96 lakh to 5.83 lakh. During the tenth plan, university of Rookie was upgraded to on IIT and the number of IITs increased to 7. Eleventh five year plan (2007-12) has envisaged setting up of 8 new IITs. 7 new IIMs and 10 new NITs. An ordinance has been promulgated for establishing 15 central universities. Six new Indian institutes of technology (IIT) have started functioning in Bihar, Andhra Pradesh, Rajasthan, Orissa, Punjab and Gujarat during 2008-09. Two

more IITs in Madhya Pradesh and Himachal Pradesh were expected to commence their academic sessions in 2009-10. With the commencement of academic sessions in the Indian institutes of science education and research (IISERs) at Bhopal and Thiruvananthapuram, all 5 IISERs announced by the government are now functional. Teaching is expected to commence in four of the six new Indian institutes of management, proposed for the eleventh plan period, from the academic year 200910. These are in Haryana, Rajasthan, Jharkhand and Tamil Nadu. As an integral part of the co-ordinate action plan for skill development, the government created the national skill development corporation in July 2008 with an initial corpus of Rs. 1,000 crore to stimulate and co-ordinate private sector participation in skill development. The number of students in engineering and technology colleges and industrial training institutes has increased sharply. The same picture holds true for other categories like scientists, doctors and agricultural graduates. Resultantly, India now has the third largest scientific and technical work force in the world. However, the capacity of the system to absorb fully these skills in productive employment has been less than adequate. In pure and applied research, advances have been limited except in a few areas like agricultural research, atomic energy and space. Human skills are a formidable asset since they last not merely during one working life but because they are transmitted for generations. If these assets are used effectively, they may well turn out to be one of the most fruitful of planning. Technical education including management education is one of the most potent means for creating skilled manpower required for developmental tasks. While this implies high costs of construction, laboratory equipment, library books and journals and high rate of obsolescence, such high cost, being directly related to development, should be viewed as an essential productive investment, yielding valuable returns to the society. The quantity of technical and management education needs to be improved not only through modernization and upgradation of infrastructure but also by adopting futuristic approaches and strengthening industry institutional and R&D laboratories interaction. Indian technology policies are undergoing significant changes, and on the whole have improved greatly in recent years. A coherent technology strategy in India must address a number of interconnected elements in the incentive regime and the relevant factor markets and institutions. Medical Education

In India medical education is highly regulated and there is an access barrier for setting up new medical and dental colleges. Eligibility for setting up medical or dental colleges is limited to the following organisations: 1. 2. 3. 4. A state government/union territory. A university. An autonomous body promoted by central/state government. A society registered under the societies registration act, 1860 or corresponding acts in states. 5. A public religious or charitable trust registered under the trust act, 1882 or the Walk act, 1954. Thus for example, the corporate sector is not eligible and only not for profit organizations can apply. The private sector medical and dental colleges that have been established in large numbers have all done so by setting up not for profit societies. Besides, the problem of the number of healthcare personnel, there is an acute problem of quality as well. Some of the private colleges are producing graduates far below the standards required but the government colleges have also deteriorated, in part because of shortage of staff, the vacancies remaining unfilled because of unattractive remuneration. In government medical colleges smother reason for deterioration of the quality of medical graduates is that they do not get the opportunity to observe the treatment of patients because of the fall in the number of patients coming to government hospitals for treatment. A critical overview of higher education in India brings out a number of issues. Chief among them are the deterioration in quality, the resource crunch leading to poor infrastructure and the serious problems of governance brought about by the influence of factors and forces extraneous to educational objectives. Private Sector Institutions Recent decades have seen the emergence of private sector institutions, particularly in technical education, financed by large capitation fees charged by them. This development has been inequitable, as it has led to the deprivation of large number of students who have not been able to pay the substantial sums involved in the capitation fees. While encouraging private sector initiative to expand higher education, it has become necessary for the government to ensure that private sector institutions take measures to provide the government to ensure that private sector institutions take measures to provide scholarships and free-ships to an adequate number of meritorious students who do not have the means to pay the fees. Shortage of Faculty One of the main reasons for falling standards of higher education is the teacher shortage in the institutions of higher learning, particularly the technical

education institutions. The salaries commanded by graduates in the market are so high that they do not have the motivation to move on for post graduation or doctoral level with the ultimate objective of becoming teachers. In order to made the teaching profession attractive and motivate bright young professionals to take post graduate courses, it is necessary to look at the salary structure and career opportunities of teachers in colleges. Research project funds must be shared as incentive payment to the faculty and the faculty should be given maximum freedom to undertake consultancies. Curricula and Assessment The decline in standards in higher education is also due to the failure to revise the curricula to keep pace with the developments in the various fields of knowledge as well in the society. The curricula must be revised every three years and the revisions must be subjected to outside peer review. The process of revision should be streamlined and decentralized with more autonomy given to teachers. One of the major reforms needed in the education system is a change in the method of assessment of students, which relies exclusively on examinations. The current system sin inadequate because it tests memory rather than understanding and does not encourage the development of analytical and creative abilities. Assessment of students must be based on the work done throughout the year rather than being judged solely on the performance during the annual examination. Evaluation of courses and teachers by students should also be used an input in the process of assessment of students. Semester system must be introduced in the institutions of higher education. Also important is the need to introduce a system of credits whereby a student who discontinues studies or who changes institutions may be granted recognition for the courses completed earlier, thus granting them spatial and temporal flexibility in pursuing studies. Non-viable Institutions The problem of non-viable institutions, with low enrolment and inadequate provision of facilities, as well as proliferation of such institutions, offering general academic courses, would need to be tackled with determination, both in order to avoid increasing unemployment among the graduates as well as to make better use of the available economic resources for educational development. At the same time, the problems of first generation learners, particularly the socially disadvantaged sectionsfor whom higher education provided a transition, opportunity and challenge in terms of life perspectives and socio economic aspirations of the communitywould need to be harmonized into the academic pattern. To sum up, the problem of the re-organisation of university education is really three-fold: the reform of the existing system to enable it to yield the best results it is capable of yielding, the building up of a new system (or systems) more suited to

national needs and the working out of the relationship of the various systems, while they exist side by side. In spied of their grave defects, the existing universities are the only repositories of the tradition of organised knowledge and the course of wisdom is to improve their working while building a better system is attempted. Extensive and widespread facilities have been created for higher education and the main thrust should be to co-ordinate them and maximize their utilisation. There is sufficient scope for, and possibility of, greater use of the infrastructural physical facilities. The existing imbalances in the level of development of universities among themselves as well as in relation to colleges would have to be examined for suitable remedial programmes and selective support in keeping with their requirements, potential and scope. Higher education needs to be extended in an equitable and cost effective manner mainly by large scale expansion of distance education system and increased involvement of voluntary and private agencies. Apart from strengthening of facilities and restructuring curriculum, the component of value education should be introduced as part of foundation programme. While an integrated approach to the development of higher education needs to be adopted, measures to promote excellence should be emphasised. The excellence of Indias university products and professionals is well acknowledged, both at home and abroad. The competitive advantage of the country can be maintained and improved only if the university and higher education sector perform well. Their contribution to improving capability to interact effectively with the fast expanding global techno-economic systems has been significant and their potential needs to be harnessed to the full. Adult Education Literacy is the most essential pre-requisite for individual empowerment. Adult literacy and further education of the literates is as vital an area as universal elementary education. Programmes/Schemes for Adult Education A new thrust was given to adult literacy in the national policy on education (NPE), 1986 and the plan of action 1992, which advocated a three pronged strategy of adult education, elementary education and non-formal education to eradicate illiteracy. The national literacy mission (NLM) was launched on May 5, 1988 as a technology mission to impart functional literacy to non-literates in the country in the age group of 15-35 years in a time bound manner. This age group has been the focus of attention because they are in the productive and reproductive period of life. NLM

was set up with an initial target to make 80 million persons literate was to achieve a threshold level of 75 percent literacy by 2007. Total literacy campaign (TLC) has been the principal strategy of NLM for eradication of illiteracy in the target group. These campaigns are area specific, time bound volunteer based, cost effective and outcome oriented. They are implemented by Zila Saksharata Samities and district level literacy societies. Keeping pace with its endeavors, campaigns and programmes, NLM has strengthened and revitalized the states literacy missions which have been imparted greater autonomy. They now have the authority to plan, implement and monitor literacy programmes and sanction continuing education programmes at the state level. The NLM has also come to recognize the great potential that NGOs are now allowed to receive funds from Zila Saksharata Samities and actually run continuing education centres. The Jan Shikshan Suntans have expanded their outreach and are also catering to the rural segment by offering vocational training courses. At present, 137 districts are implementing TLCs, 165 districts post literacy programmes and 295 districts continuing education programmes. In addition, 157 Jan Shikshan Sansthan have been set up to provide vocational training to the neoliterates and backward sections of the society. There are 25 state resource centres established for providing academic and technical resource support for the literacy programmes. NLM has accorded priority for the promotion of female literacy. According to 2001 census, 47 districts in the country had female literacy rate below 30 percent. Most of these districts were concentrated in Bihar, Jharkhand, Uttar Pradesh and Orissa. Special innovative projects have been taken up to raise the level of female literacy in these areas. Special efforts have been made to target female panchayati raj functionaries and make them literate. A. Jan Shikshan Sansthan (JSS) The objective of JSS schemes is educational, vocational and occupational development of socio-economically backward and educationally disadvantaged groups of urban/rural population, particularly neo-literates, semi literates, scheduled castes, scheduled tribes, women and girls, slum dwellers, migrant workers etc. by linking literacy with vocational training. JSSs seek to improve the quality of the beneficiaries. JSSs offer around 284 different types of vocational coursesfrom candle and agarbatti making to computer training and hospital/healthcare. The total number of JSS is 198. B. Weaknesses of Adult Education Programmes The constraints in the implementation of adult education programmes include inadequate participation of the state governments, low motivation and training of

voluntary teachers/preaks, lack of convergence of programmes, and weak management and supervision structure for implementation of NLM. Besides, the funding for various components of NLM scheme is inadequate and the level of community participation is also low. While designing this programme, the lot of the weaker sections like women scheduled castes, scheduled tries and agricultural laoburers as well as slum dwellers should be given priority. The strategy in these cases should be the development of methods and contents suited to the varied needs and situations. Thus promoting flexibility in the means of delivery of education. More intensive efforts are required to spread literacy in the rural and tribal areas which are lagging behind, with special attention to women and such marginalized groups as small and marginal farmers, landless labourers and educationally neglected tribal groups. For this purpose, a disaggregated and decentralized mode of planning and implementation should be adopted. Inter-linkage of the adult education programme with income generation, better health and nutrition, womens empowerment and overall rural development should be focused upon. At the grassroots level, peoples participation should be ensured in planning and implementation of local programmes. C. Targets and Special Focus Areas of Eleventh Five Year Plan (2007-12) Targets Achieve 80 percent literacy rate. Reduce gender gap in literacy to 10 percent. Reduce regional, social and gender disparities. Extend coverage of NLM programmes to 35+ age group.

Special focus Areas: Scheduled castes, scheduled tribes, minorities and rural women to have a special focus. Focus also on low literacy states, tribal areas, other disadvantaged group and adolescents. To conclude, adult education lays emphasis on minimum essential education to all citizens, irrespective of their age, sex and residence. The approach to achieve this objective is characterized by flexibility, inter-sectoral co-operation and inter-agency co-ordination. Technocracy is adopted as the major instrument for the spread of literacy, numeracy and practical skills relevant to the economic activities of the people concerned. It is supported by post literacy continuing education through a network of rural libraries as well us instructional programmes through mass communication media.

Skill Development The term skills are used in the literature to refer to a wide range of attributes and to that extent there is no clear definition of a skilled worker. In practical terms the term used is marketable skill which commonly refers to any skill/expertise/ability that has a market value, i.e. which has the potential of being utilised for generating income/employment. Skill development is important because of its contribution to enhancing productivity at the individual, industry and also national levels because of the complementarities that exist between physical capital and human capital on the one hand and between technology and human capital on the other. Fast changing knowledge economies call for new core competencies among all learners in the society. Coordinated Action on Skill Development Skill building can be viewed as an instrument to improve the effectiveness and contribution of labour to the overall production. It is as an important ingredient to push the production possibility frontier outward and to take growth rate of the economy to a higher trajectory. Skill building could also be seen as instruments to empower the individual and improve his/her social acceptance or value. Coordinated action on skill development as proposed by planning commission was approved by the cabinet on May 15, 2008. The coordinated action is the major initiative for achieving eleventh plan objective of inclusive growth and development through coordination and harmonization of skill development initiatives of different players. The acting aims at creation of a pool of skilled manpower with adequate skills that meet the employment requirements across various sectors of the national economy. The approved coordinated action on skill development envisaged setting up of a three-tier institutional structure involving prime ministers national council on skill development coordination board (NSDCB) and national skill development corporation (NSDC). The institutional structure was put in place in 2008 itself. A. Prime Ministers National Council on Skill Development (NCSD) In pursuance of the decision of the cabinet at its meeting held on May 15, 2008 on coordinated action for skill development and setting up of the national skill development corporation, prime ministers national council on skill development was constituted. NCSD was set up for giving policy directions and periodic review of efforts to address the issue of skill development by expansion of training capacity in a mission mode. The council will be responsible for vision setting and laying down broad strategies for skill development. The main functions of NCSD are as under:

1. To lay down overall broad policy objectives, financing and governance models and strategies relating to skill development. 2. To review the progress of schemes, and guide on mid course corrections, additions and closure of parts or whole of any particular programme/scheme. 3. Coordinate public sector/private sector initiatives in a framework of a collaborative action. NCSD has set a target of creating 500 million skilled people by 2022 with emphsise on inclusivity so as to deal with divides of gender, rural/urban, organised/unorganised, employment and traditional/contemporary work place. It has laid down the core governing strategies for skill development. Some of the key governance principles for skill development strategy include designing of programmes under which the learner can pay the skill provider directly, skills are fungible and bankable, and individuals are enabled to convert their knowledge and skills through adequate testing and certification into higher diplomas and degrees. The emphsise is on promoting multiple models of delivery that can respond to differing situation in various states and to utilize existing available infrastructure of educational institutions for skill development after school hours without affecting formal education. The state government is encouraged to set up the state level coordination body for skill development. B. National Skill Development Coordination Board (NSDCB) In pursuance of the decision of the cabinet at its meeting held on may 15, 2008 on coordinated action for skill development and setting up of the national skill development corporation, national skill development coordination board was constituted. NSDCB is entrusted with the coordination and harmonization of the initiatives of governments for skill development spread across 17 central ministers and state government with the initiatives of the national skill development corporation (NSDC). It has 12 members which include high level government officials and distinguished academicians. The main functions of NSDCB include the following: 1. Enumerating strategies to implement the decisions of the prime ministers national council on skill development (NCSD). 2. Developing suitable operational guidelines and instructions to achieve the objectives of skill development requirements of the economy. 3. Initiating solutions and strategies to address the problems of (a) regional imbalance in skill development infrastructure, (b) socio economic rural-urban and gender divide, (c) quality teachers (d) ensuring effective utilisation of investment in terms of money and infrastructure, (e) integrating varying

4. 5.

6.

7.

8.

existing regulatory institutions, (f) involving private sector to develop skills for wage/self employment and (g) promoting apprenticeship/on-the-job training for creation of skilled personnel to address unemployment problem. Encouraging state government to put in place similar institutional structures. Establishing national skill inventory and national dataset for skill deficiency mapping on national web portal to facilitate exchange of information on employment and skill development. Coordinating and facilitating the repositioning of employment exchanges as outreach points for storing and providing information on employment and skill development. Coordinating the establishment of a credible accreditation system and a guidance framework for all accrediting agencies of different ministries and private players. Monitoring, evaluating and analyzing the outcomes of the various schemes and programmes and apprising NCSD.

NSDCB has constituted the following 5 sub-committees to look into various aspects of skill development. 1. Curriculum revision. 2. Remodeling apprenticeship training. 3. Evolving vision on the statures of vocational education and training in educational system. 4. Institutional mechanism for skill mapping and skill inventory on real time basis. 5. Improvement in accreditation and certification system. C. National Skill Development Corporation (NSDC) NSDC, a non-profit company under section 25 of the companies act, 1956 has been set up under the ministry of finance. It has an equity base of Rs. 10 crore of which 49 percent is contributed by the government and 51 percent by the private sector. NSDC has two tier structure, viz a 15 member board and a national skill development fund (NSDF) as a 100 percent government-owned trust to facilitate its mandate of coordinating and stimulating private sector initiative in the area of skill development with enhanced flexibility and effectiveness. NSDF, operating arm of the NSDC, was created with a corpus of Rs. 995.10 crore as government owned trust to receive financial contributions from donors, private entities, governance (both central and state), statutory bodies financial institutions etc. NSDC would enter not an investment management agreement whereby NSDF would provide funds to NSDC for furtherance of the objective of skill development in accordance with the approved work and financial plan. NSDC

would charge a management fee from NSDF for managing its resources. The beneficiaries of the trust are the youth of India who require skill development and vocational training. Its main functions are as follows: 1. Making periodic as well as an annual report of its plans and activities and put them in the public domain. 2. Establishing a trainee placement and tracking system for effective evaluation and future policy planning. 3. Establishing credible independent certification systems for both vocational education (VE) and vocational training (VT) with the scope for permitting vertical and horizontal mobility within and between VE and VT. National Policy on Skill Development (NPSD), 2009 NPSD was formulated by the ministry of labour and employment and was approved by the cabinet in its meeting held on February 12, 2009. The objective of NPSD is to create a workforce empowered with improved skills, knowledge and internationally recognized qualification to gain access to decent employment and ensure Indias competitiveness in the dynamic global labour market. It aims at increase in productivity of workforce both in the organised and the unorganised sectors, seeking increased participation of youth, women, disabled and other disadvantaged sections and to synergize efforts of various sectors and reforms the present system. The salient futures of NPSD are as under: 1. Demand-driven system guided by labour market signals thereby reducing skills mismatch. 2. National vocational qualification framework which will, inter alia, include opportunities for horizontal and vertical mobility between general and technical education, recognition and certification of competencies irrespective of mode of learning. 3. Expansion of outreach using established as well as innovative approaches. 4. System to deliver competencies in line with nationally and internationally recognised standards. 5. Focus on new emerging occupations. 6. Focus on pre-employment training and life-long learning. 7. Adequate participation of women, disabled persons and disadvantaged groups including economically backward and minorities and enhancing their access to training and employment opportunities. 8. Stress on research, planning and monitoring. 9. Involvement of social partners, i.e. responsibility and financing of the system would be shared with all stakeholders and provide greater space for public private partnership (PPP). 10. Promoting excellence. 11. Use of modern training technologies including distance learning, e-learning, web based learning etc.

12. Skill upgradation of trainers, their quality assurance, and improvement of status.

CHAPTER VI

Impact of Reforms on Health

Health Security:Sarva Swasthya Abhiyan Improvement in the health status of the population has been one of the major thrust areas in social development programmes of India since independence. Over the past six decades, India has built up a vast health infrastructure and manpower at primary, secondary and tertiary care levels in the government, voluntary and private sectors manned by professionals and Para-medicals. India has invested massive amounts under the successive five year plans in medical education, training and research which have ensured large manpower from the super-specialists to the auxiliary midwives. Sarva Swasthya Abhiyan (SSA) Tenth five year plan (2002-07), indicated the dismal picture of the health services infrastructure and emphasized the need to invest more on building good primary-level care and referral services. The plan emphasized on restructuring and developing the health infrastructure, especially at the primary level. The plan highlighted the importance of the role of decentralization but did not state how this

would be achieved. Programme-driven health care was in focus. Verticality and technical solutions were given more importance than the comprehensive primary health care. The multi-sectoral approach that is much needed for a vibrant health system had not been well thought out. Eleventh five year plan envisages inclusive growth by introducing national urban health mission (NUHM) which along with national rural health mission (NRHM) will from Sarva Swasthya abhiyan (SSA). NRHM was launched for meeting health needs of all age groups and reduce disease burden across rural India. NUHM will be launched to meet the unmet needs of the urban population. NUHM asked on health insurance and public private partnership will provide integrated health service delivery to the urban poor. Initially, the focus will be on urban slums. NUHM will be aligned with inclusive growth by finding solutions for strengthening health services and focusing n neglected areas and groups. National Urban Health Mission (NUHM) NUHM is designed to meet health needs of the urban poor, particularly the slum dwellers by making available to them essential primary health care services. This is done by investing in high caliber health professionals, appropriate technology through public private partnership and health insurance for urban poor. Recognizing the seriousness of the problem, urban health is slated to be taken up as a thrust area during the eleventh five yard plan. At the state level besides the state health mission and state health society and directorate, there would be a state urban health programme committee. At the district level, similarly there would be a district urban health committee and at the city level, a health and sanitation planning committee. At the ward slum level, there will be a slum cluster health and water and satiation committee. For promoting public health and cleanliness in urban slums, eleventh five year plan will also encompass experiences of civil society organisations working in urban slum clusters. It will seek to build a bridge of NGO-government partnership and develop community level monitoring of resources and their rightful use. NUHM would ensure the following: Resources for addressing the health problems in urban areas, especially among urban poor. Need based city specific urban health care system to meet the diverse health needs of the urban poor and other vulnerable sections. Partnership with community for a more proactive involvement in planning, implementation and monitoring of health activities. Institutional mechanism and management systems to meet the health related challenges of a rapidly growing urban population.

 Framework for partnerships with NGOs, charitable hospitals and other stakeholders. Two-tier system of risk pooling: (a) womens Mahila Arogya Samiti to fulfill urgent hard cash needs for treatments; (b) a health insurance scheme for enabling urban poor to meet medical treatment needs. NUHM would cover all cities with a population of more than 100,000. It would cover slum dwellers; other marginalized urban dwellers like rickshaw pullers, street vendors, railway and bus station collies, homeless people, and street children, construction site workers, who may be in slums or on sites. The existing urban health posts (UHPs) and urban family welfare centres (UFWCs) urban health posts (UHPs) and urban family welfare centres (UFWCs) would continue under NUHM. They will be marked on a map and classified as the urban health centres, on the basis of their current population coverage. All the existing human resources will then be suitably reorganized and rationalised. These centres will also be considered for upgradation. Inter-sectoral coordination mechanism and convergence will be planned between the Jawahar Lal Nehru National urban renewal mission, and the national urban health mission. National Rural Health Mission (NRHM) NRHM was launched on April 12, 2005 to provide accessible, affordable and accountable quality health services to the poorest households in the remotest rural regions. The thrust of the emission was on establishing a fully functional, community owned, decentralized health delivery system with inter-sectoral convergence at all levels, to ensure simultaneous action on a wide green of determinants of health like water, sanitation, education nutrition, social and gender equality. Under the NRHM, the focus was on a functional health system at all levels, from the village to the district. The mission aims to provide universal access to equitable, affordable and quality health care which is accountable and at the same time responsive to the needs of the people. The mission is expected to achieve the goals set under the national health policy and the millennium development goals. To achieve these goals, NRHM facilitates increased access and utilisation of quality health services by all, forge partnership between the central, state and the local governments, set up a platform for involving the PRIs and the community in the management of primary health programmes and infrastructure and provides an opportunity for promoting equity and social justice. The NRHM establishes a mechanism to provide flexibility to the states and the community to promote local initiatives and develop a framework for promoting inter-sectoral convergence for

primitive and preventive health care. The mission has also defined core and supplementary strategies. Strategies of NRHM A. Core Strategies: These are the following: Train and enhance capacity of Panchayati Raj Institutions (PRIs) to supervise and manage public health services. Promote access to improved health care at household level through the female health activist (AHSA). Health plan for each village through village health committee of the panchayat. Strengthen sub-centre through an untied fund to enable local planning and action and more multipurpose workers (MPWs). Strengthen population for improved curative care to a normative standard (Indian public health service standards defining personnel, equipment and management standards). Prepare and implement an inter-sectoral district health plan prepared by the district health mission, including drinking water, sanitation, hygiene and nutrition. Integrate vertical health and family welfare programmes at national, state and district levels. Technical support to national, state and district health missions for public health management. Strengthen capacitates for data collection, assessment and review for evidence based planning, monitoring and supervisions. Formulate transparent policies for deployment and career development of human resources for health. Develop capacitates for preventive health care at all levels for promoting healthy life styles, reduction in consumption of tobacco and alcohol, etc. Promote non-profit sector particularly in underserved areas. B. Supplementary Strategies: These include: The mission is expected to address the gaps in the provision of effective health care to rural population with special focus on 18 states, which have weak public health indicators and/or weak infrastructure. The mission I a shift away from the vertical health and family welfare programmes to a new architecture of all inclusive health development in which societies under different programmes will be merged and resources pooled at the district level. The mission aims at effective integration of health concerns with determinants of health like safe drinking water, sanitation and nutrition through integrated

district plans for health. There is a provision for flexible funds so that the state can utilize them in the areas they feel are important. The mission provides for appointment of accredited social health activist (ASHA) in each village and strengthening public health infrastructure, including outreach through mobile clinics. It emphasizes involvement of the non-profit sector, especially in the underserved areas. It also aims at flexibility at the local level by providing for untied funds. The mission in its supplementary strategies, aims at fostering public private partnership; improving equity and reducing out of pocket expenses; introducing effective risk-pooling mechanisms and social health insurance; and taking advantage of local health traditions. In the eleventh five year plan, the emphasis under NRHM will not be on numerical achievements only but also on Indian public health service standards and enforcement of guidelines for improving the functioning of infrastructure being strengthened and created. It has been felt that the mission directors, both at the centre and the states, should be officials with public health background, supported by the civil service cadres. NRHM has successfully provided a platform for community health action at all levels. Besides merger of departments of health and family welfare in all states, NRHM has successfully moved towards a singly state and district level health society for effective integration and convergence. Through a concerted effort at decentralized planning through preparation of district health action plans, NRHM has managed to bring about intra health sector and inter-sectoral convergence for effectiveness and efficiency. In all the states, specific health needs of people have been articulated for local action. With the establishment of public institutions like the village health and sanitation committees (VH&SCs), hospital development committees and PRI-led committees, it is the civil society to which the health system is being made increasingly accountable. Through local communities to make their own decisions. It is thus a serious effort at putting peoples healths hands. Janani Suraksha Yojana (JSY) To change the behavior of the community towards institutional delivery, the government of India, under NRHM in 2005, modified the national maternity benefit scheme (NMBS), from that of a nutrition-improving initiative to the JSY. The scheme has the dual objectives of reducing maternal and infant mortality by promoting institutional deliveries. Though the JSY is implemented in all states and Uts its focus is on states having low institutional delivery rate. The scheme is 100 percent centrally sponsored and integrates cash assistance with maternal care. It is funded through the flexi-pool mechanism. While the JSY scheme is meant to promote institutional delivery, it has to take two critical factors into account one being that India does not have the institutional

capacity to receive the 26 million women giving birth each year, and the other being that around half of all maternal deaths occur outside of delivery, during pregnancy, abortions and postpartum complications. If institutions are preoccupied with handling the huge numbers of normal childbirths, there will be inevitable neglect of life-threatening complications faced by women. They will be compelled to vacate beds in the shortest time. Consequently, complications during pregnancy and after childbirth will not be given attention. Second, JSY money sometimes does not reach hospitals on time, and as a result, poor women and their families do not receive the promised money. Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH) Health sector trends suggest that no single system of healthcare has the capacity to solve all of societys health needs. Of late, there is a resurgence of interest in holistic systems of health care, especially in the prevention and management of chronic lifestyle-related non-communicable diseases and systemic diseases. India can be world leader in the era of integrative medicine because it has strong foundations in western biomedical sciences and an immensely rich and mature indigenous medical heritage of its own. The AYUSH sector across the country supported a network of 3,203 hospitals and 21,351 dispensaries. The health services provided by this network largely focused on primary health care. In the private and non-for-profit sector there are several thousand AYUSH clinics and around 250 hospitals and nursing homes for inpatient care and specialized therapies like panchkarma. In clinics and nursing homes there are anecdotal reports of the role of AYUSH in the successful management of several communicable and non-communicable diseases. Key interventions and strategies for the AYUSH sector in the eleventh five year plan are given hereby: Training in public health for AYUSH personnel is envisaged as an essential part of education and continuing medical education. Mainstreaming the system of AYUSH in national health care delivery system by co-locating AYUSH facilities in primary health network. Restructuring public health management to integrate AYUSH practitioners into the national health care system. Promoting scientific validation of AYUSH principles, remedies and therapies. Revitalizing, documenting and validating local health traditions of AYUSH. Improving the status of quality of clinical services by creating specialty AYUSH secondary and tertiary care centres. Ensuring conservation of medicinal plants gene pools as well as promoting cultivation of species in high trade and establishment of medicinal plants processing zones.

 Strengthening regulatory mechanism for ensuring quality control R&D and processing technology involving accredited laboratories in the government and non-government sector. Establishing centres of excellence. Promoting public awareness about the strengths and contemporary relevance of AYUSH. Growth of Private Sector in Health Care Growth of private health sector in India has been considerable in both provision and financing. There is diversity in the composition of the private sector, which ranges from voluntary, not-for-profit, corporate, trusts; stand-alone specialist services diagnostic services, pharmacy shops and a range of highly qualified to unqualified providers, each addressing different market segments. Private sector is flourishing primarily because of the failure of the public sector. The growth of private hospitals and diagnostic centres was also encouraged by the central and state governments by offering tax exemptions and land at concessional rates, in return for provision of free treatment for the poor as a certain proportion of outpatients and inpatients. Apart from subsidies, private corporate hospitals receive huge amounts of public funds in the form of reimbursements from the public sector undertakings, the central and the state governments for treating their employees. The cost of health care in the private sector is much higher than the public sector. Many small providers have poor knowledge base and tend to follow irrational, ineffective and sometimes even harmful practices for treating minor ailments. Bold of the qualified medical practitioners and nurses are subject to selfregulation by their respective state medical councils under central legislation. In practice, however, regulation of these professionals is weak and close to nonexistent. Health Insurance India with her huge geographical area, very large population and inequity of resources, ensuring good health for all, particularly the poor, is a complex issue. Health system is a mix of the public and private sectors, with the NGOs and civil society still playing a very small, though important, role. Coverage of health insurance in India is pathetically limited. Traditionally healthcare insurance in the country has been limited to the employees state insurance schemes (ESIS) for industrial workers the central government health scheme (ECHS) for employers and pensioners of the central government and the ex servicemen contributory health scheme for the former armed forces personnel.

After general insurance was opened up to the private sector and further to FDI, there has been a considerable expansion of health insurance, covering mainly the urban upper-middle class. However healthcare insurance schemes have experienced problems such as high premium, delay in settling claims and nontransparent procedures in deciding reimbursements. The system of third party administrators (TPAs) has facilitated cash payments and expanded access to providers and as a result delivery of healthcare services to the upper middle class has improved. Other segments of the population, the below poverty line (BPL) categories in particular, have remained depredated of the benefits of health insurance in the country. Side by side with the development of health insurance on a commercial basis, the country has seen the emergence of community based health insurance (CBHI). CBHI is a not for profit insurance shame managed by the members themselves on the basis of collective pooling of health risks, CBHI schemes are being operated by organisations such as ACCORD, BAIF, Karuna Trust, SEWA, DHAN foundation and VHS. India has huge working population of about 400 million. Almost 93 percent of this work force is in the unorganised sector. There are numerous occupational groups in economic activities, passed on from generation to generation, scattered all over the country with differing employer-employee relationship. Those in the organised sector of the economy, whether in the public or private sector workers have no access. The national commission for enterprises in the unorganised sector (NCEUS) had recommended a specific health scheme in incidences of illness and hospitalization for workers and their families. Medical value Travel in India Recent decades have seen a tremendous growth in private sector investment in healthcare. Hospitals established by the private corporate players are of world class. They have not only the latest medical technological facilities but also the services of Indian doctors and nurses with a high degree of proficiency. Corporate hospitals are completely equipped, up market and proficient and can measure up, or even outshine, any hospital in the west. India is able to offer highly cost competitive medical treatment with the most up-to-date technological advances. The quality of service coupled with comparatively low charges for common surgeries has made India an attractive destination for medical value travel. The Indian government has moved to provide visa facilities for the medical tourists. The main clientele comes from the SAARC countries but an increasing number of NRIs settled in the US and the UK have also been availing of the healthcare services in India. There is a good prospect of patients coming from the Middle East in future. The main impediment for medical tourists coming from the UK and US for major surgeries is the fact that the insurance companies are generally not willing to cover

treatment in India. However, the cost savings involved in getting treatment done in India is bound to break barriers imposed by insurance companies. Already some hospitals are entering into alliance with international insurance companies for making it possible to send patients to India for treatment. The competitiveness of India in medical value travel is enhanced by the attractiveness of the alternative systems of medicine, ayurveda in particular, for the foreign tourists. A large number of tourists, both domestic and foreign, undergo treatment under ayurveda not only for improving their fitness and well-being but also for curing many types of chronic diseases. For the regulation of ayurveda clinics and for ensuring that they employ techniques in accordance with traditional methods, the ministry of health has issued guidelines to be used by the states. Accordingly Kerala, the most popular destination for tourists for treatment under ayurveda has promulgated an ordinance regulating ayurveda health centres. The ordinance requires registration of such centres and prescribes the facilities and medical staff that they must have in order to run them. The unique positing that Kerala enjoys with respect to ayurveda is due to the fact that the treatment in the state has proved effective in dealing with certain diseases, which are incurable by other systems. The state is also well endowed with herbs and medicinal plants, which are used for treatment. Medical tourism is an international dimension of the growth of the health care industry. Thailand has been able to attract more than 1 million medical tourists due to world class infrastructure facilities in Thailand. India should be able to replicate the Thailand example by focusing on development of good quality medical as well as tourism infrastructure. India certainly has the potential and the capacity to attract more than 1 million tourists per annum. There are two clear advantages for India in the field of medical tourism. The first and the foremost is the cost advantage. The second unique advantage of India is that it offers holistic medicinal services. With yoga, meditation, ayurveda, allopath and natural herbal treatments. India offers a unique basket of services to foreign patient-tourist that is difficult to match by other countries. Kerala and ayurveda have virtually become synonymous with each other. The preference for health tourism in Kerala is so strong that Kerala ayurveda centre Karnataka has also taken some very pioneering steps in promoting medical tourism. Government of Karnataka has planned to set up Bangalore international variety of health care products and treatments. The recent operations of children from Pakistan in Bangalore have not only helped boost the medical economy in the state, but also helped in fostering goodwill peace and harmony between India and Pakistan. In Maharashtra, there is a wide array of specialty and super-specialty hospitals that can help promote medical tourism. Some of the major hospitals already in the business of medical tourism are lilavati hospital, jaslok hospital, breach candy, Hinduja hospital, and Wockhardt Hospital and Apollo NUSI Wellness retreat. The Asian Heart institute at Mumbais Bandra-Kurla complex offers state-of-the-art

facilities for all types of heart ailments. Hotels like Hyatt, JW Marriott, Renaissance and resort offer extensive spa facilities for both domestic and international tourists. The Indian Health care federation has prepared a roadmap for making India a world class destination for medical tourist,. Accreditation of Indian hospitals is paramount for medical tourism. This will help in ensuring quality standards across a spectrum of specialty and super-specialty hospitals. In order to encourage medical tourism, air connectivity needs to be strengthened for all the major cities in the country especially Delhi, Chennai, Bangalore, Pune, Hyderabad and Kolkata... health-support infrastructure also essential to establish Indian health care brand synonymous with safety, trust and excellence. One stop centres need to be established in key international markets to facilitate inflow of foreign patients, and immigration process needs to be streamlined for medical visitors. A related area which can be exploited is provision of back-end health care related services. Health care majors in the developed world, especially the US, are already outsourcing back end health care services to Indian BPO firms. The major health care BPO operations in the country are Hinduja TMT (claims adjudication) Apollo Health Street (claims adjudication, billing and coding), comet technologies (transcription), datamatics (Transcription and forms processing) and Lapiz (medical billing). Indian Medical Professionals in Foreign Countries One of the main reasons for the international competitiveness of private healthcare institutions in India is the quality of Indian medical professionals. While the quality is highly variable across the country, the best professionals in India match the quality of professionals in the developed countries. For several decades Indian medical professionals have been serving not only in the Middle East but also in several English speaking developed countries including the USA and the UK. India has also emerged as a supplier of other categories of healthcare professionals to a number of countries, particularly radiologists, laboratory technicians, dental hygienists, physiotherapists and medical rehabilitation workers. Safe Drinking Water Provision of clean drinking water, sanitation and deaths. Women and girls in India spend hours fetching water and that drudgery is undesirable in self and it also takes away other opportunities for self development. Lack of covered toilets nearby imposes a severe hardship on women and girls. Also provision of clean drinking water without at the same time provision of sanitation and clean environment would be less effective in improving health. The two should be treated together as complementary needs.

Water supply in urban areas is also far from satisfactory. Water is supplied only for few hours of the day which leads to lot of waste as taps are kept open and water is stored not all of which is used. The access to toilets is even poorer. As per the census data (2001), only 36.4 percent of the total population have latrines within/attached to their houses. However in rural areas, only 21.9 percent of population has latrines within/attached to their houses. Rural Water Supply Government of Indias major intervention in water sector started in 1972-73 through accelerated rural water supply programme (ARWSP) for assisting states/Uts to accelerate the coverage of drinking water supply. In 1986, the entire programme was given a mission approach with the launch of the technology mission on drinking water and related water management. This technology mission on drinking water and related water management. This technology mission was later renamed as Rajiv Gandhi national drinking water mission (RGNDWM) in 1991-92. In 199, department of drinking water supply (DDWS) was formed under the ministry of rural development (MoRD) to give emphsise on rural water supply as well as on sanitation. In the same year, new initiatives in water sector were initiated through sector reform project later scaled up as Swajaldhara in 2002. With sustained interventions, DDWS remains an important institution to support the states/Uts in serving the rural population with water and sanitation related services all across India. Swajaldhara programme, launched in 2002, involves a community contribution of 10 percent of the project cost to instill a sense of ownership among the people and also to take over the O&M of the schemes constructed under the programme. The centre provides 90 percent of the project cost as grant. Swjaldhara principles are adopted by the state governments as per local conditions and adequate flexibility has been provided to incorporate such principles under ongoing accelerated rural water supply programme itself. Major Issue in Rural Water Supply The main problem are of sustainability of water availability and supply, poor water quality, centralized vs. decentralized approaches and financing of operation and maintenance costs. Habitations which is covered earlier years slip back to not covered or partially covered status due to reasons like sources going dry or lowering of groundwater, sources become quality affected systems working below their capacity due to poor operation and maintenance (O&M) and normal depreciation. Increasing population leading to emergence of new habitation also increase the number of unserved habitation.

Sustainability of the rural water supply programme has emerged as major issue. The rate of habitation slippages from fully covered to partially covered and partially covered to not covered is increasing. In addition to this the increase I the number of quality affected habitations which are dependent on ground water source is adding to these slippages. The mid-term appraisal of the tenth five year plan observed that over reliance on groundwater for rural water supply programme has resulted in the twin problem of sustainability and water quality and suggested a shift to surface water sources for tackling this issue. Restoration of tanks can provide a local solution. It is important to apply the principle of subsidiary to collect water, store water, use water and mange waste water as close to the source as possible. There are about 25,000 habitation affected with multiple problem. About 66 million people are at risk due to excess fluoride in 200 districts of 19 states. Arsenic contamination is widespread in west Bengal and it is now seen in Bihar, eastern UP and Assam. The hand pump attached defluoridation and iron removal plants have failed due to in appropriate technology unsuited to community perceptions and their involvement. Desalination plants have also met a similar fate due to lapses at various levels starting with planning to post implementation maintenance. The Bharat Nirman programme aims at addressing water quality problems in all the quality-affected habitations by 2009. While higher allocation (20 percent of accelerated rural water supply programme funds committed for water quality) of funds is addressed, the next important steps is to achieve convergence, and ensure community participation. Eleventh Plan Targets for Rural Water Supply To provide clean drinking water for all by 2009 and ensure that there are no slip backs is one of the monitor able targets of eleventh plan. Under Bharati Nirman, 55,067 not covered habitations, 2.8 lakh slipped back habitation and 2.17 lakh quality affected habitations are proposed to be covered. The states find it difficult to establish alternate sources of water supply to the quality-affected habitations, as either the source is very far off or simply not available nearby. The government is also committed to provide 100 percent coverage of water supply to rural schools. While accelerated rural water supply programme has provision of water supply to existing schools, the new schools are coved under other programmes like Sarva shiksha abhiyan of ministry of human resources development. Urban water supply The coverage of urban population with water supply facilities in the past had not been very impressive, due to various reasons, including the fact that the investment made in the urban water supply sector had been inadequate. The tenth

five year plan envisaged augmentation of water supply in urban areas to reach the prescribed norms, higher degree of reliability, assurance of water quality, a high standard of operation and management, accountability to customers and in particular special arrangement to meet the needs of the urban poor and levy and recovery of user charges to finance the maintenance functions as well as facilitate further investment in the sector. The achievement of these tasks depends to a large extent on the willingness of the state government and urban local bodies to restructure water supply organizations, levy reasonable water rates, take up reforms in billing, accounting and collection and become credit worthy in order to have access to market funding. Measures were suggested for water conservation, re-use and recycling of waste water. Major issue in Urban Supply Sustainability in the urban water supply is addressed mainly through supply side segmentation distant perennial sauces are identified and long distance piped water transfer to the cities and towns are common. Augmentation plans are generally gigantic and engineering oriented and have greater acceptability at all levels. The demand management is the least preferred option. However, when it comes to payment of water charges, the decision is invariably with the elected government not with the executing agency, which has to depend on the grants for operation and maintenance, for sustaining the quantity and quality. It is not uncommon that pockets of urban areas would get higher service levels both in terms of number of hours of water availability as well as per capita availability. The unaccounted for water (UFW) due to leaking water supply systems and illegal tapping reduces water availability. The average water loss in the leaking water supply systems varies from place to place and it is generally between 20-50 percent. Dedicated efforts to plug the leakages are required in addition to demand movement measures for achieving the sustainability and equity. Long distance water transfer has brought in the attendant issues of dependence on other states for urban water supply. For example, Delhi depends on Haryana and Uttar Pradesh for its water supply. Chennai gets 15 TMC of Krishna river water from Andhra Pradesh. Bangalore water supply is fully dependent on Cauvery waters. There are a few instances when even within the state people object to transfer of water from one district to another. Sometimes these issues have serious implication on the sustainability of supplies to the cities. Eleventh Plan Programmes for Urban Water Supply With a view to provide 100 percent water supply accessibility to the entire urban population by 2012, it has been estimated that Rs. 53,666 crore is required. With a view to provide reform linked infrastructure facilities in the urban areas, the government of India has launched two new programmes namely:-

 Jawaharlal Nehru national urban renewal mission (JNNURM) covering 63 cities with populations above 1 million as per 2001 census including 35 metro cities and other state capitals and culturally important towns. Urban infrastructure development scheme for small and medium towns (UIDSSMT) for the remaining 5,098 towns having population of less than 1 million to cover all the towns as per 2001 census, irrespective of the population criteria. JNNURM is envisaged for implementation over 7 years period starting from 2005 to 2012 with a tentative outlay of Rs. 1,00,000 crore which includes contribution of Rs. 50,000 crore to be made by the states and ULBs. Water supply and sanitation is accorded priority under the programme and is likely to receive 40 percent of plan funds. It is important to tap the other sources like institutional financing, PPP and external assistance. Sanitation Rural Sanitation Sanitation covers the whole range of activities including busman waste disposal, liquid and solid wastes from household and industrial waste. Lack of drains and the presence of ditches create unsanitary condition, which contaminate water, breed mosquitoes and cause water borne diseases. Malaria, typhoid, jaundice, cholera, dengue and diarrhea are all connected to unsanitary conditions. These diseases can be prevented by appropriate sanitation system. Unfortunately, access to sanitation facilities continues to be grossly inadequate. Sanitation is to be seen as basic need, as basic as drinking water or food. A sanitary toiled within or near home, provides privacy and dignity to women. Sanitation coverage, which ought to be way of life to safeguard health, is inadequate in India. In fact, problems like open defecation continue to remain the only from of sanitation for the majority of the population in rural areas. The practice of open defecation in India is due to a combination of factors, the most prominent of them being the traditional behavioral pattern and lack of awareness of the people about the associated health hazards. Recognizing the link between health environment and sanitation, the millennium development goals (MDGs) stipulate, inter alia, halving, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation campaign (TSC) programme, the flagship programme of the government, has set an ambitious target and aims to achieve universal sanitation coverage in the country by 2012. Major Issues in Rural Sanitation

The current programme emphasis on construction of household toilets though laudable, needs to reorient itself to a vigorous information and education campaign mode to bring about a change in mind set. The issue of convergence of the programme with health awareness received a boost only after the launch of national rural health mission. While it was introduced earlier at school level, at the community level it was expanded later. However, school programme had a cascading effect on the individual household and children helped to change attitudes. The awareness is now picking up and the programme needs to capitalize on this for increasing the satiation coverage. Lack of priority for the programme by many states leading to inadequate provision of duds for the state share for the TSC, lack of emphasis on personal communication on sanitation at village level and inadequate capacity building at grassroots level are some of the common issues seen across the states which hinder expansion of sanitation coverage. Eleventh Plan on Rural Sanitation While the hardware part of the programme for assisting the states in providing the various types of sanitation would continue, the focus now should be more on changing behavior patterns. The Normal Gram Purushkar has brought a sea change in the attitudes of the community and it is promoting a healthy competiton among the panchayats for achieving total sanitation. Low cost technology options for constructing the toilet should be tried and community should be given freedom to choose the various options. The focus on school sanitation needs to continue. In addition, solid waste management in village should be the next focus area. 10 percent of the TSC funds are earmarked for this purpose already. Adequate funding for the programme would have to be providing so that the momentum generated is not lost. Urban Sanitation Including Solid Waste Management In India, about 91 percent of the urban population has got access to water supply and 63 percent to sewerage and sanitation facilities. However, adequacy, equitable distribution and per-capita provision of these basic services may not be as per prescribed norms in most of the cities. For instance, the poor particularly those living in slums and squatter settlements, are generally deprived of these basic facilities. The population effect of sanitation is enormous. Poor sanitation conditions particularly in slim are often linked to outbreaks of cholera and gastro-enteritis. Water borne diseases are major cause of mortality throughout India and impose a huge burden in terms of loss of life and productivity. Water and sanitation diseases are responsible for 60 percent of the environmental health burden. The single major cause of this burden of disease is diarrhea, which disproportionately affects the children under the age of five.

Solid waste management (SWM) is a part of public health and sanitation, and according to Indian constitution, it falls under state list. As this activity is of local nature, it is entrusted to the urban local Bodies (ULBs). ULBs undertake the task of solid waste service delivery, with its own staff, equipment and funds. In a few cases, part of the said work is contracted out to private enterprises. The management of municipal solid waste is one of the most important obligatory functions of ULBs which is closely associated with urban environmental conditions. Clean Living Conditions Achievement of health objectives involves much more than curative or preventive medical care. Many of the communicable diseases in India can be prevented through a combination of health and non-health interventions. A comprehensive approach is needed which encompasses individual health care public health, sanitation, clean drinking water, access to food and knowledge about hygiene and feeding practice etchant direct relationship exists between water, satiation and health. Safe drinking water and sanitation are critical determinants, which directly contribute nearly 70-80 percent in reducing the burden of communicable diseases. Inadequate provision of safe drinking water, improper disposal of human waste and lack of adequate systems for disposal of sewage and solid wastes leads to unhealthy and unhygienic conditions. This coupled with overall ignorance of personal and environmental hygiene are the main causes of a large number of water borne diseases in the country. Serious environmental health problems affect millions of people who suffer from respiratory and other diseases coursed or exacerbated by biological and chemical agents, both indoors and outdoors. Millions are exposed to unnecessary chemical and physical hazards in their home, workplace, or wider environment. Concern about the health effects of the high levels of air pollution observed in many mega cities is growing; moreover, it is likely that this problem will continue to grow because countries are trapped in the trade-offs of economic growth and environmental protection. Cooking and heating with solid fuels on open fires or traditional stoves results in high levels of indoor air pollution. Indoor smoke contains a range of health damaging pollutants such as small particles and carbon monoxide. Indian women spend nearly 60 percent of their reproductive life in either pregnancy or breast feeding. Most of the women keep their children in the kitchen when they are cooking, thereby exposing the children to the pollutants too. This, combined with malnutrition may retard growth and lead to smaller lungs and a greater prerevalence of chronic bronchitis. There is an urgent need for the implementation of control programs to reduce levels of particulate and other pollutant emissions. To be effective, these programmes should include the participation of the different stakeholders and initiate activities to identify and characterize air pollution problem

and its potential consequences for the local setting is essential for effectively targeting interventions to reduce the harmful impacts of air pollution. Towards-Health Eleventh five year plan (2007-12) has ambitious programmes to use information technology for health services and usher Indian into the age of e-health. To quote, appropriate use of IT for an enhanced role in health care and governance will be aimed at during the eleventh five year plan. It is feasible to set up a national grid to be shared by health care providers, trainers, beneficiaries and civil society. The country already has the advantage of a strong fibber backbone and indigenous satellite communication technology with trained human resources in this regard. A number of pilot projects on e-health over the past years by private concerns, corporate, GOs, medical colleges and research institutions have been set up. The successful outcome of many of these initiatives needs to be evaluated and scaled up. Health management information system (HMIS) would be important new imitative utilizing developments in the field of information technology. A computerized web enabled data capturing and analytical system will be established to provide valid and reliable data and reports for use at all levels. This would not only facilitate proper monitoring and evaluation of different programmes under implementation but will also help in various aspects of service delivery. The HMIS will also integrate the various vertical systems having their own reporting machinery into an integrated umbrella of holistic monitoring and evaluation to cater to the needs of Sarva Swasthya abhiyan. The data will flow directly from the periphery. The integrated disease surveillance project (IDSP) will eventually be byproducts of the HMIS. As the system stabilizes and the penetration of computerization at the block level increases, the system will be penetration of computerization at the block level increases, the system will be modular enough to expand the scope to the remotest areas. Wastage of drugs due to data expiry also needs to be curtailed by demand driven management and redistribution of medicines nearing data of expiry. Health management information system (HMIS) when fully developed and implemented will track demand and supply and continuously monitor the drug situation. Telemedicine could hell to bring specialized health care to the remotest corners of the country. Telemedicine is likely to provide the advantages of telediagnosis, especially in the areas of cardiology, pathology, dermatology and radiology besides continuing medical education. It will be of immense use for diagnostic and consultative purposes for patients getting treatment from the secondary level health care facilities. The efficacy of telemedicine has already been shown through the network established by the Indian space research organisation (ISRO), which has connected 42 super-specialty hospitals with 8 mobile telemedicine vans and 200 rural and remote hospitals across the country through its geostationary satellite. So far about 3 lakh people have benefited from this

programme. Facility of telemedicine will be provided in district hospitals and government medical colleges. The e-health initiatives to be taken up during the eleventh five year plan are: Training, education and capacity building for e-health. Monitoring by e enabled health MIS (HMIS) to ensure timely flow of data and collation to be used at various levels. GIS resource mapping of various health facilities (allopathic and AYUSH), laboratories, training centres, health manpower and other inputs to optimize utilisation. Providing service delivery and other e-enabled activities like, disease surveillance, tele-consultations, health helpline district hospital referral net and e enabled mobile medical units. To sum up, health of a nation is an essential component of development, vital to this economic growth and internal stability. Assuring a minimal level of health care to the population is a critical constituent of the development process considerable achievements have been made since independence in 1947 to improve health standards such as increase in life expectancy, decrease in infant and maternal mortality, and eradication of small pox and guinea worm. Nevertheless. Problems abound. Malnutrition affects a large proportion of the population specially women and children. An unacceptably high proportion of the population continues to suffer and die from new diseases apart from the existing ones. Pregnancy and childbirth related complications also contribute to the suffering and mortality of women. There is a strong link between poverty and ill-health. III-health creates immense stress even among those who are financially secure. Onset of a long and expensive illness can drive the economically well-off into poverty. The affordable and reliable health services cannot be underestimated. This is specially so in the context of preventing the non-poor from entering into poverty and reducing the suffering of those who are already below poverty line. Efforts are continuing to improve the access to and utilization of health, family welfare and nutrition services with special focus on underserved and under privileged segments of population. Technological improvements and increased access to health care have resulted in a steep fall in mortality rate, but the burden of communicable and non-communicable diseases, environmental pollution and nutritional problems continues to be high. In spite of the fact that norms for creation of infrastructure and manpower are similar throughout the country, there remain substantial variations among states and districts within a state in availability and utilization of health care services and health indices of the population. Current policies and programmes are aimed to provide essential supplies, improve efficiency and ensure accountability especially in states where performance

is sub-optimal. In view of the massive inter-regional differences in the availability and utilisation of health services and health indices of the population, a differential strategy is envisaged so that there is incremental improvement in all states and districts within a state this in turn is expected to result in substantial improvement in states and national indices and enable the country to achieve the goals set for the future. A transition from high incidence of morbidity and mortality to a state where people generally enjoy long and disease free life is a desirable and valued social change. There will have to be a continued commitment to provide essential primary health care and emergency life-saving services free of cost to individuals based on their needs and not on their ability to pay. At the same time, suitable strategies will have to be evolved, tested and implemented for levying and collecting charges, and utilizing the funds obtained for health care services, from people above poverty line.

Health and Education: A Policy Critique With human development index of 0.612, India stands at the 134 th position among 182 countries, according to the Human development report, 2009. The human poverty index (HPI) estimates show that 15.5 percent of the countrys population is not expected to survive to age 40 due to their age. The global hunger index (GHI) 2009 report pts India at 65 th position among the 84 countries that face moderate to extreme hunger situation (IFPRI et al, 2009). With at GHI of 23.9 the hunger situation n the country remains alarming. Surely, there is something seriously wrong with the development strategy of the rising global economic power. And the optimistic claims over gaining from the global economic alliances do not reflect some of the deep crises the country has been braving against for the last couple of decades. The strategic intention the government to make Goth inclusive must be reviewed and understood in the light of these crises. It goes without saying that a well planned social sector investment policy and clearly defined social development goals are integral to the efforts to develop human capital and to make growth inclusive. Hence, tracking the changes in the pattern of resources allocation to the critical social sectors like

education,

health

and

rural

development

has

remained

an

important

preoccupation in the debates on inclusive economic growth. Studies that looked at the implications of economic liberalization in the 1990s have shown particular interest in closely examining these trends for obvious reasons (Prabhu 1994; Panchamukhi 2000; Dev and Mooij 2002 & 2004: Joshi 2006; and ERF 2006). The macroeconomic stabilization drive, started in the early 1990s along with the fiscal adjustment and structural reform, marked a fundamental shift in the development strategy followed by the country until then (Nayyar 1998). These measures meant that the state consciously reduced its role giving way to the market to set the rules of the game of economic development. As the government started the process of loosening its control over the economy, among other things, public investment came to be seen as a drain on the exchequer as it leads to inefficient resource utilization (Nayyar 1998). Such compression in public expenditure, it was anticipated, would directly and adversely impact social sector investment. Though such contractions are felt by all sections of the population, the poor and the vulnerable sections are affected more deeply given their grater dependence on state provided based services. In this short paper, we give a broad overview of the changes in public development expenditure trends n the two critical components of the social sector, i.e. health and education. In section I, we delineate the trends in public expenditure in these sectors over the two decades spanning 1990-91 to 2008-09. In section II, the current approaches and programmes have been discussed section wise. We also revisit some of the larger debates on the development strategy followed during the period with a view to draw implicates for equity and inclusion, the means and ends of the countrys development planning. Spending for Social Sector: Major Trends Social sector expenditure typically refers to that part of public spending which is deployed on social and community services and on rural development in the central and state budgets. The social and community services mainly include educating, public health, water supply and sanitation, family welfare, social security and welfare, while rural development, relating mainly to the anti poverty programmes, forms part of the economic services under the broad

category of agriculture and allied services (Mooij and Dev 2004). Though some scholars consider only revenue expenditure (Prabhu 1994, for instance), many scholars consider only revenue and capital expenditure while estimating public expenditure shares. In Table, We have presented the percentage shares of social sector expenditure in total public expenditure (revenue plus capital expenditure) and GDP at market prices. These are worked out form the combined revenue and capital expender as reported in the Indian public finance statistics. We have used simple there year moving averages of the expenditure figures to free the series of the effect of short term fluctuations and to smoothen the trend. The overall shares of social sector expenditure, including rural development expenditure, show a clear pattern of gradual increase until 1997-98, a steady decline thereafter till 2002-03 and again gradual improvement. As of 2008-09, social sector expenditure accounted for 26.17 percent of the total public expenditure. The share of depending on education showed signs of improvement in the mid to late 1990s. But it registered a decline in the first half of the current decade. Some signs of improvement are suggested by the data for the more recent year. Regarding health expenditure, the most striking aspect it its relatively smaller share in public expenditure. The expenditure shares largely followed the trend in education expenditure. As is clear form table the social sector expenditure share relative to gross cosmetic product (GDP) has been varying between 6 and 7 percent throughout the period of analysis. The share increased from around 6 percent to 7 percent in the early years of the current decade ad remained largely at that level for most part of it. However, shares of both education and health expenditure in GDP do not show any perceptible improvement over the years. They have practically been stagnating but for a brief period in the late 1990s. education expenditure has remained just half of the 6 percent benchmark recommended by the Kothari commission in the mid 1960s, while public health expenditure has been hover tin between 1 percent and 1.25 percent of GDP from 1990-91 to 2008-09. This is one of the lowest figures for health spending in the world and

is lower than what some of the poorer neighbors in the region spend on this sector. Apart from the declining or stagnant trend in public expenditure on education and health both concurrent subjects under the Indian constitution in total public expenditure and GDP, concerns have been expressed about two aspects. Firstly, the central government has emerged as dominant agency in the provision of education and health services by progressively eroding the capacity of the states to spend on critical growth areas (Dev and Mooij 2002). According to Panchamukhi (2008:840), this trend of increasing role of the central government may be termed as the concentration process in the social sector in the Indian federal framework (italics ours). Secondly, a greater proportion of the spending is uncured on the revenue account for meeting the routine operational expenditures rather than on capital expenditure for creating physical capacities to deliver the services more effectively (ERF 2006). The effects of such an expenditure pattern are manifest in a multitude of problems that keep challenging these sectors. Challenges to social sector development Health It is widely accepted that healthcare is merit good that is characterized by externalities and information asymmetry. Thus, there is greater likelihood of market failure in health care which necessitates active intermediation by the state in its provisioning (ERF 2006). The enrollee of the state in healthcare, both general and pubic healthcare, is seen as being substantial also from the point of view of social equity (access to and affordability of services by the poor). Any deficiency in the public provision of healthcare would create a space for the private providers who tend to play by the rules of the market rather than by the needs and priorities of the patients, especially belonging to the poorer segments. They may hence provide the more paying services rather than the most commonly needed services. Interestingly, the developed market

economics of the world have much higher ratio of public to private health spending compared to middle and low income countries (ERF) 2006).

Table: shortfall in healthcare infrastructure and personnel Health infrastructure Sub centres PHCs CHCs Health personnel Multi purposes workers/ANM Male health workers Female health assistants Male health assistants Doctors PHC Total specialist CHC Radiographers CHC Pharmacists CHC Lab technicians PHC and CHC Source: Planning commission (2008). As we noted earlier, public spending on health in Indian has remained abysmally low over the decades. The impact of this has been demonstrated in the deficiently physical healthcare infrastructure, especially at the level of secondary healthcare. As per the data given in the planning commission (2008) notary healthcare. As per the data given in the planning commission (2008) report on social sector, the deficiency is to the tune of 40.87 percent in the case of community health centres (CHCs), while it is estimated as 13.16 percent and 18.46 percent respectively in the case of sub centres and primary health centres (PHCs). There are also significant shortfalls and vacancies in terms of medical professionals at the PHC and CHC levels. 13126 74721 5941 7169 1793 9413 1330 4389 9509 10.93 51.53 25.21 31.62 7.91 60.19 34.02 16.51 35.78 Number 20903 4803 2553 Percentage 13.16 18.46 40.87

Given such substantial gaps in the capacity of the public healthcare system, there is no wonder that there has been a major decline in the utilization of public health facilities for both inpatient and outpatient care in both rural and urban area (table). There is a commensurate increase in the proportion of spending incurred by households on health unlike most other countries in (NSSO) even that there has been progressive substitution of public Carew with private care by the households. As evident form table about 60 percent of hospitalized treatment takes place in private facilities, despite the higher cost of treatment. The average expenditure for hospitalized treatment in public facilities in rural and urban areas is considerably lower compared to private medical facilities. The difference is quite significant in the case of rural areas with hospitalization in public hospitals costing only about a third of what it takes to get treated in private hospitals. It must be noted that more than 70 percent of all the health related expenditure are out of pocket expenditure and happens are the point of delivery as per NSSO 60 th round estimates. The planning commission (2008: 68) report on social sector attributed, rightly so, the shift in the extent of utilization in favour of private sector to the peoples growing lack of trust in the public system. It goes on to list a number of factors as the main reasons for low utilization of public facilities like critical shortage of health personnel, inadequate incentives, poor working conditions, lack of transparency in posting of doctors in rural areas, absenteeism, long wait, inconvenient clinic hours, poor cotreach time of service, infectivity to local needs and inadequate planning, management and monitoring of service facilities. Table: percentage of cases of hospitalized treatment and average medical by type of hospital: Rural and Urban Cases of hospitalized treatment NSSO Rounds Rural Govt Pvt Urban Gov Pvt Average expenditure per hospitalization (rs.) Rural Govt Pvt. Urban Govt Pvt.

1986-87 (42nd round) 1995-96 (52nd round) 2004 (60th round)

59.7 40.3 60.3 39.7 43.8 56.2 43.1 56.9 41.7 58.3 38.2 61.8 2195 5344 2080 3238 4300 7408

3877 11533

Source: planning commission (2008). In other words, the central government shows great understanding of the reasons for low utilization of public health facilities. But, ironically, these reasons aroused to build a case for promoting the private players. As Queer (2008) points out, medical care became a major site of market expansion in the early 1980s coinciding with the sixth plan period and policy debates around the sector began to be driven by international players like the World Bank. It may be noted that privatization of healthcare got an impetus with the national health policy of 1983. Subsequently hospitals came to be classified as industry, which enabled them to mobilize financial resources for modernization of technology and creation of infrastructure (Thomas and Krishnan 2006). Qadeer (2008: 64) argues that the condition laities attached to the economic reform process started unfolding further in the late 1990s leading to, among other things. The central government launched the national rural health mission (NRHM) in 2005 with a vision of carrying our an architectural correction in the health delivery system to provide accessible, affordable and quality health care to the rural population, especially the numerable sections (Gol 2010). Through a mission approach the government hopes to reorganize the health care system and make it functional and accountable towards achieving substantial reduction in maternal and infant mortality ratios (MMR and IMR). With the low levels of public expenditure on health care, one wonders, how such dramatic results will be achieved. PPP in Healthcare: Myth and Reality

It is worth considering the nature and relevance of public private partnership (PPP) as it has evolved in India. PPPs have been justified on the grounds of scarcity of public resources and better efficiency of resource use by the private sector. Many forms of PPP have been experimented in the health care sector since the late 1980s. in some cases, corporate hospitals received subsidies like tax exemption and land at very concessional rates in return for a promise to provide free of charge treatment to a certain percentage of poor patients. In some other cases, states have partnered with private medical practitioners as in Gujarat (Acharya and McNamee 2009) or with NGOs as in Bihar and Karnataka (Das 2007; ILO 2006). In yet another model, partner ships have been structured around health insurance. As for partnership between states and corporate hospitals, the most talked about is the one between the Delhi administration and the Apollo hospital group (AHG) signed in 1988, which led to the setting up of the Indraprastha hospital. Under a joint venture agreement, the government of Delhi allotted 15 acres to the hospital at a lease rate of Re. 1 per year. The government also invested Rs. 16 crore in hospital construction. As per the agreement, the states stake in the venture is to the tune of 26 percent, with Apollo holding another 25 percent (The Hindu 2009). In return the hospital was to provide free treatment to poor patients to the extent of 33 percent of its bed capacity and 40 percent of daily outpatient treatment (Thomas and Krishnan 2006). Though the hospital became operational in 1997, with 200 beds earmarked for the poor and the needy, none was used until 2009. Most recently, the Brihanmumbai municipal corporation (BMC) had a PPP agreement with a super specialty hospital, seven hills hospital, under which it offered its land in return for 300 reserved beds (Suryanarayan 2010). In Delhi alone, several registered societies and trusts received

government land at below the market prices, either from the Delhi development authority or land and development office, for the construction of hospitals. They were governed by some conditions of free treatment t the poor and indigent. However, these partnership were found not serving the poor patients for a variety of reasons like lack of proper guidelines for providing free treatment

absence of any proper criteria for the identification of the poor, lack of clarity as to the nature of free ships on the free beds, and unwillingness on the part of some private hospitals to abide by any conditions. In the words of the public accounts committee (2004-05), what was started with grand idea of benefiting the poor turned out to be hunting round for the rich in the garb of public charitable institutions (quoted in Thomas and Krishnan 2010). The high power committee under the chairmanship of justice A.S. Qureshi (constituted in 2000) to look into this issue recommended that there should be 10 percent of the patients in the outpatient department (OPD) should be provided free consultation (GoD) 2007). In 2002, a lawyers group filed a public litigation (PIL) in the Delhi high court to draw its attention to the noncompliance of conditions of allotment of land to hospitals, particularly relating to the free treatment of the poor and indigent persons. After considering 20 cases, the court pronounced its final judgment in 2007 correcting all hospitals constructed on lands acquired from DDA or LDO at concessional rates to offer free treatment to indigent/poor persons of Delhi. It agreed with the recommendations of the Qureshi committee with respect to the conditions of free treatment (GoD 2007). Despite such directions, much of the available quota for the economically weaker sections remained unutilized between the ruling in 2007 and early 2009, only 93 EWS patients were referred to private hospitals against a total of 1,000 beds reserved for them (Kumar 2009). It is argued that the government hospitals do not refer eligible patients to private healthcare facilities. But it should be mentioned that private hospitals do not show any eagerness to attract poor patients and often get well of patients to occupy the beds meant for the former. The poor patients, though aware of the services, were found to avoid private hospitals as many charge them for services other than bed a consultation. In a PIL challenging the charges slapped by the Apollo hospitals (which has the highest quota for poor patients in Delhi 230 beds) the high court of Delhi directed the hospital to also provide free medicineds and consumables to the poor inpatients. Interestingly, some of the hospitals

expressed their desire to pay their way out of the condition of free treatment to the poor. As reported by the Hindu (February 2006), Escorts heart institute offered to pay Rs. 51 crore to get out f the land lease condition and the Dharamshila Cancer Hospital and research centre approached the DDA with the idea to pay to reduce its burden to treat poor patients from 25 to 10 percent. The flagship health and family welfare programmed of Gujarat, the Chiranjeevi Yojana (CY) is considered as successful PPP model worthy of large scale replication wherein the estate government has tied up with private nursing comes to perform free deliveries of poor women. Government absorbs all the costs, which include Rs. 1179, 500, paid to the empanelled private provider per every 100 deliveries, Rs. 200 to the woman towards transport cost and Rs. 50 to one accompanying person A recent evaluation (Acharya and McNamee 2009) has found that in the district of Surat only 56 of the 200 gynecologists and obstetricians have registered for the programme, most of who were from the city of Surat. Benefits of such arrangements were not available in remote areas where accessing good healthcare is a real problem. Secondly, even of the registered practitioners only few were active. Thirdly, a tendency was observed to only attend to safe cases while complicated cases were referred to the public hospitals, thus

camouflaging the real impact of the scheme on maternal and neonatal mortality. The practitioners pointed out that the cost estimates worked out by the government are unrealistic, epically regarding caesarian sections and treatment complicated cases. Thus, while the CY has proffered a way to involve and partner with the unorganized private medical practitioner community in health care delivery, instead of pampering corporate hospitals, the merits of this approach are not clearly manifest as yet. Also, the underlying incentives in both provision and access are unclear. Coming to the health insurance schemes for the poor, it must be recognized that India is yet t see a truly viable and inclusive programme in this genre. Notwithstanding the great promise held by health insurance for the poor,

it cannot substitute affordable health care services. It is the private sector that has gained the maximum from aggressive promotion of health insurance solutions to the poor people. Education The education sector in India for long has been caught in the difficult tussle between elementary and higher education. Elementary education has been the clear choice for state patronage since the 1980s. The sector has witnessed some significant positive changes in the current decade. The 11 th five year plan envisages a fourfold increase in educational outlay over the 10 th five year plan envisages a fourfold increase in educational outlay over the 10 th plan towards rising public spending on education to 6 percent of the GDP. Thanks to the universal enrolment drive under the Sarva Shiksha Abhiyan (SSA), the gross enrolment ratio for primary and upper primary levels improved considerable. SSA interventions also brought down the number of out of school children from 32 million in 2001-02 to 7 million in 2006-07. The annual status of education report (ASER) for rural areas (2009) shows that between 2006 and 2009, there was 3.4 percent decline in drop out among girls in the 11-14 years age group. The Rashtriya Madhyamik Shiksha Abhiyan (RMSA) launched in 2009, aims at achieving enrolment ratio of 75 percent in IX X grades within 5 years. Provision of schooling facility within accessible distance of every agitation, prescription of quality norms and removal of barriers to inclusion are some of the broader strategies spelt out as part of RMSA. The mid-day-meal scheme has also undergone some modification like revision of norms for food quality, cooking pots and honorarium. The right of children to free and compulsory education act 2009 is hailed as a major step towards achieving universal access to elementary education. The act has reiterated the responsibility f the central and state government in providing more infrastructural facilities, human resources, and larger funds towards achieving this. It also has some provisions to make the parents and teacher responsible towards their wards.

All these measures need to be applauded by all means. However, one would like to examine how effective these are in addressing the issues the sector has been challenged with the estimates realized by UNESCO in 2010 show that close to eight million children in the age group 6-14 years, mostly girls, are still out of school. Though gross enrolment rate (GER) improved noticeably, since the early years of the current decade, a fourth of the children left school in 2005 before reaching 5 th class and almost half before reaching the 8th class. ASER (2009) finds that about 17 percent of the children in the 15-16 years age groups do not attend school. There are considerable variations in the achievements across states. As per ASER in the states of Rajasthan, Gujarat and Andhra Pradesh registered a rise in the percentage of out of school children between 2006 and 2009. There are also perceptible variations in attendance. On a random day, the attendance is above 90 percent in Goa, Tamil Nadu, Kerala, Maharashtra and Himachal Pradesh, while it is 57 to 67 percent in Bihar, Uttar Pradesh, west Bengal, Jharkhand and Madhya Pradesh. Another noteworthy observation is about the significant defense in leering outcomes between government and private school that would lend support to the advocates of privatization of schools education. India has the largest system of higher education in the world; but gross enrolment rate in this sector of education is quite low (12 percent) compared to the world average 26.7 percent) as also the average for the developed nations (57.7 percent). The higher education sector in the country expanded quite rapidly since the 1990s mainly due to increased demand for such education and participation of the private sector (Prakash 2007). The pace of exapansion of private sector seems to have increased in the current decade. As shown in table the percentage of share of higher education institutions in the private sector grew from 37 percent to 63 percent while their share in enrolment grew from 48 to 51 percent. The growth has been particularly evident in technical and professional education. Rani (2004) points out that the recent policy directions supporting full cost recovery from students has led to fee hike and helped forge a nexus between privations and commercial banks (students loan schemes). While

private institutions help fill the gap in the capacity of public institutions, the high cost of accessing them has given rise to a new form of exclusion as many from poorer economic background have to select themselves out of higher education.

Table: Share of Private in Higher Education in India Government and aided Percentage share of higher education institution Percentage share of enrolment in higher education Source: Prakash (2007). 67.11 48.47 32.89 51.53 57.40 36.79 42.6 63.21

Private unaided

As per the result of the NSSo 64the round, the annual expenditure per student of technical education offered by private unaided institutions is twice that of government institutions (rs. 38,675 and rs. 10,989

respectively).Increasing reliance on student fees, student loans and privatization without creaking adequate mechanisms to suit the needs of the weaker sections may produce regressive effects in the society. In short, the factors that perpetuate inequity in accessing education are still very much in operation. It may be easy to get children to school, but it is very difficult to retain them there unless some serious efforts are made to ameliorate the conditions that make them drop out even before they attain basic literacy and numeracy skills. This is where right to education act looks flawed. The act plays a lot of emphasis on enrolment, but nothing much is there to ensure attendance. Provision of drinking water and sanitations facilities are mentioned in act, but no provision to ensure that these facilities function

properly. Moreover, in order for the act to be effective it must be linked with other laws, for instance the child labour act.

Empirical Analysis
Model 1: 1.a. E = .306 +. 956GDP (27.78) adj R2 = 0.904 (10.24)** F Value = 105.02 (1, 10) ** DW test = 0.539

* Figures in parentheses denote t-values at 95 per cent level. ** Figures in parentheses denote d.f. It is evident from the test statistics computed in the form of adjusted R2 (.955) and F-value (105.21) that these are found satisfactory giving the idea of goodness of it. Computed regression coefficient of GDP is estimated positive and significant at 95 per cent level of confidence during the period 2000-01 to 2011-12. This indicates rise in GDP helps government to provide more facilities for the education level in general. However, the value of estimated DW test is not found satisfactory (quite low ). 1. b. H = .618 +. 974GDP (116.74) adj R2 = 0.974 (13.63) * F Value = 116.74 (1, 10)** DW test = 0.660

* Figure in parentheses denotes t-values at 95 per cent level. ** Figures in parentheses denote d.f.

It is evident from the test statistics computed in the form of adjusted R2 (.955) and F-value (116. 74) that these are found satisfactory giving the idea of goodness of it. Computed regression coefficient of GDP is estimated positive and significant at 95 per cent level of confidence during the period 2000-01 to 2011-12. This indicates increase in GDP helps to provide more facilities by the government for in general. The value of estimated DW test is not found satisfactory (quite low) 1. C It is to analyze the response on HDI (prepared by UNDP) for India in regard to variation in Gross Domestic Product (GDP) during the period 2000-01 to 2011-12, a simple linear regression model is used The estimated regression equation is as follows:

HDI = .417 +. 979 GDP (2.59) * adj R2 = 0.955 (15.33)* F Value = 235.04(1,10)** DW test = 0.667

* Figures in parentheses denotes t-values at 95 per cent level. ** Figures in parentheses denote d.f.

It is evident from the test statistics computed in the form of adjusted R2 (.955) and Fvalue are [235.04] that these are found satisfactory, giving idea of goodness of fit. It indicates that GDP played a vital role in increasing the Human development, in terms of HDI. Computed regression coefficient of GDP is estimated positive and significant at 95 per cent level of confidence during the period 2000-01 to 2011-12. However, the value of estimated DW test is not found satisfactory (quite low) might be due to auto- regressive and other specifications errors in the model. Model 2: The estimated regression equation is as follows: E = -.101 1.269 GDP + 1.786 GFCF + 0.46 H (-.703) R 2 = 0.98 (-4.820) (7.70) (3.23) DW Test = 2.42

F Value = 309.8 (2, 10) **

* Figures in parentheses denote t-values at 95 per cent level. ** Figure in parentheses denotes d.f. It is evident from the test statistics computed in the form of adjusted R2 (.970) and F-value are [118.32]that these are found satisfactory giving indication of goodness of fit. Computed regression coefficient of GDP is found contrary (and may be attributed to the fact that education is commercialised since economic reforms day by day). Computed regression coefficient of Gross Fixed Capital Formation Education Index is estimated a positive and significant at 95 per cent level of confidence during the period 2000-01 to 2011, indicating that GFCF is playing vital role for increasing education sector. Also the coefficient of Health Index is estimated a positive and significant at 95 per cent level of confidence during the period 2000-01 to 2011-12. This indicates sound health of the people increases the education level

Model 3: The estimated regression equation is as follows: H = 0.362 +1.911 GDP -2.11 GFCF + 1.21 E (3.55) * Adj R2 = 0.958 (3.88) * (2.11) * (3.2) * DW test =1.91

F Value = 235.04(1,10) * *

* Figures in parentheses denote t-values at 95 per cent level. ** Figures in parentheses denote d.f.

It is evident from the test statistics computed in the form of adjusted R2 (.970) and Fvalue are [118.32] that these are found satisfactory giving indication of goodness of fit. Computed regression coefficient of GDP is found positive and significant, indicating its vital role in changing Health index. Also computed regression coefficient of Education Index is estimated as positive and significant at 95 percent level of confidence during the period 200001 to 2011-12.This indicates Education Index is playing a vital role in raising health index. However, computed regression coefficient of gross fixed capital formation is found contrary (and may be attributed to the fact that alone physical medical infrastructure is not sufficient to improve the level of health index in general).

CHAPTERVII

CONCLUSION AND SUMMARY

Conclusions:
Broad conclusions drawn on the basis of above held empirical analysis of the problem under hand are as below mentioned: 1. GDP (Gross Domestic Product) seems to have positive contribution to education and health sectors in different forms in India. Rising levels of GDP year over year influence favorably both education and health in general. 2. Some similar is found in case of HDI (Human Development Index) for India as stated above. 3. Both education and health are positively correlated and do influence each other favorably. But, the contribution of education seems stronger to health conditions, while, health seems to encourage education but not so strongly as education seems favorable for health. This may be considered as phenomenal in Indian economy. This implies that

educated people are more health-conscious while healthy people seem less educationconscious. 4. GDP along with GFCF seems quite comfortable for health and medical care facilities while contrary is observed in case of educational facilities and education. This may be considered as phenomenal and may be attributed to the fact that education is being privatized and is being commercialized day by day particularly in technical and higher education after the inception of economic reforms in India since 1991. (It would not be out of place to mention here that the government is emphasizing than on education though literacy is a sub-set of education). 5. GFCF seems to contribute positively and comfortably for expanding educational facilities in the economy in general. 6. GFCF seems to contribute in contrary fashion for medical sector as a whole. Again, GFCF may provide better physical medical care and health facilities in the economy but not all categories of facilities required in medical sector comprising both man and material for improving health conditions of people in the economy in general. more on literacy

Emerging Issues Policy Implications

Indias 2011 HDI of 0.547 is below the average of 0.630 for countries in the medium human development group and below the average of 0.548 for countries in South Asia Indias Global Position in Social Development Indicators, indicates the existing gaps in health and education indicators as compared to developed countries and also many of the developing countries. The need for much faster and wider spread of basic health and education, seems invariably required. As per World Bank consultation Report (Human Development in India: Emerging

Issues and Policy Perspectives) In India the education policy should shift its focus from enrolment to improvement in the functioning of schools as well as towards raising the quality of education outcomes. Special strategies a r e n e e d e d t o i m p r o v e the outreach of the school system to the disadvantaged and marginalised groups in the country. A more systematic school mapping exercise should be undertaken to provide these groups access to both lower and upper primary classes, for removing social barriers to education. Shared public space should be created in education to allow private schools

to co-exist with government schools in the delivery of education. Further, there is a need for standardisation of schools, with the mechanical provisioning of core inputs and a well-developed pedagogy. Long-term goals are required to bridge the gender gap, which constitutes a key hurdle in achieving literacy in the country, along with measures to ensure universalization of elementary education among girls.

There is a need to plug the gaps in teaching inputs. For this, a well-designed programme of recruitment, retention and deployment of teachers needs to be put into place in each state to ensure a high level of teaching quality and also to clear the backlog of vacancies at all levels. The issue of child labour, which is estimated at a whopping figure of 12 million children, should be tackled at the earliest, as without it, there can be no improvement in child participation in schools. The implementation and monitoring of this strategy should be done at the state level, for which respective governments should create additional supervisory structures and mobilise financial and human resources. Effective policies in the public health sector call for a convergence of initiatives in different sectors. The focus should be on certain wider determinants of healthcare like food and livelihood security, drinking water, womens literacy, better nutrition and sanitation, and

above all, confidence in convergent community action. The public health policy should focus on the prevention of diseases by providing clean water and sanitation rather than fighting diseases by administering antibiotics. This necessitates training of public health specialists and development of health facilities at all levels. Crucial attention should be paid to the financing of healthcare. Public expenditure on health in the country constitutes only around 1 per cent of the GDP. It should be raised to about 2 per cent during the next five years. There is also a dire shortage of healthcare staff. In order to meet these challenges, the government could forge partnerships with various stakeholders Conclusion The retreat of the central government from social sector financing and mindless involvement of the private sector in critical sectors like health and education will not help the process of equitable and inclusive development. Given the lopsidedness of social and economic development in the country, there is a far greater need now for the central and state governments to be pragmatic and proactive going beyond petty political bickering. Making the private sector the trusted of the common man may be a convenient and lofty strategy, but experience suggests that without adequate regulation, including its effective enforcement, the outcomes more often than not may turn deter mental to the achievement of the desired social welfare objectives. A more inclusive and discursive process of consultation abounded issues like access to social services, affordable costs, efficacy of service provision and quality of service offered should bring in the result.

BIBLIOGRAPHY Economic survey, various issues and ( 2011-12) Government of India Ministry of Finance, Department of Economic Affairs, Economic Division, Jalan, Bimal (1996). Indias Economic Policy: Preparing for the Twenty-First Century. Penguin Books, New Delhi Government of India, Planning Commission, Eleventh five Year Plan,and Tenth Five Year plan World Bank. (2009) World Development Report 2011 Knowledge for Development. Washington: World Bank. [1999, 9 August]. http://www.worldbank.org
Dr. Subramaniam Swamy (2000), Indias Economic Performance and Reforms, Konark Publishers Pvt.

Ltd., Main Vikas Marg, Delhi.

Government of India, planning commission, eleventh five year plan (2007-12), volume, II, pp. 85-87