The inequity in access to growth opportunities will harm the country’s growth story. To ‘Build India’, we need a new approach to ‘Govern India’
POLICY DEBATES ON INEQUALITY in New Delhi focus on poverty: the worsening Gini coefficient (‘Indian income inequality, 1922-2014’: Lucas Chancel and Thomas Piketty) or how the top 1 per cent earned 22 per cent of the national income while the bottom half took home just 15 per cent (World Inequality Report, 2017). How should democratic, socialist India share the income pie is the question. Citizens agitating in our streets reflect a different debate about inequality: the inequity in access to opportunity. Intuitively, this makes sense. A per capita annual income of a mere $1,710 (versus $57,000 in the US or $8,100 in China) suggests that most of our growth is ahead of us. Our real wealth, the 450 million citizens below 18 years, are yet to start their game. For them, ensuring access to the growing pie (of market, services and space) is the measure of inequality. But when most narratives state that a 10 per cent economic growth will magically cure all our ills, should India worry about inequality?
INEQUALITY COULD HURT HOW LONG INDIA GROWS FOR
Successful nations ensure consistent productive growth. Compounding, it appears, works for societies as much as for individuals. Two factors drive long periods of growth: ensuring social mobility and keeping all citizens engaged. The arc of development does not benefit everybody equitably, simultaneously. This is often due to differences in natural advantage: a community is more literate, or
has historical migration linkages, or access to ports or fertile land. Or the practical reality of state capital-allocation choices leads to differences: investing in roads versus airports, irrigation or policemen, a development-oriented leader or a compromise candidate. Whatever the reason, citizens perceive different growth trajectories. And they must believe that the game is not ‘rigged’. That one day, they too will partake of opportunities. Else, murmurs of dissent lead to protests. If unheard, citizens create ‘the other’, rejecting the system by voting in extreme political choices. Brexit and Trumpism are two examples. So, do all Indians believe they have access to opportunity, space and services?
BASIC SERVICES AND SUBSIDY ARE NOT ACCESS
First, the good news. Seventy years of democracy have enshrined a new norm in a civilisation that has lived with centuries of inequity: every Indian is born equal. The state mandate includes delivery of basic services: near universal school enrolment, the world’s largest food security programme, rural roads and, now, power-for-all and affordable housing. Not an easy endeavour, given our scale.
Now, the challenge. This is insufficient to ensure equity. For every child to access opportunity, he/ she must be healthy, skilled and belong to a community where the policy environment creates adequate jobs (public or private) in sync with his/ her skills and aspirations. Indian kids have big aspirations. We fall short on the other fronts. Poor maternal health and sanitation stunt almost 48 per cent of children. And given the inadequate infrastructure and teacher training, 40 per cent children drop out by Class 8; less than 12 per cent graduate. And skills do not match jobs. While sectors like construction, hospitality, logistics and public service will create massive jobs, we are not skilling (or creating social equity) for these. And, finally, our policies do not create the right growth context, often focused on the easy, not the right, levers. Indeed, most recent protests are led by the Jats, Marathas, Patidars and Kapus, erstwhile rural-rich and politically-dominant communities. They worry about the future of their educated youth: government jobs are ‘reserved’ and there are few private jobs. While carving them a sliver of public jobs is a likely solution, they need value-adding jobs, in agriculture, for starters, or in cities. Making agriculture viable needs big shifts: technology investments in inputs, consolidated land use (not land ownership), changed crop mix and valueaddition at farms and dismantling the hold that powerful, politically strong intermediaries have on prices. These tough choices need political capital and courage. But for our leaders, a farm loan waiver is an easier short-term fix!
India’s record in equitable access to space and services is weak too. Indian women epitomise one story of inequity in access to spaces. A gender ratio of 900 and a mere 27 per cent working (the world’s lowest but for West Asia) demonstrates the limited space for Indian women. The talent waste is astonishing in a country that needs lakhs of doctors, teachers, policewomen and businesswomen. Similarly, urban children are increasingly obese as safety concerns keep them indoors. Narrow space also haunts inter-faith marriages in the 21st century, with love coloured by hateful connotations of jihad. Finally, access to citizen services remains limited. Indeed, three sectors with severe supply constraint (education, health and housing) account for 37 per cent of India’s core inflation, making India unique: its fiscal policy drives its monetary policy! The historical solution to this has been a two-tier market. The rich and powerful access private markets or get preferential access to public goods. The poor pay more or live with service gaps: running pillar-to-post for a school admission or a hospital bed. This will no longer work. The biggest service gaps now are also air pollution and safety, with no elite solution. The street protests are getting more frequent and
we could see many more in 2018. The inequity remains. Is inequity written in our karma, in our stars?
POLITICAL MINDSET AND STATE ACCOUNTABILITY
Not really. Seven million citizens of Himachal Pradesh suffer from lower inequality. Jobs have been created systematically. Land reforms (since 1971) ensured that 80 per cent households own land, critical equity in a predominantly rural state. Since then, profitable horticulture jobs grew nine times to 28 per cent. Local agri universities provided the right inputs. Farmer-producer groups invested in value addition and direct market access. Smart policies also created jobs in relevant sectors: construction, tourism, energy and public service sectors. In turn, this resulted in near-universal access to roads, drinking water, education (highest literacy in north India) and public health (83 per cent citizens access it versus 34 per cent for India). An astonishing 63 per cent of rural women work; 80 per cent participate in village decision-making. With land sale prohibited to outsiders, the state maintains its traditional focus on sustainability. Of course, HP has its issues, and needs a new growth model. But let perfect not be the enemy of good.
What ensured equity in Himachal? It is not the longevity of any one political party as voters, almost always, trounce the incumbent. Experts highlight three factors: a benevolent political class that chose smart policy and public investment over subsidy, an independent bureaucracy that engages with communities to tailor policy, and literate, engaged citizens who demand local accountability through institutions such as village PTAs and panchayats.
So the issue is not that it’s not in our stars. Perhaps we need to recognise that the state’s role is not that of a benevolent subsidy provider but an enabler of public and private investment by framing right policies, skilling citizens and preventing ‘elite capture’. Our political engagement could mature too: voter groups must stop bargaining for their share of the pie and vote for inclusive, longer term change. Equally, we need more thoughtful bureaucrats to work for the heterogeneity of India, respecting the agency of citizens rather than being their benefactor. But could this happen?
GREEN SHOOTS: BOTTOM-UP DEMOCRACY
Two factors might help: the rise of bottom-up democracy and a new approach to govern India. Let’s start with the first. Political parties have experimented with a new business model to win elections: directly communicate with voters, tailor messages to local regions, manage voting booths to ensure last-mile voter delivery. They have started building a permanent local presence of party workers and volunteers. This model, effective in recent elections, is also a two-way street. Soon, smart voters will demand impact, not just action. The face on social media will suggest a real relationship. The on-ground presence will cement expectations of local accountability. And managing booths could morph into area development around the booths. Over time, smart parties will create a cadre career path—from booth manager to panchayat/ district leader to town mayor and state leader. Engaged citizens, with technology and aspirations, could use likes/dislikes to drive policy and capital allocation. A bottomup democracy might finally triumph over a top-down choice of political leaders. 2018, with multiple state elections, could see youth demand more from those seeking their support.
Politicians are necessary, but not sufficient. Designing inclusive policies needs capacity and expertise. We struggle with both. Our 7,935 cities need more staff to serve all their citizens: Bengaluru and New York have similar populations but the Bengaluru city government has only six per cent of the staff strength in the Big Apple. Our 250,000 panchayats need accountants and auditors, planners and project officers. We also need a million-plus folk with expertise: to map aquifers and run water-user associations or to design transport and IT systems. The resulting jobs will be welcome: we are a surprisingly small state for such a large citizen base.
Finally, we need administrative capacity that looks longer-term and beyond the latest fire: separating the legislative (designing policies and laws) from the executive (staffing institutions and creating standard operating procedures to execute well). To ‘Build India’, we need a new approach to ‘Govern India’. Civil society should focus its energy here. Currently, our best NGOs are haplessly squeezed between the FCRA or the Foreign Contribution (Regulation) Act nightmare and the perceived encroachment into their space by CSR initiatives. But India needs active, scaled-up civic institutions to be society’s memory-keepers, to serve as honest brokers between business and the state and to ensure citizens remain alive to their civic responsibility and rights. Their role is pro-India, not anti-government. And they will need old fashioned door-to-door campaigns to get citizens to demand more capacity to serve them. 2018 is a good year to relaunch this effort, given the millions of first-time voters.
Indians do not dislike the rich. Indeed, becoming rich is often part of their dream. They dislike feeling that rich folks and politicians (often overlapping) have rigged the game. They like to believe that their children will have a chance to win too. It is inequity in access to growth opportunities that will harm the Indian growth story. Smart politicians would do well to ensure the game is played fairly. Else, the India story could end prematurely.
TO DESIGN INCLUSIVE POLICIES, WE NEED CAPACITY AND EXPERTISE. INDIA STRUGGLES WITH BOTH