What is to be done for the next five years?

By Dr Rahul Pandey
May 22, 2009
The author is a former faculty member of Indian Institute of Technology (IIT) Bombay and Indian Institute of Management (IIM) Lucknow . He is currently a founder member of a start up venture that develops mathematical models for planning and policy analysis. His areas of interest are operations strategy, energy, environment and climate change, and development. Email: rahulanjula@gmail.com

The United Progressive Alliance (UPA) government has been re-elected with near majority. With the country facing a host of social, economic and political problems, its plate is full. Most sectors and people are reeling under the economic recession. At the same time the prices of some of the basic essentials like food products have been high. The poor – small farmers and landless people in villages and low skilled workers and small informal (unorganized) sector entrepreneurs in urban areas – are the worst hit. Myriad environmental problems – both local and global – stare us rudely in the face. Communal divisions and related threat of terrorism have made people insecure. The government simply does not have the luxury of a honeymoon period. It must tighten its belt and begin to act.

But before we talk about what is to be done, let us briefly look at what made the people elect the Congress and what explains the rout of the BJP and the Left? This will give us insight into what people of India want.

In the past five years Manmohan Singh and Sonia Gandhi have steered the Congress in two different directions. Instead of conflicting politically, these efforts somehow appeared to satisfy two different but major segments of our society. This was in spite of the usual corruption and other flaws that characterize the Congress culture.

The well-off, urban people have grown to become enamoured of Dr. Singh. His image of an honest and intelligent person has only been reinforced in these five years. The only serious allegation, that he was a weak PM and a puppet to the Congress president, was thwarted by some of his actions like his passionate pursuit of the Indo-US nuclear deal. Although the latter meant compromising India ’s neutrality and commitment to peace, it did show he was a strong willed person, unwilling to budge under pressure from heavyweights in his own party. This enhanced his credibility among the people, especially the educated middle class.

Sonia Gandhi, on her part, earnestly backed and saw through the fruition of two very important Acts – Right to Information Act (RTI) and National Rural Employment Guarantee Act (NREGA). To do so, on the one hand she involved several eminent social activists to help design and draft the Acts. On the other hand, she cleverly dealt with the opposition to these Acts from vested but influential interests within her own party and outside. These Acts have strong checks built in them. Hence, despite corruption and leakage, their implementation has been reasonably well received. In many districts, several local NGOs and activist groups supported them and got engaged in their monitoring at the ground. While RTI itself has significantly increased common people’s access to governmental schemes and information, NREGA together with RTI has made perceptible improvement in rural employment and wage for the poor and curtailed distress seasonal migrations in several regions. Now many agree that these Acts constitute major institutional reform and progress, and need to be given more teeth. Such schemes helped enlist the support of the masses.

The BJP, on the other hand, had barely any positive alternatives to offer. Its personal allegations against Manmohan Singh backfired and brazenly linking terrorism to a community sounded too crude and shallow. The Left, with its disastrous pursuit of industrialization in Nandigram and Singur without any rehabilitation plan for the displaced, stood utterly discredited among the people. It appeared stripped of its own core principle.

What should be done now by the UPA government? Economic recession, poverty and unemployment, environmental problems, and terrorism loom large over India ’s social-political horizon. An innovative policy response will be one that attempts to address all these problems in a synergistic stroke. Trying out a way that solves one problem while worsening another is something we have done many times in the past and will not work this time too.

Many economists and planners agree that a key solution to recession is to increase government or public spending. This would directly pump money in the economy and create jobs in public works. The money that thus reaches the hands of consumers will eventually boost consumer spending. The banks must simultaneously ease up credit schemes so that people can borrow at low interest rate, which again boosts spending and investment in the economy.

The tricky policy question is: For which kind of activities should the government increase spending and the banks offer easy credit? How much and for how long? Answer to these questions will determine the success of our economic revival. It will also determine what kind of capabilities India would acquire in the process, for instance, in technologies and management systems in agriculture, industrial, infrastructure, energy and environmental fields. More crucially, it will also determine the extent to which we will solve our social problems like poverty, unemployment and wide economic disparity.

To identify the right policy direction for India it is important to recognize certain dominant global trends. First, globalization is rapidly increasing the access of people, especially those connected with the modern economy, to information from everywhere. People are becoming more aware of the critical issues of politics, economies, development, environment and human rights in different parts of the world. Second, as the forces of globalization are also unleashing repression of ordinary communities by big capital intensive projects, the opposition of people to such forces is becoming louder. At more and more places local people are getting organized and raising voices against unjust development projects that displace them from local resource base and do not offer much in return. And more and more such people’s groups are getting networked. This is leading to greater demands for a more democratic and just society. Third, the same forces of development have caused grave environmental damage, both locally in polluted cities, rivers, lakes, forests and industrial sites, and globally in form of changing climate. These problems too have mobilized scores of NGOs, policy makers and people everywhere to lobby for environment and people friendly policies. Fourth, as organizations worldwide are under increasing pressure to offer innovative products and services that are both customer and environment friendly, these dimensions are becoming important bases of competition in more and more marketplaces.

All these are irreversible trends which are strengthening and spreading widely. The policy prescriptions that directly address India ’s internal social-economic-environmental problems and are, at the same time, in sync with these global trends will be the most robust ones.

To begin with, a drastically enhanced government spending is required on rural infrastructure and environment – roads, wells, water supply, electricity supply, upgraded primary and higher schools, schools for women, training centers in useful employable skills, community centers, planting trees, etc. All such works must be linked with NREGA. This will simultaneously create many productive jobs and build useful infrastructure. Given the current state of such infrastructure, these works can consume most of NREGA’s budget for years.

In order to be environment friendly and sustainable, rural infrastructures like water harvesting and electricity supply must be small and based, as far as possible, on locally available and renewable resources. Fortunately, different parts of India are enriched with at least one renewable resource like solar energy, wind, water, and several types of biomass. Agricultural practices must be based on modern but organic and low energy intensive methods as much as possible. Industries must be energy efficient and source energy first from renewable resources. All waste must be recycled.

Once set up, the facilities for water, electricity/energy, agriculture, education, waste handling, etc. will offer a lot of employment opportunities to operate and maintain them. Hence the newly established training centers must provide training in these and a host of other skills useful for local youth and women to start various entrepreneurial activities relevant for the local society.

Most crucially, for all these initiatives to be useful to local economy, be environment-friendly, and reach all communities and people, they must be governed and monitored locally in the most democratic manner. This can be done only by local bodies that constitute representation from all communities, are democratically elected, and linked with other decentralized institutions of governance. This, in turn, requires that the local institutions of governance are strengthened and made fully decentralized and democratized. This will ensure that local people are the ones who have maximum say in the decisions of fund allocation, selection and monitoring of works, and choice of infrastructures, skills and economic activities. Any large industrial or infrastructure project that impacts local resource base and livelihoods, along with necessary rehabilitation scheme, too must be approved by the local governing bodies.

What about the urban areas? Their design too must change to eco-friendly and people friendly one in which people do not commute much to work, roads are neither congested not polluted, there is high enough capacity of public transport systems, there are many parks and community places for children and adults to enjoy, trees are abundant, houses and buildings are fitted with renewable systems of electricity and water supply, most of the waste is collected and recycled, and there are no slums as all low income people live in proper houses with proper sanitation facilities provided by the government. A lot of urban poor can be engaged and employed in the process of such transformation of urban landscape.

And what about the modern industries? They must be forced through regulation to acquire new technological innovation and management capabilities to become highly energy efficient, environment friendly, and customer friendly. Besides benefiting the society and the environment around them, such capabilities will enable industries to become globally competitive. This is a huge challenge for the Indian industry and will require change in mindset and a lot of work. The surplus manpower in current times of recession can be usefully trained and engaged to build the new systems and capabilities required in this process.

The government must enhance spending and the banks must offer easy credit to directly support the activities that lie within the ambit of strategies proposed above. This will enable the Indian society to transit to a new development path that entails people-driven decentralized governance systems, sustainable and environment friendly infrastructure, agriculture and industrial systems in rural areas, eco-friendly cities, and modern industries with energy efficient and environmental innovation capabilities. The support must be offered until such a transition is achieved. As for terrorism, it will be rendered a secondary concern if we set out seriously on the task of building a prosperous, sustainable and just society.