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Saturday, December 21, 2002

Now that Gujarat elections are out of the way, the nation can get back to the business of the more pressing, long-term, important issues of economic growth and alleviation of poverty. For several months now, our whole energy and attention were focused on the tragic event of Gujarat, and more specifically to the political fallout of the vicious battle for power. Happily, the doomsdayers were proved wrong. Gujarat people voted peacefully, and communal violence has not spread to the rest of India. Once again, Indian people showed they have too much of resilience and good sense to be influenced by hatred and bigotry.

Given our historical baggage, fiercely competitive political process, and the power-centered nature of our society, communal and caste poison is bound to be injected from time to time. But Gujarat of 2002 is an aberration, not the norm. Mumbai of 1993 was the true reflection of our society. When terrorists blasted many buildings, and over 300 innocent people lost their lives, there was not a single incident of communal violence or hatred. The people picked up the pieces calmly and rebuilt their lives.

But the economic situation the world over is less than satisfactory. We are slipping behind China. Even the mighty US is faltering. Japan has been facing crisis for over a decade now. Germany is “plagued by a severe economic malaise and uncertainty”, to quote the redoubtable Economist. What then, can we do to bring good cheer to the millions of our long-suffering people?

Perhaps the answer lies in the big picture. Sometimes we are lost in the triumphs and travails of the moment, ignoring our long-term real goals. Look at the US economy. The artificial wealth created by the bubble of the 90’s has disappeared. Investors lost an unbelievable $8 trillions! The nation is beset by several problems: excess, unused capacity; high individual and corporate debt; rapid stock-market changes in a hyper sensitive economy; and enormous and growing inequities. Top 20% of Americans enjoy 50.4% of after tax income (top 1% enjoy 12.9% income), while the poorest 20% earn only 5.2% of the income.  15% of all Americans have no health coverage, though health costs are an astonishing $1.3 trillions per annum. There are, of course some signs of mild recovery lately in the US economy. If the strongest economy in human history could be subjected to such vagaries, we can well imagine the plight of Indian economy.

Over the past two decades, we have tended to focus undue attention on the capital markets and macro-economic stabilization, ignoring the bigger picture. Given our state of economic maturity, there has been over financialization with excess emphasis on stock values, mutual funds and daily trading volumes. No matter how much we imitate the US, it is unlikely that India will ever achieve the level of American prosperity.

But that need not deter us. Fortunately we live in an age and time when many things are possible at a low cost.There are three goals India can and should aspire for over the next decade.

First, we need to promote human dignity through strong policies, effective laws and allocation of resources. In today’s world, child labour, back-breaking drudgery, hunger, and public defecation are unacceptable and unnecessary.  Some 30 – 40 million children are now child workers, eking out a precarious livelihood, with their potential unfulfilled. Incidence of hunger in India is on the decline, with a reduction from 19% in 1983 to 7% in 1993. Although this is a welcome trend, no Indian needs to go hungry with food grain surplus and resources. 70% of all Indians are forced to defecate in public, and over 80% of all illnesses are water-borne. These are problems which can easily be addressed with available technology and resources. These are the tangible indicators of human dignity.

The second fundamental goal ought to be accessible justice with accent on rights of the poor. Local Courts, fair process, just compensation for rights violations, and speedy resolution of disputes are all easily achievable goals. Judge/population ratio can be dramatically improved at low cost, and procedural changes effected at no cost at all. Once people's rights are protected, the poor will get their due, and rule of law will encourage investment and hard work.

The third goal should be creation of opportunities for vertical mobility. Global history teaches us that people are willing to accept any amount of hardship and privation, if only there are realistic avenues of emancipation from poverty and drudgery. Every child should be entitled to reasonable quality school education which imparts skills and knowledge and enables participation in wealth creation. And good health care is both inexpensive and attainable to all Indians if only we build sensible systems. Finally we need to focus on basic infrastructure, particularly transport, power and water to promote growth and create job opportunities.

These goals are well within our reach in the next decade, thanks to modern technology, communications and democratic institutions. Once they are achieved, embarking on a path of rapid growth will be easy and inevitable. We need not envy China. We can catch up with it. Democracy is not a handicap. It can be an empowering tool. But first, we need to get the big picture right, and focus on the essential goals clearly.


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