labels: economy - general, governance
India talkingnews
Uday Chatterjee
17 May 2004

Till last week, India was billed as the largest democracy in the world. From today, India also deserves to be billed as the canniest democracy in the world. The Indian voter has shocked and awed 'knowledgeable' commentators and pollsters alike by giving the thumbs down to three ruling governments. No one saw what was coming and when it came, the faceless Indian voters' message was loud and clear - govern, or else!

The golden boy of Indian political governance, Chandra Babu Naidu, hailed all over the country and internationally as a visionary either did not envision what was coming or chose to ignore it. Either way, he paid the price for it by being routed beyond every body's wildest imagination, except the Andhra voter's.

What went wrong? A lot of research, analyses and time will be needed to arrive at the right conclusions. But the average Andhra voter is neither going to wait for the conclusions nor does he care about it. His needs are simple and he found that Naidu could not deliver.

The Andhra voter saw the shine, glitter and sparkle of the software parks of Cyberabad. At the same time he saw thousands of farmers reeling; committing suicide with more reeling in debt. The politically savvy chief minister was the major supporter of the central government, albeit from outside. He also knew that if he withdrew his support, the government would collapse. He used this trump card to arm twist (read blackmail) the centre to give numerous-out-of turn sops and aids to his state, but to no avail as it seems to now appear.

A case in point is the Rs400 crore foodgrain the state received from the centre. Did the foodgrain reach the people who needed it desperately? Well, judging by the voters' response, no. The chief minister also made a 'high-tech presentation' to the World Bank and received a hefty loan for irrigation projects in the state. The state continues to remain dry.

The deficiency in such 'aids and development' projects lies in the delivery system. Some time back it was found that in poverty alleviation programmes the delivery is just about 10 per cent. This means that for every Rs100 sanctioned barely Rs10 is ultimately spent on the actual project. The remaining Rs90 is frittered away on administrative expenses like administration, salaries, conveyances and 'leakages' (read corruption).

But this is an ugly facet of the politics of development that every one knows and has lived with since Independence. Every one also knows that corruption cannot be wiped out overnight. However, if belts are tightened and the delivery rate is raised to 20 per cent, it will be a great. leap forward for the story of development. The state of Andhra is the first state to have become completely 'e-governance compatible.' Under such circumstances why there has been no visible improvement in the state's delivery rate is confounding.

In the state of Karnataka, the voter also gave its government the same message as the Andhra voter did. The loss to the ruling party may have not been as severe as in Andhra but the message was the same. The state had modelled its governance style based on the glitzy, high flying, high tech, e-governance pattern of Andhra. In Karnataka, too, thousands of farmers have committed suicide, and more are reeling under debt and there is no water.

And now we come to the big one, the central government. Judging by most of the economic parameters, the performance of the government has been, (hold your breadth) good. Yet the government was shown the door. And the reason for that is, (hold your breadth, once again) economics.

The monsoons during the last year have been excellent; it catapulted GDP growth rate to about eight per cent annually. The fiscal deficit, though a worrisome figure has been brought down substantially. The country has been attracting plenty of foreign direct investment (FDI) and foreign institutional investment (FII ) investments and our foreign exchange reserves have swelled to about 120 billion dollars. To top it all, another good monsoon is expected this year and a high growth is likely to be maintained. Yet, about 80 per cent of the country's population, which comprises the rural and urban poor have not been able to taste the fruits of this economic growth.

A skewed growth is what the India 'Shining' story is all about. A one per cent growth in the GDP is supposed to generate 'x' amount of additional employment, which did not happen. A hundred point rise in the sensex of the capital market is supposed to generate 'y' amount of capital formation, which, too, did not happen. Capital formation is supposed to spawn more manufacturing and services companies which once again means more jobs, more purchasing power to the people, more taxes for the government which can be used for health, educational and welfare schemes and for addressing the wretched fiscal deficit problem.

Lastly, let us come to the small and marginal farmer, landless labourer and the urban poor. These poor souls also need investments to enable them to find jobs to earn a livelihood. Their investments do not come from the capital market but from banks and other financial agencies. Are those agencies financing this sector? No real data is available but here one gets the sense that bankers are, of late, obsessed with affluent and upper middle class consumer spending - home loans, car loans, consumption loans, credit cards, etc, - which really are no big deal as far the mass employment is concerned.

Let the banker come up and finance a small farmer for, say, Rs20,000 to purchase and maintaining milch cows. The cows, if properly maintained, will yield about 12 litres of milk every day. The 12 litres will fetch the farmer about Rs120 every day. With his earnings from his farm holding and the Rs120 per day, he will have enough money to feed his family, pay back the loan with interest and will also be able to buy soaps, detergents and, may be, a television set one day.

If that happens, he will vote for the government that gave him the loan, when he needed it most.


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