The
Developer’s Model Of Development Or The Economist’s?
By Aseem shrivastava
22 February, 2007
Countercurrents.org
“An epitome of beauty, serenity and colonial charm…”
- From an advertisement for The Carlton, a luxury hotel created
by The Rahejas in Kodaikanal, Tamil Nadu
Two
competing notions of development are increasingly at war in the Indian
economic landscape. One model is familiar to economists and policy-makers
of an earlier era. We shall discuss that model later.
Development according
to developers: the new Indian way
With changing times it would
be folly to cling to outmoded concepts. One such concept, which wasted
the nation’s best resources during the days of the license-permit,
Neta-Babu Raj, was the post-war notion of development. It sucked the
human, capital and natural resources of the country for over four decades
– for which we have little to show.
There is thus urgent need
to create and implement an entirely new model of development which answers
Indian aspirations in a globalized world with far greater success. Here
is what it looks like.
There will be world-class
apartments in impressive high-rises touching the sky. Prospective residents
will have choices ranging from compact studios to 6-bedroom dupleix
flats designed for traditional Indian joint families. The apartments
will be equipped with handsome, marble-topped bathrooms, studded with
Jacuzzis and golden bidets imported from Europe. Every room will afford
a commanding view of the golf course within whose precincts the skyscrapers
will be located.
As you step out of the building
you will find yourself before the 18th hole of the golf course nearest
to you. If not in a golfing mood, you may choose to step out of the
rear of your building: your eyes will alight upon an Olympic-sized swimming
pool that has been built just for you. Look to your right and you will
see Wimbledon-class tennis courts fully appointed with coaches and the
latest equipment.
If you prefer independent
accommodation we have for you a range of impressive townhouses and bungalows
with sprawling lawns and their own private swimming pools. They come
with all the facilities available for apartment-dwellers.
You will find your workplace
within cycling distance of your residence. (100% safe biking tracks
have been laid down on artificial turf to ensure your ease and comfort.)
The building that houses your office is equipped with world-class business
and communication facilities, including satellite links, global video
conferencing facilities and broadband wireless internet connectivity.
Within your office building
itself you will find a stress-busting massage parlor (offering a large
variety of oriental massages), a mental health clinic (having world-class
experienced professionals) and a beauty parlor (with some of the best
herbalists in the world). There is also an in-house gym facility, a
health club and an all-weather swimming pool.
For those of our customers
connected to manufacturing, there are dozens of industrial parks within
the city, properly zoned away from residential areas to minimize any
of the negative effects of pollution (which itself is expected to be
eliminated in the foreseeable future). These parks are fully provisioned
with global quality infrastructure such as reliable, internally generated
power facilities and ready and easy access to container and cargo terminals,
making use of the latest international advances in efficient logistics.
SEZs (Special Economic Zones)
are the latest innovation in Indian policy-making. They provide legal
relief from archaic constitutional obstacles to rapid industrial growth:
investors need no longer worry about paying taxes, minimum wages, health
and pension benefits and environmental fines. We have several SEZs with
irresistibly attractive terms of investment for both global and Indian
players.
When you need to shop, you
needn’t drive far. We offer you tens of thousands of global brands
not far from your doorstep. There are dozens of dazzling shopping malls
excelling global standards, where you can find everything suited to
your taste. There are supermarkets, garment, fashion and design stores,
footwear stores, jewelry shops, electronics and IT bazaars, music shops,
book stores, drug stores, hardware stores, home improvement outlets
and even car dealerships. Now you need not lose time on your vacations
to shop: even curios from all over the world have been gathered and
assembled at our malls for your shopping pleasure.
When you have guests from
out of town they can be accommodated at one of the many internationally
networked luxury hotels. Our hotels offer all the facilities and amenities
available to our residents, with attractive discounts available for
our regular customers.
For your entertainment there
are half a dozen multiplexes in the city, showing over three dozen films
at a time. The film theatres are abutted by gaming parlors where young
people can compete with their counterparts the world over.
Adjoining the hotels are
amusement parks with childcare facilities on offer. Busy guests traveling
with their children need not worry any more: we take full responsibility
to entertain them on roller-coasters and waterslides. Our customers
will find it assuring that we have won the highest international awards
for excellence in providing hospitality to our guests.
We also have some of the
most interesting theme parks in the world. There are stimulating interactive
facilities to enable visitors to learn Hindu mythology and religion
by signing up at the Panchatantra Park. You can even don the armour
of a Pandava warrior at our Mahabharata Theme Park.
The city boasts of a number
of helipads from where chartered flights can take you to the nearest
international airports enabling smooth connections. Arrangements can
also be made for chartering jets of all sizes from the nearest airports.
Our travel agents will look after all your travel needs, both for business
and pleasure, offering you some astounding discounts on vacations at
virtually every beach or mountain resort anywhere in the world.
For your children we have
some of the best schools in the world, offering the International Baccalaureate
diploma in three different languages. Our teachers are trained in London
and Geneva and are required to know at least three globally recognized
languages well. They are also required to have spent at least half their
working lives abroad.
Given the scrupulously clean
and hygienic environment we maintain within the city sicknesses and
poor health are rare. But should you ever feel the need there are world-class
hospital facilities managed by the world’s leading healthcare
providers. You will be in the care of internationally reputed doctors
and nurses.
Last, not least, every building
and facility within the development is guarded by world-class surveillance
equipment and security forces trained especially for you. You need never
worry again for your safety once you entrust your security to us. Residents
and visitors will especially appreciate the finesse with which our security
personnel do their daily job without making themselves even remotely
obtrusive or even visible.
Is it all only a fantasy?
The above is hardly a fantastic
caricature of the promises made by India’s leading builders and
developers today. Indeed, one may observe that in some cases the promises
are close to being met – at the appropriate price.
Consider just a few promotional
advertisements from some of India’s leading builders and developers.
Rahejas have already been quoted above. Unitech, whose profits this
year are 3000% higher than last year, offers us “Shoppertainment
for Indians.” “Dreams are for achieving”, they say,
not merely to be savoured as fantasies. Ansals, with an international
endorsement (Norsk Akkredit Ering EMS 006), offer a “futuristic
SEZ in Greater Noida” which will become the “greentech IT
hub” and “will usher in the new age of an IT-led economy”.
Parsvnath Parivar (with an ISO 9001/14001 certification) wish to invite
us to join their family in order to enable them to create an “ever-enlarging
footprint” across the length and breadth of the country. Any perceived
irony is not intended.
It is evidently the case
that India is “poised” to become a “developed”
superpower at the cutting edge of the global economy. Those of us who
are skeptical of the promises and the developments are either naysayers,
doomsdayers, wet blankets or simply ignoramuses.
Unanswered questions
But some thorny issues remain.
What about the people laboring to create and maintain these lavish establishments?
What is their share of the promised prosperity? And what of those who
the “developments” have displaced without rehabilitation?
And what sorts of inputs of energy, water and resources are involved
in the implementation of this world-class model of development? Where
are the air and water-borne effluents from the establishments going
to be discharged? Finally, hardly inconsequentially, what are the implications
of these developments for that neglected and forgotten sector of the
Indian economy, agriculture, on which two-thirds of our people –
anywhere from 700 to 750 million – are directly dependent? Will
the gathering crisis in agriculture endanger food security and supply
in times to come, reducing to naught the gains made in the direction
of self-sufficiency in food, canceling one of India’s great achievements
since gaining independence from the British in 1947, and possibly reintroducing
the era of famines in India?
Is there any reckoning of
these questions in the meetings and discussions carried out in the boardrooms
of our policy-making elites? One wonders.
Trickle-down or vacuum up?
The questions raised above
can be answered optimistically only with some heroism. The only assumption
under which the model of development outlined above can be of any tangible
benefit to the teeming millions of impoverished Indians is that the
growth induced by large investments in the real estate sector of the
economy will bring benefits to the lower classes in the form of new
opportunities of employment – both directly and secondarily, through
spin-offs. This is the familiar refrain of pious promises of eventual
trickle-down, which have yet to materialize anywhere in the world.
The narrow base of economic
growth in India – focussed thus far in the IT-BPO sectors of the
service economy – has meant that trickle-down theories of the
spread of prosperity have remained confined to the sphere of illusions.
The persistence of widespread hunger, malnutrition, poverty and unemployment
reminds one of the economist-diplomat John Kenneth Galbraith’s
acerbic observation that faith in trickle-down is a bit like feeding
race horses superior oats so that starving sparrows can forage in their
dung.
In fact, far from the benefits
of growth trickling down to the downtrodden, the policies adopted since
the mid-1980s and early 1990s have led to big losses of rural economies
and livelihoods that are not reckoned on the negative side of the ledger
(where they belong) in the growth calculations of government statisticians.
Besides, the poor throughout the country are being rapidly dispossessed
of the only real asset in a primarily agrarian economy: land.
What happened to the old idea of development?
One thing is clear. The paradigm
of development that is in place bears a far closer resemblance to the
developer’s model of development, as outlined above, than to the
developmental visions of the first generation of planners and economists
under Nehru. It ignores the repeated recommendations of seasoned thinkers
like Amartya Sen (who has warned that even a 100 Cyberabads and IT Parks
will make no dent in long-standing challenges of reducing malnutrition,
starvation and poverty). Needless to add, the de facto “developmental”
vision of our policy-makers does arrogant violence to Gandhi’s
vision of village republics.
It appears that somewhere
during the past decade the meaning of the term “development”
has undergone a decisive mutation in the heads of our policy-making
elite.
Is economic growth the same as development?
Every student of Development
Economics learns on the first few pages of her textbook that economic
growth does not translate directly into economic development. The two
notions are in fact quite distinct. Though, typically, the two are seen
to go together, up to a not insignificant degree development is possible
without growth as growth is possible without development. Sri Lanka,
for instance, while scarcely growing at all, raised its average life
expectancy – a crucial indicator of well-being – by a dozen
years during the first 7 years of its independence from Britain. Saudi
Arabia, despite growing rapidly after the OPEC-led oil boom of the 1970s
has failed to bring about a transformation in the lives of the bulk
of its citizens. To see whether growth will lead to development, one
has to scrutinize closely the content and pattern of growth. On this,
more will be said presently.
The point is that aggregate
figures like per capita income can be seen to rise rapidly with economic
growth, but the inequalities of wealth and income might be such as to
mask entirely the poor material condition of most people’s lives.
Economic growth in India
in the last decade or so has been the experience of a minority, reflecting
huge and growing corporate remuneration and the bloated salaries of
skilled and English-speaking urban professionals belonging to upper
and middle classes. Growth in the organized sector (including both private
and public) has been largely jobless. In many cases, like at the manufacturing
plants of Tata and Bajaj in the Mumbai-Pune belt, production has shot
up dramatically during the last decade while, in fact, cutting back
significantly on the employment of workers. Jobless growth, thanks to
the path of labor-saving technology from the West, is the norm.
Development, as conceived
by economists, planners, policy-makers and political leaders after decolonization
in the middle of the last century, was about the socio-economic and
political transformation of the lives of hundreds of millions of ordinary
people. It was much more than just raising the real per capita income
of the developing country. Importantly, it had nothing to with the fairy-tale
dreams of builders and developers. For that matter, the Indian constitution
does not even make a commitment to economic growth!
In addition to real per capita
income (which in any case glosses over glaring and widening inequalities),
by 1990 the pre-eminent international institution concerned with development
issues, the World Bank, had learnt to include at least two other features
in what began to be called “human development”: average
life expectancy as an indicator of health and the literacy rate as an
indicator of education. When one observes trends in India’s ranking
among countries with respect to HDI, one sees that it has yet to fall
below the 120s (China hovers between 70th and 75th). A per capita income
of $2 a day at market exchange rates (China is $6-7 and the US is $100)
is unbecoming of any country, let alone a purported or aspiring superpower.
Development with dignity?
How much dignity remains
for those who are thrown off their farmlands in order to make way for
the growth and progress of the nation in the form of a real-estate boom,
the ultimate aim of property developments? And how much for those, sometimes
the same people, who live “on the other side of the wall”,
so to speak, from the developments, and have to make do with open sewers,
lack of drinking water, poor hutments, lack of hospitals and schools?
As far back as in 1972, soon after Indira Gandhi launched her idea of
Garibi Hatao, the economist C.T.Kurien had written thus in an article
entitled “Strategy for Development”: “The development
process in India has not yet become a mass movement. The development
process cannot become effective until it becomes a movement” (Seminar,
January 1972). It went on to say: “If development is for the people
it has to be by the people also. Herein lies the connection between
development and mass movement.” The main policy recommendation
of that piece was a public works programme by a district-level Land
Army of those who were looking for work in the countryside, a proposal
not dissimilar to the NREGS launched belatedly last year, so far with
dubious success.
Amit Bhaduri’s recent book Development with Dignity has argued
forcefully the case for full employment in India. Here are his main
observations:
1) “Our unforgivable
failure has been the persistence of mass poverty and destitution. It
is a matter of utter shame that nearly six decades after Independence,
we have anywhere between one-third and one-fourth of our people desperately
poor and denied the minimum conditions for human existence - the largest
number of illiterates, millions of children crippled or blinded due
to malnourishment.”
2) India’s continuing
reliance on English has sustained a linguistic divide and inequality
of opportunities between those who speak and those who do not speak
English.
3) Agriculture is so overcrowded
and devoid of earning opportunities, thanks to destructive trade and
other agricultural policies of the governments after 1991, that in poor
states like Bihar and MP, even selling peanuts on the streets brings
more income. Disguised unemployment is extremely high.
4) “India’s immense
diversity creates a bewildering variety of identities, and politicians
try to manipulate them to their advantage in the game for gathering
votes at any cost.”
5) “India has given
its citizens political rights, but not economic rights to a decent livelihood,
with or without economic liberalisation.”
6) “Narrow minded policies
focussing on ‘cost’ reduction fail to see that cost is a
concept defined in a particular social context of contending economic
interests.”“The worker might think of profit as the ‘cost’
he has to bear for being employed, just as the employer thinks of wage
as the ‘cost’ of employing the worker!”
Thus, Bhaduri proposes that
“the developmental process that we must strive for is not simply
a higher growth rate; nor should it mean simply an elaborate bureaucratic
mechanism for income transfer to improve the distribution of income
in favour of the poor. It has to be viewed from a different perspective
altogether in which growth and distribution are integrated into the
very same process, while breaking systematically the social barriers
of discrimination and prejudices based on gender, caste, language, religion
or ethnicity. This is what Development with Dignity must mean for us
in India” (emphasis added). The author, one of India’s well-known
economists, adds with authority: “This is not a utopia. It is
the only reasonable economics that this country can pursue with the
support of the majority of its citizens who are poor to varying degrees.”
So, importantly, Bhaduri proposes that redistribution of income and
wealth and reduction of poverty and inequality happen through the growth
process itself, not something that happens once growth has been achieved
(by which time it is usually too late, since each growth strategy has
a distributional strategy implicitly built into it).
For illustration, Bhaduri
argues: “Nowadays in big cities, and even in small towns, bottled
drinking water is available at a price, which at most only the top 10
per cent of the income earners can afford. And yet, while the market
naturally has no compulsion to make a basic good like safe drinking
water available to the poor, it might produce more of bottled water
and this could step up our statistic of the rate of growth!”
In an primarily market-driven
economy the only reliable way of bringing most people to an acceptable
standard of living is by creating employment opportunities which will
put purchasing power into the hands of the hitherto poor, thereby altering
in their favour (as also of aggregate growth data), the direction of
market signals which determine what will be produced and in what quantities.
For instance, by putting
the rural landless to work on infrastructure projects like road-building
or environmental projects like watershed management, a demand for basic
food, clothing and shelter will be created. The market mechanism will
take over after that and supply the goods in the required amounts. This
will tackle several challenges – of the creation of infrastructure,
the conservation/regeneration of the environment, the alleviation of
poverty, the creation of employment, and the growth of the overall economy
– at one stroke. The same strategy could be applied equally well
to infrastructure and environmental projects like watershed management
or soil conservation to generate mass employment and income.
For a public spending of
less than 4% of our GDP the families of some 40 million people (totalling
about 200 million) could be lifted out of poverty. Taxation, public
borrowing, or even printing the required currency are all viable options
for financing such schemes if the economic activity undertaken is productive
and generates income and demand in the economy.
Bhaduri is not unmindful
of the staggering diversity of this country. So he wants such schemes
to be administered not centrally – by the state or central government
– but by local Panchayati Raj institutions.
Thus, like Kurien and many
others, Bhaduri advocates a two-pronged economic strategy for a country
like India. The rich and middle classes can hope to gain from the booms
generated by a globalized market economy. However, what’s good
for the goose is sometimes poison to the gander: countless millions
can only expect disruption of their livelihoods and ways of life on
account of the powerful interests operating in the country (and its
countryside). For such people – running into several hundred millions
– an altogether different strategy of development is called for.
Bhaduri advocates an employment strategy much along the lines advocated
by Kurien and already enacted in the NREGS regulation, though, as already
mentioned, the attempt has been feeble and half-hearted.
In sum, recognizing the false
promises of trickle-down Economics, Bhaduri advocates a strategy of
“employment first, with growth as outcome” and not “growth
first, and full employment later.”
Needless to say the expenditures on health and education, long advocated
by economists like Amartya Sen, are equally urgent if underprivileged
India is to be lifted out of underdevelopment.
None of this is pie-in-the-sky daydreaming. On the contrary, to change
the content and pattern of economic growth in the country is an imperative
to sustain its level. When one considers, to take just one among many
similar instances (the potential contribution made to effective aggregate
demand by the poor being another), the shortage of skills being reported
from all corners of Indian industry today, it becomes clear that in
the future there will be no growth without development in the true sense
of the word.
Development according to
developers must be restrained, while the old idea of development must
be awakened from its slumber in the minds of the policy-making elite.
A failure to achieve this is likely to prove economically costly, quite
apart from generating a political derailment of the growth process,
with worse outcomes to follow in the shape of rising social tensions,
political violence and crime.
Aseem Shrivastava
is a trained economist and an independent writer. He can be reached
at [email protected].