Special issue with the Sunday Magazine
From the publishers of THE HINDU

Wealth : August 27, 2000

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The great divide

Harsh Sethi

The author is an economist and consulting editor at Seminar.

If the accolades being showered on Gurcharan Das' India Unbound are any indication, the country has finally come into its own. Not only has the former CEO of Procter and Gamble (makers of Vicks) managed the largest ever advance for an Indian work of non-fiction, he has successfully laid to rest, if the publicity blurbs are to be believed, the great Indian obsession with poverty. Free us to create wealth, not control us in the name of poverty eradication - so goes the new mantra.

Christine Pemberton/Fotomedia

What began a decade back, partly under pressure from The World Bank and IMF, to meet the impending foreign exchange crisis - the structural adjustment and liberalisation programme - seems now to have acquired the status of the new orthodoxy. There is little doubt that our tryst with planning, involving extensive State control over the production and distribution of wealth, has soured. True that in the first four decades since Independence, our economy unlike other freshly decolonised Third World States, made substantial progress, most evident in averting famines. The country also developed an extensive and complex production structure (from giant mills, large dams to a bewildering variety of consumer goods). It is equally true that the system became overly rigid, hierarchical, bureaucratic, resulting in immense delays and inefficiencies.

Evidently it was time to change, and maybe the external compulsions provided the necessary impetus to an otherwise inertia-based system. Yet, the current excitement with growth, the pride with which we quote NCAER figures about the size of the Indian middle class, and the frequency with which we hear of new ventures and new brand names, is not just unaesthetic, it seems more hype than reality.

There seems inadequate realisation, at least among sections who matter, that alongside a prosperous India there exists an impoverished and impoverishing Bharat; that this divide, both absolutely and relatively, is increasing. Not only is a third of our population stubbornly mired in poverty, the distance between them and the more fortunate others, has been increasing. And were we to break down this omnibus figure into its constituent correlates of caste, gender, occupation, region and so on, the picture would appear decidedly grimmer.

For instance, in the mid Nineties, while the all India proportion of people below the poverty line was around 39 per cent, the figures for Assam, Bihar, Orissa, Madhya Pradesh, Rajasthan and Uttar Pradesh were significantly higher. Further a large proportion of the poor came from scheduled caste and tribes, rural landless labour, artisans and petty farmer groups, as also those engaged in casual non-farm occupations. Similarly, while the incidence of urban poverty is lower than for rural areas, the numbers involved are large and concentrated primarily among the casual and self-employed. The implications of this persistent, some argue, growing, divide for the political stability of the country are obvious.

The above however is a static picture and does not adequately convey the processes that create, perpetuate and accentuate the divide between the haves and the have-nots. Nothing captures the paradox of modern India better than the fact that alongside hundreds of millions who remain undernourished, the godowns of the Food Corporation of India are overflowing, with a couple of million tons of food grains lost to pests and weather. The tragedy is that rather than creatively use the surplus foodgrain (surplus only because of a lack of purchasing power with the poor) to create jobs and permanent community assets through Food for Work programmes, our government is seeking to control its macro fiscal deficit by reducing subsidies on food grains.

Such examples can be multiplied ad nauseam. In the name of city planning and beautification drives, ostensibly to better attract domestic and foreign capital into commercial and industrial complexes, our authorities routinely displace the poorer settlements to the edge of the city, thereby increasing their distance (and hence expense) from places of work. By building more flyovers and carriageways to increase the speed of traffic, we further squeeze out cyclists and those who walk to work.

The situation is no different in rural areas. Development projects - dams, power stations, roads, industrial centers - displace nearly 15 million annually from their habitats. The decade long debate on the Narmada Valley Project convincingly demonstrates that our chosen mode of generating power or increasing irrigation flows directly impinges on the livelihoods and lives of thousands of poorer tribals who source the river and its bounties for survival. Similarly, every time we permit a company to log forest for paper or timber products, we undermine those who live off the forest's produce.

Ace Fotomedia

Earlier, the planning process, even if inefficient, did attempt to correct the vagaries of the market and build in some social objectives. Now with planning and the ideologies associated with it having lost face, market processes with profit as a prime objective reign supreme. Once the terms of the battle are defined as betting on the strong rather than protecting the weak, the growth of inequality and poverty (relative if not absolute) should cause little surprise.

There is, however, a deeper problem with an indiscriminate emphasis on growth and wealth creation. For a start is the negative impact on nature - not just the depletion of non-renewable resources but also the degradation of renewable natural resources. Partially this has been recognised in the concern about pollution - of land, water, and air. What is less understood are the implications for both health and survival, particularly for communities that depend on non-market common property resources. Dumping industrial and household waste in rivers affects not just our water supplies, it wipes out entire fishing communities.

Some of the above contradictions inbuilt into the process of modern wealth creation are being handled through better planning or infusing the private capitalist market with social goals. What seems more intractable is that the very object of growth and wealth creation i.e., to free ourselves from the tyranny of nature and increase available choices through an accretion of materialities, traps societies into an unsustainable and unfillable path. In seeking to emulate in consumption and institutional terms of lifestyles and models of those considered wealthy and developed, poorer communities and societies have locked themselves into a path of self-destruction.

We all quote Gandhi, "There is enough to feed every person's hunger, but not greed." Accepting its implications is another matter. We may come to terms with the fact that not everyone will own a car. We, however, do little to debunk the ideological construct. The frame still remains that everyone must aspire to own and drive a car. This, notwithstanding, the obvious illogicality of the proposition.

To return to the starting metaphor, India Unbound a la Gurcharan Das. There is undeniable power in the imagery, an appeal to our strength as a nation, to the fact that we too can make it to the ranks of the wealthy. Without for a moment lamenting the past, we do need to be aware that the invitation to the pursuit of wealth, in terms currently hegemonic, reduces us to a pale imitation of the West. True, everyone cannot have a Cadillac, but why not a Maruti. More than an increase of poverty and inequality and the accompanying conflict, the real danger is of mortgaging our imagination.