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Why fruits of India's new found prosperity haven't flowed to low income layers

By Moin Qazi*
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. ― Franklin D. Roosevelt
One of the most significant goals of inclusive and equitable development is poverty elimination. Although India has made rapid progress in several fields, its impressive economic growth has not trickled down to the larger population. India's millions still continue to face mounting daily challenges and are struggling to meet the bare basic necessities of subsistence; education, health, housing, employment and adequate food.
The father of the nation Mahatma Gandhi had said that elimination of poverty was his mission and was also the prime objective of 'Swaraj' or freedom. In his famous speech, 'Freedom at Midnight', the first Prime Minister, Jawaharlal Nehru mentioned, "The ambition of the greatest men of our generation has been to wipe every tear from every eye. That may be beyond us, but as long as there are tears and suffering, so long our work will not be over."
Nehru reminded the country that the tasks ahead and emphasized: ”The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity.” That mission of Gandhi and ambition of Nehru are still a mirage, a far distant dream.
India has witnessed a relatively high aggregate economic growth coexists, but also abounds in persistent and endemic deprivation and deep social failures. .appalling poverty and the staggering inequalities continue to characterize the lower social and economic pyramid. Barring an impressive growth in per capita income which has inherent faultiness, India is actually falling behind its neighbors in South Asia— in every social indicator that matters, from literacy to child malnutrition to access to toilets.
This imbalance is largely on account of the continued neglect, in the post-reform period, of public involvement in crucial fields such as social security, basic education, health care, gender equity, and civil rights. India’s development landscape is dotted with schemes that sounded ambitious but were very poorly funded and simply didn’t deliver.
The creamy layer of the population has collectively generated an enormous amount of wealth in the past 20 years. Most of that newly generated wealth has gone to those who are already affluent. This has particularly been acute in developed countries. The recent Oxfam report on inequality in the context of India brought out disturbing facts to the public domain and stated:
  • India added 17 new billionaires last year, raising the number to 101 billionaires, 
  • Indian billionaires' wealth increased by INR 4891 billion from INR 15,778 billion to over INR 20,676 billion. INR 4891 billion is sufficient to finance 85 per cent of the all states' budget on health and education, 
  • Between 2018 till 2022, India is estimated to produce 70 new millionaires every day and 
  • Number of billionaires has increased from only 9 in 2000 to 101 in 2017 
Oxfam believes that this sharp rise in inequality in India is damaging, and that India needs to take strong steps to curb it. Rising inequality will lead to slower poverty reduction, undermine the sustainability of economic growth, drive inequalities in health, education and life chances and compound the inequalities between men and women.
One of the ideas India is seriously weighing is Universal Basic Income (UBI).In a UBI system, the government gives citizens a regular infusion of free cash with no strings attached. There are however several downsides. In the words of Thomas Piketty, the renowned French economist:
"The cost of substantial fiscal redistribution would be considerable, because it would decrease the return on investments (for individuals) in human capital and thus decrease the incentives for individuals to make such investments."
It is important that UBI should not be seen as a replacement for properly funded public services and social-protection measures—these are the essential building blocks of fair and thriving societies.UBI should ,in fact , be a an additional tool in the social-welfare arsenal.
India cannot justifiably afford a full UBI. Former chief economic adviser Arvind Subramanian has proposed a quasi-universal basic rural income (QUBRI) of Rs 18,000 per year to each rural household, except those which are "demonstrably well-off", at an estimated cost of Rs 2.64 lakh crore to tackle agrarian distress.
A per-household annual transfer of about Rs 18,000, or Rs 1,500 per month, encompassing 75 per cent of the rural population, can be covered at a total fiscal cost of about 1.3 per cent of the GDP, or Rs 2.64 lakh crore (at 2019-20 prices), he said in a paper that he co-authored with Director of JH Consulting Josh Felman, World Bank economist Boban Paul and Harvard University's PhD student MR Sharan.
While providing free income for a short period, we need to plan for empowering grassroots communities to chart out their path out of poverty. This will require a recast of our development paradigm. The perception that the poor do not have skills or would not be able to survive on their own is now being widely recognized as a myth.
This conclusion is grounded in the premise that a paternalistic conceit of low income communities and negative beliefs perpetuated about them has hindered their development. The new findings are challenging traditional development wisdom-particularly the assumption that poor need a great deal of advice, aid, support, and motivation to improve their lives.
There are two main areas where changes to policy could boost economic equality: taxation and social spending:
  1. Progressive taxation, where corporations and the richest individuals pay more to the state in order to redistribute resources across society. 
  2. Social spending, on public services such as education, health and social protection, is also important. There is a strong case in India for free, universal public services.
The fruits of India's new found prosperity have not flowed to deeper pockets of low income layers, and the outcome has been quite skewed. While a minuscule minority is enjoying astronomical prosperity, the vast majority continues to grapple with the same old problems.
One major reason is that we have still not been able to empower communities to develop and design programmes that can deliver them from their present plight. When programmes view their clients as beneficiaries, they tend to see them as relatively passive people and recipients or beneficiaries of doles from government or donors. In such a context, decisions about what type of help to provide are made not at the local level but on the basis of what programme designers think is good for the beneficiaries.
Experts have been scratching their heads for breakthrough solutions, and now suggest that the poor no longer have a mindset that expect governments riding a white horse with a bucket of money to fill their bowls. They argue that strategies that ensure wider participation of the poor in programmes meant for them have the potential to deliver remarkable outcomes.
India cannot move forward without investing significantly in public services: Health care, tolerably good schools and other basic facilities important for human well-being and elementary freedoms. More important, India needs to enlist the participation of the communities whose development it aims to achieve.
The most important feature of good local governance is participation. People not only vote every few years; they have a direct voice in decision-making and governance through civic committees, voluntary action campaigns and public forums. However, in large swathes of rural India, representation has not necessarily translated into active engagement in the political space.
Women still face a number of challenges including inadequate education, the burdens of productive and reproductive roles, social and cultural prejudices financial dependence and a deep-seated belief system that considers them as inferior to men.
Development is fuller when put in people's hands, specially the poor, who know best how to use the scarce and precious resources for their uplift. The first generation leaders of independent India believed that economic justice would be advanced by the lessons of cooperation where common efforts to achieve the common good will subsume all artificial differences of caste, community and religion. This goal got mired in narrow self centeredness.
One can't talk about design of programmes without quoting Steve Jobs: "Design is a funny word. Some people think design is how it looks. But of course, if you dig deeper, it's really how it works." We need to be better informed about what the poor value, what they think could be done to improve their well-being and how they could work better.
If the primary focus is really ending poverty, a partnership must be established among poor communities so that they learn from one another and share traditional, practical knowledge and skills. The field has shifted profoundly and has become much more nuanced, but we still we cling to the old development playbook. There is need to properly understand the interplay of various factors to in the whole constellation.
The hallmark of any intervention for the poor is that it should stand on the following legs: empathy, humility, compassion and conscience. Observations like, "I am a farmer myself", "you can't pull wool over my eyes" and "I was born and brought up in a village and know rural problems better than anybody else" are a sign of arrogance and will not go down well with the people with whom one wants to work.
There’s a famous, Chinese Proverb, ”Not the cry, but the flight of a wild duck, leads the flock to fly and follow”. We have to lead by action, and not preaching.
Importing unworkable ideas, equipment and consultants also destroys the capacity of communities to help themselves. Ensuring that those most in need are not forgotten and that they have the freedom to make their own choices is just as important as delivering concrete development outcomes.
The people who pioneered the world's most successful development programmes recognised this potential and always sought to evoke it. They are the ones who have helped the marginalized communities take the right step on the right ladder at the right time. The results have been miraculous.
Development economists acknowledge that the poor act rationally, however straitened their circumstances may be. If their undertakings are too small, or their efforts too thinly spread, to be efficient, it is not because the markets for land, credit or insurance have failed them. Good management of even the smallest asset can be crucial to very poor people, who live in precarious conditions, threatened by manifold adversities.
Economic development and social change must begin from within even though the initial nudges may have to come from outside. Well-meaning people should have the open mindedness to listen to those who work in the field and live the day-to-day challenges. That respect opens many doors.
Lasting change comes about so slowly that one may not notice it until people resist being taken care of. This can help India transition to another economic model—one that generates a fairer, more equal, and more humane economy. This goal is sacrosanct for every Indian-because it has an implicit social contract, enshrined in its constitution, upon which modern India is founded. The bottom-line of India’s development paradox is: People need to be given a chance to fulfill their innate potential.
---
*Development expert, consultant with Niti Aagyog, Government of India

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