The Black Hole In The Heart

Review the medical condition as it obtains now. What Bose was referring to in 1985바카라�to bundle all development indices into a simple demographic바카라�was the huge ratio of the poor in these states, accounting for nearly 40 per cent of India바카라�s population at the time. These intervening decades have seen India go through some epochal changes, and it바카라�s now routinely referred to as an engine of global growth. These states too have not been immune to the tidal churn unleashed, yet they lie at the heart of a big set of disturbing economic challenges the country faces.

Bose바카라�s ailing states, especially UP and Bihar, remain laggards in terms of prosperity and income, judged by the par­ameter of net state domestic product, read along with a few other factors. Despite robust growth rates, and despite Mandal politics creating new forms of social mobility, they haven바카라�t been able to reduce the gap with the club of rich states. It바카라�s a troubling gap, and speaks of a huge, unfair skew in India바카라�s economic map. The picture of regional imbalance is so acute that it forms, as chief economic advisor Arvind Subramanian puts it, India바카라�s biggest 바카라�political-economy puzzle바카라�.

Take UP, India바카라�s most populous state and a political bellwether. In every general election, it decisively tilts India바카라�s political scales. But on income, it still hugs the bottom of the graph. A couple of quick juxtapositions. If UP were a country, the size of its economy would be like that of Qatar. That would have been impressive, except for one minor detail: Qatar has only 2.5 million inhabitants, whereas UP has 215 million. This massive population, about the same as Brazil바카라�s, means its ave­rage per capita income is no more than that of Burkina Faso, a landlocked sub-Saharan country. That implies, by common allusive practice, the gold standard in poverty.

What바카라�s cause for worry is how India has been unable, for decades now, to put into motion any kind of targeted policy thrust to address the regional imbalance. For, the handful of states that climbed the income ladder real quick since the 1960s have ensured that they stay up there바카라�Kerala, Gujarat, Tamil Nadu and Karnataka. And Kerala, despite its lower level of industry presence and dependence on remittances, has a model that spreads its prosperity fairly evenly (though it too is not without a gap between the creamy layer and the outliers). All this is in sharp contrast with the states that exhibit a strong developmental inertia.

One piece of evidence is the share of 바카라�Bimaru바카라� states in the total income of all states. In 2013-14, UP had a mere 1.2 per cent share! Again, throw in a few juxtapositions and the picture becomes starker. The share of Chhattisgarh, a new entrant in the race, was way higher at 14.5 per cent. Tripura, admittedly a poor state, improved its per capita income nearly six times between 1984 and 2014. (In 1984, the average Tripura resident earned Rs 11,537, according to India바카라�s Economic Survey, which increased to Rs 64,712 in 2014). Himachal Pradesh, which in the 바카라�80s ranked in the middle, upped its per capita income four-fold. Orissa, once synonymous with the starvation deaths of Kalahandi, has cut rural poverty twice as fast as Bihar, and has consequently jumped three spots.

Its neighbour West Bengal, though, offers reasons for despair. A rich, industrialised state in the 1960s, it has slid down the ranks, letting states like Andhra Pradesh and Maharashtra take its place. One reason: de-industrialisation. Between 1998-1999 and 2004-2005, Bengal recorded a fall of 4 per cent in the number of people employed in the industrial sector. With a renewed emphasis on attracting investment, this figure improved to 3.5 per cent between 2005-06 and 2012-13. But barring this exception, the composition of the rich/poor clubs has remained largely unc­h­anged over the past four decades, according to Sanghamitra Bandyopadhyay of the London School of Economics.

Bihar is at the heart of the puzzle. It바카라�s now one of India바카라�s fastest growing states, mainly because of the low-base effect, a statistical phenomenon. If growth rates had been very low, even a small increase would arithmetically show up as a high figure. The state posted the highest average growth rate during the whole of the 11th Plan period (ending 2011-12). Consider these peaks: 15.69 per cent in 2006-07 and 14.48 per cent in 2012-13. Bihar even topped all states in terms of growth of per capita incomes. Yet, the catch-up distance is the largest for Bihar. Adjusted for inflation, its net per capita income was the lowest (Rs 26,801 in 2015-16). UP came in just one spot above (at Rs 38,234). By comparison, Kerala was 365 per cent richer than Bihar.

What would be the impact of such uneven progress on people바카라�s lives? If you are a young job-seeker in, say, Bihar or UP, you would be better off moving to Kerala, Gujarat, Karnataka or Maharashtra because you will likely end up being four times richer. Ordinary Indians know this. Railway passenger traffic data, collected by the finance ministry, shows annual internal work migration doubled to about 9 million between 2011 and 2016. Loads of people are shifting out from these disadvantaged states.

This picture of inertia inverts global trends. Everywhere, poorer regions are climbing up. No Chinese province has been stuck at the poverty levels of three decades ago. This is precisely how it should be, according to what economists call 바카라�convergence바카라�: a region with poor income and consumption data sees fast growth on those counts if its markets are linked to those of richer regions. India바카라�s economy has those linkages, yet paradoxically its states show a polarising picture of 바카라�divergence바카라�바카라�judging by net state domestic product (NSDP) in per capita terms, the most common measure that indicates the average income of a state바카라�s resident.

The NSDP is a variant of state GDP, with subsidies, interests and taxes subtracted. Distributed per capita, it becomes a handy proxy for average income바카라�a statistically kosher method. It바카라�s not without flaws, of course. The total economic activity in a state, which is what state GDP or NSDP show, would obviously include high-value activity바카라�mining, for example바카라�concentrated in a tiny segment and may not accurately reflect the lack of prosperity outside it. Bengal바카라�s slide after the flight of industry shows that바카라�once you take away those pockets, the data starts reflecting the actual immiseration outside. Maharashtra, minus Mumbai and Pune, would surely fare differently바카라�its ranking does not reflect the distress in the farm sector. Kerala바카라�s ranking, similarly, hides the destitution in its adivasi pockets. Still, assuming any wealth will inevitably percolate to some deg­ree, NSDP is one way to generalise.

India often likes to compete with China. Poverty reduction would be a good arena to do so. China바카라�s current catch-up rate of about 3 per cent means Gansu province바카라�whose spectacular mountain and desertscapes host the highest poverty levels in the country바카라�will reach midway to the level of the richest provinces, the coastal Guangdong and Shanghai, in 23 years. What about us? Subramanian, who analysed the problem in the annual Economic Survey, provides a grim answer. 바카라�The evidence so far suggests that, in India, catch-up remains elusive.바카라�

Trouble is, this stayed static through the liberalisation period. Economists Vivek Dehejia and Praveen Chakravarty of the Mumbai-based IDFC Institute, in a landmark recent study, show how 바카라�pre-1990 and post-1990 look like almost two different eras바카라�. They blended traditional methods with a new, cutting-edge tool used for the first time in India: 바카라�night-time lights or NTL luminosity바카라�, which uses satellite imagery of glowing specks of night-time light as a marker of prosperity. The results were, well, illuminating.

Altogether, 12 large states were analysed, including Bengal, Bihar, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Tamil Nadu and UP, using US satellite data for 1960. They noticed that the richest state in 1960, Maharashtra, was twice as rich as the then poorest state, Bihar. By 2014, the richest state was Kerala, but its income was four times that of the 바카라�still poorest state of Bihar바카라�. Their conclusion: 바카라�the initially richer states grew more rapidly in the liberalisation period바카라� and stayed the course.

Kerala and Tamil Nadu have often been cited by economist Amartya Sen as models. These two have famously focused big on social spending, enhancing the state-led expansion of education, food security and health. These became critical inputs for a productive workforce and, in the case of Kerala, job emigrations. If Kerala were a country, it would rank alongside developed European economies. Life expectancy in Kerala is 82 years, the same as Sweden. Its infant mortal­ity rate of 12 per 1,000 live births is low, same as China바카라�s.

There are signs of life in the Bimaru states too: consistently high growth in recent years shows Bihar is structurally changing. 바카라�But per capita income continues to be low, just as it was decades ago. I would blame our poverty load and last-mile hiccups,바카라� says Vishnu Dayal Pandit, deputy director of Bihar바카라�s directorate of economics and statistics.

Pandit has a point. A World Bank study in 2014 found Bihar limping with a huge 바카라�unmet demand바카라� for rural jobs under NREGA. The scheme바카라�s impact on rural poverty in Bihar was just 1 percentage point against a potential of 14 percentage points, the study found. Bihar바카라�s population below the poverty line of about 54.4 per cent in 2004-05 came down only marginally to 53.5 per cent in 2009-10, according to erstwhile Planning Commission data.

Orissa, by contrast, shows a faster dec­line in poverty rates. Udit Sharma of the Institute for Studies in Industrial Development cites National Sample Survey data that shows the wages of casual workers there rising 17 per cent annually between 2009-10 and 2011-12바카라�one of the highest.

Does economics alone explain the resistance of Bihar and UP to mobility? There is a social corollary to all this, difficult though it is to disentangle cause and effect here. Soc­iologists point to caste바카라�the persistence of discriminatory feudalist structures that don바카라�t allow the markets to function independently, causing growth to disproportionately benefit the dominant castes.

In India, a 바카라�tension바카라� exists between democracy and development, says Jeffrey Witsoe, author of Democracy Against Development, a landmark work that looked at the economic impacts of feudalism in Bihar. Caste empowerment politics, he says, increased 바카라�democratic participation바카라�, but 바카라�radically threatened the patronage state by systematically weakening its institutions and disrupting its development projects바카라�.

바카라�Caste, landlessness and bonded labour are big culprits,바카라� says Allahabad University sociologist Kunal Keshri, who specialises on migration and social mobility. 바카라�Studies show lack of inter-caste marriages hampers social mobility. Even in my city, Allahabad, or Varanasi, only recently have inter-community marriages become noticeable.바카라� Internal migration from poor states has been of two types, Keshri says. The skilled, educated classes mostly move out permanently. The second type바카라�seasonal casual workers바카라�is driven by both better income prospects and the chance to escape village-level shackles of caste.

UP continues to have the highest share of India바카라�s total population below the poverty line바카라�at 22.17 per cent. The state anyway has the highest share of marginalised groups, such as Dalits (20.5 per cent) and Muslims (22.34 per cent, of whom only a small fraction are elite). UP바카라�s poverty profile is spread across about 50 districts. According to its annual plan document, 15 districts remain abysmally poor: Jaunpur, Ballia, Lalitpur, Mau, Ghazipur, Bahraich, Maharajganj, Hardoi, Deoria, Azamgarh, Balrampur, Shrawasti, Kushi Nagar, SK Nagar and Mirzapur.

Land ownership patterns hold another clue. 바카라�In most assessments of Bihar, hurdles in land reforms are often overlooked,바카라� says Ashok Kumar Sinha of Bihar Agricultural University, Bhagalpur. On paper, Bihar was one of the first to prioritise implementation of the Abolition of Zamindari Act in 1949 to redistribute land, he says. Yet, powerful elite-caste zamindars secured many waivers after a series of court battles, including continued rights. 바카라�Remember, zamindars were successful in exploiting the loopholes because successive governments were in reality their representatives. It was precisely to circumvent the Zamindari Abolition Act that the Bihar Land Reforms Act, 1950, was passed,바카라� he says. Even the Ceiling on Landholding (Amendment) Act was sponsored by zamindars to prevent transfer of excess lands. 바카라�The only way to change is to create non-farm-based employment and that바카라�s happening now,바카라� he says.

In its pursuit of growth, India tends to ignore two facts, clinging to the well-worn shibboleths of the reform years. One, farm growth can actually cut poverty twice as fast as industrial growth. Two, they are NOT mutually exclusive areas of priority in a zero sum game: a 1 per cent rise in agricultural output in fact raises industrial production by 0.5 per cent and natio­nal income by 0.7 per cent, according to one calculation.

The rate of investment in agriculture in the 1980s and 바카라�90s was an abysmal 8-12 per cent, so farm growth hobbled at 2.4 per cent or so. Other sectors not only saw reforms but got public investments over 35 per cent. This was reversed only with the 10th and 11th five year plans (2002-07 and 2007-12). Even today, only 40 per cent of India바카라�s net sown area is irrigated, leaving farmers vulnerable to droughts. And according to the government바카라�s own findings, only 14 per cent of farmers are able to get minimum support prices.

Chakravarty and Dehejia say one simple way to 바카라�understand this complex issue of economic divergence바카라� is to take the recent example of Apple wanting to set up a manufacturing base in India. Land and labour costs for Apple would be much cheaper in Bihar than in the 바카라�much richer states of Karnataka or Tamil Nadu바카라�, they say. Yet, it has chosen to go south. The 바카라�real political economy question바카라�, they contend, is whether Bihar will continue to 바카라�tolerate바카라� the development gap. 바카라�The best response is to allow maximum policy freedom to the states to innovate. The states, in turn, should allow greater freedom to the regions within, such as by empowering municipal cor­porations,바카라� Dehejia says.

The whole paradigm of 바카라�growth바카라�, of course, is not without its sceptics. Sociologist Ashis Nandy thinks there바카라�s something fundamentally wrong about modern economic development. In a scholarly work, The Beautiful Expanding Future of Poverty, Nandy says the effects of development have been such that poverty, which always existed with India, has given way to utter destitution. He says he stands by it. 바카라�One can stick out one바카라�s neck and claim the dominant model of development, whatever else it can do, cannot abolish poverty바카라�. Otherwise, there would be no poor people in America,바카라� he says.