India’s mantra of ‘inclusion’
The Holi and Id-e-Milad breaks coming right after the presentation of Union Budget 2010-11 have been welcome, for they allow an unhurried look at what the Government of India is saying versus what it indicates it will do. This Budget’s two key documents – the Budget proposals for 2010-11 and the Economic Survey 2009-10 – contain a term which was entirely absent from government-speak only three years ago. That term is “inclusive”. The central and state governments are now using the words “inclusive” and “inclusion” to talk about almost everything: inclusive growth, financial inclusion and inclusive development. It has gained, in India of today, the same sort of currency that “sustainable development” did worldwide about a decade ago. What on earth does it mean for the sarkar?
“For the UPA Government, inclusive development is an act of faith. In the last five years, our Government has created entitlements backed by legal guarantees for an individual’s right to information and her right to work. This has been followed-up with the enactment of the right to education in 2009-10. As the next step, we are now ready with the draft Food Security Bill which will be placed in the public domain very soon. To fulfil these commitments the spending on social sector has been gradually increased to Rs 137,674 crore which now stands at 37% of the total plan outlay in 2010-11. Another 25% of the plan allocations are devoted to the development of rural infrastructure. With growth and the opportunities that it generates, we hope to further strengthen the process of inclusive development.”
So said Pranab Mukherjee, Minister of Finance, in his Budget speech on 26 February 2010.
“A nation interested in inclusive growth views the same growth differently depending on whether the gains of the growth are heaped primarily on a small segment or shared widely by the population. The latter is cause for celebration but not the former. In other words, growth must not be treated as an end in itself but as an instrument for spreading prosperity to all. India’s own past experience and the experience of other nations suggests that growth is necessary for eradicating poverty but it is not a sufficient condition. In other words, policies for promoting growth need to be complemented with policies to ensure that more and more people join in the growth process and, further, that there are mechanisms in place to redistribute some of the gains to those who are unable to partake in the market process and, hence, get left behind.”
This is from Chapter 2 of the Economic Survey 2009-10, titled ‘Micro-foundations of Inclusive Growth’. Notice that the word “growth” has become a corollary to “inclusive”/”inclusion”. This is a serious problem, but not one that seems to concern the sarkar. Growth (most broadly, of GDP, which is a deviant, outmoded concept) and inclusion are utterly different ideas. The problems of “growth” can easily be illustrated by this paragraph:
“Price movements during fiscal 2009/10, as reflected in both the WPI [wholesale price index] and the CPI [consumer price index], have been characterised by very high rates of inflation in primary food articles and manufactured food products. The WPI rate of inflation for primary food articles crossed 20% in November 2009 and even at the end of January 2010 was close to 18%. Other than food products, the prices of other primary and manufactured goods have generally not increased by much.
Within the primary food articles basket, the goods that have exhibited the highest rate of inflation are foodgrains – pulses, wheat and rice, in decreasing order of magnitude. Within the manufactured food products segment, sugar products (sugar, khandsari and gur) have increased the most with annual inflation of over 51%. Another factor, which considerably blunted the impact of foodgrain releases by the government, was the overload on the PDS. There is a clear imperative to develop a distribution channel by the State governments, to supplement the PDS, so as to enable faster distribution of the additional releases made by the central government.”
From ‘Concluding Coments’, ‘Management of Prices’ in Review of the Economy 2009/10, by the Economic Advisory Council to the Prime Minister. That is what “growth” does to prices, and prices that move the way food prices have in India for the last three years utterly wreck “inclusion”. I find it worrying that the Economic Advisory Council is talking about a parallel distribution channel to supplement the PDS, when (1) any number of independent studies have pointed out that the PDS has been handicapped in fact by exclusionary policy and (2) when state governments are quite likely to use public-private partnership methods to set up alternative distribution channels, which heap more misery on the rural and urban poor.
How contradictory the government’s “inclusive” claims are versus its intentions as contained in its other Budget measures can be seen in the Budget highlights, in which the Ministry of Finance summarises the major provisions.
“Rs 200 crore provided for sustaining the gains already made in the green revolution areas through conservation farming, which involves concurrent attention to soil health, water conservation and preservation of biodiversity.”
The contradictions in this point are ludicrous in the extreme. The Green Revolution methods ignore entirely conservation farming, soil health, water conservation and preservation of biodiversity. These four points are achieved by orgnic and biodynamic methods, for which state support is either neglible or not there at all. The Budget highlights add:
“Reduction in wastage of produce:
* Government to address the issue of opening up of retail trade. It will help in bringing down the considerable difference between farm gate, wholesale and retail prices.
* Deficit in the storage capacity met through an ongoing scheme for private sector participation – FCI to hire godowns from private parties for a guaranteed period of 7 years.
Credit support to farmers – Banks have been consistently meeting the targets set for agriculture credit flow in the past few years. For the year 2010-11, the target has been set at Rs 375,000 crore.”
Retail trade has so far done exactly the opposite of what is claimed here, while more storage capacity will directly benefit the flourishing agricultural commodity futures traders and brokers. Increased credit support is visible only in bank statements whereas small and marginal farmers (who together account for 81.9% of operational agricultural land holdings) are left out. Several estimates made in the last three years (a World Bank study amongst them) show that 87% of marginal and 70% of small farmers are not getting credit through institutions. In fact, 51% of all farmers, big and small, get no banking services, let alone credit. If 2009-10 was the year in which “inclusion” became popular with Bharat sarkar, 2010-11 needs to be the year in which its “inclusive” claims are either backed up by credible action or thrown out.