PROBLEMS OF REGIONAL DEVELOMENT IN A GLOBALISED ECONOMY : THE CASE OF INDIA

1. PROBLEMS OF REGIONAL DEVELOMENT IN A GLOBALISED ECONOMY : THE CASE OF INDIA Prof. R.P. Misra President Sustainable Development Foundation, India Email; sdf.misra@gmail.com

2. India’s Federal Structure till 1990s UNION STATES DISTRICT BLOCK / TALUKA VILLAGE

3. Federal Structure After 1992 Constitution Amendment in India Central Government State Government Local Government Urban Local Bodies Rural local Self- Governing Institutions • District Panchayats • (540) • Corporations • Intermediate • Panchayats (6096) • Municipalities • Town Areas • Village Panchayats • (2,32,000)

4. Structure of the Indian Constitution • Article 1 (1) of the Constitution: India, that is Bharat, shall be a Union of States. • There are • 28 States; and • 7 Union Territories. • Neither ‘Federal’ in the classical sense nor ‘Unitary’ in character. • Some call it ‘quasi federal’

5. Structure of the Indian Constitution • Constitution of India follows a unique system of three-tier polity - the predominant strength of the Union is blended with the essence of cooperative federalism. • Several features have been designed to institutionalize the concept of cooperation. • The wide range of Concurrent jurisdiction and intertwining of certain items in the State List with several entries in the Union List are examples.

6. Legislative Relations between the Union and the States Extent of Laws made by Parliament and by the Legislatures of State • Parliament may make laws for the whole or any part of the territory of India. • Legislature of a State may make laws for the whole or any part of the State.

7. Division of Legislative Jurisdiction • There are three lists in the Seventh Schedule of the Constitution: • List – I (Union List) • List – II (State List) • List – III (Concurrent List) • Parliament has exclusive power to make laws with respect to any matter contained in List-I (Union List). [Article 246(1)]

8. Division of Legislative Jurisdiction • Parliament as also Legislature of any State have power to make laws with respect to any matter contained in List-III (Concurrent List). • Legislature of any State has exclusivepower to make laws with respect to any matter contained in List-II (State List). • Parliament can make laws with respect to any matter contained in the State List for any part of the territory of India not included in a State. [Article 246(4)]

9. Financial Relations between the Union and the States • Financial arrangements have two main aspects: • Distribution of taxation heads (Articles 246, 248 and 265, read with the Legislative Lists I and II); and • Distribution of revenues and sharing of resources between the Union and the States (Chapters I and II of Part XII of the Constitution).

10. Financial Relations between the Union and the States Distribution of taxation powers • Separate heads of taxation for the Union and the States are provided in Lists I and II. • No tax can be levied unless it is related to a specific head of taxation in List I or List II. • There is no head of taxation in the Concurrent List (Union and the States have no concurrent power of taxation).

11. Financial Relations between the Union and the States Distribution of taxation powers • Residuary power of taxation vests in the Union. • There are thirteen taxation heads comprised in Entries 82 to 92B in the Union List; and • Nineteen taxation items comprised in Entries 45 to 63 of the State List.

12. Financial Relations between the Union and the States Broad Principle of Allocation of Heads • Taxes which are location-specific and relate to subjects of local consumption have been assigned to the States. • Those taxes which are of inter-State significance and where the tax-payer can gain or evade tax by shifting his habitat, or where the place of residence is not a correct guide to the true incidence of tax, have been vested in the Union.

13. Financial Relations between the Union and the States Finance Commission • Determination of shares of the States in the aforesaid taxes and duties and their inter se allocation as also of grants-in-aid of revenues, is done on the recommendations of the Finance Commission, constituted every after five years. • Every recommendation made by the Finance Commission together with an explanatory memorandum as to the action taken thereon has to be laid before each House of Parliament.

14. Eleventh Schedule lists 29 matters to be delegated to the local bodies Agriculture, incl. extension Land improvement, land reforms, consolidation soil conservation. Minor irrigation, water management watershed devpment Animal husbandry, dairying and poultry Fisheries Social forestry farm forestry Minor forest produce Fuel and fodder Maintenance of community assets Rural housing Drinking water Poverty alleviation programme Public distribution system Education, including primary and secondary schools Technical training vocational education Adult and non-formal education Libraries Cultural activities Welfare of the weaker sections, in particular of SCs and STs Social Welfare, Welfare lf handicapped and mentally retarded Women and Child development Family welfare Health and sanitation hospitals. Primary health centers dispensaries Roads, culverts,bridges, ferries, waterways other means of communication Non- conventional energy Markets Fairs Khadi, village and cottage industries Small scale industries, food processing industries Rural electrification, distribution of electricity

15. India on the March • India is on the move. So say the India watchers. It is no longer compared with the USA or West European countries in matters economic growth. The only country it can be compared with is China. All eyes are set on which of these two global giants would make to the top in the next two decades. • Both have more than a billion people each; • Both are huge countries in terms of area; • Both have switched over from socialist to capitalist mode of production during the last two decades; and • The GDP of both is growing at the rate of around 9 percent per annum as compared to 1.8 percent for the developed countries of the world.

16. The speed at which India is advancing economically, and technologically is phenomenal. Its economy rarely grew at more than 3-4 percent from 1947 to 1970s or so (THE HINDU RATE OF GROWTH), slightly above the rate of population growth.  • Then it increased to 5-6 percent during 1980s. And now it hovers around 9 percent. This year (2007-08) it has become a trillion dollar economy; and the per capita income has crossed Rs. 3,000, which in dollars (PPP) means   $300 per head. Foreign institutional investors and rating agencies are upbeat on India’s future. • India’s exports have gone up from US$ 18.1 billion in 1990-91 to US$ 52.8 billion in 2002-03. This is despite the fall of American dollar vis-a-vis Indian rupee making it far more difficult to export. • The corporate results, by and large, have been encouraging; and Indian companies mobilized a staggering amount of $ 30 billion in 2007-08.

17. India's Export and World Trade, 1990-2002 (in $ billions) 

18. BUT ALL THAT GLITTERS IS NOT GOLD • Poverty in the Midst of Plenty • Economy Is Growing, but Employment Is Shrinking • Widening Rural-Urban Divide • Growing Regional Disparities • Environmental Degradation

19. Poverty in the Midst of Plenty • India is shining but not the whole of India; one fifth of the 1.2 billion people have become richer; they can be compared with the rich anywhere else in the world. Pretty soon we would have more billionaires than any other country in the world. • Another one fifth has improved its economic base and is better off than earlier propelling consumerism to attain new heights. • But the remaining half of the population has gained little or not at all. At least 15 percent has rather lost. Below the veneer of shining India, is the India of massive poverty, environmental degradation and growing regional disparities. • No scheme appears to work. People caught in the whirlwind of globalization are unable to see the writings on the wall.

20. More than 60 percent of the people of India depend on agriculture for livelihood, but the contribution of agriculture of GDP has secularly declined from 56.6 percent in 1950s to less than 19 percent in 2004 it was 18 percent in 2006) • Poverty Level has come down but the number of people below the poverty line has not declined so fast. • According to some it has gone up. The official figures show that the percentage of population living in poverty fell sharply from 56 per cent in 1973-74 to 26 per cent in 1999-2000 to 20 percent in 2006. • The number of poor people declined steadily from 321 million in 1973-74, to 240 million in 1999-2000. • In India, the poverty lines are described as permitting a calorie intake of, say, 2400 calories in rural areas and 2100 calories in the urban areas.

21. Employment Situation Has Worsened • Since more than 90 per cent of India's employment is in the unorganized or informal sector, there are no reliable statistics on employment. • According to a recent government report '…the unemployment rate in India has increased significantly since 1993-94 and was above 7.3 per cent in 1999-2000 compared to 6.0 per cent in 1993-94 on Current Daily Status basis… . • The present rising unemployment is primarily an outcome of a declining job creating capacity of growth, observed since 1993-94. • The employment growth fell to 1.07 per cent per annum (between 1993-94 and 1999-2000) from 2.7 per cent per annum in the past (between 1983 and 1993-94) in spite of acceleration in GDP growth from 5.2 per cent between 1983 and 1993-94 to 6.7 per cent between 1993-94 and 1999-2000. • It means that the capacity of job creation per unit of output went down about three times compared to that in the 1980s and early 1990s.'

22. Rural-Urban Divide Has Widened • An equally disturbing facet of growing socio-economic disparities is the growing rural-urban divide that is brought out by the National Sample Survey Organisation's (NSSO) household consumer expenditure surveys for recent years. • According to the data complied by the NSSO, the average monthly per capita expenditure (MPCE) by rural households during 2000-01 (July-June) was Rs 494.90, which was just a little over 54 per cent of the corresponding figure of Rs 914.57 for a typical person in urban India. • Cities especially the large cities are the engines of growth. The have the necessary infrastructure for manufacturing as well as IT. • Naturally then the large cities have more activities both in the formal and informal sectors of the economy, and hence more employment opportunities and income.

23. This has led to massive distress migration from rural to urban areas. As the youthful population from rural areas shifts to large cities, agriculture is orphaned, and the cities become slums. • There is hardly a large city in India which does not have at least 40 percent of its population in slums. • While over 60 percent of the people of India depend on agriculture, the contribution of agriculture to the national GDP ha come down to less than 20 percent. • No wonder then that the gap between the average per capita expenditure for urban and rural areas has widened by over 8 percentage points between 1987-88 and 2000-01. • The urban-rural gap is much more pronounced for non-food vis-à-vis food items. An average urban resident's monthly expenditure on food items during 1987-88 at Rs 139.73 was higher than the corresponding non-food spending of Rs 110.18. • But in 2000-01, the position had reversed, with average non-food expenditure (Rs 514.01) exceeding that of food expenditure (Rs 400.57).

24. Regional Disparities Have Widened  • India is a land of contrasts. India is growing fast but base of its economic upswing is narrow and fragile. • Rural India is yet to benefit from economic reforms set in motion during the last two decades. • Agriculture, on which a vast majority of the population and a large part of the industry depend, is not growing fast enough to keep pace with the other sectors of the economy. • In fact it often becomes a drag on the economy. More industrialized and urbanized a region is more developed it often is. • Regional disparities exist no matter at what administrative level we look at: national, state, and district. • At the national level the southern and western states (Kerala, Tamil Nadu, Andhra Pradesh, Maharashtra, Goa and Gujarat) are far more developed than the northern states (UP, Bihar, MP, Chhattisgarh, Orissa, Jharkhand, together known as Bimoru states). • In between are the north-western states like Rajasthan, HP,

25. Regional Disparities in India

26. Development is not uniform within the states. Even advanced states have poor districts, and less developed states have developed districts. • A Recent World Bank Report on India (Sustaining Reform, Reducing Poverty, 2003) as also the UNDP's Human Development Report 2003 have expressed grave concern over the widening inter-state disparities and the growing urban-rural divide in India. • The World Bank Report says that development has been uneven and, as a result, poverty is getting concentrated in the slower growing states of Uttar Pradesh, Bihar, Madhya Pradesh and Orissa. • The report adds: "Accelerating growth and poverty reduction in India cannot be achieved without also accelerating growth in India's lagging states."

27. The UNDP's Human Development Report (HDR) bemoans that India contains regions of intense poverty relieved little by overall national growth. It points out the enormous disparities across India's states with extremely high gaps in literacy between low social classes and the rest of the population. •  Census 2001 revealed disturbing disparities in the demographic indicators such as population growth rates, literacy levels and sex ratio. • For instance, Bihar, with a dismal record of human development indicators, recorded a much higher rate of population growth at 28.3 per cent during the decade of the 1990s against 23.3 per cent during the previous decade. • Similarly, Uttar Pradesh, the most populous state in the country, recorded a higher population growth of 28.3 per cent against 23.38 per cent during 1981-91. Rajasthan also recorded a high rate of population growth at 28.33 per cent during 1990s (28.44 per cent).

28. More than half of India's poor live in just four states. Over two-thirds of poor live in rural areas and depend largely on agriculture. • The highest incidence of poverty is found among people of scheduled castes and scheduled tribes, who face major social barriers that exclude them from opportunity. • It is evident that if this trend of widening regional disparities and growing rural-urban divide is not arrested and reversed soon, it will not only continue to pull down the overall growth rate of the economy, but will lead to serious social strife in the country. • It is, therefore, time the policy-makers viewed the situation with a new sense of urgency and initiated measures to contain the damage.    

29. Uttar Pradesh (UP): A Case Study •  U.P. is the 6th largest ‘country’ of the world in terms of population. As in 2008, it has 180 million people. • The gangetic Plain, that spans the state, has been the ancient seat of Hindu religion, learning and culture, the birth place of the Indo-Islamic syncretic culture of medieval period, a center of nationalism during the colonial period and has continued to play a prominent role in Indian political and cultural movements. • The state has a rich heritage of traditional crafts and cottage industries of various types that require highly skilled craftsmen and artisans. • It was one of the most developed provinces of India in 1950s and continues to determine the political colour of the country.

30. Study Area: State of Uttar Pradesh

31. Regional Structure • The state comprises of five distinct regions. These are:  • Rohilkhand in the north (better developed); • The Doab (land between two rivers) region (well developed agriculturally); • Awadh (Oudh) in the centre (better developed industrially); • The Eastern UP or Poorvanchal, (very poor); and • Baghelkhand and Bundelkhand in the south (Poorest). • It has 70 district grouped into seventeen divisions; and 403 state legislative constituencies. Kanpur Nagar is the largest district of the state.

32. As per 2001 Census of Population, male literacy rate was 70.23 percent and a female literacy rate was 42.98 percent. But far more is needed especially because the primary education in the state has deteriorated in quality. • The major economic activity in the state is agriculture engaging around 70 percent of population of the state. • 46 percent of the state income was accounted for by agriculture. UP has retained its pre-eminent position in the country as a food-surplus state. • The production of foodgrains has increased from 14.5 million metric tons in 1960-61 to 42.5 million tons in 1995-96, showing an average annual growth rate of 3.1 percent, which is much higher than the population growth rate.

33. National share of major food commodities from Uttar Pradesh

34. UP has witnessed rapid industrialization in the recent past, particularly after the launch of policies of economic liberalization in the country. • As of March 1996, there were 1,661 medium and large industrial undertakings and 296,338 small industrial units employing 1.83 million persons. • The per capita state domestic product was estimated at Rs 7,263 in 1997-98 and there has been visible decline in poverty in the state. Yet, nearly 40 percent of the total population lives below the poverty line. • Uttar Pradesh's gross state domestic product for 2004 was $339.5 billion by PPP and $80.9 billion by Nominal, making it the second largest economy in India after Maharashtra and a bigger economy than many of the world's big economic players like Israel, Switzerland and Hong Kong. The state does not lag behind in IT. • It exports of software is only mext to Karnataka in South India.. But the industry is concentrated in just three districtz around the National Capital, Delhi, and Lucknow-Kanpur Corridor.

35. Reasons for UP’s Backwardness • Locational Disadvantages • Unimaginative Political Leadership • Lack of Technology • Neglect of education • Misallocation of resources • Population pressure • Low level of Urbanisation • Corruption

36. TOWARDS SARVODAYA • If the ultimate goal of economic growth is improvement in the quality of life of the people as reflected by higher level of income, higher level of human development, and higher level of human dignity, peace and harmony, then economic growth must be accompanied by higher level of HDI, distributive justice, and inner development of man as a human being. • Unfortunately, the modern growth proponents lay too much emphasis on income and consumer goods and too little on family ties, social solidarity and advancement towards HIGHER LEVEL OF CONSCIOUSNESS. • We need outer development as much as inner development. The widening gap between the two has created a situation in which no one is at peace: rich or the poor; all are dissatisfied. Some have even chosen to commit suicide both in the developed and developing parts of the world

37.  “There is enough on this earth to meet everyone’s need but not everyone’s greed’ said Gandhi long ago. The greed must give place to caring and sharing. • Economic growth must take place within the threshold limits of nature; and it must be distributed equitably not equally) so that all can have the privilege to lead a good quality of life. The present distributional system we have adopted is not necessary ideal. • As gender inequality was built in our thinking and doing things, so is the economic inequality between man and man, region and region and nation and nation. • There is no way to create a society imbued with love, peace, justice, equality and high quality of material life without changing the way we have been managing our affairs from times immemorial. 

38. Gandhi advocated the concept of Sarvodaya i.e. development of all, not just the development of the majority, or maximum number of people, from all perspectives. • In his model there is no place for any kind of poverty: material or spiritual. Those who are rich need spiritual development so that they can share their riches with others and those who are poor need material development first. • Bread is the God of the poor. The material-cum-spiritual developments would lead to a society that is balanced, sustainable and worth living. • If material advancement alone can give happiness to people, why is it that the rich commit suicide, and kill each other.

39. So long as the present of mode of development tilted as it is towards material welfare of some (not all), unmindful of the spiritual side of man, there would neither be peace within or outside, nor equality among peoples, and regions whether they live in cities or villages; whether they have higher income or lower. • Further, the pursuit of the present mode of development is likely to lead to more violence against fellow human beings and against nature.

40. We thus need a new model of development which takes care of economic and technological development without neglecting the human development. • Human development has however to be refined not only in terms of social development but also in terms of spiritual (not to be confused with religious) development. • In my view the Gandhian concept of Sarvodaya offers the basic principles on which this model can be built.

41. THANK YOU