[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...
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REIMAGINING INDIA<br />
a complex interplay of social, political<br />
and economic factors, can be addressed<br />
only by interventions that hit<br />
hard at the root causes of inequalities,<br />
rather than by the quirks of unregulated<br />
markets that by design are tailored<br />
to suit the conditions of the rich<br />
and the powerful. Given the enormous<br />
amounts of power, influence and resources<br />
that the latter tend to have at<br />
their disposal, often catalyzed by increasing<br />
overlap of political and business<br />
interests in most modern economies,<br />
the only chance for the poorest<br />
people rests on systems of governance<br />
that can be held to account and at least<br />
be subjected to a floor test of popularity<br />
based on electoral performance of<br />
alternative political ideologies.<br />
<strong>The</strong> message of the poorest people<br />
is loud and clear: governments must<br />
protect them from the vagaries of market!<br />
<strong>The</strong>ir verdict has been communicated<br />
clearly on many an occasion,<br />
evident in the electoral defeat of the<br />
‘India Shining’ campaign in India. <strong>The</strong><br />
resurrection of the ‘Aam Aadmi’ (i.e.<br />
the ‘common man’) as a reference<br />
point of current development policies,<br />
at least rhetorically, has been compelled<br />
by lessons learnt from many of<br />
these recent trends. Yet, the poorest of<br />
the poor in countries like India continue<br />
to face unprecedented challenges<br />
to their existence. <strong>The</strong> markets are<br />
pushing them hard to extinction, by<br />
encroaching upon some of their commonest<br />
avenues of survival, notably<br />
retail trade, artisan-crafts, common<br />
property resources and most alarmingly,<br />
agriculture.<br />
One needs to delve into the basic<br />
Food grain off-take through the PDS declined from 17<br />
million tonnes per year in the early nineties to 12 million<br />
tonnes per year around the end of the decade, endangering<br />
the food security of millions of the poor<br />
character and orientation of markets<br />
to assess their potential role in poverty<br />
reduction. Markets operate on the<br />
laws of supply and demand, and thereby<br />
play a role in fixation of prices and<br />
wages. <strong>The</strong>oretically speaking, the<br />
price of a product or service is directly<br />
proportional to the rarity of its supply,<br />
its quality, the cost of production, and<br />
inversely proportional to the bargaining<br />
power of the buyer and degree of<br />
regulation of unfair practices. For<br />
markets to be favourable entities for<br />
the poor (when participating in markets<br />
as sellers), the latter ought to be<br />
able to vie with competing forces towards<br />
suppressing the cost of production,<br />
acquiring greater market share to<br />
limit the range of suppliers and towards<br />
investing adequately in optimizing<br />
the quality of the product. Such<br />
possibilities are likely to be highly infeasible,<br />
given their limited economic<br />
abilities. Similarly, as buyers of products<br />
or users of services, their bargaining<br />
power is often limited on account<br />
of their limited ability to promise continuity<br />
as buyers or users, limited creditworthiness<br />
and lack of effective<br />
mechanisms to hold sellers/service<br />
providers accountable. Profit-seeking<br />
markets are more likely to serve clients<br />
that can offer greater economic returns<br />
to producers and therefore are<br />
likely to exclude the poor. <strong>The</strong> only<br />
ways to offset this fundamental likelihood<br />
of exclusion is to either regulate<br />
the markets in order that the poor are<br />
compulsorily served on pro bono terms<br />
as a principle of policy, or to create<br />
alternative providers that by mandate<br />
serve the poor. This necessitates a<br />
role for a pro-poor welfare state<br />
or non-profit organizations in<br />
serving the needs and interests of<br />
the poor.<br />
India was one of the fastest growing<br />
economies in the world during the<br />
nineties. <strong>The</strong> decade also witnessed an<br />
unprecedented scale of entry of market<br />
forces in various sectors of the<br />
economy. Yet, despite a significant<br />
spurt in macroeconomic growth, the<br />
rate of reduction of rural poverty in<br />
India was halted during the 1990s. Estimates<br />
show that the incidence of poverty,<br />
which between 1972-1973 and<br />
1989-1990 fell from 55.4 percent to<br />
34.3 percent in rural India, never went<br />
below the 1989-90 level in subsequent<br />
70 THE <strong>IIPM</strong> THINK TANK