Friday, February 07, 2014

Running Out of Ropes to Climb?

I recently started reading Gurucharan Das’s “India Grows At night”. I am yet to finish the book but I am sure it will certainly be a great read. The basic premise of the book is this: India’s growth in last couple of decades is potentially reaching its end point. The growth happened in spite of weak, corrupt and generally incompetent government and unless the situation with governance changes in near future we will be staring at not-so-bright future. Mr. Das is much more positive and optimistic in his assertions that my previous sentence suggest but we are really running out ropes to climb. 

I recently moved to India and I see how things are stretched to the limit. The government is responding at certain levels. Roads are getting built and fly-overs are taking shape but it’s coming too late and too little. The population is growing so fast, in spite of fall in birth rate, and government is miserably failing to meet even the basic needs.  The thing is that in old days government not functioning was given and it didn’t affect the normal life as much since there were few opportunities and there wasn’t a sense of how much potential we have. But people have understood the potential. Small set of population has done exceedingly well in last ten years. The money was made in honest business (construction, services, entrepreneurship, land etc.) and the money is very apparent. And I am not even talking about folks who drive Audis and BMWs. The upper middle class and the middle class are having a lot more luxurious life than what was possible  twenty years ago. The foreign trips to Sri Lanka and South-East Asia are very common and having multiple maids at home to take care is a norm. And I think those are all good signs. The money in most such cases is made honestly and is results of hard work. These people have shown appetite for opportunity and jumped on it. But there is still a large majority left in lurch and to bring these millions of people to a respectable living condition (i.e. way above the BPL level that government insist on referring to when it comes to talking about poverty)we need healthy government functioning competently.

The middle class and upper middle class that is enjoying the fruits of liberal economic policy made their money in spite of government. The money is either coming from US through BPO or hybrid outsourcing model or money is made by driving on bad roads, facing power shortage and running around in the maze of unlimited bureaucracy. The airports are congested, the railways are overflowing and large scale industrialization plans are hidden away on environment minister’s desk. The inflation is sky rocketing beyond imagination and comprehension.  Given these issues continue to not only persist but developments have been very slow, how far can middle class can go without hitting the wall?

But I think even after hitting the wall they will survive. They are better educated and there will always be some or other opportunity for them as India will be forced to integrate with world economy. It is the poor that I am worried about. It is the maids and paper-boys, the cleaning ladies and her children that are of most concern. 

For example, more than 80% of road projects are well behind their schedule and planning commission has admitted that port development projects in last planning commission period will not be completed on time. How does it affect poor? As per the  World Economic Forum in its 2011 report on infrastructure, 163 people are lifted out of poverty for every million dollars spent on road development.

Primary education should be the gravest of concerns for next Indian government. The private sector is proliferating at a staggering rate since majority of the public schools i.e. government run schools are in shambles. The private schooling is very expensive for majority of the people. In any case, providing quality education at a very reasonable rate is one of the basic duties of any government. Education shouldn’t be a privilege; it should be a fundamental right. Yet our government has failed miserably. The teachers are either absent or not hired or worse, untrained. This reflects in student’s passing percentage. Only 42% students passed the Math exams in class 8th in government schools.  In 2012 only 30% of Standard 3rd students could read Standard 1st text. Such grim statistics are many.

Similar situation is in public health sector. As per KPMG research the infant mortality in India is 52 per 1000 births. To give the readers more perspective the same statistics stands at 18 per 1000 births in China. Hospital bed density is 9 in India, which means there are only 9 hospital beds available for every 10,000 people. The number stands at 30 in China. Interestingly the total government expenditure on health care as percent of GDP in 2007 is 4.1 in India and in China it is 4.3!

I don’t want to make this blog full of statistics. The readers are well versed in googling correct terms and read the publications. But I wanted to cover certain basic tenets on which a country can assess its progress and unfortunately, our government is miserably failing in those indicators. What’s worse is unless these basic issues are fixed - our children are born in safe and healthy environment, they are educated decently and provided means to earn livelihood, we will keep stumbling in the future.

And I haven't even talked about the inflation monster that's wrecking havoc in last five years. 

Sources:
1)      New roads to economic growth”
2)      Education’s primary problems
4)      Healthcare: Reaching out to the masses
http://www.kpmg.de/docs/Healthcare_in_India.pdf