Development and Governance

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  • The 3 Cs- Corruption, Clientelism, Capture

    It is now universally acknowledged that in most developing countries, the hard-earned resources invested in welfare and development programmes have leached away, mainly because of the curse of the three Cs: Corruption, Clientelism, and Capture.

    CORRUPTION is commonly understood as the use and abuse of legal authority to benefit oneself (embezzlement), or kith and kin (nepotism), or another (expediency, bribery).

    In India, it has long been a way of life – an ordinary citizen makes allowances in his budget for corruption. To get one’s child admitted to this playgroup, or that school or a better college – everything requires some wheeling-dealing. Of course, bribery has become a fine art in local governments, where a series of agents act as brokers to procure every service (which you are in any case entitled to), like a power or water connection for a new house. The scale rises as one goes higher up the ladder to procurement of contracts, for example.

    The underlying assumption is that a corrupt act or practice is always at the cost of the rights of another individual, group or organisation. Compounded over its entirety, corruption results in huge financial losses and social cost to any country.

    Robert Klitgaard, economist and academic – considered the world expert on corruption – set forth the problem succinctly in his famous formula:

    Corruption = Monopoly + Discretion – Accountability

    Therefore, Governments with the willingness to seriously tackle corruption must minimise monopolistic structures, reduce discretion and enhance accountability.

    They can take several immediate and concrete steps:

    Monopoly: Where possible, the effects of monopoly can be reduced by allowing some private operators to provide the same services, but there must be a proper regulatory mechanism in place, right from the point of award of contracts, to avoid situations which have erupted in various ‘scams’ in India recently.

    Where a service provider is monopolistic by its very nature (like a Municipal Corporation) we need to look at ways to mitigate the monopoly of decision-making. The most obvious way is widening the space for decision-making through regular and formalized public consultations and participation. Furthermore, outsourcing the basic services to workers’ collectives, NGOs and CBOs, will also soften the monolithic, monopolistic work culture of these places. Another way would be through the lateral induction of managers who have had corporate experience in the areas which the monopoly deals with.

    Discretion: Most day-to-day bribery is a result of the enormous discretionary powers given to individuals. It is necessary to revisit some of the archaic laws, vestiges of British Rule, where the ruling class did not trust the natives, and all powers were vested in senior civil servants. Did you know that there is a major element of discretion in assessing the property taxes for your property? It is no secret that even middle level workers can make big sums of money by manipulating the area for commercial property in the bigger metros. The only way to outwit individual discretion is through e-Governance, where there are several layers of checks and balances; business processes have been re-engineered; and standardization has been put in place. Moreover, people’s access to information is much greater in an IT-enabled environment, allowing for greater vigilance by civil society.

    Accountability can be increased by Access Legislation, like the Right to Information (RTI) Act of 2005, provided it is adhered to in letter and spirit by both sides. There are far too many instances of the misuse of RTI by vendors, contractors and losing sides in a tendering process. This results in a huge burden on the Government body – and sullen, half-baked replies, which help no one.

    Much greater transparency and proactive disclosure in the procurement process and the award of contracts will greatly enhance accountability – especially at a time when we have put in power a Government that believes in running the country through Projects, rather than Policies.

    Summarising: Governments that are serious about reducing corruption in public systems need to look earnestly at 5 key issues:

    • Building objective criteria and benchmarks for decision-making, thus reducing individual discretion and arbitrariness
    • De-bureaucratization or simplification of procedures so that expediency does not become a reason for corruption
    • Enunciating clearly the role of various agencies, provisions, conditionalities, benefits, monitoring and evaluation mechanisms of Government schemes
    • Putting in place mechanisms for social, financial, legal and political accountability at every level – local, regional and national
    • Creating public awareness of the mechanisms of redressal available to citizens when faced with corruption

    Corruption and fraud it seems, is no longer a monopoly of the government machinery, but is growing with alarming rapidity in the private, non-government and professional sectors as well. Perhaps the time has come for better regulation of all transactions in the public domain.

    CLIENTELISM: Early definitions of clientelism were confined to the exchange of votes for favours returned over a long period of time. However this rather simplistic ‘sale of votes for future favours’ is now recognised simply as corruption. The growing cost of fighting and winning an election – especially one as long-playing and complex as that of the President of the United States, say – has given clientelism a whole new meaning.

    According to Federico Varese in the Oxford Political Dictionary, clientelism today usually involves rewarding clients with public office, contracts, appointments and the like not because of merit or qualifications, but because of their prior support. Given the nature of this exchange, the relationship between a politician and client tends to be both clandestine and long-term.

    It is worth noting that Clientelism does not become ‘corruption’ if it remains on the right side of law and is socially acceptable.

    In fact according to Varese, if the exchange goes counter to public sentiments, it still qualifies as clientelism and not corruption (although the public frowns upon it) because no laws have been contravened. As most clientelist transactions take place away from the public gaze, their vitiating influence is best countered with open public debate on the subject and bringing these transactions out into the light of public scrutiny.

    The most prevalent form of clientelism thrives in India because of our ‘first past the post’ electoral system (yet another legacy of the British!). Where a small swing of 2-3% can win a seat, the local power-broker who can deliver such a swing, gets the assurance of a ticket in the next local or state election along with the organisational and financial support from the concerned political party to win his/her seat when the time comes. This is clientelism in action, and as no laws have been broken in coming to such an agreement, both the patron and client can argue that it is not corruption – merely the voice of an aspiring society!

    The obvious way to reduce the impact of clientelism is to go in for ‘proportional representation’ a common practice in all the more mature democracies in Europe. However, it is unlikely that this change will ever happen in India as all parties are opposed to it. Have you ever wondered how certain leaders manage to win again and again in their home constituencies, cultivated over long years, no matter how badly their party performs elsewhere? Well that again is clientelism…

    CAPTURE: The concept of state capture came into prominence with the break-up of the Soviet Union, and the emergence of powerful ‘oligarchs’ who shaped and controlled the economy and policy in most of the transition states.

    ‘Capture’ is understood as firms and businesses shaping and affecting formulation of the rules of business through private payments to public officials and politicians, or contributions to campaign funds at the time of elections.

    Capture is also referred to as ‘crony capitalism’ and was considered one of the main reasons for the 1997 economic meltdown of the Asian Tigers. Many analysts blame these practices of the military-industrial complex in developed countries, for pushing those countries into unnecessary wars to make a profit.

    So how does it work? If the land acquisition norms are disregarded to favour one businessman, that is capture. If the land laws are to be amended in favour of big business, that is capture. If the environmental norms are to be disregarded to expedite particular projects, that is capture. If a nationalised bank extends credit to a business for investment abroad (without any jobs being created in India!), that is capture. If Natural Resource companies in the Public sector are de-nationalised to enable private companies to pick up cheap shares, then that is capture. (In fact this was the favourite tool for enriching the oligarchs in Yeltsin’s Russia, and it took a massive re-nationalisation effort during Putin’s first term, to get the economy back on track.)

    The proposed infusion of Private investors into infrastructure building is also a form of Capture, because, across the world, private firms are only interested in ‘cherry-picking’ and go only for profitable projects. This means that the social objectives of infrastructure are seldom met through private sector participation in infrastructure, and the country has to pick up the tab to service unprofitable sectors.

    Again, capture by the business elite is not just a financial burden to the country but also entails heavy social costs, as the rich get richer, and social disparities increase exponentially. Capture economics can also demotivate smaller businesses and entrepreneurs.

    The only way to counteract capture is to have a vigilant press; constant scrutiny and publicity of such instances; and a willingness of the opposition to take these issues head on in Parliament. But alas in the present Indian situation, it will perhaps become a case of ‘who will cast the first stone…”. And the less said about the ‘vigilance’ of our mainstream media, the better.

    In my next few posts, I would like to look at urban poverty in its various dimensions, and try to understand issues of human development and sustainable livelihoods. Keep reading…

  • Social Accountability

    The credit for bringing Accountability to the centre stage of Indian politics should perhaps go to the eventual founders of the Aam Admi Party (AAP). They brought to our consciousness the concept of Social Accountability, which was gathering momentum across the developing world from Africa to South East Asia, thanks to the efforts of local NGOs, Civil Society Organisations (CSOs) and international aid agencies like the World Bank, which saw their aid efforts being eroded by the unaccountability of the ruling elites in these countries.

    So who is accountable? The simple answer to that is ‘those who govern, and have the power and authority to do so.’ By this definition, the elected representative wins legitimacy by getting the political mandate in an election, and then the law of the land confers power and authority upon her/him. This constitutes political authority, which is in turn delegated to the bureaucracy as administrative authority. In this way are policies, programmes and decisions implemented, through a well understood and well regulated delegation of power and authority.

    Through regulation, governments are both mandated by, and made accountable to society at large, putting all governance in an essentially social context – hence SOCIAL accountability. Further, this mandate confers the power and authority to use PUBLIC funds to run the country and its government, making those who govern financially accountable as well.

    Accountability is an essential component of a democratic system. Accountability systems are based on periodic elections and different types of vertical and horizontal accountability arrangements that hold executive branches accountable to legislature; civil servants to politicians; and businesses to their shareholders.

    Such systems comprise of a range of independent regulatory agencies, such as superior audit institutions and corruption commissions that scrutinise the actions and decisions of businesses, politicians and bureaucrats.

    Accountability, therefore, is about holding people to account for the impact of their actions, and ensuring that those people who are impacted have the right to be heard and their views taken into account; that those in power have the obligation to listen and respond; and that a system of sanctions is in place to enforce these rights and obligations.

    By this definition, one can also extend the concept of social accountability to the Private Sector. Although Corporates may feel that they are accountable only to their shareholders, staff and customers, their operations may impact much larger sections of society, sometimes directly, or sometimes unexpectedly. The most obvious and visible impact of corporate production may be pollution of the air and water in its vicinity, indirectly impacting the health and life expectancy of the people living in that area. The Bhopal Gas tragedy and its aftermath, is the most extreme example of lack of corporate accountability, which India has had the misfortune to encounter first hand.

    Similarly, the much vaunted industrial development of Gujarat has come at a high price:

    • The Central Pollution Control Board of India declared Gujarat to be the most polluted state in 2010
    • Due to critical levels of pollution, the Central Government’s Ministry of Environment and Forests in 2010 banned all new projects and expansion of existing ones in the industrial cluster of Vapi in Southern Gujarat
    • The Central Pollution Control Board in 2012 declared three Gujarat rivers to be the most polluted in India*

    But which industrialist in Gujarat has ever been held accountable?

    There are two ways in which Social Accountability can operate:

    The first is known as demand-side Social Accountability and figures largely in the urban, educated middle class discourse on accountability. The best known mechanisms of demand-driven SA operate from the bottom up, and include means like Citizens’ Charters, Independent Budget Analysis, Municipal Participatory Budgeting and Planning, Sectoral Expenditure Tracking, and Social Audit.

    All these demand-side mechanisms of Social Accountability essentially pivot around civic engagement. They presume an enlightened, empowered and enabled civil society, both willing and able to demand accountability from those in power, and bring the wayward to book. And that is why, despite sporadic attempts in metros, they have never really taken off in India.

    In a developing country like India,  where vast swathes of the population are busy just surviving from day to day, who has the luxury of time to hold the powerful to account? Therefore it makes sense to look at the other side of the social accountability coin viz. government-driven or supply-side mechanisms, and how these can be effectively strengthened.

    Some initiatives which have worked well in countries like Australia and New Zealand are:

    • Open Government which proactively seeks greater civic participation through information and consultation
    • Proximity initiatives aimed at reducing the “distance” between the governed and government by identifying citizen needs and preferences
    • Citizen involvement in making decisions which directly affect them, like municipal budgets
    • Emphasis on voluntary disclosure under freedom of information laws
    • Commitment to transparency on the part of public bodies

    Signs of such an awakening in India are already visible, as almost every Central Government scheme now provides for some form of social accountability (like Social audits in MNREGA), and the changes though slow in coming, are beginning to happen, as we see from the various government-led initiatives like proactive disclosure under Section 4 of the Right to Information Act, 2005.

    In my next post we shall look closer at Corruption and its hidden aspects, such as Clientelism and Capture…Meantime have a look at: *http://blogs.lse.ac.uk/indiaatlse/2014/04/04/gujarats-troubling-environmental-record)

  • Unique but not alone

    When I walked out after a month from my Physics Masters Programme into Social Anthropology, my friends and family were perturbed to say the least. Maybe I was going stir crazy, locked up in labs on beautiful summer days on a sylvan campus…

    Whatever. But I had no regrets as I found Anthropology to be an extremely humanizing subject, and strongly feel (to this day) that if we taught children anthropology in schools, there would be much less bigotry around – and hopefully, less violence and bloodshed too…

    Anyway, I simply felt lucky to have wandered around in two such disparate worlds, the majesties of Physics and Mathematics on the one hand, and the welcoming warmth of the larger human family on the other; and I was quite sure that never the ‘twain shall meet – until I happened upon Jacob Bronowski’s Ascent of Man several years ago. How can one forget his magical exploration of the blooming of quantum mechanics and the gathering clouds of World War II…

    What brings this to mind is an encounter with the latest BBC series from Professor Brian Cox (envied in equal measure for his mastery of Physics, and his youthful rock star looks) … called Human Universe. Throughout the series, the Prof oscillates between hi-tech sites like NASA and little Andean villages and isolated Berber tribes, giving the series a definitely anthropological look.

    brian cox                       brian cox 3

    But the killer (for me) comes in the third episode, where he talks about the ‘fateful encounter’ between two simple cells; their unexpected and successful merger to form eukaryotic cells, from which all complex life forms were to emerge… Then came the flourishing of thousands of species in the Cambrian era, leading to our own species by evolution through natural selection.

    The moment of epiphany comes when Cox says that to become what we are today, we had to pass through an evolutionary ‘bottleneck’ which is highly improbable to have been replicated elsewhere in our Galaxy. (Of course, there may be a million other evolutionary pathways occurring on other planets, so perhaps as a life form, we are not alone…)

    However, as a species with the curiosity and intellect to explore its entire Universe, perhaps we are unique… I don’t know about you, but at the end of Cox’s exposition, I was filled with a feeling of utter desolation and utter contentment at the same time – in other words I felt utterly and overwhelmingly human. In the end, all great Science is essentially humanising… I suppose.

  • Good Governance

    One has observed a gradual fading out of a defining corpus of knowledge as one moves from Left to Right on the ideological spectrum. Thus the Marxists have an absolute embarrassment of riches on EVERY aspect of politics, economics and social dynamics; while even the middle of the road parties like the Congress have a legacy bequeathed by Mahatma Gandhi, Pandit Nehru, Dr Ambedkar and numerous others. Mr Mani Shankar Aiyar and Dr Sashi Tharoor are of course internationally read authors today, while the BJP now has Mr M J Akbar – never mind that he spent almost his entire career spewing vitriol against his new friends…

    Of course, the new regime in Delhi compensates by being ultra tech-savvy, but sadly a sound bite here and a tweet there do not a Corpus make… Underlying all the alliterative wisdom, slogans and campaigns, is one key word – Governance. We are told that the new Government will provide good governance, while the previous government was simply guilty of bad governance. Period.

    In explanation we are assured of quicker decisions, fewer referrals, and faster file movement – in short, more efficiency. (That the efficiency or inefficiency of any government eventually rests upon the capacity and motivation of our permanent bureaucracy is a sad truth the Government will soon discover).

    That aside, surely there is more to Governance than mere Government?

    Of course there is – and that’s you and me…

    Quite simply, GOVERNANCE = GOVERNMENT + CITIZENS

    So, to set the record straight on a complex concept like GOVERNANCE, let us look at the received wisdom on what constitutes GOOD GOVERNANCE, and what are its parameters… Thanks largely to the work of UN bodies like UNDP and UN-ESCAP, there is now a global consensus on these criteria:

    For the GOVERNMENT component of GOVERNANCE, these are:

    Efficiency and Effectiveness: Good governance means that processes and institutions produce results that meet needs, while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment. While efficiency is a relatively simple ratio of output upon input; effectiveness looks at outcomes and impact.

    Decentralization, Security and Sustainability: Good governance also means devolution of powers and resources to the local level. Local governments should be empowered with sufficient resources and autonomy to meet their responsibilities. Further, every individual has the inalienable right to life, liberty and the security of person. Insecurity has a disproportionate impact in further marginalising poor communities. Cities must strive to avoid human conflicts and natural disasters by involving all stakeholders in crime and conflict prevention and disaster preparedness. Security also implies freedom from persecution, forced evictions, and provides for security of tenure. On their part, local bodies must balance the social, economic and environmental needs of present and future generations. This should include a clear commitment to urban poverty reduction. Leaders of all sections of urban society must have a long-term, strategic vision of sustainable human development and the ability to reconcile divergent interests for the common good.

    For the CITIZENS’ INTERFACE component of Good Governance, we require:

    Participation: All men and women should have a voice in decision-making, either directly or through legitimate intermediate institutions that represent their interests. People are the principal wealth of nations; they are both the object and the means of sustainable human development. Participation also means civic engagement, which implies that living together is not a passive exercise: in cities, people must actively contribute to the common good. Furthermore, the civic capital of the poor must be recognised and supported.

    Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organisations must be accountable to the public and to their institutional stakeholders. In general an organisation or an institution is accountable to those who will be affected by its decisions or actions. (More on Social Accountability in a separate post…)

    Transparency is built on the free flow of information. Access to information is fundamental to this understanding and to good governance. Laws and public policies should be applied in a transparent and predictable manner. Elected and appointed officials and other civil servant leaders need to set an example of high standards of professional and personal integrity.

    Responsiveness: Good governance requires that institutions and processes try to serve all stakeholders within a reasonable time frame. The introduction of Citizens’ Charters and e-Governance are the first steps in measuring and monitoring the responsiveness of government bodies to the needs and demands of citizens.

    Inclusion of ALL stakeholders in decision-making which affects the lives of all citizens is an essential criterion of good governance. A society’s well-being depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires that all groups, but particularly the most vulnerable, have opportunities to improve or maintain their quality of life.

    Consensus Orientation: There are several actors (and as many viewpoints) in a given society, on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development. This can only result from an understanding of the historical, cultural and social contexts of a given society or community, so that it becomes feasible to arrive on common ground and work together.

    Rule of Law: Legal frameworks should be fair and enforced impartially, particularly the laws on human rights. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force.

    Equity: The enforcement of the rule of law and the distribution of public goods should not only be equitable, but perceived as such by all citizens. Inclusive societies provide everyone – be it the poor, the young or older persons, religious or ethnic minorities or the handicapped – with equitable access to nutrition, education, employment and livelihood, health care, shelter, safe drinking water, sanitation and other basic services.

    So far, we are yet to see any major breakthroughs in meeting ANY of these criteria – in fact, words like inclusion and equity invite derision rather than support; and the approach tends to be confrontational, rather than consensus oriented.

    The new Government really has its work cut out. Good Governance remains a distant dream, and 5 years may be too short a time to make good on extravagant electoral promises.

    Please surprise us, and convince the 69% who did not vote for you…

  • We shall overcome…

    There is an Arabic Phrase Al Nakba, meaning Catastrophe, to refer to the creation of the State of Israel in 1948. What an irony then, that Brazil had its own Al Nakba at the hands of Germany, on the very day that Israel launched its latest assault on the Gaza Strip.

    The next day, on Bing perhaps, I found this picture, which is my PC wallpaper, and a constant reminder of the Greek Tragedy that was our exit from the World Cup – Neymar, the wounded hero, big brother David Luiz consoling Rodriguez after Colombia’s exit, a touch of hubris at the start of the home World Cup… ah well!

    Brazilian

    Now Brazil are redeeming themselves, winning all friendlies in style under Dunga… and given their history, they will win the Federations Cup in style as well, in 2017.

    But I hope they don’t. Because every time they do, they lose in the World Cup the following year. (A point noted by Beckenbauer as well, besides yours truly!)

    Probably because their Confed star gets picked up by Real or Barcelona or some such, and is totally ‘clubbed out’ by the time the FIFA World Cup begins.

    Fingers crossed, and hope to see this little fan smiling in 2018

  • Development and the informal urban economy

    The term informal economy was coined by social anthropologist Keith Hart in 1971, while working in West Africa. It is:

    • The survival economy of the poor, whose individual economic transactions do not ever rise to the taxable limit;
    • The grey zone of commercial exchange, where the worker offering his labour allows the mainstream economy to subsidise itself.

    It should be remembered that the informal economy thrives and grows, only because the formal economy finds it the most cost-effective means of earning profit. In reality, being undocumented and unregulated, the informal economy weakens the national economy in the long run:

    • By pushing more and more of its practitioners deeper into poverty
    • By dissipating India’s age advantage, as deprivation leaches away at the human potential of generation after generation, denied access to education and skill building
    • By operating below the tax radar and denying taxes to the local, State and Central Governments
    • By untold damage to the urban environment, as a consequence of little or no monitoring or regulation

    The informal economy in large cities manifests itself in 3 ways:

    • Informal INDUSTRY
    • Informal ENTERPRISE
    • Informal HOUSING

    Informal INDUSTRY is usually based upon an investment of a few thousand rupees, seldom exceeding one lakh. Thus the assets created are too meagre to warrant capital financing by banks in the formal sector. Moreover, as the eminent Peruvian economist Hernando de Soto pointed out, the reason that poor countries (like India) remained poor is:

    “… the absence of a representational system that converts every asset, every liability, every land, every building, every inventory and every business into a property document, thus making it visible to the larger formal economy.”

    In the absence of such a representational system, the assets of the poor in the informal sector cannot become fungible assets and remain as dead capital, unable to benefit their owners. With conservative estimates putting 60% of India’s economy in the informal sector, these assets if formalized, can become an immense national resource, besides bringing millions into the formal economy, easing poverty and augmenting India’s tax collection by a huge quantum.

    Informal ENTERPRISE can benefit greatly through changes at the local government level. The current policy on street vendors is nebulous to say the least, and only results in endless harassment for this segment, whose contribution to the retail trade is grossly underestimated. Well-meaning efforts to provide hawkers’ zones have failed, primarily because they overlook the Unique Selling Point (USP) of street hawking in India – the mobility of the hawker, as he passes through one neighbourhood after another providing his services and wares on demand, when needed and where needed.

    Imagine how difficult domestic life would be without the periodic visits of the raddiwala or the knife grinder! Local Government can act as facilitator by marking parking spots for street vendors, with a built-in time limit; providing basic facilities like toilets and electricity to weekly street markets; and providing licenced premises for those entrepreneurs with wares to sell from a fixed outlet.

    Or like China, we could remove the vendors of trinkets from the streets by building mini-malls on public land like the suburban railway station in Shenzhen, where Indian tourists flock to buy Gucci rip-offs.Examples of such markets/malls abound in India in the ubiquitous Gol Markets found in all our defence establishments. Shops in these malls can be leased out at a reasonable rent for, say, 10 years, which is a reasonable time of security to educate the next generation and enable an entire household to move upwards on the social scale. It is this secure breathing space which will move millions of urban poor from the struggling classes to the aspiring classes – so eagerly wooed by all our politicians, come election time.

    That this great social change is achievable, is borne out by the experience of our blue collar workers who went and sweated their life’s blood on the desert sands of the Gulf in the 80s and 90s, so that their daughters and sons could become neurosurgeons and IT engineers. Within the span of a decade, the community changed from blue to white collar.

    Informal HOUSING (or ‘slum’ as it is derisively called) has become the hallmark of all metros in the developing world, from Rio to Lagos to Nairobi to Mumbai. The evolution of slums in post-Independence India is the stuff of legend, on which many a career in New Wave Cinema of the 1970s was built….

    Several studies during this period revealed that the typical migrant to urban areas was a semi-skilled or skilled male, 18-35 years old, who sent a major share of his earnings back home to support his family.  Housing was a low priority for such a person and he was ready to squat or settle at any location which cost him the least of his hard earned money. The social vacuum created by a separation from rural roots was compensated by congregating along ethnic, caste, linguistic and regional lines, and such arrangements provided a strong social support system to compensate for the break-up of the rural extended family.

    The downside of this has been ghettoisation, which not only enhances strife and bigotry, but provides easy mobilisation in violent crises – be they communal riots, industrial unrest, or underworld gang wars.

    In planning terms, the assumption that slums and urban poverty were co-extensive and coterminous led to numerous ad hoc ‘slum improvement’ schemes at this time, where it was naively assumed that upgrading living conditions in slums in a piecemeal fashion, would eliminate the scourge of poverty from our towns and cities.

    But as the research and information base has grown, it has become clear that the relationship between urban poverty and slums is both tenuous and complex – especially as a second generation of slum dwellers, with few choices and little upward mobility, begin to emerge on the urban scene. They can look forward to a life only in the informal economy of the city, and given our antediluvian civic laws, even a new-born child in such a household, breaks a dozen laws as he draws his first breath… (Hope to share some interesting insights on slums in Census 2011,in a future Post)

    During the 1980s, urban slums could no longer be seen as extensions of rural poverty and became more or less autonomous. As thriving, self-sustaining social systems in their own right (Dharavi being an example), urban slums were no more synonymous merely with urban poverty. Thus while urban poverty incidence has declined between the early 1970s and the late 1980s, there is no evidence of any decline of the slum population.  As a result, fewer people have access to safe drinking water and nearly 70% are reported to be without basic sanitation.  Poor housing, infrastructure and urban services are the problem, not poor people.

    It is the failure to perceive this key point that has undermined most poverty alleviation programmes. As a UBSP Benchmark Survey (NIUA:1997) rightly points out …

    “Since it is assumed that those living in slums are poor, there is very little effort to affect cost-recovery for improvement work or collect user charges for services when provided, even though the capacity to pay may exist among a substantial proportion of the slum dwellers. This reduces the resource potency and the scope for expanding the coverage to include those who are at the lower side of the poverty ladder.”

    The consequences of regarding urban poverty and slums as co-extensive and coterminous have been largely negative:

    • Once a slum is recognized as such, subtle political forces prevent it from ever becoming de-notified and this has stigmatised entire communities of urban poor, doomed to be labeled ‘slum-dwellers’ for generation after generation
    • As a result, slums become powerful vote banks and can be mobilised for various anti-social activities like crime, extortion, land grabbing, strike breaking and communal violence
    • The various slum upgradation schemes set up an unsustainable regime of subsidies, inculcating the same dependency syndrome among beneficiaries, which was earlier seen only in Indian villages
    • Providing basic services in slums was made synonymous with poverty alleviation, and the neglect of health and education in urban slums continues to eat away at the human potential of slum populations, pushing them further and deeper into unemployment, under-employment and the informal sector
    • On the side of local government, there is a tendency to underestimate the ability of the urban poor to pay for services and they have to learn to ‘do without’ these services
    • Slum schemes with their emphasis on shelter and basic services, neglect informal enterprise, and compound the problem by making no effort to integrate the informal slum economy within the larger city economy
    • Almost all housing schemes continue to neglect the key issues of  access, security of tenure, and affordability and it is this – the most visible housing dimension of urban poverty ­­- which continues to scar Indian cities
    • Finally, with the entry of private commercial interests into slum rehabilitation projects as under Maharashtra’s SRA, there is a danger of encroached government and municipal lands passing forever into private hands.

    Perhaps Indian cities can take a leaf out of Singapore and China’s public housing and long-term lease policies to ensure development with equity. Summarising, one sees endless opportunities for doing something to formalise India’s growing urban informal sector, but these measures will take a long time to produce results, and a polity in its eternal 5-year rat-race is highly unlikely to take the trouble.

    Especially one so notably in favour of the rich that it is willing to cast even the formal sector workers’ rights on the dust heap; change land acquisition laws without a thought for the rehabilitation of those affected; and dilute environmental strictures – all in the name of ‘development’!

    This is what I meant about the direction of growth we are now stuck with, at the start of these series of posts…. Hope to look at Governance next time round…

  • Development and the Rural-Urban Continuum

    A nation which has forgotten its history is doomed. That is why, if we are to understand why Indian towns and cities are the way they are, we need to go back at least to British colonial times…

    Every schoolchild knows that the East India Company was here primarily to trade, and stayed on to rule. Therefore the urbanization of India (as in other colonies) concentrated on the development of port cities at Madras, Bombay and Calcutta; Cantonments for the mobilization of the army to maintain law and order; and railway towns to move goods and soldiers as required.

    The British were never interested in developing the hinterland – only in exploiting it – and concentrated all facilities like Universities and Hospitals in the cities and towns they created and inhabited.

    Meanwhile, the pre-colonial towns and their hinterland went into steady decline, and millions died in the regularly occurring famines in India. The situation is best summed up by that consummate and accessible historian, and our first Prime Minister, Jawaharlal Nehru in The Discovery of India:

    “With the developments in industrial techniques in England a new class of industrial capitalists rose there, demand­ing a change in policy. The British market was to be closed to Indian products and the Indian market opened to British manufactures…The Indian textile industry collapsed, affecting vast numbers of weavers and artisans…

    The liquidation of the artisan class led to unemployment on a prodigious scale. What were all these scores of millions, who had so far been engaged in industry and manufacture, to do now? Where were they to go? Their old profession was no longer open to them, the way to a new one was barred. They could die of course; that way of escape from an intolerable situation is always open. They did die in tens of millions. The English Governor­ General of India, Lord Bentinck, reported in 1834 that ‘the misery hardly finds a parallel in the history of commerce. The bones of the cotton weavers are bleaching the plains of India.’ 

    All these hordes of artisans and craftsmen had no job, no work, and all their ancient skill was useless… So they became a burden on the land and the burden grew, and with it grew the poverty of the country, and the standard of living fell to incredibly low levels… India became progressively ruralized.”

    Couldn’t have said it better myself!

    The Census of India in 1961, defined an urban area as:

    – Firstly, those settlements that were given urban civic status, like corporation, municipality and cantonment by the State Governments, and were recognised as ‘statutory’ towns.

    – Secondly, ‘census town’, applied to areas which met the following criteria: (1) population size of 5000 or more; (2) density of at least 400 persons per square kilometre; (3) at least 75% of the male workers to be engaged outside agriculture.

    As urban development is a State subject in the Constitution of India, there is quite a bit of variation in identifying Statutory Towns across States, making comparisons difficult. State Governments have been declaring overgrown villages as municipalities with great alacrity, often in the neighbourhood of existing metros. As these metros expand, land-owners on the periphery acquire overnight wealth and in order to match their new economic clout with political power, displace the traditional landed elite by the simple expedient of having their home village declared an urban area.

    According to the Government of India Census 2011 there are 7,935 urban centres or townships that house the 377 million urban citizens of the country. Of these, the 53 million-plus urban agglomerations account for 160.7 million persons (or 42.6%), and the remaining 217 million – or more than half of the total urban population of India – live in small and medium sized towns.

    For example, in Maharashtra there were 26 Municipal Corporations with population > 3,00,000; 12 Class A municipalities (1,00,000-3,00,000 population) ; 61 Class B (40,000-1,00,000 population);152 Class C (< 40,000) and 13 Nagar Panchayats, as notified.

    There is news today that the Government is planning to develop these small towns by opening BPOs! Of course, where they will find the manpower in such places to make a success of it, does not trouble the policy announcers! Nor can mowing down these towns as part of developing ‘industrial corridors’ provide sustainable livelihoods – it will only bring displacement of native populations, loss of agricultural land and water and air pollution.

    Can we not, therefore, look at the larger picture and convert our small towns from the problem to the solution?

    Even the most cursory survey will show that no more than 40% of the adult population of the ‘C’ Class municipalities is employed in non-agricultural activities (which, incidentally, contravenes the 75% criterion for urban areas outlined in Census 1961). Already, these smaller towns are intimately tied to the agrarian foundations of the country, informally networking tens of thousands of villages with regional and national markets.

    It is argued that with adequate resource allocation and infrastructure development, this network could be formalized, and extended into the global arena. Such a network would sustain the agricultural economy regionally and globally, and also become the base for the industrial, manufacturing and service sectors by providing competitive labour. Such a development would not only lead to more balanced economic growth, but also prevent distress migration to the metros, by tertiarizing rural economies.

    With 60% of the population of the smallest of these municipalities already engaged in agriculture, they provide the ideal hubs for the tertiarisation of the rural economy through the development of agro-industries and food processing and storage. Once the agro-industries sector is well developed, we can consider FDI in retail without jeopardising rural livelihoods.

    Where handicrafts are the main industry, this networking could be developed on the basis of workers’ collectives. There is the classic case of a village in Rajasthan, where the main industry was the manufacturing of mojri shoes. Thanks to the initiative of a development agency and local NGO, a workers’ collective was created, the entire manufacturing process was streamlined and standardised, and the collective was soon flush with export orders from places as far afield as Japan and the US!

    The success of sugar cooperatives in Maharashtra (like Warananagar and Baramati) is strong evidence of the success of cooperative farming, food-processing units, workers’ collectives and SHGs in making these places the hub of India’s growing food and agro-industry. That is the way to prosperity and elimination of local poverty and eventual prevention of emigration to bigger metros.

    In my next Post, I hope to touch upon the larger cities and ways to stem informalisation, and address at least some of the issues arising from the growing urbanisation of Indian poverty…

     

  • Development as directed growth

    As Mr Narendra Modi has managed to sell the development mantra to two of the most economically important States of India – Haryana and Maharashtra – we need to take pause and reflect on what exactly this development implies.

    At its most basic, development is ‘directed growth’, so while economic growth qua growth seems a laudable objective, the direction of this growth is most important, if development is to provide sustainable livelihoods to all Indians.

    Isn’t that what the aspiring classes aspire to?

    Immediately after Independence, India’s growth was headed in the right direction where food security in the famine riddled countryside became the top national priority resulting in the Green Revolution. Simultaneously, new industries took shape in the public sector and the new steel plants became the new temples of Modern India.

    It was Nehruvian vision that also saw the creation of IITs, IIMs, TIFR, BARC and several institutions of higher learning, which were to provide India with the necessary manpower in time for the information revolution and the nuclear age. (Ironic indeed that the beneficiaries of Nehru’s vision are today so eager to write him off the pages of India’s history!)

    However, this vision became somewhat blurred in the post-Nehru era and things spiraled out of control in both the rural and urban areas throughout the 1970s and 80s, culminating in the near bankruptcy of the country in 1989. The economic reforms that followed in 1991  – and have become the common guiding light of both the Congress and BJP – did succeed in creating a high consumption middle class, but also sharpened the socio-economic divide to the point that there is no serious discussion today on poverty alleviation and subsequent human development, at either end of the ideological spectrum.

    While the post-Independence development strategy averted a major crisis in the tenability of the idea of India, it had TWO long-term effects on the sustainability of development:

    • Firstly, the stress on agricultural production during the  Green  Revolution relegated the rural economy to the primary or extractive sectors, effectively preventing its tertiarisation, thus making RURAL growth unsustainable in the  long run;
    • Secondly, the neglect of urban areas and the emphasis on elitist rather than universal education led to the spiraling informalisation of the urban economy, making URBAN growth unsustainable in the  long run.

    The Garibi Hatao philosophy of the 1970s spawned programs like IRDP, which were essentially a transfer of subsidies to those below the poverty line, and this practice has continued in one form or another through the Jawahar Rozgar Yojana, the SGSY, and MNREGA. That the main beneficiaries of these subsidies were the big land-owners, is another story…

    While, there are many reasons for the indifferent impact of these schemes, they have collectively created such a culture of dependency among the rural poor, that individual enterprise and self-help has become rare enough to be eulogised in management textbooks as a ‘best practice’… Anna Hazare’s Ralegan Siddhi being a case in point.

    The continuation of similar subsidies by the present government, directly or indirectly, will only perpetuate this dependency and fuel further distress emigration to urban areas.

    The failure to move rural economies to the secondary and tertiary sectors also means that rural households do not have an alternative source of income, and a single crop  failure can tilt the balance towards utter desperation, leading at worst to farmers’ suicides; or at best to emigration to the nearest metro.

    This exclusive dependence on agricultural livelihoods also skews the societal landscape of the village, where the amount of land one holds decides everything from one’s status to access to basic services and one’s political clout.

    The eminent social anthropologist  M N Srinivas rightly asserted that the politics of rural India is the politics of Dominant Caste. He defined Dominant Caste by 3 criteria:

    – Firstly, numerical strength
    – Secondly, a place not too low in the ritual hierarchy
    – Finally and most importantly, LAND OWNERSHIP

    And because land ownership is almost entirely hereditary, it forecloses all opportunities for social mobility for those born into landless households. Is it any wonder then, that the majority of India’s poor (67%) live in the rural areas, and the poorest of the poor are landless labourers,  who tend to belong to Scheduled Castes and Scheduled Tribes, who are the worst off, because tribal societies have historically had communal, rather than individual, ownership of land and its resources.

    Dominant Caste politics also enables the powerful to deliver an entire village, district or region to a single party come election time, and we saw this phenomenon (of the ultimate vote banks) at its greatest potency in Uttar Pradesh in 2014.

    How can a country where the future of a majority of its citizens is decided by an accident of birth ever become a world leader? Isn’t Development meant to break these social barriers – like gender and caste?

    It should be understood that poverty implies not only denial of basic necessities like food and shelter but also denies or limits access to basic social services like education and health, which are in any case extremely inadequate to start with, because we never made the investments needed in social infrastructure for the world’s second most populous nation.

    Added to this is a virtually non-existent social security net – and chronic deprivation, low life expectancy and the world’s highest malnutrition is the sad reality of India today.

    The urban landscape has hardly fared better. It is estimated that almost 68% of Mumbai’s economy  now falls in the informal sector while the figure for Chennai and Delhi hovers around 60%.

    With the proposed dilution of labour laws and added incentives to small and medium enterprises, this figure is sure to grow, bringing in its wake exploitation, tax evasion, deregulation, higher levels of industrial pollution, overwhelmed civic services and infrastructure and greater urban poverty through unsustainable livelihoods.

    The continuing and growing informalisation of cities is directly linked to higher unemployment, more crime, and bigger slums through informal housing; as also more black money transactions in daily business… and even a 100 new smart cities will not shine in the increasingly desolate, polluted, drought-ridden, power-hungry and informal landscape that is fated to be the future of Urban India.

    Perhaps some direction for tackling both rural and urban poverty may be sought by revisiting India’s recent urbanization, as I hope to do in my next post…