Bettiah, Bihar, Part 2

Under the influence of Gandhi, who was profoundly wrong in many things, modern India has embarked on a path that is not only disastrous but also non-sustainable. Gandhi was not an economist nor was Nehru, his intellectual counter-point in the thinking about making of the modern state. P. C. Mahalanobis, whom Nehru hired with great fanfare to be the chief economic strategist of the modern India was a traditional socialist who was under the spell of the Soviet-style central planning. Together this created a perverted set of beliefs that landed us in this current mess.This Gandhi-Nehru concept of state-building was opposed by Sardar Patel who was quickly and effectively marginalized by Nehru. The resulting system, that lasted for 30 years (and still persists in many ways and forms) has certain unique characteristics. The strong and great belief in the importance of villages and the propensity to channel funds to rural development Creating cottage industry sectors and restricting the growth of sectors Central planning with very little input from the local and cultural realities Uneven trade union and labor laws Strong belief in heavy industries and core sectors Nationalization and strong state character of industrialization Agricultural policies like land reform and subsidized power and water Highly restricted credit policies (India's credit rating agencies like ICRA are relatively new and the states were encouraged to be fiscally irresponsible through the planning process) Strong dislike for private sector investment and private capital A planning commission that did not hold bad governance accountable Bloated government interference through the license raj Controls and tariffs Passing of the laws with no enforcement (and even worse, uneven and patchy enforcement) Wasted effort and underfunding of urban infrastructure In a nutshell, this created a system where urban areas were allowed to decay and their resources were unevenly and inefficiently distributed to the rural areas for so-called development without any regard for sustainability. (For an interesting discussion on this topic just an example, please look at the budget figures break-up of the ministry of aviation for the top 20 airports in the country for the last 10 years. And compare the expense figures to the capital expenditure and you will find some interesting things.) Is there a different path forward? The rate of Indian urbanization is very low. At this time, I think the urban population is less than 30%. This is a huge contrast to all the other countries that dream of becoming world powers. Is it possible to grow to a strong industrial country through rural development? Lets look at an average Indian village: Land ownership is uneven Caste and religion considerations make social mobility difficult and impossible Resources are very inefficiently allocated among villages Industrialization requires heavy capital and infrastructure investment. It is not possible todevelop even 20% of the villages to that degree because of lack of sustainability The only possible alternative is strong and large scale urbanization. If a place like West Champaran can be organized into a fairly large urban area, then all the resources of the district can be pooled into that single space for equitable development. Urban movements have always contributed towards changing the social order and destroying feudal (or caste) considerations. Because of sugar and wild cane in this area, as an example, industrialization can be concentrated. Bihar's development deficit in PPP is now a staggering Rs. 18000 (approx). With an average per capita infrastructure investment of Rs. 500 it is impossible to devote any meaningful share to any village. However, it is indeed possible to improve the infrastructure of Bettiah and even provide for affordable housing the the people who would move from the villages. There are other persistent issues, such as water and power deficit that require significant investment. But I would argue that with a state wide infrastructure of Rs. 21000 crores in the 10th plan, it is possible to develop first-class infrastructure for both, it there is agreement that one region will be developed first. In other words, concentrate the infrastructure development where the highest payout is first. In addition, with concentrated schools and non-agricultural labor creation (factories of produce) educational levels can go up significantly since factories can be (and have been) used as places for social development as well, such as literacy campaigns. With this and women's empowerment, basic mortality and birth rate statistics can be reduced and monitored better. The urbanization also helps in two other things. It helps increase land efficiency by cultivating more land with fewer people and increase non-cultivated land without reducing output. This has been done successfully in Maharashtra and Punjab. Once urbanization program starts, it is extremely important to destroy the villages and redistribute resources. This also eliminate the feudal structures and prevent relapse. Power theft and power line loss can be minimised through concentration. Eliminate cottage industry status in these newly urbanizing areas and suspend the trade unionizing to allow for basic growth to take place. It is also extremely important to break up the daroga system and hire professional policemen from all castes. patrolling becomes easier since the population is concentrated in a small area. Out of the rural population of 2.7 million, the target should be to redistribute 1.2 million to the newly urbanized zone in the first three years. And to complete the process of redistributing another 1.5 million over the next seven years. This will create a large city. But it will be a large city that can be self sustaining and is able to afford the development cost. And as the education levels increase and total local investment increases, the city can organically grow. Am I dreaming? Perhaps yes. But it has been done in other countries. And in dire ways, this scale of urbanization has been successfully tested in Tamil Nadu and Maharashtra without intervention. The biggest difference has been good governance. So before I shake my head, blame bad government and walk away, at least one thing is doable. Change the mind set of rural development and embrace urbanization as the real vehicle for growth. India is not going to grow through the spinning wheel and the village, but through massive local industrialization and urban growth. It is already evident if you look at the number of Biharis fleeing bad governance and moving to the mega cities. Lets face facts and do something about it before it is too late. Adios. ----------------------------------------------------------------------------------- For a decent discussion on Caste situation in Bihar, please see Roy, Ramashray, Caste and political recruitment in Bihar, from Caste in Indian Politics, pp 215-244, Kothari, Rajni., Ed., Orient Longman, Hyderabad, 2004. More general discussion on Communinalism can be found in Pandey, G, The construction of commununalism in Colonial North India, Oxford University Press, New Delhi, 1990. For a decent discussion on the development of Bihar under the British, please refer to Yang, Anand A., Bazar India - markets, Society, and the colonial state of Bihar, University of California Press, Berkeley, 1998. A different model of development model can be found in Parayil, Govindan, Ed., Kerala, the development experience (reflections on sustainability and replicability), Zed Books, London, 2000. I find the papers by Shrum and Ramanathaiyer; Veron and Kurien particularly fascinating.

Example of a Flawed Strategy: Rural Development Bringing pumps to people: A five-point strategy for poverty reduction by bring water pumps to villages The research summarized here analyzes factors that have influenced the success and failure of groundwater development schemes in India. Based on these studies, five points are recommended for policy action: _ Discontinue government minor irrigation programs and focus on private tube wells as the primary mode for bringing groundwater irrigation to poor communities. _ Improve electricity supply for agriculture by reintroducing metered charging, decentralized retailing of electricity, and prepaid electricity cards. _ Promote the modification of pump sets to improve the energy efficiency of groundwater pumping, reduce pollution and lower the sale price of water to poor users. _ Introduce small diesel pumps and manual irrigation technologies for vegetable growers and marginal farmers. _ Remove pump subsidies and open the market to the import of smaller micro-diesel pumps, such as the Chinese equipment used in Pakistan and Bangladesh. If this is not practical, a useful alternative is to redesign pump-subsidy schemes along the lines of the Uttar Pradesh Free Boring Scheme. (Taken from IWMI-TATA Policy Paper, this is for a place where water resource overuse is over 32% How this is sustainable is beyond me.)