Monday, June 18, 2007

Of the Indian economy and human development...

Reading the news, especially news from India, seems to give me plenty of blog material. The latest in the series is this article from Statesman, Calcutta (oops! its Kolkata now!) stating that over 48% of all outbound investment is from the IT and the IT-enabled sector. The point of this post is not to debate the whys and wherefores of outbound direct investment by Indian companies and its mechanisms, but to wonder how far IT and ITeS can lead us as a nation?

I am not an economist and I will not debate the macroeconomic considerations behind calling India an emerging economy. As a student of Security Studies, I am more concerned with the issue of Human Security. And as a student of International Relations, I am more concerned about human development. So, here I am, asking the question I should have asked a few years ago during the BJP's "India Shining" campaign. How far can IT take us when nearly 30% (maybe more) of India's population is illiterate? What do IT, computers and Internet mean to the one-half of India that has no access to drinking water? And finally, how does IT ensure the security and well-being of the citizen, thus bringing into focus the issue of human security?

My immediate response to these questions is that it does not, in fact, contribute in any way to improvement of the lives of nearly 400 millions Indians who live below the poverty line. When I say this, I am not condemning IT or ITeS as unnecessary or pointless. I am simply observing that the money brought in by Indian multi-national companies (yes, they do exist) does not contribute effectively to improving the standard of living of the Indian masses. By masses, I do not mean the middle class and the upper middle class. I mean the real masses who live far away from bustling urban centres. It is easy for us, as Indians, to pat ourselves on the back for the rise of Indian multinational companies, not only in IT and ITeS, but also in other areas like steel, telecommunications and aviation. It is easy also to forget that India still ranks an abysmal 126 out of 177 countries, with a human development index of 0.611, according to the 2006 Human Development Report of the UNDP.

It is important to find out where we are going wrong. Indians often pride themselves on the excellent system of higher education that exists in India. We waste no time in reminding everyone that our IITs and IIMs are comparable to MIT and Harvard Business School. However, we tend to forget that the students of these IITs and IIMs are often from elite, private schools that offer world class secondary education. The HDR says that the combined gross enrolment ratio in primary, secondary and tertiary education is merely 63%. That means that nearly 40% or India's population has never been to school. How does economic development help the nearly 500 million people who have never stepped into an educational institution?

The problem lies here. It lies in the education sector. An emphasis on higher education and the existence of heavily subsidised universities and colleges serves no purpose if 40% of the country's population cannot afford access to the first 12 years of schooling that will help them get into these universities. The fees my parents had to pay during my school years clearly demonstrates this. When I was in Class 12, the final year of school, my parents paid nearly 10,000 rupees ($250) a year. This changed dramatically once I got to college. As I did history in an aided college, albeit autonomous, I paid something like 3000 rupees ($75) including maintenance fee that WCC charged for the upkeep of the campus. I would have paid about 700 rupees (less than $20) had I studied in a government college. At post-graduate level, my entire year's expenses, including exam fee, were no more than 2500 rupees ($65) at the University of Madras. How are people supposed to get to the stage where the government pays for everything if they can't afford the $250 a year for primary school in the first place? Government-run primary schools are so bad that even the lady who works for my mother as domestic help prefers a badly-run private school. In rural centres, the teachers rarely ever show up. In states like Bihar and Madhya Pradesh, schools are used to host local criminals and/or politicians. How will India ever really shine if primary education is so neglected?

I am not saying that economic development is a bad thing. In fact, economic development is essential to facilitate infrastructure building and education. However, the problem arises when higher education is given preferential treatment over primary education because of flawed government policy. The market in India does its job perfectly well: it creates wealth. The redistribution of the wealth thus created by ensuring access to basic public goods is the job of the government. Sadly, nothing seems to change in India. Every year, the Finance Minister offers sops to the IT sector and the services sector. But, no progress seems to be made on basic issues of health, sanitation and primary education. These are the primary issues that must be addressed if India intends to ever get to the position of a developed country.


little donut said...

Interesting research question to ponder!

I think economic development is in fact essential to human security and progress in one can not occur without progress in the other. What is interesting is if the general increase in overall wealth of the nation actually mean there is an increase in the per capita income of the "masses" that you mention? Eventually when there is more than enough wealth generated by the IT sector and other service oriented sectors (most of Indian growth is a function of the service sector rather than the industrial sector), is it possible that the wealth will have a gradual spill-over effect improving eventually the lives of one and all? - this would be a more free-market approach to development and security.
Or do we actually need a redistributive government policy to affect human security needs of the masses? - a dependency argument.

students of economics often ignore the security externalities created by trade agreements, FDI etc. As political scientists, we are more tuned to such externalities and with concerns over human security which get easily overlooked.

We should possibly compare notes and syllabi for a better discussion. There is so much I could write - but a blog doesn't seem the right space for it.

little donut said...

my blog is pure crap. I never write anything of value on there.

As for the other questions:
I am certainly a political scientist rather than an economists and quite like you, am actually very much interested in security studies.
However, in studying human security I think it is a must to study the impact of various economic interactions, because while they are wealth-generating, they do not necessarily generate social development, but at the same time a systematic study can enable us to channel "gains" economic interactions towards better human security.

As you can guess then, my areas of interest/expertise is conflict, security studies (including human security) and international political economy. In fact the dissertation is a work in progress regarding the nexus of politics and economics for better human security.

little donut said...

Definitely do a PhD if you like this stuff.

I am almost finished with mine - i.e. next Spring say hello to Dr. D

We should also find a better/efficient way to communicate, rather than leaving comments on each other's blog.