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The Hindu, review on "Growth, Inequality and Social Development in India: Is Inclusive Growth Possible?", edited by R. Nagaraj

2 Nov 2012

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  • Title: When Growth Allows No Trickling Down
  • Author(S): K. Subramanian
  • Date: 29 Oct 2012
  • Publication: The Hindu
The Hindu, review on
This book is timely inasmuch as it coincides with the brouhaha over India launching into a new wave of 'reforms.' In six chapters, eight economists examine the development (Planning) strategies undertaken since Independence. It is part of a multi-country research programme on poverty reduction and policy regimes done under the auspices of the United Nations Research Institute for Social Development (UNRISD), Geneva. The idea is to study if there is an identifiable relationship between policy regimes and the record of poverty reduction in India.

The issues are truly complex and puzzling. The relationship between “policy regimes” and “poverty reduction” can no longer be assessed through Marxian praxis or the certitudes of neo-liberal market theories. Policy regimes may themselves be captured by classes.

The underlying assumption of the contributors is: “... poverty reduction is not simply a positive function of economic growth; the macroeconomic environment, social policies and politics may also have significant bearing on the outcomes.” The venerable vintage view of “growth trickling down” is thrown out of the window.

Public health

It is not a view cavalierly suggested to the reader as a new faith. The analysis is clinical, detailed and balanced. They try to set out India’s record of development alongside its impact on poverty reduction and redistribution. The authors weave their analyses in an inter-disciplinary manner.

There is an introductory chapter by the editor which gives an overview and a summary of the contributions made by the contributors. It sets the stage for the whole book.

Referring to the changes in policy regimes in India and comparing it with China’s, he says, “… contemporarily India is perhaps an example of polarising growth with modest decline in absolute poverty.” He goes to examine investments in public health and sanitation and highlights the neglect of the sector. Reports on lack of sanitation, especially public toilets, have shocked the public.

As Nagaraj explains, “under-investment in sanitation probably reflects social apathy and policy neglect towards the services that these caste groups perform.” On other areas such as “social protection” and “inequality”, India’s achievements appear modest in a comparative perspective. Economic growth, regardless of the policy regimes over the decades, has been iniquitous though social and political changes have brought about a semblance of inclusiveness. Where India scores is in its efforts to build a political democracy that works in favour of the poor and the disadvantaged. Political parties, however elitist in their practice, have to reckon with these pressures and cannot take the electorate for granted. The development model has remained elitist and worked against the interests of the poorer sections.


The Indian state has generally found common cause with the business class (Indian and foreign). These groups are able to command better resources to lobby with the government than the working class. Over time, the working class is getting weakened and is unable to raise the resources to match the ability of the business groups and vested interests.

There is the resultant tension arising out of democratic structure in which the demands of the poor such as subsidies come into conflict with “fiscal” constraints demanded by adjustment programmes. These issues are studied in depth by the contributors especially by Vivek Chibber and Atul Kohli.

There are six chapters which include: Development strategies and poverty reduction; economic development and inequalities; social protection policies; and rethinking social reforms. The chapter on organised interests and their impact on development strategies and social policies by Vivek Chibber deals with social dynamics and the last chapter by Atul Kohli handles “state and redistributive development in India.” All the authors share a common world view and each chapter resounds as a note in a fugue played on different instruments. The contributions are highly scholarly and enrich our understanding of development constructs.

In chapter two, Nagaraj provides a broad historical sweep of development (Plan) strategies and how they have been influenced by political and social classes, especially the landowning class in the early years and by the business class in later years. As he says, despite much rhetoric, the principal goal of the development strategy has always remained accelerating output growth with reasonable macroeconomic stability. As distribution of existing property or a progressive system of income tax was ruled out on political considerations, what is left, in effect, is a pious belief of economic growth trickling down to the poor to ‘lift all the boats.’

Social protection

On issues like “Inequalities” and “social protection”, the record is depressing. By and large, there is agreement that though poverty has been reduced in monetary terms, it has not come about in real terms. On social protection, the Indian record is pathetic. The workers in the unorganised sector are thrown to the wolves and they have no medical or social cover.

Gita Sen and Rajasekhar (chapter 4) analyse them graphically. They detail the record during the reforms when inequality in wealth, incomes and consumption between the so-called middle class and those below increased sharply. It is observed that the record was better in the pre-reform years of 1980s and deteriorated after the reform era.

Vijay Shankar and Mihir Shah (chapter 5) provide a brilliant paper on a vision for the social sector. They draw attention to lack of investment in public health, education, sanitation, water, etc.

These sectors have been historically neglected and have also become victims of fiscal reduction. As the authors conclude, “Every democratic state in history has invariably delivered basic social services to its citizens. India’s record in this regard has been abysmal.”

The last two chapters by Vivek Chibber and Atul Kohli are studies in social dynamics and portray the changing balance of power between the Indian State and the group interests such as the business class, workers, etc. They draw attention to rising democratic pressures. Sadly, the conclusion is clear: the State aligns itself more and more with the business class and the working class is squeezed. Kohli is an old India hand and has several books on India to his credit.

He draws the modest (pessimistic?) conclusion that the Indian State lacks the capacity to undertake public investment and improve its lower level bureaucracy to improve its delivery system.

As we said earlier, this book is an outstanding contribution to development theory. It should chasten, if not disturb, those who look upon reforms as the road to higher welfare. Contents of reforms are important. Adding another tier of foreign direct investment (FDI) to the current social mélange may queer the pitch by strengthening the business groups vis-à-vis the masses.

The book review is posted with permission from The Hindu.