The right development choice

The World Development Report 2009 (WDR), which focused on reshaping the economic geography, has received a lot of attention in India. This is primarily because the report seems to be implicitly criticising a number of programmes of the government as inhibiting mobility of labour within the country. A case in point is the national rural employment guarantee scheme (NREGS), which has created a wage floor that is being seen as a barrier to the flow of labour within the country to demand centres. This is a rather strange argument — India does have a minimum wage definition that already exists, but most agricultural wages are still lower than this level due to poor enforcement of laws. If the wage floor established by NREGS is higher than the minimum wages in certain areas, it should be welcomed, as the minimum wages currently specified are inadequate to overcome poverty levels. Of course, the government must make sure that the NREGS programme is regulated to ensure that it does not become an instrument of political patronage, and that its support pricing system reflects the new realities in rural areas. However, the regulatory failure of the government cannot be translated into a penalty for the poor. The WDR itself draws upon a lot of international experience to make the case for urbanisation (essentially implying a near linear relationship between concentration of people and economic well-being). Undoubtedly, larger concentration of population creates great scale economies for both infrastructure and enterprise. However, it would seem a little superficial if we came to the conclusion that the entire population in a country should be packed into cities without considering the hand-in-hand movement of such concentration with the creation of jobs. There have been enough studies in India that have showed that the quality of life of rural migrants in cities is significantly poorer than what they enjoyed in the villages. Rural migrants in urban areas typically move into slums in the most inhuman and degrading circumstances with little or no infrastructure facilities or even social networks to fall back on. We can definitely debate the contribution that such migrants are making back to their villages and the amelioration in status — economic and social — that they can expect over future generations. This needs to be weighed against an honest attempt to improve the socio-economic-environ-mental infrastructure of rural India adjusting for the happiness quotients. By the year 2030, India is slated to have a population of more than 1.4 billion people. Nearly 35 per cent of these people would be living in urban areas. In other words, urban India has to grow to accommodate another 150 to 200 million people in the next 20 years — which translates into a nearly 50 per cent increase over the current urban population. Given the gestation periods involved, we are obviously not seeing a planned development of either urban infrastructure to accommodate this additional population or employment opportunities to absorb them in a productive, socially undisruptive manner. Despite this large growth in urban population, nearly 900 million (rounded figures) people would still be living in rural India in this time frame. India does not have the capacity to absorb them in urban areas leave alone productively employ them. In short, it is foolhardy to suggest simplistic solutions for development or make uninformed criticism of government efforts to improve the capacities of its people. The NREGS scheme is a unique initiative globally which, if implemented well, has an unprecedented opportunity to transform the future of a huge mass of people. Issues of leakages, political interference and productive focusing definitely need to be addressed, but this can only be achieved if all stakeholders in this effort came together constructively. Finally, a scheme like the NREGS should be looked at in conjunction with the host of other initiatives being undertaken on provision of education, health, energy services, franchisee development, rural enterprise creation etc. The real question for India is not whether we should move all our people into a ‘hot, flat and crowded’ state, but whether we can re-align their development along greener and more rewarding pathways without repeating the mistakes of the developed world.