INDIA’S common people, the aam aadmi, are likely to occupy the public stage once again now that a general election to the Parliament is round the corner. I say ‘likely’ because the nationalistic jingoism in the wake of the terrible and heinous act of terrorism in Mumbai – India’s Mumbai, I dare say – has every chance of overpowering every other agenda. Thanks to the immense contribution of the electronic media, there seems to be little space for a collective and collected deliberation on the causes of such acts of terror in the country which might also have a socio-economic dimension. That would indeed be unfortunate, not for everyone but certainly for those whom we call the aam aadmi.

When political parties and politicians refer to the aam aadmi, I doubt that they have any idea of the magnitude of this group of people. Perhaps their gut feeling tells them that they form the majority of the Indian people. If that indeed is the case, I think that politicians’ gut feelings often give them a better signal than the complicated, and often convoluted, arguments and estimates of the experts.

But, whatever happened to the aam aadmi? When the United Progressive Alliance came to power they had the backing of a Common Minimum Programme (CMP) that was devoted in large measure, and in terms of promises made, to the aam aadmi and her/his upliftment. Some argue that the promises to the aam aadmi have been fulfilled to a great extent and if there is any shortfall it is only due to the fact that we could not enhance our growth rate well above nine per cent. Growth trickles down but more growth would create a bigger trickle. Others are more wont to say that whatever has been done for the upliftment of the aam aadmi is mere tokenism and the main agenda is nothing but an obsessive pursuit of aggregate economic growth per se. As it happens, reality is rarely black and white.

Indeed there was, in my view, a historic step in the form of a right-based employment guarantee programme that was designed for the rural poor and at wages that are not based on ‘starvation wages’ prevalent in so many parts of this great country (see accompanying Table). Such a scheme is unlikely to have seen the light of day but for the rare political will that was demonstrated against the urban elite whose ‘spokespersons’ went to the extent of suggesting dropping money from helicopters as a better alternative to a leaky delivery system. The story of employment guarantee is still unfolding as it has entered only the third year and is yet to cover the whole country. Yet the early reports are promising in terms of average days of employment created, wages paid, works undertaken, the pride and joy in the face of women who have taken to it much more than the men. This does not mean that there are no problems in the implementation of this programme. Yes, problems there are, but it has undeniably opened up a new front for the aam aadmi to articulate demands in concrete terms: provide employment, mandated wages and treat us with dignity. But what else?

 

The most likely answer is a loan waiver for the marginal and small farmers. But how did farmers come to such a pass? The share of public investment in agriculture nose-dived to nearly half of what it was in the early nineties; access to institutional credit by marginal and small farmers was limited, driving many to the moneylender; prices of agricultural commodities did not keep pace with inflation; and, among others, the agricultural extension system nearly collapsed. It is, therefore, no surprise that these marginal and small farmers also become casual wage labourers for several months in the year. But some of them, including the not-so marginal and small, were pushed into taking their own lives.

Then there is the Bharat Nirman, a package of existing but modified rural infrastructure building programmes. The scheme is due to expire in 2009 but the realization of targets seems to be way behind. As against the modest targets, achievement in village electrification is only 34 per cent, electrification of officially determined BPL households an abysmal six per cent, and drinking water connections to habitations around 48 per cent. Bharat Nirman seems to be a case of ‘business as usual’, with implementation largely driven by the bureaucratic machinery and minimal participation of stakeholders, especially at the local level. The National Rural Health Mission seems to be headed for a similar fate.

 

If such is the situation with regard to programmes that have been implemented, there are also some glaring cases of non-fulfilment of the promises in the CMP. Take the case of a national minimum social security to the 300 million odd (or over 400 million if unpaid family workers are included) informal/unorganized workers in this country. The proposal of the National Commission for Enterprises in the Unorganized Sector (NCEUS) which was mandated to examine the issue was indeed modest, but would have been a necessary and logical complement to the employment guarantee programme. The proposal was deliberated in the all-party Parliamentary Standing Committee which expanded the coverage of the scheme and wanted it to be implemented in three years, instead of the earlier five years, to underline the sense of urgency and criticality. The cost of the scheme to the government was estimated at not more than half a per cent of GDP were every eligible informal worker to be covered.

To put this in perspective, we need to recall that the revenue that would be foregone by the government as a result of implementing the SEZ policy was reported to be more than three times this amount. Despite the political consensus on such a national minimum social security, what has been currently promised to the informal workers is a collection of half-baked schemes, existing and seemingly new ones, for some segments of this universe of informal workers, without either an empowered authority to implement or a dedicated fund.

Even from the point of economic growth per se, this is the least that the state ought to ensure. Witness the rush to ensure the flow of credit to the private corporate sector in the wake of the ongoing financial and economic crisis. But what about the micro enterprises that constitute 98 per cent of all non-farm enterprises in this country? They employ nearly 108 million workers. Don’t they contribute to the GDP of this country in significant measure?

 

The NCEUS Report on Financing of Enterprises in the Unorganized Sector brought out that these enterprises vary from a single person (self-employed) to those with less than ten workers with an investment in plant and equipment of less than Rs 25 lakh. In fact, 94 per cent of them have an investment of less than five lakh rupees. But they contribute 30 per cent of the GDP in the country. Therefore, these are nothing but livelihood strategies of people who do not have any other gainful options but to work and toil extremely hard to make both ends meet. In return they get less than five per cent of the aggregate bank credit in the country. Again, less than five per cent of these enterprises have access to institutional credit. As for those with less than five lakh rupees in investment, only two per cent of the aggregate bank credit reaches them. One can only wonder what kind of inclusive growth this is.

A proposal was submitted to the government more than a year ago, to create a development finance agency to cater, even if modestly, to the credit needs of this sector. The model suggested is along the lines of NABARD for agriculture and Small Scale Industrial Development Bank of India (SIDBI) for the small scale sector largely catering to units with an investment of more than Rs 50 lakh. The proposal remains ‘under consideration’. But one may legitimately ask why the banking system has turned a blind eye to this sector? Aggregate bank credit in India grew by more than 16 times, yes more than 16 times since the early nineties, but the share going to the micro and even small enterprises came down. More than 3000 bank branches were closed down in rural areas but new and aggressive private banks bloomed with daily calls offering loans to urban elite consumers.

 

I am afraid the report card is not an exciting one if one takes a decidedly pro-aam aadmi position, one that is likely to be ridiculed as anti-growth by the proponents of neoliberal economic policies. Despite a legacy of different shades of inclusive politics and the increasing political articulation of the aam aadmi, not to speak of the rising aspirations of the young, economic policy continues to be firmly anchored and entrenched in the neo-liberal paradigm that continually seeks to bet on the strong.

The market here is not the leveller but the divider because it talks the language of money and nothing else. However, there is an opportunity given the current crisis of financial capitalism for chalking out a decidedly pro-aam aadmi strategy and policy of economic development rooted in enhancing their capabilities, focusing on small production and reorienting the formal sector primarily to serve and expand the domestic market. Whether the Indian political system will be ready to re-evaluate its strategy of economic development that has several meanings in terms of social, regional, sectoral and gender identity is something that is yet to become clear.

But I wish to convey here that the aam aadmi, besides having a face of a poor and vulnerable person working in the vast unprotected informal economy, also has a social face that has to do with the deeply entrenched, hierarchically ordained, social inequality in the country, something that we are all aware of but shy to debate in a disinterested way.

 

As one can see from the accompanying Table, India’s aam aadmi are mostly the poor and vulnerable if one goes by an international definition of income poverty that is equivalent to two Purchasing Power Parity dollars. This was equivalent to two times the official poverty line at Rs 24 per person per day in 2005, just over two PPP dollars (2.1 to be exact). They form 77 per cent or a whopping 836 million of our people. Some experts called this estimate ‘absurd’ until an independent estimate by World Bank researchers put it around 72 per cent for 2007. It is this segment that some of us would like to call ‘India’s common people’ or the aam aadmi (see Economic and Political Weekly, 15 March 2008). Nearly 80 per cent of the informal workers in this country belong to this segment of poor and vulnerable.

But this average, if viewed from the angle of social identity, conceals the social inequality that is not only well-entrenched but also shows a systemic and hierarchical pattern. By collapsing the myriad of castes and communities, I present a stylized picture of the hierarchical social structure by identifying some at the bottom (SC/ST) and some at the top (called Others including upper caste Hindus, Sikhs, Christians, and so on) and some at the middle (Muslims and OBCs). The middle is separated into two for reasons that I need not labour here.

While 77 per cent of the Indian people are poor and vulnerable, it is as high as 88 per cent for the SC/ST, 84 per cent for Muslims, 80 per cent for OBCs and 55 for others. But a more robust measure of long term physical poverty is chronic energy deficiency and by taking women I try to get at the most vulnerable. It is 43 per cent for the bottom and 28 per cent for the top social group. Anaemia is another indicator of physical stamina and the incidence ranges from 61 per cent for the SC/ST and 50 per cent even for those in the upper segment. Human dignity can be measured in many ways but I am sure, having a private toilet facility even in a rudimentary form is one such. Of course, a majority of Indians do not have this luxury to claim a life of such dignity, but it is as high as nearly three-fourths for the SC/ST at the bottom and close to one-third for the upper social group.

 

When there is so much talk about a ‘demographic dividend’ and the potential to expand the home market, one needs to take a hard look at the quality and capability of the workforce. Informal workers, who constitute 92 per cent of the total workforce, do not have more than five years of schooling, ranging from just three years for SC/ST and only a little more than seven years at the upper social group. If this is a dismal picture, then how should one describe the educational capability of women workers that is not even half that of men for most social groups? Casual workers are among the most vulnerable with irregular work, low wages, poor conditions of work often involving the handling of hazardous substances and poor environmental conditions. Primarily they are involved in what are called menial jobs. Therefore, their wage rates, irrespective of social status, show some kind of ‘equality’ except, of course for those at the bottom. This rule is not reflected in the wages of women, all of whom get around 40 per cent less than men.

What is to be done, especially in the current context of the global financial crisis turning into India’s economic crisis as well? The aam aadmi hardly gained when the economy was booming on a high growth path but now face the prospect of losing her/his employment, however poor in quality and low the earnings. If we take an aam aadmi view of livelihood security, long-term growth and human development, it will call for a paradigm shift in economic policies that would certainly be compatible with the politics of democracy. It will call for (a) a shift in public expenditure aimed at increasing the purchasing power of three-fourths of the households immediately, (b) initiating a coherent set of policies for social protection, (c) increasing public expenditure in basic social services that will enhance the human capabilities of the neglected three-fourths of the population, (d) enhancing public investment in economic infrastructure especially in rural areas, and (e) such other additional measures as are warranted for expanding the domestic market.

 

Let me cite some programmes that should find a place in such a pro-aam aadmi policy framework. These are (i) strengthening the rural employment guarantee programme by removing the 100 day cap, allowing convergence with other programmes and strengthening the capacity of village panchayats; (ii) initiating a similar programme for urban areas aimed at providing housing for the low income groups especially slum dwellers; electricity, water supply and sanitation to such housing areas; slum improvement programmes; low cost waste management, and greening of the urban space; (iii) expand the self-employment programmes in non-farm activities; (iv) launch a special programme for marginal and small farmers, who constitute around 84 per cent of all farmers, to bring them on a group basis and to secure effective agricultural extension, credit and other services; (v) ensure adequate access to micro enterprises by creating a development refinancing agency; (vi) launch a skill development programme aimed at the working poor; and (vii) ensure the complete coverage and effective implementation of preschool child development programmes, e.g. ICDS, Sarva Shiksha Abhiyan, mid-day meals, public distribution system and rural health programme. Last, but certainly not the least, create a ‘social floor’ for the working poor guaranteeing a minimum set of conditions of work, a national minimum social security as well as a national minimum wage to which states could contribute as an ‘additionality’ depending on their capacities. It is crucial that such national policies are implemented by taking state governments into confidence and by a process of ‘hand-holding’, if needed.

 

How long it will take for such a policy shift as a bottom line of India’s development strategy will depend on how long the aam aadmi is prepared to wait.

The magnitude and profile of the aam aadmi that I have attempted to portray here shows the existence of a huge underbelly of ‘suffering India’ in an otherwise ‘shining’ one. We cannot be complacent just because the macro economy is doing well with high aggregate growth rates, and our foreign exchange position is comfortable. Growth, of course, is a necessary condition, but it is not the same as asserting that growth will necessarily trickle down. So far it has not, or even if it has, it has been at a snail’s pace. It is mere wishful thinking that a majority of people will patiently wait for this to happen.