Annual Budget is an exercise of stock taking therefore highly contextual; yet the balancing act it has to perform is not only in terms of revenue and expenditure, but need to address a number of dualisms that confronts Indian economy - for example, short and long term goals, rural and urban economy, agriculture and industrial (service) sectors, dualism of labor markets where 90% of labor force is in informal or unorganized sector, government versus private sector initiatives and not the least - Social Sector - so called people’s sector versus other formal sectors of the economy. Thus it is not a simple balancing line crossing, rather a number of such lines which are not parallel and the multiple crisscrossing in the web called National budget is not easy to confront with.
The contextual reality is that India is facing the heat of global economic downturn; and it would be futile to take solace in still positive growth of 6.3% in 2008-9 compared to near zero or a marginal global growth. What is important is not the level of GDP growth, but what incremental growth is achieved during the previous year; and a growth deceleration of about 3.0 % or so, does translates in to innumerable formal and informal shocks the corporate as well as general public is facing. One sure consequence is a broad based increase in unemployment but more specifically retrenchment of skill labor employed in selected export led industrial/services sectors where migrant and women labor has suffered.
The Budget 2009-10 presented this morning in many ways is a carried forward of the interim budget, but not much is added in terms of the ‘big bang’ second generation reforms nor strategy to plug a very high fiscal deficit of 6.8% which alone is 40 % of the total budgetary allocation and note that this amount is not on hand yet that spending will take effect immediately. Often upto one-third of allocations is never actually appropriated and spent thus the effecting need of fiscal deficit will be much smaller. Although the tax to GDP ratio is declared at 11.5%, the proceeds are far too inadequate to ease the interest payment worth 4% of GDP and the inevitable expenditure on defense worth another 2.5% of GDP.
This is budget with high fiscal deficit with no indication of from where this money will be brought in, limited direct tax incentives, no indication that domestic demand will be fired through fiscal and monitory incentives and there is no roadmap of disinvestment targets. However, while more details are awaited, what can be stated from the presentation of the finance minister is a focus on Bharat – meaning a focus on the common man beginning from a resolve to make agricultural sector rebound to a 4% growth; and there is also an emphasis on a number of infrastructural investments which can push both employment generation and augment rural markets. A 45% increase in allocation to projects under Bharat Nirman are noteworthy; further Rs. 325,000 cr or 5.45% of GDP worth funds are promised to be made available mostly from banking channels for agricultural credit at about 7% rate of interest. The farmers loan waver scheme is also extend further.
There is an emphasis on infrastructural development beginning from power development to development of rural roads and housing in both rural and urban areas especially through the Indira Ahwas yojana and JNNURM linked projects. The biggest gainer in this budget is the NREGA which has an allocation of Rs. 39,100 crores yet measures up to only 0.66% of GDP. This amount if fully spent will comfort millions of households especially by promoting employment of women. But since the NREGA wages are increased to Rs. 100/- nationally, a number of wage labor households may in fact net lower than expected annual income through wages since they may not migrate to urban or high wage rate areas due to availability of NREGA work. Thus the NREGA is a double edge apparatus, while on the one side it feels cool and nice on the other it can harm innovation and risk taking behavior.
Allocation to education programs including SSA and mid-day meals appear on the expected direction, but what is important is to ensure improving the quality of public education especially at the primary and elementary level which is not forthcoming in the budgetary allocations. The age old PDS is at its first year of getting redundant through a new program of providing 25 kg cereals at Rs.3 per kg for the BPL families. This program can only succeed if the BPL families are intelligently and correctly identified, and there is nothing which suggests that such a situation is achievable given over four decades of unsuccessful implementation of PDS. Whether ‘universal ID’ scheme can be put in place is yet to be seen and I am not yet hopeful on this innovation.
On the whole, agricultural and social sectors soaps are subject to implementation efficiencies and partnerships of the states; both are in the danger zone, therefore not much can be built upon these announcements yet. Besides, roads, markets and communications are drivers of the Indian economy but what has to be remembered is all this investment will be of no use if there are no users, for example what will you do by building mega infrastructural structures if there are no users and cost recovery. Having said that, the Indian growth story is going ‘ga-ga’ about the role of domestic demand; and given the global recession, it is indeed that capacity of the Indian citizen both in rural and urban areas to ‘fire the market’ so to speak that is the key for growth for the year 2009-10, but there is a week indication of this happening in the current budget.
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Crores of Rs. % GDP
Total Plan Exp 325,000 5.45
Fiscal Deficit 6.80
Revenue Deficit 4.80
Tax-GDP ratio 11.50
Interest payment 236,000 4.0
Defense expenditure 141,702 2.38
Selected social sector allocations 105,079 1.76
Total Budgetary allocation 1.020,838 17.1
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Monday, July 6, 2009
Wednesday, June 17, 2009
Labor Market Response in South Asia to the Global Recession
Key characteristics of the economic downturn / recession
Economic downturn/recession being experience during 2008-9 and still continuing has a global spread and most developed and many developing countries affected; in fact it all began from the USA, UK and Europe. Recession affected ability to sustain domestic demand mostly due to failure to sustain mortgages which triggered a banking crisis affecting investments, stalling large businesses especially those dependent upon global, multilateral and bilateral cross country production and distribution anchored on international trade. The global production slumped by 20% in the fourth quarter of 2008 (The World Bank, 2009). The average citizens across the developed economies especially, the USA which accounts for over a quarter of global business followed by many nations in Europe (eastern), experienced a decline in real income, postponed and/or squeezed household expenditures. This affected investments, production and trade in countries far and wide who supplied consumer goods and services to the developed world. Asia, especially countries which were dependent upon external trade for growth suffered most such as Japan, China, Korea, and India and so on.
By the time this contagion was taking place there were multiple channels through which the depression affected the households and labor markets. Noteworthy are sudden retrenchments and possibly wage cuts. However, almost the same time (and it is not co-incidental) that during the early period of the downturn oil prices touched the new high crossing USD 100/- and proceed further topping $140/-, unusually large increase in food price without major shortages in food stocks, increase in real rate of interest mostly in developing economies and tightening of credit and commodity markets. Economic slowdown can also be associated with falling prices known as deflation due to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the west.
Although none of the countries in South Asia have recorded negative rates of growth yet, they indeed have experienced a steep decline in rate of growth. For example, India recorded a GDP growth of 6.7% in 2008-9 (CSO, quarterly estimates) lower than 8.7% growth of 2007-8 (Economic Survey, 2007-8)and a considerably low growth compared with the projected growth of 9-10%. The following occurrences in South Asia seem to be due to the impact of global reaction in South Asia:
1. Financial conditions deteriorated in developing countries, also reduced liquidity in the respective economies (India - some banking crunch, a few corporate postponed primary issues and joint ventures). Sharp decline in stock market and frozen real estate market
2. Sharp decline aggregate domestic demand and weak international demand for goods and services; reduction in industrial output
3. Reduced job opportunities, retrenchments and wage cuts (all countries in South Asia). India alone was estimated to have shed more that 500 thousand organized sectors employment during 2008, which is miniscule in terms of its share in the total labor market. Small and medium enterprise sector to suffer most. Increase in poverty and loss of gains in MDG goals likely.
4. In spite of declining commodity prices globally, country level inflationary tendencies, and food price increase (food price especially high in Pakistan and Bangladesh).
5. Drastic fall in global trade, Indonesia, Philippines, Turkey experience a decline of over 20%, India experience a 15 % decline in exports last year after a phenomenal 35% growth achieved previous years (World Bank, 2009). China and other Southeast Asia affected by a drastic fall in exports although not reached the negative side yet.
6. Overall decline in GDP (India recorded a lower 5.8% growth during last quarter of FY 2008-9 and the expected growth for the following quarters is also low).
7. Reports have begun to appear about steep increase in number of people affected by food vulnerability and hunger (UNICEF, 2009).
8. The internal and international economic migrations streams to stall and even reversed especially the rural-urban migration. It is likely that the laid-off nonfarm workforce returns to their respective rural areas and try to work on original occupations especially in agriculture causing serious labor market distortions and reduction in agricultural wages.
South Asian economies are experiencing a differentiated impact of the downturn; and the extent of impact depends upon the structure of the economy such as the extent of dependence on exports, whether it is a single or multiple commodity exporting country and the extent to which the country is dependent on imported capital inputs (FDI & FII) to manufacture exportable goods and intensity of labor used in manufacturing and so on. Consider, India whose export to the United States (which is under serious downturn) account for just over 3% of GDP and India has a healthy trade surplus with the United States. Yet India being a multi-commodity exporter, a number of sectors got adversely affected such as a total collapse of diamond and ornaments industry; steep reduction in textiles, garments and leather products which were exported in large quantities and many others. There has been a decline in overall export proceeds due to a 15% decline of exports in October 2008 and 19 % in February, 2009 (UNDP, 2009?). Industries have to build up now only on the strength of domestic demand and with steep reductions in market prices, which is not easy. The net result is high degree of unemployment of the labor engaged in manufacturing, and especially the migrant labor, mostly from rural areas but also from other urban locations working in a number of urban manufacturing growth centers. Yet only a fraction of Indian labor force is employed in the organized manufacturing sector (NCEUS, 2009; see also Table 1), since overwhelming proportion and size of labor is self employed and occupied in unorganized vocations both in rural and urban areas which are not integrated with the markets especially the global ones. This sector also gets affected albeit indirectly. The case of Pakistan is much more alarming as its economy is most vulnerable due to high fiscal and current account deficits, runaway inflation, dwindling foreign exchange reserves, a very weak currency and above all considerable internal security issues.
Linkage between Recession and Labor Markets
Long term effects on unemployment: In the absence of dependable data on employment and unemployment in south Asia, one is forced to review studies on the impact of recession on unemployment in developed economy such as the USA. Historically recessions have left traces of drastic fall in employment, a considerable size of addition to the unemployed during the medium term - upto 5 years. Schmitt and Baker (2008) estimate such impacts for the USA during the previous three recessions (of 1980-82, 1990-1991 and 2001) and also project impacts subsequent to 2008-9/10 recession under different scenarios. Accordingly, the rate of unemployment for example after the 1980-82 recession in the USA increased to 7.1%, 7.6, 9.7, 9.6 and 7.5 % during the five successive years from the peak year just before the recession when the rate was only 5.8. Similarly, the 2001 (March to November) recession pushed unemployment from only 4% to 4.7, 5.8, 6.0, 5.5 and 5.1 % respectively during the flowing five years. Further they provide the structure of unemployment according to gender, age and race to identify most vulnerable groups that suffer during the recessions, for example the teen and black-teen experienced higher unemployment rates of over 8% during the 2001 recession. Their projections for the 2008-9/10 recession in unemployment rates are as high as around 20% for the teen, 35-40% for black-teen, and 7-8% for Hispanics, even under the mild to moderate recession impact.
What is instructive from the above is the long term effect of recession on unemployment which lingers on for many years after the recession is over, and such impacts can be severe and longer in less developed economics such as those in South Asia. There are fewer studies assessing the impact of economic downturn or recession in the South Asian region.
The World Bank (2009) states, that the current economic crisis has increased poverty by 46 million by the end of 2008 itself (P.9). The UNCEF (2009) estimates just about 100 million more number of people in south Asia have become hungry and food vulnerable (P.2). The effect is transmitted to the poor through unemployment and wage effects. But vulnerability can further get accentuated through a number of indirect mechanisms operating though markets and contraction of consumer demand. Besides, in South Asia, the problem of vulnerability, food insecurity and poverty has exacerbated by country specific violent happenings of extreme order such as in Western parts of Pakistan, Northern Sri Lanka and in Nepal; and natural calamity in Bangladesh and parts (Bihar) of India. Period of recession is now setting in which is not yet well recognized in South Asia. Sectors having local markets are not suffering and in spite of a ‘sense of optimism’ and hope both amongst the poor and others, yet poor are getting affected. Some sectors that have suffered and also affect the poor are, the diamond industry (fully collapsed), recycling business has reduced to half (rag pickers deeply affected), and employment in construction industry has stood still. More micro occupations can be listed from all over south Asia.
Dualism in South Asian (labor) markets complicates the issues further: Broadly, South Asian economies are characteristic of dualism in growth and structure and in labor markets. For example the economy is split in to rural and urban areas with a heavy bias towards the latter. Similarly, large agricultural sector is entirely managed by individual farmers compared to industrial and modern services which are entirely organized and constantly infused with capital and technological inputs promoting unprecedented productivity growth. Similarly, the labor market is structured with informal and unorganized compared with formal and organized sectors. Even the so called organized sector in India employs almost one half of its workforce on casual informal basis (refer Table 1below) thus exposing them to the vagaries of recession. Such casual labor even while working in factory sector does not get coverage of the social security schemes meant for industrial workers.
In an effort to catch up with the west, so to speak, the south Asian economies especially, India and Pakistan have pursued heavy industrialization and modern services development which favor the urban and organized sectors, and mostly at the expense of rural and agricultural sectors. Even public investments are extremely low in rural agricultural sectors where the largest share and number of people are occupied. As a proportion or share, the poor concentrate in rural, agricultural and unorganized sectors where the policy focus is little if at all present.
The entire attention of the public policy, private finance and regulatory mechanism during the downturn has reprogrammed to address problems of the organized manufacturing and service sectors and mostly relevant for urban areas which already have high concentration of both physical and social infrastructure. The recession which has caused job losses in India too (World Bank, 2009) especially in the organized sector which was populated by the migrant labor, on their return to place of origin cause catastrophe in the local labor and wage market. In the absence of any social security for the displaced workers they are under extreme stress and suffering. This in turn has disturbed the labor wage market on the one side while demand for products produced in the rural, agricultural and unorganized sectors have declined due to the direct impact of recession in the first place. Thus the rural economy is now subjected to a kind of double whammy.
Table 1:
Relationship between Sector of Economy and Type of Employment
All Workers 1999-2000 and 2004-05
Formal/Informal Sector Total Employment (in percentage)
Informal/ Unorganized Worker Formal/ Organized Worker Total
2004-05
Informal/ Unorganized sector 99.6 0.4 86.3 (393.2)
Formal/Organized Sector 46.2 53.8 13.7 (62.6)
Total 92.3 7.7 100.0 (455.7)
1999-2000
Informal/ Unorganized sector 99.5 0.5 86.2 (341.5)
Formal/Organized Sector 42.1 57.9 13.8 (54.9)
Total 91.5 8.5 100.0 (396.4)
Note: Estimates based on the usual principle and subsidiary status of workers developed by the National Sample Survey Organization. Figures in parenthesis are in millions of workers.
Source: National Commission for Enterprises in the Unorganized Sector (NCEUS) (2009). The Challenge of Employment in India: An Informal Economy Perspective, Table 2.3, page no. 13. New Delhi. (Calculated by NCEUS using NSSO 55th and 61st Round Employment and Unemployment Survey).
Characteristics of labor markets in South Asia
People in populous economies typically depend for a living upon the rural and agricultural occupations. No other region compared to South Asia characterizes this scenario especially during the second half of the last century. Since about decade and half the south Asia especially India is identified as an emerging economy, where the role of rural occupations and farming is fast declining; while contributions from off-farm sectors such as manufacturing, trade and services has increase manifolds. What is less known is, the absence of concomitant shifts in labor force from the rural-traditional and less efficient occupations to urban oriented off-farm and apparently more productive occupations. Further the south Asian economies have a high growth of workforce which is more than 2% per annum. As mentioned earlier, most of the workforce is informal and they are also either illiterate or barely educated, and under skilled. There is also a general tendency to deny work opportunities to women seeking work.
India is characteristic of dualism in it labor market. But low growth of employment is not because of rigidities in labor market (NCEUS, 2009). Lately there has been a decline in overall employment, decline in wages and low growth of formal employment. Disconnect, between growth and employment appear a long lasting problem. There is also no expectation of growth of employment in formal sector employment even when the GDP growth remain high, in fact the Indian planning model did not put foundation of growth on formal sector, instead on small scale industries and micro-enterprises. New employment is capital intensive and not labor intensive in formal sector. There may be growing inequality which can be termed as the ‘latin americanization’ of India. Therefore, policy approach should favor massive investments in informal sectors - may be a shift in investment from formal sector necessary. Public and private sector issues are relevant in this context.
One also notice a slow movement of labor from agriculture to RNFE, yet the nonfarm sector is not able to provide high productivity employment in India, although relative to agriculture these sectors have registered high productivity growth (see Table 2). There is also feminization of agricultural and manual labor (NCEUS, 2008 –Report No2, Shariff, 2009), while the policy emphasis on non existing micro-enterprises (survey of enterprises). Lack of education amongst young labor force is alarming which threaten the very foundation for future GDP growth in the region.
Table 2
Shares of income and labor, and productivity ratios in Rural India
Share of
Income Share of
Labor Income/Labor ratios
%ge Change in
ratios
(1994) (2005) (1994) (2005) (1994) (2005)
Self employed 12 12.9 12.7 8.8 0.95 1.5 58.0
Salaried 16.5 20.4 10.4 9 1.6 2.3 44.0
Manual worker 6.3 12.8 9.8 15.8 0.64 0.81 27.0
Cultivator 55 33.1 43.7 42.3 1.26 0.78 -38.0
Ag Labor 7.9 12 23.5 24.1 0.34 0.5 47.0
Other residual* 2.4 8.8 --- --- --- --- ---
*Other residual is a source of income category but not an occupation
Source: Shariff (2009)
How does the crisis affect the informal economy?
It is estimated that during 2004-05, 420 million or 92 percent of labor force was engaged in informal economy; and only about 8 percent were occupied in the formal sectors in India. The informal workers are the self-employed including the cultivating farmers, casual wage laborers, street vendors to those who operate micro enterprises with less than ten workers, and those regular workers in the formal sector who are without any employment or social security and so on. Eighty-four percent of cultivators are marginal and small farmers operating not more than 2 hectares of land. Agricultural laborers, the bottom layer of the occupational structure, include a majority of workers from Scheduled Castes and Scheduled Tribes, and constitute around 89 million in the total labor force. This is also the poorest segment in the Indian economy from an occupational point of view.
It needs to be recognized that the impact of the crisis is not restricted to the larger, organized segments of industry and is indeed of a much more serious nature among those engaged in the informal economy. Consumption estimates, during the period of growth (1993-94 / 2004-05), suggest a rapid expansion roughly in the top two deciles, fuelling the growth, but the benefits of this growth principally bypassed the vast majority of the population (about 77%) who remained vulnerable with an average per capita daily consumption below Rs. 20. However, during the current slowdown, it is precisely these people, the poor and vulnerable, engaged in informal sector enterprises or informally employed by the formal sector, who will be affected the most adversely:
- the informal workers in the organized sector losing employment – in manufacturing, construction and tradetinal services sectors.
- Small producers who contribute more than 30% of exports and traders have suffered in sectors such as in handlooms, textiles, apparel, leather products, gems and jewellery, metal products, carpets, and various types of agricultural products such as spices, and marine fishery.
- Unorganized sector manufactures with investment below Rs. 5 lakh in ‘plant and machinery’ gets less than 2 percent of net bank credit, yet they are getting liquidated due to the economic downturn.
- Casual workers, the urban self-employed, and rural producers in the unorganized sector, including marginal farmers who are net buyers of food grains, have been affected in the recent months by the sharp upturn in the prices of food grains and the rate of inflation, depressing their real income.
The combined impact on the informal economy would be an increase in livelihood insecurity, decline in income and intensification in the conditions of poverty and vulnerability.
Pakistan has seen unusually large increase in food and every day commodities' prices coupled with the high fuel prices. Stock markets have suffered banks sans deposits and Pakistan rupee has seen a large downward trend. Pakistan gets most of its FDI from the west which has dried down. Pakistani exports are steeply reduced due to slowdown in the west. But so far Pakistan has escaped the recent economic turmoil emerging from the US and engulfing the developed European economies. But as the financial analysts go, it has created a situation loaded with immense possibilities for Pakistan. Top bankers are expecting a lot of eastward investment in the near future as options are drying out swiftly in the developed countries' markets. So far as the rural and informal economy is concerned the impact in Pakistan has been on the similar lines described for India.
Bangladesh has also seen considerable increase in food prices and it is only in April-May 2009 that India lifted the ban on rice export which will help reduce food price inflation in Bangladesh which imports rice from India. Bangladesh which was building up its economy through the value added export projects such as garments has got adversely affected due to downturn.
Nepal is one of the countries which have seen migration as an opportunity since long; the labor market is characteristic of long distance and often international (mostly to India) migration. A neighborly county good gesture of India is that labor migration from Nepal can happen without any restrictions generally imposed by rules of international travel such as restriction due to visa and permit requirements. But an adverse impact of recession in India is being felt in Nepal as many migrant workers will be returning back to Nepal. This will put unprecedented pressure in Nepal as well. Nepal which is experiencing political instability exacerbates the problem of dwindling economic fortunes.
Research Gaps in the area of Labor markets
Understanding the Push and the Pull Factors are important: The prevailing spatial market and non-market characteristics exert pull and push forces to both the capital and labor shifting from the inefficient to efficient sectors of the economy. In this regard the role of rural to urban migration is important. Besides the current trend of development of growth centers either in the form of ‘development corridors’, ‘urban peripheries’ or even the growth of medium and small towns which are promoting nonfarm employment and higher incomes are important to be explored. There could also be reverse association in the form of commutation, backward and forward market linkages in goods and services; and income from remittances from the urban to rural areas that will add richness to this analysis. Reverse migration may have taken a clear shape due to the impact of economic downturn which need to be studied.
Increasing role of remittances: Remittances are now a major source of household income both in rural and urban areas. Data on remittances has for the first time become available from the NSSO 64th round and also from NCAER-IHDS surveys, which can be analyzed.
Restructuring the production sectors due to declining role of land as productive asset: Another area worth exploring relates to the asset ownership profile of farmers, agricultural laborers, artisans and tradesmen in the agriculturally progressive versus marginal areas in India, Bangladesh and Pakistan. Given a long history of feudalism in the region, it would be appropriate to document changes in land ownership pattern after the Independence, subsequently after the green revolution period and in the contemporary context of consolidation of land both due to cultural factors and modern markets based on contract farming. While cultivable land appear to be the dominant asset, both productive as well as contractual in nature; many human capital enhancing assets such as formal education, skills and access to working capital would be denting the importance of land assets. Besides the breakdown of the jajmani system in the region seems to have released a large number of wage workers and artisan from the bondage; but could well have pushed them in penury due to the breakdown of traditional support systems; which then get linked with institutions supporting evolution of safety net mechanisms.
Productivity versus Safety Nets: Why growth in employment is low, what is it which is holding back employment generation, which formal sector not growing needs a study? Beside it is useful to focus on policies which aim for productivity growth versus and provisioning of safety nets. The institutional mechanisms, emanating either from public programs and/or market orientation cushion favorable changes in movement of labor, generate higher income or sustain welfare effects at the household level. One of the challenges in Asia is to accurately trace labor market mobility and associated income changes during fast pace of economic growth . Given that a good proportion of work force is employed in rural-agricultural vocations, it is imperative to understand the dynamics of rural life and survival strategies that people resort to. Further, labor market reforms in developing societies should be aimed to ensure fair distribution of income from out of expanding domestic product. This demands mechanisms that not only enhance household income but also enables food and nutrition adequacy and improves basic human capital such as levels of literacy; disease free enhancement of life expectancy and socio-culturally peaceful living.
Migration, Labor flexibility and Poverty in South Asia
Physical movement of labor, manifest in migration mostly from rural to urban; but also the other three identifiable streams including international has not been studied in-depth. Recent evidence suggests closer to 10% of Nepal’s population out migrated, mostly to (India) international destinations, contributing (Rs. 102.1billion 2006-7) over 14% to the GDP , and enabling 11% decline in poverty between 1994 and 2004 . Similarly, remittance from aboard is the largest foreign exchange earner which constitute over 8% of GDP in Bangladesh, and reduced poverty by 6 per cent . India, during 2006-7 received a net of US$ 27.8 billion in remittances which is over 10% of India’s foreign exchange reserve. The remittance for the year 2005-6 was 25.2 billion dollars and for two earlier years it averaged about US$ 22 billion in India. This suggests a substantial role that migration can play in building national economies as well as household welfare. On the similar lines, if one identifies the economic role of internal migration it becomes clear as to how important migration is in the growth process of economics in south Asia. Besides the economic benefits, concurrently there are a number of household level positive changes in attitudes, perceptions and livelihood strategies that take place due to migration. The subject matter of this study is to document the role of migration mostly (internal) in sustaining and improving rural livelihoods and reducing poverty.
Migration, an opportunity or distress: Migration a source to sustain income and consumption but can be at the cost of a decline in a number of human capital formation outcomes such as reduced schooling and literacy, increase vulnerability to sickness, family splits leading to emotional discard and increase in vulnerability. Yet migration has been seen as an opportunity especially by the land less labors, and surprisingly both the educated and illiterate from the rural areas. Concentration of economic activities in urban and semi-urban areas and higher casual wage rates in urban sectors of the economy probably provide the necessary motivating pull, but the push factors in the rural parts which can be due to both natural cause such as declining land productivity, increase pressure of population growth; and also policy neglect and low investment in agriculture.
Migration a bridge between Rural and Urban Economies: Rural and urban livelihoods are interconnected economically, financially, and socially. From a rural perspective, most farmers depend on urban markets to secure their livelihoods such as sale of agricultural produce often on a daily basis such as supply of milk, fruits, vegetables, poultry and so on. Rural households generally depend on cities and towns to access various institutional services such as from hospitals, schools and colleges, banks, and government offices) and for the provision of various private and public goods. The rural households also benefits from remittances sent by family members who migrated to urban areas on employment.
Urban areas are similarly linked to the rural sector, for example, various large businesses and enterprises depend on rural demand for their goods and services (bicycles, ratdios, TVs, FMGC products, seeds and fertilizer, IT enabled communications and so on). Urban areas also rely on rural areas for the supply of raw materials. Urban consumers, on the other hand, benefit from sustained food supply from rural areas. Many poor urban households partly depend on rural activities (e.g., farming) for their livelihoods. The rural sector can also act as a buffer from the impact of macroeconomic shocks on the urban economy. Links between the rural and urban sectors also include flows of information, such as markets and employment opportunities, as well as flows of people moving between rural and urban centers on a temporary or permanent basis
Policies that strengthen or weaken migration
• Inhibiting trade been districts, states, and rural and urban areas by using taxation policies or outright ban.
• Agricultural policies protect urban households, e.g., from high food prices, can indirectly stymie agricultural investment. Low commodity prices discourage farmers from continuing and expanding production, not only affecting the desirability to allocate capital into agriculture, but also potentially creating food shortages
• State policies can discourage people from moving freely between regions, historically there are barriers to labor mobility. Differences emerging from cultural and linguistic differences and variations in life style factors such as food habits and so on can inhibit migration. Besides local politics seeking favors especially jobs, permits and so on only for local population, often referred to as ‘sons of the soil’ policies discourage interstate as well as rural to urban migration.
• Limiting provisions such as housing, water, electricity, roads to living localities populated by migrants
• Limiting social services such as education, health and nutrition/ food access to migrant families. Rural out-migrants usually are unable to claim state benefits in urban areas of India and China (Deshingkar, 2006).
Refined Understanding of Links between Migration and Poverty
The dynamics of migration differs considerably by its type. The characterization of migration streams is not very well documented in economic literature, especially in south Asia, due mostly to want of data and definitional issues. Distinctions, for example, between rural-to-urban and rural-to-rural, just to name two of the four major streams is important. Similarly, distinction between internal and international migration is another useful characterization. Another way is to identify life time versus circular migration which carry very different dynamics; and the intermediating ‘step-wise’ migration in which a migrant cautiously moves over to the final destination after taking a number of shorter and smaller migration moves over time. A recent research , for example, has found that the impact of household welfare especially on gender specific child schooling and health differed substantially depending upon whether the economic migration was within ‘district’, ‘within state but out of district’ and ‘out of state’ migration.
The available data from surveys do not capture many of the variations in migration enunciated above especially the short term and circular migration. Migration is an intermediating process which generally breaks a household, often leaving women, children, the old and infirm vulnerable. Yet this same vulnerability may turn out to be a factor leading to empowerment of women in the rural areas. One such evidence has been feminization of Indian agriculture, the skeptics use this as an evidence of distress but one can look at this phenomenon as empowerment of women instead. Women’s control over resources generally leads to better human capital output indicator such as better education and health conditions of children.
Migration in the south Asian context is considered a sign of distress. A historical assessment of migration since the partition provides credence to such a hypothesis. Often the migrants originating from rural areas belong to asset less households such as the landless, small / marginal farmers (for example, migrant agricultural labour to Indian Punjab from Bihar and Eastern Uttar Pradesh), low castes such as the dalits, tribal groups (for example, migration from high lands and mountains to tarai regions in Nepal) and minorities (for example, Muslims in India and Hindus in Bangladesh). Such high propensity migration often leads to permanent or life time migration as well. This dynamics of migration has immense relevance to the future of social cohesion and peaceful living within a country or region. Further migrating adult male members leave behind dependents who can get into distress and penury. The proposed study intends to document and empirically measure various aspects of class and caste hierarchies, power structures, gender relations, social cohesion and historical factors that have a bearing on migration of people / households and relative impact on livelihoods.
Firstly there is a need to assess migration streams using data from large scale sample survey of households in Bangladesh, India, Nepal and Pakistan Longitudinal datasets are useful in understanding change over time in critical variables at the household level such as occupations, assets, poverty/wealth status. A number of qualitative studies needs to be launched so as to get complementary information to substantiate the quantitative data analysis. Qualitative study and in depth interviews will highlight village level processes and individual life trajectories in response to wider changes (environmental, market and policy).
Hypotheses - Migration, labor mobility and poverty:
• What are the patterns of labor migration in each of the countries? Is there evidence of large-scale movement of labor from low-productivity regions to high-productivity regions?
• To what extent has the shift from farm to nonfarm income sources occurred via migration? In other words, has income diversification taken place through migration of some family members to urban areas?
• Remittances now form a large share of household income both in rural and urban areas of South Asia. Even in India, its importance has increased. New data available from NSSO 63rd round data and data from NCAER’s IHDS can be analyzed to find out the poverty reducing impact of migration linked remittances.
• What types of occupations (using the three-digit International Standard Classification of Occupations) have seen growth, and which occupations have seen a decline, over the last two decades in each of the seven countries?
The frame of analysis of ‘migration and its impact’ must begin with analyzing the economic structure and labor market imperfections followed by the process and mechanisms that in turn determine impact and outcomes. The outcomes in this research are to be identified at the levels of household and community. The set of questions which will be used in both quantitative as well as qualitative approaches are listed below:
a) Economic structure, migration and market imperfections
• Economic structure and income/GDP profiling by source with a focus on rural urban differentials.
• What type of labor market imperfections are promoting migration flows. Is it linked with rural - urban or interregional wage differences?
• What kind of strategy is adopted by migrants to enhance income and savings leading to remittances?
• Role of migration in sustaining household income and impact of remittances on poverty.
• Identify uninsured risks that need to be addressed by public policy?
b) Societal factors and household level social process
• What are the social drivers of migration at the intra-household level and at the village level (e.g. historical connections with certain destinations) and how these vary by social groups?
• The relationship between income and occupation, education, skills; which social groups are excluded from well paid jobs and for what reasons?
• Migration as a response to differential needs – (short versus long term).
• The impact of migration on assets, durables, education, social standing, creditworthiness and how this differs by caste and gender.
c) Gender response and outcomes
Gendered response will be investigated in four different perspectives: (a) implications for the individual woman, (b) implications for the household, (c) implications for the society, and (d) implications for agriculture. The expectation is that while woman assumes a greater role in household decision making as a consequence of migration of a male household member; and over a period of time it generate a number of women empowering effects which will operate through her own self, human capital formation of children, through a number of public and social goods and even improvements in agricultural productivity.
Bibliography and References:
Mujahid, G. B. S (2007). Rural-urban migration, urban underemployment and earnings differentials in Pakistan, Review of World Economics, 111(3):585-598.
Schmitt, J and Dean Baker 2008. ‘What we’re in for: Projected Economic Impact of the next recession’, a paper of the Center for Economic and Policy Research, Washington DC. (www.cepr.nt).
Admes H Richard Jr and Jane J. He (1995) Source of income inequality and poverty in rural Pakistan, Report No. 102, Washington DC: International Food Policy Research Institute.
Muller, Valerie and A. Shariff, 2008. ‘Can Migration Improve Living Standards in Developing Countries? Internal Migration and Welfare in India’, International Food Policy Research Institute, Washington DC, (December).
World Bank 2009. ‘Swimming against the tide: How developing countries are coping with the global crisis’. Background paper prepared by the World Bank Staff for the G20 Finance Ministers and Central Bank Governors meeting, Horsham, the UK, March 13-14.
Behrman, Jere, R (1988). ‘The impact of economic adjustment programs’ in Bell, David E and Michael R. Reich (eds.) Health, Nutrition, and Economic Crisis: Approaches to Policy in the third World, Dover, Massachusetts: Auburn House Publishing Co.
UNICEF (2009). A Matter of Magnitude: The Impact of the economic crisis on women and children in south Asia. Katmandu: Unicef Regional Office.
Key characteristics of the economic downturn / recession
Economic downturn/recession being experience during 2008-9 and still continuing has a global spread and most developed and many developing countries affected; in fact it all began from the USA, UK and Europe. Recession affected ability to sustain domestic demand mostly due to failure to sustain mortgages which triggered a banking crisis affecting investments, stalling large businesses especially those dependent upon global, multilateral and bilateral cross country production and distribution anchored on international trade. The global production slumped by 20% in the fourth quarter of 2008 (The World Bank, 2009). The average citizens across the developed economies especially, the USA which accounts for over a quarter of global business followed by many nations in Europe (eastern), experienced a decline in real income, postponed and/or squeezed household expenditures. This affected investments, production and trade in countries far and wide who supplied consumer goods and services to the developed world. Asia, especially countries which were dependent upon external trade for growth suffered most such as Japan, China, Korea, and India and so on.
By the time this contagion was taking place there were multiple channels through which the depression affected the households and labor markets. Noteworthy are sudden retrenchments and possibly wage cuts. However, almost the same time (and it is not co-incidental) that during the early period of the downturn oil prices touched the new high crossing USD 100/- and proceed further topping $140/-, unusually large increase in food price without major shortages in food stocks, increase in real rate of interest mostly in developing economies and tightening of credit and commodity markets. Economic slowdown can also be associated with falling prices known as deflation due to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the west.
Although none of the countries in South Asia have recorded negative rates of growth yet, they indeed have experienced a steep decline in rate of growth. For example, India recorded a GDP growth of 6.7% in 2008-9 (CSO, quarterly estimates) lower than 8.7% growth of 2007-8 (Economic Survey, 2007-8)and a considerably low growth compared with the projected growth of 9-10%. The following occurrences in South Asia seem to be due to the impact of global reaction in South Asia:
1. Financial conditions deteriorated in developing countries, also reduced liquidity in the respective economies (India - some banking crunch, a few corporate postponed primary issues and joint ventures). Sharp decline in stock market and frozen real estate market
2. Sharp decline aggregate domestic demand and weak international demand for goods and services; reduction in industrial output
3. Reduced job opportunities, retrenchments and wage cuts (all countries in South Asia). India alone was estimated to have shed more that 500 thousand organized sectors employment during 2008, which is miniscule in terms of its share in the total labor market. Small and medium enterprise sector to suffer most. Increase in poverty and loss of gains in MDG goals likely.
4. In spite of declining commodity prices globally, country level inflationary tendencies, and food price increase (food price especially high in Pakistan and Bangladesh).
5. Drastic fall in global trade, Indonesia, Philippines, Turkey experience a decline of over 20%, India experience a 15 % decline in exports last year after a phenomenal 35% growth achieved previous years (World Bank, 2009). China and other Southeast Asia affected by a drastic fall in exports although not reached the negative side yet.
6. Overall decline in GDP (India recorded a lower 5.8% growth during last quarter of FY 2008-9 and the expected growth for the following quarters is also low).
7. Reports have begun to appear about steep increase in number of people affected by food vulnerability and hunger (UNICEF, 2009).
8. The internal and international economic migrations streams to stall and even reversed especially the rural-urban migration. It is likely that the laid-off nonfarm workforce returns to their respective rural areas and try to work on original occupations especially in agriculture causing serious labor market distortions and reduction in agricultural wages.
South Asian economies are experiencing a differentiated impact of the downturn; and the extent of impact depends upon the structure of the economy such as the extent of dependence on exports, whether it is a single or multiple commodity exporting country and the extent to which the country is dependent on imported capital inputs (FDI & FII) to manufacture exportable goods and intensity of labor used in manufacturing and so on. Consider, India whose export to the United States (which is under serious downturn) account for just over 3% of GDP and India has a healthy trade surplus with the United States. Yet India being a multi-commodity exporter, a number of sectors got adversely affected such as a total collapse of diamond and ornaments industry; steep reduction in textiles, garments and leather products which were exported in large quantities and many others. There has been a decline in overall export proceeds due to a 15% decline of exports in October 2008 and 19 % in February, 2009 (UNDP, 2009?). Industries have to build up now only on the strength of domestic demand and with steep reductions in market prices, which is not easy. The net result is high degree of unemployment of the labor engaged in manufacturing, and especially the migrant labor, mostly from rural areas but also from other urban locations working in a number of urban manufacturing growth centers. Yet only a fraction of Indian labor force is employed in the organized manufacturing sector (NCEUS, 2009; see also Table 1), since overwhelming proportion and size of labor is self employed and occupied in unorganized vocations both in rural and urban areas which are not integrated with the markets especially the global ones. This sector also gets affected albeit indirectly. The case of Pakistan is much more alarming as its economy is most vulnerable due to high fiscal and current account deficits, runaway inflation, dwindling foreign exchange reserves, a very weak currency and above all considerable internal security issues.
Linkage between Recession and Labor Markets
Long term effects on unemployment: In the absence of dependable data on employment and unemployment in south Asia, one is forced to review studies on the impact of recession on unemployment in developed economy such as the USA. Historically recessions have left traces of drastic fall in employment, a considerable size of addition to the unemployed during the medium term - upto 5 years. Schmitt and Baker (2008) estimate such impacts for the USA during the previous three recessions (of 1980-82, 1990-1991 and 2001) and also project impacts subsequent to 2008-9/10 recession under different scenarios. Accordingly, the rate of unemployment for example after the 1980-82 recession in the USA increased to 7.1%, 7.6, 9.7, 9.6 and 7.5 % during the five successive years from the peak year just before the recession when the rate was only 5.8. Similarly, the 2001 (March to November) recession pushed unemployment from only 4% to 4.7, 5.8, 6.0, 5.5 and 5.1 % respectively during the flowing five years. Further they provide the structure of unemployment according to gender, age and race to identify most vulnerable groups that suffer during the recessions, for example the teen and black-teen experienced higher unemployment rates of over 8% during the 2001 recession. Their projections for the 2008-9/10 recession in unemployment rates are as high as around 20% for the teen, 35-40% for black-teen, and 7-8% for Hispanics, even under the mild to moderate recession impact.
What is instructive from the above is the long term effect of recession on unemployment which lingers on for many years after the recession is over, and such impacts can be severe and longer in less developed economics such as those in South Asia. There are fewer studies assessing the impact of economic downturn or recession in the South Asian region.
The World Bank (2009) states, that the current economic crisis has increased poverty by 46 million by the end of 2008 itself (P.9). The UNCEF (2009) estimates just about 100 million more number of people in south Asia have become hungry and food vulnerable (P.2). The effect is transmitted to the poor through unemployment and wage effects. But vulnerability can further get accentuated through a number of indirect mechanisms operating though markets and contraction of consumer demand. Besides, in South Asia, the problem of vulnerability, food insecurity and poverty has exacerbated by country specific violent happenings of extreme order such as in Western parts of Pakistan, Northern Sri Lanka and in Nepal; and natural calamity in Bangladesh and parts (Bihar) of India. Period of recession is now setting in which is not yet well recognized in South Asia. Sectors having local markets are not suffering and in spite of a ‘sense of optimism’ and hope both amongst the poor and others, yet poor are getting affected. Some sectors that have suffered and also affect the poor are, the diamond industry (fully collapsed), recycling business has reduced to half (rag pickers deeply affected), and employment in construction industry has stood still. More micro occupations can be listed from all over south Asia.
Dualism in South Asian (labor) markets complicates the issues further: Broadly, South Asian economies are characteristic of dualism in growth and structure and in labor markets. For example the economy is split in to rural and urban areas with a heavy bias towards the latter. Similarly, large agricultural sector is entirely managed by individual farmers compared to industrial and modern services which are entirely organized and constantly infused with capital and technological inputs promoting unprecedented productivity growth. Similarly, the labor market is structured with informal and unorganized compared with formal and organized sectors. Even the so called organized sector in India employs almost one half of its workforce on casual informal basis (refer Table 1below) thus exposing them to the vagaries of recession. Such casual labor even while working in factory sector does not get coverage of the social security schemes meant for industrial workers.
In an effort to catch up with the west, so to speak, the south Asian economies especially, India and Pakistan have pursued heavy industrialization and modern services development which favor the urban and organized sectors, and mostly at the expense of rural and agricultural sectors. Even public investments are extremely low in rural agricultural sectors where the largest share and number of people are occupied. As a proportion or share, the poor concentrate in rural, agricultural and unorganized sectors where the policy focus is little if at all present.
The entire attention of the public policy, private finance and regulatory mechanism during the downturn has reprogrammed to address problems of the organized manufacturing and service sectors and mostly relevant for urban areas which already have high concentration of both physical and social infrastructure. The recession which has caused job losses in India too (World Bank, 2009) especially in the organized sector which was populated by the migrant labor, on their return to place of origin cause catastrophe in the local labor and wage market. In the absence of any social security for the displaced workers they are under extreme stress and suffering. This in turn has disturbed the labor wage market on the one side while demand for products produced in the rural, agricultural and unorganized sectors have declined due to the direct impact of recession in the first place. Thus the rural economy is now subjected to a kind of double whammy.
Table 1:
Relationship between Sector of Economy and Type of Employment
All Workers 1999-2000 and 2004-05
Formal/Informal Sector Total Employment (in percentage)
Informal/ Unorganized Worker Formal/ Organized Worker Total
2004-05
Informal/ Unorganized sector 99.6 0.4 86.3 (393.2)
Formal/Organized Sector 46.2 53.8 13.7 (62.6)
Total 92.3 7.7 100.0 (455.7)
1999-2000
Informal/ Unorganized sector 99.5 0.5 86.2 (341.5)
Formal/Organized Sector 42.1 57.9 13.8 (54.9)
Total 91.5 8.5 100.0 (396.4)
Note: Estimates based on the usual principle and subsidiary status of workers developed by the National Sample Survey Organization. Figures in parenthesis are in millions of workers.
Source: National Commission for Enterprises in the Unorganized Sector (NCEUS) (2009). The Challenge of Employment in India: An Informal Economy Perspective, Table 2.3, page no. 13. New Delhi. (Calculated by NCEUS using NSSO 55th and 61st Round Employment and Unemployment Survey).
Characteristics of labor markets in South Asia
People in populous economies typically depend for a living upon the rural and agricultural occupations. No other region compared to South Asia characterizes this scenario especially during the second half of the last century. Since about decade and half the south Asia especially India is identified as an emerging economy, where the role of rural occupations and farming is fast declining; while contributions from off-farm sectors such as manufacturing, trade and services has increase manifolds. What is less known is, the absence of concomitant shifts in labor force from the rural-traditional and less efficient occupations to urban oriented off-farm and apparently more productive occupations. Further the south Asian economies have a high growth of workforce which is more than 2% per annum. As mentioned earlier, most of the workforce is informal and they are also either illiterate or barely educated, and under skilled. There is also a general tendency to deny work opportunities to women seeking work.
India is characteristic of dualism in it labor market. But low growth of employment is not because of rigidities in labor market (NCEUS, 2009). Lately there has been a decline in overall employment, decline in wages and low growth of formal employment. Disconnect, between growth and employment appear a long lasting problem. There is also no expectation of growth of employment in formal sector employment even when the GDP growth remain high, in fact the Indian planning model did not put foundation of growth on formal sector, instead on small scale industries and micro-enterprises. New employment is capital intensive and not labor intensive in formal sector. There may be growing inequality which can be termed as the ‘latin americanization’ of India. Therefore, policy approach should favor massive investments in informal sectors - may be a shift in investment from formal sector necessary. Public and private sector issues are relevant in this context.
One also notice a slow movement of labor from agriculture to RNFE, yet the nonfarm sector is not able to provide high productivity employment in India, although relative to agriculture these sectors have registered high productivity growth (see Table 2). There is also feminization of agricultural and manual labor (NCEUS, 2008 –Report No2, Shariff, 2009), while the policy emphasis on non existing micro-enterprises (survey of enterprises). Lack of education amongst young labor force is alarming which threaten the very foundation for future GDP growth in the region.
Table 2
Shares of income and labor, and productivity ratios in Rural India
Share of
Income Share of
Labor Income/Labor ratios
%ge Change in
ratios
(1994) (2005) (1994) (2005) (1994) (2005)
Self employed 12 12.9 12.7 8.8 0.95 1.5 58.0
Salaried 16.5 20.4 10.4 9 1.6 2.3 44.0
Manual worker 6.3 12.8 9.8 15.8 0.64 0.81 27.0
Cultivator 55 33.1 43.7 42.3 1.26 0.78 -38.0
Ag Labor 7.9 12 23.5 24.1 0.34 0.5 47.0
Other residual* 2.4 8.8 --- --- --- --- ---
*Other residual is a source of income category but not an occupation
Source: Shariff (2009)
How does the crisis affect the informal economy?
It is estimated that during 2004-05, 420 million or 92 percent of labor force was engaged in informal economy; and only about 8 percent were occupied in the formal sectors in India. The informal workers are the self-employed including the cultivating farmers, casual wage laborers, street vendors to those who operate micro enterprises with less than ten workers, and those regular workers in the formal sector who are without any employment or social security and so on. Eighty-four percent of cultivators are marginal and small farmers operating not more than 2 hectares of land. Agricultural laborers, the bottom layer of the occupational structure, include a majority of workers from Scheduled Castes and Scheduled Tribes, and constitute around 89 million in the total labor force. This is also the poorest segment in the Indian economy from an occupational point of view.
It needs to be recognized that the impact of the crisis is not restricted to the larger, organized segments of industry and is indeed of a much more serious nature among those engaged in the informal economy. Consumption estimates, during the period of growth (1993-94 / 2004-05), suggest a rapid expansion roughly in the top two deciles, fuelling the growth, but the benefits of this growth principally bypassed the vast majority of the population (about 77%) who remained vulnerable with an average per capita daily consumption below Rs. 20. However, during the current slowdown, it is precisely these people, the poor and vulnerable, engaged in informal sector enterprises or informally employed by the formal sector, who will be affected the most adversely:
- the informal workers in the organized sector losing employment – in manufacturing, construction and tradetinal services sectors.
- Small producers who contribute more than 30% of exports and traders have suffered in sectors such as in handlooms, textiles, apparel, leather products, gems and jewellery, metal products, carpets, and various types of agricultural products such as spices, and marine fishery.
- Unorganized sector manufactures with investment below Rs. 5 lakh in ‘plant and machinery’ gets less than 2 percent of net bank credit, yet they are getting liquidated due to the economic downturn.
- Casual workers, the urban self-employed, and rural producers in the unorganized sector, including marginal farmers who are net buyers of food grains, have been affected in the recent months by the sharp upturn in the prices of food grains and the rate of inflation, depressing their real income.
The combined impact on the informal economy would be an increase in livelihood insecurity, decline in income and intensification in the conditions of poverty and vulnerability.
Pakistan has seen unusually large increase in food and every day commodities' prices coupled with the high fuel prices. Stock markets have suffered banks sans deposits and Pakistan rupee has seen a large downward trend. Pakistan gets most of its FDI from the west which has dried down. Pakistani exports are steeply reduced due to slowdown in the west. But so far Pakistan has escaped the recent economic turmoil emerging from the US and engulfing the developed European economies. But as the financial analysts go, it has created a situation loaded with immense possibilities for Pakistan. Top bankers are expecting a lot of eastward investment in the near future as options are drying out swiftly in the developed countries' markets. So far as the rural and informal economy is concerned the impact in Pakistan has been on the similar lines described for India.
Bangladesh has also seen considerable increase in food prices and it is only in April-May 2009 that India lifted the ban on rice export which will help reduce food price inflation in Bangladesh which imports rice from India. Bangladesh which was building up its economy through the value added export projects such as garments has got adversely affected due to downturn.
Nepal is one of the countries which have seen migration as an opportunity since long; the labor market is characteristic of long distance and often international (mostly to India) migration. A neighborly county good gesture of India is that labor migration from Nepal can happen without any restrictions generally imposed by rules of international travel such as restriction due to visa and permit requirements. But an adverse impact of recession in India is being felt in Nepal as many migrant workers will be returning back to Nepal. This will put unprecedented pressure in Nepal as well. Nepal which is experiencing political instability exacerbates the problem of dwindling economic fortunes.
Research Gaps in the area of Labor markets
Understanding the Push and the Pull Factors are important: The prevailing spatial market and non-market characteristics exert pull and push forces to both the capital and labor shifting from the inefficient to efficient sectors of the economy. In this regard the role of rural to urban migration is important. Besides the current trend of development of growth centers either in the form of ‘development corridors’, ‘urban peripheries’ or even the growth of medium and small towns which are promoting nonfarm employment and higher incomes are important to be explored. There could also be reverse association in the form of commutation, backward and forward market linkages in goods and services; and income from remittances from the urban to rural areas that will add richness to this analysis. Reverse migration may have taken a clear shape due to the impact of economic downturn which need to be studied.
Increasing role of remittances: Remittances are now a major source of household income both in rural and urban areas. Data on remittances has for the first time become available from the NSSO 64th round and also from NCAER-IHDS surveys, which can be analyzed.
Restructuring the production sectors due to declining role of land as productive asset: Another area worth exploring relates to the asset ownership profile of farmers, agricultural laborers, artisans and tradesmen in the agriculturally progressive versus marginal areas in India, Bangladesh and Pakistan. Given a long history of feudalism in the region, it would be appropriate to document changes in land ownership pattern after the Independence, subsequently after the green revolution period and in the contemporary context of consolidation of land both due to cultural factors and modern markets based on contract farming. While cultivable land appear to be the dominant asset, both productive as well as contractual in nature; many human capital enhancing assets such as formal education, skills and access to working capital would be denting the importance of land assets. Besides the breakdown of the jajmani system in the region seems to have released a large number of wage workers and artisan from the bondage; but could well have pushed them in penury due to the breakdown of traditional support systems; which then get linked with institutions supporting evolution of safety net mechanisms.
Productivity versus Safety Nets: Why growth in employment is low, what is it which is holding back employment generation, which formal sector not growing needs a study? Beside it is useful to focus on policies which aim for productivity growth versus and provisioning of safety nets. The institutional mechanisms, emanating either from public programs and/or market orientation cushion favorable changes in movement of labor, generate higher income or sustain welfare effects at the household level. One of the challenges in Asia is to accurately trace labor market mobility and associated income changes during fast pace of economic growth . Given that a good proportion of work force is employed in rural-agricultural vocations, it is imperative to understand the dynamics of rural life and survival strategies that people resort to. Further, labor market reforms in developing societies should be aimed to ensure fair distribution of income from out of expanding domestic product. This demands mechanisms that not only enhance household income but also enables food and nutrition adequacy and improves basic human capital such as levels of literacy; disease free enhancement of life expectancy and socio-culturally peaceful living.
Migration, Labor flexibility and Poverty in South Asia
Physical movement of labor, manifest in migration mostly from rural to urban; but also the other three identifiable streams including international has not been studied in-depth. Recent evidence suggests closer to 10% of Nepal’s population out migrated, mostly to (India) international destinations, contributing (Rs. 102.1billion 2006-7) over 14% to the GDP , and enabling 11% decline in poverty between 1994 and 2004 . Similarly, remittance from aboard is the largest foreign exchange earner which constitute over 8% of GDP in Bangladesh, and reduced poverty by 6 per cent . India, during 2006-7 received a net of US$ 27.8 billion in remittances which is over 10% of India’s foreign exchange reserve. The remittance for the year 2005-6 was 25.2 billion dollars and for two earlier years it averaged about US$ 22 billion in India. This suggests a substantial role that migration can play in building national economies as well as household welfare. On the similar lines, if one identifies the economic role of internal migration it becomes clear as to how important migration is in the growth process of economics in south Asia. Besides the economic benefits, concurrently there are a number of household level positive changes in attitudes, perceptions and livelihood strategies that take place due to migration. The subject matter of this study is to document the role of migration mostly (internal) in sustaining and improving rural livelihoods and reducing poverty.
Migration, an opportunity or distress: Migration a source to sustain income and consumption but can be at the cost of a decline in a number of human capital formation outcomes such as reduced schooling and literacy, increase vulnerability to sickness, family splits leading to emotional discard and increase in vulnerability. Yet migration has been seen as an opportunity especially by the land less labors, and surprisingly both the educated and illiterate from the rural areas. Concentration of economic activities in urban and semi-urban areas and higher casual wage rates in urban sectors of the economy probably provide the necessary motivating pull, but the push factors in the rural parts which can be due to both natural cause such as declining land productivity, increase pressure of population growth; and also policy neglect and low investment in agriculture.
Migration a bridge between Rural and Urban Economies: Rural and urban livelihoods are interconnected economically, financially, and socially. From a rural perspective, most farmers depend on urban markets to secure their livelihoods such as sale of agricultural produce often on a daily basis such as supply of milk, fruits, vegetables, poultry and so on. Rural households generally depend on cities and towns to access various institutional services such as from hospitals, schools and colleges, banks, and government offices) and for the provision of various private and public goods. The rural households also benefits from remittances sent by family members who migrated to urban areas on employment.
Urban areas are similarly linked to the rural sector, for example, various large businesses and enterprises depend on rural demand for their goods and services (bicycles, ratdios, TVs, FMGC products, seeds and fertilizer, IT enabled communications and so on). Urban areas also rely on rural areas for the supply of raw materials. Urban consumers, on the other hand, benefit from sustained food supply from rural areas. Many poor urban households partly depend on rural activities (e.g., farming) for their livelihoods. The rural sector can also act as a buffer from the impact of macroeconomic shocks on the urban economy. Links between the rural and urban sectors also include flows of information, such as markets and employment opportunities, as well as flows of people moving between rural and urban centers on a temporary or permanent basis
Policies that strengthen or weaken migration
• Inhibiting trade been districts, states, and rural and urban areas by using taxation policies or outright ban.
• Agricultural policies protect urban households, e.g., from high food prices, can indirectly stymie agricultural investment. Low commodity prices discourage farmers from continuing and expanding production, not only affecting the desirability to allocate capital into agriculture, but also potentially creating food shortages
• State policies can discourage people from moving freely between regions, historically there are barriers to labor mobility. Differences emerging from cultural and linguistic differences and variations in life style factors such as food habits and so on can inhibit migration. Besides local politics seeking favors especially jobs, permits and so on only for local population, often referred to as ‘sons of the soil’ policies discourage interstate as well as rural to urban migration.
• Limiting provisions such as housing, water, electricity, roads to living localities populated by migrants
• Limiting social services such as education, health and nutrition/ food access to migrant families. Rural out-migrants usually are unable to claim state benefits in urban areas of India and China (Deshingkar, 2006).
Refined Understanding of Links between Migration and Poverty
The dynamics of migration differs considerably by its type. The characterization of migration streams is not very well documented in economic literature, especially in south Asia, due mostly to want of data and definitional issues. Distinctions, for example, between rural-to-urban and rural-to-rural, just to name two of the four major streams is important. Similarly, distinction between internal and international migration is another useful characterization. Another way is to identify life time versus circular migration which carry very different dynamics; and the intermediating ‘step-wise’ migration in which a migrant cautiously moves over to the final destination after taking a number of shorter and smaller migration moves over time. A recent research , for example, has found that the impact of household welfare especially on gender specific child schooling and health differed substantially depending upon whether the economic migration was within ‘district’, ‘within state but out of district’ and ‘out of state’ migration.
The available data from surveys do not capture many of the variations in migration enunciated above especially the short term and circular migration. Migration is an intermediating process which generally breaks a household, often leaving women, children, the old and infirm vulnerable. Yet this same vulnerability may turn out to be a factor leading to empowerment of women in the rural areas. One such evidence has been feminization of Indian agriculture, the skeptics use this as an evidence of distress but one can look at this phenomenon as empowerment of women instead. Women’s control over resources generally leads to better human capital output indicator such as better education and health conditions of children.
Migration in the south Asian context is considered a sign of distress. A historical assessment of migration since the partition provides credence to such a hypothesis. Often the migrants originating from rural areas belong to asset less households such as the landless, small / marginal farmers (for example, migrant agricultural labour to Indian Punjab from Bihar and Eastern Uttar Pradesh), low castes such as the dalits, tribal groups (for example, migration from high lands and mountains to tarai regions in Nepal) and minorities (for example, Muslims in India and Hindus in Bangladesh). Such high propensity migration often leads to permanent or life time migration as well. This dynamics of migration has immense relevance to the future of social cohesion and peaceful living within a country or region. Further migrating adult male members leave behind dependents who can get into distress and penury. The proposed study intends to document and empirically measure various aspects of class and caste hierarchies, power structures, gender relations, social cohesion and historical factors that have a bearing on migration of people / households and relative impact on livelihoods.
Firstly there is a need to assess migration streams using data from large scale sample survey of households in Bangladesh, India, Nepal and Pakistan Longitudinal datasets are useful in understanding change over time in critical variables at the household level such as occupations, assets, poverty/wealth status. A number of qualitative studies needs to be launched so as to get complementary information to substantiate the quantitative data analysis. Qualitative study and in depth interviews will highlight village level processes and individual life trajectories in response to wider changes (environmental, market and policy).
Hypotheses - Migration, labor mobility and poverty:
• What are the patterns of labor migration in each of the countries? Is there evidence of large-scale movement of labor from low-productivity regions to high-productivity regions?
• To what extent has the shift from farm to nonfarm income sources occurred via migration? In other words, has income diversification taken place through migration of some family members to urban areas?
• Remittances now form a large share of household income both in rural and urban areas of South Asia. Even in India, its importance has increased. New data available from NSSO 63rd round data and data from NCAER’s IHDS can be analyzed to find out the poverty reducing impact of migration linked remittances.
• What types of occupations (using the three-digit International Standard Classification of Occupations) have seen growth, and which occupations have seen a decline, over the last two decades in each of the seven countries?
The frame of analysis of ‘migration and its impact’ must begin with analyzing the economic structure and labor market imperfections followed by the process and mechanisms that in turn determine impact and outcomes. The outcomes in this research are to be identified at the levels of household and community. The set of questions which will be used in both quantitative as well as qualitative approaches are listed below:
a) Economic structure, migration and market imperfections
• Economic structure and income/GDP profiling by source with a focus on rural urban differentials.
• What type of labor market imperfections are promoting migration flows. Is it linked with rural - urban or interregional wage differences?
• What kind of strategy is adopted by migrants to enhance income and savings leading to remittances?
• Role of migration in sustaining household income and impact of remittances on poverty.
• Identify uninsured risks that need to be addressed by public policy?
b) Societal factors and household level social process
• What are the social drivers of migration at the intra-household level and at the village level (e.g. historical connections with certain destinations) and how these vary by social groups?
• The relationship between income and occupation, education, skills; which social groups are excluded from well paid jobs and for what reasons?
• Migration as a response to differential needs – (short versus long term).
• The impact of migration on assets, durables, education, social standing, creditworthiness and how this differs by caste and gender.
c) Gender response and outcomes
Gendered response will be investigated in four different perspectives: (a) implications for the individual woman, (b) implications for the household, (c) implications for the society, and (d) implications for agriculture. The expectation is that while woman assumes a greater role in household decision making as a consequence of migration of a male household member; and over a period of time it generate a number of women empowering effects which will operate through her own self, human capital formation of children, through a number of public and social goods and even improvements in agricultural productivity.
Bibliography and References:
Mujahid, G. B. S (2007). Rural-urban migration, urban underemployment and earnings differentials in Pakistan, Review of World Economics, 111(3):585-598.
Schmitt, J and Dean Baker 2008. ‘What we’re in for: Projected Economic Impact of the next recession’, a paper of the Center for Economic and Policy Research, Washington DC. (www.cepr.nt).
Admes H Richard Jr and Jane J. He (1995) Source of income inequality and poverty in rural Pakistan, Report No. 102, Washington DC: International Food Policy Research Institute.
Muller, Valerie and A. Shariff, 2008. ‘Can Migration Improve Living Standards in Developing Countries? Internal Migration and Welfare in India’, International Food Policy Research Institute, Washington DC, (December).
World Bank 2009. ‘Swimming against the tide: How developing countries are coping with the global crisis’. Background paper prepared by the World Bank Staff for the G20 Finance Ministers and Central Bank Governors meeting, Horsham, the UK, March 13-14.
Behrman, Jere, R (1988). ‘The impact of economic adjustment programs’ in Bell, David E and Michael R. Reich (eds.) Health, Nutrition, and Economic Crisis: Approaches to Policy in the third World, Dover, Massachusetts: Auburn House Publishing Co.
UNICEF (2009). A Matter of Magnitude: The Impact of the economic crisis on women and children in south Asia. Katmandu: Unicef Regional Office.
Monday, April 20, 2009
Thursday, April 2, 2009
AfPak Development Strategy
A strategy that will work is outlined below: Understanding causes and mechanism to alleviate vulnerability amongst people who living rural and remote areas is the key to conflict resolution in Afghanistan. In this context it is important to study the problem of Agriculture in Afghanistan which has suffered extensively due to long period of internal disturbance and a war like environment all over the country. The reconstruction of Afghanistan can at best be based on bringing back agricultural into focus and while doing so modernize it. Given the rural nature of Afghan economy, reduction of poverty and ensuring food security for the masses needs urgent attention on its agricultural sector and linkages between its rural-urban markets. Agricultural sector growth needs support from a number of non-farm activities beginning from agricultural extension activities and provisioning of input supplies to rural outback. Given not so hospitable terrains most important is to crate/recondition rural road network, establish transportation and market linkages. Expanding Irrigation systems and enhancing water availability to promote cultivation is another important activity which requires immediate attention. All the above sets of activities require involvement of both trained and manual workforce drafted form the local areas. Afghanistan has been well known for exporting exotic high value dry fruits all over the world. A cost efficient strategy to enhance rural incomes, therefore, is to encourage cash crop (fruit) cultivation and complementing it by technology aided processing, for example, dehydrating and packaging that facilitate exports. Technology and skill formation will also be needed in the area of warehousing, milling, standardization and food processing so as to modernize agricultural markets. Market information system and establishing a rural area data and information network are other areas that need investment in training, education and extension activities.
Sunday, March 29, 2009
What Balanced Growth means to the World Bank
Abusaleh Shariff and Amitabh Kundu
Amidst the global gloom of economic meltdown rivaling only the depression of the 1930’s, the World Bank has delivered its 31st ‘world development report’ (WDR) in its own ritualistic fashion last week in New Delhi. The report is a visual treat as the complexities of world’s business is presented in three dimensions, using geographic depictions that are easy to understand. Although it argues for balanced growth between the rural and urban areas, it makes a strong case for the ‘scale economies’ that can occur through geographic concentration of economic activities, which alarmingly is taking place in and around a few large city concentrations. The case of Tokyo which accounts for closer to one half of Japan’s exports is presented as an illustration with a lot of fervor. The cases of Seoul in South Korea, Dongguan in China, specified region in Egypt have been noted to strengthen the case. The report introduces the concepts of ‘three Ds’ depicting density, distance and division all in geographic parlance and their spatial overlapping without going into the details of their distressing manifestations in many of the countries in less developed regions.
The report makes a case against policies which could hinder the so called natural process of rural to urban migration and process of urbanization. It argues for well informed and people friendly provisioning of services to urban areas so as to facilitate economic growth oriented industrial and service activities. Understandably, the large cities with greater potentials are to be preferred in designing the strategy. A compulsive argument made is that it is just not for the sake of higher wage incomes and better jobs that people migrate to cities and urban agglomerations. They do so due to concentration of economic and social infrastructure; for example, the markets, facilities for education, health, entertainment, leisure and so on. In this context there is emphasis on the fact that it is no more a dichotomy of rural and urban areas but it is a continuum, rural-villages to towns, cities and metropolises that should constitute the premise of the development strategy.
The durability and resilience of an economy during the crises is linked with its own diversity and vastness in terms of the sectors of economy, For example, economies dependent on export of single or few commodities would get affected much more from a sharp fall in global prices of these commodities, compared with economies with a diverse basket of goods and services in its markets. One can extend the argument to geographic diversity and hold that a broad spread of economic activities across all different regions in a country including rural areas and semi-urban corridors would be less vulnerable to such global shocks. Thus the key to long term efficiency and stability in growth lies in economic and geographic spread and not in its concentration. Note that such counter arguments and conflicting policy orientations between economics of specialization, agglomeration and even division of labor are as old as economic thought itself and there cannot be a single prescription for countries that face very different economic situations. There have to be a range of economic prescriptions depending upon the nature, depth and breadth of global integration and level of economic development itself.
The WDR recommendation in favour of concentration of economic activities in the name of size economies would be grossly unsuited for countries like India for several empirical reasons. The country owing to historical and socio-economic reasons has experienced low rate of migration, if you exclude mobility of women occurring largely for marriage and family linked factors. More importantly, the male population has become less mobile over the past several decades. The rhetoric of the regional leaders leading to antagonism between the local population and outsiders is partly responsible for this. The decline in the rate of immigration can be observed not only in case of Maharashtra but also other developed states like Punjab, Haryana, West Bengal, Gujarat and Tamil Nadu. Correspondingly, the rate of outmigration from the less developed states has gone down. Expenditure class wise data from the National Sample Survey suggest that the poor households are worst hit by this trend and their migration rates have declined significantly. Furthermore, the WDR does not draw lessons from the fact that it is the rural-rural migration which has created fascinating geographic economic linkages in India. This linkage is the result of technological transformation of agriculture in specified areas which had relative advantage in water resources and other inputs. In the context of the rural areas the WDR under emphasis two important processes: (a) the role of technology in agriculture, and (b) the role of agriculture in economic growth and livelihood sustenance to the teaming millions in India.
The decline in the growth in urban population during the past two decades indicates that rural urban migration has not gone up despite accentuation of rural-urban disparity. The metropolitan cities have become hostile to the migrants and consequently their poverty levels have come down sharply to about 12 per cent as compared to the figure of 24 per cent for the country as a whole. The household level data show that growing rural-urban disparity provides economic rational for greater migration. Unfortunately, the socio-political reality of the country has come in the way of its materialization. It would be imprudent to plead for a strategy resulting in grater regional imbalance without ensuring that mobility can indeed be increased given the present social environment.
The major concern of the inclusive strategy designed for the Eleventh Five Year Plan is regional imbalance and social justice. A large number of programmes have been designed, targeting the development of backward areas and regions that also have large concentration of socially vulnerable people. The Prime Minister’s flagship programmes including NREGA are trying to reach out to the people who have benefited only marginally from the growth dynamics of the earlier periods. Redressal of the problem of regional balance is taken as a key component of the strategy of inclusive development in the Plan. India is not the only country where regional and social inequalities have gone up in the past few decades, partly associated with adopting measures of globalization. The WDR for the year 2006 entitled Equity and Development had expressed serious concern on this issue and pleaded for providing access to basic factors of production and strengthening the capabilities of the people in vulnerable social groups and regions. The policy perspective emerging from the present report is bound to send erroneous signals to policy makers in developing countries and come in the way of achievement of MDG by 2015. Economic growth foundations if linked securely to the economics of agglomeration will do more harm not only to the farming communities but also to those who live in relatively less endowed geographic spaces; besides creating mega-problems faced by mega-cities. Can anyone imagine India marching ahead on a high growth path even for the next couple of decades by strengthening infrastructural facilities and high quality services in a few urban agglomerations, ignoring the five thousand small towns and six hundred thousand villages, even in the short run? Utopianism can show us the moon, but only a few can reach there. The development practitioners must think about the welfare of the millions living in un-serviced villages and urban slums rather than projecting a dream of creating a few millionaires.
Amidst the global gloom of economic meltdown rivaling only the depression of the 1930’s, the World Bank has delivered its 31st ‘world development report’ (WDR) in its own ritualistic fashion last week in New Delhi. The report is a visual treat as the complexities of world’s business is presented in three dimensions, using geographic depictions that are easy to understand. Although it argues for balanced growth between the rural and urban areas, it makes a strong case for the ‘scale economies’ that can occur through geographic concentration of economic activities, which alarmingly is taking place in and around a few large city concentrations. The case of Tokyo which accounts for closer to one half of Japan’s exports is presented as an illustration with a lot of fervor. The cases of Seoul in South Korea, Dongguan in China, specified region in Egypt have been noted to strengthen the case. The report introduces the concepts of ‘three Ds’ depicting density, distance and division all in geographic parlance and their spatial overlapping without going into the details of their distressing manifestations in many of the countries in less developed regions.
The report makes a case against policies which could hinder the so called natural process of rural to urban migration and process of urbanization. It argues for well informed and people friendly provisioning of services to urban areas so as to facilitate economic growth oriented industrial and service activities. Understandably, the large cities with greater potentials are to be preferred in designing the strategy. A compulsive argument made is that it is just not for the sake of higher wage incomes and better jobs that people migrate to cities and urban agglomerations. They do so due to concentration of economic and social infrastructure; for example, the markets, facilities for education, health, entertainment, leisure and so on. In this context there is emphasis on the fact that it is no more a dichotomy of rural and urban areas but it is a continuum, rural-villages to towns, cities and metropolises that should constitute the premise of the development strategy.
The durability and resilience of an economy during the crises is linked with its own diversity and vastness in terms of the sectors of economy, For example, economies dependent on export of single or few commodities would get affected much more from a sharp fall in global prices of these commodities, compared with economies with a diverse basket of goods and services in its markets. One can extend the argument to geographic diversity and hold that a broad spread of economic activities across all different regions in a country including rural areas and semi-urban corridors would be less vulnerable to such global shocks. Thus the key to long term efficiency and stability in growth lies in economic and geographic spread and not in its concentration. Note that such counter arguments and conflicting policy orientations between economics of specialization, agglomeration and even division of labor are as old as economic thought itself and there cannot be a single prescription for countries that face very different economic situations. There have to be a range of economic prescriptions depending upon the nature, depth and breadth of global integration and level of economic development itself.
The WDR recommendation in favour of concentration of economic activities in the name of size economies would be grossly unsuited for countries like India for several empirical reasons. The country owing to historical and socio-economic reasons has experienced low rate of migration, if you exclude mobility of women occurring largely for marriage and family linked factors. More importantly, the male population has become less mobile over the past several decades. The rhetoric of the regional leaders leading to antagonism between the local population and outsiders is partly responsible for this. The decline in the rate of immigration can be observed not only in case of Maharashtra but also other developed states like Punjab, Haryana, West Bengal, Gujarat and Tamil Nadu. Correspondingly, the rate of outmigration from the less developed states has gone down. Expenditure class wise data from the National Sample Survey suggest that the poor households are worst hit by this trend and their migration rates have declined significantly. Furthermore, the WDR does not draw lessons from the fact that it is the rural-rural migration which has created fascinating geographic economic linkages in India. This linkage is the result of technological transformation of agriculture in specified areas which had relative advantage in water resources and other inputs. In the context of the rural areas the WDR under emphasis two important processes: (a) the role of technology in agriculture, and (b) the role of agriculture in economic growth and livelihood sustenance to the teaming millions in India.
The decline in the growth in urban population during the past two decades indicates that rural urban migration has not gone up despite accentuation of rural-urban disparity. The metropolitan cities have become hostile to the migrants and consequently their poverty levels have come down sharply to about 12 per cent as compared to the figure of 24 per cent for the country as a whole. The household level data show that growing rural-urban disparity provides economic rational for greater migration. Unfortunately, the socio-political reality of the country has come in the way of its materialization. It would be imprudent to plead for a strategy resulting in grater regional imbalance without ensuring that mobility can indeed be increased given the present social environment.
The major concern of the inclusive strategy designed for the Eleventh Five Year Plan is regional imbalance and social justice. A large number of programmes have been designed, targeting the development of backward areas and regions that also have large concentration of socially vulnerable people. The Prime Minister’s flagship programmes including NREGA are trying to reach out to the people who have benefited only marginally from the growth dynamics of the earlier periods. Redressal of the problem of regional balance is taken as a key component of the strategy of inclusive development in the Plan. India is not the only country where regional and social inequalities have gone up in the past few decades, partly associated with adopting measures of globalization. The WDR for the year 2006 entitled Equity and Development had expressed serious concern on this issue and pleaded for providing access to basic factors of production and strengthening the capabilities of the people in vulnerable social groups and regions. The policy perspective emerging from the present report is bound to send erroneous signals to policy makers in developing countries and come in the way of achievement of MDG by 2015. Economic growth foundations if linked securely to the economics of agglomeration will do more harm not only to the farming communities but also to those who live in relatively less endowed geographic spaces; besides creating mega-problems faced by mega-cities. Can anyone imagine India marching ahead on a high growth path even for the next couple of decades by strengthening infrastructural facilities and high quality services in a few urban agglomerations, ignoring the five thousand small towns and six hundred thousand villages, even in the short run? Utopianism can show us the moon, but only a few can reach there. The development practitioners must think about the welfare of the millions living in un-serviced villages and urban slums rather than projecting a dream of creating a few millionaires.
Saturday, March 28, 2009
Economic Recovery
Economic Recovery is in the Brain!
As the global economy saw a sustained and uninterrupted growth of just about a decade since the east- Asian crisis of 1998-9, the USA became first to strike back with a vengeance as if she was waiting to destabilize the world economy with a purpose. The blame game began – it is the sub-prime lending, crash of the housing market and so on; but the real culprit was the inefficient and unregulated banking sector in the US and selected European countries. Remember even the erstwhile east-Asian crisis was triggered by the failure of the banking sector who could not sustain FII and FDI flows and the panic subsequently robbed the capital markets across the region through contagion. This time it is not the financial constraints per se, rather glut of easy and cheap money channeled into the American financial system from across the world, mainly through federal bonds and speculative investments in real estate. USA has been the favorite destination for keeping ‘global sovereign funds’ as a store of value through the purchase of federal bonds and investments in private markets. For example, most of surplus petro-dollars from the Middle Eastern countries, the national savings from China and Japan are dominantly parked in the American bond and stock markets and by the end of 2008 US had the largest negative trade balance in the world of $821billions.
Another fact important is that financial crisis that hit the real estate in the US came unannounced; the undercurrent of this ‘financial tsunami’ was not at all visible. Murmurs of overheating of economies were heard during 2008 but they were taken as positive indications for promoting high levels of production and marketing activities thus benefitting corporate sector. But subsequent to the crisis inter-banking activity came to standstill and developmental fund channel for industrial production, trade and services was desiccated. Many expansion plans and future investments were put on hold. A grand psychological deficit took shape which further drained the financial markets, that not only damaged institutions and business but also individuals and households. In spite of the fear of loss of value of cash savings, individuals preferred to withhold cash or should we say stash cash under the pillow thus damaging the business and marketing activists. Such a forced and unwarranted savings create disaster especially during the slowdown as this behavior reduces domestic demand and brings down the overall economic activity leading to massive unemployment, although there could be initially a decline in rate of inflation. Such a behavior normally snowballs into deep crisis. The efforts to stop such disaster have lead to what is now known as economic bail out plans but amidst serious criticisms.
As a fall out of the meltdown a number of less developed countries are affected. The Economic Intelligence Unit predicts that 95 countries around the world are facing a threat of social unrest which can disrupt economies and topple governments. Volatility and uncertainty in food and fuel prices, and associated pricing and trade policies needs to be at the top of the economic agenda of low income and transition economies so as to keep a watch on the welfare of millions of the downtrodden spread across both the rural and urban areas. Many businesses are resorting to wage cuts or reduction in working hours, depleting inventories and so on. The durability and resilience of an economy during the crises is linked with its own diversity and vastness in terms of the sectors of economy, for example, single or fewer commodity export economics would get affected much more from a sharp fall in global prices of such commodities; compared with economies with a diverse basket of goods and services in its markets. An extension of this phenomenon is geographic diversity and a broad spread of multiple economic activities across all parts of a country including rural areas and semi-urban corridors. Thus the key is in economic and geographic spread and not in its concentration, notwithstanding the most recent prescription of the World Bank vehemently promoting economic concentration in the guise of economics of agglomeration (World Development Report, 2009). Note that such counter arguments and conflicting policy orientations between economics of specialization, agglomeration and even division of labor are as old as economic thought itself and it is easy to recommend a balanced view on it; but what is relevant today is that there cannot be a single prescription and that countries face very different economic situations. Thus, there have to be a range of economic prescriptions depending upon the nature, depth and breadth of global integration and level of economic development itself.
The rich economics are putting financial bailout packages to banks and industrial houses under sever criticisms that such efforts are akin to nationalization and getting closer to socialistic virtues which are not respected in liberal market economics. The economic bailout plans mostly in US but also in the UK and to a limited extent in other European countries are intended to bring back vibrancy of economic activity through promoting businesses. But this is better said than done, as businesses can be promoted only when psychologically they are again ready to take risks and initiatives for furthering production, distribution and trading activities. A saving grace during this state of madness has been not so high increases in basic food items although there are indicators of food price increase during this year and the year after. Food prices have either declined or remained same, but there are pressures that they may increase which will mean that the poor will be affected.
It was common knowledge that India and China were engines thrusting economic momentum of the globe during previous decade and expected to do so during next half a century or more. But the meltdown has affected both - China much more than India. This is because of China’s high degree of global integration in spite of not being a member of WTO for a long time. China has recorded industrial unemployment never heard of and economic growth rate is expected to be half of decadal average. India on the other hand not fully integrated globally both in terms of exports and financial inflows are affected somewhat less. It has not yet seen massive unemployment although a recent ‘labour bureau’ estimate puts is at about 500,000 job losses but it is nowhere near to 2.5-3 millions reported from China. Indian has continued to receive FDIs almost at the same rate and reached the peak last month. Thus what appeared a problem for India that its economy was growing due to domestic demand has become a blessing in
disguise, and supporting reasonable growth during the downturn. Even the IMF (18th March 2009 news papers) has accorded accolade for India for its responsible economic policies and sustaining growth in the vicinity of 6 % during the current year.
A natural response to protect an economy from the global forces of meltdown could be to insulate itself through protectionist policies. A few countries have precisely done the same especially in areas of financial flows and food exports. But what appears a curse in transferring and augmenting the impact of the meltdown, is precisely what will work to ward off such an evil. Multilateralism and open borders still are the solutions to reduce the impact jointly and ultimately get a set of countries out of recessionary situations. At the national level it is prudent to sustain expenditures on programs such as for mass employment generation (NREGA) which enables the rural poor to sustain income and consumption. Fiscal deficits will be under stress but that is what the national governments are expected to do, manage fiscal and financial flows prudently.
As the global economy saw a sustained and uninterrupted growth of just about a decade since the east- Asian crisis of 1998-9, the USA became first to strike back with a vengeance as if she was waiting to destabilize the world economy with a purpose. The blame game began – it is the sub-prime lending, crash of the housing market and so on; but the real culprit was the inefficient and unregulated banking sector in the US and selected European countries. Remember even the erstwhile east-Asian crisis was triggered by the failure of the banking sector who could not sustain FII and FDI flows and the panic subsequently robbed the capital markets across the region through contagion. This time it is not the financial constraints per se, rather glut of easy and cheap money channeled into the American financial system from across the world, mainly through federal bonds and speculative investments in real estate. USA has been the favorite destination for keeping ‘global sovereign funds’ as a store of value through the purchase of federal bonds and investments in private markets. For example, most of surplus petro-dollars from the Middle Eastern countries, the national savings from China and Japan are dominantly parked in the American bond and stock markets and by the end of 2008 US had the largest negative trade balance in the world of $821billions.
Another fact important is that financial crisis that hit the real estate in the US came unannounced; the undercurrent of this ‘financial tsunami’ was not at all visible. Murmurs of overheating of economies were heard during 2008 but they were taken as positive indications for promoting high levels of production and marketing activities thus benefitting corporate sector. But subsequent to the crisis inter-banking activity came to standstill and developmental fund channel for industrial production, trade and services was desiccated. Many expansion plans and future investments were put on hold. A grand psychological deficit took shape which further drained the financial markets, that not only damaged institutions and business but also individuals and households. In spite of the fear of loss of value of cash savings, individuals preferred to withhold cash or should we say stash cash under the pillow thus damaging the business and marketing activists. Such a forced and unwarranted savings create disaster especially during the slowdown as this behavior reduces domestic demand and brings down the overall economic activity leading to massive unemployment, although there could be initially a decline in rate of inflation. Such a behavior normally snowballs into deep crisis. The efforts to stop such disaster have lead to what is now known as economic bail out plans but amidst serious criticisms.
As a fall out of the meltdown a number of less developed countries are affected. The Economic Intelligence Unit predicts that 95 countries around the world are facing a threat of social unrest which can disrupt economies and topple governments. Volatility and uncertainty in food and fuel prices, and associated pricing and trade policies needs to be at the top of the economic agenda of low income and transition economies so as to keep a watch on the welfare of millions of the downtrodden spread across both the rural and urban areas. Many businesses are resorting to wage cuts or reduction in working hours, depleting inventories and so on. The durability and resilience of an economy during the crises is linked with its own diversity and vastness in terms of the sectors of economy, for example, single or fewer commodity export economics would get affected much more from a sharp fall in global prices of such commodities; compared with economies with a diverse basket of goods and services in its markets. An extension of this phenomenon is geographic diversity and a broad spread of multiple economic activities across all parts of a country including rural areas and semi-urban corridors. Thus the key is in economic and geographic spread and not in its concentration, notwithstanding the most recent prescription of the World Bank vehemently promoting economic concentration in the guise of economics of agglomeration (World Development Report, 2009). Note that such counter arguments and conflicting policy orientations between economics of specialization, agglomeration and even division of labor are as old as economic thought itself and it is easy to recommend a balanced view on it; but what is relevant today is that there cannot be a single prescription and that countries face very different economic situations. Thus, there have to be a range of economic prescriptions depending upon the nature, depth and breadth of global integration and level of economic development itself.
The rich economics are putting financial bailout packages to banks and industrial houses under sever criticisms that such efforts are akin to nationalization and getting closer to socialistic virtues which are not respected in liberal market economics. The economic bailout plans mostly in US but also in the UK and to a limited extent in other European countries are intended to bring back vibrancy of economic activity through promoting businesses. But this is better said than done, as businesses can be promoted only when psychologically they are again ready to take risks and initiatives for furthering production, distribution and trading activities. A saving grace during this state of madness has been not so high increases in basic food items although there are indicators of food price increase during this year and the year after. Food prices have either declined or remained same, but there are pressures that they may increase which will mean that the poor will be affected.
It was common knowledge that India and China were engines thrusting economic momentum of the globe during previous decade and expected to do so during next half a century or more. But the meltdown has affected both - China much more than India. This is because of China’s high degree of global integration in spite of not being a member of WTO for a long time. China has recorded industrial unemployment never heard of and economic growth rate is expected to be half of decadal average. India on the other hand not fully integrated globally both in terms of exports and financial inflows are affected somewhat less. It has not yet seen massive unemployment although a recent ‘labour bureau’ estimate puts is at about 500,000 job losses but it is nowhere near to 2.5-3 millions reported from China. Indian has continued to receive FDIs almost at the same rate and reached the peak last month. Thus what appeared a problem for India that its economy was growing due to domestic demand has become a blessing in
disguise, and supporting reasonable growth during the downturn. Even the IMF (18th March 2009 news papers) has accorded accolade for India for its responsible economic policies and sustaining growth in the vicinity of 6 % during the current year.
A natural response to protect an economy from the global forces of meltdown could be to insulate itself through protectionist policies. A few countries have precisely done the same especially in areas of financial flows and food exports. But what appears a curse in transferring and augmenting the impact of the meltdown, is precisely what will work to ward off such an evil. Multilateralism and open borders still are the solutions to reduce the impact jointly and ultimately get a set of countries out of recessionary situations. At the national level it is prudent to sustain expenditures on programs such as for mass employment generation (NREGA) which enables the rural poor to sustain income and consumption. Fiscal deficits will be under stress but that is what the national governments are expected to do, manage fiscal and financial flows prudently.
Wednesday, March 4, 2009
Marginalized and Indian Democracy: A case of Muslims
There are a number of ways marginalized groups of people can be defined in India; often referred to as the excluded as well. These generic expressions, inherently suggest a systemic but mechanical manner in which groups of specified identities are driven away towards peripheries of democratic decision making institutions. They miss out from the benefits of protective and promotive public policy approaches, mostly due to lack of motivation amongst functionaries assigned with implementative duties. They often lack informational and institutional support structures that through community networks could claim their own space in governance and civil society. Put differently exclusion can occur due to the acts of omission and commission by the political and governance structures. The dimensions namely, political process, bureaucratic reach and drive for organized civil society initiatives are all essential to enable citizens seek fair access and achieve reasonable levels of outcomes in modern day developmental initiatives.
Given the complex maize of socio-cultural and religious pluralism and diversity in India, often population groups identified as dalits, tribals (notwithstanding constitutional guarantees), minorities (mostly religious), land less manual workers, migrants from rural and less developed regions and those living in inhospitable hinterlands are identified as marginalized or excluded groups. They generally do not carry political patronage, nor do they attract attention of developmental functionaries under routine setup, and are unable to organize themselves in the mould of civil society. In short they are easy to pry, mislead and even soft targets of exploitation.
In India we invoke general (national) elections every five years to choose 552 members to loka sabha (house of the people) in parliament. They along with members of rajya sabha (council of states) and state level legislatures select a Prime Minister as chief of executive, representing largest faction of elected representatives, and he in turn selects his team of ministers. Thus one finds a multi-level process and at each level the marginalized may experience the brunt of exclusion and suppression. Since the Indian democracy recognize and respect those who have support of the majority, which can be just over one half and often much less due to multiple contestants. In many circumstances those at the helm of governance do not in fact represent majority at all. In such a mechanism, those identified as marginalize and excluded cannot make inroads into functional democratic formations. Thus, executive and legislature in India seems to work for the majority not because institutional formations were based on majority but rather to an illusionary majority which is important to sustain power in future as well. Besides, one finds a declining share as voters, amongst the marginalized especially in case of religious minorities, which can further cause marginalization and exclusion.
It is absolutely necessary, therefore, that other institutional structures are available to protect the interest of marginalized and excluded. The judiciary is one such institution, which is part of the trilogy (along with legislature and executive) accounting for good governance. But judiciary acts only when approached and marginalized normally are incapable to reach out seeking redresses. Normally, judiciary addresses individual cases and only rarely accommodative to ponder over systemic and mechanical exclusion; and on its own it does not initiate corrective measures.
In India, there are other quasi-public institutions such as the human rights commission, the SCs and STs Commission, minority commission and so on; whose mandate is not well defined, and a look at their functioning suggests little attention towards three types of exclusions enunciated above. Such quasi-public institutional arrangements are involved in seeking redresses through the enactment of law; lacking are intuitional arrangements to ensure implementation of laws and program that promote inclusion.
The hope for democracy in India lies in the grassroots identified as the panchayati raj institutions. Even at this level same principle of ‘highest count wins the cup’ is utilized, which in fact pushes the identified communities further towards deepening marginalization, exclusion and distress. The concept of proportional representation was rejected at the time of formation of the Indian republic in 1947 on the belief that democratic selection through ‘highest vote gather’ method was good enough to address concerns of minority groups that were not capable of winning a place through votes. But as we experience now such expectations are not to be found. It appears, therefore, time is ripe to introduce some form of proportionate representation at the level of local self governments. For example, legislation in Andhra Pradesh in 2006 ensures nomination of two minority members to the panchayat sabhas across the state. Other states will do better by emulating this format and learn from experiences.
Although Indian has made a name for itself in the world as an emerging economy, production and consumption hub, and part of the global energy revolution; it is going through one of the lowest spiral so far as inter-community relationships are concerned. It has poor record in social policy of building safe and secure place of living for people who profess varied religions and social customs. Inter-community relationships must be addressed as the priority of this government and the government which will be formulated after impending general elections. It is a matter of ‘trust’, but the minority communities especially the Muslims and Christians are looked down upon by certain political thinking, which is corrupting the young minds. While other minorities namely Buddhists, Sikhs and Janis do not sufferer from such mistrust of the polity and establishment.
Security Concerns- In organized societies especially in a pluralistic context there can be physical threat to life if a dominant group intends to eliminate or reduce the civic power of the other group. But the legal structure and state security machinery such as the police, the army and other agencies are put in place to ensure security to all citizens. It is in this context and frame of governance that one needs to understand the physical security of the Muslim community in India.
In spite of democratic governance in place in India there is physical threat to life of many minorities – mostly Muslims and Christians; and castes such as dalits and adivasis.
Muslims especially face threat to life if they do not align their political ideology with the dominant community of a given area such as a constituency, a district or a state. Often organized threat to life of Muslims emerges from the State especially when those with deviant ideology assume power – For example in Gujarat. But such organize crime causing loss of life can be caused even in the so called secular regimes – thus such mass killings such as during the communal riots are mostly engineered and well planned in connivance with the security agencies of the state. The police force in the Indian context seems somewhat less concerned with the problems of the poor and excluded.
When there is a fear phobia amongst a community it affects practically all facets of human lives. While it generates a feeling of perennial insecurity in the minds of people, which in turn pushes them in to living in exclusive spaces and ghettos? Children, especially girls would not participate in normal and regular schools for fear of life as most often such facilities are found in living spaces where the Muslims do not reside. Muslim women will not come out to secure employment in common places such as the markets. Even the well educated and qualified Muslim men may not be employed in the private sectors, as they will be considered not trust worthy. Especially since the whole of the Muslim community across India is under the suspicion, it is not uncommon to find that the security agencies pick up Muslim youth at random and subject them to merciless killing just to create a terror phobia amongst the Muslims.
This is a national disgrace and needs to be set right. In this connection there is a need to establish the ‘equal opportunities commission (EOI)’ as recommended by the Sachar Committee, and appropriate legal mechanism through an enactment of law must be put in place to deal with religious discrimination. The EOI also helps strengthen grassroots level participation by reducing willful exploitation and exclusion of communities, socio-cultural or economic groups such as the wage laborers, temporary migrants, women, and minorities and so on. Maintaining diversity in public spaces was also recommended to be absolutely essential through extending a set of carefully crafted incentives and disincentives. Sachar report essentially is a review and record of success or failure of the democratic institutions intended to achieve social-equity, participation and inclusiveness. It is two years since the report was handed over to the parliament, but so far there has not been any discussion and debate on it. In a democracy, keeping issues under wraps, away from the public debates can defeat the very purpose and objectives of developmental governance. Although there are some gains with respect to enhanced sensitivity amongst the policy makers and bureaucrats with respect to excluded communities in this case the Muslims; no noteworthy policy shift has been noticed. Mechanisms to improve diversity in government employment, admissions in colleges and universities, and in institutions of local self governance have to be addressed on an urgent basis. Importance of information sharing and transparency in public debates effected though establishing an independent data bank and assessment and monitoring authority will go a long way in ensuring the fact that Indian democracy is moving towards maturity and that it meets the standards set by modern day democracies around the world.
The following initiatives will yield better results both at the level of State and National government frameworks:
Markets, Credit and Employment:
City/ town specific modernization, marketing and export schemes for products produced by artisans. Access to bank and cooperative credit to facilitate production, gradation, packaging and exports. Easy access to bank and micro-credit programs for promotion of self-employment.
Promote food-processing industries for export of meat, chicken and fish with participation of Muslims in backward and forward markets. Retailing, where many Muslims are engaged is now being hijacked by the organized sector.
Promote environment friendly leather industry with involvement of Muslims and SCs and STs in the backward and forward markets.
Strengthen the backward and forward linkages in both credit and product markets in hand loom and power loom sectors to promote production of cotton textiles and Silk.
Provide clearly identified urban space for undertaking vending operations for vegetables, fruits, flowers and other food products with proportionate share for Muslims.
Provide mainstream space to show case crafts produced and manufactured by Muslim artisans. The artisans are feeling the heat of technological inventions, and their livelihood is endangered.
Recognize self-help groups from amongst the Muslim communities. Enable registration of Muslim oriented civil society organizations.
Social Services:
Ensure ICDS centres in Muslim dominated area to be managed by Muslim Women and attach libraries and provide reading material.
Ensure presence of Muslim men and women in adequate proportion in local panchayats. Nominate Muslim women and men in panchayats where they cannot get elected due either to local political factors or due to smaller numbers.
Recruit Muslim men and women in regular schools as teachers, assistants and administrative staff in all types of public schools, not necessarily in schools for Muslim boys and girls.
Appoint Muslims in Police and other institutions meant for protection of public property such as the railways, border security force and so on.
Recruit Muslim men and women in regular rural health programmes such as doctors and surgeons, ANMs, health assistants, extension workers.
Draft Muslim men and women in public employment programmes. Promote inter-faith committees in all locations with Muslim concentrations. Promote membership of Muslims in the urban housing societies.
Muslim Community itself must take Initiatives of the following type:
In today’s time ‘knowledge’ is becoming central to all paths of progress and that is where Muslims have to strive hard. Chart out strategies and accumulate resources to promote educating amongst the poorer sections of Muslim community. Promote compulsory 7 years of education amongst both boys and girls.
Promote appropriate technical education (computer linked) such as the Indian Technical Institutes for those who are failed at the matriculation and pre-university levels.
Establish transparency in managing Islamic institutions such as the Wakf and Mosque committees. The resources including from Zakat and other donations along with Wakfs should be targeted to the poorest amongst the Muslim community. Welfare activity must not end at construction of mosques, but also to ensure measurable transfer of welfare gains to the society.
Establish small and medium enterprise program to promote manufacturing of goods such as, soups, shampoos, pulses, dairy, spices, edible oil, wheat flour, homemade pickles, homemade drinks, home made sugar, cosmetics, hatchery, skin processing, poultry, cattle feed, rearing of cattle, sheep & goat, garment manufacturing, lime kilns, gaur gum units, hydrated lime, plastic goods dyes, colour and chemicals, textile processing units, toothpaste, toothbrush, shaving creams, hair dyes, jewellery etc. and things which are being used in everyday life by common man. There is a need to eliminate the middlemen though the establishment of SHGs. All these products would be “halal” products and the whole community would be galvanized to buy these Sharia compliant products without much marketing efforts.
I Initiate an anti-dowry movement amongst the Muslim communities so as to become a model for the whole of population in India. Imbibe nationalism amongst boys and girls in young ages by promoting respect to national flag and national anthem. There can be a Muslim way to saluting the national flag and ‘sare jahan se achha hindustan hamara’ must be used as the national anthem along with ‘jana gana mana’.
There is widespread absence of civil society groups with a focus on Muslim advancement, who could play a vital role in the implementation and monitoring processes of various Muslim oriented programs. This challenge could be addressed by encouraging Muslims to set up civil society groups, and even offering some Masjid Committees to take over this role until a full fledged civil society group emerges in the locality as a meaningful alternative. But the latter decision need to be carefully made so that such initiatives should not result empowering Muslim clergy class who are often known for regressive interpretation of Islam denying gender equality to Muslim women. The secular development intervention needs to have enough space for Muslim girl’s education and advancement, without which addressing Muslim backwardness could be entirely impossible.
The intellectual and political leadership addressing the issue of Muslim backwardness is led by largely non-Muslims indicating consolidation of secular content of India’s public debate. The Muslim community must continue to engage one and all strategically so as get integrated into the mainstream democratic value system enshrined in the Indian constitution. Promote importance of protecting public property, community infrastructure and place of worship of all religions and castes.
Given the complex maize of socio-cultural and religious pluralism and diversity in India, often population groups identified as dalits, tribals (notwithstanding constitutional guarantees), minorities (mostly religious), land less manual workers, migrants from rural and less developed regions and those living in inhospitable hinterlands are identified as marginalized or excluded groups. They generally do not carry political patronage, nor do they attract attention of developmental functionaries under routine setup, and are unable to organize themselves in the mould of civil society. In short they are easy to pry, mislead and even soft targets of exploitation.
In India we invoke general (national) elections every five years to choose 552 members to loka sabha (house of the people) in parliament. They along with members of rajya sabha (council of states) and state level legislatures select a Prime Minister as chief of executive, representing largest faction of elected representatives, and he in turn selects his team of ministers. Thus one finds a multi-level process and at each level the marginalized may experience the brunt of exclusion and suppression. Since the Indian democracy recognize and respect those who have support of the majority, which can be just over one half and often much less due to multiple contestants. In many circumstances those at the helm of governance do not in fact represent majority at all. In such a mechanism, those identified as marginalize and excluded cannot make inroads into functional democratic formations. Thus, executive and legislature in India seems to work for the majority not because institutional formations were based on majority but rather to an illusionary majority which is important to sustain power in future as well. Besides, one finds a declining share as voters, amongst the marginalized especially in case of religious minorities, which can further cause marginalization and exclusion.
It is absolutely necessary, therefore, that other institutional structures are available to protect the interest of marginalized and excluded. The judiciary is one such institution, which is part of the trilogy (along with legislature and executive) accounting for good governance. But judiciary acts only when approached and marginalized normally are incapable to reach out seeking redresses. Normally, judiciary addresses individual cases and only rarely accommodative to ponder over systemic and mechanical exclusion; and on its own it does not initiate corrective measures.
In India, there are other quasi-public institutions such as the human rights commission, the SCs and STs Commission, minority commission and so on; whose mandate is not well defined, and a look at their functioning suggests little attention towards three types of exclusions enunciated above. Such quasi-public institutional arrangements are involved in seeking redresses through the enactment of law; lacking are intuitional arrangements to ensure implementation of laws and program that promote inclusion.
The hope for democracy in India lies in the grassroots identified as the panchayati raj institutions. Even at this level same principle of ‘highest count wins the cup’ is utilized, which in fact pushes the identified communities further towards deepening marginalization, exclusion and distress. The concept of proportional representation was rejected at the time of formation of the Indian republic in 1947 on the belief that democratic selection through ‘highest vote gather’ method was good enough to address concerns of minority groups that were not capable of winning a place through votes. But as we experience now such expectations are not to be found. It appears, therefore, time is ripe to introduce some form of proportionate representation at the level of local self governments. For example, legislation in Andhra Pradesh in 2006 ensures nomination of two minority members to the panchayat sabhas across the state. Other states will do better by emulating this format and learn from experiences.
Although Indian has made a name for itself in the world as an emerging economy, production and consumption hub, and part of the global energy revolution; it is going through one of the lowest spiral so far as inter-community relationships are concerned. It has poor record in social policy of building safe and secure place of living for people who profess varied religions and social customs. Inter-community relationships must be addressed as the priority of this government and the government which will be formulated after impending general elections. It is a matter of ‘trust’, but the minority communities especially the Muslims and Christians are looked down upon by certain political thinking, which is corrupting the young minds. While other minorities namely Buddhists, Sikhs and Janis do not sufferer from such mistrust of the polity and establishment.
Security Concerns- In organized societies especially in a pluralistic context there can be physical threat to life if a dominant group intends to eliminate or reduce the civic power of the other group. But the legal structure and state security machinery such as the police, the army and other agencies are put in place to ensure security to all citizens. It is in this context and frame of governance that one needs to understand the physical security of the Muslim community in India.
In spite of democratic governance in place in India there is physical threat to life of many minorities – mostly Muslims and Christians; and castes such as dalits and adivasis.
Muslims especially face threat to life if they do not align their political ideology with the dominant community of a given area such as a constituency, a district or a state. Often organized threat to life of Muslims emerges from the State especially when those with deviant ideology assume power – For example in Gujarat. But such organize crime causing loss of life can be caused even in the so called secular regimes – thus such mass killings such as during the communal riots are mostly engineered and well planned in connivance with the security agencies of the state. The police force in the Indian context seems somewhat less concerned with the problems of the poor and excluded.
When there is a fear phobia amongst a community it affects practically all facets of human lives. While it generates a feeling of perennial insecurity in the minds of people, which in turn pushes them in to living in exclusive spaces and ghettos? Children, especially girls would not participate in normal and regular schools for fear of life as most often such facilities are found in living spaces where the Muslims do not reside. Muslim women will not come out to secure employment in common places such as the markets. Even the well educated and qualified Muslim men may not be employed in the private sectors, as they will be considered not trust worthy. Especially since the whole of the Muslim community across India is under the suspicion, it is not uncommon to find that the security agencies pick up Muslim youth at random and subject them to merciless killing just to create a terror phobia amongst the Muslims.
This is a national disgrace and needs to be set right. In this connection there is a need to establish the ‘equal opportunities commission (EOI)’ as recommended by the Sachar Committee, and appropriate legal mechanism through an enactment of law must be put in place to deal with religious discrimination. The EOI also helps strengthen grassroots level participation by reducing willful exploitation and exclusion of communities, socio-cultural or economic groups such as the wage laborers, temporary migrants, women, and minorities and so on. Maintaining diversity in public spaces was also recommended to be absolutely essential through extending a set of carefully crafted incentives and disincentives. Sachar report essentially is a review and record of success or failure of the democratic institutions intended to achieve social-equity, participation and inclusiveness. It is two years since the report was handed over to the parliament, but so far there has not been any discussion and debate on it. In a democracy, keeping issues under wraps, away from the public debates can defeat the very purpose and objectives of developmental governance. Although there are some gains with respect to enhanced sensitivity amongst the policy makers and bureaucrats with respect to excluded communities in this case the Muslims; no noteworthy policy shift has been noticed. Mechanisms to improve diversity in government employment, admissions in colleges and universities, and in institutions of local self governance have to be addressed on an urgent basis. Importance of information sharing and transparency in public debates effected though establishing an independent data bank and assessment and monitoring authority will go a long way in ensuring the fact that Indian democracy is moving towards maturity and that it meets the standards set by modern day democracies around the world.
The following initiatives will yield better results both at the level of State and National government frameworks:
Markets, Credit and Employment:
City/ town specific modernization, marketing and export schemes for products produced by artisans. Access to bank and cooperative credit to facilitate production, gradation, packaging and exports. Easy access to bank and micro-credit programs for promotion of self-employment.
Promote food-processing industries for export of meat, chicken and fish with participation of Muslims in backward and forward markets. Retailing, where many Muslims are engaged is now being hijacked by the organized sector.
Promote environment friendly leather industry with involvement of Muslims and SCs and STs in the backward and forward markets.
Strengthen the backward and forward linkages in both credit and product markets in hand loom and power loom sectors to promote production of cotton textiles and Silk.
Provide clearly identified urban space for undertaking vending operations for vegetables, fruits, flowers and other food products with proportionate share for Muslims.
Provide mainstream space to show case crafts produced and manufactured by Muslim artisans. The artisans are feeling the heat of technological inventions, and their livelihood is endangered.
Recognize self-help groups from amongst the Muslim communities. Enable registration of Muslim oriented civil society organizations.
Social Services:
Ensure ICDS centres in Muslim dominated area to be managed by Muslim Women and attach libraries and provide reading material.
Ensure presence of Muslim men and women in adequate proportion in local panchayats. Nominate Muslim women and men in panchayats where they cannot get elected due either to local political factors or due to smaller numbers.
Recruit Muslim men and women in regular schools as teachers, assistants and administrative staff in all types of public schools, not necessarily in schools for Muslim boys and girls.
Appoint Muslims in Police and other institutions meant for protection of public property such as the railways, border security force and so on.
Recruit Muslim men and women in regular rural health programmes such as doctors and surgeons, ANMs, health assistants, extension workers.
Draft Muslim men and women in public employment programmes. Promote inter-faith committees in all locations with Muslim concentrations. Promote membership of Muslims in the urban housing societies.
Muslim Community itself must take Initiatives of the following type:
In today’s time ‘knowledge’ is becoming central to all paths of progress and that is where Muslims have to strive hard. Chart out strategies and accumulate resources to promote educating amongst the poorer sections of Muslim community. Promote compulsory 7 years of education amongst both boys and girls.
Promote appropriate technical education (computer linked) such as the Indian Technical Institutes for those who are failed at the matriculation and pre-university levels.
Establish transparency in managing Islamic institutions such as the Wakf and Mosque committees. The resources including from Zakat and other donations along with Wakfs should be targeted to the poorest amongst the Muslim community. Welfare activity must not end at construction of mosques, but also to ensure measurable transfer of welfare gains to the society.
Establish small and medium enterprise program to promote manufacturing of goods such as, soups, shampoos, pulses, dairy, spices, edible oil, wheat flour, homemade pickles, homemade drinks, home made sugar, cosmetics, hatchery, skin processing, poultry, cattle feed, rearing of cattle, sheep & goat, garment manufacturing, lime kilns, gaur gum units, hydrated lime, plastic goods dyes, colour and chemicals, textile processing units, toothpaste, toothbrush, shaving creams, hair dyes, jewellery etc. and things which are being used in everyday life by common man. There is a need to eliminate the middlemen though the establishment of SHGs. All these products would be “halal” products and the whole community would be galvanized to buy these Sharia compliant products without much marketing efforts.
I Initiate an anti-dowry movement amongst the Muslim communities so as to become a model for the whole of population in India. Imbibe nationalism amongst boys and girls in young ages by promoting respect to national flag and national anthem. There can be a Muslim way to saluting the national flag and ‘sare jahan se achha hindustan hamara’ must be used as the national anthem along with ‘jana gana mana’.
There is widespread absence of civil society groups with a focus on Muslim advancement, who could play a vital role in the implementation and monitoring processes of various Muslim oriented programs. This challenge could be addressed by encouraging Muslims to set up civil society groups, and even offering some Masjid Committees to take over this role until a full fledged civil society group emerges in the locality as a meaningful alternative. But the latter decision need to be carefully made so that such initiatives should not result empowering Muslim clergy class who are often known for regressive interpretation of Islam denying gender equality to Muslim women. The secular development intervention needs to have enough space for Muslim girl’s education and advancement, without which addressing Muslim backwardness could be entirely impossible.
The intellectual and political leadership addressing the issue of Muslim backwardness is led by largely non-Muslims indicating consolidation of secular content of India’s public debate. The Muslim community must continue to engage one and all strategically so as get integrated into the mainstream democratic value system enshrined in the Indian constitution. Promote importance of protecting public property, community infrastructure and place of worship of all religions and castes.
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