Tails You Lose

As a percentage of total Central expenditure, the Government’s spending on thesocial sector has risen from 6.96 per cent in 1989-90 to8.56 per cent in 1995-96. But eventhen, when compared to other developing countries, this percentage is quite low. SaysXerxes Desai, managing director, Titan Industries: "The social sector is where moneyneeds to be spent and it will be a huge mistake to make huge cuts as we did earlier."Economist Jean Dreze points out: "There is enough evidence to prove that theGovernment is not moving towards increasing expenditure on education. Even though CentralGovernment expenditure has increased, if you include the expenditure of state governments,total expenditure has actually reduced." Dreze also points to another worrying fact:50 per cent of women between the ages of 15 and 20 are illiterate.

The reform years have seen an expansion of the public distributionsystem (PDS), but a study conducted by economist S.P. Gupta evaluates that less than 22per cent of the subsidised food has gone to the poorest 20 per cent of households.Besides, the Government has also periodically revised the issue price of food distributedthrough the PDS upwards.

It increased the price of rice in December 1991 by 30.4 per cent, inJanuary 1993 by 16 per cent and in February 1994 by 22.9 per cent. At precisely the sametimes, it increased the price of wheat as well by 19.7 per cent, then by 17.9 per cent andfinally by 21.9 per cent.

The other well-intentioned scheme of the Government—the NationalRenewal Fund (NRF) to re-train workers retrenched during public sectorrestructuring—too has wavered from its stated objective. Most of its Rs 1,600-crorecorpus has been spent on voluntary retirement schemes, not re-training. And since1992-93—the NRF was set up in February 1992—spend on NRF has practicallystagnated.

But if one were to believe the finance minister, the economy is now generating over 7million jobs a year, up from the 3 million immediately prior to the reform period.Similarly, he also points to the fact that real wages of the unskilled agricultural workerhave increased during the reform period (some independent calculations, however, do notsupport this contention).

The Government is banking on growth, hoping that the benefits will trickle down to thepoorest of the poor. For two years the country has enjoyed a 6 per cent-plus growth rate,which policy-makers hope will be sufficient for the trickledown. But Gupta’s studynotes that this will happen only if growth accelerates to more than 7-8 per cent perannum. Till then, it seems the poor will have to wait.