FEATURE
.... cont. from last month
INCLUSIVE GROWTH IN INDIA:
WHY STILL A MIRAGE?
- Dr. K. Shanker Shetty
THE REMEDIES
1. It must be admitted in all fairness that it is the ultra – conservative approach of RBI, that has been hindering the process of bringing banking to remote areas. There is also a hesitancy and lukewarm attitude on their part to extend branches, banking correspondents and opt for technological options. There is a disturbing trend that in extending financial facilities, technology has been given backseat v/s safety in clitism and it needs to be reviewed.
2. Government when it talks of socialistic pattern and welfare society must not rest with only policy formulation as a populist weapon of vote bank politics. It is such an hypocricy under the shadow of democracy, that despite of budgetary allocation of thousands of crores of rupees since 1950s, on Health, insurances and pensions; social security schemes and welfare; employment generation etc. that such welfare measures, only a fraction of that segment of population which actually needs such help could be impacted. The impact has been nullified due to faulty implementation clouded with corruption, procrastination, passivism and lack of commitment by all concerned. Hence, this trend must be reversed forthwith.
3. In socio – economic terms it must be clearly understood that it is the increased employment opportunities that shall fuel the inclusive growth in India, because failure to grow inclusively shall result in the declining collective buying power of consumers affecting the future entire growth process. Therefore, India which aspires to emerge as a major global power, must connect and integrate its diverse population including elders and youths, gents and women both in rural and urban areas, though this in turn depends upon level of education, employment of the poor and excellences in rural disposition policy implementation by the government.
4. Inclusive process must be preceded by enhanced application of technology oriented services; improved financial infrastructure and providing adequate knowledge to the rural poor about availability of such services.
5. “Inclusive” growth and “financial inclusions” issues must be divorced from political populist sphere; instead there should be a consolidated but integrated growth agenda for the country as a whole, to serve the socio – economic needs of the poorest by directly involving them in the task. India, in nutshell needs a social and political consensus, devoid of ideological and philosophical hindrances, but based purely on merit of the need for inclusive growth of the deprived segment of the populations.
6. Inclusive growth must also divorce the draconian principle of “Quota” system based on caste or any other yard sticks. Poverty must be related only to economic criterion of people belonging to all castes, religions, languages or regions. Reservations are not acceptable to Indians after 6 decades of independence. Unless such a broad policy is evolved and adopted, any effort to improve ‘inclusiveness’ shall be sabotaged for political gains by the political players in the country. Inclusive growth with such a fluid – faultlines cannot be ensured now or never in the future.
7. In recent years a section of the banking sector has expressed its reservations about the workability of ‘microfinancing’ which was the main plank of ‘financial inclusion’ so far in rural areas. They argue that revised investment regulations give more import and safety and risk factor within the balance sheets, pushing the concept of “financial inclusion” into sidelines. This aspect must be carefully analysed both by the government and RBI before the very essence of financial inclusion gets derailed.
8. Financial Institutions, banks and the government must design the investments in such a way that it serves as a link between rural areas to urban centres and create physical and market infrastructure in rural areas to expedite the process of inclusive growth of rural economy resulting in enhanced purchasing power. However, this must be accomplished by lowering the cost of living and upgrading the standard of living of the poor community.
9. Rural primary health centres must be strengthened with improved infrastructure and medical and para – medical staff for the benefit of those excluded segments hitherto.
10. One of the prime reasons why Indian agriculture suffer is the lack of long term investments to create requisite infrastructure. Both central and state governments must gear up to this and ensure that impact of central schemes in rural areas is improved and felt in real terms.
11. In India food security is still to be legitimized, though there are some village clusters which have set up traditional local food grain banks. Establishing such outlets in more villages but managed exclusively by village panchayats must be carried out to secure zero – hunger programme.
12. Government in co – ordination with NASSCOM must harness technology products to inspire, educate, propogate and empower micro – enterprises in rural and semi urban areas. In this direction, all out efforts must be ensured to have paradigm shift in rural marketing, focusing on roads etc and encourage the private sector to actively participate in the task of sustained rural development through inclusive process. There is also need for injecting ethical meaning of economic pursuits by the corporate sector which can help to improve lives of poor. Similarly, recent trend in organized retail outlets must be encouraged to penetrate into grocery, fruits, vegetables and other agro based activities at reasonable price, directly benefiting the rural poor.
13. It must be borne in the mind of all authorities, that populism oriented anti – poverty programmes during the last many decades have failed to amend and correct the nutritional imbalance among the poor. It must be taken up on war footing but devoid of politics attached.
14. Inclusive growth cannot be secured with a major segment of farming community suffering from starvation and indebtedness resulting in suicides around the country. Government must address such issues, from the basics to ensure that such horrible situations do not arise.
15. As per the CAG performance Audit of union accounts 2008, it is revealed that India has spent hardly 1.34 percent of GDP on social services and 0.42 percent in rural welfare in 2007 – 2008 (XI Plan), which speaks in volumes about the utter negligence of poor because most needy are most ignored at a time when rich are becoming richer. Whereas we boast of number of Indian billionairs, appearing in Forbes list of billionaires, we forget of poor billions around the country who feel excluded, neglected and left to languish in utter poverty. A casual visit to a remote village in any part of the country can stand testimony for such colossal neglect of welfarism in India. Therefore, a time has come when bureaucrats, planners, professionals and political leaders must strive to maintain a tough balancing Act so that inclusive growth becomes a reality.
16. It is a fact that financial innovation done on the pedestal of technology has not done any good to poor so far. Hence, bankers, investors and philanthropists must help the poor by devising process by designing conducive inclusive growth plans. There has been a strong belief that micro financing must succeed in rural areas for the success of inclusive growth process.
17. Self Help Groups in villages sprang up during 1990s have done good job to encourage inclusive process. However, in recent years they too find it difficult facing problems like uncertain interest rates; absence of standardized processing of applications; reluctance of banks to set up rural processing centres; lack of provision for doorstep banking and above all financial inclusion still remains a mirage because of the attitude of banks and government agencies. Getting rid of such exigencies may encourage SHGs to emerge as one of the strongest instruments of inclusion process in the nation. It will help to change the face of rural India, encouraging new entrepreneurs, cheaper production of goods and services; new innovation on crop pattern, use of fertilizers; improved income to the farmers; easier access to finance etc.
18. Finally, though government has enhanced the corpses of ‘Financial Inclusion Fund and financial inclusion technology Fund” from Rs.100 cr. To Rs.600 in 2010, there are hardly any takers of government schemes in rural and unbanked areas. It warrants to create better awareness and encourage SHGs and young entrepreneurs to come forward to utilize the opportunities, subject to the condition that banking and other infrastructure too improved simultaneously unlike in the past.
In conclusion it may be said that inclusive growth cannot succeed as a mere wishful thinking. Process of development must be built upon a strong foundation of education and social security measures. It must be routed through the financial inclusion which in turn must use the power of technology. Government, RBI corporate sector must co – ordinate and co – operate with meticulously designed plans and programmes and including every segment of the population to realize a welfare state through the process of inclusion; because inclusive growth has failed in the past but it must succeed in the future if India has to emerge as a global power.
Author is Former General Manager of Vijaya Bank
INCLUSIVE GROWTH IN INDIA:
WHY STILL A MIRAGE?
- Dr. K. Shanker Shetty
THE REMEDIES
1. It must be admitted in all fairness that it is the ultra – conservative approach of RBI, that has been hindering the process of bringing banking to remote areas. There is also a hesitancy and lukewarm attitude on their part to extend branches, banking correspondents and opt for technological options. There is a disturbing trend that in extending financial facilities, technology has been given backseat v/s safety in clitism and it needs to be reviewed.
2. Government when it talks of socialistic pattern and welfare society must not rest with only policy formulation as a populist weapon of vote bank politics. It is such an hypocricy under the shadow of democracy, that despite of budgetary allocation of thousands of crores of rupees since 1950s, on Health, insurances and pensions; social security schemes and welfare; employment generation etc. that such welfare measures, only a fraction of that segment of population which actually needs such help could be impacted. The impact has been nullified due to faulty implementation clouded with corruption, procrastination, passivism and lack of commitment by all concerned. Hence, this trend must be reversed forthwith.
3. In socio – economic terms it must be clearly understood that it is the increased employment opportunities that shall fuel the inclusive growth in India, because failure to grow inclusively shall result in the declining collective buying power of consumers affecting the future entire growth process. Therefore, India which aspires to emerge as a major global power, must connect and integrate its diverse population including elders and youths, gents and women both in rural and urban areas, though this in turn depends upon level of education, employment of the poor and excellences in rural disposition policy implementation by the government.
4. Inclusive process must be preceded by enhanced application of technology oriented services; improved financial infrastructure and providing adequate knowledge to the rural poor about availability of such services.
5. “Inclusive” growth and “financial inclusions” issues must be divorced from political populist sphere; instead there should be a consolidated but integrated growth agenda for the country as a whole, to serve the socio – economic needs of the poorest by directly involving them in the task. India, in nutshell needs a social and political consensus, devoid of ideological and philosophical hindrances, but based purely on merit of the need for inclusive growth of the deprived segment of the populations.
6. Inclusive growth must also divorce the draconian principle of “Quota” system based on caste or any other yard sticks. Poverty must be related only to economic criterion of people belonging to all castes, religions, languages or regions. Reservations are not acceptable to Indians after 6 decades of independence. Unless such a broad policy is evolved and adopted, any effort to improve ‘inclusiveness’ shall be sabotaged for political gains by the political players in the country. Inclusive growth with such a fluid – faultlines cannot be ensured now or never in the future.
7. In recent years a section of the banking sector has expressed its reservations about the workability of ‘microfinancing’ which was the main plank of ‘financial inclusion’ so far in rural areas. They argue that revised investment regulations give more import and safety and risk factor within the balance sheets, pushing the concept of “financial inclusion” into sidelines. This aspect must be carefully analysed both by the government and RBI before the very essence of financial inclusion gets derailed.
8. Financial Institutions, banks and the government must design the investments in such a way that it serves as a link between rural areas to urban centres and create physical and market infrastructure in rural areas to expedite the process of inclusive growth of rural economy resulting in enhanced purchasing power. However, this must be accomplished by lowering the cost of living and upgrading the standard of living of the poor community.
9. Rural primary health centres must be strengthened with improved infrastructure and medical and para – medical staff for the benefit of those excluded segments hitherto.
10. One of the prime reasons why Indian agriculture suffer is the lack of long term investments to create requisite infrastructure. Both central and state governments must gear up to this and ensure that impact of central schemes in rural areas is improved and felt in real terms.
11. In India food security is still to be legitimized, though there are some village clusters which have set up traditional local food grain banks. Establishing such outlets in more villages but managed exclusively by village panchayats must be carried out to secure zero – hunger programme.
12. Government in co – ordination with NASSCOM must harness technology products to inspire, educate, propogate and empower micro – enterprises in rural and semi urban areas. In this direction, all out efforts must be ensured to have paradigm shift in rural marketing, focusing on roads etc and encourage the private sector to actively participate in the task of sustained rural development through inclusive process. There is also need for injecting ethical meaning of economic pursuits by the corporate sector which can help to improve lives of poor. Similarly, recent trend in organized retail outlets must be encouraged to penetrate into grocery, fruits, vegetables and other agro based activities at reasonable price, directly benefiting the rural poor.
13. It must be borne in the mind of all authorities, that populism oriented anti – poverty programmes during the last many decades have failed to amend and correct the nutritional imbalance among the poor. It must be taken up on war footing but devoid of politics attached.
14. Inclusive growth cannot be secured with a major segment of farming community suffering from starvation and indebtedness resulting in suicides around the country. Government must address such issues, from the basics to ensure that such horrible situations do not arise.
15. As per the CAG performance Audit of union accounts 2008, it is revealed that India has spent hardly 1.34 percent of GDP on social services and 0.42 percent in rural welfare in 2007 – 2008 (XI Plan), which speaks in volumes about the utter negligence of poor because most needy are most ignored at a time when rich are becoming richer. Whereas we boast of number of Indian billionairs, appearing in Forbes list of billionaires, we forget of poor billions around the country who feel excluded, neglected and left to languish in utter poverty. A casual visit to a remote village in any part of the country can stand testimony for such colossal neglect of welfarism in India. Therefore, a time has come when bureaucrats, planners, professionals and political leaders must strive to maintain a tough balancing Act so that inclusive growth becomes a reality.
16. It is a fact that financial innovation done on the pedestal of technology has not done any good to poor so far. Hence, bankers, investors and philanthropists must help the poor by devising process by designing conducive inclusive growth plans. There has been a strong belief that micro financing must succeed in rural areas for the success of inclusive growth process.
17. Self Help Groups in villages sprang up during 1990s have done good job to encourage inclusive process. However, in recent years they too find it difficult facing problems like uncertain interest rates; absence of standardized processing of applications; reluctance of banks to set up rural processing centres; lack of provision for doorstep banking and above all financial inclusion still remains a mirage because of the attitude of banks and government agencies. Getting rid of such exigencies may encourage SHGs to emerge as one of the strongest instruments of inclusion process in the nation. It will help to change the face of rural India, encouraging new entrepreneurs, cheaper production of goods and services; new innovation on crop pattern, use of fertilizers; improved income to the farmers; easier access to finance etc.
18. Finally, though government has enhanced the corpses of ‘Financial Inclusion Fund and financial inclusion technology Fund” from Rs.100 cr. To Rs.600 in 2010, there are hardly any takers of government schemes in rural and unbanked areas. It warrants to create better awareness and encourage SHGs and young entrepreneurs to come forward to utilize the opportunities, subject to the condition that banking and other infrastructure too improved simultaneously unlike in the past.
In conclusion it may be said that inclusive growth cannot succeed as a mere wishful thinking. Process of development must be built upon a strong foundation of education and social security measures. It must be routed through the financial inclusion which in turn must use the power of technology. Government, RBI corporate sector must co – ordinate and co – operate with meticulously designed plans and programmes and including every segment of the population to realize a welfare state through the process of inclusion; because inclusive growth has failed in the past but it must succeed in the future if India has to emerge as a global power.
Author is Former General Manager of Vijaya Bank
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