India’s Disposable Children

A couple of weeks ago, I had discussed A Matter of Rights in connection with the population problem and had concluded that post with

Does a person have a right to inflict pain and suffering on another person? If my action were to lead to immense suffering, and I plead that if you do not allow me to freely act you are impinging on some basic right I have, would you allow me that “right”? Or will you circumscribe my “right” to act as I please because otherwise it results in unnecessary pain and suffering to a human being?

Small girl with an infant
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Rural Economic Development and RISC

Nobel Prize winning economist Robert Lucas had remarked that once you start thinking about economic growth, it is hard to think of anything else. What are the causes of economic growth and how can the process be enabled is a question that has obsessively occupied some of the best minds in the world of economics and commerce.

The question takes on an unparalled urgency and importance when applied to the rural Indian economy because it presents an enormous challenge, and, consequently, presents an equally great opportunity for making a difference in the lives of hundreds of millions of people. India’s economic development is predicated upon India’s rural development because around 700 million Indians live in rural India. An astonishing one out of every ten living humans lives in rural India.

Rapid progress in GDP growth and globalization in the last decade has primarily impacted the urban economy. While software exports, business process outsourcing, etc, have helped urban economic growth, it has done relatively little for the rural economy.

Without rural economic development, India has little chance of achieving growth rates required to become a developed nation. Furthermore, economic development is both a cause and a consequence of urbanization. Clearly, in the Indian context, urbanization through further rural to urban migration is both unsustainable and socially disruptive. Therefore urbanization of the rural population will have to be achieved in the rural areas.

Rural India is caught in what is called a development trap. Because of lack of economic opportunities, incomes are low. Therefore they are unable to pay for goods and services that would enable them to increase their incomes. This leads to low demand for goods and services. Consequently, firms don’t find it profitable to do business in rural India. This leads to the inadequate provision of infrastructure, which in turn leads to lack of economic opportunities, and so on.

It is important to recognize that human capital is the scarce resource globally. Fortunately India is lavishly endowed with immense human capital. However, physical capital is in relatively short supply in India. The challenge therefore is to use the limited capital most efficiently to break out of the poverty trap by integrating the rural economy with the urban Indian economy and indeed the global economy.

Various models for rural economic growth have been proposed and implemented. Vinod Khosla and I have proposed a model which harnesses the power of the information and communications technology (ICT) revolution to accelerate rural economic growth. The model called Rural Infrastructure & Services Commons (RISC) has the potential for achieving the multi-faceted goals of sustainable development. It uses limited resources efficiently by focusing them in specific locations that are accessible to a sufficiently large rural population, such as that of 100 villages.

RISC provides the benefits of urbanization by making available to rural populations the full set of services and amenities that are normally available in urban areas. It brings the benefits of ICT and the increased access to global markets that globalization promises.

The model recognizes that rural populations face a number of inter-related gaps, not just the celebrated digital divide. Bridging them simultaneously with a holistic solution is more likely to succeed than any partial intervention can.

The model facilitates the coordination of the investment decisions of the private sector, the public sector, NGOs, and multilateral lending institutions. To achieve its goal, the model strikes a number of balances &#151 between the local and the global, between planned infrastructure investment and market-driven service provision, between specialization and standardization. It does not require government subsidies for its continued operation, although the government does have a role in providing some critical functions such as risk alleviation, loan assistance, and enacting enabling legislation.

A typical RISC installation would provide services for about 100,000 rural people. These services, mostly but not all provided competitively by a large number of for-profit firms, will range from education, health, market making, financial intermediation, entertainment to government services, social services, etc. Since all services themselves require the infrastructural services such as power, telecommunications, water, physical plant, etc., large specialized firms will provide the infrastructure.

RISC obtains urbanization economies, which arise from the agglomeration of populations and infrastructure facilities. By installing RISCs to serve the rural populations of an entire state, economies of scale and scope are also obtained. Scale economies would be significant at each level of the model. At the infrastructure level, there are transaction costs associated with the necessary coordination between the firms providing the core infrastructural services. At the services level, the cost of the services will be inversely proportional to the quantity demanded and supplied.

A RISC provides a complete set of services and functions. Each service provider itself is a customer of other services co-located on the RISC. The banker uses the internet and postal services, and the internet service provider uses the banking and postal services, and so on. They make each other mutually viable and even possible. All these economies essentially lower the cost of service provision and, in a competitive market, makes them more affordable.

At a certain level of abstraction, the proximate causes of poverty can be seen as two gaps: the ideas gap and the objects gap. The objects gap is the lack of physical resources &#150 too little land, too little capital stock, etc &#150 that contribute to persistent poverty. The ideas gap is the lack of knowledge about how to make the best use of the resources available. Fortunately, the cost of knowledge goods has dropped precipitously due to the revolution in information and communications technologies. Bridging the ideas gap is a much easier task than ever before. RISC uses ICT intensively towards that end.

The transition from the concept to the actual implementation of the RISC model requires co-ordination of investment decision of the government and the large firms that provide the infrastructural elements. It is a non-trivial but surmountable challenge provided the political will and the vision exists among policy makers, private sector leaders, leading investors, and opinion makers.

Idol-worshipping gone haywire

This is a followup to the comments on my post on Gandhian Self-sufficiency.

It is more than a bit unfortunate that we have a tendency to immediately label any criticism of any person as a sign of disrespect. Any person whose image cannot withstand the harsh glare of honest criticism says something about the fragility of that image. The image takes on a aura of such holiness and awe that any hint of possible flaws is taken as sacrilegious. Taken to an extreme, this sort of idol-worshipping ends up with the worshippers lynching anyone daring to profane the sacred image.

For the record, I do believe that Gandhi was a giant of a man. But for all his greatness, he was still cut from the same cloth as you and I. The same human frailties, the same hopes and ambitions and fears. The difference between a Gandhi and one of us is one of size, not of substance. If we keep that in mind — not just about Gandhi but everyone — I do believe that we would have a useful working hypothesis. Those great big people are magnified images of ourselves. And that which magnifies the virtues, magnifies the flaws as well. An old Chinese saying says that the bigger the front-side, the larger the back-side. Continue reading “Idol-worshipping gone haywire”

On Gandhian Self-sufficiency

I am somewhat familiar with the concepts of Satyagraha and non-violence that Gandhi preached and sometimes practiced. They are interesting tools and can be employed effectively in some circumstances. But, like all tools, they too can’t be employed in every case; they are not easy for mere mortals to employ even under favorable circumstances. In fact, they have severe limitations in that they are not general purpose tools but are rather special purpose tools. The interesting thing is irrespective of whether they work or not, the user gets to occupy the moral high ground.

Occupying moral high ground is well and good if that is one’s objective. But one could be very dead at the end of the day — on high ground but still dead.

Those tools elevate the user in the user’s estimation at least. But the sad fact of this world is that it does not work in those cases where you most desperately want it to work. One needs an effective tool against mass murderers more urgently than against robbers. The former could not care less whether you have an elevated opinion of your own moral standing. Hitler, for instance, would have slaughtered without compunction those who responded to his aggression with non-violence; it would have eased the realization of his megalomanical dreams of world domination. Continue reading “On Gandhian Self-sufficiency”

Seduced by ICT

Yesterday I started writing about the ICT for development meeting I was at held at ICRISAT at Hyderabad earlier this week. The usual suspects were in attendance. I had met many of them at the MS Swaminathan Policy Makers’ Conference at Chennai a few months ago. One face new to me was Prof Ken Keniston of MIT who gave an opening address.

He made five cautionary points which are worth noting. They are:

  • Do not get seduced by ICT
  • Localize, localize, localize
  • Do realistic cost projections
  • Given the complexity of systems, choose operators with extreme care
  • Be patient

The use of ICT tools for development is a no-brainer. But it is a mistake to think that a Pentium4 in every village will solve India’s developmental problems. The point one has to pay special attention to is to examine the entire set of ICT tools and then choose ones that are appropriate to the task. Information and communications technology tools are not limited to PCs and internet connections. There are many other tools such as radio (both FM and shortwave), ham radio, and TV which may be more cost effective and relevant in a given context.

Recently I came across a news item which said that they are looking at solving Mumbai’s traffic problems by making Mumbai roads “electronic intelligent roads.” I don’t have the slightest doubt that it would involve huge outlays to the tune of millions of dollars and lots of people will make lots of money up and down the line providing expertise and hardware and software for this hi-tech venture. I am also convinced that it will not make the slightest effect on the congested Mumbai roads because it is not the roads that need the intelligence but the people designing the roads that need to be intelligent.

Close to where I live in Kandivali, a suburb in North Mumbai, there is an intersection that is almost always caught in a grid-lock. The intersection is like an “H” with bi-direction flow of traffic along all the sections and it has one traffic signal at one of the points where the horizontal section meets the vertical sections. Traffic gets log-jammed around 300 meters of this intersection and it takes about a half hour to cross this bit every evening. Hundreds of autorickshaws, buses, cars, trucks, two-wheelers, and whatnots spew exhaust fumes and honk continually and people suffer. It is astonishing that the traffic people have not figured out that the simplest thing to do would be to paint some part of this intersection with the “KEEP CLEAR — DO NOT BLOCK” sections and put a couple of traffic cops to teach the people to keep off these sections. It would be a simple effective system which would cost very little compared to the enormous price that everyone pays throughout the day due to the congestion.

Instead, the Mumbai municipal corporation is investigating ways of using electronics. Why not better road markings and so on? Because there is not much money involved in a simpler but more effective system. Simpler may be better but there is not much profit in it. A blackboard, a teacher, and a dozen slates and some chalk may be simpler and better for adult education, but there is not as much profit as in putting PCs with literacy programs to teach adults how to read in rural areas.

PCs have powerful lobbies to promote their use. Chalkboards, radios, TVs, etc, don’t have that. Put it this way: the manufacturers of expensive shiny new hammers need people to be convinced that every problem is a nail and that everyone should have a shiny new expensive hammer. Never mind that sometimes a rusty screwdriver is better at a particular task than a shiny new expensive hammer.

HP, Microsoft, Intel and others of its tribe have to keep pushing their products. For impoverished people who can barely afford food, finding the most cost-effective solution is more important. But doing that involves much hard thinking and for those who make the decisions, there is not as much money in it. So the poor get saddled with expensive but ineffective solutions.

I should hasten to add that I am not a Luddite. I don’t need to be convinced of the extreme utility of computers and connectivity. Not only am I a user of these technologies, I have studied computer science and have worked for computer corporations. Some of my best friends are computer geeks (there but for the grace of god go I.) My concern is that PCs and the internet are crowding out the other more effective technologies that could help India develop.

The Amazing Ogallala Aquifer

I have been neglecting this blog because I have been traveling to places exotic. Well, maybe not all that exotic since it was just Hyderabad, the capital of Andhra Pradesh. I had gone there to speak at a conference on ICT and development.

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Hunger in India

According to UN estimates, India has the largest number of hungry people. Over 200 million, or about one-fifth of India’s population, is chronically hungry. This is an apparent paradox in a country which is food-surplus on the aggregate. The Wall Street Journal of June 25th 2004 reports that according to Indian government sources, by 2001 India had a national stockpile of around 60 million tons of rice and wheat. It goes on to say:

But with inefficiency and local mismanagement plaguing distribution, it couldn’t move the grain fast enough through the system. Some even spoiled in warehouses. A 2002 government survey concluded that 48% of children under five years old are malnourished. That’s an improvement from three decades ago and even today, given rapid population growth, the proportion of chronically hungry Indians continues to fall. But in a sign that there are limits to the Green Revolution, the absolute number of hungry people in India began to rise again in the late 1990s, according to the U.N.

The paradox is easy to resolve if one understands one basic principle: that economic policies matter. The Indian economy has been chronically mismanaged by the Congress ever since India’s independence. And now the new Congress government could continue on the same failed path of socialism that led us to this sorry state. Vote-bank politics and the command and control license-permit-quota raj is responsible. Paul Samuelson could have been speaking about India when he wrote in April 2002 (HOW TO PROSPER IN THE TWENTY-FIRST CENTURY):

The good life does not come from dramatic speeches or boisterous parades. Where economics is concerned, so far, there is nothing in sight more promising than the limited welfare democracy where public laws harness and monitor the energies and efficiencies of the somewhat free marketplace.

It is a good time to review Amartya Sen’s book of 1982, Poverty and Famines: An Essay on Entitlement and Deprivation. Here is an excerpt from Ken Arrow’s review of the book:

In a free-enterprise economy every good or service has a price, and each economic agent starts out by owning some goods or services. The rice farmer owns some land, used for producing rice, which can then be sold on the market at the going price or reserved for use by the farmer and his family. The receipts from sales can be spent on other goods—different foods, spices, clothing, and so forth. The agricultural laborer has only his or her labor to sell; the proceeds can be spent on rice or other goods. Similarly the cities contain workers who sell labor for money to buy food, shelter, and clothing, and entrepreneurs who buy goods and labor, produce other goods, sell them, and have the proceeds for personal consumption and investment in business expansion.

People will starve, then, when their entitlement is not sufficient to buy the food necessary to keep them alive. The food available to them, in short, is a question of income distribution and, more fundamentally, of their ability to provide services that others in the economy are willing to pay for.

This, of course, does not mean that the supply of food is irrelevant. A decrease in the supply of food will usually increase its price, as people compete for the scarcer quantity. This will in turn decrease their ability to buy food by using their entitlement and, if they start close enough to the margin of hunger, may drive them to the point of starvation. Further, the entitlement approach, simple as it is, enables the analyst to say something about the distribution of the burden of starvation. Farm owners and, to a lesser extent, sharecroppers, should be less affected than others because the reduction in the amount they sell is at least partly offset by the higher prices. If the reduction in supply is caused by some factor, like flood, that reduces the amount to be harvested, farm laborers are thereby more likely to be seriously affected.

I am reminded of Oliver Goldsmith’s words from his poem The Deserted Village:

Ill fares the land, to hastening ills a prey
Where wealth accumulates and men decay

There is something rotten about India that so many people are so unconcerned about the true state of affairs. The communists are solely concerned with protecting a handful of jobs, the larger interests of the nation be damned. The government is concerned with blocking the liberalization of the economy and dragging it back to its insular autarkic pre-reform paralysis. The idiotic hype about India Shining and IT superpower crap has addled the brains of the already marginally stupid. One wonders where this is all going to lead to.

It is all karma, neh?

Peddling Pornography

Caught a glimpse of the front page of The Times of India while commuting to work this morning. I noticed that they are now peddling pornography to increase their circulation. No wonder they are referred to by some as The Slimes of India. The top left hand corner of the front page declares in bold print:

Internet Hawker Puts Brittney Sex Video Up For Sale

A few weeks ago it was confirmed that the newspaper has paid editorial-page content that masquerades as honest reporting. I wonder how much they get paid for peddling pornography on the front page.

{See also India’s Primary Concern.}

Tolerance and Economic Prosperity

When I feel angry about India’s lost opportunities and feel especially despondent about the Indian economy, I sometimes compare India with its neighbors, Pakistan and Bangladesh, just to get a sense of balance and say to myself “but for the grace of our un-countably many gods, goes India.” India is not ruled by intolerant monotheistic morons (an expression I picked up from the Department of Redundancy Department) — at least not yet.
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Irreversible Decisions

A friend of mine with whom I had dinner last night at a restaurant in Colaba has an interesting job. As he puts it, he gets women pregnant and is paid handsomely for doing it. He is a doctor and runs an in vitro fertilization clinic. There are more than one way of making babies (18 ways, according to his website Malpani Infertility Clinic) and he knows them all.
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