The Indian economy is growing rapidly, the stock market is at an all time high, Indian companies are expanding abroad, and a large middle class is emerging. It is the best of times. It seems India is finally keeping its tryst with destiny. Contrast this with another India.
Eighty per cent of Indians are below the $2 a day poverty line. Thirty-nine per cent of adults are illiterate. Ten per cent of boys and 25 per cent of girls do not attend even primary school. Forty-nine per cent of children are underweight for their age. Nine per cent of children die in the first five years of their lives. Thirty-one per cent of rural households and 9 per cent of urban households do not have access to safe drinking water. Eighty-one per cent of rural households and 19 per cent of urban households do not have a toilet. About 400,000 children die of diarrhoea (a waterborne disease) every year.
The boom in the private sector has been accompanied by a significant failure of the state. In recent years, the political ideology of the world -- and of India -- has shifted decisively towards an increased role for markets and a correspondingly decreased role for the state. But the role of the state has certainly not been eliminated, nor should it be.
The state is responsible for basic education, public health, water, sanitation, public safety and infrastructure. The government in India certainly professes to accept responsibility for these traditional functions. Yet it has failed dismally to deliver on its promises. The cost of this failure is borne disproportionately by the poor.
The rich often purchase these services from private enterprises. It is the middle class that is the main beneficiary of public service expenditures. The poor have no or little access to these services, or get very low-quality public services.
For instance, the rich go to world-class private hospitals and clinics, and the middle class has access to reasonable public health facilities. While public health centres do exist to serve rural and poor areas, they are grossly under-funded and understaffed. Even worse, the staff are under-qualified, and often absent.
Children of the rich go to exclusive private schools. The middle class uses a mix of private and public schools. Children of the poor often do not go to school or if they do, they attend low-quality public schools. In one survey of such schools, a quarter of the teachers were absent and another quarter were present but not teaching. Absentee rates for teachers and health workers are higher in poorer regions.
The rich have ample access to clean water: they purchase bottled drinking water, drill private tube wells and use booster pumps. The middle class settles for piped water, even if only for a few hours a day. The poor, on the other hand, have no or little access to clean public water supply.
The burden of the failure of public services is borne disproportionately by women, which exacerbates gender inequality. Lack of access to toilets poses a bigger problem for women because of anatomy, modesty and susceptibility to attack.
Women often lose much time to hauling buckets of water over long distances. They are more likely than men to need medical care; they are expected to care for sick family members, especially children. Girls attend school less often, especially in poor families.
There is a growing "neoliberal" movement which looks to the private sector for a solution to the failure of public services. There is much debate about whether the direct production of these services should be privatised. But few would argue that the state can totally avoid its responsibilities.
For instance, if water supply is privatised, the government needs to regulate the rates or ensure that the poor have enough purchasing power to buy water. In the case of a "public good" service such as sanitation and public health, the market cannot solve the problem. Even late Milton Friedman advocated the school voucher system, and was not in favour of the state withdrawing totally from the field of education.
The state must be responsible for services where there is a natural monopoly (piped water), a public good (public health), and for the sake of equity (education). When the state fails, the market might be a partial complement, but it cannot be a total substitute.
Business guru C K Prahalad has said, "If people have no sewage and drinking water, should we also deny them televisions and cell phones?" Writing about the slums of Mumbai, he argues that the poor accept that access to running water is not a "realistic option" and, therefore, spend their incomes on things that they can get now and which improve the quality of their lives. This opens up a market, and he urges private companies to make significant profits by selling to the "bottom of the pyramid" (BoP).
The real issue which the BoP proposition glosses over is: why do the poor accept that access to running water is not a realistic option? Even if they do, why should we all accept this bleak view? Instead, we should emphasise the failure of the government and attempt to correct it.
Giving a "voice" to the poor is a central aspect of the development process. Surely, that is the intent of a representative democracy. Yet in India, the political process has been hijacked by various vested interests. The business community, bureaucrats, politicians and the media are deep in self-applause on the booming private sector -- for example, on the increased penetration of cell phones.
However, the representative image of contemporary India is not a cell phone, but rather defecating in public. In Mumbai, the business capital of India, about 50 per cent of the people defecate in the open. There is no magic solution, but the starting point is passion and anger at the failure of the state.
Appealing private companies to help the poor on the grounds of corporate social responsibility has not been an effective strategy. But, we can demand that private companies, at a minimum, should not drown out the voices of the disadvantaged.
For instance, sustaining a social movement to empower women is more difficult in the pervasive presence of sexist advertisements, such as those for Fair & Lovely, the whitening cream marketed by Hindustan Lever. Self-regulation by the private sector might be the solution.
Civil society, with good intentions, often tries to supply the services the state has failed to provide. The problem is that the civil society has neither the resources nor the economies of scale to provide these services to any significant degree. Instead, the civil society should attempt to strengthen the state, support the voices of the disadvantaged, and be a catalyst in the political process.
Amartya Sen, the Nobel Prize-winning economist, eloquently argues that development can be seen as expanding social, cultural and political freedoms, which are desirable in and of themselves, and also are enablers of individual income growth. We should emphasise the role of the government and public policy in cultivating and safeguarding these non-economic freedoms. A booming India that leaves behind more than half the population in poverty, ignorance and squalor is no tryst with destiny -- it is a travesty of justice.
The author is Associate Professor at Ross School of Business, The University of Michigan.
