Alleviating Poverty: Role of Good Governance and Constitutional Reform

Author(s): Dhiraj Nayyar

Source: Economic and Political Weekly, Vol. 35, No. 42 (Oct. 14-20, 2000), pp. 3739-3742
Published by: Economic and Political Weekly
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 Perspectives

Alleviating Poverty
takes place as fast as possible. In plain
terms the quality of governance must be
improved. If possible, the Constitution
must devise a system of incentives and
Role of Good Governance and Constitutional disincentives, which would play the role
of the carrot and the stick where imple-
Reform mentation of policy is c4cerned.
Economic policies, at a macro level, are
The persistence of poverty in independent India has been the likely to be market oriented for some years
to come with a reduced role for the state
subject of extensive research and intensive debate. Yet absolute
in industrial activities. That I believe is a
poverty is a state of being for more than one-third of India's
desirable shift in policy. The state should
popullation at the turn of the century. Issues relating to the review concentrate on its comparative advantage
of the Constitution have been at the centre of controversy in recent vis-a-vis the private sector. The state must
timles. Issues relating to the reformi of government itself have been concentrate on improving its traditional
functions like the maintenance of law and
largely ignored. The intersection of the three tihemes remains
order, an area where it has not excelled
unexplored. Can an improvement in governance brought about by by any means, and its economic function
constitutional reform assist in the task of poverty alleviation, a task should be restricted to providing the
on vwhich successive governments have failed to deliverfor the last necessary social and physical infrastruc-
53 years? The paper addresses this question and suggests that the ture for development. The state would also
answer is in the affirmative. need to evolve new laws to govern the new
market economy and to ensure its smooth
and efficient functioning. But these laws,
DIRIIAJ NAYYAR strategies adopted, the former for 40 yearswhen formulated, should facilitate and not
and the latter for 10, have common fail-obstruct the functioning of markets. In this
India has achieved a lot in terms of
ings. Both have failed to address adequatelypaper, however, I would like to focus on
development over the last 50 issues
yearsrelated to human development. how the state can help in the alleviation
India's
especially if one takes into account the failure to invest sufficiently in its of poverty and how the Constitution can
starting position. However, a lotbiggest
still and most valuable assets, our vastbe used to serve this purpose.
remains to be done. Somehow India has population, is one of the primary reasons
Economic Growth
missed the bus to the expressway for
of the persistence of large-scale poverty.
development which has seen many coun-
I would argue that both the strategies have Poverty can be. and must be; tackled
tries worse off than India until about 30 failed to give the state the right role in theusing three strategies simultaneously:
years ago now much more developed. India development process. While the planning economic growth, human development
still has a chance to hop aboard the nextstrategy gave too many responsibilities toand anti-poverty programmes, the last o
the state, some of which should not havewhich should be used only as short-term
bus but time is fast running out. The number
of people living under the poverty linebeen53 in the domain of the state, the reformmeasures.
years after independence, 350 million, strategy
is has sidelined the state from any Economic growth will come ab
the same as the population of India at theuseful role it can play. In part, this is the freeing of markets and th
time of independence. While a select few because the state has done little right in ment of an excellent infrastructure. This
have standards of living comparable to thethe years preceding reform. However, theremay have to be accompanied by a change
richest in the world, the majority failare to certain things only the state can do.in some laws, which would help make the
get two meals a day. The development Therefore, there is an urgent need to reformeconomy more efficient. For example, one
strategy adopted at the time of indepen- the functioning of the state, somethingcan take the case of labour laws which at
dence, with its focus on planning and which successive governments and the present are very much in favour of those
state-led development while building a
reform process have not done. It is in this already in thejob market and are anti those
area that I believe constitutional reform
strong industrial base clearly failed to raise who are on the outside. If the insiders did
the living standards of the masses. Thecan play an important role. The Consti- not necessarily have security they would
post-1990 era' has seen major economic tution can do little directly for poverty be forced to be more efficient or make way
reforms and reorientation of development alleviation but it can do a lot indirectly for others from outside. Efficiency is one
strategy more favourably disposed towards by reforming and strengthening the role area where India lags behind others, es-
free markets. However, if one studies of the state in the quest for poverty alle- pecially in the public sector, though I
various poverty estimates at the end of viation and human development. The should add that the private sector does not
the decade one finds that there has been Constitution must improve accountability come out with flying colours in this area
little reduction in poverty despite rapidthrough stricter laws as well as ensure that
either. Other laws like consumer protection
economic growth. I believe that the two decentralisation of government authority laws and stricter laws against monopolies

Economic and Political Weekly October 14, 2000 3739

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must be introduced in order to have well Constitution can directly address the trained personnel. Again the implementa-
functioning markets. Discussion on these problem of implementation by making tion it should be left to the panchayats who
is unfortunately outside the purview of this compulsory for states to devolve func- should have the authority to pay the per-
paper which is looking at poverty and how tional and financial autonomy to panchayats sonnel. If the health care worker does not
best to tackle it. A high rate of growth for implementation. The Education Guar- come to work then the pay can be withheld.
sustained over a long period is, then, antee a Scheme of Madhya Pradesh is aSimilar is the case of teachers in primary
necessary though not a sufficient condi- shining example of the success of schools. At the moment many teachers do
tion for a country to develop with high decentralisation in the field of education. not attend work but are paid their salaries
levels of employment, income and pros- The other problems and their solutions lieby the state governme)t based far away in
more in the realm of government policy the capital city. If the panchayats take
perity forall. It is important to try and attain
high rates of growth in agriculture andbut the Constitution can lay down certaincontrol of salaries then teachers as well as
allied activities as those are the areas most guiding principles with respect to thehealth workers will report to work.
likely to generate employment in the allocation of resources to states. There has The, development of good physical in-
medium term. However, something has toto be a system of incentives and disincen-frastructure is essential for rapid and
be done for poor in the short run and thattives so that all states implement highbalanced economic growth. Most of India's
is where anti-poverty programmes have aquality education programmes. I willvillages are still poorly connected or not
role. Also without human developmentdiscuss this later in this paper. connected at all by proper roads. It would
and sufficient rural and urban infrastructure Most villages in India have limited andbe impossible for markets to develop in
the majority cannot benefit from growth.poor quality access to health care. Goodareas where there are no roads. Again the
These are the two issues I take up nextand free health care would play a very funds allocated by the government for this
beginning witii human development andimportant part in reducing poverty bothpurpose are misused. The funds for devel-
the need for better physical infrastructure.directly and indirectly through reducingoping rural roads should also be devolved
population. Primary health care and health to the panchayats. Thus, this should be the
Human Development centres must be set up in every village withthird area after education and health where
No country in the world has been able
to develop without an educated and healthy
workforce and India is no exception. Also
SAMEEKSHA TRUST BOOKS
in the age of globalisation and information
technology an uneducated workforce is Selections of articles from Economic and Political Weekly
unlikely to be employable. Education has
many other benefits as well. It can help
in population control as it has in Kerala, Ideals, Images and Real Lives
especially when women are educated.
There are other social benefits from edu- Women in Literature and History
cation, which cannot be quantified but are Edited by Alice Thorner and Maithreyi Krishnaraj
very important nonetheless. Despite the
obvious benefits of education, the provi- 'Birds in a Cage': Changes in Bengali Social Life as Recorded in Autobiographies
sion of education services in India has
by Women Sarabashi Ghosh :- In Search of the 'Pure Heathen': Missionary Women
been less than satisfactory. There are in
a Nineteenth Century India Geraldine H Forbes :. Sarojini Naidu: Romanticism
number of problems, which I will now and'Resistance Meena Alexander *: Women, Emancipation and Equality: Pandita
highlight. Ramabai's Contribution to Women's Cause Meera Kosambi : Outside the Norms:
There are four different problems with Women Ascetics in Hindu Society Catherine Clementin-Ojha *: Nationalist Iconogr
respect to the provision of education in Image of Women in 19th Century Bengali Literature Tanika Sarkar Positiv
and Nationalism: Womanhood and Crisis in Nationalist Fiction - Bankimchandra's
India. First, is the total expenditure on
education, which at 3 per cent of GDP is Anandmath Jasodhara Bagchi :. Govardhanram's Women Sonal Shukla *: How Equ
insufficient. The second problem is the Women in Premchand's Writings GeetanjaliPandey *: Representing Devadasis:'Dasi
allocation of resources between higher Mosavalai' as a Radical Text S Anandhi *: The Virangana in North Indian Histo
Myth and Popular Culture Kathryn Hansen :. Construction and Reconstruction
education on the one hand and primary and
Woman in Gandhi Sujata Patel : Feminine Identity and National Ethos in Ind
secondary education on the other. In India,
Calendar Art Patricia Uberoi.
the state spends far too much on higher
education and relatively less on primary
education. Third, there is the usual pp viii + 354 Rs 350
problem of leakages of resources and poor
implementation. Schools are ill equipped, Available from
are sometimes too far for students to attend ORIENT LONGMAN LIMITED
and suffer on a large scale from absentee
Calcutta Chennai Mumbai New Delhi Bangalore Bhubanesh
teachers. And fourthly, there is the problem
Ernakulam Guwahati Hyderabad Jaipur Lucknow Patna
of the quality of syllabi used in schools.
Unfortunately, the education system in
India is not creating individuals who are
employable. Out of the four problems the

3740 Economic and Political Weekly October 14, 2000

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complete functional and financial auto- and are indeed being used for special groupsagricultural productivity in Jhabua doubled
nomy should be handed over to the like those above 60 years of age and thosein four years. There has been a rapid
panchayats. Thedevelopment of other rural with disabilities. The Constitution can in- regeneration of grass, which has enabled
infrastructure like watersheds and other troduce as a fundamental right, the rightsome villagers to make a living out of
of all those below the poverty line andselling surplus grass. Also, many have
irrigation facilities is also of vital impor-
above 60 years of age or all those belownow been able to raise better quality live-
tance given the fact that most people derive
their livelihood from agriculture. the poverty line with a disability to claimstock due to better quality fodder. On the
a dole or direct transfer from the govern- whole, the collective and individual finan-
Another form of physical infrastructure
which is vital for economic development ment. All others below the poverty linecial security of the villagers has gone up.
is power. This is another area where Indiashould have access to an anti-poverty Jhabua is not the only example of people-
has performed poorly. The government programme but it would probably be dif-led development. The 73rd amendment
ficult to make it a right.
does not have a clear and transparent policy does stipulate the devolution of a number
on investment in power. Foreign investmentThe problems highlighted in this paperof powers to panchayats but unfortunately
needs to be invited but nobody will investthus far are crying out for two majorthe devolution of functional and financial
in a system which is riddled with corrup- institutional changes. First, there is thepowers in these areas to the panchayats in
need to decentralise by devolving bothmost states implementation has been slow.
tion and red tapism. There has to be greater
transparency with all deals open to publicfunctional and financial autonomy to There is a need to explicitly state the
scrutiny. Then investment, both domestic panchayats in areas like education, health,importance of handing over complete
and foreign, will be more forthcoming.roadsI and innovative programmes like functional and financial autonomy in pri-
will deal with the various ways in which watershed development. Second, there ismary education, health and the construc-
accountability can be strengthened consti-a need for greater accountability and trans-tion of rural infrastructure to the panchayats.
parency in the functioning of government The functioning of village panchayats must
tutionally a little later. The next section of
the paper deals with anti-poverty institutions. The lack of good governancebe freed from bureaucratic control exer-
programmes. according to me is an important reasoncised from the state capital. There is al-
behind persistent poverty. Economic de-ways the possibility that some panchayats
Anti-Poverty Programmes velopment may be a more difficult task andmay not be transparent or efficient in their
Anti-poverty programmes such as thethere may be more to it than just gover-functioning. The Gram Sabha, therefore,
Jawahar Rozgar Yojana and the Integratednance but to ensure two proper meals forhas to be given more powers so that it can
Rural Development Programme have beenthe entire population is n9t a Herculeanact as an effective check on the panchayats.
unable to generate sufficient assets andtask if efficient governance is provided.The role and power of the Gram Sabha
earning capabilities of the poor despite have not been explicitly and clearly stated
Decentralisation and in the 73rd amendment.
huge sums of money being spent. The
government spends around Rs 7,000 crore
Accountability Second, there is a need to introduce
annually on these programmes with few Most of the failures of the state come greater accountability, at the national level,
results. One of the major problems hasabout because of poor implementation, state level and panchayat level. At the
been poor targeting with the richer groupswhich is a result of weak or non-existent centre the role of the Comptroller and
gathering the benefits rather than theinstitutions. Therefore, implementation Auditor General (CAG) should be made
needs to be improved. Hence, while the
poorest. Yet again this is a direct result of more prominent. A week's time should be
poor implementation and there is no optionstate still has an important role to play, assigned
it annually in parliament where the
does not mean that the implementation has
but to strengthen this aspect of government CAG presents his report and highlights the
functioning. An alternative short-term anti-to be through the existing institutions.
main leakages so that the opposition and
poverty strategy is direct transfers or dolesImplementation the
of development pro- entire nation know all the facts. Similar
provided to all those under the poverty grammes in education, health, rural infra- reports should be discussed and made
line. However, direct transfers to all those
structure and even anti-poverty program mes public at the level of the states.
under the poverty line are not possible onmust take place at the level of the There is a possibility that the Planning
a sustainable basis. It has been estimated panchayats. They in turn would be ac- Commission can play the role of monitor-
that a family needs approximately countable to the Gram Sabha comprising ing the states. However, this would require
Rs 15,000 a year to be above the poverty of all the adult members of the village. that the Planning Commission be made an
line. And there are around 70 million Villagers are more likely to effectively independent constitutional body, which
families below the poverty line. The an-
implement these programmes as opposed would have the right to penalise poorly
nual cost of a direct transfer programme performing states and reward well per-
to politicians or-bureaucrats sitting far away
will therefore be Rs 1,05,000 crore which in the state capital or the national capital.forming states in terms of their annual plan
Is about 10 per cent of India's GDP. It are a number of examples which
There grants. A system of incentives and disin-
would be impossible for the government illustrate the ability of panchayats andcentives must be in place to ensure that
to finance this for even one year let villagers
alone to lift their communities from all states are disciplined. Credible threats
longer. Therefore, the current anti-povertypoverty. Jhabua presents an excellentare needed to.force governments to follow
programmes need to be continued, example albeit of how poverty can be eradicated rules. Even the European Union, which I
with better targeting and better implemen- by empowering local people. In Jhabua daresay has more responsible and respon-
tation. Here again greater decentralisation
people manage their environment through sive governments than many states in India,
and accountability is essential. A limitedwatershed development. With increased has devised a system of penalties to ensure
amount of direct transfers should be used all states adhere to all the rules of the
water availability, irrigated area as well as

Economic and Political Weekly October 14, 2000 3741

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European Monetary Union. The penalties to reform the functioning of the govern-
essary impediment. An excellent example
suggested are so hefty that few, if any, of the fruits of cooperation between ment
the by making slight changes in the
states would violate any rule. States in state and individuals can be seen in the
Constitution. The process of decentrali-
India need disciplining and a constitu- sation must be taken to its logical con-
case Ralegaon Siddhi in Maharashtra. The
tional body empowered to discipline them clusion with the devolution of a lot more
Ralegaon Siddhi project covered four
is essential. But along with punishment watersheds and a total geographical areapowers, both functional and financial,
there will also be a system of positive of about 892 hectares. The total expendi-
to panchayats. The lack of transparency
benefits for those states which perform ture on the project was Rs 112.75 lakh and
of accountability has hampered our eco-
well. In order to prevent protest of unequal which Rs 52.75 lakh was granted by the nomic development at all levels. The
allocation at the beginning, all states should Maharashtra government. That was where problem of poverty persists because of a
be treated at par and their performance the involvement of the state ended. The number of leakages in the system. New
judged according to where they start. So laws have to be evolved to ensure more
rest of the money was borrowed from banks,
a backward state will not be penalised at and the balance of the contribution came accountability. Bodies like the Planning
the start for being behind the others but from villagers. The success of the conver- Commission, which have little use in
a further widening of the gap between it sion of this poverty stricken village into framing macroeconomic policies in the
and the better performing states will be a self-sufficient one has to be credited to era of free markets, should be modified
dealt with severely. At the village level, the leadership of Anna Hazare who led theinto new constitutional bodies which
the Gram Sabha should be empowered to villagers into developing a series of check-can hold governments accountable for
check on all expenditure made by the dams, cemented bandharas and nullah their failure to implement developmen
panchayats and to haul them up for leak- bunds. These measures increased the in- programmes. A strong system of incen
ages. This can be facilitated through a tives and disincentives also needs to be
filtration of harvested water and recharged
system of 'social audit'. If one wants proper groundwater acquifers. Farmers can now
introduces as argued earlier. The encour-
use of resources new ways to ensure agement of non-governmental organi-
grow two to three crops every year includ-
accountability must be devised. Then, sations and private sector individuals in
ing fruits and vegetables. Equitable distri-
perhaps, we can achieve poverty allevia- bution of water is assured through water tackling poverty is imperative, as the
tion and development in quicker time with supply associations. The involvement of state cannot do everything. Success stories
less wastage. all the villagers has made this a sustainable
must be publicised in order to help others
In India, it has become imperative to project. Examples like this should be emulate them. Some of these suggestions
have strong system of incentives and dis- publicised across the country, especially would require changes in laws. Others
incentives, in monetary terms, as that is in villages. Villagers elsewhere may feel should be added to the directive principles
the only credible way to ensure implemen- motivated and encouraged if they know of of state policy. But giving them all a place
tation of development programmes. It is in the Constitution would give them more
others who were in a similar state of poverty
unfortunate that somebody will have to but who as a result of their own efforts legitimacy.
play the role of a school master who has have come out of it. The central and state Towards the end, I must add that
to cane his students if they misbehave. But governments should encourage and sup- though this paper suggests some changes
the reality of Indian government and politics to the Constitution, it is not because the
port all such initiatives by partially fund-
makes such a system necessary. And a ing them or obtaining fundingfrom other Constitution is flawed or has failed us.
constitutional authority can only wield this organisations, including various UN As is often said, it is not the Constitu-
stick, which is outside the clutches of organisations. tion that has failed us but the people
government. who have implemented it. However, if
Another law at the national level that
Conclusion
some changes in the Constitution can
would help accountability is a Right The to Indian state has without a doubt help reform those who implement it,
Information Law, which should allow failedall in its responsibilities towardsthen
its it should certainly be looked into.
government papers and information to be
citizens The Constitution Review Commission
over the last 50 odd years. There
made available to the public, except is a need for the state to move out of
cer- has a golden opportunity to recommend
many areas, which it has previously
tain sensitive matters relating to defence certain fundamental reforms relating to
and security. Such a law is essentialoccupied
not governance, which would assist India
and the process has been started
only for poverty alleviation but alsowithfor economic liberalisation. However,in its quest for the eradication of pov-
efficient and transparent functioning of are other areas where although erty
there the and for economic development. One
the new market economy. state has failed it cannot be replaced.canItonly hope that the changes are made
has
Last, but not least, the participation ofto be reformed. The Constitution at this crucial time in our process of
Review Commission has the opportunity
private sector parties, whether individuals development. 1n
or NGOs should be encouraged in an effort
to alleviate poverty. At present, the Con- Back Volumes
stitution reserves this area only for the
state. However, as some of the following Back Volumes of Economic and Political Weekly from 1976 to 1999 ar
examples will illustrate, individuals and
available in unbound form.
NGOs can bring about dramatic change Write to:
without direct help from the state. The Circulation Department, Economic and Political Weekly
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particular sometimes can act as an unnec-

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