Roaring corporate sector and a booming economy!! But what about the last man standing on the street??

“20000 points on the sensex, the economy growing at 9% have a good weekend” wrote economic times on one Saturday. It is indeed great to have a booming sensex and it’s equally good to know that we are one of the fastest growing economies of the world. But does it end there?? Is a booming sensex and a roaring corporate sector all we want for our country, where millions of people still sleep on the road. In the history of our country this is truly one of the most important eras because on one hand we are the front runners in economic growth and global investments. In fact in the Presidential debate of 2004 between President Bush and Senator Kerry, Senator Kerry assured the people of America that if he becomes President then he will prevent American jobs from being “Bangalored” and sent to India where a booming IT sector awaits the best talent on the globe. On the other hand we are also known to be the front runners in mal nutrition and poverty and illiteracy. Do these people who are mal nourished and illiterate even know why their country is respected globally? They don’t, and why should they?? When the hyped growth and the boom that Economic Times raves about has not gone even remotely close to them.

Therefore the time has come when we need to make economic growth more inclusive. The current pattern of economic growth is only favoring specific sectors of the economy. And therefore people associated with those sectors are also benefiting. But the people who do not come under the purview of those sectors are experiencing stagnant growth. An article recently published in the Navbharat Times pointed out that the present government or for that matter any government has a tendency to start worrying about things only when a worrisome situation gets created. While the situation is gradually going from bad to worse they are indifferent. The economic policies being followed by the current government have undoubtedly increased foreign investment, boosted economic growth and made India one of the preferred destinations on the globe for any kind of business and financial activities. But at the same time as a result of all of this, the government is forced to reduce the fiscal deficit as per the terms and conditions of IMF and WTO. Reduction in fiscal deficit results in declining expenditure for essential services like health and education. According to the Kothari commission led by Dr Vijay Kothari in 1966 expenditure on education has to be minimum 6% of the GDP but for the last several years it has remained between 2.5% to 3.5%. In the eleventh plan it is estimated to be at around 4%. Recently it was reported the IITs don’t have enough funds to pay proper salaries to its professors. IIT Bombay made a request to the government to give a grant of 20000 crores, so it can look after its basic expenditure. This is one of the implications of reducing the fiscal deficit that even the premier institutes are down in the dumps. IMF tells our government to reduce the fiscal deficit to control inflation. According to an article on the Indian economy, when the government borrows money from the RBI it tends to increase the quantity of money and hence it results in inflation. This argument has two flaws one that the new quantity of money doesn’t chase the same goods conventionally perceived. While the quantity of money circulating in the economy increases the production and output also increases. But apart from these technical details and principles, it is important to note that if the government reduces its expenditures on health and education then any significant development for the masses is not achievable, and then it’s meaningless to merely float on the fact that sensex is on 20000 and economy is growing at whatever percent when it is of no consequence to majority of the population.

Urbanization and environment

This was my speech for a competition, the topic was “Urbanization improves environment” and i was speaking for the proposition.

Urbanization this term has economic as well as social significance. Economic because it brings about a structural change in the way people function and seek jobs and this influences the economic activity of individual units of the population and the economy. Social significance is the natural outcome of the economic significance, as Karl Marx once explained, that a change in the economic system and structure has its social repercussions as well. Urbanization today is a natural and independent process; the percentage of population migrating to the urban areas is rising inexorably irrespective of the developments taking place in the rural areas. According Warren Thomson an American demographer as the economy expands its people move from the rural to the urban, now this movement may not necessarily be geographic movement of going to urban cities but a change in the basic character of a place where people live, a change from the rural character to the urban character. So taking into account this principle urbanization in my view is an inevitable process and a natural outcome of development.

Coming to environment, environment isn’t just air, water, land and resources, it also includes man, his activities and his material welfare. The two major factors determining the environment in the urban setting, is the population and the economic development. One of the distinguishing factors of urbanization is capital formation. Goods are made to sell and money is earned to buy, but certain amount of consumption has to be kept away for future use. Current consumption has to be used for creation of capital in future. As Prof Shahuraja has put it “It is necessary to break away from the vicious circle of poverty and initiate the virtuous circle of prosperity. To improve the environment investments in education and health are important and this happen only through capital formation. The rural economy tends to be self sufficient, now self sufficiency is not bad per se but to move to a productive level interaction between resources and saving of resources is necessary and it happens only through urbanization. Also urbanization facilitates mobilization of huge investments to initiate and implement new policies. As the economist Rosenstein Rodan has said in his theory “the big push” that for a plane to take off it requires a certain minimum ground speed, anything less than that and the plane won’t take off, similarly for improving the environment we need a certain minimum investment to be mobilized, anything less than that is inadequate.

Now speaking of development it is not just the addition of physical capital but also human capital Urbanization facilitates the training of human capital we may have the best of equipments and machinery but to match that, we need equally good human capital. We need skilled human capital for economic growth and development and we need sensible human capital to maintain social tranquility and political stability. Urbanization gives importance to education and practical training. Education ultimately has the power to pull the poor people from the lower end of the poverty line and push them to the upper and through urbanization education assumes importance. Urbanization also increases the prospect of revenue generation and revenue collection for the government. And this revenue is utilized to give essential services like education and health at a subsidized rate. So essential services like good health care and education are given at a subsidized rate.

Coming to the point of natural environment, at the outset I must say that man has always been in a conflict with nature. Man, in pursuing his interests and the interest of the community at large has had no choice but to alter the physical structure of nature. A water power project requires the construction of a dam and a reservoir and this may have an impact on the physical environment, it may even force a number of people to relocate themselves. But on the other hand, it’s difficult to exist without electricity. If environment is for the people even development is FOR the people. If we are sacrificing the natural environment to some extents we are creating value at the same time. Development always comes with a price, we have to ensure that the cost of any project or plan does not outweigh the benefits; if this balance can be maintained then we can certainly have sustainable development.

Now let’s examine the commodity of land under urbanization. It so happens that in the rural areas the population is scattered over a vast region of land, almost every piece of land is utilized either for living or for cultivation. And as we all know that the supply of land is scarce in relation to the demand, so effective utilization of land is very important since it’s a very important natural resource. Now urbanization concentrates the population into smaller land areas, leaving more land undistributed and therefore protecting it and making it available for other important activities like farming, and other agricultural activities.

Resources are constantly needed by cities. And one of the outputs of resources is waste and this waste has to be properly handled to prevent any serious damages to the environment. The waste hierarchy system plays an important role in waste minimization, it refers to the three “R’s” reduce, reuse and recycle. The aim of the waste hierarchy system is to extract the maximum practical benefits from products and to generate the minimum amount of waste. Another method is the extended producer responsibility, in this system the producer has to be accountable for the entire life cycle of the product, so firms which manufacture are required to be responsible for the products during manufacture and even after their useful life. Also the standard sanitation technology in urban areas collects waste water and treats it so that it can be left in the sea or lakes. So urbanization provides safer and better water and provides better sanitation facilities. So the crux of the matter is that although urbanization harms the environment and creates waste it ALSO ensures its proper handling and disposal, infact the input of resources and output of waste has been described as the metabolism of cities.

And finally at a social and cultural level urbanization improves environment because it increases the credence given to status of education or other merit based achievements and reduces the credence given to birth status which originally existed. So urbanization does improve the social, economic, political and cultural environment and it does sustain the natural environment.