A common experience for most of us who are used to living in metropolitan cities is to be caught sitting in a car at traffic intersections. And, as is invariably the case, a very young boy or an adolescent mother, carrying a baby in her arms, shows up next to the car window, arms extended. The boys, as I have noticed across cities in India, moan lugubriously, but with practised ease, at the car occupant, offering packets of incense sticks for sale, punctuating the sales promotion monologue with the invariable reminder that they haven't ever had a square meal in their little lives. The mothers resort to a variety of other forms of appeals, though each one of these uses the baby's innocent face as the ultimate weapon to thaw the iced chamber in which our hearts reside in sterilized comfort.
We in turn, or at least most of us most of the time, look the other way with supreme indifference, having had as much practice in this act as the supplicants have had in their respective professions, and wait in mild irritation for the traffic light to change. As we look the other way, we are often not even conscious of what it is that we are staring at with feigned interest. More often than not, however, it would be a newly come up shopping mall catering to the needs of the blessed class to which we belong.
There is an element of randomness though, a highly impersonal one, in these events. The randomness in question concerns who it is that's standing outside the car and who sits inside. Once you begin to think about this, there is little else that you can think about. The realization I invariably end up with is that the boy or the young mother begging in the streets could have been my own children, if God had tossed a coin and decided to make things happen that way.
As we celebrate our fabulous growth rate story, few remember that the darkness surrounding the unfortunate lives of endlessly many people in this country is growing ever more deep and this is happening hand in hand with the growing intensity with which the lights are glittering along the runway on which our economy is gathering speed on its mission to the moon!
There are few things in the universe which are as vulgar as the sight of economically deprived people. Yet this vulgarity offends one's sensitivity far less than the spectacle of God's favoured few dancing to the tunes of ipod relayed sound waves, headphones protecting their ears and perhaps minds too from the ugly realities of below subsistence survival. The fact, however unpleasant, remains though that many of us in this gathering belong to this last category and it is difficult to avoid the question: Are we endowed with a human face?
The question is more difficult to answer than what might appear to be the case at first sight. What, first of all is the nature of a human face in the society that is growing around us? Humanity, it might appear, is standing now at the crossroads, trying to decide if God had indeed created Man in His own image. The endless violence that has overtaken us all cannot fail to raise this question. Indeed, who amongst the Homo sapiens is it that owns a human face? The suicide bomber, the mindless rapist, responsible officers in poverty alleviation programmes, who need to be bribed to deliver the honest tax payers' money to the endlessly deprived communities living in remote, inaccessible localities? Indeed, to a large extent, we have probably lost track of what humanity is all about. So, it is not an easy matter to engage in discussions surrounding Economic Development with a Human Face.
Yet, our combined conscience bothers us at the same time. As economists, we cannot avoid the tell tale numbers that stare us in the face. According to the Human Development Report, the US per capita GDP was $35,277 in 2001. Norway's per capita GDP was of the order of $ 36,815, Japan's $32,601 and Switzerland's $ 34,171. And, at the other end, Ethiopia's per capita GDP was $ 95, Sierra Leone's $ 146 and the Democratic Republic of Congo's $ 99.
And closer home, students from premier institutions are picked up by the industry and offered salaries exceeding lakhs or rupees, when the poverty line hovers around a few hundred rupees a month. As we enjoy ourselves in the shopping malls, which we have every right to, the question remains whether we should also spend a while in defining what are the features that constitute a human face. Few of us would disagree perhaps that one of them is an unavoidable desire to open the gates leading to the shopping malls to the children who are languishing in the Fagin school in malign neglect.
India is a resource rich country and the most potent of our resources happens to be our young population. It is time we stop lamenting the absolute size of our population and begin to notice that India's population density is far lower than some of the richest countries. India' population density is around 358 persons per sq. Km, whereas Singapore has a density of 7,022 and Hong Kong 6,348. Japan has a density of 337, which is not too low compared to India. India is also mineral rich, it has vast tracts of arable land as well as land available for industrial use. The law of diminishing returns suggests that it is labour that is scarce relative to land and yet, we have not been able to use this elementary law to our advantage.
Why has this been the case? The immediate answer that one tends to come up with is that we have not been particularly successful in building up capital. So, it is capital that is acting as the ultimate constraint to development. One question leads to another and once capital is brought up, one cannot help asking further, what is it that constitutes capital in the first place? Is capital a collection of machinery, is it finance that constitutes the essence of capital? What is it?
With the progress of economic science, it is being increasingly recognized that the most productive form of capital is a human being himself. Or, more specifically, it is human capital that one should aim at building up if development has to take place with a human face. How does one go about building up the stock of human capital? The answer is fairly simple. What metamorphoses a human being into a piece of human capital is education. Not education aimed towards producing nuclear scientists or pilots in charge of fighter aircrafts. Such people are needed of course, but a handful of super-educated cannot help converting our advantageous population density to an economically useful entity. Our first goal should be a minimally educated population. A population every member of which can at least read a newspaper. Elevating an illiterate population to a newspaper reading population is a hard challenge indeed, far more challenging than building nuclear war heads.
Yet, is this the direction in which we are moving? Unfortunately no. A few figures will demonstrate this clearly. Now that we are passing through the budget season, I will try to illustrate where we could have been going wrong. To this end, I decided to look into the capital budgets allocated in different ministries over the years (2001-02 through 2009-10) as a fraction of the total capital budget for the country as a whole. And the figures are most disturbing. The Defence Sector, we note has had a least capital budget of 29 per cent and a highest of 51 per cent during the chosen period. The capital budget for elementary schooling, literacy and even higher education has been close to zero. The capital budget for health has had a minimum value of 0.003 per cent and a maximum of 1.3 per cent. Rural Development and Drinking water had a minimum value of exactly zero and a maximum of 0.15 per cent.
One can go on and on with these figures, but the ones I have quoted will suffice. Without a doubt, our national borders need to be protected. However, the borders are not protected for the sake of the borders alone. They are ultimately a way of protecting what lies inside the borders. And the figures I have quoted would seem to imply that inside the borders lies a vast wasteland of untapped resources. Resources that need to be nurtured and converted to a massive force of human capital.
If development is to be equated to capital accumulation, then the capital itself needs to be properly identified. And the most productive of all capital has a human face.
To make that face visible in broad daylight is the only meaningful goal of economic development strategies.
[This was an inaugural lecture I had delivered at a Conference held recently.]