Thursday, October 2, 2008

SEZ and Rural Development.........

We have two kinds of rural development: One, the traditional variety; it targets the very poor. Two, the latest fad, the special economic zone (SEZ); it takes very rich investors to poor villages. The former has failed again and again but its sponsors will not concede defeat. The latter is evoking bitter conflicts. Even so, the powers that be will not concede that the scheme is flawed.It must be admitted that both schemes have their uses. Unfortunately, their flaws outweigh their good points. That is why, in the previous article, I argued “Existing rural development schemes are so badly riddled with corruption and inefficiency that they will not remedy the ills of even our well-off villages, let alone those of Naxal infested ones.”Vocal and socially powerful groups have emerged in recent years that strongly oppose development of almost every type. Often, the government is no match for these activists. The activists succeed and governments lose because of the different natures of politics and development.
Politics is about “Who?” and development is about “What?” Politics concentrates on the miseries and travails of the poor; development concentrates on the hopes and aspirations of the poor. The two, politics and development, should complement each other but in practice they are often in conflict.For activists, modern development (implying increasing incomes) is a threat to existing order. In 1974, Easterlin demonstrated that “higher income was not systematically accompanied by greater happiness.” He found that people in Japan became no happier after a fivefold jump in incomes.A recent study by Justin Wolfers at the Wharton School modifies this finding: It reports that growing incomes do increase happiness but mainly in poor countries. That is not unreasonable: For the poor, even a small improvement in income can lead to big jumps in welfare; for the rich, even a big jump in income fetches little extra of real value. Therefore, development is more important for India than for the US or Japan.
Development need not necessarily be expensive. How little an increase in investment is enough to make a large difference was brought out in a recent seminar in Ahmedabad. Dr Amarjit Singh, a medical doctor-turned IAS officer of Gujarat, explained that in his State, the total number of gynaecologists in all of its health centres in 25,000 villages is seven — that is right, the number seven that you can count on your fingers.He described how he roped in over 800 private partnerships in a Public-Private Partnership. Last year, the scheme, Chiranjeevi, supported private doctors to attend 1,31,329 child births of poor (mainly tribal) mothers. Dr Singh claimed that, as a result, both maternal mortality and infant mortality came down by over 90 per cent, producing results better than even Sri Lanka. In this scheme, as against the usual expenditure of about Rs 4,000 per delivery, poor families spent Rs 727 on an average — not for medical treatment but on medicines and transport. The scheme has been implemented mainly in four of the most backward districts of the State and cost Rs 11 crore last year. If extended to the whole country, it will cost no more than Rs 1,000 crore.
In a similar low-cost effort, the CAP Foundation in Hyderabad is providing accelerated training in lifestyle skills (spoken English, computer literacy and work skill) to school dropouts. It has a success rate of better than 90 per cent in placing its students in skilled jobs.
The cost is between Rs 3,500 and Rs 6,000 per candidate. If this technique is extended to train school dropouts who seek non-farm employment, the cost for the entire country will be no more than Rs 1,200-2,000 crore a year.
Instead of treating Naxals as incurable criminals, we should concede their reasonable demands. Of these, two stand out: healthcare and life skills. That is where the Chiranjeevi Scheme of Gujarat and the CAP Foundation programme in Hyderabad can be useful.
Both have done well because they are paid by results instead of for inputs, the way state schemes do. Admittedly, Gujarat has a culture of both entrepreneurship and social service. Hyderabad too is advantageously situated. Such favourable conditions are not easy to find elsewhere. Hence, these two examples may not be replicable everywhere. Yet, their success shows that powerful programmes can be devised at very low cost through Public-Private Partnership. In contrast, state-managed schemes or the latest SEZs are expensive. They do not make people happy; they spawn Naxals.
In recent years, India has been growing economically faster than most other countries. Yet, its Human Development Index has not improved because its social development is lagging behind. Till the 1990s, we invested in social development at the expense of economic growth. Nowadays, we concentrate on economic growth at the expense of social development. Either way, it has been unbalanced development. The Centre has sanctioned over 600 SEZs. At the same time, the Government of Goa has cancelled all of its own SEZs. The Centre has argued that the State government has no powers to do so. That is legally correct but politically untenable: In ignoring local opposition to SEZs, the Centre is taking the State down a slippery, violent path.
Businessmen too should rethink; stop thinking of quick bucks and start thinking of peaceful, long lasting development. Suppose they offer to adopt one village (population 1,500-2,000) for each acre of land they acquire. That is, fund one class room and one trainer in life skills as well as one hospital bed plus one doctor/nurse per acre of SEZ. That will cost them a fraction of what they are paying out now if they follow the CAP Foundation, Chiranjeevi example. Will not that social development inspire confidence among local people and halt their violent opposition to SEZs?
Actually,introducing one teacher or one doctor in any village does not work in practice. Social development will be viable only when a number of teachers or medical specialists are concentrated in one place. Hence, it is necessary to provide public transport to help villagers reach relatively large, well-located training schools and hospitals. Then, each SEZ should also provide one bus per acre, not a big one, a small one will do.In brief, I propose that promoters of SEZs donate one class room, one hospital bed and one small bus for each acre of land they acquire, that they also support one trainer of life skills, one doctor or nurse and one bus driver. The government should chip in by subsidising social service providers by results: for each maternal/infant death prevented, for each job filled, for each km travelled by the buses.
SEZ developers have three options: One, lean on government patronage. Two, buy off rich landlords ignoring their poor neighbours. Three, include all neighbours by contributing to local social development. If developers are not penny wise and pound foolish, they will choose option three: Invest Rs 30 lakh per acre in social development and contribute a fraction of that amount annually. The expense will be worth the trouble: Human capital will accumulate; Naxalism will stop spreading. Above all, that will fetch goodwill, invaluable goodwill.

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