Last week justice Sudershan Reddy retired from the Supreme Court. However, just prior to superannuation, he delivered two judgements—one on black money, and the other on the Salwa Judum (the vigilante force created by the Chhattisgarh government to fight Naxalites)—that will leave his imprimatur in the ongoing social dialogue of modern India.
This is particularly true if one views the arguments he used to arrive at dramatic conclusions. They are, if you take their underlying spirit, a powerful, though overtly emotive and ideological, critique of the political economy of India’s spectacular growth in recent years.
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It should be seen together with the two rounds of data released by the National Sample Survey Office (NSSO) on employment and consumption. While the employment data revealed that the first phase of the United Progressive Alliance (UPA) government was one of jobless growth, the data on consumption shows that the same period also saw a deterioration in inequality in the country. The two sets of data actually reinforce each other: failure to generate jobs means the growth process was not inclusive in nature, which also means that income for those who could not find a job grew less fast than that of those who found one.
It would be tempting to dismiss Reddy’s remarks as ideological rhetoric. Instead, policy wonks and politicians in particular should actually debate the growth process for possible course corrections, especially since the UPA is committed to inclusive growth and yet the data shows it has been anything but that. Whether you like it or not, growth has to be broad-based and inclusive to be sustainable. (Think the bottom-of-the-pyramid thesis propounded by management guru C.K. Prahalad.)
Both judgements, for entirely different reasons, have created quite a stir: the black money order, which led to the setting up of a group to monitor and guide efforts to track black money and directly under the aegis of the apex court, was attacked for visible signs of overreach; by outlawing Salwa Judum, the court vindicated the stand of human rights activists who have consistently campaigned against it and posed a major setback to the state government. A lot of attention has been focused on the overreach of Reddy’s order on black money. And rightfully so; but, like other commentators have already said, the UPA has only itself to blame: by failing to deliver the basic tenets of governance, it has created a vacuum that is now coming to be occupied by either the judiciary or activists.
Citing the findings of an expert group constituted by the Planning Commission, among other references, Reddy, in his order on the Salwa Judum, holds the view that Naxalism is not simply a law and order problem. “That violent agitator politics, and armed rebellion in many pockets of India have intimate linkages to socio-economic circumstances, endemic inequalities, and a corrupt social and state order that preys on such inequalities has been well recognized. In fact the Union of India has been repeatedly warned of the linkages.”
Also Read | Copy of the judgement click here
The order then goes on to deliver a powerful critique of the political economy of the growth process before concluding that the Salwa Judum was unlawful.
The importance of Reddy does not lie in the seductive rhetoric of his words. Instead, it is in the question he is raising about the sustainability of our present growth strategy. It should not be viewed as a debate on pro- or anti-growth. Growth has to be welcomed as it is one of the key ways of generating tax revenue for the government to fund social welfare. It is, therefore, the pattern of growth that has to be debated and necessarily new conclusions have to be derived. The judge did not have the benefit of access to NSSO data when he delivered his judgement. We do. The ongoing jobs debate in Mint captures the disturbing pointers from the employment data. And now the consumption data, as Mint reported on Saturday, makes the equally worrisome point that inequality in the country has increased.
In India, unlike in other countries, consumption and not income (because it is difficult to estimate at the bottom and tends to be under reported by the high income segments) is measured. So our comments on income inequality are derived from studies of consumption behaviour; and consequently, the most commonly used measure of inequality, the Gini coefficient, is based on consumption data.
I asked an academic friend to compile the Gini coefficients for India based on the various NSSO consumption surveys since 1993—so all political regimes are equally to blame and the UPA can draw comfort that it is not being singled out. The data is very disturbing. Both, in rural and urban India, inequality has worsened: the top 30% of the population accounts for 70% of national consumption.
The deterioration is substantially more in urban areas. Are we surprised? The bulk of the growth process has been restricted to the services sector and primarily urban areas. Anecdotally, we can see the ostentation on display in malls and other elite social watering holes and the economic misery among the urban underclass—that lubricates urban lifestyles by providing cheap labour.
The UPA has three more years in office. Walking the talk on inclusive growth is a sure passport to a record consecutive third term in office. But is the UPA listening?
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at firstname.lastname@example.org