May 1999 Edition

Liberalization, Infrastructure and 'Quality of Life'

In the past several years, the state of the nation's infrastructure has attracted considerable attention in the nation's press. There have been stories of severe power and water-shortages; uncollected garbage and untreated sewage are common occurences, and so too are tales of heavily contaminated water and polluted air. Harried home-makers (from the very poor to the barely surviving middle-class) have resorted to 'rasta-rokos' and 'dharnas', hoping to bring attention to their plight. Although the national media has not shirked from printing these tales of woe - rarely have these issues reached the point where India's leading journalists have felt compelled to grill the responsible government officials and politicians, and bring them to account.

Political Indifference
Even as India's top political pundits spend hours commenting on equations of caste and religion - the miserable state of the nation's infrastructure rarely excites their fancy. It is little wonder that the state of the infrastructure is a priority for virtually no political formation in the country. Defending secularism and ensuring a modicum of affirmative action for the oppressed castes is about all one can expect from most of the nation's "alternative" political parties. That the poor are as much at risk from death and disease resulting from drinking unsafe water or exposure to untreated sewage is something strangely lost on most of the parties that espouse to represent the interests of the downtrodden. Air pollution is often cynically dismissed as a problem for the rich and upper middle-class. But while the rich and upper middle-class, can roll up their windows and turn on their air-conditioners to escape the worst effects of air-pollution, it is the poor, who get no respite from breathing the poisons that pollute our atmosphere.

Free-Market Illusions
It is not just the political parties and political pundits who have failed the nation in this respect. Many of India's well-patronized economists have displayed an equally grave and callous insensitivity to this problem - which now threatens to assume gargantuan proportions. In the post-liberalization era - it has become quite fashionable to preach the miracle of free-markets. It is assumed that just as the private sector stepped in to provide the latest model colour TVs, and a plethora of other electronic gadgets and gizmos - so too will the private sector take care of the nation's infrastructure. Government isn't supposed to provide it - and especially not, if it means raising taxes or providing any subsidies for it's development. If private sector doesn't step in - all that is required is to keep loosening government regulations and provide more and more incentives - whether in the form of tax rebates and counter-guarantees, or free land and so on. So argue the liberalizers.

Such free-market oriented economists have had their say for almost a decade with the consequences all too visible for any conscious Indian to see. Since 1991, investment in infrastructure has continuously shrunk as a proportion of the GDP. Primary and secondary education has suffered and so has university education. Investment in roads has been abysmal and the railways have been systematically starved of funds. Investment in the power sector has woefully lagged requirements as has investment in water-treatment plants and sewage facilities.

At the same time - regulatory relaxation has led to industrial growth concentrating in ever narrower pockets - straining the available infrastructure to the point where even above-average salaries cannot provide a decent quality of living. Lax implementation of environmental laws has led to unacceptable air and water quality, further straining the health of urban residents. Yet, for these doctrinaire liberal economists, nothing has warranted any change in the rusty old tune - "...it will all be fine - just keep deregulating....".

Effects of Recession
But last year, on account of the deepening recession - especially in basic industries like steel,cement and HTVs (Heavy Transport Vehicles) - sections of Indian industry began to voice fears about the sustainability of economic growth, expressing concerns about the inadequate state of the infrastructure. After a decade of discounting the problems arising from inadequate infrastructure - some organizations representing Indian manufacturers (like FICCI and ASSOCHAM) suggested that government expenditure on infrastructure could be increased. Intelligent analysts began to corelate falling government expenditures on infrastructure with the deepening industrial recession. But even as demands for increased spending on the infrastructure mounted, parallel demands were made to tighten the fiscal deficit and continue with a low-tax regime.

The BJP's Commitment to Infrastructure
Upon entering office, the BJP-led coalition attempted to juggle these contradictory demands. When presenting his 1998 budget, Yashwant Sinha tried to suggest that infrastructure spending would increase. It seemed as if education, drinking water and roads were to get additional allocations. But reality has been quite different. One year after the BJP-led coalition assumed office, it has become increasingly apparent that infrastructure spending has not seen any significant improvent. In spite of bold statements embodying grand projections, the BJP-led coalition (like it's predecessors in government), has also failed the nation on this count. (Although six months ago, the BJP did announce an ambitious scheme to 4-lane the nation's major highways, and more recently has called for an increase in allocations for the rail budget, it's first year in office was essentially frittered away.) One reason for this is that the BJP, like the Congress and it's idealogical cousins in the now-defunct United Front, (such as the TMC), has been unable to move away from the theoretical fixations that afflict the free-market hard-liners, i.e. "let the private sector do it".

But a restive public is beginning to wonder when this long awaited maxim will fructify. For almost a decade, each new government has come up with one new scheme after another - supposedly to attract private sector spending in infrastructure. But in most cases, nothing has happened. As a result, the shortfall in infrastructure spending has steadily worsened. Consequently, the recession that has plagued several major sectors of the Indian economy may still linger - (optimistic predictions, notwithstanding.)

The Power Shortfall
Perhaps, no single issue excites urban home-dwellers more than the subject of erratic power supply. Whereas the very rich can make do with private generators most Indians cannot afford such expensive individual solutions. In any case, the excesive use of generators increases the nation's dependance on oil imports, and their use damages the environment, and violates existing noise laws. For many residents, the discomfort caused by power outages is exacerbated by the high-decibel noise of neighbourhood generators. And power cuts invariably mean water shortages as well because water pumps can't run without electricity.

Ever since the Narasimha Rao government embarked on it's "liberalization" policy, the power sector has been systematically starved of funds. Not only has the private sector failed to contribute to production capacity in any significant way, investment in transmission and maintenance of existing plants has seen catastrophic declines. As a result, even when new plants are commissioned, the problem of poor transmission networks will remain.

Here too, the BJP-led coalition has mostly failed to make a dent. Although the power minister has been quite articulate in outlining the problems faced by the power sector, there doesn't seem to be the political resolve and financial commitments to truly address this serious problem.

The Telecom Swindle
One of the by-products of falling investment in core sectors of the economy has been a recession in the capital goods sector. After the formation of the BJP-led government, there was hope among some sections of industry, that the BJP might help bring about a turn-around.

Instead, the BJP has recently become party to a new problem. Telecom was one of the few industries to witness explosive growth in the last decade. Last year, telephone penetration appeared to have reached the 45 per 1000 mark. In order to facilitate the further penetration of telephones in the country, a reduction in rentals was in order. But instead, under pressure from the TRAI ( the brain-child of the Congress), the BJP-led coalition recently approved a near-doubling of local call rates and rentals for all home users.

Every sensible Indian knows that India is an extremely price-conscious market. (The boost in car sales after Maruti announced it's dramatic price-cuts is just one telling example.) By world standards, telephone penetration in India is still quite low. Telephone demand was increasing only because telephone rates had been kept within the affordability range of middle-income families. But this shocking and irresponsible manouver w.r.t call-rates and rental charges will impact a wide range of urban and rural users. Not only does the TRAI move now threaten the demand for home telephones - it may also inadvertently jeopardize the growth potential of the nation's Internet market, especially in small towns and rural areas.

For a nation like India, the Internet offered hope that India could make several quick technological leaps. Bypassing the expensive phase of building and running isolated networks based on proprietary protocols, Indian science and industry could benefit from the universality of the Internet. Rural education could get a fillip by enabling access to a much wider range of information - through remote training and access to educational materials put out by urban facilities that were once too far and expensive to reach. Caste discrimination that held back students from the subjugated communities could be overcome by providing alternate and remedial instruction through the anonymity of the Internet. The spread of the Internet in smaller towns and villages could also open up local job opportunities in the service industries - in remote billing, remote call processing and warehousing, for example.

But in order for the Internet to reach it's full potential as an economic 'balancing' and 'democratizing' tool, local telephone tarriffs need to be kept very reasonable - even subsidized if necessary. For instance, unmetered local calling is a standard and affordable option offered to the vast majority of US telephone users. But TRAI's move to meter local calls every three minutes means that most Indians will simply not be able to call out very much. Being on-line for even a half-hour a day may be out of question. Contrary to the hopes of many, this step by the TRAI will in all likelihood ensure that the Internet in India remains a highly exclusive and elite-oriented network.

Indian industry, which has so far greeted this move with near unanimous approval may one day realize the economic folly buried in these new tarriffs when SW exports begin to slow down, and a recession in the domestic telecom sector comes back to haunt them.

The Internet already connects India's export-oriented SW houses to the West. In the future, it may also connect India's NRIs to India's RNIs - but the dream of providing Internet connectivity to every ordinary Indian may seem more and more like an illusion.

Transportation
One area where the neglect of the infrastructure is most apparent is in the nation's roads and rail network. India must be the only country in the world where there can be mile-long traffic jams after midnight. These can occur on any one of several national highways, including the Delhi-Jaipur highway that every international traveller must take to reach Delhi's airport. But the worst reports pertain to sections of the Delhi-Calcutta highway.

Consider the irony of travelling between Mughalsarai and Benaras. The national highway that connects Delhi to Calcutta also connects Mughalsarai and Benaras - running right through the heart of these two cities. Long-distance trucks that have no reason to enter either of these Eastern UP cities jam this local segment of the national highway so that local traffic can barely make it through. Impatience and idiocy amongst the drivers only adds to the chaos. A train service between the two cities could probably alleviate the problem. In fact, there is a train track between these two cities. However, most trains that come into Mughalsarai don't continue on to Benaras and vice-versa. As a result, it is not uncommon for passengers headed for Benaras to come into Mughalsarai. But because there are no local trains between these sister-cities, the passengers must come out of the station and take one of the crowded mini-buses that ply the route between the train stations of Mughalsarai and Benaras. Although the distance by rail can easily be traversed in 20 minutes or less, the bus-ride routinely takes an hour, and often, on account of traffic jams, it can take as long as two or three hours. So while all the trucks and buses sputter and drone, spewing their deadly cocktail of noxious gases into the atmosphere, the train tracks between the two towns remain idle and unused for most of the day.

And this is not an atypical story. While it is true that the tracks around the major metros are over-burdened, train tracks are under-utilized when one moves away from the metros. But no rail-minister in India has thought about providing low-cost inter-city day trains that can move passengers at higher speed and more comfort than the gas-guzzling metal-rattlers that pass off as 'state transport buses'! Buses on India's national highways may run quite frequently but they are invariably over-crowded and uncomfortable and subject passengers to the most harrowing traffic jams. Whereas even a "fast-passenger" averages 50km an hour, few state transport buses in states like Bihar and MP beat 25km an hour these days. In a densely populated nation such as India, trains are a far superior mass-transit alternative.

But rail budgets have been decreasing. And the priority for every railway minister is adding a new train that connects their constituency to Delhi or Mumbai or some other metro. That one may need more day trains between regional centers such as Lucknow and Allahabad, or Benaras and Ranchi, or Indore and Nagpur, simply does not occur to any one.

And although it is not a bad thing that the BJP has begun thinking about a modern road network that links India's major metros, every one seems to have forgotten the pathetic condition of our "State Highways". Many are just single-lane - and collapse after every monsoon. Even in the dry season, it is often hard to tell if the highway is a road with too many potholes - or in fact, a series of ditches with fragments of road rising from the depressions. Driving a bus or a truck on such "highways" is more like negotiating a back-breaking obstacle course. That such poor roads reduce the life of the vehicle, add to the maintenance and fuel costs, and greatly increase the chances of accidents seems to be lost on the nation's planners. But because these highways are designated as "State Highways", they do not come under the ambit of national plans. This is a mistake, because such highways can serve as important traffic links between neighbouring states. For instance, in Madhya Pradesh, the road from Indore to Pune via Aurangabad is listed as a "State Highway", and is consequently in very poor condition. So too is the road from Indore to Baroda. Or the road from Indore to Jaipur. Pune, Baroda and Jaipur - all are emerging commercial and industrial centers of considerable importance. Surely they could be better connected to the commercial capital of India's most central and largest state?

And Madhya Pradesh is no exception. State highways are in equally poor condition almost all over the country. While few would be surprised to find unmotorable roads in Bihar, one can find several poorly maintained highways in states with far better reputations, such as West Bengal, Tamil Nadu and Kerala. Even Karnataka - with it's generally better roads is inconsistent when it comes to keeping up it's state highways. It is precisely because state highways are so neglected that the pressure on the national highways increases further. And it is for this same reason that India's businesses choose not to locate new plants where land is relatively cheap and more available.

It is ironic how the mantra of the "private-sector knows best" has created tremendous over-capacity in car manufacturing (Ford and GM are barely able to sell 20% of their installed capacity in India), but ten years after "liberalization", the number of roads on which these ultra-modern cars can be driven safely and efficiently seems to be shrinking. In many instances, driving time between cities has almost doubled, even as driving has become more dangerous and accident-prone. Obviously, the private-sector has done a very poor job of allocating the nation's investment capital. We have more cars than we can afford to drive - but not enough roads to drive the cars we can afford to own!

Holistic View
One might think that more car-buyers, and those in the transportation industry would be aware of this striking anomaly. One might think that the nation could be more vocal in expressing it's frustration over the transportation bottlenecks that beseige it? But the condition of our roads and rail network is simply symptomatic of an all-pervasive neglect of the national infrastructure. Although considerable progress has been made in reducing rates of abject poverty and life-expectancy in post-independence India - few have attempted to define an acceptable quality of life that goes beyond a life of minimal subsistence. Few have forced the Indian nation to define for itself a more acceptable standard of living whereby clean air, safe drinking water, proper sewage and educational facilities, and decent housing with a reliable power connection are treated as indispensible aspects of daily life. It should not be enough that India simple feed it's population - but it should also be imperative that every family find the opportunity to live life with a minimum level of comfort and dignity.

A GNP that grows by 6-7% every year is meaningless if even those with above-average salaries experience an inordinate ammount of stress in their daily routines. At some point, no ammount of new consumer goods can substitute for the absence of harmony in ones daily existence. And this harmony can only come if the standard of living is raised for all Indians. If half the population in our cities consists of slum dwellers without access to running water and sewage facilites - without access to decent transport facilities - even those with more means will pay a price in terms of uncontrolled health epidemics and urban chaos. And if those who do have homes are plagued with recurring power outages and water shortages - they too, aren't really enjoying the benefits of modern urban living.

India has been lulled by the mantra of "liberalization" and "privatization". This mantra has delivered home appliances and electronic gadgets galore. But it is also time we realize what this mantra has not delivered. It has not delivered a modern infrastructure that keeps pace with growing demands and consumption of a still rapidly growing population. India is now able to satisfy the demand for items of individual consumption. But it seems completely unable to satisfy the demand for items of collective consumption - such as clean air or clean water or a smooth transportation network.

For that, a different paradigm may be necessary. But to even begin to find the right solution - the right model for collective interaction - we will have to rethink some common myths - that all problems of collective interaction can be solved by individual choice. We will have to re-orient the nation's priorities in such a way that emphasizes greater harmony and tranquility in our daily lives - where our most basic needs are met without the daily trials and tribulations that confront and challenge most of us.

Unless more of us begin to articulate the importance of our national infrastructure - our collective infrastructure - our quality of life will stagnate or even deteriorate. For too long, the nation's politicians have attempted to keep us diverted and divided by endless hair-splitting over who is casteist and who isn't and who is communal and who isn't. That doesn't mean we kowtow to those who would like to oppress and discriminate based on caste, creed or any other social division. On the contrary. India must remain a secular nation - and yes - it must transcend caste - but it must also become a nation that is worth living in - that provides means and opportunities for a well-balanced life for all it's inhabitants. Our path to progress must combine struggles for greater democracy and and greater equality with demands for better living. Politicians who neglect one or the other will inevitably fail the nation and contribute to the gridlock that has led to the present crisis in parliament.

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