It is a well-known fact that the underlying objective of introducing any reforms by a welfare state is to re-structure the sector in such a way that the benefits of development flowing from the policies of the Government percolate to the maximum number of people in the country. The Govt. of India had introduced economic reforms in 1991 to re-structure the economy/financial system with a view to ensuring optimum utilization of the financial resources, removing artificial road-blocks and managing the country's resources in a manner which could embrace all the segments of the population and thereby ensuring distributive justice and reduction in the poverty levels. It may, however, be mentioned that the economic reforms were introduced by the Government largely to cope with the unprecedented financial crisis emanating from depletion in the forex reserves to an all time low resulting in the Government's inability to service its debt obligations to the World Bank and IMF. The economic reforms undertaken by the Government have gone a long way in opening up the economy and removing unwarranted controls and restrictions with regard to licensing of industrial projects, de-regulation of the banking sector and paving the way for global competitiveness. Since the focus of these reforms was limited and confined to elite segments, they unfortunately, bypassed the primary sectors of the economy, i.e. agriculture and rural development. These reforms have so far proved to be anti-poor and had a counter-productive effect though marginal benefits did accrue to the poor through trickle down process.. The planners, economists and bureaucrats have been advocating that these reforms were intended to alleviate poverty and unemployment in the country. It has become almost a fashion among our politicians, planners and economists to preface their presentations and speeches with their resolve to remove poverty from the country and ensure distributive justice. It seems `poverty' in this country is being treated as an `industry' where vested interests thrive and prosper. It will not be an exaggeration to say that one-third of the country's population is living below the poverty-line and a large fraction of such population lives in rural areas. Since the introduction of economic reforms, the people below poverty-line in this country have registered an increase from 300 million as at the end of 1991 to nearly 355 million in 1999. Another interesting feature about poverty is that there has been sharp disagreement among the planners and the economists regarding the magnitude of poverty in this country; different statistics have been issued in this regard from time to time. The fact, however, remains that the entire planning in this country, as also the process of economic reforms and liberalization have embraced only about 10% of the total population. The teeming millions, who are reeling under abject poverty have to pay the price of these reforms and bear the brunt. A large number of poverty alleviation programmes have been undertaken by the Govt. of India and the State Governments during the past 50 years and thousands of crores of rupees have been spent through these schemes for empowerment of the poor. If one were to calculate the total outlay spent by the Government for developing rural areas and for alleviation of poverty during the last 9 Five-Year Plans, the whole rural sector would appear to have been over- developed. The allocation of huge funds on the rural development schemes have not gone to the target groups and have been manipulated to a large extent by the grass-root level politicians and bureaucrats. There is no denying the fact that lot of development has taken place in the economy and the reforms undertaken by the Government have facilitated integration of the domestic economy with the world market. In this whole process of economic liberalization, the rural sector, which accounts for 74% of the total population in the country, seems to have been neglected. The gains flowing from the planned economic development and economic reforms do not appear to have percolated to the people at the grass-root level. The distribution of national income, therefore, has become highly skewed inasmuch-as about 10% of the population owns 90% of the nation's assets. There has been concentration of power and wealth in the hands of few people, who are presiding over the destiny of the country. The per-capita income in this country is about $ 300 per annum, which also includes the above 10% of the people, who own bulk of the assets. Therefore, any growth in GDP would further accentuate the income disparities between the rich and the poor. The planning should, therefore, ensure distributive justice to the people and remove glaring disparities in the distribution of national wealth. This cannot be done merely by spending money in rural areas through various development schemes. The planning should aim at creating productive activities in the rural areas and developing skills among the youth to undertake self-employment ventures. In this connection, it may be mentioned that the High Powered Committee on Integral Rural Development Programme (1994) of which I was the Member Secretary, had recognised the need to impart technical skills to the people of rural areas and had recommended for setting up of industrial training institutes at block/district level. Such a development effort could build confidence among the youth in the rural areas to set up their own ventures and thereby improve their living standard. This will also go a long way in arresting migration of labour force from rural to urban centres. Over-dependence of population on land had resulted in sub-division and fragmentation of land holdings resulting in increase in the number of small and marginal farmers. Besides, it has led to phenomenal rise in the number of agricultural labourers in the country. Since there are no alternative avenues of employment or self-employment in the rural areas, they either languish as casual labour or migrate to urban centres in search of their livelihood. This vicious circle goes on unabated in the rural areas and the situation seems to have assumed alarming proportions. Because of lack of employment opportunities and dwindling life standards, social tensions are growing even in the village community. The planners and the economists in this country must, therefore, take cognizance of the ground realities and draw up schemes for introducing labour-intensive activities, besides initiating sustainable programmes for upgradation of technical skills and re-vitalization of rural industrialization. The salvation of the country lies, in the present circumstances, to revival of rural and cottage industries on a massive scale. This will rehabilitate traditional artisans in the rural areas and will encourage unemployed youth to set up their own ventures depending upon their technical skill, which should be imparted to them in an organized way. The empowerment of rural poor can take place only if at least 50% of the agricultural produce is processed in the rural areas, besides setting up ancillary industries based upon availability of raw-material and local skill. This would lead to value-addition of agricultural produce and will generate employment opportunities to a very large extent. In this process the wealth will start flowing from the urban and metropolitan areas to the rural areas and will eventually usher in prosperity and better standard of living.
( K. K. MUDGIL )