WELFARE ECONOMICS
Attaining Comprehensive Development
R. S. Bora,Associate Professor & Swati Virmani, Research Analyst Institute of Economic Growth, Delhi University 1/1/2011 11:57:07 PM
Development is generally perceived as a multi-dimensional process, reflected in a wider context like improvement in the quality of life, achieving demographic transition, population stabilization, creating economic infrastructure and much needed investment. It includes growth and is a broader perspective term. The success story of inclusive growth, poverty reduction and achieving socio-economic development depends upon the quality of governance. Inadequacies of governance may not be reflected from overall growth rates, but are clear from issues such as unmet demand leading to migration. It is therefore important that any analysis of government intervention must not simply take into account growth; it must capture development in an equitable way.
During the formation in 2000 there were widespread expectations that reforms would rapidly put Uttarakhand on the path of balanced development and provide a surge of opportunities. However such expectations went unobserved, as the development literature itself supports that economic activities, social development activities, and demographic transition tend to foster growth in those regions that are already developed. Instead of a balanced pattern of development, an increase in regional inequalities was observed; resulting in a situation wherein only state policies and governance could counter regional imbalances (Bhattacharya and Sakthivel, 2003; Krugman, 1991). Uttarakhand is a case of late formation, whereas, Himachal is all set to meet the National Population Policy (NPP) targets and is better placed in terms of development indicators, in a way pointing towards the benefit of being a timely formed state.
It is often argued that as a result of formation of smaller states, the unproductive expenditure on the administration increases. Though national per capita expenditure on administration may rise in the first instance, but the productivity of such expenditure may also increase in smaller states (Rao, 2010). As Uttarakhand was bifurcated from the larger state of UP, the study pays attention to some of the characteristics of UP to validate the rationale for the constitution of smaller states, quite clear from Uttarakhand’s (and Himachal, another smaller state) demographic, education, migration and growth trends, outperforming UP.
The study is divided into six sections. The second section analyses the recent demographic trends; trends in education and employment are analyzed in third; forth is devoted to analyzing the structure of economy; fifth looks at the extent of migration; and finally the last section draws a few broad conclusions.
Demographic Trends and Development
Population and development are closely linked to each other. Stabilizing population is a pre requisite for promoting sustainable development with more equitable distribution (NPP-2000). In many states of India, population growth continues to be high on account of high fertility, high infant and maternal mortality. If controlled, these demographic indicators can reduce population growth. The National Population Policy (NPP, 2000) has set up medium term objectives which have to be achieved by 2010. Some of these are: bringing down the Total Fertility Rate (TFR) to replacement level of 2.1, reduce infant mortality rate to below 30 per 1000 live births and achieving maternal mortality rate to below 100 per one lakh live birth (NPP, 2000; Census of India, 2001).
In the context of the NPP objectives, Himachal already achieved replacement level of fertility by 2005 and after 2010 the state will have below replacement TFR of 1.8. Uttarakhand and UP, on the other hand, achieved 84.0 and 55.0 percent of their TFR reduction in 2010 (SRS, 2000 and 2005). Examining the projected TFR, Uttarakhand lagged 20 years behind Himachal. Looking at Figure 1, in UP and Uttarakhand there is a big difference between wanted and actual TFR (1.5 and 0.7 respectively). Though Uttarakhand’s wanted TFR is below 2.1 (target), but the actual rate is 2.5, thus implying is a need to control unwanted fertility.
The conditions conducive to unwanted fertility decline are pitiable in U.P, Uttarakhand and in the country as a whole (NFHS-3, 2005-06).
Infant Mortality Rate (IMR) is also considered an important indicator of socioeconomic development. As per the NPP target, IMR should be below 30 per thousand births. Though projected IMR is lowest for Himachal, yet the state lags behind the target; none of the three states under study would achieve this target up to 2025 (Table 1). Due to hilly location child care facilities are not accessible easly.
Talking about the maternal health, as per the safe motherhood programme 80 percent of all deliveries should take place in institutions; however, only 43 percent deliveries took place in Himachal, followed by all India (39 percent), Uttarakhnd (33 percent) and UP (21 percent). Secondly, all deliveries should be attended by trained personnel, but only 39 and 27 percent deliveries were attended in Uttarakhand and UP, whereas Himachal had 48 percent and all India had 47 percent attended. Also the goal is to have the maternal mortality ratio (MMR) reduced to a level below 100 per lakh live births (NFHS-3). For the smaller states the SRS does not give any estimation, still the combined figure for UP and Uttarakhand was 517 per one lakh (SRS, 2001-2005). This value is very comparing with the national average of 254. The safe motherhood indicators reveal that though Himachal is well above the national average, but it too is far from meeting the safe motherhood norms in near future.
Overall in terms of demographic indicators, while comparing with other Indian states, Himachal has already attained the status of demographically advanced state, whereas Uttarakhand still lags behind.
Education and Employment
The literacy rate (as per 2001 census) was highest for Himachal (76.5 percent) followed by Uttarakhand (72 percent) and UP (56.3 percent). The rates for former two were higher than the National average of 65 percent. Figure 2 shows Male-Female literacy gap wherein Himachal stands out with 18 percent, even below the national average of 22 percent. The higher gap in Uttarakhand and UP could be explained by higher percentage of marriages before 18 years (Figure 3)
Up to middle level the proportion of females is higher in Himachal, in Uttarakhand and UP the proportion is higher only up to primary level. Looking at the dropout rates of Himachal during 2005-06, for I-V, I-VIII and I-X, are 10.69, 10.82 and 0.0 (indicating no dropout) respectively. For states such as UP, the respective dropout rates are 9.76, 41.25 and 43.02 (figures inclusive of Uttarakhand; indiastat).
Trends in Work Participation and Shift in Employment
Over the decade, the proportion of main workers has declined in both the states, but the declining trend among the total main workers as well as rural main workers has been higher in Uttarakhand (NSSO, 2004-05). In Himachal both male and female work participation trends are noticeable; in Uttarakhand female work participation is declining, whereas male participation has shown a definite increase over 1999-2000, but still remained lower than Himachal.
Coming to changes in the structure of employment, in Uttarakhand, the proportion working in agriculture and allied activities has declined from 64.5 percent in 1999-2000 to 61.7 percent in 2004-2005 (NSS 1993-94, 1999-00, 2004-05). However, over all trend reveals that in Uttarakhand, since 1993-94, shift of workers from agricultural sector to other activities has been very slow and participation in agricultural activities is still high, agricultural workforce accounting for 62.0 percent. This is in contrast to falling growth rate of agriculture sector.
In Uttarakhand, therefore, because of impeded growth of non- agricultural sector workers did not have any other option other than subsistence agriculture or to migrate-out in search of jobs, indicating a job less growth.
Structure of Economy
Development disparities and benefits are reflected in the forms of per capita income, below poverty line population and sectoral growth. Since the post reforms, the Indian economy has been growing at about six percent per annum. With the adoption of globalization, the socio-economic gap between rich and poor and also between developed and backward regions has increased. Between rich and poor states, the extent of disparities which was 125 percent by early 1970, escalated steeply to 200 percent towards the end of the nineties (Rao, 2005). This disparity creates socio-economic as well as demographic imbalances.
Status of Economic Growth
The trends in gross state domestic product (GSDP) shows that before the formation of Uttarakhand state i.e., between 1993-94 to 1999-2000, the economy grew at the rate of 3.2 percent per annum, which was far below than the UP’s average of 4.7 percent and Himachal’s average of 7.2 percent (CSO, 2006). After its formation as a separate state the GSDP grew at the rate of 10.0 percent per annum (at factor cost at 1993-1994 constant prices) during the period 1999-2000 to 2004-2005. Since its formation the economy started moving towards a higher growth path, and the rate was far higher than the two neighboring states of Himachal (6.4 percent), UP (3.8 percent), and all India average of six percent per annum. Similarly, during the same period, Uttarkhand’s per capita GDP grew from 1.3 percent per annum to a little above eight percent, almost double in comparison to its neighboring states and national average.
However, it is very early to say whether such growth is sustainable, mainly because its base is not as strong as that of Himachal, who’s past growth rates have been very high and stable.
Sectoral Performance
In Uttarakhand, the agriculture and allied activities, a mainstay of vast majority of population showed a deceleration. It declined from 2.33 percent per annum to 1.81 percent during Uttarakhand’s pre and post formation, whereas in Himachal the sector was growing at the rate of sixpercent in these activities (CSO, 2006). As was shown in previous section, agriculture formed the main sector of livelihood for the population of Uttarakhand, and with such low growth rate it is apparent that this sector could not sustain burden well, in turn leading to migratory decisions by the workers.
Except agriculture and allied activities, all the sectors and sub-sectors showing high growth rates are partly due to the small base of these sectors in the past and partly due to role of administration and governance in the form of fiscal incentives given to private participation (Sabyasachi Kar, 2007; Mamgain and Mehta, 2006). In terms of segregation of sectors into primary, secondary and tertiary, the share of primary sector declined accompanied by increase in the share of secondary and tertiary sectors, with latter occupying a dominant status in case of all three states under comparison.
Poverty Issues
Over the period, population below poverty line (BPL) has declined in India but in some states poverty is not responsive to the SDP growth rate. Figure 4 shows BPL population for three states for both rural and urban areas. It therefore seems that in Uttarakhand efforts towards poverty reduction are not substantial and existing poverty is not responsive to the SDP growth.
The growth trends of Uttarakhand and Himachal shed light on the missing link between attaining high GDP and realizing the benefits of the same; manifested from a slow achievement of demographic goals, and educational and employment status. Further, BPL population indicates a gap in achieving comprehensive level of development in Uttarakhand in comparison to Himachal.
Migration Trends
Migration is an economic phenomenon, occurring against regionalization of development and growth. As long as disparities in development among the regions exist, the process of migration will continue (Bilsborrow, 1987; Bora, 1996, 2008; Cashin and Sahay, 1996; Kuznets, 1966; Harris and Todaro; 1970).
In India between 1991 and 2001 the proportion of migrant population to total population increased from 27.9 to 30.6 percent, an increase of 2.5 percent. The increasing mobility was recorded among intra-district and inter-state migrants; though a rise in the inter-district migration was negligible at the national level, it was higher in two hill states (Census 2001).
Inter-District Migration
In Uttarakhand, out of thirteen districts the net effect of migration was negative in seven districts i.e., more people were going to other districts than coming in these seven districts. In the process these districts lost 4-12 percent of their population. The population gain through in-migration was especially high in Nainital, Dehra Dun, Udham Singh Nagar and Haridwar (Census, 1991, 2001) and major losers were Pithoragarh, Almora, Tehri Garhwal, Garhwal and Bageshwar. In Himachal of the twelve districts, the net effect of migration was negative in six districts. Three districts namely Shimla, Kullu and Solan observed higher net-in migration. Compared to Himachal state, the proportion of net loss in each sending district has been significantly higher in Uttarakhand, implying a high level of inter-district variations in the level of development in Uttarakhand, the state is not homogenous and higher incidence of inequality of income, assets and development persists.
Inter-State Migration
As per 2001 census, from Uttarakhand a total of 9.27 lakhs persons or 10.93 percent of the total population out-migrated to other states and from other states 8.67 lakhs or 10.21 percent in-migrated. The volume of out-migration is larger, but the volume of in-migration is also very large. Overall, Uttarakhand lost 0.72 percent of its population.
In Himachal, in-migration from other states and out-migration to other states is far below than Uttarakhand. A total of 3.44 lakhs or 5.70 percent of the total population enumerated as in-migrants and 4.51 lakhs persons or 7.41 percent out-migrated, implying net-migration (in-out) of 1.7 percent of the total population, Himachal was losing more population. Figures 5(a), 5(b), 6(a) and 6 (b) shows the major states of ‘out’ and ‘in’ migration, from and into these states.
The extent of out-migration and destination reveal that persons from these two hill states have migrated to areas where the level of industrialization, urbanization and agricultural development is higher. Our analyses reveal that in comparisons to pull factors, push factors have dominated in influencing out-migration from the hill states. ‘In search of work/employment’ has been a major cause of migration for the inter-state and inter-district migrants in both the state.
Conclusion
The paper looks at a comparative difference in the changes taking place in the socio-economic and demographic aspects of the two hill states. The study reveals that the developmental activities whether economic, social and demographic, tend to expand fast in those states/regions that have past advantages in development. This is true among the states as well as within the state/regions, in respect of all these issues. As is clear from the trends, Himachal has been outperforming Uttarakhand, with the latter facing greater disparities in development. With the result, the volume of migration and its intensity is higher in the state of Uttarakhand. State policies and its positive role therefore form an essential mediator in bringing down disparities and imbalances. In the context of out-migration, push factors must be kept in mind while evaluating the impact of policies and programmes such as National Rural Employment Guarantee Act (NREGA), which play an important role in combating migration, especially from rural to urban regions.
References and
Additional Thinking
• Bhattacharya and S. Sakthivel, (2003). “Regional Growth and Disparity in India: A Comparison of Pre and Post- Reform Decades”, Discussion Paper No. 74/ 2003, IEG, Delhi.
• Bilsborrow, R., (1987). “Population pressures and Agricultural Development in Developing Countries: a Conceptual Framework and Recent Evidence”, World Development, 15(2), 183-203.
• Bora, R. S., (2008). “Arresting Out-migration: Some Policy Considerations for Uttaranchal”, in Growth, Equity, Environment and Population: Economic and Sociological Perspectives, Edited by Kanchan Chopra and C. H. Hanumantha Rao, Studies in Economic and Social Development No. 69, IEG, Delhi, SAGE.
• -------- (1996). Himalayan Migration: A Study of the Hill Region of Uttar Pradesh, IEG, Delhi, SAGE.
• Cashin P. and R. Sahay, (1996). “International Migration, Center-State Grants, and Economic Growth in the States of India”, IMF Staff Papers, Vol.43, No. 1, March.
• Census of India, (2001). Series-1, India, Provisional Population Totals, Paper 1 of 2001. Census of India 2001, D Series, Electronic data, http;//www.censusindia.net
• Census of India, (1991). Series I, India, Part V-D Series, Migration Tables, Vol-India, States and Union Territories.
• GoI, (2006). Family Welfare Statistics in India, Ministry of Health and Family Welfare, New Delhi.
• -------- (2000). National Population Policy, Department of Family Welfare, Ministry of Health and Family Welfare, New Delhi.
• Harris, I. R. and Todaro, M. P., (1970). “Migration Unemployment and Development: A Two Sector Analysis”, American Economic Review, 60 (1).
• Kar, S., (2007). “Inclusive Growth in Hilly Regions: Priorities for the Uttarakhand Economy”, Working Paper Series No. E/281, IEG, Delhi.
• Kuznets, S., (1966). Modern Economic Growth, New Haven, C T: Yale University Press.
• Mamgain, Rajendra P. and Singh, M. B., (2006). “Employment and Income in Uttaranchal: Trends and Policy Issues”, The Indian Journal of Labour Economics, Vol. 49, No. 3, pp. 475-495.
• National Family Health Survey III, (2005-06). India, Himachal and Uttarakhand, International Institute for Population Sciences, Mumbai.
• Office of the Registrar General, (2009). Special Bulletin on Maternal Mortality in India, 2004-05, SRS, GoI.
• Rao, M. Govinda, (2005). “State-Level Fiscal Reforms in India”, in India’s Emerging Economy: Performance and Prospects in the 1990s and Beyond, ed. Kaushik Basu, pp.115-149, OUP, New Delhi.
• University Grants Commission Annual Report, (2005-06), India.
• www.indiastat.com
(R. S. Bora is Associate Professor at the Institute of Economic Growth Delh, a Ph.D. in Economics. He has been working since completion of his doctoral thesis and completed various research projects related variously to: Governance and Development Performance of Indian States; Demographic Trends and Development Performance; Missing Issues in the Imbalance of Child Sex Ratio; A Study on the Use of Ultra Sound Machine by Registered Ultra Sound Clinics in Delhi; Bonded Labour in India; Japanese Investment in India; Spread of AIDS in India, and currently Co-coordinating an ICSSR Research Project entitled Migrant Workers In the Informal Sector: A Study of Conditions of Work, Health Status and Social Security; and also jointly co-coordinating a study on the Mapping of Medical Health Facilities and the Mechanism of Recording and Reporting Data for strengthening Health Management Information System (HMIS) and Operationalizing the Mother and Child Tracking System (MCTS) in the National Capital Territory of Delhi. He has written a book on Himalayan Migration: a Study of the Hill Region of Uttar Pradesh, SAGE publications. He has published around fifteen papers in the peer reviewed Journals.
Swati Virmani is a PhD Economics student at University of Manchester, UK. She has also worked at the Institute of Economic Growth as Research Analyst for Prof. Bina Agarwal and Dr. R.S. Bora, during 2009-10. Swati holds a Masters’ in Economics from Delhi School of Economics, India (2007-09). She wrote and presented the following research papers: “Forecasting Agriculture Product of India, 1971–2001”, “Gender Wage Discrimination in Indian Urban Labour Market (2004)”, “Governance and Development Performance of Indian States” and “Indentured Women: Bound or Free?”. During May-July 2008, Swati worked as Co-Researcher at the Oakland University, Michigan (USA), carrying out data collection, literature review and analysis on Residential Mortgage Refinancing in United States over 1980-2007 interval.
The views expressed in the write-up are personal and do not re?ect the official policy or position of the organization.)
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