Sunday, November 3, 2013

Rural folks, underprivileged growing rapidly…..could create UPA-3

A series of stories being run in “The Mint” on rural prosperity (based on NSSO data) as well as the piece by Swaminathan S Anklesaria Aiyer in the TOI last Sunday finally draw focus to areas mostly forgotted by mass media…..the ones that are the pet of the UPA government. There is a surge in growth rates in the rural areas in general. More specifically, it is the underprivileged communities that are doing far better economically. This probably explains why Rahul Gandhi usually travels to rural areas for his speeches, away mostly from TV cameras, while the urban-middle-class centric BJP’s PM aspirant Narendra Modi almost always clings to the bigger towns.

The UPA has made it a business to cater to the rural folks and the underprivileged. Take the MNREGA as an example. For the poor who want to work, and who have nowhere to do so, the MNREGA provides a way out. By providing a guarantee for 100 days work at Rs 100 a day, the poorest of the poor have something to look forward to. For the urban middle class BJP supporter, the MNREGA is a bad word, but for the rural poor, it is a god-sent. Later, by linking the daily wage to inflation, much of the poor has been protected from the attacks of inflation. The MNREGA has had another impact. It has led to less migration to urban areas, raising wage rates there. Again, it inflicts pain on the urban middle class, who are used to exploiting this class of migrants with poor wages and inhuman working hours, as well as on industry that has to pay more…..but in the long run, it will bring about social equality and peace.

Take MSP for farmers. It’s been rising rapidly under the UPA regime. During the 5 years of NDA rule between 1999 and 2004, the MSP rose at a snail’s pace. In these five years, farmers managed to get only 25% more prices for rice and just 15% more for wheat. Now imagine this. If you were a salaried worker, and in five years, your salary went up by a total of just 15-25%, would you keep working in the company or quit it?! That’s why the farmers quit the BJP in 2004. In contrast, in the last 7 years of UPA rule, the price of rice has gone up by 96% and that of wheat by 78%. Has this fuelled food inflation. Sure. But has this inflation hurt the poor? No….it has in fact been caused by them.

The Mint articles talk about the huge growth in rural consumption in the last few years. This is a direct result of the above two programs. This consumption growth has made companies that focus on rural markets the favorites of the stock markets. Companies like tractor companies (M&M), consumer staples (HUL, Dabur), motorcycles (Hero, Bajaj) and pharma are considered hot picks.

Rural areas aside, the article by Aiyer yesterday shows how poverty reduction at an All India level has been happening at double the pace in the years since 2004-5 compared to the decade before. Aiyer quotes a paper from Columbia University written by Panagariya and More (Poverty by Social Religious and Economic groups in India and its Largest States, 1993-94 to 2011-12. Incidentally, Panagariya is the same top-gun economist for whom the BJP had unbound love recently, when he took on that spat with Amartya Sen on Narendra Modi!

Aiyer writes “The two economists calculate that in the seven years between 2004-05 and 2011-12, the all-India poverty ratio fell by 15.7%. The decline was much higher at 21.5% for dalits and 17.0% for tribals. The decline in the poverty ratio of the upper castes was much lower, at 10.5%. This represents very substantial progress in poverty reduction. In the earlier decade, between 1993-94 and 2004-05, the decline was only 9.6% for dalits and 3.7% for tribals. The overall poverty ratio declined by 8.0%.”. Now one reason for the lower drop in upper caste poverty levels is of course their already better standing. But a lot of this is also to do with the focus area of the Congress. The better All India performance is of course thanks to the much higher UPA GDP growth rate compared to NDA’s.

It is safe to say that in the years to come, irrespective of who rules, laws like the Food Security Bill and the new Land Bill will make the rural folks do even better. Would the BJP have ever enacted such laws? Today, it will claim that it would have, but the reality is that it probably wouldn’t have. The BJP has traditionally been focused on urban areas. That’s why it focused its road building program on the national highways (even then, most of the Golden Quadrilateral program was finished by UPA-1). The Congress on the other hand focused on the smaller state highways and town roads…..not as glamorous as the national highways, but more useful for the rural folks. Ditto with MSP and inflation, when the BJP preferred low food prices in urban areas by starving the farmers. There is nothing wrong with this kind of politics…..just that the difference between the two grouping needs to be stated clearly.

Can shoddily conducted poll forecasts, with a largely urban focus, then capture the true mood of the country? These polls show the UPA in trouble and the BJP doing better. A mild memory test is in order here. Does anyone remember how the BJP was riding a similar high in 2004 with its “India Shining” campaign…..again completely ignoring the mood in the rural areas…..and how it was given a “surprise” drubbing? Ditto in 2009, when the urban areas voted for the Congress (thanks to the Indo-US nuclear deal), but the rural areas also did so? That’s why the Congress got to 206. Will the same thing happen in 2014. It’s difficult to say, but let’s be clear. If the BJP thinks it has already won 2014, it’s being foolish to say the least.

The real truth is that the Congress focuses on rural areas, the marginalized and underprivileged. These are the unglamorous parts of our society….the ones that don’t make for glamorous TV. The BJP – and much of our media – focuses on the urban, and completely ignores the rural. To say then that 2014 is a deal already done is just lazy and stupid commentary…..

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