Pranab Bardhan on inequality in India

Over at How the Other Half Lives, Shivam has excerpted Pranab Bardhan's Financial Times column titled Time for India to reduce inequality. Here are some more excerpts:

Reforms have been halting in India. In the National Election Survey for 2004, the largest social-scientific study on Indian elections, three-quarters of respondents with any opinion on the subject said that reforms benefit only the rich. Indeed, over the last decade, even ruling politicians who supported reforms have played them down during election time, and a party that initiated reforms has been quick to oppose them when out of power.

This duplicity is also evident within the left: in states where it is in power, its representatives are often too driven by the inexorable logic of fiscal near-bankruptcy and competition for investment to be pro-reform; but in New Delhi, their leaders regularly indulge in ideological grandstanding. Of course, opposition to reform is not confined to the left. Trade unions of the right as well as leftwing groups are opposed to privatisation and labour reform.

Severe educational inequality, for example, makes it hard for huge numbers of people to absorb shocks in the industrial labour market, since education and training provide some means to adapt to market changes. In China the hardships of restructuring under a more intense process of global integration were mitigated by the fact there was some kind of a minimum rural safety net, largely enabled by egalitarian distribution of land cultivation rights. In most parts of India there is no similar rural safety net for the poor. So resistance to the competitive process that market reform entails is that much stiffer in India.

The discussion in India on economic reform is preoccupied with issues of fiscal and trade policy, financial markets and capital account convertibility. Reform would be more popular if it were equally concerned with the appalling governance of basic social and infrastructure services for the poor and with the need for greater transparency (recent attempts at backtracking on the new Right to Information Act, for example, do not bode well).