R. Maria Saleth S. Galab E. Revathi   Editors Issues and Challenges of Inclusive Development Essays in Honor of Prof. R. Radhakrishna Issues and Challenges of Inclusive Development R. Maria Saleth S. Galab E. Revathi (cid:129) (cid:129) Editors Issues and Challenges of Inclusive Development Essays in Honor of Prof. R. Radhakrishna 123 Editors R. Maria Saleth S. Galab Madras Schoolof Economics Institute for Development Studies Kottur, Chennai, Tamil Nadu,India Visakhapatnam, Andhra Pradesh, India E. Revathi Centrefor Economic andSocial Studies Begumpet, Hyderabad, Telangana,India ISBN978-981-15-2228-4 ISBN978-981-15-2229-1 (eBook) https://doi.org/10.1007/978-981-15-2229-1 ©SpringerNatureSingaporePteLtd.2020 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfrom therelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authorsortheeditorsgiveawarranty,expressorimplied,withrespecttothematerialcontainedhereinor for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictionalclaimsinpublishedmapsandinstitutionalaffiliations. ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSingaporePteLtd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Dedicated to the memory of the following eminent scholars, who nurtured Prof. R. Radhakrishna over the years: Professors: P. N. Mathur D. R. Gadgil D. T. Lakdawala G. Rami Reddy Krishna Bharadwaj G. S. Bhalla and George Rosen Foreword Itwasagreatpleasureformetojointhedistinguishedscholarsforpayingtributeto Prof.R.Radhakrishna,inwhosehonourthepapersinthisvolumewerepresentedat anInternationalSeminaron‘InclusiveDevelopment:IssuesandChallenges’heldat the Centre for Economic and Social Studies (CESS), Hyderabad. Professor Radhakrishna is an eminent economist with social commitment. His research work on consumption, food security, poverty, growth and inequality and well-being is well recognized as authentic and credible. Apart from his own research work, his contributions extend to the development of premier academic institutions in the country such as CESS, as its Director for nearly a decade in its formative years and now as its Chairman; Andhra University, Vice Chancellor; Indira Gandhi Institute of Development Research in Mumbai, Director and Vice Chancellor; ICSSR, Member Secretary; and Madras Institute of Development Studies, Chairman. For him, institution-building has meant developing human resources, as evidenced by the outstanding work of several scholars with his guidanceandcollaboration.Hiscontributionstowardspolicy-makinginthecountry areimmensethroughhisparticipationandleadershipinvariousExpertCommittees, including as Chairman of the National Statistical Commission. In his recent work, Prof. Radhakrishna has highlighted therising inequalities in income in India in post-reform period and suggested remedial measures. Globalizationandinternalliberalizationoftheeconomywithinaninequitablesocial structureresultinaccentuatingtheexistinginequalitiesinincomeandwealthinthe society,unlessseriouseffortsaremade simultaneouslytoremovesocialbarriersto equal opportunity and equip the youth with necessary education and skills. Risinginequalitiesinwealthandincomeleadtounequalaccesstopower,status and influence. Democracies may be less prone to such state capture than dictator- ships, but even democracies have proved to be vulnerable to pressures from the powerful private interests, particularly when the prevailing social structure is inequitable. Policyanalyses,worldwide,highlightrisingincomeinequalitiesastheforemost concerntoday.RecentOECDevidenceovertheperiod2002–12showedanegative correlation between income inequalities within a region and region’s growth, vii viii Foreword basically on account of underinvestment in human capital by the lower-income groups, suggesting that policies should avoid the ‘grow first, distribute later’ assumptionthathascharacterizedtheeconomicparadigmuntilrecently,andinstead considerfromtheoutsetthewayinwhichthebenefitsofgrowthwillbedistributed to different income groups. Further, there is a general consensus among these studies on the major factors driving inequalities and on the agenda for action to reduce inequalities, prominent amongsuchagendabeingpublicprovisionofeducation,healthcareandnecessary skills. But these studies rarely ask why countries in general failed to implement suchagendaeffectively,eventhoughthesemeasureshavebeenarticulatedforover twodecades—aperiodduringwhichinequalitieshaveinfactreachedunacceptable proportions. There is thus a major gap in understanding with respect to the rele- vance of sociopolitical factors beyond the oft-repeated economic policy agenda. In general, democracy has been regarded as a major political instrument for achieving inclusive development. But inequalities have been rising even in mature democracies which had experienced democratic revolutions long ago and have undergone radical social transformation, as in Europe. In China, feudalism was abolished in the late 1940s. However, the authoritarian political system of China with enormous powers for political mobilization and will for action, while suc- cessful in bringing about high growth, resulted in highly uneven sharing of gains fromgrowth.India,ontheotherhand,succeededinsustainingdemocracysofarin a society that is ancient, slow-moving and ridden with various kinds of inequities withrespecttoclasses,castes,gender,etc.Butinsteadofdemocracybringingabout radical social change, the long-entrenched and powerful social groups are able to influence even the popularly elected governments for appropriating dispropor- tionately large benefits from growth. Thereseemtobetwomajorsourcesforthefailureofdemocraciesinthisrespect. Inthe first place, democracieswere expectedtogive rise tolarge middle class that wouldespousethecauseoflibertyandequality,butexperiencehasshownthatthe upper sections of the middle class are more interested in reaching the top 10 per cent or 1 per cent of the income ladder than joining the forces working for wider sharingofbenefitsfromgrowth.Anothermajorsourcefordistortionofdemocratic frameworkis‘moneypower’.Itrangesfromtheverywealthyemployingthehighly paid consultants andlawyers for ‘taxplanning’to financinginterest lobbies towin overthelawmakers,asoftenobservedintheUSAandeveninotherdemocraciesin Europe. Itisnowwidelyrecognizedinsocialscienceresearchthatmuchofthevariation inpovertyandinequalityacrossrichdemocraciesisduetopoliticsandinstitutions. For example, there is convincing evidence of a strong relationship between unionization and higher earnings, and lower inequality and poverty, the indirect effect of unionization through liberal welfare policies of states becoming more prominent.Theproportionalrepresentationsystemofdemocracy,wheremultiparty competitionbecomeseffectiveatdifferentstages,explainswhycountriesinEurope with the system of proportional representation have much less poverty and inequality than the countries with majoritarian system like the USA. There is Foreword ix evidence that congressional shifts to the Republican Party, diminishing union membership,lower taxratesandfinancialasset bubblesplayedastrongrole inthe rise of super-rich in the USA. Political actors, who favour free markets, do not simply ‘letmarkets dotheirjob’andactively influencehowmarketsworkthrough their choices regarding whom to tax and what to regulate. One of the emerging concerns with the dramatically rising inequality in countries like USA is that it resultsinanunbalanceddistributionofpoliticalpowerwhichreinforcesinequalities and may by itself have a corrosive effect on the functioning of democracy. A major casualty of rising income inequality and the increasing role of money power in policy-making is that those adversely affected start losing interest in the prevailingdemocraticsystem.Thisisconfirmedbystudieswhichdemonstrate that increasing income inequality strongly depresses political engagement by people who feel left out. The decline in voter participation and apathy isexplained by the declineinthegovernmentexpenditureonsocialdevelopmentandwelfaremeasures asaproportionofG.D.P.sincethelate1980s,whichhadsteadilyincreasedearlier in such economies for over two decades on account of unionization and political pressures. All this shows that formulating a good policy agenda for achieving inclusive growth is not enough. There is a need for a debate on the efficacy of the existing framework of democracy and necessary modifications so as to enable it to more adequatelyrepresentthelong-termsocietalaspirationsforjusticeandfairplay.Itis alsonecessarytoexplorethepossibilitiesofstrengtheningcivilsocietyactivismby combating the prevailing apathy. This is a formidable challenge at the political level. But intellectuals can contribute to this effort through their investigations and thinking.Thisrequiresindividualaswellasjointeffortfromdifferentscholarssuch as political scientists, sociologists, historians, economists and others. C. H. Hanumantha Rao Honorary Professor Centre for Economic and Social Studies Hyderabad, India Preface This volume is published in honour of Prof. Rokkam Radhakrishna. Professor Radhakrishna is recognized as one of the most influential applied economists of India. Known both nationally and internationally for his immense contributions to the literature and policy in the areas of development economics and welfare anal- ysis, Prof. Radhakrishna is a prolific researcher, respected teacher, able academic administratorandnotableinstitutionbuilder.Heledanumberofinstitutionsintheir formative years, including the Department of Economics of the Central University ofHyderabadandtheCentreforEconomicandSocialStudies(CESS),Hyderabad, and Indira Gandhi Institute of Development Research, Mumbai. He has also held manydistinguishedpositions,andnotableamongtheminclude:Chairman,National Statistical Commission; Member Secretary, ICSSR; and Vice Chancellor, Andhra University. Over the years, he has also been bestowed with several academic and public awards. We are conscious of the fact that bringing this volume in honour of Prof. Radhakrishna should not be a usual ritual but should be a real testimony truly proportionate to his immense contributions to the literature and professional standingwith theacademic community.Inthis sense, weconsidered it appropriate to organize an international seminar participated by leading scholars and experts around the world, who have been associated with Prof. Radhakrishna during his longanddistinguishedcareer.Asaresult,aninternationalseminaronhisfavourite theme‘InclusiveDevelopment:IssuesandChallenges’hasbeenorganizedatCESS during 8–10 October 2018. The present volume includes a set of papers presented in this international seminar, which have been selected through careful process of peer review. They cover some of the key issues and challenges of inclusive development largely within the Indian context, though international experiences are also covered in relevantcontexts.Thethemeofinclusivedevelopment isexplorednotonlyfroma historical and overall macro-perspective but also with a particular attention to sector-specific contexts such as agriculture, industry and health. Similarly, the coverage ranges from the intersection of inclusive development with poverty measurement and social sector issues to the inclusionary implications of xi xii Preface international dimensions such as trade, outsourcing and global financial crisis. Overall, this volume resembles a compact canvass of issues and challenges of inclusive development with latest information from a multiple perspective. Wewouldliketotakethisopportunitytoformallyrecordoursincerethanksand appreciationtoanumberofpeopleandorganizationsformakingthepublicationof thisvolumeareality.Firstofall,weareindeedgratefultoallthecontributorstothis volumefortheircommitment,supportandpatienceduringthelengthyprocess.We are also grateful to Prof. C. H. Hanumantha Rao for providing a thoughtful and fitting foreword for this volume. We thank Dr. Brajaraja Mishra for his excellent editorialandcommunicationsupport.OurthanksarealsoduetoProf.R.K.Mishra, Prof. K. N. Murty, Prof. Venkata Reddy and Dr. G. Swaroopa Rani, for their multifarious support during the preparation of this volume. We also thank the faculty and staff of CESS for their cooperation and support. Finally, but impor- tantly, we thank Springer Nature, particularly Ms. Sagarika Ghosh, Ms. Nupoor Singhandtheirstaff,fortheirexcellentsupportinbringingoutthisvolumeinsuch a nice quality and within such a short time. We do hope this volume deserves the attention and support of researchers and policy-makers alike. CESS, Hyderabad, India R. Maria Saleth October 2019 S. Galab E. Revathi