Tuesday, June 23, 2009

Goals for the next decade

I do not know if the state or central governments in India start out with a short and long term vision. Unless you set your goals very high, you will not achieve even moderate development. It seemed to me that government functions mostly on an ad-hoc basis. As I have discussed in earlier blogs, majority of poor Indians live in rural India where infrastructure is non-existent, jobs are low paying and living condition is abysmal. I believe that the thrust should be toward urbanization on a massive scale. I think that the following goals should not be unreasonable for India at this stage of development:

A. Citizen ID: Every citizen should be given a citizen ID card at birth and the record should be maintained by government. The fingerprint of the person should be electronically stored in government database.

B. Urbanization: Today, about 35% of Indians are urban. In 10 years, this has to be raised to 80%.
1. Starting in 2009, a mission should be set up to urbanize most rural people by 2019. A few towns should be identified in every district and they should be expanded massively so that they can house most rural people of that district. In each district, at least 80% of the population should live in cities and towns by 2019.
2. The cities and towns will need huge expansion. There will be towns with population between 200000 and 600000 each. Each town should be able to issue municipal bonds to raise money to build infrastructure. Big builders should be encouraged to build massive, low cost housing with ample road and shopping complexes.
3. No one will be allowed to build unsafe houses made of clay, asbestos, hay or incomplete house. 90% of houses will be built by large builders.
4. The real estate market must be free. Any flat owner should be able to sell the flat in open market. Banking sector will need expansion in order to meet huge demand for housing loan
5. Each town should have wide roads, underground sewage, proper waste disposal and waste processing plant. Rather than developing these in the congested old part of the town, these sections should be developed in the fringes of the town where population is sparse. If necessary, adjoining villages should be incorporated as part of the town. Wide highways should be built that connect cities in the state.
6. Single window clearance must be given to housing, road construction, township building and other related projects.
7. Home loan will be regulated. The annual mortgage should not exceed a certain percentage of the family’s annual take home pay. In order to avoid speculation, a home buyer will not be able to sell the home for first two years except for distress conditions.

C. Social Security: The way subsidy is delivered to the poor should be changed.
1. Reputed national and global audit companies will be assigned the task of determining household income of every household in the country. This should be measured every 4 years and based on this data the government would determine households that fall below poverty level (BPL).
2. Only BPL households will get subsidy in the form of cash which will be transferred directly from Ministry of Finance in New Delhi to the person’s bank account every month. This will be for a specific amount of time (say 6 months to a year). The states will not have control over this money.
3. Nothing should be provided to the poor or other disadvantaged classes at below market price. Ration shops should be dismantled. There will be no subsidized grain for the poor. As stated in item 2, the BPL households will get cash subsidy with which they will buy goods from open market.
4. Every BPL family and unemployed adult will be assigned a mentor who can be from an NGO or reputed social service organization. The mentors will be trained uniformly across the country. They, in turn will advise the families and individuals about avenues to come out of dependency on government. The goal should be to move the BPL family up the ladder so that they can escape poverty.

D. Electricity: Every household and industry/service must get uninterrupted electricity
1. The central government should study electricity generation, transmission and distribution in developed nations and how it is privatized and regulated
2. Based on the study, it should initiate privatizing of electricity generation, transmission and distribution.
3. A mechanism should be in place to subsidize electricity cost for BPL households. Probably, the best approach will be for the government to directly pay a certain amount of the electric bill directly to the electric company on behalf of the BPL household.

E. Water: Every household must get potable water at the house faucets for 24 hours
1. One or more large lakes or ponds should be excavated near every town/city.
2. They will collect rain water throughout the year and should be sufficient for the urban consumers
3. The water should be pumped from the lake into a processing plant and then distributed to overhead tanks.
4. The processing plant must ensure that the water at the house faucets is free from contamination and potable
5. Every urban household must get 24x7 water supply from the city water supply.

F. Road network: All rural and urban roads must be paved.
1. Every neighborhood must have all paved roads.
2. All sewage must be underground. There will be no open gutters.
3. Every town should be connected to a highway.
4. All new roads should be wide enough to meet international standards.
5. Major highways must be at least 4-lane. In congested urban areas, highways should be 6-lane.

G. Education: Basic education up to high school must be mandatory and free.
1. It will be a state responsibility and center should help poor states.
2. A state should be able to introduce state income tax to raise money for school education. The money thus raised cannot be used for any other state expenditure.
3. If a student cannot afford to go to school, she/he should be provided free boarding facility near the school.
4. In general, high quality food must be provided in mid-day meal.
5. College and university education should be free only to meritorious students coming from BPL and lower-middle class households.
6. The government should encourage creation of private colleges and universities. The government can rank them according to various qualities for the benefit of prospective students and parents.
7. The government must not interfere into management of private educational institutions in the areas of tuition, teacher salary, lab size, classroom size etc. In a free market, customers will choose a college based on its ranking, quality and cost.

H. Basic Healthcare: Free basic healthcare for everyone
1. Basic health care including immunization should be free for everyone.
2. Specialized care such as cancer, organ transplant, heart bypass surgery etc. will be free only to BPL households.
3. Routine checkup often reduces expensive treatment due to early detection of disease. Every person must undergo routine checkup in free, government facility once or twice a year depending on age.
4. Those who can produce records of regular routine checkup for last 3 years should be eligible for reduced health insurance premium irrespective of the result of such checkups.
5. People will be encouraged to purchase health insurance for catastrophic illness. If a family chooses not to buy insurance, government should not be responsible for their health problems.

I. Agriculture: The goal should be to increase farm productivity at par with the west.
1. Today, rice yield per hectare in India is half of that of China and is 35% of Australia. The wheat yield is almost one-third of UK. The overall yield for oilseeds is half of China and less than 30% of UK.
2. I believe that in the long run, yield can be increased only be corporate farming.
3. In the medium term, some gain can be achieved using contract farming.
4. The process of urbanization will, hopefully wean away millions of farm laborers to better paying urban jobs. The mechanized farm will produce more and need much fewer workers. Hence, they will be able to pay much better wage to farm workers.
5. The workers in a mechanized farm have to be educated and skilled. The government can start training institutes or encourage the private sector.

An example of a specific district

The goal should be to urbanize 80% of Indians in next 10 years. Let us take a concrete example of the Birbhum district of West Bengal. It is a mostly rural district which also boasts of Tagore’s Vishvabharati University in Santiniketan. In Birbhum, 75% of people depend on low paid agriculture. It is a backward district with a substantial tribal and scheduled caste population.

Birbhum’s population is about 3 million. According to 2001 census, about 90% of the population is rural. There are four major towns: Siuri, Rampurhat , Bolpur-Santiniketan and Sainthia. The populations of these towns vary from 40000 to 65000 as per 2001 census. These four towns can be expanded by creating planned townships at the edge of each town. These townships will have underground sewage, piped water and 24x7 electricity at every home, schools, shopping center, hospital as well as other facilities that we take for granted in major cities. For safe drinking water, artificial lakes can be created near the town from where water will be pumped into the city, processed and then stored in reservoirs. As I said before, the towns can raise money by selling municipal bonds while the rest can be funded by the central government. The goal should be to raise population of these 4 towns to about 600000 each. That will enable most rural folks in the district to become urban in 10 years time. This will be much more cost effective than attempting to provide urban facilities in all 2200 odd villages in Birbhum. These four towns will be connected by excellent highway system which in turn will be connected to the National Highway network.

The same mechanism can be replicated in all 591 districts in India, keeping in mind variations in geography, culture, population density etc.