Innovation Systems and Inequality: Indian Experience

        

  K J JosephCentre for Development Studies, Thiruvananthapuram

 Lakhwinder Singh

Punjabi University, Patiala 

Vinoj AbrahamCentre for Development Studies, Thiruvananthapuram

 

Background

Globalisation and Inequality

Origin and Rise of Inequality

Structuralist-Evolutionary Approach

Development Strategy and Inequality

Co-evolution of NIS and Inequality in India

• Phase I-Growth With Equity-Reducing injustice• Import Substitution and Public Sector• Technology-FDI-IPR Regime and Labour Related

Policies• Asset Redistribution and Regulation of Monopoly

Capital Policies• Fiscal, Monetary, Pricing and Freight Rate Policies• Food Procurement and Public Distribution System• Finance Commission and Redistribution of Revenue

Co-evolution of NIS and Inequality in India

• Phase II: Market Oriented Growth for Equity

• Dismantling Controls and Policies

• Widespread distress in the Rural Economy

• Return back of Equitable Considerations

• National Rural Employment Guarantee Act

Trends and Patterns of Interpersonal Inequality

in Consumption Graph 1: Rural-Urban Inequality Across Households in India: 1951-2004

0102030405060

1 4 7 10 13 16 19 22 25 28 31

Years

Gin

i Co

effi

cien

t

Rural Gini Coefficient Urban Gini Coefficient

 Inequality of Wealth Across Households in India: 1961-62 to 2002-03. (Figures are in Rs.)

Year RuralAverage Assets Gini Coefficient

UrbanAverage Assets Gini Coefficient

1961-62 5287 0.6440 - -

1971-72 11343 0.6564 - -

1981-82 36089 0.6364 40566 0.7037

1991-92 107007 0.6207 144330 0.6805

2002-03 265606 0.6289 417158 0.6643

Source: Subramanian and Jayaraj (2006).

Population Distribution According to Poverty Status

0%

20%

40%

60%

80%

100%

1993-94 1999-2000 2004-05

Extremely poor and poor Marginal and vulnerable Middle income High income

Inter-Regional Disparities

Interstate disparitiies in per capita income

0

0.05

0.1

0.15

0.2

0.25

1960-61 1970-71 1980-81 1990-91 1998-99

Years

Gin

i C

oef

fici

ent

Gini Coefficient

Inter-Regional Disparities

• History does matter-Colonial System of Exploitation and Regional Structure

• Three Phases• First Phase: Decline in Inter-regional disparities

till Mid-Sixties• Second Phase: Rise in Inter-regional disparities-

Green Revolution Period• Third Phase- Liberalisation Period-Rising

Inequality-Service Sector driven growth and disparities

Social Disparity

• Class Vs Social Categories Provided by the Constitution

• SCs, STs and OBCs• Education, Capability Building and Opportunities• The rate of educational dropouts is much higher

for SCs, STs and OBCs.• The rates of return on education for SCs/STs is

also very low

Gender Discrimination

• Adverse Sex Ratio- 933

• Discriminatory practices such female infanticide, female foeticide and practice of dowry

• Female literacy has improved but still gender gap is 0.7

• Gender gap in wages is also very high

Access to Health

• Continuous improvements in Health Indicators, but gini coefficient shows stagnation in the post-liberalisation period

• Piling up of food stocks and persisting malnutrition

• 40 per cent children suffering from severe malnutrition

• 46 per cent children remained unvaccinated• More than half the births take place without the

benefit of a skilled attendent

Economic Development and Structural Heterogeneity

• Structural Transformation from agriculture to service sector

• Dependence of workforce for livelihood primarily remained on agriculture sector

• Employment opportunities in the informal sector

• Informal employment in the formal sector• Decline in employment elasticity.

Inter-sectoral Productivity Differentials and their bearing on Inequality

Year Primary Secondary

Tertiary Secondary + Tertiary

Kuznets’ index of inequality

Secondary + Tertiary/ Primary

1950-51 0.73 1.57 1.88 1.76 39.94 2.41

1960-61 0.68 1.74 1.93 1.85 46.38 2.72

1970-71 0.60 2.00 2.10 2.06 58.09 3.43

1980-81 0.53 1.88 2.32 2.12 66.18 4.00

1990-91 0.44 2.35 2.19 2.26 77.29 5.14

1999-00 0.37 2.23 2.08 2.14 81.20 5.78

Source: Sivasubramonian (2000). 

Regional Disparities in Competence Building Institutions and Production

• 1300 Science and Technology Institutions have been established

• 1400 R&D Units are functioning• These are located in eight states-Viz. AP,

Karnataka, Kerala, TM, Maharashtra, Delhi, UP and WB

• Public sector R&D is still more than 78 per cent• Concentration of both public and private sector

R&D expenditure in the Engineering and Technology.

Graph 4: Correlates of S&T index, Economic and Welfare indices across Indian

States

0

0.2

0.4

0.6

0.8

1

1.2

States

S&T index

Economic index

Welfare index

Conclusions and Way Ahead• Innovation System Remained Subservient to the National

Priorities and Goals• Production structure shown dynamism and inherently

generated inequities• Science and technology accentuated inequities• Policy Instruments ensured to some extent the control over

the inequitable regime but upper sections of society turned these instruments either in their favour or subverting them into non-functional

• Social movements and inclusive growth: Return of employment guarantee programme-Democratic Polity and Inclusive growth