The Line of the Poor

India’s official poverty estimates are based on the regular consumer expenditure surveys conducted by the National Sample Survey Organization (NSSO). These surveys, pioneered by P. C. Mahalanobis in the 1940s and 1950s (Mahalanobis and Sen in 1954) were the world’s first system of household surveys to apply the principles of random sampling established in 1920s and 1930s.

The NSSO conducts both large and small surveys while the Planning Commission uses the larger ones on the ground that they are required to estimate poverty accurately for each state and those estimates are the basis for transfers from the central government to the state governments. These official poverty estimates count the number of people living n households with monthly per capita total expenditure below a poverty line specific to state and sector (rural or urban). The poverty lines are updated periodically using a system of state-by-state price indices which are estimated separately for rural households (the consumer price index for agricultural laborers) and urban households (the consumer index for industrial laborers). Rural and urban poverty estimates for each state are aggregated for all the states and an all India poverty line is set up that matches the sum of state counts.

NATIONAL ACCOUNTS AND SAMPLE SURVEYS

Before the 1990s, the planning commission used the national accounts estimate of consumption as a control total for the surveys in estimating poverty. Thus, for example, if the ratio of national accounts to the survey estimate of mean consumption was greater than one, the commission would multiply the expenditure of each household by that ratio before calculating the number of people living in households below the poverty line. This gave rise to a debate: does the growth measured in the national accounts show up in improvements in the living standards of the poor?

During the 1990s the national accounts estimates of mean consumption grew much more rapidly than did the survey estimates. Scaling up thus would have shown a more rapid reduction in poverty in the 1990s than by the survey estimates. Those who believe that the economic growth following the reforms has been associated with large scale poverty reduction have tended to argue that national accounts are right and surveys are wrong. While the early comparisons between the national income and surveys are similar with even a coinciding show in distribution pattern of income and consumption, the recent comparisons are anything but.

The use of outdated rates and ratios in a growing economy experiencing struc­tural development will typically lead to systematic trend errors in the accounts. Con­sider the netting out of intermediate production from value added, which is frequently done using a fixed ratio. Because the degree of intermediation tends to grow as the economy becomes more complex and more monetized, the rate of growth of GDP and of consumption will be systematically overstated in a growing economy. Cooking oil, particularly vanaspati, provides a good example for India. The national accounts estimate consumption of vanaspati as total production less imports plus exports, less consumption by government or business. In an economy in which all vanaspati is used for household cooking, this gives the right answer. But as the economy grows, consumers eat more meals out, so that an increasing fraction of vanaspati is used by commercial food suppliers, restaurants, hotels, and street vendors. Consumer spending on these services is derived from (fairly shaky) data on the gross output of the services sector, adjusted to a value-added basis by deducting the value of intermediate inputs, including vanaspati. At best, this adjustment is done using one of the rates and ratios, which means progressive and increasing overstatement if intermediation increases with income and if rates and ratios are infrequently adjusted. In the case of vanaspati in India, no adjustment is made at all, so that all vanaspati used in restaurants is counted twice, helping overstate the rate of growth of consumption and GDP and to increase the ratio of national accounts to survey consumption.

METHODOLOGY

An important design issue for poverty measurement is the length of the reporting period. The NSSO had adopted a uniform 30-day recall period, based on experiments carried out by Mahalanobis and Sen (1954) in the 1950s. A ques­tionnaire with a 7-day reporting period for high-frequency items (food, pan, tobacco), 365 days for low-frequency items (durable goods, clothing, footwear, insti­tutional [hospital] medical care, and educational expenses), and 30 days for every­thing else gave poverty counts that were only half of those derived from the questionnaire with a uniform 30-day reporting period.

The reduction in measured poverty comes from two quite separate effects. The first is that a higher rate of monthly expenditure is reported when people are asked to report food, pan, and tobacco over the past 7 days rather than over the past 30 days. Higher reported expenditure, other things being equal, decreases mea­sured poverty. The second effect comes from the low-frequency items. Although the mean reported expenditure for this category decreases for the longer reporting period, the lower tail of the distribution increases. With 30-day reporting periods, most households report no purchase of low-frequency items, but in 365-day peri­ods most households report at least some purchases. Thus despite the decrease in the mean, the longer reporting period for the low-frequency items also acts to reduce measured poverty. Measures of inequality are substantially reduced by moving from a 30-day to a 365-day reporting period for low-frequency items. Because the mean falls and the bottom tail increases, measured dispersion in these purchases is much reduced, and this carries through to total expenditure. This means that it is never legitimate to compare measured inequality across surveys with different reporting periods with­out some sort of correction.

POVERTY LINE(S)

Although the recent debate on poverty in India has focused mainly on the measure­ment of expenditures, poverty lines are equally important. How they are updated and adjusted across regions or urban and rural households have a major effect on poverty estimates. In India, as in many other countries, a base poverty line is adjusted across time and space using price indexes, so the selection and construction of these indexes become a key input into poverty measurement.

The history of poverty lines in India is a case study in the interaction of science and politics, with political decisions often claiming a scientific basis, sometimes with justification, more often without. Although poverty lines are often linked to the amount of money needed for a minimally adequate diet, the use and long-term survival of poverty lines depend on policymakers and others accepting them as useful. For example, Rudra (1974), in discussing the history of Indian poverty lines up to that time and the persistence of the "magic number" of 20 rupees per head in 1960/ 61 prices shows that a food-based analysis would lead to a considerably higher number. Yet the magic number persisted, as similar magic numbers have persisted in other countries, not because they are correct but because, once established as useful in economic and political discussions, poverty lines are resistant to change.

From the late 1970s to the mid-1990s the Planning Commission used only two poverty lines for per capita household expenditure, 49 rupees for rural households and 57 rupees for urban households at 19 73/ 74 prices, which was close to the 15 percent urban price differential estimated by Bhattacharya and Chatterjee (1971) using unit value data from the National Sample Survey. The poverty lines were held constant in real terms and were converted to current rupees using the implicit price deflator of consumption in the national accounts. This process ignored interstate dif­ferences in price levels and in urban to rural price differentials. Furthermore, the national accounts consumption deflator is probably not the best measure of inflation for households near the poverty line. These problems and several others were dealt with by an expert group in 1993 (India, Expert Group on Estimation of Proportion and Number of Poor 1993). Their recommendations for new poverty lines were adopted (in somewhat modified form) by the Planning Commission, and these pov­erty lines have been used in official calculations since 1983.

The expert group poverty lines have a serious flaw, however: the urban to rural price differentials that they imply are too large to be credible. It is unclear how this happened, whether because of an error in calculation or because the price indexes used in the calculations produced the result through some unexpected cumulative effect. The state by state urban and rural poverty lines were calculated indepen­dently, without consideration of the implicit urban to rural price differentials. In any case, the average ratio of urban to rural poverty lines is around 1.4 and varies widely across states. As a result, official headcount measures of poverty are higher in urban than in rural areas in some states, and the all-India headcount ratios differ lit­tle for urban and rural areas. In Andhra Pradesh, which is the most dramatic exam­ple, the 1999/2000 official estimates give a poverty rate of 27.2 percent for urban areas and only 10.8 percent for rural areas.

Another serious issue is the accuracy of the inflation rate used in the state-level price indexes. Errors in the indexes will induce errors in the trend rate of poverty reduction. These indexes are reweighted infrequently. For example, until 1995 the consumer price index for agricultural laborers used weights based on a 1960/61 survey. And although this index and the index for industrial workers are almost cer­tainly better than the price deflator of national accounts consumption, it is unclear whether the prices or the weights that go into these indexes are the right ones for a national poverty measure.

(New benchmarks by the Planning Commission, submitted in an affidavit to the Supreme Court as part of new food security legislation, suggest that a person living on more than Rs32 ($0.64) a day in urban areas, like New Delhi and Mumbai, would no longer be classified as being below the poverty line. The threshold for rural areas would be Rs26 a day. By comparison, the World Bank’s poverty line is $1.25 a day.)

LESSONS

There is no suggestion here that the statistical failures in India in the 1990s were the result of undue interference by politicians or policymakers in data collection or publication. Yet politics in the broad sense played a role. In evaluating the reforms, the political right had an interest in showing low poverty, and the political left in showing high poverty, and this undoubtedly intensified the debate on survey design and led to the unfortunate compromise design that temporarily undermined the poverty monitoring system. This politicization of data collection and interpretation is often bemoaned. Yet political accountability is essential to poverty reduction, and policymakers have a legitimate interest in monitoring the statistical system and asking for changes that serve their interests.

Mistakes are inevitable, and survey data can be compromised by internal and exter­nal factors. Thus poverty assessments will often have to be made using imperfectly comparable surveys. India's experience illustrates the possibility of repairs to enhance the credibility of estimates. But that experience also demonstrates that repairs, however creative, are a poor substitute for the collection of clean, credible, and comprehensive data. What are convincing assumptions to one person can be unconvincing to another, and political positions inevitably influence the assump­tions that people are prepared to make or accept. 

Battlefield Next - Africa

If time plays in a cycle then perhaps the next destination is Africa. With Asia already bursting with development, Africa will play a crucial role in running the engines of the giants – India and China. The question is whether it will be able to accommodate the two giants simultaneously and fairly. The concern is also about sustainable development of the native African population and their secure futures. And for a long time it will be unclear whose futures are more at stake than others.

The gravest requirement and investment is in the field of infrastructure which is blooming at a frantic pace. The Chinese are building presidential palaces (as souvenirs to the governments), railway tracks, roads and ports across the continent. With their advent into strategic areas like mining, railways and ports the Chinese investment might well be beyond 90 billion US dollars (counting unrecorded deals) while its bilateral trade stands at 130 billion dollars.

Just as the reasons for China‘s interest in Africa are complex, so too are the reasons that so many African leaders are receptive to Beijing‘s entreaties.  First, China can provide much-needed funds for development (or simply to avoid become more impoverished).  This is important because many African states are desperate for investment and aid, and, (promises to the contrary notwithstanding) because many Western countries are providing relatively less aid or providing aid in ways that are less appealing to recipient countries.  Second, China‘s approach to providing aid or investment is a congenial one to many African leaders. China generally requires only that the recipient country refuse to recognize Taiwan. Beyond this, China‘s approach is, to many African leaders, refreshing:  it is pure capitalism, without attempts to work social or political changes through the pursuit of wealth. Besides, the Chinese do seem to cut their way through labyrinthine government policies – no meetings, no environmental impact assessment, no demand for anti-corruption measures and no check on private benefits for local leaders.

Long ignoring this case of ‘Dutch Disease’, the after effects of this in-pour of wealth have been neglected. The cases of over reliability on one goods (banana republic), a marginalized manufacturing sector, over dependency on FDI from a single source shall culminate into a deep hangover for the over-zealous countries.

Contrast this with Indian investments - mainly in the private sector, notably in telecom, pharmaceuticals and manufacturing. Interestingly, some Punjabi farmers have got farming outsourced from the Kenyan farms where the natives find themselves unable of being able to handle vast stretches of land. Besides, we are doing, what we do best – being a soft power. Despite the relatively neglected role of India in Africa compared with that of China, India’s trade with the continent has grown ten-fold over 4 years to $39.5 billion in 2008-09 (over half of the US’s $77 billion).  The turning point, came in 2008 with the India-Africa summit in Delhi, which led to a doubling of credit to Africa (to $5.4 billion over 5 years), a focus on African human capital development programs, and a duty free preferential tariff scheme for the 34 least developed countries in Africa (with 94% of all tariff lines opened).

The young population, the second fastest growth rate of any continent, and the possession of nearly a third of the world’s natural resource value are the main motivations for India’s interest in Africa. While Chinese investments were merely extractive in purpose, India’s were more transformative, focusing on small and medium businesses, agricultural productivity, information technology, and investments in health care.

The mounting investments in Africa specially come into limelight by the name of expenditure on development. Vastly simplified, the theory is that if rich countries provide a big push of aid, and if the aid is used to address a wide range of problems simultaneously, then people in poor countries will, in a generation or so, begin to enjoy the kind of economic development that those in the west have seen. Broadly speaking, this approach emphasizes the transfer of wealth from rich to poor countries, the targeting of aid to meet human needs, and a strong role for rich and poor governments.  A second model is similar to the first, but with much less faith in the power of governments and aid agencies to meet the needs of people.  Argued most provocatively by William Easterly, this model accepts the need for Western countries—including governments—to contribute generously to the development needs of those in poor countries. And it accepts a limited role for Western aid agencies in fostering economic development.  But it is deeply skeptical of the efficacy of conventional aid programs because they rely on plans developed by outside experts and provide little room for aid recipients to influence the programs designed to help them.

Recent time brought an unpredicted change to the African black waters – social revolution. Prima facie it has over thrown authoritative governments, but on second thoughts it has triggered something bigger. The Africans are more aware of their place in the world than ever. The policies of ‘neo-colonialism’ cannot fool them forever. The issues of drainage of wealth and resources from Africa can no longer be put on back burner. But equally true is that the rate of development can only be accelerated by putting certain industries on accelerated rate while ensuring that the development process in all the areas goes along simultaneously.

As an African official candidly put – the Chinese are investing in the present of Africa while the Indians are investing in its future. Sooner or later, the Africans will rise enough to judge what is right for them; none of the players in their development process would want to show a laggard performance.

South Asian Union

The South Asian wave of regionalism started in 1980 when the former President of Bangladesh proposed the formation of an institutional arrangement for regional cooperation in South Asia. Barred by bureaucratic tussles, the idea finally took shape in 1985, when the heads of South Asian states met to form the South Asian Association for Regional Cooperation (SAARC) and adopted a formal charter. The seven member countries affirmed their commitment to achieve economic integration for mutual prosperity. An organization that began with an initial membership of seven countries has today grown by admitting Afghanistan as a full member in 2005 and six other countries with observer status.

Lessons from the EU

At the end of World War II, Europe was going through one of the most traumatic periods of its history; paradoxically this helped create the 'circumstances' under which a successful partnership could take shape. The urge for closer cooperation often arises from the difficult times a nation or a continent has to go through. Unfortunately, the comparison stops here. The motives of those who built Europe were different. Jean Monnet, the father of Europe, and his German colleagues believed that to avoid a new conflict, the surest way was to come together on the very thing which had previously divided the nations.

As both Germany and France had to rebuild their industries; the proposal was to create a supranational higher authority which could manage the resources in coal and steel for both nations. This was the birth of the European Coal and Steel Community. A treaty was signed in Paris in 1951 establishing the embryo of the European Community. A close partnership between the enemies of yesterday was set in motion. Though (or because) no 'ideology' was involved, Germany and France were able to collaborate and work together.

For India and Asia, the Asian Relations Conference was a continuation of their freedom struggle. An official document states that one of the purposes of the event was: 'How to terminate foreign dominion, direct or indirect, and to achieve freedom to direct their affairs in accordance with the will of the people concerned.'  The proceedings lasted till April 2 when Gandhi delivered the valedictory address: 'If you want to give a message again to the West, it must be a message of Love; it must be a message of Truth.'

Here lies the difference of approach between the two continents. While the Europeans were not bothered about philosophy and ideas, but coal and steel only, the Indian leaders thought that they could build the future of Asia on 'love and truth' only. Unfortunately hardly five months after this first attempt at uniting Asia, the sub-continent was itself partitioned and by the end of 1947, the circulation of people and ideas between South Asian nations and particularly India and Pakistan had stopped. During the same period, the former enemies in Europe had no problem to travel from one country to another.

Another positive feature of the European integration is the active presidency of one of the 27 nations for six months during which the presidency presides at least at two summit meetings and works hard to leave his 'national' mark in the integration. It is certain that if South Asian leaders are serious to advance towards a closer South Asian cooperation, if not integration, more meetings will be required.

Uneven Progress & Key Players

Instead of working on a solid basis for creating peace, security and prosperity in South Asia, the Association, for the first several years, emphasized cooperation of a technical nature in areas such as agriculture, education, meteorology and communication. The emphasis on a social charter or free trade area came much later and was considered ‘too little, too late’ since by then, the organization had already acquired the reputation of being a non-performing entity.

Apart from the delayed realization of its essential goals, SAARC has also fallen prey to regional political tensions. South Asian countries, especially India and Pakistan, continue to live with acrimonious feelings, engendered by the partition that dates back to the colonial period.

Within SAARC, India is the largest member state and was the only country that shared borders with all the other member states, prior to the induction of Afghanistan in the organization. Hence, without doubt, India bears a disproportionate responsibility for the success or failure of SAARC and is regarded as the necessary engine as well as the likely obstacle in the fulfillment of the organization’s potential.

Historically, democracy in Pakistan has been weak and not given a proper chance to grow roots and develop. Parliamentary elections have been marked by low turnouts and those elected did not truly represent the Pakistani people. Pakistan is ‘a federal parliamentary democracy, but with strong army influence’. The military has ruled Pakistan for 35 of its 61 years as an independent state. Soon after he came to power, General Musharraf argued that he intended to move Pakistan from ‘sham democracy’ to ‘true democracy’. There had never been ‘real democracy in Pakistan because democracy is certainly not having elected governments’, but ‘how an elected government behaves’. To him, there was no ‘rebuilding’ of democracy, but the building of democracy. According to Sayyid, ‘those who claim to believe in democracy do not wish to practice it, and those who claim not to believe in democracy promise to implement it’.

Nepal, in recent years has been unable to achieve a democratically elected government. There have been issues of power-grabbing by the Maoists. Although, there has been support from GoI, EU, UN yet the formation of government remains an internal matter for a country and without a concrete functioning government to expect any progress on the union’s front from Nepal would be foolishly optimistic.

Sri Lanka has just got over its problem of civil war with LTTE. It is on the right path of developing infrastructure much of which will be needed for its further progress, inside the union or outside it. Regional partners such as India and Bangladesh must be helpful in advancing the necessary prerequisite for the process of nation-building in Sri Lanka. With a healthy democracy at helm one can expect them to play active role in the sub-continent in future.

Bangladesh is also performing well on several parameters despite being laggard on certain others. Previous regimes there have been troublesome for the peaceful atmosphere in the region – ephemeral tension with India and Myanmar.  Their initiative in micro financing is setting examples for the world over and we are sanguine to achieve great feat with such endeavors.

Bhutan remains an underactive yet important partner of SAARC. Being a landlocked hilly terrain, it has not many opportunities in agriculture or industry, but can achieve significant results in tourism. It has been host to many SAARC meetings earlier and is of profound importance in South Asian culture. Myanmar is having its tryst with military junta. Despite all the misgivings of an alleged nuclear program the country has made small yet significant leaps in infrastructure. Being the eastern most partner geographically it is the gateway of SAARC to South-East Asian countries and hence very important by the point of view of trade.

The Economic Imperative

South Asia has great economic strength in terms of market potential, rich natural resources and human capital. Unfortunately, the large comparative advantages that the SAARC countries have in certain export services are reduced considerably due to poorly managed customs services. This hinders the large, untapped potential for economic growth and employment. South Asia’s imports and exports are a much smaller share of each country’s GDP than in Latin America or East Asia, and tariffs are among the highest in the world. Intra-regional trade is insignificant, representing only 4 per cent of their total trade as against 62 per cent in the European Union, 55 per cent in the NAFTA and 35 per cent in ASEAN. The collective share of the SAARC region in world trade is a dismal one per cent.

SAFTA can act as a vehicle through which all participants in the region can gain by exploring their competitive advantages. Integration of economies in South Asia would lead to the emergence of a big market for investors. Though SAFTA has managed to get all the SAARC members on board, there still exist barriers, as not all member states are equally optimistic, especially the Least Developed Countries (LDCs). They are skeptical and suspicious as they fear the risk of revenue-erosion and collapse of their already weak domestic industrial bases due to a decrease in tariffs. As a result, the timeframe for the complete implementation of the agreement, by reducing tariffs to 0-5%, has been set to 2016.

In the case of South Asia, bilateral tensions will prove detrimental to the implementation of SAFTA in letter and spirit. For example, both India and Pakistan are members of the WTO. While India has accorded the Most Favored Nation status (MFN) to Pakistan, the latter has not reciprocated in the same way, as it claims that SAFTA has no clauses with regard to granting MFN status to India. This goes against the WTO norms (Article 1 of the General Agreement on Tariffs and Trade 1994). Adhering to the principle of bilateralism, India has not brought this up for discussions at the WTO. Thus, the objective of SAFTA will be defeated if these two relatively developed trading partners fail to increase their mutual trade.

Challenges

The progress of economic integration depends upon the willingness of national authorities to confer real powers on supranational authorities. South Asia is in dire need for implementation of trade facilitation measures in order to improve economic growth. The failure to implement trade facilitation measures can also be a detriment to the transit rights of landlocked states like Afghanistan, Nepal, and Bhutan. There are very few developed transit points between every country as most of the trade links through sea and road are almost on the verge of collapse. Therefore, necessary recommendations must be made by the SAARC Intergovernmental Group on Transport so that necessary ideas can be developed to curb this problem.

Trade facilitation measures are not enough and a lot needs to be done on the infrastructure front. For example, most of the SAARC trade takes place by sea. The average number of days required for customs clearance is over eight days in South Asia, compared to less than six days in East Asia and just about two days in the developed countries. As a result, trade is getting diverted to the informal sector.

Apart from that the people-to-people connection is very low as there are no air links connecting the capital cities of the member states in the SAARC region. SAFTA does not include trade in services even though the service sector accounts for a huge chunk of the economies of the South Asian countries. Apart from reduction in tariffs, importance must also be given to the reduction of para-tariff and the non-tariff barriers that contribute equally to the stalling of free flow of goods and services across borders.

For an unsuccessful SAARC is to transition into a successful South Asian Union, the countries of the region will have to break free from their past and build a different kind of relationship in the future that is devoid of the ‘trust deficit’. Without this, SAFTA is likely to be stillborn, or at the very least lead to sub-optimal levels of implementation. The formation of institutes such as the SAARC Chamber of Commerce and SAARC Finance are commendable achievements, but they can only be successful if there is political will.

Is Autonomy the best answer to combat Balkanization?

Balkanization is a geopolitical term originally used to describe the process of fragmentation or division of a region into smaller regions. The term finds origin in the division of the Balkan Peninsula which was held in its entirety by the Ottoman Empire into a number of smaller states. By and large the division of countries gives leaves poignant history and a hostile future and as such the world balkanization is seen as pejorative. However, in recent years the term comes vis-à-vis democratic rights of an ethnic group and the sustenance of its people. Thus new dimensions of balkanization have come up and rendered the issue very much debatable.

The seeds of balkanization are sown in time when groups of different ethnicity, language, and creed are co-existent in one geopolitical location. There is an inherent tendency in people to get separated from each other and make an entity of their own identity. The tension only grows when in a region, one entity feels that its rights have been pushed to margin by others. In absence of appropriate representation and a strong voice, people begin to feel that they may be better benefitted if they have a separate nation of their own. This leads to agitations – in cases for more rights, more representation and in cases for a separate nation-state. For obvious reasons the process becomes violent in the race to gain ‘freedom’ and retain resources.

Fragmentation of the Byzantine Empire into emerging ethnic kingdoms marked the entire 14th century on the Balkan Peninsula. The coining of the term itself had to wait five centuries for the time of the emergence of Modern Balkan States in the 19th‐century and the retreat of the Ottoman Turks. Balkanization was increasingly used by the rising Western powers during romanticism, allegedly first by British diplomacy forced to revert its support of the Ottomans. Thus Balkanization is hand-in-hand with modernization, if not early modernism, coming out as its casualty. The next Balkanization emerged in 1875-76 with the squeezing and the thinning of the Ottoman remains in the region. This caused the rapid change of multiple borders as the two competing treaties were held almost simultaneously. Trying to consolidate the borders for at least one quick generation, one was held by Russia in San Stefano and the other by Otto van Bismarck in Berlin. The following Balkanization had to wait until the Balkan Wars and the Fall of Austro-Hungarian Empire. More specifically: two “Balkan Wars” occurred. In the first in 1912, small new nation states, which had gathered together against the long domination by the Ottoman Empire, cooperated in ethnical cleansing of Slavic Muslims from the Balkan territory. The “Balkan War II” occurred just a year after in 1913 when the same Balkan nation states went against each other in the race to win as much land for any given national territory. Bosnia was special because of its earlier annexation by the declining Austrian-Hungarian Empire, which produced the first safe heaven for European Muslims. It was only when post-WWI diplomacy consolidated these small Balkan nations into the compound kingdoms of Romania and Yugoslavia that the term was laid to rest. This lull even continued after WWII through the second Yugoslavia granted to Tito by the Western sponsors, Churchill and Roosevelt, to keep them all safe from Stalin. However, with the death of Tito, the thread binding the country (and for many reasons, NAM too) withered away. Very recently, Kosovo also declared its freedom and finds itself in the centre stage of international politics. The concern of Russia (which considers it illegal) and China (which has expressed concern) perhaps present the real worry of large unions of ‘unsatisfied’ parts of country insistent on declaring their independence.

Ayn Rand quoted in Global Balkanization: “As to the stagnation under tribal rule -take a look at the Balkans. At the start of this century, the Balkans was regarded as the disgrace of Europe. Six or eight tribes, plus a number of sub-tribes with unpronounceable names, were crowded on the Balkan Peninsula, engaging in endless wars among themselves or being conquered by stronger neighbors or practicing violence for the sake of violence over some microscopic language differences. Balkanization - the break-up of larger nations into ethnic tribes - was used as a pejorative term by European intellectuals of the time. Those same intellectuals were pathetically proud when they managed, after World War I, to glue most of the Balkan tribes together into two larger countries: Czechoslovakia and Yugoslavia. But the tribes never vanished; they have been popping up in minor explosions all along, and a major one is possible at any time.”

The case of Soviet Union propounds the context of centralized development in handful of regions. With the obsession of Cold War at hand, the Soviet government concentrated on high end technology development in the field of defense, space exploration etc. The center of power was at Moscow and the requirements of the remote areas of the union took back seat. By 1982 the stagnation of the Soviet economy was obvious, as evidenced by the fact that the Soviet Union had been importing grain from the U.S. throughout the 1970s, but the system was so firmly entrenched that any real change seemed impossible. A huge rate of defense spending consumed large parts of the economy. The transition period that separated the Brezhnev and Gorbachev eras resembled the former much more than the latter, although hints of reform emerged as early as 1983. After the Andropov and Chernenko interregnum, Gorbachev rose to power amidst Afghanistan war. Glasnost and Perestroika took heavy casualties on the Soviet Union and the dissention which was being piled up for two-three decade in the Soviet constituents took a violent shape and dissolution of the USSR was just a matter of time. The gun powder was ignited by the act of Aijerbaijan on people of Armenian descend. There was wide spread demand from the constituent Soviet unions to get separated from the USSR and finally the inevitable happened on the Christmas day of 1991.

When the government made steps to provide a little bit of autonomy the smaller states in the Union were only too eager to cede away. But autonomy cannot be completely blamed for this cessation because the desire to cede away was seeded in the era of heavy centralization and this centralization only gave water and manure to the seed. The era of autonomy only showed the seed the path to bloom into a fully fledged tree. Whereas Soviet republic dissolved only when leeway in terms of freeness (glasnost and perestroika) was granted by the government and the dissolution was not too bloody a struggle; whereas on the other hand Yugoslavian dissolution was a completely messy and bloody affair- a direct opposition to centralized power.

United States of America seems to be exemplary model of how autonomy can curb balkanization. Each of the 50 states in America has their own set of law which, in many cases, is entirely different from the others – capital punishment, gun control, drinking age etc. The states are also at complete autonomy to formulate and execute their laws. However, the reasons for non-cessations movement may not lie in autonomy alone. Consider the fact that the American economy – industry, agriculture, services are highly decentralized over the entire area of the country. The states also compete with each other to lure the industry to establish in their zones. Besides, the ethnic conflicts based on origin, language are almost non-existent since apart from the native Indians, the ethnicity and origin of people is similar.

Balkanization of America is generally presented as a call against US immigrant rights to keep ethnic and religious origin intact. Largely responding to the growing Latin population in Northern America which succeeds in keeping its language autonomy, those calls echo racist calls for forced assimilation by spreading fear from emerging claim for difference. Balkanization here is particularly aimed as an accusation against Mexicans, who in the minds of racist movements do not belong to ‘Whites, Yellows and Blacks’ and are thus subdividing perceived monolith of the Caucasian race.

The concept of balkanization in India is multi-dimensional – lingual, ethnic, religious and ideological. Centralization can curb the impending balkanization as a short term measure. Heavy centralization means a strong centre always looking down on the weaker states. Any slightest dissention is being dealt with a heavy hand by the centre. This will surely intimidate the divisive forces to take any revolutionary step but at the same time it will pile up their dissentions within themselves which will explode sooner or later. A government that uses an iron clad hand for enforcing the ‘nationalism’ on its states and its people would perhaps be looking down the barrel of revolution in long term. There can be no question regarding decentralization of economy. The after-effects of localization of economic centers are already visible in Mumbai – the call for return of people from UP & Bihar to their own states and voices of Marathas first. Implausible, though it may seem to many, the centralization of economy has also taken the government’s focus from traditionally agricultural zones like Vidarbh and Rayalseema.

However, the question regarding the extent of centralization of powers remains. Considering the size of the country and the demographic distribution administering the country through a centralized power is quite enormous a task. Especially when there is a multi-party system of politics in India and there is a whole lot of regional political parties with strong regional and ethnic (caste based) support base. Any plan for a strong centre will first be opposed by the regional powers whose hegemonic influence over a particular region will be seriously jeopardized. A strong centre will create more tension than the existing situation.

This also calls for the analysis of the argument regarding autonomy – can it satisfactorily answer the call for separation? In a set up like ours where the nation is characterized by so many difference in social, economic parameters, the forces of separation cannot be left unchecked. The smaller parties may gradually call for higher independence from the Indian union for electoral gain which might not be the favorable situation for us. Autonomy is a double edged sword if not used properly it will harm in more ways. And to reap the benefits of this weapon one has to have a certain level of maturity and a favorable political set up which, unfortunately India lacks. As German sociologist Georg Simmel put it:

The deepest problems of modern life derive from the claim of the individual to preserve the autonomy and individuality of his existence in the face of overwhelming social forces, of historical heritage, of external culture, and of the technique of life.

Some special cases like Punjab’s Khalistan, Kashmiri Separatist movements also exist which have to be considered specially, for there is/was a presence of external element in these states. The agitation took the form of violent struggle and is considered terrorism. Such cases only advocate the presence of capable, strong centre. State autonomy is unthinkable in nations where the cessation movement has assumed the flavor of terrorist sabotage. For example autonomy will fail to prevent balkanization, in fact gather momentum for it, if granted to countries like Iran, Afghanistan and Pakistan. So we stand at a point where neither autonomy nor heavy centralization is of any good help to prevent the evil of balkanization.
At present we have a quasi-federal set up. This is a mid way between full autonomy and full centralization. The states have been provided autonomy in many important matters but there is provision for central control of the states through some administrative machinery.

In this way the states cry for more power has been answered so also the control of the states when the state government becomes wayward. But the quasi-federalism as practiced is not the appropriate method. We need to address issues like equitable distribution of industrialization, removing regional disparity, spread of education and awareness throughout the country.

Balkanization is a concept born out of mind. The perception of man towards a particular situation gives shape to the ideology of balkanization. If people begin to think that they are not less developed to their neighbors or the union government is giving them as much importance as to any other state then will not have the urge to get separated. The only way to combat the evil of balkanization is to attack it at the level of human brain. It can be tackled by developmental administration. The development activity - be it on an autonomous stare or a centralized state always work as a force against balkanization. Whenever there is development people begin to understand that the government is working for them and they will not have the courage or any valid reason for ceding away from the union.