Rural India : Poverty and Development Key in Election

Patna, 16 Apr. Today the polls opened in the world’s largest democracy. Remarkably, it is the rural and poor areas which will both shape the outcome of the election and help to revive the nation’s struggling economy.

Patna, 16 Apr. Today the polls opened in the world’s largest democracy. Remarkably, it is the rural and poor areas which will both shape the outcome of the election and help to revive the nation’s struggling economy.

About 400 million of the 714 million voters are expected to turn out, making this perhaps the largest democratic event in history. And with 70% of the country living in rural areas, it is these voters, that tend to be less educated and less affluent, who will be key in determining the outcome.

What was once considered a demographic which only slowed the economy down and soaked up resources but didn’t produce is now looked to as a savior for the shaken economy.

“For so long, these states were a drag on our economy,” said Surit Bhalla, head of New Delhi advisory firm Oxus Research & Investments, in reference to Bihar and the other poorest areas.

The rural residents of Bihar, the poorest and least literate state, have not felt the global economic recession the same way the rest of India, or the world has.

They have been sheltered from external shocks by the lack of outside investment. Very few foreign firms have invested in their agrarian sector due to high agricultural tariffs. Approximately 88% of the country’s rural incomes fall under those agricultural markets.

And increased government spending has transformed these impoverished regions into communities with at least some ambition, optimism, and employment. Children are back in schools and their parents are working. Demand for new infrastructure and manufacturing have given them jobs, and allowed them to see the dawn of progress.

They have the new lawmakers to thank for this rural development spending – that is how candidates won elections. They appealed to the masses (the 700 million rural residents), and had success in the polls.

Not that all the elected officials were to be entirely trusted – health, infrastructure, and education have been often ignored or overlooked.

Still, Bihar is incredibly, poor, with half the residents surviving on around $1 a day, which is below the international poverty line. Only about 10% of the lowest caste in Bihar, the Mushahar (Hindi for “rat eater”), know how to read.

Nitish Kumar, a former minister of railways, was elected as the chief minister of Bihar. Having come from a low caste himself, he understands the plight of the poor.

Indeed, Kumar has instituted widespread development projects in the poverty-stricken state. He has hired private doctors to work in public clinics, he hired 200,000 new schoolteachers and plans on employing 100,000 more, and he has built thousands of kilometers of roads.

“My message is that democracy should provide solutions to the problems,” he said, commenting on his town hall-style meeting format to address any public complaints.

The result is that Bihar is fast catching up to the rest of India; it is growing at a rate of 5.5%. This rural growth is critical in a suffering economy, especially considering its size.

“Up until now, a lot of our growth has been bubble growth,” said Nandan Nilekani, Infosys Technologies cochairman. “That makes the internal reforms even more important now, so we create momentum for future growth.”

“If any one part of the economy is decoupled from the global crisis, it is India’s rural sector.” Added Anand Mahindra, vice chairman of the Mahindra Group.

Mahindra experienced a surprise growth in the sale of its SUV/minivan cross, the Xylo, in rural areas. In fact, it couldn’t keep up with orders.

The polls will not close for another five weeks. The leading candidates are incumbent Manmohan Singh, from the Congress party, and LK Advani, from BJP. It is not known which party will have a clear lead, but the party that appeals most to the poor – many of whom have had their first taste of prosperity – may just win.

More on poverty in India: Poverty in India

Charles Cole, EconomyWatch.com