CHAPTER 1 Infrastructure and Human Development in Madhya ... · INFRASTRUCTURE AND HUMAN DEVELOPMENT IN MADHYA PRADESH and sanitation has been an important determinant in reducing

CHAPTER 1

Infrastructure and Human Developmentin Madhya Pradesh

1.1 INTRODUCTIONThe positive relationship between infrastructure andeconomic growth is well-known, and requires littlefurther elaboration. Ironically, however, the linksbetween infrastructure and human developmentare often less recognized and are not enunciated interms relevant to policy. After all, the concept ofhuman development was originally advanced to movebeyond the relatively restrictive economic analysesbased on growth of income alone, and to incorporateboth human capabilities and empowerment, whichrelied much more on social and distributive variables.Nevertheless, it is obvious to anyone that infra-structure contributes directly to conditions of life notonly by increasing labour productivity, but alsothrough the provision of a range of amenities thatare either necessary or desirable for human existence.

The crucial role played by infrastructure devel-opment in creating better conditions of life has beenhighlighted again and again. Transport and commu-nications infrastructure is important in terms ofproviding access to basic health services and therebyimproving conditions of health and life, particularlyof women and girl children. Basic infrastructure suchas electrification plays a similar role, apart fromchanging the quality of life in general. It is now well-known that basic road connectivity to a school, mini-mum facilities like separate toilets for boys and girlsin school buildings are crucial determinants of theenrolment and attendance of girl children, and so on.Of course, the effects of such investments need to beassessed in terms of how the additional infrastructurechanges the lives of people in any given area, and whatchanges would make it more effective and useful. Thegender and class dimensions of the linkage effects alsoneed to be examined, not just in terms of the direct

effects, but also in terms of the secondary employ-ment and opportunities created by such infrastruc-ture building, for example, shops and new servicesthat emerge with the construction of a new road.

We briefly examine the interrelationship betweeninfrastructure and human development, and alsobetween infrastructure and poverty reduction, whichin itself is perhaps the single most critical humandevelopment objective.

1.2 IMPACT OF INFRASTRUCTURE ON HUMANDEVELOPMENT AND POVERTY REDUCTIONAt the core of this report is the idea of the role ofinfrastructure in fostering inclusive growth andhuman development. Human development is aboutexpanding choices and inclusive growth is aboutimproving the incomes and lives of all members ofsociety, particularly, the poor. It depends on generat-ing economic growth, sharing its benefits with thepoor, and enhancing their access to basic services.

Infrastructure is highly intertwined in our lives.The knowledge that infrastructure, per se, is impor-tant is widespread. However, measuring the precise

Construction of dam in progress

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MADHYA PRADESH HUMAN DEVELOPMENT REPORT 2007

importance of a particular component of infrastruc-ture is difficult. But as choices need to be made aboutinfrastructure, there is a need to identify the impacton human development, understand how they arechanneled, and recognize what they depend on.

Infrastructure provides people with servicesthat they need and want. Access to water, sanitation,electricity, telephones, computers and transport makeimmeasurable difference in people’s lives. The absenceof some of the most basic infrastructure services oftentranslates into absence of human development.

Broadly, infrastructure impacts on human devel-opment in two ways: first, it supports the processesof growth on which much of poverty reductiondepends; and second, it helps the poor access basicservices which can improve their lives and incomeopportunities. At its best, infrastructure can draw pov-erty reduction, service provision, and growth into areinforcing virtuous cycle.

Infrastructure also has an important impact onhuman development and poverty through growth.It is also an intermediate input into production.Without power and water, all but the most basicproduction would grind to a halt. It raises the pro-ductivity of factors of production—by generating thepower that allows factories to mechanize, by allow-ing workers to get to work quicker, or by providingthe networks through which information healthcan pass electronically. Infrastructure connects goodsto markets, workers to industry, people to services,and the poor in rural areas to urban growth centres.Infrastructure lowers costs, enlarges markets, andfacilitates trade.

Infrastructure has a human development impacton the activities through which people earn theirliving. It contributes to the health and education thatpeople need to fill jobs, or create them. Some of thechannels through which its impact is felt are not veryobvious. It may seem intuitive that the ability ofpeople to earn a living is increased when transport,information, power, and water are readily available.But infrastructure has some less obvious impacts,for instance, the impact of transport and electricityon education. The impact of health services may besimilarly affected by the ability of the poor to accessfacilities. A road, or a telephone call, can make anenormous difference.

Research into the impact of infrastructure onpoverty has examined the extent to which infrastruc-ture improves access to education and health services(transport, communications, and power infrastructureare likely to play roles here) as well as the impact ofimproved water and sanitation services on health.

Perhaps, the widest definition of human devel-opment focuses on expanding people’s choices,enhancing social inclusion, human capabilities andfreedom. Such approaches may focus on the impactthat transport and communications infrastructurehave in improving people’s ability to engage in col-lective activities, access wider sources of informationand opportunity, and find time for both economicand non-economic purposes. (This is particularly trueof women who bear the principal responsibility ofprovision of water and energy for the household).

1.2.1 Impact of Infrastructure—Evidence and ExperienceEvidence and analysis shed some light on the magni-tude of the impact of infrastructure on human devel-opment, defined in these ways. In a large exercise, 102cross country studies were assessed by Fuente andEstache in 2004. Table 1.1 shows the distribution ofthe study findings. The study found that in a majorityof these country studies, the impact of infrastructureon both growth and poverty reduction was positive,while in the case of 12 developing country studies thislinkage was a hundred per cent. The role of invest-ment in infrastructure in developing countries showsthat these countries have underinvested in infrastruc-ture, and further that any investment here has the mostsignificant impact on pro poor growth and directimpact on reducing poverty, apart from providing thepoor with critical services.

Some studies show that access to water and sani-tation explains a substantial portion of the differencein infant and child mortality rates experienced by therich and the poor, that better transportation increasesschool attendance, and that electricity access allowsmore study time (see Leipziger et al. 2003). Anotherstudy (Calderon and Serven 2004) found that quantityand quality of infrastructure—particularly of waterand sanitation—have a strong positive impact onincome equality, as well as on economic growth. And,a further study showed that enhanced access to roads

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INFRASTRUCTURE AND HUMAN DEVELOPMENT IN MADHYA PRADESH

and sanitation has been an important determinant inreducing disparities between the poorer and the richerregions of Argentina and Brazil (Estache and Fay1995). Studies of rural roads have shown that theyraise the productivity and value of land for poorfarmers (see, for example, Jacoby 2000).

Rural roads have been found to have a substan-tial positive impact on overall poverty reduction in anumber of other studies, but there are some interest-ing nuances. One study found that rural roads werethe form of public expenditure that reduced povertymost effectively in India (see Box 1.1). For China,

Box 1.1: Investments in Infrastructure and Impact on Poverty in India

A detailed study was carried out by Fan, Hazell, and Thorat (1999) to understand the role of different types ofpublic investments and their impact on poverty. The study looked at data from different states in India. The primarypurpose of this research was to investigate the causes of the decline in rural poverty in India and, in particular, todetermine the specific role that government investments have played in the same. The research quantified theeffectiveness of different types of government expenditures in contributing to poverty alleviation, and looked atevidence from the 1960s.

The direct effects arise in the form of benefits the poor receive from employment programmes directly targeted tothe rural poor. The indirect effects arise when government investment in rural infrastructure, agricultural research,health and education of rural people stimulate agricultural and non-agricultural growth, leading to greater employ-ment and income-earning opportunities for the poor and to cheaper food. Understanding the different effectsprovides useful policy insights for helping to improve the effectiveness of government expenditure in reducingpoverty.

The results from the model show that government spending on productivity enhancing investments, such as onagricultural research and development, irrigation, rural infrastructure (including roads and electricity), and ruraldevelopment targeted directly to the rural poor, have all contributed to reductions in rural poverty, and most havealso contributed to growth in agricultural productivity. However, differences in their poverty and productivityeffects are large.

The model has also been used to estimate the marginal returns to agricultural productivity growth and povertyreduction obtainable from additional governmental expenditure on different technology, infrastructure, and socialinvestments. Additional government expenditure on roads is found to have the largest impact on productivitygrowth. It is a dominant ‘win–win’ strategy. Additional government spending on agricultural research and exten-sion has the largest impact on agricultural productivity growth, and it also leads to large benefits for the ruralpoor. It is another ‘win–win’ strategy. Additional government spending on education has the third largest impacton rural poverty reduction, largely as a result of the increases in non-farm employment and rural wages that itinduces.

Source: Fan, Hazell, and Thorat (1999).

Table 1.1: Distribution of Findings on Impact of InfrastructureInvestment on Productivity and Growth

Area studied No. of Percentage showing Percentage showing Percentage showingstudies a positive effect no significant effect a negative effect

Multiple Countries 30 40 50 10United States 41 41 54 5Spain 19 74 26 0Developing Countries 12 100 0 0Total/Average 102 53 42 5

Source: de la Fuente and Estache (2004).

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the same study found that they were the most effec-tive form of public expenditure on infrastructure,but that expenditure on education and agriculturalresearch and development was a more effective meansof reducing poverty. A study of rural roads in thePhilippines (Balisacan and Pernia 2002) found thataccess to roads is important for poverty reduction,and that the impact is increased if the roads arecoupled with education expenditure. By contrast, thisstudy found that the poorest households lackedthe minimal income and complementary facilitiesnecessary to benefit from access to electricity.

One study into rural road investments suggeststhat the establishment of a new road in a village raisedthe per capita income of households by 30 per centbetween 1993 and 1998, after controlling for otherfactors, such as household size and education(Deolalikar 2001). Moreover, the spatial location ofroads increased the household probability of movingout of poverty by 68 per cent over the same period oftime. It also showed that rural roads expanded schoolenrolment of children at all levels, and improved the

utilization of public health services. And the spatialand economic benefits of rural roads were significantlylarger in poorer provinces than in the richer ones.

A comprehensive study was undertaken onwhether infrastructure works for the poor or not. Itwas conducted through four country studies inBangladesh, Senegal, Thailand, and Zambia. Thestudy showed clear evidence of a positive relation-ship. The many ways in which small-scale infrastruc-ture defined in this study as infrastructure that islocal, small in scale directly affects lives of people invillages and poor habitations, and has a direct andspecific service to provide—a local road connectiv-ity, a local school, a local water managementprogramme etc.—have been outlined in this study(see Box 1.2). With roughly similar conditions ofpoverty, and backwardness in these countries andthe situation in Madhya Pradesh, the findings estab-lish a firm and powerful link between small-scaleinfrastructure and the impact on reduction in pov-erty and improvement in the lives of the poor andservices needed by them.

Box 1.2: Making Infrastructure Work for the Poor—Summary FindingsThe basic idea of the project is to assess, in the context of small-scale, community-level infrastructure, the dynamicsof the infrastructure–poverty reduction–governance nexus.

The Case for small-scale, community-based projectsIn the context of overall infrastructure–poverty reduction–governance nexus, small-scale, community-based infra-structure assumes a special place. The small-scale, community-based projects may present more insights withregard to poverty reduction. For example:1. Because of its nature, location, design, and implementation process, small-scale infrastructure may bring about

a more direct impact on the lives of the poor people. For example, small irrigation projects contribute immedi-ately to agriculture productivity, bringing tangible benefits to local farmers. A rural feeder road improves themobility of local communities and reduces transportation costs which have an impact on economic activities.

2. Local communities take part directly in decision making regarding the nature of the infrastructure, location offacilities and design. And, local communities can take part in the implementation process and also be involvedin the operation and maintenance of facilities.

3. It also helps to reinforce social capital and consolidate community organizations.Such infrastructure efforts are complementary to large-scale infrastructure initiatives in many ways. First, they

fill in the gaps left by large-scale projects. Second, improvement of access to a high quality main road and transpor-tation system enables improvement of agriculture technology, a stable supply of input goods and improvement in pro-ductivity. Third, some of the governance lessons from such infrastructure projects may be replicated and scaled up.

Key Findings of Country Studies1. Small-scale infrastructure contributes significantly towards reduction of income poverty and hunger: Most of

the projects included in the country studies have indicated that small-scale infrastructure contributes signifi-cantly to reducing income poverty and hunger. This finding was more or less the rule across the four countrystudies.

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1.3 HUMAN DEVELOPMENT ANDINFRASTRUCTURE IN MADHYA PRADESHInvestment in infrastructure, as all other investments,reflects social choices, in terms of both public policyand private investment, that can be influenced byrelative power positions in society. For example, evenin expanding a road network, the need for which isuniversally acknowledged in Madhya Pradesh (MP),there may be excessive concentration on certain typesof infrastructure creation. Obviously, the importanceof a basic transport network, particularly in, what areknown as, relatively less developed or inaccessibleareas, cannot be overemphasized in terms of the ef-fects on health and life conditions of ordinary people.However, this means not just that major highways andtransport systems need to be developed, but also that

there should be a lot of emphasis on minor transportnetworks, for example, paved roads extending toevery village. The emphasis on major roads, combinedwith the effort to ensure private sector participation,sometimes presents the possibility that investmentin this area may remain largely confined to majorroads that effectively become toll highways withrestricted access.

It is also important to bear in mind the indirectsocial costs of infrastructure projects, for example,through possible displacement of local communities.This is now well-known in the case of large irrigationprojects, but it also matters where displacement takesplace for road construction or other land developmentfor non-agricultural purposes. Infrastructure develop-ment policies need to be framed in such a manner as

2. Mortality rates are reduced with the expansion of small-scale infrastructure services in health and water areas:Infrastructure initiatives that improve a community’s access to a primary health care centre, with its medicalequipment, skilled nurses, and health personnel, who work actively to promote healthy practices and imparthealth education to community residents, can contribute to reducing mortality rates, particularly, child andmaternal mortality rates.

3. Small-scale infrastructure has a positive impact on education: The country studies have argued that small-scaleinfrastructure contributed to educational attainment through various transmission mechanisms. First, betterroads led to lower transportation cost and better security: as a result, school attendance improved and drop-out rates fell, particularly, for girls. Second, improvement of school facilities also contributed positively in thisarea. Third, improved energy facilities, by providing electricity in households and bringing televisions andcomputers to households, helped students to improve their skills. Finally, there are a series of indirect im-pacts—enhanced income from other infrastructural development, better awareness of parents, and so on.

4. The phenomenon of HIV/AIDS can also be influenced by small-scale infrastructure.5. Small-scale infrastructure can move forward gender equality and women’s empowerment: Most projects iden-

tified two major trends with regard to gender equality and women empowerment. The first is that interventionscan help remove gender inequality in capabilities and opportunities, and the second is that in order to achievethe first goal, the design and location of small-scale infrastructure should be such that women with all theirsocio-cultural constraints, can derive full benefits from them.

6. Small-scale infrastructure can enhance environmental sustainability.7. Small-scale infrastructure, if properly oriented, contributes to community building and social capital.8. Small-scale infrastructure in public works programmes, income-generating activities, and irrigation projects

contributes directly to income and employment creation, and reduction of poverty and hunger: It also helps interms of jobs, income, and food security.

9. The involvement of the community in small-scale infrastructure is a must for specific aspects of such projects;while for other aspects, the nature of involvement may vary, depending on the nature of the project.

10. Institutional and financial sustainability of such projects are essential for the expected development impactsto be seen.

11. Capacity development is a crucial element for the sustainability of small-scale infrastructure.12. Proper linkages of local initiatives with national ones bring good results to the local ones.

Source: Jahan and McCleery (2005).

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to minimize such adverse effects, ensure adequatecompensation and rehabilitation, and pay particularattention to the special needs of vulnerable groupssuch as women and socially marginalized sectionswho may be especially adversely affected.

It can be argued, therefore, that a focus on im-proving human development implies somewhat dif-ferent priorities in terms of infrastructure provisionthan an approach based entirely on maximizingeconomic growth. This would affect not only whichsub-sectors of infrastructure get higher resourceallocation, but also the geographical spread, theextent of public versus private provision, the pricingpolicy for users, and so on. Infrastructure investmentdirected at maximizing economic growth rather thanensuring better human development for all may beless concerned with regional imbalances, exclusionof citizens from access, affordability of services andutility rates for common people, and more focusedon efficient provision in areas that would havethe greatest growth impact. This has indeed beenthe dominant pattern of infrastructure provision,especially in the last decade, where there has beenmuch greater reliance on private provision in a widerange of infrastructure categories.

It is, in this context that the overall infrastructureconditions in MP need to be viewed. In a politicalcontext in which elections are fought and won or lostaround issues of bijli, sadak, pani,1 the significanceof infrastructure is as much a political issue as anyother, perhaps even more so. Signals from the citizenshave been very clear to the state administrations:there is little compromise that people will accept onbasic amenities and basic infrastructure. It is truethat investment in infrastructure in MP has been low.However, recent political upheavals and continualsocial concerns have led to a significant increase ininvestments. But, the fact remains that the publicprovision of infrastructure facilities is increasinglyexpensive, uncertain and inequitable. The poor stateof infrastructure in the state continues to generatepoor human development outcomes. This is why anexamination of the basic state of infrastructure in thestate is of such significance.

1.4 GROWTH PATTERNS IN MADHYA PRADESHObviously, basic tendencies in economic growth playan important role in determining possibilities ofthe expansion of human development options. Thisis not only because of the role of income in overall

Box 1.3: Where does the Private Sector Invest in Infrastructure?The experience in MP has shown that the private sector participation/investments in infrastructure are markedlybiased in favour of economically developed regions and urban zones.

A simple look at data on telephone density shows this adequately. In December 2004, the tele-density of thepublic service provider, Bharat Sanchar Nigam Ltd. (BSNL), was 2.43, 0.65, and 7.33 in all of the state, rural MP,and urban MP, respectively. When we take all service providers together (public plus private), the tele-densityincreases to 4.83 for all of the state, and expands to 16.09 for urban areas, but the rural tele-density remains 0.65,showing negligible rural telephones provided by the private service providers.

Similarly, if we take a look at banking, while there were 4735 bank branches in MP (September 2006) (ReserveBank of India, RBI). The nationalized banks and Regional Rural Banks (RRBs) had 3415 branches, of which 1767were rural branches (52 per cent), the other Scheduled Commercial Banks (SCBs) (private ownership) had 86branches with no rural bank branch.

In the case of new state highways/redevelopment of state highways, nearly 2657 km of roads are being con-structed under the Bond–Build-Operate-Transfer (Bond–BOT) scheme with private players. However, the entireeffort on rural roads lies solely with the national and state government.

The example of roads as well as telecom shows that the role of the state and its agencies will be most critical inbuilding infrastructure for rural and backward zones. The role of the private sector will be seen in urban or prosper-ous areas, where they like to partner with the state, but their ability, and perhaps even intention is not there to investin any manner into areas where there is no immediate and extraordinary profit.

The state must continue to remain the only player in critical infrastructure areas—rural roads, rural telephony,rural electrification, irrigation, small credit for consumption and survival, and basic amenities.

1 Electricity, roads and water.

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human development, but because higher aggregateincomes typically allow more fiscal resources to begenerated as well, which allow for more per capitapublic spending in ways that can generate betterhealth, education, and capability outcomes. Unfor-tunately, recent growth patterns in MP have not beenparticularly promising in that respect. In fact, MadhyaPradesh has not only shown a rather dismal annualcompound rate of growth of income of only 4.5per cent between 1993–94 and 2003–04 (at constant1993–94 prices) as against the national average of6.2 per cent, but also its compounded annual growthrate of per capita income for the same period standsat 2.3 per cent as against the national figure of 4.4per cent. The state also has the third highest inci-dence of poverty as well as the lowest rate of povertyreduction among the major states of India.

The fact that the performance of MP has beenrelatively worse than that of the rest of India in termsof per capita income is indicated by Figure 1.1, whichshows a constant increase in the gap between MPand the rest of India over the 1980s and the 1990s,and this trend appears to be continuing even in thecurrent decade.

Agriculture sector was the worst affected, show-ing a deceleration in growth that was even sharperthan the average for All India. It is now much morecommonly accepted that basic infrastructure inrural areas plays an important role in the expansionof agriculture, and in MP, infrastructure conditionshave not been able to give a push to the rapid expan-sion of agricultural output and incomes. Agricultureis critical for any growth and expansion of welfareand well-being in MP. Agriculture accounts for36 per cent of the state’s income, and employs over73 per cent of the workforce, whereas nationally,it contributes 22 per cent of national income andemploys 61 per cent of the workforce.

The critical importance of irrigation is too obvi-ous to require further elaboration. In 2000–01, thenet irrigated area in MP was only 24 per cent com-pared to national average of 54.7 per cent, but thishas gradually increased to 30 percent by 2004–05.Agriculture intensity was 124 for MP compared to134 for All India, and irrigation intensity was 131compared to 167 nationally (NABARD 2006).

Other infrastructure conditions also mattergreatly. Transport conditions determine the access ofthe farmers to both input and product markets; theyallow for the emergence of non-agricultural activi-ties that positively affect agriculture in turn. Powerhas become increasingly important as more and morefarmers become dependent on electricity for pump-ing water, and both the availability and the price ofpower affect the viability of cultivation.

Figure 1.1: Per Capita SDP in MP as aPercentage of the Indian Average

Figure 1.2 shows that while both aggregate andper capita income (in terms of Net State DomesticProduct, NSDP) grew between 1993–94 and 1998–99,thereafter they have been quite volatile around a stag-nant trend. In fact, per capita income fell sharplybetween 1999–2000 and 2002–03, and in the lateryear it was even lower than it was six years earlier, onlyto partially recover from 2003–04 onwards. This re-flected poor investment and infrastructure conditions,as well as caused them, in a vicious circular process.

Figure 1.2: Index Number of Real NSDP andNSDP Per Capita

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The availability of the infrastructure for theprovision of organized credit is critical in allowingfarmers to purchase the necessary inputs for moreproductive cultivation. The Credit Deposit Ratio(CDR) in MP remained well below both the nationalaverage and the desired CDR of 60 per cent. The CDRin MP in 2004 was nearly 10 percentage points belowthe CDR of All India (in 2004, CDR of MP was 47.7and national average was 58.7). However, this hasbeen gradually improving over the last two years,and as of March 2006, the CDR in MP has gone upto 64 per cent, slightly higher than the national CDR.

Of course, agriculture was adversely affected byother processes in the 1990s: the reduced role of pricesupport for crops, the deregulation of inputs, greaterexposure to volatile international prices of both in-puts and output, and so on. But the paucity of much-needed public investment in crucial areas and the poorquality of rural infrastructure clearly played a majorrole in the deteriorating performance of agriculture.As evident in Figure 1.3, the share of agriculture inthe NSDP fell by nearly one-third, from 41 per centto 31 per cent over this period.

Further, as Table 1.2 indicates, agriculturecontinued to be the dominant activity for most of thelabour force, with hardly any change in the proportion

of workers employed in cultivation even as the shareof agriculture in Gross Domestic Product (GDP) fell.This points to a fall in the per capita agricultural incomeshare. These ratios indicate a greater degree of dualismin MP than in India as a whole, and suggest that theabsence of productive employment generation andthe enforced stagnation of workers in low productivityagriculture are critical problems in the state.

1.4.1 Patterns of Public ExpenditureIt is well-known that in economies such as those ofIndia, and in states such as MP in particular, publicinvestment is the principal source of growth anddevelopment both through the creation of employ-ment and infrastructure and as a stimulant of privateinvestment. Capital expenditure by the state govern-ment reflects the extent to which such a qualitativeand quantitative role was actually played. Since 1990,a declining trend in total capital expenditure of thestate government as a percentage of state’s incomeis observed. Aside from a year of ‘abnormally’ highexpenditure in 1997–98 (because of a large outlayfor a particular energy project), the late 1990s andthe subsequent period till 2000–01 showed continu-ous declines in aggregate capital spending, to anaverage of less than 2 per cent of NSDP. However,

Figure 1.3: Average Share of NSDP

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the state has experienced a turnaround since 2001–02, and the trend in capital expenditure as a propor-tion of NSDP has been showing an increasing trend,as is the trend in economic services that constitutethe bulk of such expenditure (Figure 1.4).

Within economic services, the expenditure onagriculture actually fell in absolute terms till the mid-1990s, while irrigation stagnated. Expenditure onrural development, in constant price terms, has beenfluctuating, with a rise recently in the revised esti-mates for 2005–06 (Table 1.3). Apart from energy,

Table 1.2: Share of Agriculture inIncome and Total Employment

Madhya Pradesh India

Share Share of Share Share ofof SDP workforce of SDP workforce

1980–81 43.6 76.2 35.7 66.51990–91 38.2 75.3 32.1 67.02000–01 25.8 72.9 24.3 61.4

Source: Shankar 2005, p. 5015; Ghosh 2005, p. 5503.

Table 1.3: State Government Expenditure on Economic Services (at constant 1993–94 prices)(in Rs crore)

Year Agriculture Rural Irrigation Energy Industry Transport General Totaland Allied Development and Flood and Economic Expenditure

Control Mining Services

1993–94 733 668 588 807 86 345 31 83251994–95 699 562 586 311 82 363 18 80101997–98 864 669 538 949 105 360 23 103672000–01 840 648 550 433 62 274 34 107462001–02 714 485 598 1395 38 305 25 100002002–03 773 525 737 815 47 331 28 104482003–04 712 494 803 2543 44 355 26 127342004–05 763 590 1170 1881 51 402 23 134552005–06 (RE) 820 904 1134 2853 77 640 34 15936

Source: Various budget documents of the Department of Finance, Government of MP.

Figure 1.4: Capital Expenditure as a Percentageof NSDP

Figure 1.5: Capital Expenditure on Social Servicesas a Percentage of NSDP

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every other major head under economic services hasbeen either stagnating or rising marginally, except inthe last couple of years.

Roughly, half the social sector revenue expendi-ture has been on education, which peaked in thelate 1990s and then declined, and except for socialwelfare and nutrition, which has quadrupled its sharein social sector revenue expenditure and as a percent-age of NSDP, this was true of all heads. In the post-bifurcation period, spending on social sector on therevenue account has not kept pace with the slowgrowing NSDP2 on all heads except the category‘Welfare of Scheduled Castes (SCs) and ScheduledTribes (STs)’, which accounts for a very small sharein any case.

The pattern of public expenditure in rural termsindicates a generalized stagnation on both capitaland revenue accounts. This obviously had direct andadverse effects on economic activity, but was alsocrucial in affecting the conditions of infrastructure,by reducing the possibilities for its creation throughcapital spending, or its maintenance through greaterrevenue spending.

1.4.2 Irrigation SourcesAs is true elsewhere in the country, agriculture in MPhas increasingly relied upon groundwater irrigation(especially in the form of tube wells which arepowered by electricity or diesel). This, in turn, createsreal problems of sustainability, causing over-use,declining water tables, and inequitable access towhat is essentially a social resource. Despite theintroduction of large major irrigation schemes,which have also involved substantial displacementof people, both the spread and the efficiency ofsurface irrigation, have declined in relative terms. Theneglect of traditional tank irrigation sources as wellas inadequate maintenance of existing canal sourcesand feeder channels has meant that the new schemeshave to make up for losses of access to surface waterthat was previously available and, therefore, havehad less net positive effects. Clearly, a focused andparticipatory water policy is called for, one that wouldemphasize the conjoint use of surface and ground-water, and allows more equitable access and wellas more sustainable forms of water use, especiallyin cultivation.

Figure 1.6: Revenue Expenditure on Social Sectors as a Percentage of NSDP

2 The state of finances of the Government of MP post-bifurcation went through a period of financial crisis.

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1.4.3 Road ConnectivityThe relatively inadequate state of road infrastructurehas been a major issue in MP for quite some timenow, and has also become an important politicalissue in recent times. The vast size and difficultterrain of the state have meant that road connectiv-ity is relatively hard to achieve, and this has beencompounded by the colonial legacy of neglect oflarge tracts of the hinterland of the state, especiallytribal areas.

As a consequence, road connectivity in MP hasalways been amongst the lowest in India. The roadlength per 100 sq. km of area in MP was 52 km ascompared to the national average of 75 km.

The bulk of the state’s roads are its village roads,constituting 68 per cent of the total roads in MP.In terms of the percentage of habitations connectedby roads, MP was amongst the last ranked statesin India in 2000, with only 28 per cent of villagesactually connected to all-weather roads. There hasbeen improvement in road connectivity over the lastfive years (due to efforts under the Pradhan MantriGram Sadak Yojana, PMGSY), and the state’s ownefforts) but this still does not cover in anyway thehuge gaps between the availability and the nationalaverages (by the end of January 2006, 55 per centhabitations remained uncovered in MP, compared to32 per cent across the whole of India).

There has been some improvement, however, inthe length of pucca roads in MP. As Figure 1.7 shows,every region in MP has shown an increase in the puccaroad length between March 1999 and January 2006.In fact, all the increase in pucca road length that wesee over the years across the regions is mostly due toincrease in rural connectivity.

A major difficulty relates not just to the actualroad length in terms of kilometres, but to the qualityof roads, since even many pucca roads are found tobe unable to provide all-weather access and tendto become at least partially unusable during or justafter heavy rains. In addition, the poor quality of mostroad surfaces makes journeys more difficult and moretime-consuming. Therefore, maintenance of roads,so as to ensure reasonable quality and continuousaccess, is as important, or possibly even more impor-tant, than fresh investment in creating new roads.

Table 1.6 provides an indication of village roadconnectivity in purely quantitative terms, that is

Table 1.4: Net Irrigated Area by Source of Irrigation

Percentage of Net Irrigated Area Share in Incremental Irrigated Area

1980–81 1990–91 2002–03 1980–2003

Canals 44 35 29 18Tanks 6 4 2 0Total surface water 50 39 31 18Wells 42 42 35 31Tube wells 8 19 34 52Total groundwater 50 61 69 83

Source: Shankar 2005, p. 5015.

Table 1.5: Distribution of Roads acrossMajor States

States Road Length Road Popu-per lakh Length per lation

Population 100 sq. km Density

Kerala 474 388 819Karnataka 289 80 276Maharashtra 276 87 315Gujarat 272 70 258MP 267 52 196Rajasthan 234 39 165Chhattisgarh 170 26 154UP 150 103 690West Bengal 115 104 903Bihar 92 81 881INDIA 239 75 313

Source: Department of Road Transport and Highways, Ministry of Ship-ping, Road Transport and Highways, GoI (2002) and Census of India,2001.

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without taking into account the qualitative dimen-sions (see Table A1.1 for district-wise details on thenumber of villages connected by Madhya PradeshRural Road Development Authority, MPRRDAsince its inception). It is evident that in almost allthe districts, more than half—and sometimes asmany as two-third—of the villages are not connectedby pucca road. Thus, the problem of ensuring uni-versal connectivity (that is road access for all villages)is a gigantic task in MP, and one that is not likely tobe easily managed in the foreseeable future withoutmassive investments. But here of course, the problem

is that of public resource allocation under very se-vere resource constraints, when there are numerousequally deserving candidates for additional publicspending. It is important to note, however, that thisis one area where private investment cannot beexpected to meet the gap even with very attractiveincentive packages. While private investment may bemotivated to participate in major toll highway projectsthat would generate profits over time, these wouldalso have to be promising in terms of anticipatedtraffic. In cases, where private returns are potentiallyquite low and in any case are far outweighed bysocial returns, as is the case for village road connec-tivity, the task will clearly have to be taken up usingpublic resources.

The situation with regard to roads is that morethan 3200 villages have now been covered underthe PMGSY since the end of 2000. Further fundingwill come from the Bharat Nirman initiative of theGovernment of India. There are no rural roads un-der Public–Private Partnership (PPP) or toll systems.On 8th April 2003, the state cabinet decided thatthe maintenance of rural roads being constructedby the MPRRDA would be handed over to the zilapanchayats3 once the road completes five years ofoperation. The funds for maintaining these roadswould be derived from the mandi cess4 of 2 per cent,which is currently being levied. Out of this, the mandi

Figure 1.7: Pucca Roads in MP

Table 1.6: Indicator of Road Accessby Habitation

Habitation MP Habitations Percentageby Size Total connected Habitations(with popula- by MPRRDA still uncon-tion of:) as on nected as on

31st January 31st January2006 2006

1000+ 14285 2261 24.8500–999 16977 620 59.1250–499 13079 239 69.8< 250 11378 126 77.5Total 55719 3246 56.6

Source: MPRRDA.

3 Local democratically elected body at district level.4 A cess on sale of agriculture produce by farmers at the common marketing facility centre call mandi.

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retains 1.15 per cent and passes on the remaining0.85 per cent to the Farmers’ Road Fund (KisanSadak Nidhi). Though, the first road constructedby MPRRDA will complete five years in 2006–07,the mandi cess money has already started flowingin the MPRRDA’s kitty. While they have startedretaining the required amount for 2006–07, thebalance is being passed on to the Public WorksDepartment (PWD) strengthening major/other dis-trict roads.

1.4.4 Power SupplyAccess to electricity and payment for power sourceshave become much more than purely developmentalissues in MP. A generalized lack of development hasbeen recently compounded by an energy crisis thathas been gripping not just the state but the entirenorthern India, and thus, attempts to move towardsa different pricing and management regime are alsoproving difficult.

their own domestic power connections and nearly40 per cent of the households still do not have anyaccess to electricity.

It is true that there has been a slight increase inthe progress of electrification, as indicated in Table1.7. However, progress has been painfully slow,with less than 100 villages added to the number ofelectrified villages in each of the recent years. Onceagain, regional differences have also intensified. Theimpact of electricity access on quality of life is soobvious that it surely requires no elaboration, yetin this most basic of indicators, public provisioninghas sadly been lacking.

The patterns of electricity consumption areshown in Table 1.8. Domestic electricity consumptionhas increased, as has aggregate consumption inthe period between 2002–03 and 2005–06. While in

Figures 1.8 and 1.9 indicate just how severethe problem of lack of development in the energysector still is. As late as 2003–04, only 42 per cent ofall households had domestic power connections, upfrom 36 per cent in 1995–96. A larger proportion—70 per cent—had access to electricity in some way,but even this is very far from the national averageor the goal of universal access. Predictably, the situa-tion is especially bad in rural areas, where morethan 70 per cent of the households do not have

Figure 1.8: Percentage Households withDomestic Power Connections

Figure 1.9: Percentage Households withAccess to Electricity

Newly constructed power house

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Table 1.7: Number of Villages Electrified

Number of Villages Number of Villages Electrified

State/Zone (1991) (2001) 1998 1999 2000 2001 2002 2003 2004

Central Zone 15548 15688 15075 15159 15189 15199 15200 15215 15235Eastern Zone 24046 24186 22864 22982 23023 23028 23046 23124 23178Western Zone 12212 12212 12038 12052 12059 12059 12060 12061 12061Madhya Pradesh 51806 52086 49977 50193 50271 50286 50306 50400 50474

Source: Central Electricity Authority: General Review, 1999–2000 to 2003–04.

Table 1.8: Total Electricity Consumed byDifferent Categories

Year

Category 2002–03 2003–04 2004–05 2005–06

Domestic 3243 3311 3762 3753Non-domestic 652 688 799 851Industrial 5855 6058 6518 7049

LT 670 651 667 686HT 5186 5408 5851 6363

Water works 435 463 502 516LT 154 163 184 195HT 281 300 318 321

Agriculture 4974 5346 5598 5600LT 4966 5342 5593 5594HT 9 5 5 6

Street lighting 121 127 128 143Total 15280 15867 17307 17912

LT 9805 10155 11133 11222HT 5475 5712 6174 6690

Note: LT–Low Tension, HT–High Tension.Source: MPSEB (2006).

2005–06, electricity consumption in the industrialsector comprised 39.4 per cent of the total con-sumption, its share in total consumption has grownby nearly one percentage point in the period underconsideration. Electricity consumption in industrialsector is the highest among all the categories ofelectricity consumption. During this period, electricityconsumption has shown a secular increase across allcategories. While the compounded annual growth ratein ‘non-domestic’ category has been the highest at9.3 per cent, agriculture has grown at nearly fourper cent, which is the lowest among all the categoriesof electrical consumption.

1.4.5 Education InfrastructureEducation is one specific area where there has beensubstantial improvement in MP. The last decade sawa very high jump in literacy levels from 45 per centin 1991 to 64 per cent in 2001. This was managedby dedicated work to increase access to adult literacyand schools, especially primary schools. From 78794primary schools in 1996 in undivided MP, the num-ber of primary schools rose to 82219 in 2000, andstood at 95517 in 2005–06 in new MP. Similarly,the number of middle schools was 19058 in 1996 inundivided MP, rose to 21043 in 2000, and was 24293in 2005–06 in new MP. There has been a phenomenalincrease in primary schools, and within two yearsbetween 1998 and 2000, nearly 30000 access-lesshabitations were provided with a school. A similarinitiative for middle schools saw a phenomenal

Table 1.9: Number of Schools byType of School

Year No. ofInstitutions

Primary Schools 1995–96* 566472005–06 95517

Middle Schools 1995–96* 143932005–06 24293

High and Higher Secondary School 1995–96* 52912005–06 8504

All Schools 1995–96* 763312005–06 128314

Children aged 6–19 years per school 1995–96 141Children aged 6–19 years per school 2004–05 138

Note: *Indicates figures for divided MP.Source: Various reports of Directorate of Public Instruction and RajivGandhi Shiksha Mission, Government of MP.

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increase in these as well. Now, the state claims thatall habitations in the state have one primary educa-tion centre within one km radius. There is one middleschool within 3 km radius of every village in the state.

Although, in terms of schools, the number appearsto be adequate now, the situation, as far as otheramenities in the schools, is not very clear. Are thereenough rooms in the schools? Do girls have separatetoilets? Are there blackboards and other teachingaids available in schools? Data for these parametersare not available for recent years as data from thelatest educational survey have not been released.Other evidence does show that there is a long way togo towards ensuring adequate rooms, proper schoolbuildings, proper toilets, drinking water facilitiesand so on.

1.4.6 Health InfrastructureThe three-tier public health system is built on theSub-Health Centres (SHCs), Primary Health Centres(PHCs) and specific service focused CommunityHealth Centres (CHCs), to the district/civil hospitals;and in the final tier, the referral hospitals. In ruralareas especially, the PHC is the most critical healthfacility. In MP, in the last twelve years, the numberof PHCs has actually gone down, mainly because ofconversion of many PHCs into CHCs. This changehas brought down the population serviced by eachCHC from over 3.6 lakh in 1994 to 2.6 lakh in 2006,thus, improving quality of care.

The health infrastructure cannot be called ad-equate even by Government of India norms as therural population served per PHC is significantlyhigher than the prescribed norm of 30000. Similarly,number of SHCs is also less compared to the normof 5000 population in general and 3000 populationin tribal areas. The existing health centres also facean acute shortage of quality manpower meaningthereby that the state needs to do something innova-tive to improve the access and quality of health care.

1.5 CONCLUSIONSWhat we have seen till now is a clear linkage betweeninfrastructure and human development progress.This linkage has some very direct evidence, and thenmany indirect ways in which infrastructure—bothits creation and maintenance at certain standards—promotes and sustains human development growth.Without roads, without basic power, without basicschools and health centres, and without access tocredit the poor are the most affected, as their areasare most infrastructure-poor, their dependency onpublic provision of infrastructure is the highest andthus they are the most direct beneficiaries of publicinvestments.

The case for infrastructure for human develop-ment is made powerfully. There is, of course, evidencefrom studies, empirical evidence, and our own directevidence and experience that support this. There aretwo aspects that we have to keep in mind when we

Table 1.10: Health Infrastructure—Time Series Data on Health Institutions andPopulation Served

Particulars 1994 1998 2001 2003 2006

District and Civil Hospital 97 93 94 96 103Population served per District and Civil Hospital 501052 523117 642000 656688 668079Number of CHC 133 203 229 227 265Population served per CHC 365429 239655 263528 277718 259669Number of PHCs 1263 1188 1192 1194 1152Rural Population served per PHC 28752 30592 37232 38715 42665Number of SHCs 8407 8316 8874 8835 8835Rural Population served per SHC 4319 4370 5001 5232 5563Total Health Institutions 9900 9799 10389 10352 10355Population served per Health Institution 4909 4965 5809 6012 6645

Source: Various publications of Directorate of Health, Government of MP, Bhopal.

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define infrastructure. It has been discussed that in-frastructure that directly and most efficiently impactspoverty reduction and human development is thatwhich is located where the poor live. It looks aftertheir needs first, is technologically accessible tothem, and enables them to break their barriers ofphysical, economic, and financial limitations. Itenables and empowers them to reach out to, to nego-tiate, and to benefit from the world outside theirown domain.

Thus, roads, specially rural connectivity, basicelectricity (that helps run their manufacturing unitsand their agriculture pumps to draw water), basicaccess to funds/credit that helps them to invest intotheir livelihood (primarily agriculture)—all these com-prise the critical infrastructure that requires eitherdirect investment by the state or investment into es-tablishing systems and agencies that help poor peopleaccess services.

Then, there is another set of infrastructure thatenables and builds an entire system and economicenvironment. It helps in reducing poverty, in build-ing options for the poor, in building their capabilitieswhich ultimately help them grow into stronger,more empowered, and more self-sufficient individu-als. This infrastructure comprises the bigger roads—the highways—that link areas and help balance outproduct, opportunity, finance and job rich or deficitareas with each other, and it indirectly builds theoverall economic strength and viability of an area,supply and use of electricity, of capability enhancinginfrastructure such as telecommunications andInformation Technology (IT), and transportation linksby rail and air.

Investing into both these scales in infrastructure,especially, the small-scale, local infrastructure has sig-nificant and sustained impact on three factors—growth, growth with equity and reduction in povertyby adding efficiency and productivity to assets of poor,and making the resources of poor more reliable.

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Appendix A1

Table A1.1: Rural Road Connectivity by District (January 2006)

District Percentage of District Percentage of District Percentage ofvillages not villages not villages not

connected by connected by connected bypucca roads # pucca roads # pucca roads #

Balaghat 36.2 Harda 61.6 Rewa 51.8Barwani 51.8 Hoshangabad 58.3 Sagar 68.3Betul 61.9 Indore 44.3 Satna 52.4Bhind 33.8 Jabalpur 63.6 Sehore 67.5Bhopal 42.4 Jhabua 48.2 Seoni 68.4Chhatarpur 56.6 Katni 65.1 Shahdol 59.6Chhindwara 62.6 Mandla 61.8 Shajapur 67.4Damoh 57.1 Mandsaur 57.7 Sheopur 39.1Datia 46.4 Morena 32.1 Shivpuri 62.4Dewas 64.7 Narsimhapur 62.0 Sidhi 51.3Dhar 61.8 Neemuch 56.7 Tikamgarh 52.8Dindori 64.6 Panna 63.3 Ujjain 70.1East Nimar 43.5 Raisen 68.7 Umaria 59.8Guna 72.2 Rajgarh 82.3 Vidisha 66.0Gwalior 29.8 Ratlam 66.7 West Nimar 53.1

Madhya Pradesh 58.7

Note: # Villages connected by PWD between April 1999 and January 2006 (estimated figure 450) have not been included.Source: MPRRDA and Annual Reports of PWD for 1999 to 2006.

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CHAPTER 1 Infrastructure and Human Development in Madhya ... · INFRASTRUCTURE AND HUMAN DEVELOPMENT IN MADHYA PRADESH and sanitation has been an important determinant in reducing