The reforms and consequent growth created extra resources that allowed India to speed up three significant initiatives.
Laveesh Bhandari, in his piece, Energizing The States, in the book India Transformed gives three examples of the successes of the 1991 reforms
The reforms and consequent growth created extra resources that allowed India to speed up three significant initiatives—the objective of universal literacy through Sarva Shiksha Abhiyan (SSA); universal rural road connectivity through the Pradhan Mantri Gram Sadak Yojana (PMGSY); and widespread penetration of rural telephones at low costs to the consumer. Kale and Bhandari pointed out that the high growth rates post 2005 would not have sustained for so long were it not for these three successes of post-reforms India.
To put it another way, India has surpassed aggregate literacy levels of 80 per cent, connected rural residents to a well-spread road infrastructure and empowered them through access to communications, including the internet, at relatively low costs. One would expect all these factors to have had a tremendous impact on rural productivity, but unfortunately, due to a lack of long and thorough data on capital stock in India, the increase in total factor productivity cannot be captured accurately. Circumstantial evidence, however, reports the same—an increased proclivity to go back to school among manual workers; a lack of major production disasters despite poor agriculture seasons in 2009 and again in 2013–15; sustained high-growth levels in rural areas—all of which strongly indicate (though admittedly not prove) that a very deep change had occurred in the agriculture sector and rural India.
First, consider basic literacy. Between 1991 and 2011, literacy levels went up from 52.21 per cent to 74.04 per cent—adult literacy rate (fifteen years and above) improved from 61 per cent in 2001 to 69.3 per cent in 2011—and are expected to cross 80 per cent by 2016 (census figures and author estimates). This has occurred largely due to the expansion of the SSA.
One of the most significant impacts of SSA has been a considerable decrease in dropout rates. According to the Statistics of School Education (SES), the dropout rates for primary stage showed very little decline during the period of 1990–91 to 2000–01, from 42.6 per cent to 40.7 per cent respectively. However, after 2000–01, when the SSA was launched, the dropout rate among primary school going children declined from 40.7 per cent in 2000–01 to 25.7 per cent in 2005–06. Similar decline in the dropout rate has been observed at the upper-primary stage of education. SSA has also been a boon for girls’ education. All of this augurs well for the sustainability of demographic and economic changes and for the future in general. At the same time, no one can deny the poor quality of education being imparted in Indian primary schools. Much has been written on the matter, especially since the release of ASER data since 2006 about the less-than satisfactory learning achievements of Indian schoolchildren. While the glass may be only partially full, it is significantly better than before.
Let’s look at PMGSY. The programme has been driven by the Centre, but its implementation falls under the state governments’ ambit. As per the PMGSY 2014–15 Annual Report data, the number of habitations connected by the PMGSY increased from 13,687 in 2000–04 to 77,877 in 2010–11 and to 1,08,637 in 2014–15. However, the pace appears to have increased since, with 65 per cent of rural habitations expected to have been connected by 2015, another 17 per cent sanction has occurred and the remaining (18 per cent) is expected to be covered by 2019. This is not simply about connecting villages with each other, but also connecting them to the closest market; this is not only an initiative in human interest, but has tremendous economic implications as well.
Nearly all state governments contracted out the task of building roads to private parties. Despite the risk of corruption and lack of capacity in the state line departments for such a massive project, a moderate- to good-quality road network has been laid out and is expanding rapidly. Moreover, despite the presence of interstate variations, the maintenance of these roads has been a welcome change from the past, when rural roads were known for their poor quality.
This change has been largely due to investments and efforts in the private sector but was primarily achieved through far-sighted central government policy and regulation. Even state governments provided rare support to the private entities and their contractors. As per ITU (International Telecommunication Unit) data, between 2001 and 2011 the percentage of households with telecom connections increased from 9 per cent to 63 per cent and further crossed 81 per cent by 2015.
But wide dispersion is not the most important part of the story. It was achieved with no subsidies and at low cost for the user. The tariff rates are much lower than the maximum rates specified by the Telecom Regulatory Authority of India (TRAI), which only goes to show the success of competitive forces in the sector.
The ITU provides international comparisons that further underscore the same. The reforms have enabled a great combination of competition and regulation, and together, they have enabled rapid expansion and coverage and low cost.
It is sometimes claimed by many that the telecom network was easier to create because it was largely wireless. That is not entirely the case: telecom towers need to be put up in the vicinity of large population centers and are susceptible to the same forces that beset any infrastructure. In this case, the pressure for cellular connectivity was not only driven from the top, but from the ground up as well. The greater demand was natural, given the low cost and great accessibility to the consumer. The state governments actively contributed and supported the rapid roll-out of telecom tower construction, enabled land for setting up cable networks and supported the need for the security of the large network of unmanned towers in the hinterlands.
Excerpted with permission from India Transformed: 25 Years of Economic Reforms edited by Rakesh Mohan. You can buy the book here https://goo.gl/jmk7bT