India is not a part of the Regional Comprehensive Economic Partnership (RCEP) trade pact and Japan is also holding its breath. These dissensions are a manifestation of the complexities in the relationship between the tiger and the elephant, and its ripple effects across Asia.
India has joined the Asian Infrastructure Investment Bank (AIIB), which is funded by China. Delving into its functioning explains the context of the recent dissensions on RCEP. Last year, the third annual meeting of the AIIB was held in Mumbai. There was a preparatory meeting organised at Ahmedabad, which I was asked to chair. One of the issues raised by me was that the urban and the rural in India are a continuum and not separated by policies as in the Chinese model, where, conventionally, a person needed a permit to shift to an urban area.
In India, the Research and Information System (RIS) for developing countries and Assocham were mandated by the finance ministry to organise these discussions. The first issue was the definition of what is urban. I pointed out that during the last intercensal period (2001 to 2011), over 40 million kisans had moved to what are called census towns. These were urban towns according to the census definition, but state governments preferred to keep them as rural habitations because of political reasons.
Ignoring these settlements means that the most dynamic aspects of the rural-urban linkage were being left out when conceiving of infrastructure provisions. The Chinese bank officials found it difficult to grasp that in a fast-growing economy, its agro-based non-grain commodity base — milk products, animal husbandry including poultry, fish and meat, vegetables and fruits — was the sector whose demand was rising. Also, this was a politically significant issue.
It is not easy for the more specialised smaller RCEP countries to appreciate this, and hence, the pleas to India to fall in line. The Chinese paradigm is different. Infrastructure needs of these fast-growing sectors for transport, markets, first-stage processing are tremendous.
The smart city systems in India also ignore these needs. While private and community investments are needed, the state had to fill the gap. I reminded the meeting that in a visit to a Walmart outside Shanghai, I had found a section in which farmer cooperatives and producer organisations, as we would define them, had been given space as a strategic partnership.
There is also a need to support the newer kind of farmers’ organisations that are coming up. The need for initial financing for such arrangements, drawing in private rural savings and other financial sector savings, is tremendous. In fact, a number of these newer kinds of arrangements are important for the upsurge of agro-exports. Working capital needs could also be financed. The meeting recognised that it is these newer areas of the rural-urban linkage that are being focused on.
There was an interesting debate on the fact that, as regards the land question, there were a number of farmer-producer movements in India which protected the interest of farmers. The term-lending experts thought of this as a hindrance, but some of the town planners and NGO participants argued that it was important to configure processes in a way that included them in the investment and development systems rather than seeing them as bottlenecks.
The meeting noted that a number of professional town and country planners had their first field experiences in such movements. In Ahmedabad, the architect B V Doshi, the town planner Christopher Benninger, and I had started a School of Planning in the Seventies. Its earlier batches, who we taught, were by now legendary names in India and abroad. They had cut their teeth sitting with demonstrators in the slums of Gul Bai Ka Tekra in Ahmedabad.
Our Chinese friends would not fully understand. I remembered that on a visit to China, the mayor of Shanghai told me that he had relocated 60,000 persons in four months. I had to confess that as chairman of the Narmada Planning Group, it took me two-and-a-half decades to rehabilitate 20,000 families. Infrastructure development differs across Asia. It is wise to hasten slowly.
This article first appeared in the print edition on December 12, 2019 under the title ‘India’s RCEP choice’. The writer, a former Union minister, is an economist.
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