What has been the impact of India's economic reform in the short term? Are states implementing reforms as the central government intended? What effects does reform have at the village level and who feels the pinch most when the state tightens its belt? Tackling these questions is the key to providing policymakers with knowledge about the impacts they expect from economic reform, but also about unexpected outcomes.

India's economic reform package, underway since 1991, has meant a push for privatisation, deregulation, removing subsidies and changing management and incentives in state institutions for the sake of better governance. While the intention has been to protect social welfare as far as possible, in many states cuts in spending on food and agriculture have been resisted, but social spending has been hard hit. Research on the impact of short-term adjustment policy led by researchers from Queen Elizabeth House, Oxford University and the Madras Institute of Development Studies looks more closely at how one Indian state has been managing under the pressure for reform. Both food and agriculture and social welfare spending cuts have been resisted in Tamil Nadu, but effects are still being felt. New studies in 11 villages which have been under study since the 1970s reveal some of the areas in which the short-term impact of reform should be of concern to policymakers. In the case of food and agriculture, the following

• Levels of agricultural subsidies have not dropped, nor have resources been moved into improving agricultural infrastructure. Irrigation tanks and canals need better management, renovation and extension, as better infrastructure is more likely to produce the desired agricultural supply response, and the impact on social division and the environment of the privatisation of ground water access so far has been negative.
• Dependence on private irrigation has increased social differences and damaged the environment, despite strict rationing of electricity. Alternative forms of water provision need to be found, as the present system is economically, socially and ecologically unsustainable.
• Formal sources of credit cannot be tapped by poor and landless producers, who rely instead on expensive and exploitative loans. Access to credit for land would improve their asset-base and enable them to get formal credit on better terms in the future.

Social welfare concerns arisingn from the studies were as follows:

• For the first time in a decade, excess girl child (under six) mortality has increased, and the state's promotion schemes for girl children and baby cradle schemes (taking care of abandoned girl babies) do not operate here.
• The programme for mandatory primary education announced in 1994 needs implementation to improve the educational chances of poor, low-caste and girl children, which remain slight.
• Disabled people need access to disability benefits and loans as chronic illness and disability are major causes of loss of livelihood for the very poor.
• Social assistance programmes need improved management to ensure that they are accessible without the bribes which currently reduce access. Decentralising these schemes locally could improve their administration.

Source(s):
Adjustment and Development: Agrarian Change, Markets and Social Welfare in South India, 1973-95 Summary of Findings and Dissemination, B. Harriss-White and S. Janakarajan (1997)

id21 Research Highlight: 1998-Feb-19

Further Information:
B. Harriss-White, S. Janakarajan.
Queen Elizabeth House
Oxford University
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Contact the contributor: barbara.harriss@qeh.ox.ac.uk

Queen Elizabeth House (QEH), UK