Modi’s clean-up campaign could boost growth, too

modiLAST week, India’s Prime Minister Narendra Modi shared a stage with actor Hugh Jackman in New York’s Central Park at the Global Citizen Festival concert. Breaking from his usual practise of speaking in Hindi, Modi spoke in English for seven minutes largely about the importance of sanitation and cleanliness.

In fact, his frequent calls for India to provide all its people with access to toilets — which half of them currently lack — are what had earned him the invitation in the first place.

Days later, Modi was back in New Delhi to launch his Clean India campaign. The prime minister knows how to pick his moment. He chose the 145th anniversary of the birth of India’s founding father, Mahatma Gandhi — himself a fervent proponent of public and private hygiene. Never one to miss a photo opportunity, Modi picked up a broom and swept a public area in a colony inhabited by sanitation workers (who also happen to be Dalits, India’s one-time untouchables, and still among the poorest sections of society).

On cue, several cabinet ministers and senior functionaries went about sweeping public places or cleaning their offices, including toilets. Every government employee — and their numbers run into the millions — was asked to forego his or her holiday and report to work to do the same.

Of course, a public spectacle that lasted a few hours in front of television crews is not going to solve India’s massive sanitation problems. But Modi has good reason to keep banging on about the issue: a solution could bolster growth as well or better than any of his other reform measures.

The health impact of poor sanitation is tragic. The Ebola epidemic in West Africa has prompted a global panic by killing just over 3,000 people; some 200,000 Indian children under the age of five die every year from diarrhoea.

There is a cost to gross domestic product as well, caused by malnutrition and other health problems which significantly reduce the productivity of the workforce. The World Bank estimates the toll at $53.8 billion or 6.4 per cent of GDP annually.

If Modi meets his goal of achieving certain key sanitation goals in five years, the campaign could add at least one percentage point to India’s GDP growth every year, roughly the same quantum as a unified goods and services tax would yield. Clearly, it’s a worthy effort.

Thus far, the government seems to be going about the task the right way. The plan is to distribute $33,000 every year to the local administration in each of India’s 247,000 villages for the next five years.

The government is also setting up a fund to collect contributions from private companies and individuals.

The decision to have local governments spend the funds is smart. India suffers from a plethora of federal schemes, which are prone to corruption and leakage precisely because they have to trickle down several layers from New Delhi, to state governments, to villages, before reaching the ultimate beneficiaries.

It is almost impossible to fix accountability in such a system. Village administrations are far more likely to be responsive to their constituents.

Given their own lack of expertise, they may also be more willing to hire from outside the government system to execute the sanitation work. The task of building toilets, for example, can be outsourced to non-governmental organisations such as Sulabh International, whose volunteers have already built thousands of toilets across India.

Sulabh is a non-profit, but the government shouldn’t shy away from getting for-profit companies involved as well. There is plenty of evidence that Indians are willing to pay for the use of toilets, as Sulabh has discovered. Private waste-disposal companies are far more likely to find profit opportunities in the efficient disposal and recycling of garbage. Making Delhi bureaucrats clean their own toilets may be good PR, but like so many other things, the solution to India’s sanitation problems lie outside the government.

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