Less for more

Written by Madan Sabnavis | Updated: Aug 3 2014, 06:36am hrs
The impact of economic reforms in India has been a debated subject, with there being two sides to it. People like Jagdish Bhagwati, Arvind Panagariya and company have elaborated on the progress made because of private sector initiatives. The trickle-down theory has worked, as seen by the jobs created and the growth in consumerism. The solution is that the government should continue to provide such incentives to further the growth. Then there are people like Jean Dreze and Amartya Sen, who still feel that things are unequal and that there is a need for the government to take affirmative action to ensure that the poor are made less poor.

In between, there are a lot of statistics to show what all has happened despite the government being there, which has only added to the inefficiency wherever it is involved.

It is here that Dilip Hiro makes his contribution to the debate in his quite remarkable book, titled, Indians in a Globalizing World. His contention is more on the side of the antagonists of reforms, where he shows that, at the end of the day, the New Economic Policy (NEP), which was a part of the Washington Consensus followed after 1991, has aggrandised inequality. It has resulted in the rich being the main beneficiaries and the poor being left out or left just with illusions and tidbits in the form of the state spending money on social welfare programmes. In the process, we have created several success stories in a skewed economy tilted against agriculture, harnessed corruption of large magnitudes with the involvement of the government and the private sector, and generated a large population of have-nots, who, while being driven to the edge by the government-industry nexus, have fallen back on the support of terrorist outfits. This end result is far from being comfortable.

The way Hiro builds the case in the 10 chapters is interesting. The narrative starts with the township of Gurgaon, which is representative of everything that reforms and their consequences are about. There are several offices and residential complexes that have come up in Gurgaon, which show the affluence. The back-office call centres represent the globalisation and the absence of infrastructure displays the lacunae still in the system. The growth of slums and the disparity in incomes across these settlements and the super-affluent complexes tell us everything about what the new economic policies have achieved. More importantly, Hiro focuses on the call centres, which have created several jobs, but are low-paying and with a high degree of insecurity in tenure. This is what the NEP brought in.

India certainly has become global and made a name for itself in international circles. If one looks at the proliferation of Indians in the IT industry of the US and the growth of some Indian companies that have entered the world league, the story is one of bewilderment. Indian companies have made inroads into the UK too, with the Tata and Mittal groups going in for acquisitions of a scale that could never have been conceived before. Quite clearly, these achievements have been made possible because of the economic transformation in the country.

But our preoccupation with wealth creation (we can take pride in housing a growing number of billionaires) has made us concentrate our efforts on the richer segments of society in the name of supporting productive sectors. This has had two repercussions. The first is that the state of agriculture has been neglected and this is something we realise every time there is a delayed monsoon. We have actually lost out on the benefits of the green revolution and have left it to nature to address the issue of food supply. The case of farmer suicides due to their inability to repay debts is symptomatic of this malaise, which has crept through the various corners of our social fabric. In fact, Hiro is critical also of the present institutional framework, which is not fair to farmers when it comes to lending. This forces them to go to money lenders. It has led to farmers turning to other occupations, leading to large-scale migration to urban areas.

Second, the result has been creation of large slums in these areas, which has had a number of negative consequences in terms of the pressures on housing, urban infrastructure, unemployment and the wider social problem of crime. In fact, the author also points out that our public distribution schemes, such as PDS, are severely flawed and need to be revisited with a sense of urgency.

Alongside these developments, the author also talks a lot of the sleaze that has entered our society with the quest for wealth being enormous. He exposes wide-scale corruption and the close nexus between politicians and beneficiaries, which is industry. Here, he talks about scams like 2G, CWG, coal, etc, and points out that these are not new and that even in the 1980s we had the Bofors and Howitzer deals. Further, corruption is quite deep-rooted in us and the entire model of decentralisation has only created more layers of corruption. He gives instances of both the main parties in Tamil Nadu, DMK and AIADMK, giving cash incentives to voters to vote for their parties.

The private sector is no less than the government. The methods used by brokers like Harshad Mehta and Ketan Parikh, and the transfer of money to politicians added to the sleaze. The irregularities, which have come to the forefront in the cases of Satyam and IPL, are manifestations of this malaise.

Putting these developments together, Hiro points out that we have created a new problemthe rise of Maoism. Here, he goes into the details of the growth of this movement in Chhattisgarh. The case here is quite clear. Public land has been sold by the government in return for rewards to industry. For the tribal population, who live on this land and who are promised rehabilitation, there is an absence of justice, as the promises have not been kept. They, in turn, seek justice from the Maoists whose answer to these questions ranges from driving out industry through kidnappings to killing politicians and the security forces. This is the new form of justice and war, which we cannot escape.

While one can argue about the rights or wrongs of the issue, at the end of the day, we have created this new movement, which, as per the author, works well for displaced people. While the government has taken stern action against the sympathisers, its not a solution. Therefore, this development can be treated as a consequence of the uneven distributive system that has been created by us, where policies have been geared only towards capitalists.

But things are changing and the author argues that the growth of the new civil movement against corruption and a call for greater transparency have helped to a large extent in creating greater awareness. Hopefully, things will change for the better.

By the time one finishes reading the book, there is a sense of unease. There are no clear answers here. The rich feel that a lot of good has come to the country because of these reforms and hence they have an air of superiority about them, as they are convinced that they have deserved it, going by the law of economic Darwinism. Those on the fringe, who see the goodies around them, feel that they can get something somewhere. But those in the interiors dont feel that gung-ho about reforms because they are still waiting. There are no solutions to this situation, which is understandable, as they are not quite within the grasp of our thinking today.

Madan Sabnavis is chief economist, CARE Ratings