Globalising India

Print edition : September 06, 2013

Joseph Stiglitz. He says that competition among countries for investment leads to a broader “race to the bottom”. Photo: P. V. Sivakumar

Two books help us understand the consequences of India’s mindless pursuit of globalisation and the neo-liberal agenda.

THE two books under review examine the impact of globalisation and liberalisation in general and also in the specific context of India.

The first book, Globalization, International Law and Human Rights, starts with the simple proposition that the term “globalisation” is used to discuss political, social or economic phenomena mostly associated with how various forces are breaking down national borders and minimising the importance or impact of the nation-state. Other contributors to this book take this theme further, suggesting that globalisation has been strongly influenced by the neoliberal ideology.

This ideology of globalisation and liberalisation opposes an active role of the state in social and economic affairs, claiming that such intervention will negatively affect the economy of the country as a whole. As one of the contributors aptly observes, advocates of this ideology often argue that societies are best served by the principle of survival of the fittest, notwithstanding the fact that such principles vastly increase inequality and cause great hardship owing to the lack of social prevention of poverty. The second aspect of their argument is that those who survive will ultimately benefit from a richer society resulting from the achievements of the most capable and creative. But the efficiency gains purportedly resulting from globalisation have been exposed as benefiting only those working in the financial markets and increasing their advantage over other categories of workers.

As the economist Joseph Stiglitz observes in his recent book, The Price of Inequality, when workers get too demanding about their rights and wages, the threat of capital outflow keeps wages low. Competition among countries for investment takes on many forms. Apart from lowering wages and weakening worker protections, it leads to a broader “race to the bottom”, trying to ensure that business regulations are weak and taxes are low, he says.

Globalisation, under ideal conditions, means that winners could compensate the losers. According to Stiglitz, they say that they will but usually do not. In fact, globalisation’s advocates often claim that they cannot and should not do this. Globalisation hurts those at the bottom directly and indirectly because of the induced cutbacks in social expenditures and progressive taxation. The result, according to him, is that in many countries, globalisation is almost surely contributing significantly to growing inequality.

The contributors to the book under review reinforce Stiglitz’ claims with case studies drawn from many countries. In the first chapter, they point out that individuals in Africa, Asia, East Europe and Latin America suffer violations relating to their rights to health and water by, or involving, corporations because of the absence of legal remedies.

In the second chapter, the academic Kamrul Hossain explains how changes in the ecosystem and globalisation are adversely impacting the indigenous peoples of the Arctic region.

In the third chapter, Edel Hughes suggests that protection of the manifestation of religious beliefs in Europe is not as strong as might be expected because of its overall commitment to secular principles.

In the fourth chapter, Edwin Tanner argues that by declaring a war on terrorism in the wake of the September 11 attacks, the United States ignored other security threats such as global warming, the proliferation of nuclear weapons and their technology, the development of long-range ballistic missiles, world poverty, natural disasters, infectious diseases, and gender and other forms of discrimination. In the next chapter, Avinash Govindjee and Elijah Adewale Taiwo explain, citing the examples of South Africa and Nigeria, how globalisation, with its notion of education as a trade commodity, undermines the concept of education as a right that states are obliged to provide.

In the concluding chapter, Mohsen al Attar and Ciaron Murnane draw lessons from South Africa’s experience in realising economic and social rights (ESR). Under pressure from international financial institutions and a political cadre that has bought into the dominant economic ideology, government authorities refuse to expand welfare provisions of their own accord to fulfil their ESR obligations; the judiciary too has been less than enthusiastic in enforcing the state’s obligations to ensure a high standard of living. Comparing South Africa with Cuba, the authors suggest that the latter prioritised justice over dominant economic ideologies. The way forward is to abandon the competitive ideology of capitalism in favour of a collaborationist and solidarity ethos, they say.

Situation in India

The second book under review seeks to correlate this debate on globalisation with the results obtaining in India. In their book The State in India after Liberalization,Akhil Gupta and K. Sivaramakrishnan seek to explain what liberalisation means to the everyday life of villagers, townspeople and low-level bureaucrats and to public institutions and welfare programmes and how the relations between the state and other institutions and social groups are recast and re-imagined.

Liberalisation as state policy has complex forms of regulation and deregulation built into it. These policies have resulted in dramatic increases in productivity and economic wealth but also generated spectacular new forms of inequality between social groups, regions and sectors.

In the standard narrative of neoliberalism, the emphasis has always been on the slashing of public expenditure by cost-conscious governments and not on increasing public outlays to enable people to meet their basic needs. In India, however, the reverse may appear to be true. One could argue that this is a peculiar outcome of Indian democracy because the participation of poor, subaltern, and rural populations in the electoral process is often higher than that of urban, middle-class people; numerically, poor and rural groups form a preponderant part of the electorate. Therefore, the state resorts to increased public expenditures to enable people to meet their basic needs. This is what explains, according to the editors, ambitious social programmes such as the National Rural Employment Guarantee Scheme.

The editors cite Partha Chatterjee, who has argued that the paradoxical growth of state welfare programmes after liberalisation can be explained by the political compulsions of a pattern of growth that is immiserising a vast majority of people in the country. He emphasises the real fear of class war. If the effects of liberalisation on the poor and those displaced from their land and deprived of livelihoods by primary accumulation are not reversed by government policies, they might turn into “dangerous” classes. Inclusive growth has not meant including the poor in growth. What it has meant is taking the higher government revenues obtained from rapid growth in sectors of the economy tied to the global market and redistributing them to indigent sections of the population. Growth of the rural economy has not been a central concern of government policy, he says.

The first policy initiatives taken under the banner of liberalisation, lifting many of the restrictions of the licence-control raj, benefitted industrial capitalists disproportionately. This was not simply because industrial capitalists were better organised than agrarian interests at the centre but because such policies were easier to execute than policies that would have required coordinated action at the level of each state. Removing restrictions was definitely easier as policy than implementing new programmes. The consequence was that industrial capitalists were able to secure huge surpluses from expansion through international trade and from catering to the pent-up demands of a growing domestic middle class.

The second phase of liberalisation saw the decision to allow the States more freedom to promote their own economic strategies, especially to seek out their own sources of foreign direct investment (FDI). This led to the consolidation of industrial capitalists’ power and undermined the dominance of agricultural interests at the State level without displacing them entirely. States favour industries by giving them special economic zones (SEZs), tax holidays and other sops; they appeal to farmers by giving free electricity and subsidised canal water.

Economic decentralisation has reinforced federalism in that the power of State governments is likely to increase over time given their heightened ability to raise their own tax revenues and control their expenditures. According to the editors, India’s situation might increasingly resemble that of European states under the federal structure of the European Union rather than strongly confederated nations such as the U.S.

Sudipta Kaviraj, in his essay on the enchantment of the state, remarks that in the post-liberalisation phase, the state has a distinctive presence as a powerful regulatory idea and is implicitly invoked in every demand for justice, equality, dignity, and assistance. The idea of the state, he says, has gone through an astonishing transformation: it has cut itself loose from its attachment to the conceptions of the nation but has attained a strange apotheosis as the only repository of people’s moral aspirations.

Aseema Sinha in her essay points out that the existence of coalition governments in 1996, 1998, 1999 and 2004 with strong roots in the regional parties has helped the reform process in India. Opposition to reform, she says, is unable to coalesce around one single power centre as there are multiple power centres within the present government. A broad consensus on reforms explains how partners in a coalition pursue reforms on their own and with autonomous credibility. Unlike during Rajiv Gandhi’s prime ministership (1984-89), when all policy initiatives flowed from one source and reforms could only be initiated by the Prime Minister’s Office, multiple centres of power now pursue reforms with competitive vigour.

Aradhana Sharma brings out the problematic nature of empowerment as a quasi-state-implemented project of governance. Any suggestion of collaboration with the state may taint the language of empowerment, but she is not in favour of rejecting such efforts altogether, provided there is constant vigilance against complacency about their liberatory potential.

John Harriss is fascinated by how the governance agenda in the post-liberalisation phase tackles slum-dwellers and members of the informal working class of a city like Chennai by empowering them through decentralisation and community participation—rather than through any very significant redistribution of resources. This explains, according to him, why some advocacy non-governmental organisations in Chennai do not support them in struggles over rights to housing and livelihood, even while enabling them to participate more fully in decentralised urban government. Describing this as “new politics”, Harriss suggests that it is largely exclusive of the urban poor and it is accompanied by frequent resort by the state to coercive action.

New poverty

Anirudh Krishna laments that virtually no attention is being paid to the need to prevent the creation of new poverty, that is, people’s descent into poverty, while policymakers always talk of giving precedence to raising people out of poverty. According to him, different reasons for descent (into poverty) operate within different regions, and growth is hardly a panacea for all of these reasons or even the most important ones. He claims that people are pushed into poverty on account of health-care payments they make directly from out of their pockets. Research has convinced the author that relatively richer as well as relatively poor households in Gujarat villages have fallen into abiding poverty on account of health and health-care expenses. An accompanying essay by Patricia Jeffery and Roger Jeffery reveals that in rural Bijnor, Uttar Pradesh, reductions in state provision and the expansion of non-state provision have disempowered the rural poor.

Narendra Subramanian finds that the changes in the family law of the minorities have an uncertain relationship with both economic liberalisation and the formation of the post-liberalisation state. According to him, economic liberalisation changed some ends which influenced the regulation of family life. The increased privatisation of economic obligations, including responsibilities to support the indigent, is one instance of this phenomenon.

As family law generally requires better-off kin to support the indigent, policymakers interpreted religious laws in such a way that spouses, ex-spouses and natal kin support children and indigent adults through child support and alimony. He suggests that the ends that drove policymaking after the onset of economic liberalisation played a role in making the Supreme Court interpret Muslim law in 2001 in the light of constitutional rights, entitling Muslim divorcees to permanent alimony thereafter (rather than restrict the alimony to the three-month period after the husband initially stated his wish to repudiate his wife). Demands for reform found acceptance only when they were accompanied by sufficient mobilisation within the community and successful litigation based on a sound understanding of group traditions.

In her essay on the law struggles and neoliberal state in India, Nandini Sundar explains that the struggle today is as much a struggle between laws, as people seek to defend rights enshrined in earlier laws against new legislation that seeks to diminish these as privileges or deny them altogether, or make fresh laws to reflect the democratic aspirations of a post-colonial age.

She shows how the Forest Rights Act makes use of popular involvement in law-making, and its positive consequences for the functioning of democracy. She uses the term “law-struggles” as a metaphor for ordinary people’s attempts to define the rule of law in terms that meet their aspirations, and ensure that laws are observed. These struggles are likely to become an increasingly important part of Indian democracy in the post-liberalisation phase.