Red-green deal

Print edition : January 27, 2012

It is time to jettison neoliberalism for programmes that combine equity with climate-sensitive schemes for universal public service provision.

AS global capitalism's worst crisis in seven decades continues unremittingly, it becomes obvious that the shop-worn solutions recommended by the International Monetary Fund (IMF), the United States Federal Reserve, the European Central Bank and other agencies devoted to neoliberal approaches are failing. The combination of austerity, harsh budget cuts, bank bailouts, fresh capital infusion into financial institutions, and further privatisation of public companies and services is just not delivering results.

The entire edifice of the welfare state, built especially in Western Europe after the Second World War with free or subsidised health care, educational and social services, including old-age pensions and unemployment allowances, is being dismantled. This represents social retrogression on a historic scale. Yet, the Great Recession shows few signs of lifting even as joblessness reaches new highs, particularly in southern Europe.

In India, conventional indicators of economic performance are dipping. Gross domestic product (GDP) growth is slowing down, inflation remains a worry, and the rupee has lost nearly 20 per cent of its value to the U.S. dollar within a year. The stock markets have tanked, with the Bombay Stock Exchange's (BSE) market capitalisation falling by 27 per cent over the year.

The cost of money is at its highest in more than a decade, with the government borrowing at almost 9 per cent and companies at 13 per cent. The current account deficit, already about 3 per cent of the GDP, is set to widen. Foreign direct investment (FDI) flows remain sluggish. Meanwhile, there are indicators that the sovereign debt crisis in the European Union (E.U.) could affect India adversely. European banks' exposure to India now runs at about 15 per cent of the GDP.

The government's response to this situation has been to boost the capital markets artificially by allowing foreign investors, including individuals, to invest directly in Indian corporate stocks. It is also asking public and private financial institutions to set up a Rs.50,000-crore infrastructure debt fund. Meanwhile, many oil-rich Gulf states or their sovereign wealth funds, including Saudi Arabia, Kuwait, Qatar and Abu Dhabi, are reportedly planning to pull their investments from the crisis-ridden economies of the E.U. and the U.S. and shift them to India.

The Manmohan Singh government, under fire from Indian industrialists for policy paralysis is bending over backwards to reassure them that second generation reforms are on the way. These include environmental deregulation, mindless public sector divestment, more dole outs to business, and pruning the fiscal deficit, just when more public investment and tighter regulation are needed.

This largely replicates the bankrupt strategies being pursued in the West, to disastrous economic, social and political effect. This approach will address none of the structural problems that this economy and society face, including persistent mass poverty and widespread deprivation.

This translates into lack of assets (especially land) and purchasing power in the hands of the people, comprehensive denial of social opportunity, cascading class inequalities and regional disparities, and lack of food, water, shelter and energy security. The situation perpetuates a level and quality of social bondage and economic servitude which are unbecoming of a minimally civilised society.

Any society that aspires to a modicum of civilised existence and social cohesion must define clearly and pursue rapidly a project that aims to provide basic public services to all its people so that they can lead a minimally decent existence free of want and realise their basic human potential. Half of Indian children, malnourished, underweight and wasted as they are, cannot possibly realise their potential. Equally vitally, the project must accomplish this task in an environmentally sound and climate-sensitive way, while keeping the focus centrally and sharply on equity.

Here is a preliminary proposal, inspired partly by the Green New Deal Susan George proposes in her new book Whose Crisis, Whose Future? This is best expressed as a people's charter for which all progressive social and political currents must struggle. The charter at minimum must include land reform and universal entitlements to adequate quantities of food through a public distribution system (PDS), safe drinking water, basic shelter, health care (especially preventive care), education for 12 years, sanitation and electricity and other modern energy services, including clean cooking fuel. The land reform must encourage cooperative farming and redistribute land without parcelling it out into unviable plots.

To take one instance, a progressive approach to food security and food sovereignty must be based on furnishing a strong infrastructure, including soil recontouring and topsoil conservation; sound drainage; low-input, low-water methods of farming; minimal use of chemical fertilizers and pesticides; and shifts to cropping patterns that are appropriate to specific agro-climatic conditions.

Thus, Punjab will have to move away from its current paddy-wheat-paddy crop cycle, which depletes the soil of micronutrients, leads to salinity and waterlogging and necessitates the use of massive doses of cancer-causing chemicals. Water-stressed western Maharashtra will have to abandon sugarcane cultivation, which consumes eight to 10 times as much water as cereals per unit of biomass and more if millets are grown. The priorities of agricultural research will have to change. As will the metrics for measuring productivity, which must include water and energy audits.

Agrarian transformation

And we will all have to accept that the future of Indian agriculture lies not in unsustainable water- and energy-intensive Green Revolution practices but in dryland farming based on sturdy, moisture stress-resistant seeds and methods that aim at maximising the useful biomass produced. Such an agrarian transformation will need huge amounts of public works and billions of person-days of labour. But this can be logically linked to and integrated with the National Rural Employment Guarantee Act (NREGA). The infrastructure needed for a universal PDS, including grain storage, can also be tied to the NREGA.

Similarly, provision of water security will mean building a vast network of water-harvesting systems, percolation tanks, bunds and small or micro dams, and collecting water where it falls, while reducing runoff. Along with water purification facilities and adequate sanitation (essential for provision of safe drinking water), this would demand large-scale investments running into thousands of crores of rupees. The schemes could be usefully integrated into a revised version of the National Water Mission under the National Action Plan on Climate Change.

Again, we must abandon the illusion that the provision of adequate shelter both in the urban and rural areas can be left to the mercy of private builders or crude individual/family efforts. If India is to have sustainable habitats, with ecologically sound town and village planning and low-carbon, low-cost building construction, the task must be addressed by the government, including local bodies, jointly with community organisations, public-spirited and environmentally conscious architects, social scientists and civil society groups.

At least 70 per cent of the Indian housing and infrastructure that will exist by 2030 is yet to be built. How we conceptualise, design and construct it will determine how it will affect climate change processes and how successfully we adapt to these with resilient forms of housing, low-entropy cities that avert long commutes, reconfiguration of office work, embedding energy-saving approaches in buildings, adapting them to energy conservation right from the start (and not as an afterthought), and so on.

Perhaps the most challenging task is that of reaching electricity to the 500 million Indians who do not have it the largest such number anywhere in the world some of whom live in our nearly one lakh unelectrified villages, but the bulk of whom live in both cities/towns and villages officially declared electrified on bizarre criteria.

The short answer is twofold: installing lakhs of home-lighting systems based on solar cells, in the short run; and in the middle and long run, restructuring the entire power grid in a decentralised manner to meet the needs of distributed generation and consumption, in which renewable sources and small-scale power generation play a pivotal role, unlike in conventional grids based on centralised generation. India has a historic chance to do the second by technological leap-frogging.

Solar home- and village-lighting systems are becoming increasingly competitive with grid-based power. There is a veritable renewable energy revolution in progress, and costs of solar cells are falling by the month. In the latest auction for solar generation in the 100 megawatt-plus range under the National Solar Mission, bids were as low as Rs.7.49 per kilowatt-hour (kWh). This is about half the feed-in tariff being offered for renewables.

At the present rate of cost reduction, wind generation the world's fastest-growing energy source for two decades, with annual growth rates of 30 per cent-plus is already competitive with gas-based power. Biomass-based and mini- and micro-hydro are even cheaper. Soon, solar-thermal and solar photovoltaics will join this league. India must not allow the renewables revolution to bypass it and must exploit every opportunity to reorganise its energy system to promote and accommodate renewables.

All this will need massive funding. But that can come from plugging the Rs.5 lakh-crore leak of revenues forgone annually by the government, by taxing corporations and rich and upper middle-class individuals who currently pay among the lowest taxes anywhere. But there is no substitute for a green-red or Green New Deal.

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