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Well-being as a marker of growth

Print edition : Jan 28, 2011 T+T-

The image of India as an emerging global power is an illusion produced by private corporations, which are the big players in the economic sphere.

AMIT BHADURI expounds the main theme of this collection of eight essays logically, forcefully and repeatedly. And the theme is that a serious illness is spreading fast through the economy and polity of India, which maintains that there is no alternative to the kind of development regime that came into existence somewhere around the mid-1980s and has been systematically implemented since the adoption of liberalisation policies in the early 1990s. In fact the claim is even stronger, that there is no need to consider any alternatives because the processes mentioned above have lifted the economy from its old, chronic rate of growth of around 3 per cent per annum (so changeless and persistent that one of our economists referred to it as the Hindu rate of growth) to a high level of 8 to 9 per cent, way above the global average and close enough to China's spectacular 10-plus per cent. Gone, also, are the days when in the comity of nations India was considered to be a large but poor country; the image today is that of India as an emerging global power, large and strong. It is maintained, too, that if this growth rate is kept up for a few more years the persisting poverty will get eliminated as well.

These are illusions, says Bhaduri, produced by private global corporations, who are the big players in the new India's economic sphere, and their cronies who together are coming to influence, if not control, the political processes as well. To prove his point, Bhaduri presents the other face of the country that you were afraid to see. Despite near double-digit growth for more than a decade and a half, available estimates suggest that more than a third of the Indian population lives in sub-human poverty. It has been reckoned that nearly 42 per cent of the Indian population is absolutely poor by international standards with an income less than 1 U.S. dollar in purchasing power. More than three-fourths of the population has a daily purchasing power of less than Rs.20 a day; nearly half the children of India are undernourished, which renders many crippled; anaemia is on the rise among women, and food deprivation in the countryside has not decreased in the last two decades. Not a pretty picture, this.

So, what has been going on in the name of liberalisation, globalisation, marketisation and privatisation? Sure enough, there has been a veneer of modernisation and prosperity in the country as witnessed by the transformation our big cities have been undergoing and the wealth that many in the cities and some in rural areas are flaunting. By 2007, India overtook Japan in the production of billionaires, the number increasing from nine in 2004 to 40 and thus giving the country the first rank in Asia. It cannot be said that growth is not having any impact. But these are confined to a small proportion of the big country, leaving the rest uprooted, agitated and frustrated a situation similar to what Charles Dickens described: It was the best of times, it was the worst of times,it was the spring of hope, it was the winter of despair for different sets of people.

Practically all the essays deal with this duality and its causes and implications. Three specific factors have been identified. The first is the fact that the high growth of income is accompanied by an extraordinarily slow growth of regular employment. While the gross domestic product (GDP) was growing at well over 7 per cent, growth of employment in the organised sector was creeping at around 1 per cent. Consequently, the growing labour force is being pushed into the unorganised sector, including many forms of self-employment characterised by low earnings and many forms of exploitation. At the same time, the big corporates that cater to the upscale domestic market as well as the global market benefit by reductions in their workforce and increase in profits. Their employees and stock holders benefit, too.

The second is the hesitation of the state to make adequate provisions for the social welfare sector health, education, and public distribution on the grounds either of financial constraints or of the view that these are areas where the private sector should play an increasing role. The third is the encouragement that the state gives to the big corporations for the kind of development that they are aiming at. By making use of the power to acquire land for public purpose, land is taken over, frequently using force, and passed on to private companies at cheap rates, depriving many poor people of their only source of livelihood. Bhaduri points out that the governments at the Centre and in the States, irrespective of their political complexion, have become promoters of private business, not a regulating mediator between big business and poor people. Corporate profit since the 1990s has grown three times faster than the GDP. And, the poor face the terror that is development', and the poorest face this most severely.

The main outcome of this pattern of celebrated growth is the generation of inequality, and in turn it nurtures, for a while, more growth. What is growing, of course, are the goods and services that those who become rich demand on the basis of their ever increasing purchasing power. And the process goes on supported by the hidden ideology of modernisation, progress and power shared by the rich and the growing middle class'. But, warns Bhaduri: No society, not even our malfunctioning democratic system, can withstand beyond a point the increasing inequality that nurtures this high growth. For a while it will be propped up by the economic openness that formed the basis of the new economic policies initiated in the early 1990s. There has been an increasing flow of capital into the country and the possibility of catering to external markets. But neither of these can be counted on for long. The main feature of global capital today is its quick mobility here today and gone tomorrow. As for external markets, India's performance has not been particularly impressive so far and with several other countries entering the fray, that, too, is unlikely to provide long-term opportunities.

Alternative pattern of industrialisation

What, then, is the alternative? To avoid any misunderstanding about his position, Bhaduri indicates that he is not against industrialisation per se. But the nature of industrialisation is the crucial issue. The three essays at the end deal with this matter. Some broad indications have been given. Any alternative pattern of industrialisation would involve the poor and the illiterate, who constitute the skilled and semi-skilled labour force, operating in their traditional environment. It would be characterised by labour-intensive technology, small-scale production by masses and maximum direct linkage between consumer and producer. And more forcefully: A programme of decentralised, employment-intensive, rural industrialisation through participatory democracy at the local level is no utopia. It is the compulsion of our time.

There is little that is novel about this alternative because in general terms it has been under discussion from the days of Gandhiji. However, when a distinguished economist now puts it forward as his alternative, it may sound noble, but rather vague and feeble too. Bhaduri could have done better if he had cared to go through the Indian literature on this subject of the 1970s. The omission appears to be deliberate: At the end of the collection, he offers a reading list, but except for K. Polyani's The Great Transformation (1944) and J. Scot's The Moral Economy of the Peasant (1976), all other entries are of the 1990s and the first decade of the present century. The Indian literature of the 1970s was on the nature of growth. The context was the launching of the garibi hatao slogan as the main plank of Indira Gandhi's election campaign of 1971 and the Approach to the Fifth Five Year Plan document that came soon after she returned to power with a convincing mandate and reconstituted the Planning Commission, inducting two of our top economists into it. That document suggested that high growth accompanied by some redistribution would be the economic route for poverty eradication.

Most economists had accepted this view, but there was a minority that challenged it. Insisting that growth was not merely a number but a reflection of socio-economic and political processes, it was pointed out that within the capitalist system growth would result in affluence for a few and privation for many and that political processes would not permit the kind of redistribution necessary to rectify it. On this basis, it was argued that poverty eradication in situations like ours called for drastic changes in the pattern of production. There were publications that not only suggested such radical alternatives to bring up the levels of living of the vast masses, but made specific suggestions on how to achieve it. Even a casual glance through the literature of the period would have helped Bhaduri to give concrete shape to his proposals.