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NFIFWI, Tirunelveli Division [email protected]

How 20 years of neoliberalism has ravaged India

Praful Bidwai Last updated on: July 29, 2011 17:41 IST

Exactly two decades ago, Dr Manmohan Singh, then the finance minister, launched India on a

new economic policy course of liberalisation, privatisation and globalisation (LPG).

Singh exploited a short-term foreign exchange crisis to push through a far-reaching long-termagenda. Ironically, on the 20th anniversary of the event, the sleaze associated with neoliberalism,

with all its cronyism, criminality and plunder of public wealth, is on full display.

But neoliberalism's diehard supporters strain to deny a link between LPG and scandals.

The crudest of neoliberalism's apologists claim there's no such thing as crony capitalism -- only

crony socialism and 'licence-permit raj'. It's as if Harshad Mehta-engineered stock market scamsor the Enron scandal of the 1990s, the great telecom scams and public sector selloffs (VSNL,

Centaur Hotel, Modern Bakeries, and Balco) of the 2000s or the more recent Posco, Lavasa,ISRO-Antrix, and Krishna-Godavari gas-pricing scandals hadn't happened.

And as if 'regulatory capture' in power, petroleum, insurance and telecom was a mere fiction.

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Yet other neoliberals are chiding Singh for paying too much attention to 'welfare' and not

pushing through second-generation 'reforms', such as dismantling protective labour laws.

A former Leftist claims that neoliberalism is a thing of the past and says the Washington

Consensus no longer exists. It was called that because LPG policies were drafted by the UnitedStates government with the World Bank and the International Monetary Fund, bothheadquartered in Washington.

However, the Washington Consensus is very much alive and kicking. It's now being thrust downthe throats of European states like Greece and Ireland with the same brutality with which it was

imposed on more than 100 developing countries since the late 1980s.

And it's as passionately hated as earlier by its victims, who have to suffer 'austerity' and massivecutbacks in public services even as profligate corporations and banks drenched in speculation get

generous bailouts.

This is a good moment to draw up a balance-sheet of neoliberalism's record, and India's embracetwo decades ago of a new religion -- GDPism, or worship of rapid growth of the gross domestic

product as an end in itself, regardless of social, economic, political and environmental costs.

The faith was never officially acknowledged nor even properly named. It was often mis-named

'reform'. 'Reform' means making things better, which GDPism didn't do.

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Worse, growth was confused with development. But development isn't growth; it's structuraltransformation of society.

The primary, if not the sole, merit claimed on behalf of India's neoliberal policies is that they

have produced high GDP growth and are therefore successful by definition.

In two decades, India has indeed become an 'emerging' economic power, whose GDP has risenfrom the 12th rank in the world to the 10th in absolute dollar terms, and from the 9th to the 4th

rank in purchasing-power parity -- although in per capita terms India still belongs to the bottomquarter of the world's nations.

Yet, the connection between economic policy and GDP growth isn't straightforward. India'srecent growth isn't entirely or largely attributable to the unleashing of the 'animal spirits' of

entrepreneurs, which were supposedly locked up earlier under excessive regulation.

Indian businessmen have long been adept at bypassing and subverting rules and regulations.

The 1980s also saw high GDP growth in India, although there was no neoliberal domestic regime

then. Factors such as high investment and savings rates, and improved infrastructure, also playeda big part in speeding up growth in the last 20 years.

However, growth is one thing, distribution quite another. The quality of India's growth is poorbecause of its great unevenness.

Growth is skewed in favour of services, which now account for over 50 per cent of national

income. Agriculture, on which three-fifths of the people depend for livelihood, has declined tounder 20 per cent of GDP.

Industry has grown far too slowly to be able to absorb surplus labour from agriculture.

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India's agrarian crisis is grave. It has driven more than 200,000 farmers to suicide over 12 years,

an unprecedented tragedy in world history.

The fruits of growth have accrued largely to the top 10 to 15 per cent of India's population.

Growth has depressed employment and failed to raise the incomes of the majority, let alonesubstantially reduce income poverty.

On the most optimistic official estimate, that of the Tendulkar committee, rural poverty fell from

50.1 per cent in 1993-94 to 41.8 per cent in 2004-05. In urban areas, poverty declined from 32.6per cent to 25.7 per cent over the same period.

These numbers have been questioned by many capable economists on methodological grounds as

far too low. But even assuming they are correct, the decline in poverty was marginal, at bestmodest.

It still leaves nearly 400 million Indian living at or below an animal level of subsistence,consuming fewer calories than are needed to keep body and soul together. (That's how poverty isofficially defined in India.). This is simply unacceptable.

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So at the end of the two highest-growth decades in recent history, India still has the highest

number of dirt-poor people anywhere in the world.

Disturbing as they are, these numbers hide non-income forms of poverty and deprivation,

including dispossession from land and other natural resources, extensive ecological destruction,widespread and severe malnutrition, social bondage, unhealthy dependence on powerful

exploiters, gender-related poverty, compulsion to drink unsafe water and live in unhygienicconditions, etc.

One-half of India's children are malnourished and two-fifths of its adults have an abnormally lowbody-mass index. It's no achievement that more Indians have cellphones, whose value is

reflected in a rise in GDP, than toilets.

Acute deprivation has a direct impact on the quality of life and ability of people to develop theirelementary human potential. Life with dignity, and the capabilities that demarcate human beings

from other species, remain impossible for hundreds of millions of Indians.

Arguably, their number has grown over two decades as the natural base of the economy has got

degraded and common property resources have been increasingly privatised by predatory capital.

Equally sadly, income, wealth and regional disparities, always grotesque, have grown to a point

where we have two Indias: a huge cesspool of poverty, stagnation, social backwardness andacute deprivation, which covers much of the country, especially its heartland; and islands of high

growth, and moderate and rising social indices in parts of (but by no means the whole of)peninsular India.

Because there is withdrawal of public investment, no correctives are being applied, especially to

regional disparities. To this day, only one state (Tamil Nadu) comes close to matching Kerala's1980s social indices.

Income and wealth disparities are never properly captured in India's kleptocratic society byindicators such as the Gini coefficient, because the rich hide their income and the black economy

thrives. But anyone can see that their growth has been explosive.

Obscenely high disparities are socially undesirable in themselves. They also ensure thatinequalities in social opportunity will grow, putting the already disadvantaged at further

disadvantage.

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In India, inequalities strongly cascade at each stage of life: if you are poor, you have less accessthan the rich to nutrition, healthcare, education, employment, and other social services. You are

permanently underprivileged.

We are thus allowing GDPism to reshape India into a society which lacks, indeed is structurally

incapable of, social cohesion and a genuinely shared sense of nationhood.

An untutored sense of community can only arise from relative equality of life-chances and basic

parity in entitlements amongst people.

A notion of common citizenship and shared destiny, which goes beyond participation in electoralprocesses, cannot develop in a divided society whose chasms will further widen under

neoliberalism's ruthlessly inequality-enhancing spell.

All manner of narrow and parochial identity politics, as well as superstition and obscurantism,will thrive in such a society.

It's therefore no surprise that Gujarat, among India's most industrialised and fastest-growingprovinces, is also its most communalised state and Hindutva's laboratory, where one-eighth of

the population stands disenfranchised.

All this means we are paying an exorbitant price for GDPism -- including enormous waste of

precious human potential, perpetuation of people's suffering, rising gender inequalities, loss of

social cohesion, growth of irrational faith, and a weakening of the foundations of politicaldemocracy.

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Now add to this the ecological costs of GDPism through the melting of the Himalayan glaciers,loss of prime natural forests, degradation of land, chemicalisation of agriculture, the ravages

caused by reckless mining, extensive air and water pollution, poisoning of all our major rivers,overuse of groundwater, loss of priceless biodiversity, and rising greenhouse gas (GHG)

emissions.

Driven by a luxury consumption boom and changes in the lifestyles of the top one-tenth of thepopulation under neoliberal policies, India's emissions are growing twice as fast as the rest of the

world, aggravating and accelerating climate change.

India is now the world's fourth biggest GHG emitter. Among the world's worst victims of climatechange will be Indians themselves.

India couldn't have found a better way of shooting itself in the foot. India and her neighbourshave a lot to learn from this 'emerging power' -- including lessons in how not to emerge.

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