[Frontline |http://frontline.in/fl2817/stories/20110826281703600.htm], 26 August 2011


Under neoliberalism, income and regional disparities have got bloated to a point where the country's rich and the poor live in two separate worlds.

A TAWDRY, low-minded elitism always comes naturally to our corporate media. Even so, one is astounded at the depths to which many newspapers stooped while celebrating the 20th anniversary of Manmohan Singh's 1991 Budget, then as Finance Minister, which launched India on the economic policy course of liberalisation, privatisation and globalisation (LPG). A major national daily listed, without the slightest hint of irony, the five sectors that have seen “the biggest and most visible effects” of LPG: aviation, mobile telephony, cable television, outsourcing, and automobiles. This, when less than 5 per cent of Indians can fly, or own a car. (True, mobile phones have multiplied greatly, but it is no sign of progress that India has at least twice as many cellphones as toilets.)

Many other papers revelled in India's globally acknowledged status as an “emerging economy”, whose gross domestic product (GDP) has risen over two decades of neoliberalism from the 12th rank in the world to the 10th in absolute terms, and from the ninth to the fourth rank in purchasing-power parity. But few bothered to remind readers that in per capita terms and Human Development Index ranking, India still belongs to the bottom quarter of the world's nations.

No newspaper talked of the huge human toll claimed by the growth process, including the suicide of 200,000 farmers over 12 years (an unprecedented tragedy in history), the uprooting and marginalisation of millions of vulnerable people, including Adivasis, and rising unemployment and informalisation of work, which is causing great human misery and insecurity. There was, of course, complete silence on neoliberalism's links with sleaze, cronyism and crime – including “regulatory capture” in sectors such as power, petroleum, insurance and telecom. These have been on full, ugly display in the Harshad Mehta- engineered stock market scams and the Enron scandal of the 1990s, the great telecom scams and public-sector sell-offs (Videsh Sanchar Nigam Limited or VSNL, Centaur Hotel, Modern Bakeries, and Balco) of the 2000s, and the more recent 2G spectrum, Lavasa, Indian Space Research Organisation (ISRO)-Antrix, and the Krishna-Godavari gas pricing scandals.

It is only appropriate to draw up a 20-year balance sheet of what the LPG package has delivered. The primary, if not the sole, virtue claimed on behalf of neoliberal policies is that they have produced high GDP growth. However, the connection between economic policy and GDP growth is not straightforward, but mediated through many factors such as high investment and savings rates, larger foreign investment flows, improved infrastructure, and better export opportunities. The 1980s also saw high growth in India, though there was no neoliberal domestic regime then.

India's recent growth cannot be primarily attributed to the unleashing of the “animal spirits” of entrepreneurs, which were supposedly locked up under the earlier “licence-permit raj”. This pejorative description always grossly exaggerated the degree of regulation exercised by the state. Our businessmen long ago mastered the art of bypassing or subverting regulations. Now there is active collusion between business and politics.

Recent policies have facilitated GDP growth, but this growth is of poor quality and extremely uneven. It 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 in size to under 20 per cent of GDP and is in the grip of both an economic and an ecological crisis. Industry has grown far too slowly to be able to absorb surplus labour from agriculture.

High GDP growth has largely benefited the top 10 to 15 per cent of India's population, depressed employment, and failed to raise the incomes of the majority, let alone substantially reduce income poverty. According to 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 32.6 per cent to 25.7 per cent over the same period. Many capable economists have questioned these numbers on methodological grounds as far too low.

However, even assuming that the figures are correct, the decline in poverty was at best modest. This means that nearly 400 million Indians continue to live at or below an animal level of subsistence, consuming fewer calories than needed to keep body and soul together. It is simply unacceptable that at the end of the two highest growth decades in recent history, India still has the largest number of dirt-poor people anywhere in the world – as it did in 1991.

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 unhygienic conditions, and so on. One-half of India's children are malnourished and two-fifths of its adults have an abnormally low body-mass index. Such deprivation undermines the ability of people to develop their elementary human potential. Life with dignity and acquisition of the capabilities that demarcate human beings from other species remain impossible for hundreds of millions of Indians. Their number has grown over two decades as the natural base of the economy, on which the poorest people depend, has got degraded and common property resources have been increasingly privatised. This represents a huge social waste.

Under neoliberalism, inequalities of income and wealth and regional disparities have got grotesquely bloated to a point where two Indias have emerged: an enormous cesspool of poverty, stagnation, social backwardness and acute deprivation, which covers much of the country's heartland; and islands of high growth, and moderate and rising social indices in parts of southern and western India. Because there is withdrawal of public investment, no correctives are being applied, especially to regional imbalances. India has some of the world's lowest rates of personal income and corporate taxation. Instead of significantly rising, the share of direct taxes in GDP has recently decreased.

Social Darwinism

Obscenely high disparities are socially undesirable in themselves. They also aggravate inequalities in social opportunity, putting the already disadvantaged at a further disadvantage. In India, inequalities strongly cascade at each stage of life: if you are poor, you have progressively less access than the rich to nutrition, health care, education, employment, and other social services. Yet, no political party is demanding an ‘incomes policy'.

Neoliberalism is distorting our social and political discourse in various ways. It has created a new secular religion – GDPism, or worship of rapid GDP growth as an end in itself, regardless of its social, economic, political and environmental costs. It is often misnamed “reform”, a term used even by its critics though reform means making things better.

Under neoliberalism's sway, the “greed creed” is growing rampantly. The elite is embracing the ideology of social Darwinism, or the survival of (only) the fittest. It has great antipathy towards any notion of human solidarity and the idea of justice and equality of rights and entitlements. It wants a militarised “iron-fist” state to protect itself against the poor.

Neoliberalism is undermining social cohesion. It is also marginalising and disenfranchising the poor from participating in social life. It is only when they wage arduous battles to defend livelihoods and civic and political rights that they get heard. In contrast, the rich are becoming more aggressive in extending their privileges and demanding and getting generous tax breaks and state protection. Their political influence has never been greater. India increasingly resembles the United States' Gilded Age when Robber Baron capitalism prevailed and imposed a heavy toll on society.

At this rate, India will soon become structurally incapable of developing a shared sense of nationhood. An untutored sense of community, which is not drilled into children through chauvinistic textbooks that describe India as the greatest civilisation ever, can arise only 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 electoral processes, cannot develop in a divided society where the chasms are widening under neoliberalism's ruthlessly inequality-enhancing influence. No wonder all manner of narrow and parochial identity politics, as well as superstition and obscurantism, are thriving in India today. We are paying an exorbitant price for neoliberalism – including enormous waste of precious human potential, people's suffering, rising gender inequalities, growth of irrational faith, and a weakening of human solidarity and the foundations of political democracy.

Neoliberalism is also imposing huge ecological costs on India through the rapid melting of the Himalayan glaciers, loss of prime natural forests, degradation of land through reckless mining and the overuse of chemicals in agriculture, 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 under neoliberal policies, India's emissions are growing twice as fast as the rest of the world's, aggravating and accelerating climate change. India is now the world's fourth biggest GHG emitter. Indians, already vulnerable to climate change because of geographical and social factors and lack of resources for adaptation, will become its worst victim. Continuing along the neoliberal course means shooting ourselves in the foot.