People's Democracy

PM’S ECONOMIC LIBERALISATION

Reform or Counter-Reform?

                        Sukomal Sen

WHEREIN India’s salvation lies? The question arises out of Dr Manmohan Singh’s interview for the 2005 special edition of The Mckinsey Quarterly, on August 16. The interview seems like a manifesto of the UPA government led by him.

The interviewer asked Dr Manmohan Singh: “Which message would you like to give global managers as they think about India?” And Dr Singh replied: “If I have any message, it is that it is our ambition to integrate our country into the global economy. We accept the logic of globalisation. We recognise that globalisation offers us enormous opportunities in the race to leapfrog in development process” (all emphases added).

Further, “that our salvation lies in operating an open society, political system, an open economy, economic system --- this has widespread support. Fifteen years ago, a Congress government launched this economic liberalisation programme integrating India into the world economy. Since then, three governments have come and gone, but the direction of economic policy has been, year after year, towards more liberalisation.”

REBUFF FROM UNDP REPORT

However, nothing less than the Human Development Report 2005 gives a befitting rebuff to the prime minister’s claim that India’s salvation lies in economic liberalisation integrating India into the world economy. As the UNDP is itself a votary of globalisation and all that it entails, its report did note India’s “success story for globalisation” and “high technology exports and booming and emerging middle class consumers having become a magnet for foreign investors.” But it also said “India’s prime minister has candidly acknowledged (that) the record of human development has been less impressive than the record of global integration.”

The report points out: “The incidence of income poverty has fallen from about 36 per cent in the early 1990s to somewhere between 25 per cent and 30 per cent today. But overall the evidence suggests that the pick-up in growth has not translated into a commensurate decline in poverty. More worrying, improvements in child and infant mortality are slowing --- and India is now off track for these MDG targets. Some of India’s southern cities may be in the midst of a technology boom, but 1 in every 11 Indian children dies in the first five years of life for lack of low technology, low cost interventions. Malnutrition, which has barely improved over the past decade, affects half the country’s children. About 1 in 4 girls and more than 1 in 10 boys do not attend primary school.”

The report then asks: “Why has accelerated income growth not moved India into a faster poverty reduction path? Extreme poverty is concentrated in rural areas of the northern poverty belt states, including Bihar, Madhya Pradesh, Uttar Pradesh, West Bengal, while income growth has been most dynamic in other states, urban areas and the service sectors. While rural poverty has fallen rapidly in some states, such as Gujarat and Tamilnadu, less progress has been achieved in the northern states. At a national level, rural unemployment is rising, agricultural output is increasing at less than 2 per cent a year, agricultural wages are stagnating, and growth is virtually ‘jobless’.”

The report comments: “The deeper problem facing India is its human development legacy. In particular, pervasive gender inequalities, interacting with rural poverty and inequalities between states, are undermining the potential for converting growth into human development.”

GENDER DISPARITY, CHILD MORTALITY

Pointing to the stark gender inequalities, the report says: “Perhaps the starkest gender inequality is revealed by this simple fact: girls aged 1-5 are 50 per cent more likely to die than boys. This fact translates into 130,000 “missing” girls. Female mortality rates remain higher than male mortality rates through age 30, reversing the typical demographic pattern. These gender differences reflect a widespread preference for sons, particularly in northern states. Girls, less valued than their brothers, are often brought to health facilities in more advanced stages of illness, taken to less qualified doctors and have less money spent on their health care. The low status and educational disadvantage suffered by women have direct bearing on their health and their children’s. About one-third of India’s children are underweight at birth, reflecting poor maternal health.”

Dealing with the interface of gender inequality with income inequality, the report points out: “Four states account for more than half of child deaths: Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh. These states are also marked by some of the deepest gender inequalities in India. Contrasts with Kerala are striking. Girls born in Kerala are five times more likely to reach their fifth birthday, are twice as likely to become literate and are likely to live 20 years longer than girls born in Uttar Pradesh. The differences are linked to the chronic under-provision of health services in high mortality northern states, which is in turn linked to unaccountable state level governance structures.”

The report links gender inequality with child mortality: “Gender inequality is one of the most powerful brakes on human development. Women’s education matters in its own right, but it is also closely associated with child mortality. The under-five mortality rate is more than twice as high for children of illiterate mothers as for children whose mothers have completed middle school. Apart from being less prone to under-nutrition, better educated mothers are more likely to use basic health services, have fewer children at an older age and are more likely to space the births --- all factors positively associated with child survival. As well as depriving girls of a basic right, education inequalities in India translate into more child deaths.”

Dealing with poor public health status, the report continues: “Inadequate public health provision exacerbates vulnerability. Fifteen years after universal childhood immunisation was introduced, national health surveys suggest that only 42 per cent of children are fully immunised. Coverage is lowest in the states with the highest child death rates and less than 20 per cent in Bihar and Uttar Pradesh.”

THE QUESTION OF POLICY

All this led the UNDP to make the caustic remark that “India may be world leader in computer software services, but when it comes to basic immunisation services for children in poor rural areas, the record is less impressive.”

The report says: “Translating economic success into human development advances will require public policies aimed explicitly at broadening the distribution of benefits from growth and global integration, increased public investment in rural areas and services and, above all, political leadership to end poor governance and address the underlying causes of gender inequality.”

The report suggests: “Overcoming the legacy of decades of under-investment in human development and deep-rooted gender inequalities poses immense challenges. Political leadership of a high order will be needed to address these challenges. Failure to provide it and to extend health and education opportunities for all, regardless of wealth and gender, will ultimately act as a constraint on India’s future prospects in the global economy.”

Is any comment needed on this analysis of the UNDP Report 2005 of India’s performance in the era of economic liberalisation?

 ‘REFORM’ AGENDA: BASIC THRUST

But what is the basic thrust of Dr Manmohan Singh’s ‘reforms’? When reminded that “one item in the agenda was privatisation” when the reform process started in the early 90s,” the prime minister’s reply was noteworthy:

“We are a coalition government and that limits our options in some ways…... For enterprises which are navratnas, if we want to privatise, if we want to get more investment going into those things, I think all options are open. But I must confess that in the prevailing milieu, the thinking in our coalition is that for enterprises that are doing well under competitive conditions, we must have special justification to our coalition colleagues that there is need for privatisation.”

So privatisation of even profit making enterprises is the government’s agenda, though it cannot go ahead because of coalition compulsions!

When the interviewer mentioned that “The reform process must also incorporate labour reform,” Singh came out in true colours. He replied, “When we talk about labour reforms, we are essentially talking about 10 per cent of our labour force, which is accounted for in the so-called organised sector.” Otherwise, “for the (rest) 90 per cent we are a completely flexible labour market. The normal laws of the market take precedence.”

Dr Singh then regrets: “Even with this organised sector, the problem is most acute in the public sector. In the private sector, most people tell me that they can find ways and means by making voluntary agreements with the trade unions, where necessary labour flexibility can be introduced. In the public sector we have rigid law, and therefore there is this problem.”

In fact, the union government’s latest labour ‘reform’ proposal spells out labour ‘flexibility’ as ‘voluntary’ (sic!) agreement between management and labour, meaning complete withdrawal of labour laws in the organised sector.

Noting that new enterprises, “particularly if they are foreign backed entrepreneurs, also ask this question,” the prime minister laments: “We cannot move straight away to the western or the American model of ‘hire and fire.’ Quite frankly, I do not see that there is today a climate of opinion, which will go to this extreme.” It means the prime minister is quite willing to go that extreme; only that the prevailing climate does not permit him.

But the UNDP report has amply demonstrated the results of whatever ‘reforms’ the government of India has so far pursued.

CAPITALISM WITH A HUMAN FACE!

In the history of capitalism, reforms were enacted to soften the social and economic effects of the raw working of bourgeois system. And some of these reforms certainly meant gains for workers. These included a shorter working day and week, the right to form unions and other trade union rights, a government run social security programme including retirement benefits, higher incomes and safety laws. However, as is being observed now in the core as well as peripheral capitalist countries, capital is bent upon snatching the gains the working class had won through hard-fought struggles. Whenever conditions are decisively in favour of capital, as it is now, there are attempts to push towards minimal constraints for capital.

After the second world war, capital felt threatened by the Soviet revolutionary model that it would destroy the bourgeois system. It also needed workers’ cooperation to get the war ravaged countries back on their feet. So it promoted a welfare state in much of Europe, with paid vacations and better wages. Germany placed workers on corporations’ boards of directors.

But that was also a period when, as these economies were being rapidly reconstructed, there was plenty of money to fund welfare programmes, provide higher salaries for labour, and still make large profits. As these economies grew rapidly, taxes also increased to fund new programmes. The concern for social stability in the 1960s and the desire to have the masses’ support in the cold war, especially in the US, were also parts of the explanation for increases in social programmes. However, these gains did not come automatically; what workers actually got depended on the militancy of their struggle. As for former colonial countries, when they started building their economies particularly with Soviet help, after attaining independence in the post-war period, they too followed pro-labour policies to an extent.

However, when economic stagnation set in during the 1970s, capital responded in a number of ways. Investment strategies changed in order to sustain profits; there was a diversion of capital towards the service sectors and towards speculation. Capitalist societies now began to shift the burden of stagnation, militarism and wars on to the working people, particularly of the former colonial countries. Since the 1980s, those at the top have been promoting a continuous class war aimed at reducing corporate taxes and taxes on the wealthy. At the same time, capital unleashed a campaign to dismantle as many worker rights as possible. It attacked the welfare programmes, made it harder for workers to unionise and easier to fire them, decreased pension coverage, privatised basic services including education and health, and attempted to privatise social security. Neo-cons in the US pursued the goal of rolling back the social programmes initiated earlier. There is a similar drive in Europe to snatch workers’ protections and rights, under the guise of making industries competitive in world market.

Thus, capitalism could have a “human face” for only a short period. Otherwise, the evils of inequality, poverty and misery, environmental degradation, overuse of resources as well as the economic, political and military penetration of imperialism in third world countries --- all these flow from the very nature of capitalism.

FOR A NEW & BETTER SOCIETY

Today, there are only limited possibilities for the future of the world --- a return to barbarism at the hands of imperialism and even fascism, or the creation of a better society that may fulfil the basic needs of humankind. Conscious class and mass struggle is a precondition for it.

In India, when we embarked on a mixed economy path after independence, workers’ rights too were accepted to an extent and they won wage rises and some other benefits through immense struggles and sacrifices. In rural India, laws were enacted to dismantle the earlier feudal system though peasants were not freed from feudal exploitation in many areas as even the limited land reforms were not implemented at the behest of the landed gentry. 

And now, in the period of neo-liberal globalisation, the situation is being reversed. Inequality of income is increasing while the general poverty level shows no sign of improvement. More horrible is the jobless growth the UNDP report mentions. It is in fact ‘jobloss’ growth, with tremendous adverse impact on the people. Now the government is bent upon withdrawing some labour law provisions so as to throw labour at the mercy of indigenous and multinational capital.

This explains Dr Manmohan Singh’s pet agenda of privatisation and ‘hire and fire,’ laid bare in his interview to Mckinsey Quarterly, despite the Common Minimum Programme, coalition compulsions and the government’s dependence on the Left for survival.

As for his claim that his agenda has been widely accepted as it is for the “poorest segment of the people,” the claim has been strongly rebuffed by the same segments of the population. This is what the nationwide September 29 strike unmistakably conveyed. Issuing a war cry against the neo-liberal policies of the government, the strike was a solid reconfirmation of the fact that the Indian working people have decisively rejected the agenda of reactionary free-market ‘reforms’ being pushed by imperialist powers.