TWENTY YEARS OF REFORMS - Shun Neo-Liberal Trajectory

THE tenacity of the cheer leaders of neo-liberalism is simply amazing. They simply refuse to learn from their own experiences. Using the occasion of the 20th anniversary of the then finance minister Dr Manmohan Singh’s presentation of his first budget (July 24, 1991), they are now clamouring for further reforms particularly financial liberalisation. They seem to forget, in fact deliberately ignore, the fact that but for the Left parties which prevented UPA-I government from going ahead with such reforms like, privatisation of pension funds; increasing the FDI cap in the insurance sector; banking reforms permitting greater role for foreign banks and the full convertibility of the rupee; India would have been severely devastated by the global financial crisis and recession.

Returning to the much-celebrated budget speech, it should be realised that it alone was not the harbinger of the neo-liberal economic policy trajectory. The Indian rupee was devalued twice on the very eve of this budget. Rajiv Gandhi’s call to take India into the 21st century led to a huge profligacy in imports which, in the main, resulted in the foreign exchange reserve crisis, the pretext for ushering in reforms. This is testified by the fact that in the four years from 1985 to 1989, the over 350 Indian corporates earmarked for export promotion had registered a net loss of Rs 5,751 crores of foreign exchange. This quantum jump in imports led to a sharp rise in India’s foreign borrowing. Between 1984 and 1991, our foreign debt rose from Rs 28,000 crore to Rs 1,00,425 crore.

Two decades later, in complete contrast to this euphoria, one thing is certain. We have succeeded in creating two Indias. If the quality of life of everybody had substantially improved, then growing income inequalities would be seen as an index of relative poverty and not absolute poverty. However, given the widespread agrarian distress, the suicides by our farmers, drastic reduction in the per capita availability of foodgrains and pulses – all go to show the rise of absolute poverty among certain sections of our people. The luminosity of `shining India’ is, therefore, directly proportional with the depravation of `suffering India’.

The liberalisation pundits must note that the IMF, the international agent of neo-liberalism, had conducted a study in 2010 ironically titled, “India is the rising tide lifting all boats”. This paper measures the universally accepted index of income inequality – the gini coefficient. It shows that this has risen from 0.303 to 0.325 for the country as a whole in the first decade of the 21st century. In the urban areas, the situation is much worse with the gini coefficient rising from 0.343 to 0.378. There cannot be a greater indictment than this which demonstrates the growing hiatus between the two Indias.

While Dr Manmohan Singh continues to be hailed, unfortunately, due credit is seldom given to the then prime minister, P V Narasimha Rao who chose the finance minister in the first place. In fact, as his government entered its last year, P V Narasimha Rao, in a candid admission, said that the reform process does not guarantee to the people basic `rights to food, work, shelter, education, health and information through national determination’. Speaking at the World Summit for Social Development in Copenhagen in March 1995, he said: “Today, the world stands at the cross-roads of history even as it struggles to free itself from the attitudes of the Cold War era. We are at the cross-roads because we know that certain paradigms of development which placed the State alone at the centre did not succeed. There is now a swing to the other side, namely the tendency to put an untrammelled Market alone at the centre. While the new enthusiasm sweeps over the countries, one cannot help the uneasy feeling that what is needed really is a certain Market Plus; otherwise, the poor and the weak are likely to suffer exclusion due to the imperfections of the Market. The inadequacy in both these approaches stems from the failure to place the people at the centre. This centrality of the people is extremely important. We have to empower the people themselves as the central strategy to social and economic development to sustain human progress.”

Further, the then PM says with reference to India, “The core issues of poverty eradication and social integration cannot be addressed credibly without adequate resources, non-discriminatory access to markets and the availability of technologies that are relevant to these core issues. At the national level, countries have to commit the resources required to realise the rights for the poor in terms of institution building, formulation of policies, designing of strategies and above all, mechanisms of monitoring and evaluation that make implementation sustainable. The rights I have just mentioned are fundamental to development in its broadest sense. They act as a corrective to the distortions of the State and the Market severally and also complement the efforts and achievements of both. It is this harmony that we would seek to develop in the context of the reforms that we have embarked upon presently in our own country, as a means to our goal of eradication of poverty.”

Is it possible to achieve such economic and social empowerment of the people under the neo-liberal dispensation? The elusive objective of `inclusive growth’ can only be achieved if there is a radical departure from such a trajectory. It is precisely this that P V Narasimha Rao refused to accept thereby confirming that such concerns were mere platitudes, to mislead the people, on the eve of the 1996 general elections.

However, if such objectives need to be achieved, then this requires a new set of reforms which will provide food security, health and education for our people. It also requires the need to protect our people from increased dispossession, like it has happened with the process of land acquisition all across the country. One of the hallmarks of neo-liberalism is the prising open of newer avenues for capital accumulation. One such is the acquisition of land from the farmers at throwaway prices for super profits. Such “accumulation by dispossession”, as an American intellectual defines, is nothing new in the history of capitalist development. Recollect that, during the 19th century industrial revolution, over 50 million of such dispossessed people from Europe moved to the then `free world’ (USA, Australia etc). Today’s dispossessed have no such avenues and are thus condemned to misery. The Left has been seeking a new land acquisition law to replace the anachronistic 1894 law that is today in force. This law must ensure that apart from adequate compensation and future employment, that the former owners also have a share in the rise in the value of the land post acquisition. Further, these people must be protected by law to defend themselves against land and real estate mafias that would force them to part land at throwaway prices.

The constant refrain by the government, however, is that we have insufficient resources to implement a comprehensive food security legislation or to realise in practice the Right to Education law. This sounds not only absurd but is a patent falsification given the mega scams that this very neo-liberal trajectory has facilitated. There is no dearth of resources in our country. There is a dearth of political will to take on the corrupt politician-bureaucrat-businessmen-corporate media nexus that is looting these resources.

Instead of focusing on such reforms, that will go to some extent in providing a better livelihood for our people, there is a clamour today for what is fashionably termed as `gen next’ reforms. Permit 100 per cent foreign investment in retail trade, for instance. This would spell ruin to crores of Indian people who are today engaged in such trade. Far from the socio-economic empowerment that we have been speaking of, such reforms will only lead to greater deprivation.

What is required, therefore, is to mount popular pressure on the present UPA-II government to make a radical break from this neo-liberal trajectory. This is essential to ensure that the Indian people can realise their true potential which is today being denied by such policies that promote inequalities sharply and the loot of our country’s resources.

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Editorial People's Democracy 31 July 2011