Issue 46 Vol II, August 31, 2007

A N A L Y S I S

The Decades of our Discontent
Gobind Thukral

Think about this: sixty years after independence 836 million Indians spend only Rs 20 per day. This is all they have. They are 77 per cent of India. Around 26 percent of India's population lives below the poverty line, which is defined as 12 rupees per day? For rural poor, it is much less. Rs 503 are all the expenditure that an average family affords for a month. These are not propaganda stuff. These are facts from the files of government of India.

And, Prime Minister Dr Manmohan Singh says, "India, with a billion people with its functional democracy is a unique country. We are a role model for the world. It is a rising political and economic power.” Look around in Punjab, a comparative prosperous state like Kerala and see in its rural areas where farm workers live or the bastis of the cities and find the truth about it. How many lakhs of families that the Punjab government has recently discovered that deserve cheap atta and daal? Our political class has learnt over the years two things: build dreams and make tall promises and then declare to the world that India is shining bright. Earlier NDA government did it, now the UPA government is doing it.

The reality is indeed harsh. The government’s own National Commission for Enterprises in the Unorganized Sector [NCEUS] said, “Most of those living on below 20 rupees per day were from the informal labour sector with no job or social security. They live in abject poverty.” For most of them, conditions of work are utterly deplorable and livelihood options extremely few. The study titled "Conditions of Work and Promotion of Livelihoods in the Unorganized Sector  based on data from 2004-2005, 92 percent of India's total workforce of 45.7 crore  were employed as agricultural laborers and farmers, or in jobs such as working in quarries, brick kilns or as street vendors.

"Such a sordid picture co-exists uneasily with a shining India that is confronting the challenge of globalization powered by economic competition both within the country and across the world."

We are told that economic liberalization since the early 1990s has created a 300 million-strong middle class and led to an average annual economic growth of 8.6 percent over the last four years, but millions of the country's poor remain untouched by the boom. A study about top Indian income for 1956-2000 revealed that the top 1 per cent rich have substantially increased their share of total income during the reform years since 1990s. In the 1980s the gains were shared by everyone in the top percentile, in the 1990s it was only those in the top 0.1 per cent who cornered big gains. During 1950s the average top 0.01 per cent income was about 150-200 times larger than the average income of the entire Indian population. As a result of new policies this went down to less than 50 times as large by the early 1980s. Now it is again back to 150-200 times larger during the late 1990s. There is strong evidence to suggest that it was getting worse now. Analysis indicates an increase in wealth of over $1 trillion (over 100 per cent of GDP) in the past four years — and that the bulk of this gain has been concentrated within a very small segment of the population.

The NCEUS report suggests the majority of those working and living under "miserable conditions" were lower castes, tribal people and Muslims and the most disadvantaged of these were women, migrant workers and children. It said, "This is the other world which can be characterized as the India of the Common People, constituting more than three-fourths of the population and consisting of all those whom the growth has, by and large, bypassed."

This is visible in more than one ways. Recently the National Campaign on Dalit Human Rights visited 51 villages covering 4 districts and did rapid assessment of floods situation in Bihar. Among those who lost shelter, livelihood and life 80 percent are Dalits. 60% of the dead belong to the Dalit community - 369 people were lost their life among them 223 were Dalits in 51 villages that the team visited. 308 people were missing among them 166 belongs Dalit community. They got very little help. Since times immemorial this happens anywhere a natural calamity strikes. Over 1400 lives have been lost, and close to 15 million people badly affected in several states. At least 70,000 dwellings have been washed away in Bihar alone. The worst sufferers were the poor and deprived sections.

During the past 60 years of independence structural and other inequalities have deepened. Rural India is in a big trouble. We can find it from the struggle against economic zones all over the country and the tribal are struggling for land and water rights in six states. In at least 185 districts of the country, the Naxalite movement is on rise. It feeds on growing inequalities that cause bitterness and antagonism.

India had, in fact, never seriously dealt with structural inequalities. One of best Indian journalists for his rural reporting P. Sainath says, “Even at the start of the reforms period, the bottom half of rural households accounted for less than 3.5 per cent of total land ownership. The top ten per cent of households owned well over 50 per cent. That’s for all lands as a whole. If we took into account only irrigated land, the picture is more frightening. In one estimate, over 85 per cent of rural households are landless, sub-marginal, marginal or small farmers.”

What is the new direction of farming policy is to take agriculture out of the hands of the farmers and place it firmly in the hands of large corporations. All the name of diversification and contract farming. This is government’s answer to the ever growing agrarian crisis. Land size is dwindling each passing day. There is the largest displacement taking place in history. Sainath says “It is not happening in a dam or a mining project. It’s happening in agriculture. And we haven’t a clue yet what we will do with the millions we’re busy shoving off the land. This is not being done with tanks and bulldozers. We just make farming impossible for small holders. And we create no options for those whose livelihoods we so cheerfully destroy.”

With farm incomes collapsing, hunger is growing fast. Public investment in agriculture is almost nil since 1990s. Employment has shrunken. Non-farm employment has declined.  Crores are moving towards towns and cities where, too, there are few jobs to be found.  The credit squeeze has pushed lakhs of farmers into insolvency.  They are first pushed to high-cost cash crop cultivation like cotton and then turned miserable as the prices do not match the production cost.

The government admits that over 112,000 farmers have committed suicide since 1993. It is a gross underestimate. But it shows the severity of crisis these suicides are due to indebtedness of the peasantry, which according to the National Sample Survey has almost doubled in the past decade.

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Japanese Prime Minister Advocates Quadrilateral Alliance in India

Japanese Prime Minister Shinzo Abe, on his visit to India, has stressed the need for a strategic alliance with India and advocated a quadrilateral alliance of America, Japan, India, and Australia. Many people believe that this is an anti-China alliance proposed by America to counter the growing influence of China in Asia. Mr. Abe has become a strong advocate of such an alliance.

China, meanwhile, continues to strengthen its relations with Russia and the central Asian countries, and continues to gain influence in Asia, mostly at the expense of Japan. At one time, Japan was considered the leading country of Asia. It was the major manufacturing center of Asia. China continues to overshadow Japan and is emerging not only as the leading manufacturing center of Asia, but of the world. The Chinese economy is growing at the fastest rate among the world’s major economies while the Japanese economy is now mostly stagnant. One indication of the relative trends in Japan and China can be the Asian Olympics; at one time, Japan would lead with a very big margin. Now, China leads the Asian Olympics with Japan a distant second. Even South Korea seems poised to dislodge Japan from the second position both in manufacturing and in sports. Besides a stagnant economy, Japan is facing problems of a declining and aging population.

With Japan constantly losing to China, it has “rediscovered” India as a partner and friend. Japan is trying to counter China’s growing influence by towing the American line of forming a quadrilateral alliance of America, Japan, India, and Australia. The Japanese Prime Minister’s visit to India was a major step towards forming such an alliance. A series of major agreements to double the bilateral trade will be signed. Besides trade, nuclear issues, global warming, and defense were also discussed.

Japan seems to be reverting to its policy of subservience to the West and denying its Asian identity. This policy, which was followed in the fifties and sixties, was believed to be the result of defeat in the Second World War and the resultant defeatist and slavish mentality. However, in the seventies, Japan came out of the shock, started reasserting its Asian identity, and tried to improve its relations with China. China became its largest trading partner. China’s unprecedented growth, its improving relations with Russia, the central Asian countries, and South Korea, as well as Japan’s serious internal problems, have alarmed Japan and it has decided to revert to its anti-China, anti-Asian, and pro-western policies.

Trade was a major priority; the Chief Executives of Toyota, Mitsubishi, Canon, and Hitachi accompanied Mr. Abe. The trade between the two countries is now 7 billion dollars a year; this will be doubled in five years. Both governments will announce a plan to develop a corridor between Delhi and Mumbai as what exists between Tokyo and Osaka. It will include a high-speed railway line, ports, and airports.

Shinzo Abe became the first foreign leader to address the Indian parliament after the year 2000, when President Clinton addressed the parliament. Mr. Abe’s visit came when the Indian government is facing a  serious crisis related to the India-US nuclear agreement. The leftists are opposing the deal and threatening to topple the government. Their main concern is that India’s foreign policy is becoming subservient to America. Mr. Abe’s advocacy of the quadrilateral alliance will only strengthen their belief that India should be stopped from joining an alliance which will seriously compromise India’s traditional neutrality.

Sawraj Singh, MD F.I.C.S.

Chairman, Washington State Network for Human Rights

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60 Years of Independence Fail to Improve Majority’s Plight

India and Pakistan just celebrated their independence from the British colonialism. However, the 60 years of independence have failed to improve the plight of the majority of people in both of the countries. In Pakistan, a military oligarchy subservient to the West has usurped power and deprived the people from the most fundamental democratic rights. In India, a bureaucratic and economic elite aligned with western imperialism has monopolized the resources of the country.

In both of the countries, the elite itself is being forced to admit the realities. In Pakistan, most of the newspapers lamented the fact that Pakistan is going through a very difficult period. Pakistan is facing a deep crisis. The possibility of a civil war and disintegration cannot be ruled out. Even after 60 years, the military does not seem to be in a mood to release its control on the country. One popular Prime Minister was legally murdered by the military and two other popular Prime Ministers were forced into exile.

Pakistan is a glaring example of the western hypocritical democracy and double standards about human rights. If the West needs someone, then they receive its full backing, even though they might have most ruthlessly supressed their people, or violated the most fundamental principles of democracy. The criterion of the western democracy and human rights is subservience to the West.

The Indian Prime Minister had to concede in his speech on Independence Day that even after 60 years of independence, India is unable to eradicate poverty. The number of billionaires has increased in India faster than in any other country in the last few years. However, the number of people living below the poverty line has multiplied even faster. India now boasts of having one of the most expensive real estate in the world and a rich man in India has built probably the most expensive house in the world. The house is worth ten billion dollars in the city of Mumbai, where hundreds of thousands of people live on the streets.

India is building the most modern hospitals to attract patients from the richest countries of the world, yet it has failed to provide even the most basic health care to the millions of its poor. For the children of the rich and the upper middle class, there are world-class educational institutions, yet about 50% of the population remains illiterate.

Because of decreasing fertility rates in the western countries, the Indian subcontinent is seen as a reservoir for the needed work force. The ruling classes in the subcontinent also look at their own people as a resource to be exploited to maximize its profits. This is the real reason for the uncontrolled growth in population, which is taxing all of the resources.

However, not all is bad. There is a growing awareness that the western pattern of development will not work for the subcontinent. Many people are also finding out that the West is not a champion of democracy and human rights, but is primarily interested in maintaining unequal relations and its domination to increase its profits by controlling the resources of the developing countries. The rise of China and its close alliance with Russia is convincing many people in the subcontinent that the days of western domination and the unipolar world are numbered and the time has come to reconsider our alliance with the West.

Sawraj Singh, MD F.I.C.S.
Chairman, Washington State Network for Human Rights

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Labour Absorption: Strength of the Informal Sector in India-2
Vinod Anand

Employment generation has been a policy priority in India ever since the time of independence and the focus has been mainly on the small-scale and cottage industries. It is interesting to have a brief overview of the Government’s efforts in this context. A Cottage Industries Board was established in 1947 which was later split up into three boards: All India Handloom Board, All India Handicrafts Board, and the All India Khadi and Village Industries Board. This was not all. Three more boards were also set up. These were:  Small-Scale Industries Board, Coir Board, and Central Silk Board. This was not the end of the story. Four Regional Small Industries Service Institutes with a wide network were also established for providing technical support to the entrepreneurs. The concept of Industrial Estates also came into being in 1955, and many Industrial Estates were also established. The Industrial Policy Statement of December 1977 introduced the concept of District Industries Centres (DICs), which was finally implemented in 1979. There was another interesting move, which related to the nucleus industry programme according to which a nucleus of micro and small units were to be encouraged around a core unit in different areas. The Government has been initiating many other steps from time to time to promote the development of small-scale and cottage industries in the country. In the crucial year of 1991, a policy package for tiny, small, and village industries was also announced to give a further encouragement and support to this sector. The Ninth Plan (1997-2002) also immensely focused on the small-scale sector, which was provided with necessary incentives and support to meet the emerging competition from large industry, including multinationals. It was expected that even the tenth  and the eleventh plans will recognize the importance of the small-scale sector, and will have an effective package for its survival and support in the second phase of the Reforms process.

It is now clear that the Government has always tried to promote and support the small-scale sector in various ways. But the fact remains that

• the sector is still inhibited by a number of constraints including technological obsolescence, inadequate and irregular supply of raw materials, lack of organized market channels, imperfect knowledge of market conditions, unorganized nature of operations, inadequate availability of credit, constraint of infrastructure facilities including power etc. and deficient managerial and technical skill;

• the closure rate of micro and small firms has been high;

• there has been flaws in the implementation programmes in terms of the lack of effective co-ordination among the various support agencies;

• the benefits of the various schemes introduced from time to time do not reach the grass root beneficiaries because of many reasons, including the failure of the trickle-down effect;

• all these constraints have resulted into a skewed cost structure placing the small-scale units at a disadvantage as against the large industries, both in the domestic and export markets.

We have so far looked at the employment generation as a policy priority from the point of view of micro and small units that constitute an important segment of industrial structure/organization. These units can also be looked at as constituting an important component of labour market. The literature, which looks at these units from a labour market perspective, distinguishes between protected and unprotected designation to define informal activities. We have two perspectives of informal activities: the perspective of industrial organization, and that of labour market. An attempt has also been made to combine these two perspectives. In that case the informal activities get bound by some kind of government regulations essentially concerning the labour laws. The labour market issues of the informal sector, and also the combination of the two perspectives becomes important especially in the context of structural adjustment. There are two reasons for this:

• the response of the economic system to the policy changes and incentives is determined, amongst other things, by the structure and behaviour of the labour market via labour mobility, wage flexibility, productivity gains, etc.;

• the impact of these policy changes on the labour market will determine if the adjustment process will be (i) socially sustainable from the point of view of employment and labour incomes, and (ii) if it will be politically sustainable in terms of political stability?

The social impact of the adjustment process in the context of employment and its related variables is, thus, of crucial importance. There is no denying the fact that any indifference in this regard will surely upset the reforms process.

In this kind of a set-up, therefore, the employment generation, essentially by the small-scale sector, is not only a policy priority, but also the only way out to give a push to the economy, and for this all the obstacles inhibiting the existence and expansion of micro and small firms have, somehow, to be eliminated. An effective and efficient absorption of labour in the overall employment stream is a unique strength of the informal sector, essentially its micro and small segment. We must, therefore, provide all support to this sector so that the employment scenario in the country becomes brighter. We also have to move forward to reform our labour laws if we want to be taken seriously by the developed world, especially at the WTO forums.

[The author is presently placed at the National University of Lesotho in Southern Africa as Professor of Economics.]

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New Pakistan: Supreme Court asserts and lets exiled former Pakistan PM return home
Musharraf may lose his uniform

IN a stunning blow to Gen. Pervez Musharraf, Pakistan's Supreme Court ruled that an exiled former Prime Minister Nawaz Sharif should be allowed to return to the country where he plans to challenge the military leader's efforts to secure another term as president. This has thrown a spanner into the works of former prime minister and chief of the Peoples Party Benazir Bhutto who has reached an agreement with Musharraf through Americans to be the next prime minister with Musharraf, a la civilian as president.

The court had ruled that Sharif, whose government was overthrown by Musharraf in a bloodless coup in October 1999, and his brother, had an "inalienable right" to return to Pakistan from London. "They have an inalienable right to come back and stay in the country as citizens of Pakistan," said Chief Justice Iftikhar Mohammed Chaudhry. He said their return should not be "hampered or obstructed" by the authorities.

Mr Sharif said he would be in Pakistan before Ramzan, the Muslim holy month. "It's a great day for democracy and rule of law and for the fundamental rights of the people of Pakistan. The Supreme Court has delivered justice," he was quoted in London where he lives.

The ruling opens the prospect of General Musharraf being challenged by two former prime ministers as he desperately seeks to hold on to the presidency. Benazir Bhutto, who twice served as prime minister, has already made clear her intention to participate in elections, scheduled to take place later this year, though she has also held talks with General Musharraf about a possible power-sharing arrangement that would allow him to retain the presidency.

Mr Sharif, 57, first entered Punjab government in 1981 as finance minister under General Zia-ul-Haq. He later served two terms as prime minister, from 1990-93 and again from 1997-99. During this second term he introduced several constitutional reforms, removing the president's power to dismiss the prime minister and strengthened his position.

After the coup and his exile the following year along with his brother, Shahbaz, Musharraf sought to cement political support by co-opting much of Sharif’s Pakistan Muslim League party. Musharraf would be denied this support now.

After he was ousted, Mr Sharif was sentenced to life in prison on charges including treason and tax evasion. Instead, he and his family left the country after the government said he had agreed to 10 years of exile - something adamantly denied by Sharif.  This decision came after the former prime minister filed a petition to allow himself and his family to return.

Musharraf's support has slipped since earlier this year when he forced out Chief Justice, Chaudhry, in a move widely seen as political. Mr Chaudhry's reinstatement by the Supreme Court has been a huge boost to the independence and confidence of the judiciary. And, a great home for the beleaguered people of Pakistan.

Musharraf’s bag of problems is full. He faces not only a resurgent democratic movement that seeks a rule of under a constitution, but from the extremists, especially in the aftermath of the Red Mosque operation in July in which more than 100 people were killed. Since then there have been a number of bombings and suicide attacks against government troops. He has also been facing pressure from Washington, a major financial and military supporter and is currently unhappy and is demanding him to act against extremists.

If Sharif does seek a return to power it will not be without obstacles .the National Accountability Bureau, the government's anti-corruption unit, has said that it will be reopening cases against Mr Sharif.

But to most observers, “the era which began on Oct 12, 1999, is sputtering to its end. A new era has already begun. When the Supreme Court of Pakistan can spring captives from the custody of our intelligence agencies, hitherto answerable to no one except themselves, then it is a clear sign that times are changing… The Pakistani people had been led to believe their destiny was to suffer one tin pot fool after another. Now the canvas of their dreams and longings has become wider.”

Military dictatorship has suffered reverses hardly believable some kind of realisation is dawning upon such self-appointed guardians of the national interest as Inter-Services Intelligence (ISI) and Military Intelligence (MI) that their holy cow status is a thing of the past and they are being called to account.

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