Vinod Anand

WE shall briefly look at three indicators to assess the extent to which the benefits of growth have trickled down to the people. These indicators are: Absolute Poverty Line, Gini-Lorenz Ratio, and Unemployment Rates. We shall also look at the Reforms and their impact on the economy.
It is indicated that the number of people below the poverty line declined from a massive 54.9 per cent in 1973-74 to a low of 36 per cent in 1993-94, though there has been a better improvement in urban poverty as against rural.

Talking of Gini-Lorenz Ratio to assess the extent of income disparities, some of the studies have calculated Gini-Lorenz Ratios of the size distribution of nominal per capita household private consumption expenditure both for rural and urban India, using the National Sample Survey (NSS) data on consumption expenditure.. It can be seen that inequalities in the distribution of consumption expenditure have declined overtime, though rural areas show slightly better improvement with Gini-Lorenz ratio falling to 0.30 in the seventies and eighties as compared to 0.33 in urban areas...
The improvement in the unemployment situation is, however, not very encouraging. In order to understand this, we must know the following connotations:

? Usual Principal Status (UPS) refers to a reference period of 365 days preceding the date of survey; according to this criterion, a person is considered unemployed if he/she was available for work, but had no work for a major part of the year;
? Current Weekly Status (CWS) refers to a reference period of 7 days preceding the date of survey; according to this criterion, a person is considered unemployed if he/she was available for work, but had no work even for one hour during the reference period;
? Current Daily Status (CDS) refers to each day of the 7 days preceding the date of survey as the reference period. This is a measure of unemployment in terms of person-days of unemployment of all the persons in the labour force during the reference period.

Out of these three measurements of unemployment, as devised by the National Sample Survey Organisation, the measurement of the Current Daily Status (CDS), covering both open and partial unemployment, is the most inclusive, and hence the most appropriate On the other hand, the Current Weekly Status (CWS) is rather a rough measure of the proportion of workers remaining unemployed for a whole week, and the Usual Principal Status (UPS) is a rough estimate of chronic unemployment, which is not a serious problem in India as compared to discontinuous underemployment.

It is easy to see that the rates of unemployment do not indicate any clear trend over the period 1972-88, except for the fact that during this period there has been a shift from underemployment towards greater open unemployment. But for the period between 1989 and 1991, rural unemployment has definitely come down, whereas urban unemployment shows an upward trend.

Talking in terms the magnitude of unemployment, it was estimated by the Planning Commission (1990) that “at the beginning of the year 1990-91, about 16 million persons, 10 million in rural areas and 6 million in urban areas,” were unemployed on Current Weekly Status (CWS). It was further estimated that another 12 million persons were severely underemployed. Thus, up to the year 1990-91, the backlog of unemployment could be taken to be around 28 million. This is despite the fact that the Government of India has over the years launched a number of area-specific and people–specific programmes to combat both poverty and unemployment. India's Ninth Five-Year Plan projects generation of 54 million new jobs during the Plan period (1997-2002). But performance has always fallen short of target in the past, and this is what is going to happen in time to come too.

Section 3: Epilogue - reforms and after

Prior to 1990-91, India had witnessed three major crises in the years 1965-67, 1973-75, and 1979-81, largely caused by exogenous factors (like wars, oil scarcity and shocks, and drought). Each time, these crises took their toll in terms of high inflation, severe balance of payments, and low growth, but fortunately after every crisis the economy bounced back within a relatively short span of time because of timely and effective intervention by the Government , and every time a total collapse of the economy was prevented. In contrast to these crises of the sixties and seventies, the one that hit the Indian economy in 1990-91 was one of the worst in terms of high inflation rate, declining agricultural production, poor industrial growth, falling exports and adverse balance of payments, completely exhausted foreign exchange reserves, and political instability. This fast deteriorating economic situation was the result of the wrongly focussed policies of the preceding years. Even after the end of that decade, it is felt that this crisis is not yet over, and its aftermath still afflicts the country and counteracts against the growth process. The immediate shock of this crisis was so great that the Government responded very differently from before, and instead of coming out with its own measures, it adopted the policy of stabilisation and comprehensive structural reforms (also termed as the New Economic Policy) assigning, thereby, a greater role to the private sector, and opening up the economy to the outside world with much greater initiatives combined with a spirit of liberalization. The whole macro-economic management, thus, witnessed a paradigm shift.

As an epilogue to this Paper, we shall briefly assess here the impact of this shift on the economy. There is no denying the fact that prior to the short-period world-wide recession as has been there for the last few months, the economy presented a complete contrast to that gloomy past, as witnessed in the year 1990-91, and the revival did show itself, essentially in the external sector and that too in the stock of foreign exchange reserves. But then there is enough evidence to show that the reforms process has not yet fully worked, and the objectives of the stabilisation and structural programmes have not yet been fully achieved. In fact, many critical areas have been neglected, and the whole process has led to many adverse effects on the economy, some of which are briefly described below:

? All efforts to promote exports were more than neutralised by liberalized imports with the result that the trade deficit touched a high of Rs16325 crore in 1995-96, and then a further high of Rs 20102 crore in 1996-97 as compared to Rs.3810 crore in 1991-92, and Rs. 3350 in 1993-94. Liberalization has a wrong focus in the sense that instead of being selective it is indiscriminate.
? During the period 1990-91 and 1995-96, the growth rate of food grains production (1.5% per annum) has been less than the growth rate of population ( 2.1% per annum), and this speaks of the neglect of agriculture.
? The period of economic reforms has witnessed higher prices of food grains in terms of Consumer Price Index of Agricultural Labourers (CPIAL) on the one hand, and lesser job creation on the other with the result that it has adversely effected the food security of the poor.
? The process of reforms has been more instrumental in labour displacement (by establishing new power projects, encouraging multi-nationals to enter food-processing industries, and by initiating big industry to enter in agriculture) rather than in employment creation.
? Although the fiscal deficit of 8.4 per cent (of the GDP), existing in the crisis year 1990-91, was contained by the Reform Process, yet it could not keep it under check for very long and in 1993-94 it again soared to 7.7 per cent, and the economy was back to square one. It is surprising that the Union Budgets year after year put the fiscal deficit at a very low level without looking at what happens in reality.
? The process of Reforms has worked against the indigenous industry, especially small, medium and large, in the wake of stiff and unhealthy competition offered by the entry of multi nationals, especially in areas where the economy has attained self-sufficiency.
? The idea of emphasising private health services has worked against the poor in terms of medical fees.

We, therefore, conclude that the magic has not worked and there is a long way to go. It is pertinent here to look back and focus on the shortcomings of the whole reforms process and, thereby, learn from the past mistakes and make a way forward. There is a need to devise an optimal mix of planning and reforms keeping in mind the needs of the people, and also remembering that nothing much can be done to change the basic social, political, and administrative assumptions that dominate the scenario, and that, somehow, do not permit a majority of the people to share the fruits of planning or the reforms process.

There is one heartening aspect and that relates to the stabilizing power of our economy (just like China and Brazil) despite the world-wide recession. This does indicate that India will become a super power in time to come. The only thing is that the benefits of growth must somehow reach the poor masses.

BACK

 
Contemporary global capitalism: Multi-pronged crises-3

THE grand failure of many a financial institution in the US is one of three such crises that have affected the world today; the others related to oil prices and food shortages. These in sum have broken the back of neoliberal triumphalism, and have resulted in a spatial shift in global capitalism. No wonder, it is time to address alternatives to this greed driven, unregulated and excess-motivated system. Such an alternative must be based on the principles of ecological sustainability, social justice and democratic participation writes Professor Pritam Singh who teaches at the Oxford Brookes University Business School, Oxford.

Ecological Limits to Capitalist Expansion

In spite of relatively low per capita income levels in China and India, the sheer size of these economies makes them significant economic players on the global field, even if one is still justified in discounting the discourse of describing these economies as superpower rivals of the advanced capitalist economies. The most significant implication of the high growth rates in China and India is the likely impact on ecological limits to the growth of global capitalism. Since the marginal propensity to consume of a low income level consumer is high, even a marginal increase in income levels in China and India with their massive population sizes, has huge implications in terms of the increase in the aggregate consumption of natural resources and the waste likely to be generated from that consumption. Given the population sizes in China and India, it would not be ecologically possible to sustain a level of capitalist growth that is anywhere close to the level of growth that the advanced capitalist economies have experienced in the past. During the long period of capital accumulation in the history of advanced capitalist economies, there was neither the material reality of the scarcity of national resources nor the theoretical comprehension of the ecological implications of economic growth in any way similar to what is being experienced today. Even the critics of capitalism, such as Karl Marx, visualised the communist alternative to capitalism as an era of abundance. That imagined abundance is not possible ecologically, though the end to dehumanising poverty is certainly not only desirable but within the realm of possibility. One consumer item that most symbolizes modern prosperity is the car. At present there are about 10 cars in China for every 1,000 people. In America, there are 480 cars per 1,000 people [Rachman 2008]. If China were to aim to achieve the present American level of car ownership, it is simply not possible to visualise that our planet would be able to sustain itself, if for no other reason than the resultant pollution. A report by the Worldwatch Institute (2006) highlights that if China and India, to say nothing about Russia and Brazil, were to consume resources and produce pollution at the current US per capita level, it would require two planet Earths just to sustain their two economies. The solution, therefore, is not for emerging economies to try to copy the lifestyles of advanced capitalism, but rather for advanced capitalist countries to reduce their own levels of consumption and waste generation. According to the Sustainable Development Commission (2008) estimates in the UK, in two years time, about one fourth of all English adults would become clinically obese.8 This high degree of obesity is closely related not only to the quality of food but also to the quantity of food consumed by the citizens. Overconsumption and obesity in the west is not unrelated to under-nutrition and malnutrition in the poor countries. An ecologically sound global policy demands a critique of consumerism in the west, as well as a reduction of poverty (and a move away from aping western lifestyles) in the developing countries.

The relative decline in the economic powers of old advanced capitalist economies, and the emergence of new economic powers such as China and India, certainly arouses strong passions of nationalist pride in these nation states. One can even invoke the discourse of global justice to go so far as to celebrate the possible decline of the old, rich countries and the rise in living standards in countries that were once poor. However, neither nationalist pride nor global justice arguments can and should hide from us the fact and realization that the alternative to ecologically unsustainable advanced capitalisms cannot be another ecologically unsustainable capitalism in the newly developing nations.

The alternative to modern capitalism – whether in the old, rich countries or in the emerging economies – is to imagine and build economic and political systems that are based on the principles of ecological sustainability, social justice and democratic participation. Cuba’s success in organic farming, and many transport, housing and recycling initiatives by the Green councillors in some UK cities, are some examples of sustainable, just and democratic experiments that need to be further developed and elaborated. That is an intellectual and political challenge the critics of capitalism need to grasp at this very moment of great historical possibilities, dangers and hopes.
(psingh@brookes.ac.uk)

I am thankful to Imrich Antal, Meena Dhanda, Katarina Horuathoua, Laxmi Murthy, Ben Rogaly and Tanya Singh for comments on the first draft of the article. An earlier version of this paper was presented at a conference on Socio-Ecological Models of the Future organised jointly by Moscow-based Praxis and the Ukraine-based International Socio-Ecological Union at Peschanoe, Crimea, on July 18-20, 2008. I am thankful for the feedback received from the conference participants, especially Richard Greeman. The usual disclaimer applies.

Notes
1 For a detailed historical account of the sub-prime mortgage crisis see Blackburn (2008).
2 I have benefitted from a discussion with Andy Kilmister on this point.
3 Meghnad Desai (2008) has very forcefully highlighted the role of speculative capital in pushing up oil prices.
4 For more details on the spatial shift in the global economy see Singh (2008).
5 For a good rebuttal of the reverse dependency arguments see Sklair (2002: 32-34).
6 Subsequently, Reliance Communications almost made a successful bid but it floundered due to
legal hurdles associated with the business feuds between the Ambani brothers.
7 For an excellent collection of papers that examine different theoretical and political perspectives on advanced and developing capitalism, see the special issue of Socialist Register edited by Leo Panitch and Colin Leys (2006) with Barbara Harriss-White, Elmar Altvater and Greg Albo.
8 See www.sd-commission.org.uk

References
Anderlini, Jamil (2008): ‘China Eyes Overseas Land in
Food Push’, Financial Times (FT), online May 8.
Anon (2008): ‘Policymakers Act to Quell Storm’,
Financial Times (FT), September 19, London, p 1.
Anon (2008a): ‘Emerging Market Multinationals’, web
site https://kookyplan.pbwiki.com/Emerging-
Multinational-Companies?SearchFor=india&sp=16
accessed on September 19, 2008.
Blackburn, Robin (2008): ‘The Subprime Crisis’, New
Left Review, March-April.
Daniels, J D, L H Radebaugh, D P Sullivan (2009):
International Business, Pearson, New Jersey.
De Fraiture, C, M Giordano and Y Liao (2008): ‘Biofuels
and Implications for Agricultural Water Use:
Blue Impacts of Green Energy’, Water Policy, 10
Supplement 1.
Desai, Meghnad (2008): ‘Act Now to Prick the Oil
Price Bubble’, FT, June 5.
FT Editorial (2008): ‘Food Investment, Not Imperialism:
Foreigners Can Buy Land as Long as Sovereignty
Remains’, FT, May 13, p 12.
Fukuyama, F (1992): The End of History and the Last
Man, Hamish Hamilton, London.
Jackson, Tony (2008): ‘Speculators Accumulate
as Risks Rise for the World’s Poor’, FT, May 12,
p 24.
Johnson, Jo (2008): ‘Bharti Airtel Launches $37bn Bid
for MTN’, FT, May 6, p 21.
McGeough, Gary (2008): ‘Facing Up to the Food
Crisis’,
Change, Issue 62, Oxfam, Oxford.
Panitch, Leo and Leys, Colin (2006): Socialist Register
2007:Coming to Terms with Nature, Merlin Press,
London, Monthly Review Press and Halifax:
Fernwood
Publishing, New York.
Rachman, Gideon (2008): ‘The Oily Truth about Foreign
Policy’, FT, May 13, p 13.
Saltmarsh, M (2008): ‘Central Banks Act to Defuse
Financial Crisis’, International Herald Tribune,
September 18.
Singh, Pritam (2008): ‘Shifting Balance’, Himal, June.
Sklair, Leslie (2002): Globalisation, Capitalism
and Its Alternatives, Oxford University Press,
Oxford.
Weinberg, Peter (2008): ‘Sovereign Funds Offer a
Wealth of Benefits to the West’, FT, May 23, p 13.
Worldwatch Institute (2006): State of the World 2006:
China and India Hold World in Balance, www.
worldwatch.org

BACK

 
Farmers and UT stand to lose

Gobind Thukral

AS a young graduate student I had a running argument with my professor of economics. It concerned the status of farmers in India. Although the professor agreed that farmers’ economic condition was appalling, they themselves were largely responsible for it.

They remained without any productive work for six months in a year and had lazy habits; borrowing without considering their needs and paying capacity. They were in the clutches of the blood-sucking money-lenders and it was their fault. Others, including the government, could do little to change the situation.

With my village background, I would argue back both inside and outside the classroom with my learned professor that the system was so structured with a primitive form of farming and money-lending that it made farmers miserable.

These were the late fifties and early sixties and farming was still a punishment; ploughing with oxen the hard soil and then watering wheat during the chilly winter nights, reaping it during the scorching heat and then being cheated in mandis.

Whenever the farmer needed finance there were Shylocks all around with huge merciless interest rates of 24 to 48 per cent per annum. The small and marginal farmers lived literally from hand to mouth.

The farm workers at the lower rung of the social and economic ladder lived a miserable life; literary a sub-human existence about which novelist Gurdial Singh has written so poignantly.
It is not my case that life of the farmers has not changed. With better credit facilities from both cooperative and commercial banks, some well-off farmers are lenders too. With improved farm machines, tube wells, tractors and modern ploughs backed by superior seeds and fertilisers farmers are producing far more.

Chemicals that helped earlier are now bugging the land and farmers too. Supported by an ever-increasing minimum support price, farming is neither a punishment nor a life of drudgery.
Yet it is not much ruminative for the marginal and small farmers who constitute the bulk. They are moving out of land in hordes. During the past decade one lakh farmers in Punjab have left their ancestral profession and moved to cities as proletariat.

Now something graver stalks the land-owning community. It is the ruthless land acquisition by none other than the state itself. The reason could be some public projects or establishing industries, imaginary or real.

It is no one’s case that land should not be acquired at all. We need roads, power projects, industries, railways lines and stations and airports etc. These would come up on land only.

But should the state become a real estate shark, buying at peanuts and selling for crores of rupees — depriving the farmers of their livelihood and enriching the filthily rich? One more Nandigram is in the making in Chandigarh.

Courtesy an honest officer, Adviser Pradip Mehra, the Central Vigilance Commission is probing several land acquisition deals by the Chandigarh Administration headed by the Punjab Governor and Administrator of Chandigarh, Gen (retd) S.F. Rodrigues.

He has pushed his pet projects: amusement-cum-theme park, film city, medicity and the Rajiv Gandhi Chandigarh Technology Park despite stiff opposition from farmers and Central minister Pawan Bansal, who represents the city. The Congress had sought a CBI enquiry.

Ever since General Rodrigues landed in the city, he set his eyes on all the available farm land in the Union Territory. Projects started mushrooming. He said he would create an ultra-modern Chandigarh. This was a cover for his failures to take care of increasing traffic, poor conditions of the slums and southern sectors, besides the drying Sukna Lake.

Farmers were paid low rates and big real estate sharks were favoured by the Administrator. The lack of transparency and low land compensation has forced the public to seek an inquiry.
Medicity was proposed on prime 45 acres in the IT park area. Farmers were paid small compensation. Mr Mehra objected to the low reserved price of Rs 203.70 crore as the upfront fee for the land reportedly valued at Rs 2,000 crore in the open market.

The same is true about the proposed film city where real estate developer Parsvnath wants to opt out of the Rs 191-crore project to be developed on 30 acres in Sarangpur. The Adviser sought a probe alleging that the land for the project was “undervalued”. There were last-minute changes to help the developers and the land is valued at Rs 1,000 crore.

The theme park, supposed to be a world-class amusement park on 73 acres in Sarangpur, is now mired in controversies as Unitech has failed to deposit a further installment after Rs 5.5 crore already deposited. Financial regulations were allegedly given a go-by while short-listing the companies and a company offering 13 times higher revenue was ignored.

This loot story neither begins nor ends here. In 1990 the Administration acquired 22 acres in Burail village by paying a paltry Rs 3 lakh per acre as compensation to develop housing societies. The land has not been used and stands encroached.

Next year in 1991 around eight acres were acquired in Manimajra at Rs 2 lakh per acre for development purposes. Recently, it was auctioned recently to a private developer at Rs 20 crore per acre.

In 2002 the Administration acquired around 70 acres in Badheri village for Rs 11.80 lakh per acre to build a school. The land lies unused. Come 2004, a huge chunk of land was acquired for the Information Technology Park but not all is being used for IT.

Already CAG has raised serious objections about the valuation of land. For phases I and II land was acquired in Kishangarh over a period of time. First, 111 acres were acquired between 1950 and 1977 to set up brick-kilns. These were never built and the land lay unutilised.

Then 267 acres were acquired in 2004 at a meager price of Rs 10 lakh an acre. Around 123 acres were sold off to Parsvnath for Rs 821 crore. The Chandigarh Housing Board was supposed to earn only a 30 per cent share from the housing project, which it should have handled on its own.
This project is coming up in violation of rules and regulations as the land is adjacent to the Sukhna Lake and the official residences of the Governors of Punjab and Haryana. Town planners and architects and Mr. Bansal have repeatedly stated that the master plan cannot be changed to build houses and commercial units.

But a mega housing project where a two-bed room costs Rs 1.25 crore was allowed and village rs 3.4 crore. A major green cover in the Union Territory, part of the respiratory system was envisaged by Le Corbusier, was axed.

The UT Administration has indeed been haphazardly acquiring land in various villages in the periphery of the city at low prices only to sell it later to developers who in turn jacked up prices to make piles of money. In the process both farmers and consumers stand cheated. The cavalier way the UT Administration has gone about shows much more than mere poor vision. [Courtesy The Tribune]

BACK