Book Review

Two Decades of Neo-liberalism – Alternative Economic Survey Group – Some Reflections

C.N. Subramaniam

The year 1991 marks a major watershed in the history of world capitalism – it marked the end of the Soviet Union and the untrammeled progress of what has been termed as ‘neo-liberalism’. The Indian political leadership was forced to play along under the pressure of the severe foreign exchange crises and a weakening of the state by the rising tide of communalism. Communalism had also provided the much needed camouflage for the radical shift in state policies. While there was no dearth of apprehensions about the outcome of the policies, a large segment of the state leadership argued that in India the policies of liberalisation would be tempered by humanist concerns for inclusive growth and poverty alleviation. It was further argued that the new policies would stimulate rapid growth and break free of the ‘Hindu rate of growth’ into which the economy had been trapped during the previous decades and this would have the necessary trickle down effect to benefit everyone even if disproportionately.

It has been twenty years since then, long enough to warrant a review of the performance of the economy under the new regime. ‘The Alternative Economic Survey Group’ has sought to do precisely this in a rather bulky volume published in 2010, that is just before the onset of the present global economic crisis. This group of economists largely aligned to the CPI and CPM have conducted an exhaustive review of various aspects of economic growth during the last two decades. We would naturally recommend a careful reading of this volume to all those interested in the issues.

The opening essay by Prof. K.N. Kabra summarises the main points of the critique of the neo-liberal policies and practices of the two decades. He begins by critiquing the primacy given to the Gross Domestic Product (GDP) as an indicator of growth and development. He points out that GDP is an outcome of market mediated production valued in terms of market prices; it ignores civilisational priorities and the goals set by the society for the realisation of equity and justice for all; and ignores social and environmental costs of the growth which don’t even enter into the calculations. He further contrasts growth as indicated by GDP with development which he defines as net desirable societal change.

His main argument is that the capital intensive growth has not remuneratively employed labour and as such the gains of growth have been cornered by a small layer of the society without percolating to the rest. Growth has mainly favoured the service sector without significantly affecting agriculture or manufacturing sectors which employ the bulk of the population. The share of agriculture for example in the GDP has been on the decline with serious implications for the sustained growth of the home market and even the manufacturing sector. In contrast there has been a spectacular growth of savings from 15% to 35% of GDP and likewise of investment from 25% to 40% of GDP. Corporate savings and investments jumped by four times during this period. This has been accompanied by massive openings for graft and scams indicating the immense looting of public resources by private interests.

On pages 40-41 he cites the findings of the NCEU Report on conditions of Work and Promotion of Livelihood to the Unorganised Sector 2007. These tables somewhat indicate a different picture than what Kabra seeks to project.

For example the NCEUS survey indicates that the number of people in the extremely poor and poor expenditure categories has declined substantially (from 274 million in 1993-4 to 237 million in 2004-5). Correspondingly the ranks of the marginally poor and vulnerable has swollen from 458 million to 599 million. However it is interesting to note that the ranks of middle and high spenders too have swollen substantially from 162 million in 1993-4 to 253 million in 2004-5. This may actually indicate that absolute poverty has been ameliorated and the fruits of growth has reached more people who have made it to the middle and high income slot. If this indeed is so, then it requires explanation which has not been provided.

Prof S.P. Singh examines the impact on agriculture. He points out that the share of agriculture in GDP has been steadily declining even though it continued to employ the largest percentage of the population. Agricultural growth too has been minimal during this era with considerable slow down in capital formation in both the public and private sector. This coupled with the policies of opening up import of agricultural goods, has meant increased agrarian distress which in many regions became so acute as to cause epidemics of farmer suicides. Agrarian crises have also been accentuated by environmental crises which can be attributed to the green revolution strategy of unbridled exploitation of ground water, use of dams and canals to the detriment of tank irrigation on the one hand and blind use of chemical fertilisers and pesticides. Singh also points out a major trend in the form of continuous decline in Net Sown Area due to shift in land use from agriculture to non-agricultural use. This has also effectively meant the shift of resources from farmers to the corporate sector and the service sector middle class.

What Singh does not examine is the impact of liberalisation on different segments of the agrarian society, namely the large landlords and capitalist farmers, the middle and marginal peasants and the agricultural labour. The survey would also have been more useful if it had also taken the regional variation into consideration.

Surajit Mazumdar reviews the tightening hold of a small segment of the corporate sector on the economy in an important essay, ‘Two decades of liberalisation and the Indian private corporate sector’. During the earlier phase of post Independence Indian economic development, the state sector was seen as the driving force with its control over key industrial and financial sectors. However, since 1991, growth was seen as being driven by private corporate houses.

(Significantly, this rise in corporate savings has also been accompanied by a significant increase of domestic savings, indicating a widely shared perception of profitability of investment over consumption in this phase. Mazumdar, however, chooses to ignore this aspect.)

It would thus appear that corporate sector of India has gained substantially from the ‘liberalisation’ regime but the resultant growth has not trickled to the mass of the population of the country. It may have benefitted a small segment of the population which has been fortunate enough to get employment in the ‘organised’ sector of industry or the newly emerging service sector. However, this has been at the cost of vast numbers of workers who have been rendered redundant or left to fend for themselves in the unorganised sector.

In an another essay, Archana Prasad examines the impact of the neo-liberal policies on tribal people. She briefly discusses the World Bank sponsored forest management programmes, the new Forest policy and points out the neo-liberal agenda of reducing the role of the state, transferring the responsibility of forest protection to the tribal people and bringing in the corporate sector as a major player in the forest use and regeneration. She also points out this neo-liberal period has seen further alienation of tribal land resources and increase in landlessness among them which has been forcing them into the urban wage market as causal labourers. In a welcome departure she devotes special attention to the gender question pointing out the impact of the casualisation of the tribal people on women. She concludes her essay with an interesting critique of the Maoist intervention in tribal question. She seeks to differentiate the context of Maoist intervention in West Bengal and Chattisgarh pointing out that in West Bengal the tribal people in question had benefitted from the initial land reforms carried out by the Left Front Government but had got alienated due to the lack of further planned development of the region. On the other hand the Chattisgarh tribal population saw no such process. She obviously sympathises with the CPM and is critical of the Maoists whom she blames for closing avenues of debate on tribal policies.

The entire volume in fact is characterised by the ambivalent position of the CPM spectrum of politics. On the one hand it is critical of the neo-liberal policies but its critique is broadly within the framework of capitalist development. As a result it does not develop a class perspective of the economy. For example the volume conspicuously has no section on the impact of neo-liberal policies on the working class or landless labour or the entire process of causalisation of labour and its impact on different segments of the  labouring population including women and children.

Nevertheless the volume is a welcome addition to the literature on neo-liberal development from a left wing perspective.

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