Liberalisation process has somewhat modernised the economy

All aboard Sitaram Yechury HindustanTimes December 15, 2005

Following their electoral victories, in Madhya Pradesh and then in Rajasthan where the BJP focused on issues of bijli, sadak and paani (B-S-P), they sought to appropriate the developmental agenda and coined the bombastic slogans of ‘India Shining’ and ‘feel-good’ factor. Such was the vast disconnect between these slogans and the actual deteriorating living conditions of the mass of the people that these slogans boomeranged with a vengeance in the general elections. Even in Madhya Pradesh, having won the elections on the plank of B-S-P, within two years, the BJP has installed the third chief minister.

The process of unbridled liberalisation has led to glaring inequalities. While reports of distressed suicides and starvation deaths keep pouring in from rural India, the net collective worth of 311 billionaires has gone up to Rs 3.64 trillion, according to a survey conducted by a business daily. This is an increase of 71 per cent from last year. A total of 133 new persons had entered the billionaires list. It is this which sustains the conspicuous consumption that borders on the obscene. There can be no complaint against some people growing rich. (May their tribe increase!). But unless this is combined with active State intervention to empower the underprivileged, such a growing hiatus cannot sustain. The agenda of economic reforms, instead of being solely preoccupied with raising the levels of corporate profit, must keep people’s welfare as priority. The dynamics set in motion by the liberalisation process in our country has, while somewhat modernising the economy, also resulted in the following:

• the growing discontent among the vast majority as a result of these economic policies;
• the competition between various social groupings for a share of the shrinking cake;
• the consolidation of regional parties as important players championing the cause of certain social groups and playing upon growing regional disparities;
• communal forces seeking to reap benefits out of this discontent, while at the same time diverting people’s attention away from the real issues;
• institutionalised corruption emerging as an important factor of public life accompanied by a gross degeneration of political morality. This is the reality that needs to be urgently changed for the better.

The official preoccupation with greater liberalisation rests on the assumption that India faces a shortage of capital. Hence the policy of bending over backwards to woo multinational corporations and undertaking policy measures to make the capital available cheaper for the corporate sector. In other words, a greater dose of liberalisation, further opening up of the Indian economy and further reduction of government expenditure are paraded as the solution for further economic growth. Such a diagnosis misses the wood for the trees. The basic problem with the Indian economy is not so much shortage of capital as the restricted size of the domestic market. It is by now well recognised that an overwhelming majority of our population is bypassed in the present liberalisation process. They do not constitute a market capable of purchasing the commodities that are produced.

Further, in a situation of sluggish growth of the economy, purchasing power in the hands of the common people does not grow adequately to constitute a demand that will sustain high levels of industrial growth. Worse still, with growing unemployment and high rate of inflation, the real earnings of the people decline, if not stagnate. Thus, with a stagnant and highly restricted domestic market, no amount of availability of capital can recharge the economy. What is required is to expand the domestic demand. Conscious State intervention to bridge the growing economic hiatus, at the same time strengthening measures for adequate socio-economic empowerment of the poor, is the need of the hour. Historical experience and our own realities of existence confirm that development does not automatically lead to empowerment of the deprived. The ‘downward filtration’ theory has never worked anywhere in the world and neither can it work in India. Only through active State intervention can this be made possible.

Those who seek to oppose any affirmative action by the State in this direction, as contradicting goals of ‘merit’ and ‘development’, will eventually contribute to the negation of development itself. State intervention through massive doses of public investment, generation of employment and positive intervention to ensure social empowerment, are the course expected from the UPA government in the present situation. The time has come for us to combine the development agenda with that of social justice, not as an expression of benevolence for the underprivileged but as a necessity for the future of India. It merits repetition that demographically India is one of the youngest countries, 54 per cent of the population being below the age of 25. This is our asset, not a liability, as some erroneously see it to be. India’s future lies in providing quality of life for its youth on whose energies development crucially rests. In this context, it would be worthwhile to recollect B. R. Ambedkar:

“On January 26, 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life we will have inequality. In politics, we will be recognising the principle of one man-one vote and one vote-one value. In our social and economic life, we shall by reason of our social and economic structure, continue to deny the principle of one man-one value. How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we will do so only by putting our political democracy in peril. We must remove this contradiction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy which this Assembly has laboriously built up.” (From B.R. Ambedkar’s speech in the Constituent Assembly on November 25, 1949) The country must heed this warning. The UPA government must steer a course in combining the twin objectives of development and social empowerment. The writer is a Rajya Sabha MP and member, CPI(M) Politburo