Re: [Marxism] The inhumane face of India's reforms

[Marla Vijaya kumar <marlavk@xxxxxxxxx>]

Louis Proyect wrote: Quoting an article by Kunal Kumar Kundu in the Asia Times, Mumbai, Sep 23, 2004;

?With the architect of India's economic reforms, Manmohan Singh, now at the helm of the brand new coalition government that has been in power for over 100 days now, it is perhaps time to take stock of what the much-vaunted reforms have delivered.?

Response:

In the euphoria of the new Government?s formation with the help of communists, the congress party and specially Dr Manmohan Singh, the Prime Minister has gone on record saying that the new government will not follow privatization as an ideology. But one of the first moves of the minister for aviation was  for privatizing the Indian airports. There were policy announcements about allowing foreign equity participation in the Insurance and Telecom sectors. All this within a few days of the new government assuming power. Today the Left in India is fighting tooth and nail to restrain, if not halt the neo-liberal enthusiasm of the ministers, starting with Mr Chidambaram, the Finance Minister.

The Common Minimum Programme promises ?Reforms with a human face?, something paradoxical. How can neo-liberal reforms have a human face, other than a Janus face?

This is being seen in practice, but the experience is proving to be bitter for the people and the Left parties. If this is the experience in the first 100 odd days, what of the remaining 4 years and 9 months before the next elections?

M. Vijaya Kumar


Louis Proyect <lnp3@xxxxxxxxx> wrote:Asia Times, Sep 23, 2004

The inhumane face of India's reforms
By Kunal Kumar Kundu

MUMBAI - With the architect of India's economic reforms, Manmohan Singh,
now at the helm of the brand new coalition government that has been in
power for over 100 days now, it is perhaps time to take stock of what
the much-vaunted reforms have delivered.

Overall, in terms of certain macro-economic parameters, the economy is
surely on a much stronger base. Interest rates have been at an all-time
low and inflation is under control (the recent spurt notwithstanding, as
the point-to-point nature of calculation leaves the inflation numbers
more prone to short-term shock). India's external sector has started
showing an admirable degree of strength and resilience. Forex reserves
have crossed the $100 billion mark, rising merchandise and service
exports have led to a surplus in the current account balance after
decades of deficit. Increased emphasis on non-debt-creating forex
inflows have reduced the vulnerability of the economy to external
shocks, with India's short-term external debt as a percentage of total
external debt reduced to less than 5%. The issue, however, is while
reformers of all hues have gone overboard talking about reforms with a
human face, how humane has it turned out to be so far?

To put things in perspective, let's compare the GDP growth data during
the 1980s and the post-reform period to date. During the 1980s (the
period under consideration being 1980-81 to 1990-91), India's GDP grew
at a CAGR (compounded annual growth rate)of 5.62%, while in the
post-reform period, it was 5.71% - an increase of a mere nine basis
points. Surprisingly, the impact of reforms on GDP growth has not been a
few percentage points but a few basis points, and that, too, in single
digit. Surely, after one-and-a-half decades of reforms, one would expect
better numbers. In China, while the pre-reform (prior to 1978) economy
had seen an annual growth of 6%, the post-reform average real GDP growth
has been more than 9% annually.

Even more glaring has been the performance of the agricultural and the
manufacturing sectors. There has been a marked deceleration in the
growth rates of both during the post-reform period vis-a-vis the
immediate pre-reform decade. While the average growth rate of the
manufacturing sector during the 1980s was as high as 7.57%, it fell to
5.92% during the post-reform period. Similar has been the experience in
the agricultural sector, where the growth rate fell from 3.43% to 2.7%.

Clearly, the booming service sector has made all the difference to
India's economic growth in the post-reform period. The contribution of
this sector to GDP rose by a whopping 10% in this period, thereby
drastically reducing the contribution of the two other major sectors. A
sectoral analysis reveals industrial revolution has bypassed India as it
jumped from a predominantly agrarian economy to a service economy - a
paradoxical situation of a developing economy showing signs of a
developed economy.

Can a country, 70% of whose population depends on agriculture and 35% is
illiterate (that, by the most conservative of estimates), afford to have
a development skewed against employability of its millions? It's simply
impossible to provide alternative employment to an unemployed farmer in
the services sector.

full: http://www.atimes.com/atimes/South_Asia/FI23Df05.html

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