The two Indias

[Louis Proyect <lnp3@xxxxxxxxx>]

ZNet | Corporate Globalization

Globalization and Growing Disparities
by Girish Mishra; July 07, 2006

    The present phase of the Washington Consensus-based globalization is 
now almost two decade-old. Hence it is not premature to judge what its 
protagonists promised and what results have accrued. To begin with, 
globalization was to generate a high economic tide that was supposed to 
lift all boats, no matter whether they were in developing or developed 
countries. As Richard Hornik, an American researcher says, ?Any 
transitional pains that the resulting huge commercial shifts would 
inevitably cause would be fleeting. Everything from the expansion of the 
World Trade Organization and the European Union, to the ?reform? of 
government pension systems to force workers to work longer than originally 
promised were sold with the same political snake oil: ?Take a bit of pain 
now,? politicians and pundits assured the public from Warsaw to 
Washington,? and we?ll all cross that shiny bridge to a new prosperity in 
the 21st century.?

    After more than one and a half decades, what is the situation? There 
is uncertainty everywhere. So far as working class is concerned, no job is 
safe. The corporate sector has got unrestrained power to hire and fire. 
Wherever the government has not yielded on the demand for flexible labour 
laws, there is an intense pressure to bend it. The threat of taking 
business and investment elsewhere hangs like Damocles? sword. All workers 
whether blue collar or white collar, have to continuously worry about 
tomorrow. They may be retrenched for no fault of their own because the 
company wants to reduce labour costs or wind up the business and go 
somewhere else. Workers are all the time unsure about health benefits and 
pensions and the fate of their children?s education. With the state?s 
social welfare role all the time under attack and the financial constraints 
becoming more and more acute, it should not be surprising if working people 
become desperate.

    Over the years, socio-economic and regional disparities have 
increased. The distribution of the benefits of rising rate of economic 
growth has been skewed. To quote the UNDP?s Annual Report for 2006: ?Ours 
is a world of extremes. The poorest 40 per cent of the world population ? 
the 2.5 billion people who live on less than $2 a day ? account for five 
per cent of global income, while the richest 10 per cent account for 54 per 
cent. Never before has the goal of abolishing poverty been within our 
reach: there are no longer any insurmountable technical, resource or 
logistical obstacles to achieving it. Yet more than 800 million people 
suffer from hunger and malnutrition, 1.1 billion people do not have access 
to clean drinking water and, every hour, 1,200 children die from 
preventable diseases. Despite a growing world economy and significant 
advances in medicine and technology, many people in developing countries 
are not reaping the potential benefits of globalization.?

    A report in The New York Times (June 28) by its correspondent, Celia 
W. Dugger, has this to say: ?It is no secret that mosquitoes carry the 
parasite that causes malaria. More mystifying is why 800,000 young African 
children still die of malaria per year ? more than from any other 
disease?when there are medicines that cure for 55 cents a dose, mosquito 
nets that shield a child for $1 year and indoor insecticide spraying that 
costs about $10 annually for a household.?

    The report goes on to add: ?In Uganda, population 28 million, not one 
of the 1.8 million nets approved more than two years ago by the Global Fund 
to Fight AIDS, Tuberculosis and Malaria has yet arrived.

    ?The World Bank, after pledging to halve malaria deaths six years ago, 
had let its staff working on the disease dwindle to zero.?

    A recently published report by the World Bank, entitled Economic 
Growth in South Asia, has highlighted the fact that in spite of the overall 
rate of economic growth rising and the average incidence of poverty falling 
disparities have increased. Obviously, all sections of the society and all 
the regions have not shared the gains from economic growth equitably across 
South Asia.

    Bangladesh, Bhutan, India, Maldives and Pakistan have grown on an 
average at over 5 per cent per annum while Sri Lanka and Nepal have grown 
at 4.7 per cent and 2.5 per cent per annum respectively. The incidence of 
poverty on an average has fallen by 9 per cent in Bangladesh, 10 per cent 
in India, 11 per cent in Nepal and 6 per cent in Sri Lanka. All these 
impressive gains pale into insignificance when one takes into account the 
fact that as many as 400 million people out of a population of 1.37 billion 
in the region are below poverty line. In other words, over 30 per cent 
people do not get sufficient income to keep their body and soul together. 
The report underlines that ?Poverty is not just endemic, but increasingly 
concentrated in particular, lagging regions. Not only are the regions poor, 
but their growth are substantially slower than the better-off regions.?

    So far as India, the largest country in the region, is concerned; the 
increasing economic inequalities in the society and the widening regional 
disparities are becoming more and more acute with every passing year. This 
poses grave dangers to India?s political and social stability as well as 
national integrity. Political turmoil, criminal activities and separatist 
tendencies are bound to gain in strength. In turn, they are bound to affect 
future economic growth and development adversely. Already, the increasing 
Maoist insurgency, rising graph of all kinds of crimes and the tensions 
generated by the growing demand for reservation in jobs and educational 
institutions by the downtrodden and backward castes are indicating the more 
troublesome days ahead if necessary corrective steps are not urgently taken.

    One can ignore the following observations by the report at one?s 
peril: ?The phrase ?two Indias? exemplifies this difference in regional 
development outcomes. In 2002-03, all-India per capita GDP was $480, the 
poorest seven states (accounting for 55 per cent of the population) had a 
per capita GDP that was two thirds the national average, while in the 
richest seven states (33 per cent of the population) per capita GDP was 
nearly the double that of the poorest seven states. In the two largest 
states (Bihar and Uttar Pradesh, 25 per cent of total population) per 
capita GDP was less than half the national average and only a third of the 
richest 7 states. The four southern states, Andhra Pradesh, Karnataka, 
Kerala and Tamilnadu (21 per cent of the total population), at an average, 
enjoyed more than twice the GDP per capita of the quarter of the population 
concentrated in the two poorest northern states.

    ?Furthermore, with average GDP growth rates of 5 per cent, the 
southern states are galloping ahead of the poorest but populous northern 
states with growth rates of only 2 per cent. This threatens to further 
increase the poverty gap in the two regions, currently, head count poverty 
in the poorest northern states and the better off southern states is 35 per 
cent and 18 per cent respectively.?

    This report by Shantayanan Devarajan and Ijaz Nabi has unambiguously 
warned about the dangers looming large on the horizon: ?rising inequality 
in the wake of market-oriented pro-growth policies could elicit a backlash 
against these policies, sometimes leading to distortionary policies that 
slow growth? if inequality between regions rise above a certain threshold, 
it can trigger a violent conflict which, in turn, can lead to decades of 
reduced growth.?

    It was not without much thinking that founding fathers of modern India 
time and again emphasized the importance of removing social and economic 
inequalities and reducing regional disparities. All the plan documents 
underlined them and economic policies and programmes were judged from this 
angle. It is only after the beginning of the economic reforms inspired by 
the Washington consensus that these two important objectives have been 
almost discarded and a drumbeater of the Washington consensus like 
Gurcharan Das in his article ?The India Model? (Foreign Affairs, 
July-August 2006) has the audacity to accuse Jawaharlal Nehru and Indira 
Gandhi of ?shackling the energies of the Indian people under a mixed 
economy that combined the worst features of capitalism and socialism.? Das 
seems to be so heavily doped by his ideological masters that he forgets 
what has happened to Pakistan that unquestionably followed the American 
dictates. It got split into two and could never have even a modicum of 
democracy. India, in spite of all the diversity, has been able to preserve 
its territorial integrity and democratic institutions. Mr. Das, please look 
at the backyard of the USA, i.e., Latin America, where democracy and 
independent economic development have begun prospering only after 
discarding the Washington consensus. Lies and distortions must be given up 
if one genuinely wants to debate and convince.


          Girish Mishra
          E-mail: gmishra@xxxxxxxxxxxxxxxx