|
The
hoardings greet you everywhere: uplifting images of
happy, smiling (mostly middle class) Indians enjoying
material consumption beyond their wildest expectations,
striding confidently into the future and proudly looking
back on recent achievements. On the television screens,
the ad campaigns are about as blatant as a ruling
government can dare to be just before national
elections. Apparently, there has never been a better
time to be an Indian; we have never had it so good.
Not only are we internationally mobile global citizens
with access to the best consumer goods in the world as
well as oodles of consumer credit with which to buy
them; we are now getting international recognition
because of our prowess in new sectors like IT. In fact,
we are full of such self-confidence that even our
national team can (occasionally) beat the Australians at
cricket!
All this has happened, or so the ruling party would have
us believe, because of the excellent economic and
political management of the NDA government in the past
five years. According to this vision, India is on the
verge of achieving economic superpower greatness and is
riding the crest of material success.
But just step outside these glorious images for a
moment, and look into the fringes of the picture, which
actually make up the background. A very different
reality emerges. Rural India is in the grip of an
agrarian crisis that is unprecedented in its spread and
severity, in these past fifty years. Many once
flourishing urban industrial centres, especially in the
north and east, are now in terminal decline. Even in
the smarter and dynamic metros, look beyond the wide
streets to the by-lanes of the slums, and you will see
scenes of despair, tension and even violence because of
joblessness and material insecurity.
The recent past has witnessed the slowest rate of
employment growth in post-independence history, agrarian
crisis and worsening food security for the poor across
the country. There are daily reports of starvation
deaths and increasing numbers of suicides by indebted
farmers unable to cope with the strain. Small producers
are being wiped out in many sectors. Traditional
moneylenders, who had been marginalised by decades of
efforts to bring institutional banking to the rural
areas, are making a comeback, emboldened by the
financial liberalisation measures that have undermined
the spread of banking to the poor. The availability of
public services and access to them have deteriorated for
most people, especially - but not only - in the rural
areas. The majority of India’s citizens live in more
fragile, vulnerable and insecure material circumstances
than before.
Most of all, the youth face bleak and shaky futures,
with little hope of secure employment, as job
opportunities have simply not kept pace with the growth
of the labour force. This collapse in employment
generation is starkest in the rural areas, where the
rate of increase of all forms of work (including casual,
part-time and subsidiary jobs) has been less than 0.6
per cent per year – that is only around one-third the
rate of growth of the labour force. But it is even
noticeable in most urban areas.
This was cruelly evident some months ago, when around
30,000 petty but secure jobs in the Railways, with the
required qualification of Class 8 pass and paying Rs.
6,000 per month, attracted more than 7 lakh applicants,
most of whom were heavily over-qualified with graduate
and post-graduate degrees. The examinations for these
jobs were surrounded by rioting which claimed many lives
in some states, reflecting the growing desperation of
ordinary young people.
So whose India is shining? The ruling powers harp on
India’s large foreign exchange reserves (which are
really a sign of slack in the economy) the recent
mini-boom in the stock market and in IT-related sectors,
the availability of easy consumer loans and new consumer
goods and other supposed positive indications of
prosperity. The reason that they, or indeed anyone else,
can even begin to think that this represents the real
face of the country, is because of the dramatic increase
in income inequalities in the recent past.
This has meant that India is indeed shining for a small
minority of the population, around 10 per cent of the
people (mostly the rich and middle classes in large
cities) who are benefiting from the highly unequal
pattern of growth of the past decade. Indeed, this
minority has probably never had it so good. The economic
strategy followed by the government has not simply meant
the withdrawal of the government from its basic
responsibilities in providing a range of goods and
services. It has also entailed systematic tax cuts in
favour of the rich (especially large capital) and other
incentives designed to boost their income and
consumption. Along with this, global integration has
increased the job opportunities for this favoured group,
as financial and other services and IT-enabled
activities have expanded.
While all this affects a relatively small proportion of
the population, it is this section whose interests
dominate the media and increasingly, the policies of the
central government. And the NDA government has now
confused this small group with the Indian people as a
whole, with disastrous consequences.
What else can explain the extraordinary set of measures
(amounting to a virtual mini-budget) that was announced
by the Finance Minister in the first half of January
this year, apparently in anticipation of elections? In
blatant violation of Parliamentary norms and procedures,
the Finance Minister declared a wide range of tax
concessions and expenditures intentions, as pre-election
sops.
The harsh joke is that these measures will positively
affect only a very small proportion of the electorate,
even as they cost the state exchequer huge amounts that
will have to be paid for later. Most of these measures
will benefit the already rich. The most wide-ranging
cuts relate to customs duty. The peak rate for
non-agricultural goods has been reduced to 20 per cent
from 25 per cent; customs duty on cellular telephones
has been further cut while laptop computers can be
freely brought in as baggage; customs duty on coal and
some equipment and components has been brought down.
Inland travel tax and foreign travel tax have been
abolished and excise duty on aviation fuel has been
halved, in completely unnecessary measures that will
reduce the price of air travel, which is only indulged
in by the rich and middle classes. The amount of liquor
that can be imported duty-free has been doubled.
These measures imply a huge loss of revenue: the
estimates are that the government will lose more than Rs.
9,000 crore, and possibly up to Rs. 11,000 crore, in the
rest of this fiscal year alone, just two and a half
months! Of course this means that someone will have to
pay later for this unjustified generosity to the rich
now. This temporary largesse only adds to the
consumption boom of the rich without improving material
conditions for the vast majority of Indians.
But apart from that, just think what could have been
done with this amount of money. It could have been used
for productive employment generation schemes in the
rural areas, which would have increased rural employment
and provided much-needed infrastructure. It could have
provided better basic infrastructure to our schools and
health centres across the country, a significant
proportion of which still lack even the basic buildings.
Ironically, these measures would probably have done far
more to improve the government’s popularity and given it
a better pre-election boost, than the tax cuts in favour
of the rich and middle classes.
The other measures which are supposedly to provide for
agriculture and rural infrastructure, are so minor as to
be laughable. The Finance Minister announced grand plans
for a Rs. 50,000 crore infrastructure and manufacturing
fund, an agricultural infrastructure fund of Rs. 50,000
crore and a small and medium industry fund. These may
sound impressive, but the total budgetary allocation for
all of these funds amounts to only Rs. 2,200 over
an entire fiscal year. This is one more example of a
grand scheme being announced, without any real resource
commitment on the part of the Central Government. It
also means that effectively there is no relief for
cultivators or for small units and the people employed
by them, or for the millions of jobless people.
All in all, therefore, the purportedly "populist"
measures of the central government before the elections,
are likely to be popular only among a tiny section of
the electorate, and provide no relief to the vast
majority. The very fact that the government can even
think that these measures will help it electorally, is a
sign of how much it has lost its grip on reality.
It is not surprising that the current government – and
the political parties that are part of it – are trying
to put the best possible gloss on what is at best a
very mixed economic picture, and at worst, a story of
stagnation, decline, neglect and even deterioration
for a substantial part of India's population. What is
surprising, however, is the fact that at least parts
of the government seem to have fallen for their own
spin, and therefore have lost a basic sense of the ground
realities. When rulers start to believe their
own lies, it may be the beginning of the end for their
rule. |
