Posts Tagged ‘economy’
What did the ‘liberalisation’ of the Indian economy bring? What has 20 years of the ‘India growth story’, which is sold around the world, brought its labour and workers? How have households rural and urban fared at balancing their budgets and meeting their needs? Poorly, for it has been a struggle that continues.
An analysis in the journal of the National Sample Survey Office, Sarvekshana, has compiled estimates of average calorie intake for the country and the major states from six quinquennial (every five years) surveys of consumer expenditure. These surveys show a decline in average calorie intake between 1972-73 and 2009-10. The overall decline is substantially greater for rural than for urban India, and appears to have been sharper in the period since 1993-94 (as measured by the 50th round of NSSO surveys), especially in the urban sector.
The analysis on ‘Trends in Nutritional Intake in India’ has shown that the proportion of households with calorie intake below the level of 2700 kcal per consumer unit per day (this is a measure different from per capita) has grown steadily since 1993-94: from under 52% in rural India to nearly 62%, and from 57% in urban India to about 63%.
This is no surprise to the large proportion of our population who have borne the merciless brunt of food inflation for close to a generation. Between 2004 and 2013, food prices in general rose by 157%. Cereals, the staple diet of the poorest, were high on the scale, with rice at 137% and wheat at 117%. Pulses – the sole source of protein for most – had risen by 123%. Potato was even higher at 185%. As for vegetables, they have long priced themselves out of the diet of the poor, by rising up to 350%. This crippling rise continued while the government (UPA-I and UPA-II) loudly claimed every few months it would bring prices down.
That is why the share of cereals in total calorie intake has declined since 1993-94 by nearly 7 percentage points for rural India and by about 3.5 percentage points for urban India: the share of oils and fats has on the other hand risen by 3 percentage points for both. The share of milk and milk products has grown by about 1.4 percentage points in urban India but by only 0.6 percentage points in rural India.
Moreover, at the all-India level protein intake has fallen from 60.2 grams to 55 grams per person per day in rural India and from 57.2 grams to 53.5 grams in urban India over the period 1993-94 to 2009-10. The decline has taken place in most major states but has been sharpest in rural areas of Rajasthan, Haryana, Uttar Pradesh and Punjab – where intake has fallen by 9-12 grams.
As the major trade unions have been raising an alarm about at least every quarter, the price of rice for BPL (below poverty line) card holders increased from Rs 350 per quintal in 1997-98 to Rs 415 per quintal in 2007-08. In the same period the APL (above poverty line) price was increased from Rs 550 per quintal to Rs 755. For wheat, the price for BPL card holders was increased from Rs 250 per quintal to Rs 415 and for APL card holders from Rs 450 to Rs 610 in a period of 10 years.
In such a situation, fats ought not to be a contributor to calories more than it was 30 years ago. But the analysis tells us otherwise – for India has become the favoured importer of palm oil from Malaysia and Indonesia. Every major state shows an increase in its population’s fat intake. At the all-India level the increase has been from 31.4 grams per person per day in 1993-94 for the rural population to 38.3 grams in 2009-10 – a rise of 7 grams per day over the 16-year period, and from 42 grams to 47.9 grams per day for the urban population, a rise of 6 grams per day over the same period. Between 1993-94 and 2009-10, the contribution of cereals to protein intake has fallen by about 4.5 percentage points in rural India and by 3 percentage points in urban India, while the contribution of pulses has fallen slightly in both rural and urban India.
This analysis from the NSSO must be viewed against the growing trend in India of the corporatisation of agriculture and the industrialisation of the food system. New market monopolies whose reach is far greater than could be conceived in 1993-94 are now at work, aided by speculative financial predators. There is in response a need for strengthening social ownership of the cultivation of food staples, of the organic agriculture movement, of shortening the distances that food travels, of localisation of the Bharatiya food web.
Pope Francis has issued, a month before Christmas, a blunt and plain message to the political and financial masters of our societies. That message is: the economics of exclusion and inequality must stop.
The message comes early in his ‘exhortation’ (called ‘Evangelii Gaudium’) and which has just been released by the Vatican. You will find it in Chapter 2 which is titled ‘Amid the crisis of communal commitment’. The main body of the exhortation has a lot of the usual evangelical language that such messages from the Vatican typically contain, but this chapter rings stark and true.
Francis has begun this section with: “It is not the task of the Pope to offer a detailed and complete analysis of contemporary reality, but I do exhort all the communities to an ‘ever watchful scrutiny of the signs of the times’. This is in fact a grave responsibility, since certain present realities, unless effectively dealt with, are capable of setting off processes of dehumanisation which would then be hard to reverse.”
He gives a nod to the proponents of technological remedies to many of our contemporary problems: “We can only praise the steps being taken to improve people’s welfare in areas such as health care, education and communications.” And then gets to the root of the issue with “at the same time we have to remember that the majority of our contemporaries are barely living from day to day, with dire consequences. A number of diseases are spreading. The hearts of many people are gripped by fear and desperation, even in the so-called rich countries. The joy of living frequently fades, lack of respect for others and violence are on the rise, and inequality is increasingly evident”.
“It is a struggle to live and, often, to live with precious little dignity. This epochal change has been set in motion by the enormous qualitative, quantitative, rapid and cumulative advances occurring in the sciences and in technology, and by their instant application in different areas of nature and of life. We are in an age of knowledge and information, which has led to new and often anonymous kinds of power.” This is a complaint as plain as any we have seen from those suffering from the effects of climate change, from the forced economics of austerity, from the land grabs and the perversions of democracy. It is possible that in the last sentence, Francis has also warned against the global spying (by the USA and its feckless allies) which included the Vatican too.
In the sub-section titled ‘No to an economy of exclusion’ Francis has made plain his opposition [get the English pdf here] to the current systems of power and control:
“Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills.”
“How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalised: without work, without possibilities, without any means of escape.”
“Human beings are themselves considered consumer goods to be used and then discarded. We have created a ‘throw away’ culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the ‘exploited’ but the outcast, the ‘leftovers’.”
And in one angry paragraph, Francis effectively sends packing the army of macro-economists and financial manipulators who continue to claim that constant growth (GDP, economy, consuming, and so on) brings people out of poverty thanks to the ‘free market’.
“In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralised workings of the prevailing economic system. Meanwhile, the excluded are still waiting.”
“To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalisation of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.”
This is indeed revolutionary material from the Vatican. Now let’s see what effect it has on the suits in the G20, the banking parasites, the stock marketeers, the land grabbers, the ecological criminals in all our countries.
Not a week goes by nowadays without one high-profile institution or high-powered interest group directing us all to be part of the ‘new, green economy’. That’s where the next jobs are, where innovation is, where the next wave of financing is headed, where the best social entrepreneurship lies. There are the big inter-governmental organisations telling us this: United Nations Environment Program, UNCTAD, OECD, International Energy Agency, the big international lending agencies like the World Bank and Asian Development Bank. There are big think-tanks telling us the same thing – backed up by hefty new reports that are boring to read but whose plethora of whiz-bang charts are colourful. There are big companies, multinationals and those amongst the Fortune 500, also evangelising the new green economy and patting themselves on the back for being clean and green and so very responsible.
What on earth are they all talking about? Does it have to do with us average, salaried, harassed, commuting, tax-paying types who are struggling with food inflation and fuel cost hikes and mortgages and loans that break our backs? Are they talking to our governments and our municipalities, who are worried about their budgets and their projects and their jobs too?
Here are a few answers from working class Asia. Let’s start with restating a couple of trendlines. One, the era of growth in the West is over. Growth is Asia is what is keeping the MNCs and their investors and bankers and consultants interested, and this means China and India (also Brazil, Russia, South Africa, Indonesia). Two, the environmental consciousness which began in the 1970s to spread quickly in the West led to many good laws being framed and passed. These were responses to the industrial and services growth in the Western economies. As globalisation took hold, people in less industrialised countries – ordinary citizens – saw what had happened in the West and learnt from their experiences with industrialisation. Green movements took root all over Asia and South America, protests were common, confrontations just as much, and global capital found itself being questioned again, even more fiercely.
These are the two major trends. The forces of production want to move much further into what used to be the ‘developing’ world, but want to meet much less resistance. That’s why they appeal to the consumer minds of China, India and the other target countries – you need jobs, homes, nice cars, big TVs, cool vacations, credit, aspirations, and lifestyle is what the messages say, whether they’re from telecom companies or condominium salesmen. But it’s hard to market all this stuff – real stuff, virtual stuff – to people who are still struggling to make ends meet.
That’s where the ‘new, green economy’ tagline and its earnest-sounding philosophy comes in. “The main challenges to jump-starting the shift to a green economy lie in how to further improve these techniques, adapt them to specific local and sectoral needs, scale up the applications so as to bring down significantly their costs, and provide incentives and mechanisms that will facilitate their diffusion and knowledge-sharing,” said one of these recent reports. Look at the text which contains all the right buzzwords – ‘scale up’, ‘jump-start’, ‘applications’ (that’s a favourite), ‘knowledge-sharing’, ‘local’.
This makes the ‘old economy’ sound good but changes nothing substantial on the ground, or on the factory shopfloor or for the tens of thousands of little manufacturing units that do small piecework jobs for the bigger corporations up the chain. The world’s business philosophy has changed drastically even without the impact of environment and energy. To drive home this point, it has been a long time since we heard anything like ‘industrial relations’, and that alone should tell us how far the dominance of capital has reached, when labour, whose organisation gave the West its stellar growth rates in the 1960s and 1970s, has now become all but ignored. This is because the dominant interests associated with capital have insisted, successfully for investors and for pliant governments, that the manufacturing firms break loose from the industrial relations moorings they had established. The restructuring of firms to emphasise leaner and meaner forms of competition – as the ruthless management gurus and greedy consulting agencies instructed – was in line with market pressures that are viewed by the powers-that-be as crucial to the revitalisation of the economy.
Read their greenwash carefully and the control levers are revealed. “Further innovation and scaling up are also needed to drive down unit costs. Technologies will need to be ‘transferred’ and made accessible, since most innovation takes place in the developed countries and private corporations in those countries are the main owners of the intellectual property rights covering most green technologies.” So says ‘World Economic and Social Survey 2011: The Great Green Technological Transformation’ (UNESCO, Department of Economic and Social Affairs). Rights and access are built in from the start, as you can see.
And yet it is this very system of production, of the arrangement of capital and of the effort to weaken working regulations that is now talking about the ‘green economy’. Why do they even imagine we should believe them? They are the ones who have remained locked into the fossil fuel economy and who have partnered the enormous influence of the finance markets, who have followed every micro-second of the way the dictates of capital flows and what the market investors want in their endless quest for greater profits in ever-shorter cycles of production. For the major business of the world, ‘green economy’ is yet another route to super-profits and the consolidation of both forces of production and masses of consumers. The difference between now and the 1970s is that today they are able to successfully enlist the apparently authoritative inter-governmental organisations with their armies of economists and social scientists and engineers, to support this new profiteering. Only now, the cost is planetary.
The OECD (Organisation for Economic Cooperation and Development) has just released its Survey of India, and has said that “India now has the opportunity to move towards sustained and socially inclusive double-digit growth if the right policies are put in place”. The OCED survey said India’s economy has ranked among the best performers over the past decade, and poverty has been falling faster than in many other emerging economies. Pending a detailed reading of the report I can’t see how “best performer” and “falling poverty” can be applied to India, but the social and environmental dimensions of India’s so-called eocnomic growth may not be within the OECD’s scope in such a survey.
OECD Secretary-General Angel Gurría presented the Economic Survey of India in New Delhi and there said: “Policymakers are to be commended on the remarkable catch-up achieved in recent years, making India one of main driving forces of the global economy. The priority given to more socially inclusive economic growth is appropriate and further reforms are needed to achieve it.” There are more such conceptual conundrums here – catch up with who? And for what? What “socially inclusive” growth is Gurria talking about – India has the world’s largest population of malnourished children and the world’s largest population of hungry people. This has been so for the entire period that the OCED said India was “catching up”.
To ensure strong growth continues and is sufficiently inclusive, the government needs to target public expenditure better on the poor, the OECD has said. “Although high growth has reduced poverty, progress could have been faster. Hundreds of millions of people still live below the official poverty line. Malnutrition and poor health are still widespread.” Evidently the OECD India Survey 2011 team saw no contradiction between what they have praised and what exists. Against this backdrop, the report advocates a strengthened welfare system and improved access to health care. “Government spending on health is only around 1% of GDP – among the lowest rates in the world. Private health care provision is increasing but quality is highly variable. Better regulation and oversight is needed.” This is true, but the Survey’s objectives lead all solutions away from more and better public healthcare.
The report said that around 9% of GDP is spent on energy and other subsidies, most of which fails to reach the poor, and that diesel subsidies should be phased out. For other energy products, such as kerosene and LPG, susbidies should be transformed into cash payments targeted to the poorest people in society. The government needs to ensure that its plan to shift kerosene and fertiliser subsidies into direct cash transfers is implemented quickly. Here the roll-out of a Universal Identity Number will help ensure payments go to the right people.
The recommendations in this para are full of threat. A quick look at the full Survey itself shows that there is special mention made of the fuel subsidy and the targeted public distribution of foodgrain. If the free marketeer reformists were to have their way, these would both be scrapped overnight, to be replaced by a weekly or monthly dole, transferred electronically and validated by a new national identification number which is in theory supposed to prevent fraud and exclusion. This is dangerous for the poor, because it makes them directly vulnerable to the worst symptoms of profiteering and corruption – already rampant despite safeguards – and because it removes the responsibility from the state for providing good quality and cheap social services and provisions of daily living. In this, the OECD Survey sounds exactly like the IMF.
The OCED report has otherwise welcomed the planned introduction of a nationwide goods and services tax and suggested that in order to keep the overall rate low, the base should be as wide as possible (there go more paisas from the cash transfer to the poor). “Further fiscal consolidation is also called for, making more funds available for private investment” – which means more cutting of the health, education and rural development programmes. “Cutting red tape for businesses and further lowering barriers to trade and investment will help both companies and households. The report also notes that while progress has been made to improve infrastructure, even greater investment in this area is necessary to boost growth.”
The Survey has said that strengthening the financial system and promoting access to financial services is essential for strong and inclusive growth. (We’re quite sick and tired of hearing about ‘inclusive growth’ when the Indian government and its foreign advisers do all they can every single day to prevent it.) The report noted that many Indians still lack access to bank accounts although microfinance is improving opportunities in many communities. “The financial sector proved resilient during the global downturn but there remains scope for greater competition.” Hear, hear.
The Survey has said that education has been given high priority by India’s central and state governments and enrolment continues to grow fast – we call them degree factories for the globalisation mill. The report recommends more effective government regulation and funding. Incentives and professional development opportunities for teachers need to be strengthened while student loans for higher education should be more widely available.
Now I expect the usual round of endorsement, referencing and studious quoting to begin. Within a few months, the recommendations of the OCED India Survey 2011 will assume an oracular hue, never mind the reactionary and anti-poor real nature of its advice. The multilateral lending institutions – the World Bank, the IMF and the Asian Development Bank – will cite the Survey repeatedly. So will state governments in India and the central government. The armoury of those who assault the poor and the marginalised of India has been strengthened by a new weapon – this is the OECD contribution to the people of India.
What is the impact of the drought in China on the country’s economy and its growth rate? A Reuters news feature has attempted to provide a few answers. China’s economy is big enough to absorb this drought without slowing overall growth. But experts said the tenacious dry-spell has bigger lessons. After it passes, there are sure to be new floods and new droughts, and China’s economy will increasingly be affected by the country’s limited and unevenly spread water sources. “A single drought this year won’t lead to the collapse of China’s economy but this will have an impact, one that shows the threat that China faces from water stress,” said Xia Jun, a hydrologist at the Chinese Academy of Sciences in Beijing told Reuters.
The months-long drought parching middle and lower parts of the Yangtze River basin is the latest reminder of the risks that China’s limited and heavily used water sources pose for the world’s second-biggest economy. Even before this drought, smaller lakes around Lake Honghu were disappearing, taken over for fields and fish farms.
Water from the Yangtze will be diverted to Beijing and other thirsty northern cities, but the Danjiangkou Dam that will deliver that water in coming years along the vast South-North Water Transfer Project is at its lowest for over a decade. Victims of the latest dry spell also range from the Three Gorges Dam, the world’s largest hydropower project, to millions of poor farmers like Wang and Xiao, an elderly couple.
“I’m 70 and it’s never been this bad,” Xiao, a browned and balding man, said of the 348-sq-km (134-sq-mile) lake in central Hubei province. “You can walk across and it only comes up to your knees.” The lake has shrunk to about 207 sq km of water and is mostly no deeper than 30 cm or so, according to the China News Service — at a time of year when residents said the water should be up to their chins. “We used to always worry about floods, not droughts,” said Xiao. “Not ones as bad as this.”
That sentiment is echoed by many residents on the middle and eastern stretches of the Yangtze, which is China’s biggest river and an the artery feeding much of China’s farming and industrial heartlands. Officials have said those parts are enduring their worst drought in 50 years, and rainfall has shrunk by 40 to 60 percent of normal. Around Lake Honghu, thousands of farmers risk losing more crops, fish farms, and even drinking water if big rains fail to arrive soon. Many rice fields in the surrounding countryside are yellow or barren. Farmers use scarce water for keeping alive fewer fields or for the ponds used to raise lucrative fish, crab and shrimp. Dry lotus ponds with wilted plants dot the landscape. In other areas near the Yangtze, there is still enough water to sustain swathes of green rice stalks.
China has six percent of the globe’s fresh water resources but a fifth of the world’s population. Global warming could stoke pressures, said Xia and other experts. “There have been even worse droughts before, but now these episodes can be increasingly serious, because economic development is bringing increasing pressure on water resources, and the effects of disaster spread out wider and are felt in more ways,” said Xia.
AlertNet has reported that torrential rains battered central and southern China. Quoting local reports, AlertNet said the rains led to floods and landslides that killed more than 100 people, turning areas enduring drought just over a week ago into scenes of muddy destruction. Forecasters warned that intense rain was likely to keep striking some areas through Monday and beyond.
In Yueyang in Hunan province in the south, weather stations recorded more than 200 millimetres (eight inches) of rain in six hours, the kind of downpour that hits once every 300 years, the China News Service reported, citing local officials. In Maojiazu Village in Yueyang, the pelting downpours triggered a mudslide that crushed 24 homes and killed at least 20 residents, with another seven missing under boulders and dense mud, most likely dead, the Xinhua news agency reported.
“The concentrated scope, intensity and short duration of these recent rains have caused grave casualties and damage to property in some areas,” said Chen Lei, the Minister of Water Resources who also oversees the State Flood Control and Drought Relief Headquarters, according to a report on its website.
The office warned that heavy rains along the middle and lower reaches of the Yangtze River basin could trigger floods in an area gripped by drought less than two weeks ago. By late Saturday, the floods across parts of 13 provinces had killed 94 people with 78 missing, damaged 465,000 hectares (1,800 square miles) of crops, and toppled 27,100 houses and other buildings, the flood and drought office said. By later on Sunday, Hunan province lifted the number of people killed by floods and mudslides there to 36, up from an estimate of 19 given on Saturday, meaning the updated nationwide death toll could have reached at least 111.
This is a light little article, written for the Khaleej Times, on India and its people.
In the early years of Asian globalisation, the cry amongst the investors and business punters was “You can’t do business in Asia without India in your plans”. (They were already putting up factories in China.) Being, as punters usually are, somewhat dim but enthusiastic, these blokes – cunning bankers, makers of third-rate motor cars, purveyors of skin whitening creams, assemblers of consumer trinkets – decided that India was The Next Big Thing and ran thither.
It has been about a decade since all that began. In these 10 years, India has become richer – at least that’s what its government tells Indians, the poor and rich alike – and India is a superpower, at least according to cricketers and Bollywood film producers. It’s also a superpower for manufacturers of disposable nappies, but I don’t want to be impolite.
At some point, quite a few Indians who lived in the USA (and other, stranger, parts) decided that it might be a good idea to go home and see what all the fuss was about. Some of them packed up their Dodge minivans and Hoovers, gave the dog away, stopped at duty free on the way in, and looked around for Opportunity. Silicon Valley meanwhile returned to farming turnips and beetroots or whatever it is that happened there before the IT boys took over. Once at home, in the towns and cities of Gujarat and Andhra Pradesh and the online territory of Bangalore, they looked around. And saw dusty roads, grimy health clinics, piles of garbage, lazy policemen, burst water pipes, and lots of poor people. Not much had changed had it?
But it had. And so had their neighbours and their fathers-in-law and so had India’s chambers of commerce and its per capita income. Sure, there was heat and dust and stray dogs, but there was opportunity too. Looking around, they found that some of the world’s biggest and fastest growing IT companies were right where they had last seen a couple of coconut groves. Looking still closer, they found that state government officials had stopped sitting around drinking tea and pretending to push files and actually got some work done. This was remarkable. Rather as remarkable as imagining India could win a cricket world cup. But that too has happened.
There were flies and mosquitoes, insane political riots and infuriating power cuts. But they found that their cousins and friends and the tea stall owner down the road weren’t used to putting up with it all any more. No, the Indians at home had organised themselves (noisily, chaotically and with great garglings of sweet tea) and Got Things Done. Others put up hospitals, set up education foundations and inspired migrants in slums to start little recycling businesses. Lots of people talked about micro-credit and mobile phone apps, even if they didn’t know what these were all about anyway.
It all started coming together, despite the serial cheats, the bejeweled scamsters, the mustachioed mobsters and the unauctioned cricketers. They built highways, agitated against nuclear power plants, threw old sandals at politicians and invented the Chinese-Jain pizza. Somehow, it held together. A few of the original punters stayed on, having become employees now in Indian-owned and managed companies. People read books written by Indian authors about utterly loony Indian plots a Rushdie would die for. Others turned them into films, or mobile apps, as if there’s a difference.
Sometimes, they thought about the Raj and the chicken tikka revolution. But not often. There was far too much to do.
- Rahul Goswami (is otherwise an agricultural and rural economics researcher – makanaka [at] pobox.com)
India’s economy planners when discussing agriculture are no closer to farm and field realities. That much is clear from a reading of the ‘Review of The Indian Economy 2010-11′, by the Economic Advisory Council to the Prime Minister, released to the public on 2011 February 22.
The document had, I suspect, been finalised and was waiting for the data from the Second Advance Estimates of agricultural production for the 2010-11 year. A cursory analysis of this forms the ‘Agriculture’ section of the ‘Review’ [read the relevant portions of the Review here].
It is in the ‘Concluding Comments’ section concerning agriculture in India that the intent and direction of the current government are underlined. There are a few strong pointers:
* “As against the target of average 4 per cent growth during the Eleventh Plan period, the actual average growth is likely to be slightly less than 3 per cent.” Which only indicates that ‘growth’ in the agricultural sector will continue to be seen as a primary consideration, outweighing the sustainable use of natural resources management. The growth insistence will also mean the continued support of high-input and financially burdensome agricultural methods.
* “Somewhat in parallel, the per capita availability in grams per day has also not gone up in a context where per capita income has been rising quite strongly.” The Economic Advisory Council has not been honest enough to draw the needed connections – between population growth and therefore foodgrain demand, and the need for urgently revisiting the basis for planning agricultural cultivation at the district level.
* “The international prices for grain have been very volatile and much elevated in recent times and therefore higher levels of domestic output is an even more important factor to consider in the context of domestic food security.” This is spot on. Why doesn’t the rest of the Concluding remarks section build on this?
* “Attention must be focused on building rural infrastructure, developing technologies that are appropriate to the region which have to be disseminated – delivered in an efficient fashion. The institutions that are enjoined with this task have to be activated in a more energetic fashion.” The Concluding Remarks does not build on the above point because of such weak, vague and misguided points as this one. ‘Technologies’ and ‘Infrastructure’ for growth at 4%? Or for food security?
* “The liberalization of the economy has benefited the farm sector and as a result the terms of trade for agriculture are no longer adverse.” This is one of the Big Contradictions of the Review. No, the liberalisation of the economy has NOT benefited the farm sector. Has the Government of India and its economic planners so quickly and so completely forgotten that 200,000 farmers have committed suicide over the last decade?
* “Investment in the farm sector has also picked up substantially and capital formation as a percentage of agricultural GDP has more than doubled in the past decade.” To what end? To achieve the 4% growth target which is denominated in ‘technology’ and ‘infrastructure’ in the agri sector? Has there been even 2% annual growth in the incomes of the cultivating households?
* “There seems to be evidence that better quality seeds and superior cultural practices are available, but the delivery system for translating these to the field are lagging.” This is where the threat in the Review lies. What delivery systems and who owns them?
* “A major hurdle in agricultural development is the inefficiency of the delivery systems. There is a plethora of institutions in research, extension, credit and marketing. However, efficacy of these institutions to deliver goods and services to the country’s vast small and marginal farms section is quite limited. This is a serious cause for concern.” True. How to support this point and rescue it from the overall contradictions of the Concluding Remarks?
* “There is need therefore, to attune these various institutions to the emerging agrarian structure, which is progressively identified with the small and marginal farmers.” True.
* “A two-fold strategy is indicated for this purpose. One, to encourage farmer’s collaborative efforts as in cooperatives, or more recently in producers companies, and vertical integration of production and marketing by suitable models of contract farming.” Emphatically NO. This is not the answer.
* “Two, at the institutional level, the organizational changes to cut down the cost of transactions (e.g. through a flexible and inclusive business correspondent model) and the use of information technology for the same purpose needs to be encouraged.” True with reservations. Infotech is a means and not an end.
* “In addition both for purposes of ensuring remunerative prices for farmers as well as an anti-inflationary measure, the strengthening of organized retail, as well as use of these outlets for public distribution along with the strengthening of the existing public distribution networks, are measures that need to be tried out seriously.” This is dreadfully ill-advised and apparently motivated by the FDI-seeking stand of the central government. This point of view must be stopped immediately. Dozens of farmers’ cooperatives and small traders have clearly and vociferously rejected FDI-driven organised retail in India. This point holds the back door open for the entry of corporate retail and will be used to legitimise retail control over access to food to vulnerable rural populations.
* “Local procurement by State Government agencies provides an incentive for farmers to grow grain. Coarse cereals are a varied commodity and tastes differ across States. There is also a problem in handling coarse grains.” Yes, yes and no. This point must be supported and rescued from the other corporate-oriented directions of the Review.
In an article in the International Monetary Fund magazine ‘F&D’ (Finance & Development), Vivek Arora and Athanasios Vamvakidis discuss the ramifications of China’s opening-up policy. They said that the effects are well documented but even so, “the facts are astonishing”. From relatively poor beginnings three decades ago, the authors have said, China’s economy is now second in size only to that of the United States of America.
“Real gross domestic product (GDP) has grown by about 10% annually, implying a doubling every seven to eight years. The resulting 16-fold increase in a major economy’s national income during a single generation is unprecedented.”
China’s opening up has meant increasing linkages with the rest of the world, as reflected in its rising share in world trade, global markets for selected goods, and capital flows. China’s stronger linkages with the global economy have also led to a growing use of its currency, the yuan, abroad, as well as closer correlation of market sentiment in China and the rest of Asia and, more recently, the world. China’s share in world trade has increased nearly tenfold over the past three decades, to about 9 percent, while its share in world GDP has risen to 13% from less than 3%.
“The increase in China’s share of world trade is particularly striking in the markets for certain products. China now accounts for nearly one-tenth of global demand for commodities and more than one-tenth of world exports of medium- and high-technology manufactured goods. China’s rising share in world trade over the past three decades is underpinned by a rise in its share in the external trade of every major region (chart). China’s share is, perhaps unsurprisingly, largest in the trade of other emerging Asian economies (13%), and this share has seen a striking increase over time. But its share of African trade is almost as large, and its share in trade with the Middle East, the Western Hemisphere, and Europe has increased several-fold in recent decades.”
To quantify the effects of China’s growth on the rest of the world, Arora and Vamvakidis conducted an empirical analysis using data from the past few decades (the details are to be found in the paper this article is based upon). Shifting to the longer term, they estimated the impact on the rest of the world of long-term changes in Chinese growth, smoothing over the short-term fluctuations associated with the typical business cycle and focusing on longer-term fluctuations. Their results, based on data for the past two decades, suggest that a 1 percentage point change in China’s growth sustained over five years is associated with a 0.4 percentage point change in growth in the rest of the world (coincidentally the same amount as for the short and medium term).
The doctrine of growthism as the best tonic for India has been given new impetus by Jagdish N Bhagwati, Senior Fellow for International Economics at the Council on Foreign Relations, an American think tank.
The CFR has reprinted an article written by Bhagwati titled ‘India’s Reform and Growth Have Lifted All Boats’, originally published by the Financial Times (available here if you have a subscription).
Bhagwati’s paean to an economy judged by whether it does 8% or 9% per quarter is the latest argument in a season of several, from economists and heads of industry, from policymakers and international finance experts.
What is different about Bhagwati’s short article is that it very quickly hits out at those he has called “the reform naysayers” in India. “Such voices present India with a double challenge: they misrepresent the successful way growth has cut India’s poverty, but more importantly their critiques stand in the way of a much needed new wave of reforms, which would further benefit India’s poorest.”
Bhagwati has said that India’s liberal reforms actually pulled 200 million out of poverty, that had these reforms only started earlier more would have been pulled out, that improvements are shared by nearly all underprivileged groups and that, most important for him, “being poor is now seen by India’s underprivileged as a removable condition”.
This trend, typified by Bhagwati’s recent article, of pointing to impressive quarterly growth rates and inferring their impacts on the poor and on wage labour by citing a few studies, needs to be understood and countered.
Writing in People’s Democracy (02 January 2011) C P Chandrasekhar pointed out that “India is a country still plagued by hunger with among the highest rates of malnutrition in the world” (‘Growth for Whom?’). Deprivation in other forms such as lack of access to clean drinking water, sanitation, basic health facilities and school education still afflict a large proportion of the population.
Chandrasekhar has said that the benefits of high growth for the best part of a decade must be accruing to a small minority, resulting in increased inequality. Unfortunately, data of a kind that helps us track inequality is difficult to come by. Surveys of consumption expenditure do not cover the rich and therefore tend to underestimate the extent of inequality.
It is such shortcomings in our ability to measure patterns of consumption that allow the trend, displayed by Bhagwati, to prosper. However, there are signs enough of increased inequality in India.
The first is that the high growth of the last few years has been accompanied by a sharp rise in the gross savings rate, Chandrasekhar has said, of 5.5 percentage points to 29.1 per cent between 2001-02 and 2004-05. The rate rose by another 4.2 percentage points between 2004-05 and 2007-08. “Since it is the richer sections that have incomes that are substantially in excess of their consumption needs which can be saved, this sharp rise in the savings rate points to an increase in incomes among the richer classes.”
This is but one among the many substantial realities whcih the proponents of growthism for India cannot reconcile with their arguments for more reform.
“Can we slow down? In the year 2020, how will we interpret China’s historical changes up until 2010? Will we regret developing so quickly when we did not have a clear idea of our goals? If that’s true, how can we claim that we are in the process of creating a beautiful new world that justifies sacrifices?”
These questions are posed in the latest editorial of the Economic Observer, the English edition of the weekly Chinese newspaper. After listing several of the economic, infrastructure and trade achievements of the People’s Republic in the decade of 2001-10, the newspaper asks, is it time to revise China’s development model.
“We have exhausted our natural resources. Our environment will not recover even if we doubled our investment efforts in the future, and we have parted ways with our green hills and clear water. We have dismantled old walls but history will remain in our memories; our countryside has strived to enter the era of urbanization. But we will eventually learn that if we seize farmers’ lands in the name of establishing a new life, we are destroying not only their land, but their respect for public authority.”
We can slow down, suggest the Economic Observer’s editors, if we examine China’s rapid economic growth of the past three decades. “If we can have more dialogue with the world, if we can listen to the voices of the people and design development path that reflects their needs, if we give up fast profits for steady earnings, and a decent, happy life, why shouldn’t we slow down?”
“If we choose to maintain our current development speed at any cost, it will be impossible to slow down in the future. Slow growth does not need to signal failure; nor will China’s strength be overshadowed. If a country chooses to make its citizens happy instead of seeking recognition solely based on economic figures, it will receive more respect from the whole world. To its population of over a billion, China will be a kinder, more attractive place to live.”