Main Presentation
The New Liberal Agenda and its threat to the people, economy,
and environment of South Asia
By Vinod Mubayi
What has been dubbed as "Liberalization" was imposed on India
in 1991. Pakistan had, under pressure from the WB and IMF, gone
on this road several years earlier. Sri Lanka and Bangladesh have
under considerable pressure adopted the same policies. What has
been the result?
Ten years of experience has demonstrated that the decade of liberalization
has been anything but a liberating experience for the majority
of South Asians. The gap between the haves and the have-nots has
deepened. The quality of the water we drink (when we can get it)
and the air we breathe has worsened. The rhetoric of "abolish
poverty" has been totally abandoned. The social and cultural
climate of our region has been coarsened by the spread of religious
fanaticism and communalism.
The ethos of the New Liberal Agenda is symbolized by an intriguing
headline in the Times of India of July 25, 2001 "Starvation
Amidst Plenty". The story refers to a very recent edict of
India’s Supreme Court ordering the Food Corporation of India
(FCI) to provide food to starving people from its 50 million ton
store of foodgrains much of which is being eaten by rodents. It
seems that the FCI would rather let rats consume its stocks than
give it to the poor suffering from semi-famine conditions caused
by the recent drought in Rajasthan and Gujarat. It took the Supreme
Court acting in response to a public interest litigation to compel
the FCI to make its food stocks available. However, the attitude
displayed by the FCI is perfectly in consonance with the New Liberal
Agenda that has been, to one degree or another, embraced by the
elite and governments of South Asian countries. This attitude
can summarized as Profit before people and the Market before everything
else.
Three slogans embody the defining characteristics of the New
Liberal Agenda. Liberalization, Privatization, and Globalization.
Liberalization means a wholesale abandonment of the era of controls
that reflected the desire of the state to keep the commanding
heights of the economy in its hands. No doubt the state did an
imperfect job that needed improvement. No doubt many controls
amounted to petty annoyances created to cater to corrupt government
officials administering the license-permit raj. But is the replacement
any better? Are the thousand crore hawala scams that bilk the
middle class of their hard earned savings a great step forward
in efficiency?
Privatization has amounted to a fire sale of the assets created
on the backs of the working class. Witness, in India, the sale
of Modern Foods, the public sector company that made good quality
bread at affordable prices to the people of Delhi, to the multinational
Hindustan Lever that has no experience in bread manufacture. Or
the scandalous sell-off of BALCO, the public sector aluminum company,
at prices that amount to pennies on the dollar.
Globalization implies the take over of the national economy by
foreign multinationals and the destruction, in particular, of
small and medium size domestic companies. The reforms, so called,
appear to have accentuated and deepened the dependent nature of
economic development in our countries. More than 50 years after
the independence that was supposed to have freed us from our colonial
shackles, we seem to be slipping back into a new East India Company
mode.
The entire New Liberal Agenda was premised on "unshackling" the
latent, private energies that were allegedly being throttled by
the old "statist" regime. In India, the so-called Hindu rate of
growth was going to be replaced by something closer to the tigers
of East Asia. So what are the facts? Industrial growth in India
in the 7 years before "reform" was 8.5% annually. In the 7 years
after reform, it has been closer to 5.5%. The value of the currency
keeps declining in all South Asian countries. In Pakistan it has
suffered a major meltdown but in India too the trend is unmistakably
downward. Jay Dubashi, an Indian economist, has stated that "Reforms
have devastated small and medium industries and killed them off.
Small industries are being killed by imports and medium industries
by foreign investors."
Given this reality, the pro-reform discourse of late has stopped
talking about a dream rate of growth. Instead the Hindu rate of
growth continues to haunt the economic and financial managers
of Hindutva. Most of the talk now is on reducing the government's
fiscal deficit that is dragging down the economy. This is needed
to produce certificates of "good behavior" on the fiscal front
in order to attract foreign investment as per the World Bank-IMF
norms. In fact, FDI and Market are the only two things that matter
to our governments --- all else, such as poverty reduction, employment
generation, etc. is considered irrelevant by our economic managers,
a by-product perhaps but only incidental. In this respect, the
"Hindu nationalist" BJP and the assorted parties assembled in
the NDA regime in India, some of which have "socialist" antecedents,
have gone much further in kowtowing to the multinationals than
the old Congress regime that began the reform process in 1991.
India as a political democracy and the largest economy in South
Asia and one that had attempted some measure of an independent
economic policy, despite various shortcomings, provides a good
example of the direction in which the New Liberal Agenda is taking
the region. The first issue is one of governance in which the
elected representatives of the people decide what policy to implement.
Many basic policies that are being adopted such as replacing the
Patents Act, allowing foreign insurance companies to operate in
the country, allowing bio-engineered products in agriculture,
and so on are being implemented to allegedly meet commitments
to the World Trade Organization, WTO, with its headquarters in
Geneva, Switzerland. However, there was no widespread discussion
in the Parliament or in the country before India signed on to
the WTO, a legal body that is empowered to adjudicate, prosecute,
and punish, in fact a tool of the G-7 club of rich countries and
the multinational companies that acts to enforce the global interests
of big capital.
The Patent Act relating to pharmaceuticals that India was forced
to amend by threat of WTO sanctions is an example of this exercise
of power by an undemocratic, non-elected body thousands of miles
away that has literally life and death power over the citizens
of India, the vast majority of whom are completely unaware of
its existence. India adopted a patent law for drugs in 1970 that
allowed patenting of processes not products. This law, which replaced
an older law of 1911 dating to the British colonial era, fostered
the growth of a domestic pharmaceutical industry that made many
essential drugs and medicines available at affordable prices to
the Indian public. Currently, India is practically self-sufficient
in pharmaceuticals and even exports drugs. However, the global
pharmaceutical industry, led by U.S. multinationals, exerted enormous
pressure to change this law to allow product patents. Drug prices
are expected to rise sharply in response to this change making
them potentially unaffordable to the poorer segments of the public.
In India's neighbor Pakistan where the multinationals have a free
rein the same medicine is two or three times more expensive.
The privatization and globalization of a core economic sector,
the electric power industry, has been on the agenda of South Asian
governments for almost two decades spurred on first by advisers
from the World Bank and then the emissaries of major companies,
such as General Electric in search of markets for equipment and
technology. The U.S. government and its agencies such as USAID
have been generously offering "advice" to officials on how to
restructure and privatize the industry. Mismanagement, both technical
and financial, created the opening for the rhetoric of the private
sector solution. However, it is strange that instead of making
the agencies more accountable for their performance, packaging
the same actors under a new label and allowing the state to abdicate
all responsibility would lead to a magical solution. Transmission
and distribution loss would suddenly disappear. Plant load factors
would show an instant increase. None of this has happened. The
Hub project in Pakistan has led to various financial scams. The
Enron plant near Bombay is an even more egregious example of irresponsibility,
corruption, and sheer waste of public funds.
Now that the state is retreating headlong from its erstwhile
leading role, even more basic resources such as water and forests
are under the threat of foreign ownership. The Narmada Valley
dams are an example. The government no longer has funds to construct
dams so domestic and foreign corporations are sought for BOO (build,
own, operate) projects. The Maheshwar Dam on the Narmada is being
constructed by S. Kumar's, an Indian company in the clothing industry,
that has no expertise or experience of hydropower construction.
Naturally, they are searching for foreign partners with experience
and funds. Detailed analyses have shown that the project is unviable,
both economically and on environmental grounds. Many thousands
will be displaced and it is doubtful whether the power can be
sold at the cost of production as is happening with the Enron
plant in Maharashtra. The government guarantee, however, will
allow both S. Kumar and its foreign partner to recover their profits
risk-free at the cost of the Indian taxpayer.
Finally, we come to one sector of the economy that is supposed
to be the shining beacon of the New Liberal Agenda, the Information
Technology (IT) sector. IT is supposed to be growth engine that
has propelled India, in particular, to the front rank of the world
economy. Indian companies like Infosys have achieved that ultimate
award of globalization, a listing on the New York Stock Exchange.
No doubt IT has had over the last few years a big impact on Indian
exports. But these exports have consisted mostly of low-wage labor,
entry level jobs in the service part of the IT sector, the knowledge
industry equivalent of the hewers of wood and drawers of water
that provided cheap labor for the former colonial states. These
jobs are subject to all the fluctuations and vicissitudes of global
capitalism as illustrated by the travails of the Indian professionals
in the evaporating dot-coms of Silicon Valley. In fact, upper
level expertise in the Indian computer science industry is also
declining. Many computer graduates in India lured by the prospect
of quick money in labor contracts paid in dollars no longer go
for post-graduate study or research. This will further reduce
prospects for sustained innovation and growth of the domestic
industry. In fact, the IT sector is fast becoming a mere contractor
for cheap global labor in the service industry. Arundhati Roy
in her inimitable essay "Power Politics" describes a Call Center
College on the outskirts of Delhi where
"hundreds of young English-speaking Indians are being groomed
to man the backroom operations of giant transnational companies.
They are trained to answer telephone queries from the US and the
UK (on subjects ranging from a credit card enquiry to advice about
a malfunctioning washing machine.) On no account must the caller
know that his or her enquiry is being attended to by an Indian,
sitting at a desk on the outskirts of Delhi. The Call Center Colleges
train their students to speak in American and British accents.
They have to read foreign papers so that they can chitchat about
the news or the weather. On duty they have to change their given
names. Sushma becomes Susie, Govind becomes Jerry, Advani becomes
Andy. (Hi! I'm Andy, gee, hot day innit? Shoot, how can I help
ya?) They're paid exactly one-tenth of the salaries of their counterparts
abroad. From all accounts, call centres are billed to become a
trillion-dollar industry. Recently the Tatas announced their plans
to re deploy 20,000 of their retrenched workers in call centers
after a brief 'period of training' for the business, such as 'picking
up the American accent and slang'"
Roy comments that it is interesting to see in these centers "how
an ancient civilization can abase itself so completely."
The real growth industry in South Asia in the "reform" period
has been armament. Defence budgets have shot up and the nuclear
explosions in Pokhran and Chagai followed by the various missile
delivery systems have ensured that the military will expand at
the expense of social programs. Naturally, the global free marketers
are quite happy with this state of affairs. The profits on selling
military hardware are considerably higher than in civilian goods.
Complementing the growth of the arms sector is the growth of the
fundamentalist outfits, the Sangh Parivaris and the Jehadis, the
Bajrang Dals and the assorted Jamiats that provide a circus in
the background keeping the public diverted from the basic problem
of ensuring necessities, food, shelter, and clothing, for the
deprived majority.
INSAF is committed to a South Asia that provides peace and social
justice to all the people of the region. The New Liberal Agenda
has no role in this goal and the sooner it is jettisoned the better
it will be for the people of South Asia.
