A changing India in a changing world: potentialities and realities

Mritiunjoy MohantyIIM CalcuttaIEIM, UQAM

Preview

• India’s economy appears to be entering a period of self-sustained growth

• The obverse side of this growth is a severe agrarian crisis, diminished social mobility and a serious challenge to its secular fabric

• The result of suppression of the radical agenda of the Indian constitution

• The choices India makes in addressing these could help shape responses to new global challenges

The upside: growth and take-off

• Economy growing at nearly 9% over the last four years, i.e., from 2003/4 to 2007/8

• Will probably be slightly lower in 2008/9

• Per capita income growth has more doubled

• Currently at 7.1%, as compared with 3.4% experienced during the 1980s and 1990s

• 2007 per capita income $965, PPP $4183

• China $2460, PPP $8788

• Canada $42,738 PPP $36,984

Investment and Savings Ratios

00.050.1

0.150.2

0.250.3

0.350.4

Investment Ratio

Savings Ratio

• Investment and savings ratios in the low 30s, which would seem the requirement for modern take-off

• Domestically financed, Current Account Deficit in the range of 2%

• Increased inflows of capital• Huge increases in inward market-seeking FDI in

the last 4 years• Rising accretion of foreign exchange reserves• Sustainable macroeconomics

Private Capital

• Indian private capital finally came of age, showcasing itself in the $12 bn takeover of Corus by Tata Steel, catapulting it no.5 globally

• Tata Motors, currently no.2 in India in cars, frontrunner in the bidding for Ford brands Jaguar and Landrover

• Corporate India on a global buying binge• Outbound FDI now almost equal to inward FDI.

Next year it is predicted to be higher

Public Sector

• A public sector renaissance• Partial privatisation• Privatisation stopped because of political and

union resistance• On 21st Jan 2008, 7 public-sector firms in Top20

by market capitalisation and 14 in the Top50• End of 2000, there were 5 in the Top20 (one of

which has been sold) and 8 in the Top50

Science and Technology

• India’s science and technology, seems finally to find its feet.

• In January 2007, ISRO successfully recovered an orbiting satellite.

• It is a technology that only China, the EU, Russia and the USA possess.

• In April 2007 ISRO commercially launched and Italian scientific satellite Agile into orbit and entered the international satellite launch market.

• In January 2008 commercially launched an Israeli spy satellite.

• Successful launch of the Geosynchronous Satellite Launch Vehicle, (GSLV-F04), which placed a 2-tonne communication satellite, INSAT-4CR into orbit.

• Successfully tested an indigenously made cryogenic engine to power GSLVs

• Indian made super-computer ranked in the top-10 in the world

The international stage

• Major player in the Doha Round of WTO negotiations

• Important G24 member: coalition of shared interests

• Expanded G8

• The Indo-US nuclear deal and the recognition of India as a nuclear power without signing the NPT

The downside

Unsustainable inequality

• Agrarian crisis and land hunger

• Poor quality of jobs

• Caste inequality related violence

• Diminished social mobility as upper caste use access to higher education as an entry barrier to good jobs

• Deep strains on its secular fabric

Unsustainable Inequality

• The gini coefficient has gone up from 32.9 to 36.2 between 1993-2004

• Over the same period, for the bottom 20% of the population, per capita expenditure has grown at 0.85% p.a. while for the top 20% has grown at 2.03% p.a.

• In China the comparable statistics are 3.4 and 7.1%• That is for China’s bottom 20% expenditures rise 4 times

faster than India’s. • It is this lack of growth at the bottom which makes

increasing inequality potentially unsustainable

…. because

• An unprecedented agrarian crisis of livelihoods, income, employment and profitability has beset rural India for more than a decade

• 55% of India’s workforce is employed in rural agriculture• Of the remainder, 75% is employed in the informal

sector, most of whom do not earn even minimum wage• Almost 97% of new non-agricultural jobs created

between 2000-05 in the informal sector.• 88% of Dalits (lower castes) and Adivasis (tribes people)

population, 80% of Other Backward Castes (OBCs or middle castes) and 84% of Muslims belong to the “category of the poor and vulnerable”. These groups constitute roughly 75% of the population

… and therefore

• Land related violence• The resurgence of armed left-wings

movements• Caste related violence• Not just social but political as well• Six years later, victims of the Gujarat

pogrom still live in refugee camps and have not been able to return home and there has been very little calling to account

The Indian Constitution – radical and conservative

• Subaltern school of Indian historiography demonstrated how widespread and democratic the movement for independence was

• Explains the radical core: • Constitutionally mandated land-reforms• To fight caste discrimination, affirmative action

for Dalits (lower castes) and Adivasis (tribes people)

• A secular republic based on universal adult suffrage

• The federal government was constitutionally denied powers to tax agricultural incomes and agriculture was to remain a purely provincial subject in terms of legislative domain

• Small but influential urban bourgeoisie pushed for and got a strong federal government – therefore a quasi-federal structure

• Affirmative action for OBCs (middle castes) successfully resisted

Elite Pushback• Intermediary rights and landlordism was successfully abolished• No distribution of surplus land• As land transfer got caught up in litigation, bureaucratic

obfuscation and lack of political will• Control over bureaucratic apparatus and judicial system to

ensure that constitutionally guaranteed Dalit (lower caste) and Adivasi (tribes people) quotas did not get filled.

• Particularly in the higher echelons of the bureaucracy, judiciary and the public sector and universities

• Roll-back of affirmative action for OBCs (middle castes)• Therefore by the late 1960s, UCH (upper caste hindu) elites,

used combination of cooption and blocking strategies to suppress the radical agenda

• Very little political mobilisation around radical agenda

Elite responses, resource mobilisation, growth and poverty alleviation

• 1960s droughts and a crisis of agricultural productivity• Green revolution• Naxalbari – peasant movement – crushed• Indian state also responded by investing in agriculture in

particular (irrigation) and rural areas in general (rural electrification and rural credit etc) on the back of which, driven by both public and private investment, green revolution technology spread

• Allowing for a revival of agricultural growth and profitability from around the mid-1970s

• the rise of the rural bourgeoisie which comprised also OBCs (middle castes)

• 1980s growth of alongside poverty alleviation and declining inequality

• Resource mobilisation, debt and BOP crisis of late 1980s

Reforms and growth: the rise of the urban bourgeoisie, the agrarian crisis and land

hunger

• Early 1990s reforms nonetheless epochal because they marked the rise to dominance of the urban bourgeoisie

• Collaboration with global financial capital• Industrial de-regulation, financial liberalisation,

trade• Increasing globalisation of the economy• 1990s growth urban and self-contained• Starving of agriculture for resources• Financial liberalisation and agrarian crisis• Need for land and land hunger

Deepening of democracy and lower caste political mobilisation …

• Affirmative action in politics• ensured that there were seats for Dalits (lower castes)

and Adivasis (tribes people) in all publicly contested elected bodies, from the parliament downwards to now the panchayat.

• Politics of affirmative action – lower and middle caste mobilisation around quotas

• It is this political mobilisation and the consequent access to political power that probably explains one of the most truly remarkable aspects of India’s democracy – that in India it is the poor and not the rich who are more likely to vote

• Upper caste response – politics of religious identity

• The 2004 defeat of the BJP-led coalition

• The coming of the Congress-led UPA

• Rural employment guarantee scheme

• Power of the urban bourgeoisie

• Continuing agrarian crisis

…. new players and tradeoffs

• India’s first low caste (Dalit) chief minister at the head of Dalit majority government

• Changing elites – the rise of the urban bourgeoisie and the a largely upper caste hindu middle class

• Eclipse of the rural bourgeoisie• Deepening agrarian crisis and caste conflict• Agrarian crisis and financial liberalisation• Tradeoffs - land reforms will not be supported by rural

bourgeoisie• Tradeoffs - non-farm employment for reducing poverty –

rural biased growth strategy will not be supported by urban bourgeoisie

… the choices we make

• The struggle for more equitable growth is also a struggle for a more secular India

• The choices we make

The changing world

• BRICs

• A European renaissance

• The rise of China

• The challenge of the environment

• Living with Difference

• Two paths leading to Rome – the chinese and indian

• The notion of community and the environmental challenge

• Bolivia, democracy and the Aymara Indians

• Indian secularism – accepting difference rather than accommodating it.

• Democracy as a radical project