The poverty of reforms

The first fruitof reforms is not more comfortable second class carriages for those who travel like cattle, nor clean and modern buses, nor improved bicycles, nor even a better bullock-cart, but stylish, sleek, spirited sedans for those whose incomes place them in the top half percent. The reforms mentality puts the emphasis on the consumer. The consumer is not the citizen. A consumer is defined by the level of his effective demand. The higher his spending power, the more fastidious his tastes, the more does he count as a consumer. The citizen, on the other hand, has equal rights, conferred on him not by virtues of being a big spender but by virtues of being an Indian, no more no less. What is there in reforms for those who have not already made it good?

The standard answer of the reform enthusiasts is that full-scope reforms will lead to a sustained growth path of 7 to 8 per cent, which will consequentially wipe out poverty in a decade. It is reassuring to know that undifferentiated growth will eventually lead to povertyeradication. Alas, the poor, at least thus far, have not been the first recipients of growth; they have been, at best, the indirect or incidental beneficiaries of the reform process. They were much more enthused by the fifties-to-eighties reforms which gave them land and tenancy rights, took literacy rates from 17 per cent to over sixty, frontally tackled poverty, and 8212; withal 8212; sextupled the rate of GDP growth.

One of the most gung-ho of reform advocates, Gurcharan Das, has in a recent column accidentally touched on why Gujarat has been growing at the near-China growth rate of 9.7 per cent per annum. Yet, poverty is stark in large swathes of Gujarat. So much of the investment has been so capital intensive that rural development and, even urban unemployment, remain little affected. Indeed, globalisation has so destroyed the oil-seed economy that most Saurashtra farmers are worse-off today than in the last decade of socialism. The Amul cooperative dairy, on the other hand, transformed the rural economy ofVadodra and raised the poor as no other single initiative has.

Yet, cooperatives are not a priority for the nineties8217; reformers. Nor is any aspect of the rural economy. For proof, look no further than Yashwant Sinha8217;s diary. In the month leading up to the budget, it is chock-a-block full of engagements with corporate leaders, corporate entities and their many associations. But what proportion is taken up by rural concerns and the needs of the urban poor? The reformers have relegated these to the 8220;second phase8221;. First, they want the poor to cough up their subsidies. And, second, to rechristen the Jawahar Rozgar Yojana as the Swarna Jayanti Su-Rozgar Yojana. That8217;s it.

The reform process says unshackle enterprise but expose the tiny, the small and the medium. Reformers say 8212; and they cannot be disputed 8212; that it is protection to the marginal manufacturer that has lowered both industrial growth rates and exports. Yet, it is such protection and encouragement that has exponentially increased by the millionthe number of beneficiaries of yesteryear8217;s socialism. It is they who constitute our robust middle class.

Reforms, however, require that many, perhaps most of them, be taken over or squeezed out by the big boys. Reformers expect them to welcome extinction. The Bombay Club also squeals 8212; for their main plea to the Finance Minister, as they descend on him in hordes this merry, merry month of February, is to protect them from being taken over or squeezed out by big boys of the multinational kind. Yet, it is just this that keeps our rate of growth of manufacturing way below what it might have been. As it has kept our nineties8217; export growth rate in the single digit range compared to China8217;s 21 per cent. The Chinese miracle is export-led. Our flop show is import-led.

As for organised labour, the goal of the reformers is an exit policy, which will free enterprises of the shackles of unionised workers and give them access to the teeming crores of the unemployed. Good for the entrepreneurs. But ask theindustrial proletariat in their festering slums whether they are a 8220;privileged8221; class and they will accept that while they are better-off than the non-unionised, their living conditions are animal like 8212; and what kind of reform is it that reverts them to the horrors of their prior existence? As the editors of India in the Era of Economic Reforms OUP, 1999 conclude: Deeper and quicker reforms in India will require not only assuming, but also demonstrating, that they are positively linked to mass welfare and the elimination of poverty.8221;

The last of our socialist Prime Ministers defined 8220;Indian socialism8221; as giving 8220;priority to the poor8221;. The greatest of our non-socialist leaders, the Mahatma, summed up all governance as the worship of Daridranarayana. In the decade of reforms, the poor have slipped in priority. Rectifying that means concentrating the energies of the state on agriculture and agricultural research, rural infrastructure, watershed management, drought-proofing, rapiddisaster-response, rural technology missions, non-farm diversification, housing, education, health, employment assurance, women8217;s liberation, political empowerment. And parallel attention to the urban poor.

This was the priority in the eighties. That is when we saw the beginnings of reforms for the poor. The nineties have been the decade of reforms for the rich. Both are needed. Both have to be brought in balance. The Devi Lal solution 8212; stop turning lathes, start milking cows 8212; is emphatically not the answer. Nor does the answer lie in the Finance Minister spending hours with assorted fat cats in the run-up to the Budget and little, if any, with trade unions and unorganised workers, kisans and khet-mazdoor organisations.