Widening
Divide between the Two Indias
People’s Democracy (October
17, 2012)
THE
latest World Bank Report on Global Hunger, 2012 confirms, once again, a fact
consistently articulated in these columns that the neo-liberal economic reform
trajectory followed during the last two decades has resulted in the making of
two Indias. Worse is the fact that the hiatus between the rich and the poor
continues to sharply widen.
At
the global level, the World Bank admits that the number of undernourished
people was on the rise from mid-1990s until 2006-08. This is clearly the impact of imperialist
globalisation that has sharply escalated the predatory urge of capitalism to maximize profits. The preponderance of various types and forms
of primitive accumulation of capital has led to such a situation where the
livelihood status of the majority of the world’s people is on decline.
However,
the World Bank measures not absolute but relative hunger, ie, the proportion of
people who suffer from hunger broadly based on three component indicators –
child underweight; child mortality rate; and
the proportion of undernourished people.
Even in terms of relative hunger measurements, India ranks at number 65
in a total of 79 countries assessed by the Global Hunger Index (GHI) 2012. Neighbouring
Pakistan and Nepal are ranked higher.
What is worse is the World Bank’s observation, “According to latest data
on child under-nutrition, from 2005-10, India ranked second to last on child
underweight out of 129 countries. Only
Timor-Leste (try to locate this country on the map) had a higher rate of
underweight children.” India’s GHI 2012
is 22.9, higher than the GHI 1996 of 22.6.
This is the result of the two decades of the highly ‘celebrated’ reform
process.
Lamenting
India’s track record as being “disappointing”, the World Bank Report says,
“India has lagged behind in improving its GHI score despite strong economic
growth. After a small increase between 1996 and 2001, India’s GHI score fell
only slightly, and the latest GHI returned to about the 1996 level. This stagnation in GHI scores occurred during
a period when India’s gross national income (GNI) per capita almost doubled,
rising from about 1,460 to 2,850 constant 2005 international dollars between
1995-97 and 2008-10.” The Report further
says, “After 1996, however, the disparity between economic development and
progress in the fight against hunger widened and India moved further away from
the predicted line (of declining hunger).”
The
Report notes how a civil war-torn Sri Lanka achieved impressively high literacy
and life expectancy through welfare oriented policies, investment in public
health and education systems.
Bangladesh, through targeted public interventions, has overtaken India on
a range of social indicators including the level and rate of reduction of child
mortality. Note that in both the
countries, these positive changes have occurred through committed State
intervention and not through the operation of the ‘market forces’.
Emphasising
that under-nutrition is not simply the outcome of lack of food, the Report
notes that this is dependent upon “inadequate health services or unsanitary
environments”. It goes on to say that,
“36 per cent of Indian women of child bearing age were underweight compared
with only 16 per cent in 23 Sub-Saharan African countries.”
On
behalf of the Indian government, the ministry of statistics files an annual
country report to the United Nations on the progress in achieving the
Millennium Development Goals (MDGs).
According to the 2011 Report, India is unlikely to achieve any of these
MDGs by 2015. This relates to the
targets for reduction in poverty levels. The proportion of underweight children
below three years will be, at best, 33 per cent as against the MDG target of 26
per cent. The infant mortality rate will
be, at best, 44 for thousand births as against the MDG target of 27. India will
fall short of universal immunisation of one year olds by 11 percentage points. Likewise in terms of maternal mortality rate,
the target will fall short by 30 points.
This status report admits that households without any sanitation will be
over 43 per cent by 2015. With the
abysmally low proportion of the GDP being spent on public health and the
increasing trend of privatising universal health care, this situation will, in
fact, worsen further.
Yet
another reason why the situation will worsen further is the relentless rise in
the prices of all essential commodities which keep pushing larger numbers of
people into poverty and malnutrition. The Wholesale Price Index (WPI) has touched a
new high of 7.8 per cent in September 2012.
The retail prices at which consumers buy will be much higher. The urban
consumer inflation rate is estimated to be around 9.7 per cent, ie, 2
percentage points higher than the WPI. This inflation rate will substantially
rise as experts estimate that “The full direct impact and the resulting cascade
on prices (due to the recent hike in diesel prices) would only start coming
from October.” As India prepares to
celebrate the coming festival season, for the vast mass of our people, it will
only be a period of greater agony.
For
a miniscule section of our people who have directly benefited from this
neo-liberal reform trajectory, these festivities would be brighter. The rich
have, indeed, become richer. Apart from the rise in the number of US dollar
billionaires – 54 of them holding assets
equivalent to a third of India’s GDP –
the top 500 listed corporate companies in the country report that for the three
years ending March 2012, they held cash reserves of over Rs 9.3 lakh crores or
$ 166 billion. This money is enough to double India’s power generation capacity
or build 40,000 kms of six-lane highways every year as against the current 800
kms.
Why
is India Inc. sitting on such a huge amount of cash and not investing this. The
answer lies in the very pattern of the creation of two Indias under this reform
trajectory. The vast majority of our
people groaning under the relentless economic burdens imposed on them have very
little purchasing power left after meeting their survival needs. The consequent
shrinkage in domestic demand inhibits any investment. Unless there is a growing
aggregate domestic demand, corporates would rather sit on their cash reserves
rather than invest these in a situation where the people simply do not have the
money to buy what they produce. These monies eventually flow into speculative
activity which explains the soaring
prices of real estate and gold.
Is
this situation irreversible? Of course,
not. But the government continues to be
committed to its neo-liberal understanding that a higher growth rate will
automatically lead to reduction in poverty and undernourishment. This, they are convinced, will happen through
a process of downward filtration – a
process that has never happened without pro-active State intervention.
It is precisely such intervention that this UPA government has abandoned at the
altar of neo-liberalism. Even in terms
of its own theory of higher growth rate, it must be noted that the
International Monetary Fund, last week, estimated that the Indian economy would
grow at 4.9 per cent in 2012 down from its earlier projection of 6.2 per
cent. On both these counts, therefore, a
more agonising period lies ahead for the vast majority of our people.
This
pattern can be reversed only by an active State intervention. If the mega corruption scams can be
prevented, then lakhs of crores of rupees would be available for large-scale
public investments. But these corruption
scams are the direct outcome of these neo-liberal economic reforms that promote
crony capitalism of the worst order.
Corruption is the most primitive form of primitive accumulation.
Further,
instead of subsidising the rich by giving them tax concessions which amount to
Rs 6,000 crores more than the fiscal deficit of Rs 5.22 lakh crores, if these
taxes were collected and used for massive public investments to build our
much-needed infrastructure, then substantial employment opportunities would be
created. This, in turn, leads to consequent growth in aggregate domestic demand
which, in turn, would create conditions for higher levels of private investment
as well. Apart from putting India on a
sustainable cycle of growth, this would directly impact on improving the
livelihood of the vast mass of our people, thus leading to a reduction in
hunger, poverty and malnutrition.
There
are no lack of resources in India to reverse the above trends regarding growing
poverty and malnutrition. What is
required is a reversal of the current neo-liberal reform trajectory and, in its
place, set in motion a process of pro-active State intervention through
significant increases in public investments.
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