Whose Independence? The Social Impact of Economic Reform in India.

• Author: Kothari, Smitu

Introduction

1997 is the 50th year of India's independence, an appropriate time to critically assess the social, cultural and economic condition and independence of the country. Viewed from the wide boulevards of its cities, India seems to be thriving. There is an undisputed increase in GDP and the growth rate of the economy and the urban markets appear to be flourishing. Not, however, with the vast diversity of available indigenous products, but increasingly with a plethora of middle class consumables--from kitchen gadgets and washing machines to the latest stereo systems and cars. Over 20 channels of television with a staggering array of national and international programs are beamed into millions of homes. Cellular phones and domestically-assembled Mercedes-Benz cars have become the new status symbols.

Behind the facade of these superficial symbols of consumption, however, lies a story of increasing disparities: a rise in under- and unemployment; a deterioration in the livelihoods of a majority of the population; an increase in critical poverty; a decline in the membership of trade unions; and a phenomenal increase in the number of workers in the informal sectors of the economy and in the extent of the irregular employment. Additionally, there has been an intensification of rampant corruption, particularly by political and economic elites; a staggering increase in environmental degradation in both urban and rural areas; loss of genetic bio-diversity; and growing social unrest arising largely out of greater immiseration.(2) At the same time, there has been an increase in dependence upon international capital and multilateral and transnational institutions, resulting in a critical loss of control--not just by producers, but by the country itself.

This article explores this dualism by looking critically at the impacts of the new package of economic reforms on India's social and ecological diversity, on the livelihoods and lifestyles of a majority of the people, on the political trends that seek a more rapid "integration" into the global marketplace and on the capacity of the country to build a pattern of social and economic development that is in consonance with the deepening of democracy; the widening of social justice and the sustainability of the environment.

Background

Industrialism, Planning and Equity in the Post-independence Period

For almost four decades after independence in 1947, India managed to keep largely out of a debt trap, although this post-independence period arguably witnessed the planting of the seeds of economic dependency and debt through industrialization, militarization and a move to a chemical input-based agriculture. After the prolonged struggle for freedom throughout the late 19th and early 20th centuries, widespread aspirations for social and economic justice impelled a constitutional and planning process that initiated a series of dramatic social reforms during the 1940s and 1950s--the abolition of zamindari (landlordism), the introduction of the reservations system (affirmative action) for scheduled castes and tribes and investment in telecommunications, basic industries and infrastructure.(3) Unfortunately, the colonial structures of administrative control were left relatively intact, as were the structures of private property. Even the educational system retained its colonial legacy. Dramatic social reform policies thus went hand in hand with structures and institutions that perpetuated power and privilege.

For example, in keeping with the government's formal commitment to greater social and economic welfare, the first Five Year Plan initiated by the first independent government in 1950 retained a strong dimension of equality with an emphasis on agriculture and on cottage, small- and medium-sized industries. At that political and economic juncture, the policy of achieving self-reliance through import substitution and through appropriate trade barriers to protect domestic production from being swamped by powerful foreign and corporate interests seemed to be a prudent and judicious strategy.

By the second Plan (1955-1960), however, the former Finance Minister P.C. Mahalanobis shifted the policy emphasis toward achieving "commanding heights" in industry and agriculture--a strategy that, while stressing the importance of agriculture in attaining self-sufficiency also saw the first significant food imports. By 1957, Mahalanobis admitted that this growth policy would, in the short run, lead to an increase in inequality. There is no escape from the fact that these strategies heralded a system that favored the corporate sector more than the mass of people and that it laid flesh foundations of uneven and unequal development.

The basic endemic causes of inequality and poverty--grossly inequitable ownership of land and productive resources, entrenched .caste hierarchies, and natural resource-intensive industrialism that caused the impoverishment of millions dependent upon resources for subsistence--were only marginally addressed by the development plans of the early governments. As the intensification of industrialism and "green revolution" agriculture began to favor the middle and upper classes, the patterns of economic development began to gradually push equity and justice considerations into the background.

It is not that the planning process neglected the rights and aspirations of the poor. Numerous poverty alleviation programs were designed and much of development planning was justified in the name of the poor. By the 1970s, however, most of the top-down programs yielded, at best, marginal benefits. It was at this juncture that the then prime minister, Indira Gandhi, was facing a major political challenge from politically mobile middle-caste groups as well as the lobbies of the wealthy classes. Anticipating widespread popular agitation and responding to the decline in support for her ruling Congress party, she announced a new populist thrust--the Garibi Hatao (Abolish Poverty) program. Gandhi promised to focus fresh attention on the bottom third of the population and institute policies that would curb the power of the wealthy (i.e. bank nationalization and the abolition of privy purses--special monetary and other privileges--to erstwhile rulers). However, these programs ran into a wall of endemic social and cultural barriers, most of which were obvious and should have been addressed. The barriers included: entrenched political and economic interests; complex patron-client relations based on ties of kinship, caste, linguistic or religious affinity; official graft; inefficiency; and a reluctance by those in power to grant the historically underprivileged classes an equal share in the country's productive base.

From the fifth Five Year Plan initiated in 1970 onwards, top-down efforts to eradicate, abolish or temper poverty reinforced dependency and corruption rather than leading to widespread asset creation and control by historically underprivileged and marginalized peoples over the industrial and natural means of production.' What vitiated against even minimal success at the national level was the bureaucratic model of implementing "socialist" objectives. A bureaucratic stranglehold on this process and the failure of the ruling Congress party to, on the basis of a well-organized party with strong representation of lower caste and class groups, forge a polity that would have succeeded in implementing and institutionalizing more egalitarian, redistributive policies assured the failure of these programs. Despite socialist overtones, the problems of an essentially elitist and colonial administrative system coupled with entrenched political and economic elites with links into the upper echelons of social and cultural hierarchies in rural and urban India remained the most serious limiting factors in the successful planning and implementation of an egalitarian post-independence development model. As a consequence, there was a critical neglect of education for the less privileged, of redistribution of productive resources, of the introduction of land reform. In the end, islands of prosperity were created by the imposition of an economic model that retained its socialist principles without ever seriously challenging the hegemony of pre-existing powerful feudal and capitalist lobbies.

Undoubtedly, as the economy expanded in the years after independence, many people from poorer classes and castes were able to benefit from increased opportunities. Their numbers, however, were marginal in comparison to the overall population in the country. Instead, the license-permit raj became the means through which small groups of businesspeople, landed farmers and politicians were able to accumulate wealth at the expense of the majority.(4) Even more important was the nexus that developed between state officials and businesspeople, as well as between the state officials and the landed interests in the hinterland. Some researchers have argued that this system lowered productivity and "dampened the possible multiplier effects on employment and incomes from expanded production, thereby denying the underprivileged sections of society opportunities to improve their economic and social conditions."(5)

While some trickle down effects did take place, the basic causes of poverty, deprivation and discrimination remained largely untouched. The policy of reservations helped make some jobs available to those in the scheduled castes and tribes, but the expansion of employment in government relied heavily upon access to influential persons through patron-client relations. Patronage was also extended by local political leaders, who used poverty alleviation programs and infrastructural development monies to advance their patronage networks. In the process, most programs sustained dependency of the recipient on the donor rather than creating wider social and economic security.

The experience of the first 40...