The March of Neo Liberalism in India

The current issue of Frontline has a series of articles on ‘The March of Neo liberalism‘, including one by economist Utsa Patnaik on the agrarian crisis.

The story starts from 1991 when Manmohan Singh as Finance Minister started hounding farmers by reducing the fertilizer subsidy, cutting development expenditures so sharply that per capita GDP actually fell in one year and the death rate rose in one State, virtually doubling the issue prices of foodgrains from the Public Distribution System over three years in order to cut the food subsidy (which predictably boomeranged since the poor were priced out and the first episode of build-up of 32 million tonnes of unsold food stocks took place by 1995).

During the NDA period, the complete submission of the government to U.S. pressure and rapid removal of protection to agriculture between 1996 and 2001 – before the deadline set by the World Trade Organisation, resulted in farmers being exposed to the fury of global price declines. Between 1996 and 2001, prices of all primary products (cotton, jute, food grains and sugar) fell by 40 to 60 per cent and farmers who had contracted private debts in particular, became insolvent. The syndrome of hopelessly-indebted farmers committing suicides in Andhra Pradesh and Punjab started in 1998 and rapidly spread to other areas where cultivation of cash and export crop was predominant. The crash in pepper, coffee and tea prices came a few years later after 1998 and farmer suicides in Kerala and insolvency of tea estates in West Bengal date from around 2002.

Most alarming is the situation of the Scheduled Castes and Tribes, among whom extreme poverty has increased dramatically during the reform decade, with over three-fifths moving under the lowest level of intake, 1800 calories, by 2004-05 in urban India.

Meanwhile, at Foreign Policy, its editor Moises Naim asks whether the world can afford to feed the growing middle class in China and India.

If they don’t find the bread, perhaps they can eat cake, while the children of the poor will be fed via mid- day meals according to the Indian Finance Minister

“If we continue to grow at this rate, India would be among the most prosperous countries in the world” dominating in education, services and goods….

“Next year, thanks to growth, I will provide Rs 15,100 crore for this scheme. Similarly, in 2003-04 we had provided Rs 1,175 crore for the mid-day meal scheme.

The “growth” he is referring to is the 8-10 percent annual growth rate during the “reform” decades, of course. The amounts mentioned for his schemes are drops in the ocean of poverty that may engulf the small islets of “growth” in urban India, sooner than later. Of late, I have been wondering if I need to go back and re- read Mao’s thesis on the villages encircling the cities.

As to India soon dominating the world in education, it is a joke in a country with the world’s largest illiterate population and the UPA government’s continuing disinterest in it.

(you need to register at the outlook site to eat the cake… read the article in the link)

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bhupinder singh

reader, mainly and an occasional blogger

2 thoughts on “The March of Neo Liberalism in India”

  1. india has topped the world in the amount of remittances being sent in by those working abroad. this is a substantial part of the GNP and without it the high consumption levels to support the 8-9 % growth rate would not be possible. this is a factor that should be researched more because it substantially offsets the decline into poverty of the rural masses and also the crisis in agriculture

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