ECONOMIC REFORMS IN INDIA

ECONOMIC REFORMS IN INDIA

 

Picture the year 1990 for a moment: ¨      ‘X’ is an agriculturist in a small village cultivating about 2 acres of land, having a family of 5 and barely managing to survive. ¨      ‘Y’ is a business tycoon in a metro, leading a luxurious life.

‘Progress’, ‘change for better’, ‘development’, are few of the dictionary meanings of the word ‘reform’. Therefore, economic reforms necessarily mean ‘change for better’, or ‘progress’, or ‘development’. If we are introducing economic reforms, it necessarily means that we are attempting to change the economic conditions of the Indian public ‘for the better’. When we say ‘economic conditions of the people’, it necessarily means their ability to survive physically and financially. Or their standard of living, their income level and the purchasing power. Economic reforms therefore must bring about improvement in the economic conditions of the majority of the population, if not all. The question then is: has economic reforms in India really improved the economic conditions of the ‘majority of the Indian population’? Sadly, the answer has to be a ‘no’, much as the powers-that-be want us to believe otherwise. Yet we have the media – the print and the electronic – that keep saying that our economy is looking up, that India is likely to be an economic super power soon, that its GDP growth is likely to cross 9% and so on! We don’t need to go through George Orwell’s ‘1984’ to know the definition of ‘doublespeak’!

Let us just try to decipher what exactly they mean by “Economy is looking up”.

Automobile Industry is looking up: auto majors worldwide like, Honda, Ford, Mercedes & BMW are looking at India as their ultimate business destination.

Capital Market is looking up: SENSEX crossing the “Magical 20000 Mark”.

Food & Entertainment Industry: entry of McDonald’s chain of hotels, Pizza huts, private satellite TV channels.

Back to the future-2010: ¨      ‘X’ continues to lead similar life. For him the time has stood still, defying nature, defying science! ¨      Let us look at ‘Y’. He has just bought a yacht-what if it cost him Rs 15 crore- so he can spend his vacation, just gifted a MAYBACH-luxury version from Mercedes-what if it cost him a mere Rs 5 crore- to his daughter as wedding gift. We don’t need to probe further, do we?

We are into 20 years of Economic Reforms. Who has benefited? And in what proportion? Has it reached the ‘common man’? Has it improved the ‘majority of the population’ as was claimed?

Little does it matter if we still have ‘X’s in majority despite 20 years of ER.  Little does it matter if we still have ‘Y’s in minority cashing in on benefits of 20 years of ER. Here we need to know a little bit of Accounting Jargon. Majority in accounting parlance means one who has a major stake. One who has ‘controlling interest’ in running a business. On the same analogy, ‘Y’s in this case have ‘major’ claim over the wealth and hence are in ‘majority’!! Remember the definition of ER: it is supposed to ‘improve the economic conditions of the MAJORITY OF THE POPULATION. Well, it has. ‘X’s, though in majority are a minority stakeholders and ‘Y’s, though in minority are the majority stakeholders, of course in wealth!! ER has after all served the purpose of improving the economic conditions of the majority of the population, in every (cruelest) sense of the term.

Will ‘India’s market capitalization zooming’ mean a thing to ‘X’? Will ‘sensex crosses 19500 mark’ change the economic condition of ‘X’ for better? Or, will the head line that Honda eyes Indian automobile market cheer up ‘X’? In what way will any of the above bring about any improvement in ‘X’s life? Whether sensex sheds or gains points, ‘X’s life wouldn’t improve. Auto major setting up a unit in India will not improve ‘X’s economic condition. ‘X’ still has to live without transport facilities and electricity. He still has to be under the mercy of revenue offices. He still has to live without basic civic amenities. Of what use is ER if it does not change the living standards of the common man for the better? Of what use is ER if it keeps widening the chasm between the rich and the poor? Of what use is ER if it does not provide adequate transport system to the common man? Of what use is ER if it does not ensure reasonable social security to the common man? Of what use is ER if it does not eliminate corruption so the common man is not forced by circumstances to bribe his way at every which offices?  Mind you, we are not against reforms. Reforms by itself are fine. If it were to ensure proper health care to the common man, we support it. If it were to ensure basic education facilities to the common man, we support it. If it were to improve the agriculture, we support ER. If it were to ensure safe drinking water facilities to the common man, we support ER. In short, if it were to help ‘X’ just as it does ‘Y’, we support ER.

This is not to imply by any stretch of imagination that there have been no improvements. Of course, we have seen tremendous growth in certain sectors like IT, ITES, real estate, high way construction, telecom and electronic media over the last decade or so. They have provided excellent employment opportunities to millions of people. But then all these developments have benefited urban populace in great measure, further leading to rural-urban imbalance. It is very unfortunate that the rural masses have not been benefited by these developments just as their urban counter parts have.

One of the most visible developments is the number of telephone booths that has made communication easy. Coin boxes every 25 feet have not only helped the common man but also added to the revenue of the department. Also it has become a source of income for the subscriber by way of commission.

Another highpoint is the BPO industry that has given employment to thousands of young graduates who would otherwise be struggling. It has tremendous potential to create continuous job opportunities.

The construction activity like golden quadrangle and various other highways development projects have suddenly given new lease of life to countless people. Along with this is the continued upswing in the real estate sector providing business cum employment opportunities.

Yet, agriculture is still the main activity in India. Majority of the population still live in rural areas. The degree of eagerness with which we went about implementing the ER in urban centers is not visible when we compare the same in rural areas. This is very unfortunate. If 16 years of ER is unable to change the life style of common man for the better, how do we label it? Failure? Where are we going wrong? Have we got our priorities wrong? Or on the other hand, is it that our expectations were too high and as a consequence, we are blind to all the (whatever little) improvements that have taken place in rural India? Did you say, “trickle down theory”? In which case, it is barely “trickling” in every (cruelest) sense of the term! ER will be beneficial in the ‘long run’, so they claim. “In the LONG RUN, WE WOULD ALL BE DEAD”, so said Keynes – the Lord of Economic Theory! Thus, one thing is for sure, that these ER have aided the rich and the affluent to add to their wealth at a much faster rate than it has the common man!!

We believe that certain crucial areas need focused attention of the government, hurdles notwithstanding:

Ø  Safe drinking water

Ø  Primary healthcare

Ø  Basic education

Ø  Adequate transport

Ø  Electricity

All these require enormous investment. The government is short of money. And we have a situation where foreign companies are willing to set up business units and are willing to invest in India. Here is where we need to negotiate a deal which is a win-win situation for both. There is lot of opposition to MNCs invading India, of course not without reason. Let us look at it this way; each foreign company willing to open business unit in India must adopt 10 villages, provide the above basic facilities. This arrangement if agreed is less likely to find opposition. The MNCs are any way looking to make money and the third world is willy-nilly forced to sign pacts resulting in opening up of economy, by the US and the developed nations via IMF/World Bank combine. If we are able to exploit their business ambitions to our advantage in improving the rural India and containing poverty, probably the government could then legitimately claim to have acted on its electoral promises!!