The half-hearted agenda of economic reforms initiated in the early 1990s in response to the foreign exchange crisis has proved to be one of the most contentious issues of our time. The pro-reform lobby is convinced that the process of liberalising the economy initiated in 1991and continued in fits and starts since then, needs to be accelerated if India is to move out of its poverty trap. On the other hand, many of those who have traditionally projected themselves as representing the interests of the poor and disadvantaged sections have dubbed it a sell-out to multi-nationals and other foreign interests. They brand it as promoting neo-colonialism that will lead to the weakening of the economy and further marginalisation of the poor. Some of the opinion polls conducted in recent years claim that the Indian electorate does not consider economic reforms a high priority issue. Instead, removal of poverty, corruption and unemployment remain central to the voter’s agenda. A countrywide survey carried out by CSDS in 1996 found that more than 80 per cent of our people had not even heard of the economic reforms, let alone experienced any difference in their incomes or economic prospects due to them. Of the 19 per cent who had heard of reforms, only 10 per cent said that they “approved” of them. This amounts to less than two per cent of the overall population. Even today, the situation has not changed much and the constituency for reforms remains severely limited. The ordinary citizen uses the following yardsticks for determining whether reforms are working in their favour or not:
- that they are not required to pay bribes to government functionaries;
- they are not needlessly harassed and obstructed in their economic pursuits;
- they have the security of life and property and access to a wide range of economic opportunities;
- there are efficient dispute resolution mechanisms, should they face situations where their legitimate rights were being violated.
Clearly, none of this happened so far. Loosening of bureaucratic controls may have brought some relief to some segments of the industry and easy access to a wide variety of consumer goods for people at large. But economic insecurity seems to have increased for most people and the nuisance value of the government has not been brought under check.
The apprehensions and lack of enthusiasm for the reforms among the general public is mainly due to the fact that the entire discourse on economic reforms has been stunted by a single-minded focus on the entry of multinational corporations, the concerns of the Indian corporate sector, and the fate of government-run public enterprises, as they prepare to deal with a market open to competition. These are valid concerns. But we cannot afford to overlook the fact that Indian and foreign corporations together with the PSUs provide employment to no more than three per cent of our population. Another three per cent are employed in various government agencies. The vast majority of our people are still either dependent on agriculture and allied occupations, or work in the unorganised informal sector of the industry, as self-employed artisans, or service providers. Thus, the vast majority of our people are self-employed, as against about 10 per cent in Europe and America. Their economic well-being, unlike that of the tiny salaried class, depends on the economic health of small family enterprises with few or no employees. Yet, the concerns of this overwhelming majority (nearly 94 per cent) have found very little place in the minds of those pushing for reforms.
The concerns regarding economic reforms are being articulated, most often in distorted and mistaken forms, mainly by anti-reform lobbies, most of whom have ended up as defenders of statist controls, tighter regulations and increasing government monopoly in key sectors of our economy. The fears and phobias unleashed by the confused and half-hearted preliminary steps for dismantling bureaucratic controls over the Indian economy has made them see the license-permit-raid raj as an ally and a necessary instrument, for keeping the greed of the rich and powerful under check.
Despite their day to day experience with the failure of our present economy to provide dignified livelihoods to the people, the antireform lobby insists that moving to a more market-oriented economy would only enrich the already wealthy at the cost of the poor, leading to greater impoverishment of the majority. The fact is that the poor need the economic freedom provided by functioning markets even more than the rich if they are to move out of the poverty trap. Attempts to restrict or prohibit their access to the market often leads to loss of political freedom as well. There is all-pervasive evidence that the poor are among the worst victims of arbitrary statist controls over our economy and are squeezed even more than the rich under our still flourishing license-permit-raid raj.
Our archaic colonial-type laws allow those occupying government offices, the power and legal right to obstruct, and fleece citizens, for virtually every economic activity including begging! For the poor, bureaucratic controls do not merely stop at extortion but also facilitate subjecting them to routine violence, humiliation and arbitrary acts that seriously jeopardise their lives and livelihoods. Earning a simple livelihood has become a high-risk venture for most people in India. Their survival and dignity are being assaulted daily by the agents of the all-pervasive mai-baap sarkar, forcing them to seek protection through goondas and dadas who act as touts between them and the bureaucracy. This has kept the incomes of our people artificially depressed, destroyed their self-confidence and eroded their self-esteem.
In addition, the Indian state has prevented a large proportion of our people from accessing the numerous new economic opportunities available to people elsewhere by denying them basic education and health care facilities. Barring a few among elite families, the health and educational profile of our people is among the poorest in the world. Despite all the hype around devolution of power to panchayats, the bureaucracy continues to exercise a stranglehold over the civic affairs of communities, with the result that our educational and health services are also ridden with gross corruption, wastage and mismanagement.
The failure of our legal system to protect the legitimate interests of our people in earning their livelihood and its inability to act as an effective dispute settlement mechanism has promoted chaos, lawlessness and incompetence. All this has debilitated ordinary people trying to earn a livelihood. This can change only if the government can be persuaded to step back from its obstructive role and develop the more sensitive, minimal but fair regulations and an efficient system for adjudication of disputes.
Without economic freedom whatever political freedom we have becomes an empty ritual. That is a major reason why, despite such an actively involved electorate, our political democracy remains deeply flawed and has become a hostage to anti-social elements. Experience worldwide shows that economies are more likely to prosper when they are active players in world trade. Regimes that have used Draconian state controls to insulate their economies from the outside world have not only wrecked the financial health of those societies but also criminalised their polities and denied their people of many basic freedoms. The mindset of those justifying state controls resembles that of a battered wife who despite being the primary earner of the family dares not walk out on her abusive drunkard husband. Long years of beatings and tyranny have so destroyed her sense of self-worth that she cannot think of facing the world on her own without her husband’s ‘protection’ even though this ‘protector’ is the one most likely to reduce her to a heap of broken bones.
Urge for Economic Freedom: Those opposed to reforms tend to put the entire backlog of India’s problems at the doorstep of our hesitant, small doses of economic reforms, and make it seem as if the entire economic reform agenda consists of those measures advocated by the World Bank, the IMF and the multinationals. Ironically, the antireform lobby includes many who swear by Mahatma Gandhi but forget that he was one of the most steadfast opponents of state controls over the economic lives of our people, as well as over other institutions of civil society. His economic philosophy was not derived from any esoteric western utopian worldview but based on India’s historical legacy of self-governance.
One of the special features of Indian civilisation has been that until the coming of the British, the rulers at the top were not usually in a position, nor did they expect to assume the right to impose their rules and laws over the intimate economic, social and cultural lives of various local communities. Each village, each town had its own institutions of self-regulation. In ordinary times, the rulers usually had only a right to traditional forms and rates of taxation. If they were on hand, they were expected to adjudicate disputes according to the customs and norms established by the concerned communities. It is with the establishment of the colonial state that this system of self-governance was wrecked and the rulers arrogated to themselves more pervasive powers over the economic, political and social affairs of our people. Even after Independence, political stalwarts like Rajagopalachari, Minoo Masani, Nijalingappa and many others put up a determined fight against the bureaucratic controls imposed in the name of ensuring equity. From the 1970s onwards, strong rural movements, especially in Punjab, Maharashtra, Gujarat and Andhra, saw lakhs of farmers participate in long drawn out struggles to demand the dismantling of the regime of restrictions imposed on them by the state and to allow the agriculturists free access to the domestic and international markets.
The numerous bans on the economic activity of the forest-dependent communities and the accompanying Sarkari tyranny has been a major reason for the growth of violent resistance movements, such as those led by Naxalite groups. The industrialists may not have come out as openly as the farmers and tribals against the curbs on their enterprise since they gained some advantages by compliance, but they resisted and sabotaged the system through covert means — bribes, evasion of taxes, and working through the parallel “black” economy which grew much faster than the “official” one.
In other words, the urge for economic freedom has primarily come from within. The World Bank and the IMF get to acquire undue influence only if and when India appears in economic tatters with a begging bowl before these international bodies. The poverty of our people is thus not the product of economic reforms but underscores the need for domestically oriented reforms that can unfetter the entrepreneurial skills of ordinary people.
Pitched Against the Other: Apart from depressing the incomes and entrepreneurial skills of our people, the economic policies followed by the government in the decades after Independence also involved pitching one sector of the economy against another, as well as pitching different groups dependent on a particular sector against each other. Food producers are denied remunerative prices in the name of poor consumers, agriculturalists are put in an adversarial relationship with industries that depend on agro produce. Farmers are projected as the primary enemies of farm labourers, just as industrial workers have been trained to see owners of industries as their sole opponent, with the sarkar pretending to be the refuge and protector of all. Instead of mediating among the various economic interests and thereby facilitating the growth of productivity for all, our governments have encouraged a constant zero-sum battle among different sectors of the economy to the detriment of each so that the state could project itself as the sole power source that is in a position to resolve these disputes. In the process, it acquired dominance over the whole society which it uses for demanding humiliating forms of deference and vast amounts of bribes.
Societies make economic progress only when there is a degree of complementarity of interests between agriculture and industry, between wage earners and employers, between small scale and large scale industry, between consumers and producers — rather than where each of these sectors is locked in a permanently adversarial relationship with the others. At the same time, there need to be transparent and accountable institutions capable of providing effective and impartial conflict resolution, as and when the rights of one sector or producer are trampled upon or suppressed by the other. Our country lacks such functioning mechanisms so that conflicts keep simmering and frequently erupt in ugly and violent forms. Many otherwise honest people feel so frustrated at the failure of our legal system that they are forced to resort to outright crime and violence as a way of concluding even minor economic disputes.
Women’s Special Stake: Since women as a group inevitably get marginalised from the economy and polity of any society where violence, crime and extortion predominate, they have a special stake in widening the agenda of economic reforms. Very few women in India dare set up their own businesses (big or small) because that inevitably exposes them to criminal elements in and around the government offices and in public spaces. Many prefer home-based work, while depending on their men to deal with the outside world. This keeps them ghettoed to the lowest rungs of the unorganised labour force with little control over their incomes. In addition, the systematic assaults and erosion of women’s rights to property through the colonial and post-colonial period have thwarted their ability to engage in business and entrepreneurial activity. Since most women do not own any solid assets independently, they find it difficult to access even small amounts of credit- which is often a necessary requirement for engaging in business.
Even if they own property, the all-pervasive corruption and violence force women to depend on men for its management, especially in dealings with government offices. This strengthens women’s dependence on males who then use feminine insecurity as an excuse to impose crippling restrictions on women’s mobility and autonomy. These factors have significantly contributed to strengthening the culture of son preference in modern India. Therefore, decriminalisation of our economy is a necessary precondition for free, large scale and vibrant participation of women in the economic and political life of our country as well as to combat the devaluation of women and girls. Decriminalization requires not only debureaucratisation but also building effective institutions for ensuring accountability, effecting conflict resolution and protecting the rights of vulnerable groups.
From the Bottom Up: Since the reform process is being thwarted in the name of the poor and vulnerable sections of our population, we need to make determined and visible efforts to include the livelihood concerns of the average citizens, especially women – in their role as farmers, artisans, weavers, forest gatherers, small shopkeepers, agricultural and other wage labourers, various service providers and self-employed groups like street vendors, fisherfolk, transporters, rickshaw pullers, and waste recyclers, if we want the economic reform process to make real headway.
A meaningful agenda of economic reforms will necessarily result in:
- Downsizing the over-bloated, over-centralised bureaucracy and replacing them with locally appointed service providers, teachers, nurses, and doctors who are accountable to the local public;
- Drastic reduction in corruption and extortion by bringing about, deregulation, transparency and local accountability and control over financing;
- Allowing full play for the industrial and entrepreneurial talents of our people;
- Making earning a livelihood, including generation of wealth, an honourable and respectable activity;
- Strengthening our democracy by giving people greater control over their lives and livelihoods.