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India in the world system

Globalization in the Indian context is rooted in the contradictions that go back to the pre-Independence period. Ruthless British dominance for nearly two centuries, beginning in the mid-eighteenth century, was characterized by the exploitation of the country’s natural resources and the forced importation of industrial products from the imperial country at grossly unfavourable terms of trade. India’s freedom struggle was imbued by a deep determination to reverse the process and initiate self-reliant economic development once freedom was won and, simultaneously, to eliminate social and income inequalities. Acute awareness of foreign domination was reflected in decisions taken in the early phase of the post-Independence period : the first two Five-Year Plans aimed at accelerating economic growth with minimum external assistance. Any kind of involvement with foreign capital, particularly private foreign capital, was considered dangerous.

It was only in the early 1980s that major changes began to take place. The success with the high-yielding varieties of seeds led to the emergence of a strong kulak (landowner) community. The political party in power until then, the Indian National Congress, was heavily dominated by the upper peasantry, newly emerging industrial classes and the business community. Because of the backwardness of the rural areas,

where illiteracy was widespread, the party could still claim the support of a large part of the poor rural communities. However, given the overwhelming influence exerted by the

feudal and capitalist elements, the party’s psychological orientation gradually forgot its pre-Independence sentiments. The comfortably-off middle and upper classes had, by then, largely outgrown their anti-imperialist feelings and even anti-American attitudes, which had been very strong at the beginning of the Vietnam war, had considerably abated.

Since 1985 when, following Indira Gandhi’s assassination, her son, Rajiv Gandhi, took over as prime minister, a sea change was increasingly discernible regarding external involvement in the processes of the economy and the polity. A hankering after imported luxury consumer goods, as well as imported technology, made itself felt. Pressure developed to move away from the regulatory system enforced since Independence, including exchange and import controls, restrictions on the activities of monopolies and big industrial companies, as well as on the ingress of foreign capital. Inevitably, external accounts came under severe strain on account of the liberalized imports of luxury goods, machinery and state of the art technology.

Until that time, merchandise imports and exports had been around 5 per cent of national income. In the liberalized regime introduced by Rajiv Gandhi imports shot up to around 9 to 10 per cent of national income while exports remained stationary at about 5 per cent. A series of financial lollipops proffered by the International Monetary Fund and World Bank in exchange for large concessions on the part of the Indian Government, heralded the opening of India to globalization. With the country’s entry into the World Trade Organization (WTO) in 1994, the liberalization of external trade was strongly accentuated.

These economic developments took place in a specific political context. In early 1991, when globalization was formally accepted by the Government, the principal political party was still the Indian National Congress. The party’s leaders were then convinced that the complete liberalization of the economy would lead to a major inflow of direct foreign investment, around 10 billion dollars to begin with and, in a second phase, rising to the level reached by the People’s Republic of China. They never understood that it was mostly the success of the Chinese strategies and policies promoting high growth that attracted foreign capital and not vice versa, i.e. the inflow of foreign capital was not the source of high growth.

About that time, the right-wing party of Hindu conservatism, the Bharatiya Janata Party, had become the main national opposition. It too was heavily backed by sections of the industrial and business community, which was all in favour of globalization that favoured the private sector. It had, however, reservations about allowing major concessions to the outside world and thus stonewalled WTO legislation, including the proposed revision of the Indian Patents Act to accommodate the provisions of the Marrakech Treaty.

There is a strong similarity between the Bharatiya Janata Party and many of the so-called ‘Islamic political parties’, like the Moslem Brothers. They all support capitalist globalization and transfer genuine conflict resulting from basic contradictions linked to land (such as between capital economic global expansion and popular interests) to ‘cultural’ areas. In fact, the Congress Party and the Bharatiya Janata Party, following the example of the former Arab nationalist parties and Islamic organizations, contend for power within the dominant sectors of society.

The principal leftwing group in Parliament, the Communist Party of India (Marxist), is of course strongly against capitalist globalization. Some other new parties, such as the Samajwadi (Socialist) Party and the Rashtriya Janata (National People’s) Party, are also opposed to globalization, but their effective strength is for the time being more at the grass roots level than in the nation’s highest parliamentary body. The disappearance of the Soviet bloc was a shattering blow to the Indian left. All the Third World countries were put on the defensive and the Government of India reasoned that to survive, it had to be on the side of the western countries: it was a case of realpolitik.

Before going any further, the actual impact of globalization on the Indian economy should be reviewed. Globalization did not foster rates of growth, which during the 80s and the 90s remained at levels roughly similar to the previous decades since 1950. Of much greater relevance – and alarm – is the rate of growth of employment: the compound annual rate of growth of employment has been 0.67 per cent and 1.34 per cent for the rural and urban sectors respectively, while the rate of growth of population is estimated at around 1.7 per cent. Economic growth in India in the main sectors, instead of improving, has actually diminished over the past decade. Employment has fallen even more precipitously. Direct foreign investment, on which such high hopes had been pinned, failed to pick up. There is thus every reason to question the soundness of the prescriptions laid down by the Washington Consensus. Indeed, if the affluent sectors insist on maintaining their luxury consumption while the defence lobby contend that military expenditure - including outlay on nuclear armaments - is sacrosanct and must not be touched, India is going to find itself in serious difficulties.

Internal Democracy and the Dalit [1] issue

India became free more than half a century ago after a long drawn-out national struggle, which had aroused great expectations, particularly among the poor because it was based on the fundamental issue of poverty, precariousness and the political economy that underlaid it. During the national struggle the rhetoric of a casteless and classless society was declared as the ultimate objective. The Constitution of India affirmed this in unequivocal terms. That democracy has survived at all in India is indeed remarkable. Many thought that, given its multi-ethnic, multi-religious, multi-lingual and multi-cultural character, democracy would not take root in the country. Indeed, divisive factors are still strong, if not dominant. Democracy is still fragile, while political corruption is routine and widespread. Criminality affects all levels of the State. The Lok Sabha [2] is heavily dominated by rich peasant and business interests. As for the State Assemblies, they also by and large represent the middle class rather than the poorer sectors of the population.

Looking back over the past fifty years or so, what is most striking about Indian society is the emergence of a large middle class, now reaching over 200 million people! It is estimated that this upper 20 per cent of households control some 60 per cent of India’s agricultural land and obtain about 50 per cent of its income. They wield considerable political clout and social status. Nor are they totally secular: many of them are influenced by the Hindutuva or Hindu cultural dominance. This explains why the land reforms avowedly intended to bring about an egalitarian distribution of land has largely bypassed the landless agricultural labourers (most of them belong to the Scheduled Castes or Scheduled Tribes, terms that refer not only to the dalits, but also to small peasants and many categories of agricultural workers). Nor did the benefits of the so-called green revolution in agriculture - created by technological improvements in seeds, irrigation, fertilizers, etc. - bring many benefits to these categories.

In rural India, class exploitation and caste oppression continue to exist, although there is strong opposition to it. In areas like Kerala State, leftwing parties and progressive social reform movements have already changed the feudal relations of production. One of the more encouraging developments recently is that there is a growing mass awareness of civil and democratic rights among the oppressed categories, particularly the dalits.

Another important feature of the changing social and political scene is the emergence of the ‘backward classes’ movement, which is demanding a greater share in public sector employment, admission to professional training, political power and so forth. This demand has been given greater legitimacy by the decision of the Janata Dal Government in 1989 to accept the Mandel Commission recommendation to reserve jobs in the central government services for the ‘socially and educationally backward classes’. Several states, like Tamil Nadu and Karnataka, have made considerable progress in this field.

Moreover, the 73rd and 74th constitutional amendments contain an enabling clause permitting state legislatures to reserve seats for these ‘backward classes’ in the Panchayat [3] and municipal bodies, whereas such reservations are mandatory for scheduled castes and tribes. Thus numerous backward classes now enjoy greater social mobility and economic opportunities and are now catching up with the classes above them. But this cannot be said for most of the dalits, who have borne the double burden of class exploitation and caste oppression for centuries.

Economic development and the poverty issue

India has made significant strides in the economic field. Its current output of 200 million tons of food grains, with a comfortable buffer stock of 50 million tons is an all-time record. Also, the economic authorities and those responsible for the public sector have built up a strong and diversified industrial base. But the question remains: has all this helped to eliminate poverty and reduce inequalities in the country?

The first three Five-Year plans explicitly recognized that mass poverty could only be tackled through a development strategy aimed at economic growth, within a radical policy framework and based on institutional reforms. This approach continues, too, under the current structural adjustment policies. But the anti-poverty programme is stressed to ensure the votes of those at the bottom of society. Despite the rhetoric, however, the achievements in alleviating poverty remain modest. All social indicators show that India is way behind the rest of the world, with over 440 million people living on under $1 a day. Through the economic reforms launched since 1991 along the lines of the stabilization and structural adjustment programmes laid down by the IMF and the World Bank, the Indian authorities have been hoping that market forces, now unfettered, will promote growth and that the benefits will “trickle down to the most modest sectors of society.” This is however a question that should be empirically examined.

Trends in poverty and unemployment

Poverty in India is usually measured in terms of purchasing power per head of the population. The categories considered poor are those whose food expenditure pays for less than 2,400 calories per head in the rural areas, and 2,100 in the urban areas. A study made by the National Sample Survey (NSS) on rural and urban household expenditure from 1974 through 1999-2000 clearly shows that while poverty unmistakably declined until 1989-90, it increased under the structural adjustment policies that followed. Not only that, several studies point out that temporary and casual labour have increased sharply in recent times. In India nearly 91 percent of those employed are in the informal sector, working as self-employed, agricultural workers, casual labour and so on. In 1998-99, out of 14 states for which real income for unskilled agricultural labour categories are available (cited in the Government’s Economic Survey for 2000), seven had declining wages. The situation becomes all the more disquieting because regional disparities reckoned in terms of poverty and inequality have been widening from 1958 through 1997 across the various states in the Indian union.

The impact on human development

Infant mortality rate (IMR) is an important indicator of the status of people’s health and well-being. According to the Report of the Registrar General on India as a whole, as well as in the 22 states, the IMR increased in 1998 compared to previous years. The good health of a community depends on food security and its nutritional status. A detailed examination of the pattern of expenditure, presented in the 50th National Sample Survey (1993-94), shows that, in rural areas, food expenditure of about two-thirds of the population came to well under 2,400 calories. And for the poorest sectors the per capita calorie intake was even less than 1,327 calories. The story is similar in the urban areas, even if the situation there has slightly improved in recent years.

Food security primarily depends on purchasing power. With the increase in the price of food grains through the public distribution system following economic reform, the quantities of food grains available have diminished. At the same time, the buffer stock of food grains has increased to 50 million tons, an all-time record. The latest report of the Parliamentary Committee on Food, Public Distribution System and Consumption shows that more than 2.5 million tons of food grains had to be destroyed due to poor storage. This, in a country where millions of people are starving does not say much for the efficacity of its anti-poverty programme. It should also be noted that the expenditures on education of the central and state governments as a proportion of GDP has generally declined during the reform period (from 2.74 per cent in 1993-94 to 2.49 per cent in 1997-98 and only marginally increased, to 2.75 per cent, in 1998-99).

Reform of the financial sector and the poor

The principle governing monetary policies in the past that financial intermediaries and services should serve some social goals has been discarded under the new dispensation. Interest rates have been substantially deregulated, subsidized loans progressively reduced and barriers to the entry and expansion of private banks removed. Despite all this, the credit-deposit ratio of banks declined from 65.2 per cent in March 1991 to 49.7 per cent in September 1999. Not only that, the geographical spread of the credit-deposit ratio has become extremely uneven between rural and urban areas. This fall and increasing regional disparities are inevitable, given the trend in the decline in branch banking (actively promoted under the pre-reform regime to mobilize rural saving and promote small loans in rural areas) and the growth of commercial banking in urban and metropolitan centres.

Following the nationalization of banks in 1969, commercial banks were required to allocate 40 percent of their credit to what was called priority sector lending, which provided relatively cheap credit to small borrowers and people from the poorer sections of society. But, through a series of measures forming part of the financial sector reforms, such as the redefinition of the priority sector and of small categories etc., this policy has deviated from its purpose of assisting the poor. Small wonder that the number of beneficiaries under the anti-poverty, credit-cum-subsidy programme (called the Integrated Rural Development Programme or IRDP), which was as high as 2.54 million in 1993-94, has dropped to 1.26 million in 1998-99.

The logical result of abandoning the various measures to help the weaker sectors through the banks has been to reduce the deposits of the small borrowers (below Rs. 25,000). These fell from 95 per cent of the total accounts in March 1990 to 87 per cent in March 1998. The decline in their share of outstanding credit is much steeper, as it diminished from 23.1 per cent to 12.5 per cent during the same period. This is to be explained by the growing integration of India’s financial markets into global finance and by the increasing influence of the international financial institutions on these markets.

The impact on the oppressed dalits

The dalits comprise about 230 million people of whom 160 million are Scheduled Castes and the rest, Scheduled Tribes. They form about 23 percent of the population of the country.

As a social group, the dalits experience the consequences of poverty, inequality and unemployment more than any others. This is the reason why the Indian Constitution made provision for positive discrimination in their favour, particularly in reserving positions and jobs for them in educational institutions. But with the gradual privatization of this sector, the impact of these measures is increasingly limited, as the private sector has no binding obligation to take on dalits. As privatization gets under way, theyare losing even the jobs that require few qualifications.The rate of growth in public employment, which was 1.52 per cent in 1991, has steadily fallen and was negative from 1996 onwards.

The commercialization of education and health concern the dalits more than any other categories because they are being priced out of the market. Again, the fiscal corrective strategies of the reform, which have cut down public expenditure on education, health, social welfare, tribal and special plans for assistance to minorities, anti-poverty programmes etc., have serious consequences for the dalits. On top of all this, the food security of these vulnerable groups is affected as the price of food grains has risen, largely due to the increase in the official procurement price and the reduction of subsidies in the public distribution system.

Political opposition and resistance

In the meantime, the political landscape in India has changed. In the latest parliamentary elections, the Indian National Congress slipped into second position, with the Bharatiya Janata Party holding the reins of power since 1998. The latter lost little time in swearing allegiance to the Washington Consensus and proudly proclaimed itself as the standard bearer of “the second generation of reforms”. It now became the main defender of the amendment to the legislation on patents, which was passed with the help of the Congress Party. Within Parliament, only the two Communist parties, as well as regional parties like Samajwadi and Rashtriya Janata Dal, have consistently opposed globalization policies. The regional parties are particularly worried about the consequences of open-door policy on farmers and workers in small-scale industries. Outside Parliament, a few Maoist groups are also active in organizing protest against globalization.

Of late the Congress Party appears to be undergoing some soul-searching. It is afraid of losing its electoral base if disinvestment and denationalization programmes proceed apace, bringing massive unemployment in their wake. This is why it has moved closer to the leftwing parties on globalization issues. But it is quite likely that if it succeeds in somehow getting back into power, it could fully espouse the globalization cause.

But resistance still continues to make itself felt in several directions and in various ways. An interesting case is that of the Swadshi Jagaran Manch, an unofficial think-tank of the Bharatiya Janata Party, the government party. It is a great believer in autarkic growth and a vociferous adversary of globalization. But because of pressure exerted by the politicians, its voice is at the moment somewhat muffled, although not altogether silenced. The activities of various cultural groups attached to leftwing parties should be mentioned as they are intensely active in opposing the trend towards globalization to the detriment of national honour and interests. Several scientific and technical groups are at work, too, to resist the tide of globalization, like the Centre for Economic Studies and Planning at the Jawaharlal Nehru University, New Delhi and independent economists and social scientists in Calcutta.

A number of non-government organizations are also mobilizing public opinion against over-hasty open door policies pushing for instant global integration. Among these, the Indian Association of Scientific Workers, based in New Delhi, has been most active, along with the Federation of Scientists and Technologists (FOSET) in Calcutta. The Gene Campaign in New Delhi has been endeavouring to draw public attention to the dangers of imported genetically modified crops, as well as the clandestine export of micro-organisms. Another outfit, the Research Foundation for Science, Technology and Ecology (based in New Delhi, with a branch in Bangalore) has been continuously warning against the dangers of the spread of genetic engineering in food and agriculture, without applying the precautionary principle on food safety.

The most hopeful signs of resistance are, however, emerging from the ranks of the working classes. The Government and the employers often use closures and dismissals to protect their interests, while the workers only have strikes and agitation to defend themselves. True, globalization and the resulting large-scale closures, coupled with the fall in demand, have put the trade union movement on the defensive. In spite of this, though, a large number of strikes have taken place in such sectors as banking and insurance, telecommunications, energy, railways, oil extraction, civil aviation, etc., to make a general protest against privatization, disinvestment and the excessive entry of foreign interests into the country. These actions have been somewhat dispersed and been of short duration, but they have engendered tremendous hope.

There are other reactions too. Up until recently the affluent peasantry had been welcoming globalization policies and free international trade which could promote profitable farm exports. They are learning the hard way that it was all, in fact, a delusion. They had been looking forward to selling their products in other countries at high international prices, but are discovering that cheap grains from overseas are flooding the domestic market. Similarly, industrial capitalists who, blinded by the first round of liberalization, were praising the elimination of industrial and exchange controls as well as pricing restrictions, are now greatly concerned over imported manufactures, like automobiles, that are adversely affecting their domestic sales. This is what is mainly responsible for the drop in the rate of growth in industrial output. Protests against the importation of manufactured products began to be heard and expressed by the main group of industrialists, the Federation of Indian Commerce and Industry (FICCI).

The terrain is therefore ripe all over India for widespread agitation against policies and practices that promote globalization. But the organizational structure for a massive and cohesive protest still has weaknesses. Various organizations have already embarked upon protests and mass action but there is little real coordination between them and they do not always agree on a common strategy. There is therefore a clear need to integrate all the forces of opposition and dissent. The next stage will be to bring the national protest into the international protest movement against globalization.

Response and resistance from below

As has been seen, the egalitarian and socialist goals of the Indian constitution have remain very largely unfulfilled. This being so, one may wonder what has been the response of the population, especially the voluntary agencies, including the non-governmental organizations (NGOs), which vary considerably in size, goals, scale of operations, style of functioning, sources of support, etc. Broadly speaking, there are two types of voluntary agency: those engaged in charity and social welfare and those concerned with development, emphasizing social justice, people’s participation and so on. Along with the latter should be included several social movements like the women’s movement, the environmental movements, farmers’ movements and peasant struggles. Two case histories are given below to illustrate grassroot resistance and their history which are then followed by some general comments.

The Self Employment Women’s Association (SEWA)

That the very poor, especially in India’s rural areas, have a real need of credit that is accessible and at affordable rates of interest is well known and needs no justification here. In a socio-economic and political context in which redistributive policies have been jettisoned in favour of a market-friendly development paradigm, any collective effort towards self employment and micro-finance can be considered a significant contribution towards improving the lot of the very poor. The case of SEWA is an important success story in this respect.

SEWA includes all informal sector workers from vendors to hand-cart pullers. Started in 1972 in Ahmadabad (Gujarat) on a modest scale, today its membership is over 250,000 women, spread throughout the country. It continues to organize women and help them enter into the mainstream of the economy and society through the twin strategies of struggle and development. The struggle is against the innumerable constraints with which poor women have to contend, while development is concentrated on the seeking of employment, income, food and nutrition, health care, creation of assets, housing, etc. By pooling very small savings, workers build up deposits which are loaned out to members for productive purposes or to cover consumption needs. Prompt repayment with reasonable interest ensures the recycling of the funds and their availability. In this way, SEWA has demonstrated how poor people, when organized collectively, can themselves fight poverty and promote self-reliance.

This kind of micro-finance has subsequently been promoted successfully by the Government of Kerala, public sector banking agencies like the National Bank for Agriculture and Development (NABARD), which provides refinancing to commercial banks giving loans to micro-finance agencies, and several NGOs like the Mysore Resettlement and Development Agency (MYRADA) and the Professional Assistance for Development Action (PRADAN), which have organizational structures enabling them to mobilize savings and provide credit. Indeed, one of the most successful fights against destitution in India has been the micro-financial structures organized by women.

The Narmada Bachao Andolan

No protest movement in India can be compared to the Narmada Bachao Andolan (NBA) in terms of quality of leadership and commitment to the poor. The Sardar Sarovar project in the Narmada Valley of Gujarat is one of the most ambitious development projects in the world. It aims at building a whole series of dams, as well as a 75,000 kilometre distribution canal. Since the beginning, NBA embarked on a struggle against the construction of these huge dams in order to preserve the rights of the people being displaced, especially the traditionally marginalized, like the tribal and the scheduled castes. According to the World Commission on Dams, nearly 56 million people have been forced to leave their land as a result of the construction of major dams in India during the last fifty years. This is an alarming figure by any reckoning. But the displacements continue, although the pressures exercised by the resistance of the populations affected have met with a certain success.

The greatest setback to the movement was when, on 18 October 2000, the Supreme Court of India lifted the ban against the construction of dams. For the highest court of justice, as long as the displaced people are decently rehabilitated there is no violation of rights. It based its verdict on figures provided by the World Bank: “The project can potentially feed 20 million people and provide domestic and industrial water for about 30 million.The ratio of beneficiaries to affected persons is one hundred to one”.

This verdict raises several fundamental issues concerning democratic rights and the right to development. For example, what are the rights of the local people over their livelihood resources as against the demands of ‘development’ made by state governments? For contractors, bureaucrats and politicians, these construction projects have always been gold mines. And it is they who take all the decisions concerning development. They are the decision makers, whereas the indigenous people, those who are directly affected by these projects, cannot even make their voice heard. It is easy to speak eloquently about the rehabilitation of the people being displaced. But up until now, no measures whatsoever have been taken in this respect, as was demanded by the Narmada Water Disputes tribunal fourteen years ago. While the construction has gone ahead, so too has the struggle.

Some general comments on peoples’ struggles

Parliamentary democracy cannot represent the interests of the marginalized. They are seen as reservoirs of votes that the opposing political parties manipulate according to their own interests. It is therefore not surprising that, over the last decades, a new wave of social movements is trying to express the interests of the poor, taking up their defence and showing their power and strength.

Although the struggle for Independence was fought mainly by the middle and upper bourgeoisie, women also played an important role. For a period after Independence they disappeared from the limelight but from the 1980s onwards women have been making common cause on many issues, including the struggles to stop the atrocities committed against them, to expand their rights (e.g. reproductive rights, property rights, etc.), to increase their representation in the Lok Sabha and so on. It is a fact that the women in India have been considerably emboldened since the establishment of the Panchayati Raj institutions and the elected municipal assemblies. Since 1994, following the 73rd and 74th amendments to the Constitution, at least one-third of the seats on local assemblies have to be reserved for women.

The dalits also continue their struggles in the North as well as in the South of the country for a new identity and status. They have been more inspired by Ambedkar (himself a dalit and above all known as the architect of the Indian Constitution) than by Gandhi, the father of the nation. In fact, Ambedkar believed that only the total destruction of Hindu social structures could liberate the ‘low castes’ from their traditional destitution, while Gandhi wanted to resurrect them as harijans or ‘people of God’ within Hindu society.

The process of reforms to adjust India to accommodate global capitalism has ended by marginalizing a number of categories of the population. Besides the resistance organized by trade unions, there has also been resistance at the local level. A typical case is the palm-oil boycott movement that started in several villages in a district of Kerala, initiated by peasants who had suffered from the drop in prices following the implementation of the WTO agricultural agreements. In this instance the boycott of foreign imports is a formidable instrument of resistance and one of the most effective ways of fighting domination by foreign capital.

Indeed there is a very great need to broaden the scope of politics by politicizing such development issues and putting them on the agenda of political programmes. We are aware that the word ‘politics’ does not inspire much sympathy among the population at large, as the word has too often been synonymous with ‘lumpenization’, criminality and corruption. However, unless the people, through voluntary agencies and the media, succeed in reforming public institutions and political processes, no sustainable progress can be achieved.


[1] The oppressed, or rejected : the name nowadays used by most Dalits, who reject the term « Untouchables » as well as Gandhi’s « Harijans »

[2] Lower House of the Indian Parliament

[3] Literally « Council of the Five », the assembly dealing with business in villages and castes.