Economic ‘Reforms’ And India’s Growing Inequality:
Reshaping ‘Elite’ Behaviour And Human Relations
By Prayag Mehta
27 April, 2010
Countercurrents.org
GDP Growth and Rising Inequality
India is presently characterized by contradictory economic and social situations. GDP growth wise, it is rising, but socially, sliding. The country has recorded an impressive economic growth. The GDP per capita grew by 3.95 percent per year between 1980 and 2005. Since 2004, India has grown each year at 6.4 to 9.7 per cent.(1) However, on human development, India, already pathetically low at rank of 124 (out of 177 countries) in 2000, fell to 127 in 2001, 128 in 2007 and 132 in 2008. In 2009, it further slipped to the 134th position among 182 countries. (UNDP, 2009)
Poverty, Hunger and Super Rich
Clearly, India’s economic growth has not translated into well being of its people. Startlingly, 77 percent of India, about 836 million, lived at less than Rs. 20 per person per day. Another committee put India’s poor at a 41.8 percent in rural areas and 25.7 percent in urban areas. Independent researchers report substantial rise in both urban and rural poverty between 1993-94 and 2004-05. The rural poverty rose from 74.5% in 1993-94 to an all-time high of nearly 87% by 2004-05. This is directly reflected in growing hunger in the country. On the Global Hunger Index (GHI) in 2009, India was near the bottom ranking at 65 (out of 84 countries). The latest UN Report on the World Social Situation 2010, places India below Pakistan, Myanmar and Sri Lanka in terms of extreme poverty. A large number of distressed farmers have been forced to commit suicide. Along with this sinking situation for the vast majority, India is ‘shining’ for the richest. The list of India’s richest 100 people included 52 billionaires, nearly doubled from 27 a year ago. The collective wealth of these 100 is $276 billion (nearly Rs. 13 lakh crore), which is almost one – fourth of the country’s GDP. The top 10 richest Indians have a fortune of $155 billion, almost four times that of China’s top 10. (2)
Human Welfare and Social Development
The huge poverty and inequality have resulted in precarious food security, nutrition level, health and education of the Indian people. Thus, the infant mortality rate has not been decreasing. Some 46 percent of children under 3 were underweight in 2005-06. Presently, almost 50 percent of India’s children are malnourished. Even in such conditions, India was fifth from the bottom (or 171) in 2007-8 in terms of public health spending on health out of the 175 countries ranked by the World Health Organisation. It spends just 0.9 percent of the GDP on health for its people or even less. Personal expenditure accounts to as much as 85 per cent of the total health spending in the country
Under such adverse conditions, education for the general population is bound to be affected. Unsurprisingly, India ranks 105 among 128 countries in education for all programme . Further, about one third of all children enrolled in Grade I, drop out without completing Grade V. Among those able to survive up to standard VI, about one third children were unable to read a simple paragraph and almost 60 per cent a simple story; 65.5 percent of children could not tackle simple arithmetic problems. Most ominously, private tuition has become rampant, it begins even at class I. A large number of schools lack even minimum and essential infrastructure like drinking water, electricity and medical facilities. (3)
It is not just the school education which is afflicted by poor quality. It is equally acute in higher education. In a recent assessment some 90% of colleges and 68% of Universities were medium or poor on almost all indicators. The recent proposal to derecognize as many as 44 deemed Universities underline the seriousness of the problem. Policies have been geared to promote privatisation. The U. R. Rao Committee had earlier drawn attention to the explosive growth of engineering colleges much of it at the cost of quality. (4) This did not deter the government to expand privatisation of education. In 2000 there were only 21 privately owned institutions which were deemed or declared as Universities . It increased to 70 by 2005 and to 117 by 2007. The total number of private colleges, including professional medical and engineering colleges, went up from 5748 in 1990 to 16,865 in 2003. In that year, 86.4 percent new engineers were products of private colleges as compared to only 15 percent in 1960. Similarly, the share of private medical colleges went up from 6.8 percent in 1960 to 40.9 percent in 2003 (Nanda, 2009: 49-51).
Thus, the socio economic scenario today is marked by wide disparities, with vast population mired in poverty, depressing quality of health, education, food and nutrition
Reshaping Elite Behaviour: A Shared Mindset
India’s economic reforms are inspired by neoliberal market- perspective, which is the guiding principle of the international institutions like the World Bank, International Monetary Fund and the World Trade Organization. Thanks to their efforts, such policies have assumed a global scale over the past half-century. This globalisation has been inculcating a shared mind set which puts faith in the system which works to the grave detriment of the majority but to immense benefit of a very few. After all, as system analysts explain, ‘the purpose of a system is what it does’. The system is certainly producing widening inequality.
As economist Gates notes, nowhere in this operating system is there any provision for the values essential to the long-term health of communities, civil cohesion and environmental sustainability. Money is the only value granted a voice (Gates, 2008). This is evident in the thoughts and values of India’s elites and the middle class. In a recent survey, they perceived economic growth as the biggest event in their lives in the year 2009. There was no place for poverty and malnutrition in their mind space. (5) Economic growth has reinforced the confidence of business and political elites who redefine democracy and liberty through notions such as privatization, profit maximization, disdain for the needs of civil society and social justice. What matters for them are ‘private freedoms’ of which the pre-eminent freedom is financial — the right to earn money and consume it unimpeded. (Kampfner, 2010)
The pursuit of growth in the GDP is taken for granted and good for the society. As a result of the changing nature of education, as Giroux (2009) writes, growing generation of young people and adults live in an utterly privatized world, who are either indifferent or complicit with social issues . It reinforces the values such as: that society is (or should be) driven by self-interest and that each of us is responsible for his or her own welfare. They harbor beliefs such as, that, human misery is natural; that inequality is fated; that people deserve, by virtue of their native talents, the positions they have in society. They are unable to see the context and that inequality is a historical result of policy choices (Bock, 1994:9; Fischer et al 1996;10).
Inculcation of Manipulative Character
Privatisation of higher education tend to restrict the educational task to that of teaching employment skills. The changing mentality of employees provide a good example of such subjectivity. The young workers are now being motivated to seek personal solutions to structurally or systemically generated problems in the economy and at the workplace; negate the significance of the state in public policy; and allow both the government and employers to abdicate any responsibility for workers’ and citizens’ well-being ( Gooptu , 2009) The corporate managers are motivated to use their creativity and skills just to enhance profit for the corporation. The corporate chiefs and big industrialists, as the following brief behavioural episodes show, use their manipulative skills quite creatively, boarding on criminality. Thus, they show, what Adorno called "the manipulative character" with superb organizational skills and the inability to have authentic human experiences (Quoted in Hedges, 2009).
Some Behavioural Episodes
Economic reforms were launched in India with a view to unshackle the licence raj and to reduce the scope for corruption in business and in public life. However, just the opposite has happened in reality. Recently, the Outlook magazine documented a series of financial scams since 1991, pegging the money looted at a mind-boggling amount of Rs 73 lakh crore. What was unthinkable is now considered normal and taken for granted (6). Elites’ unethical behaviour is further shown in the fact that funds in the range of $500 billion and 1.4 trillion belonging to Indians have been parked in safe havens abroad, especially in the Swiss banks. $1.4 trillion was equivalent to Rs 70 lakh crore, more than India's national income of around Rs 50 lakh crore. The average money taken away from India annually during 2002-06 was $27.3 billion. Thus, during the five-year period, the amount stashed away equaled $136.5 billion. (7)
The former Chairman of Satyam, B. Ramalinga Raju presents an interesting case. He was involved in a fraud of over Rs. 7000 crore over several years, He was chairing the Committee of Corporate Social Responsibility of the CII till the scam news broke . He was also named Ernst & Young Entrepreneur of the Year in November 2007 while his company was fraudulently reporting higher operating margins. And, Satyam Computer Services was rated as the company with Best Corporate Governance Practices for 2006 and 2007 by Investor Relations Global Rankings. (8).
While verbally innovation and managerial skills are emphasized for securing competitive advantages, in reality multiple forms of corruption are used. It is reported that, about three quarters of the companies, including 94% in Germany and 90% in Britain think businesses from their countries use agents to circumvent anti-corruption laws. (9) An economic system that institutionalizes immorality diffuses it throughout society. (Kozy, 2009). A glaring example of the market control over attitudes, loss of empathy and social sensitivity comes from India’s middle class. A survey in cities showed, that, 55 per cent of the middle class respondents felt that they had more in common with people in the West than with the poor in India. (10)
Helplessness in Ensuring Labour Protection and Rights
In 2004-05, about 94 per cent of all workers worked in the organised sector (GOI, May 2006). At a recent labour conference, the Union Labour and Employment Ministers had to mention the inevitability of contract labourers in the present economic situation at the very forum convened to discuss ways and means of ensuring social security, implement laws and promote protection of the rights of workers in the unorganized sector. It would be interesting to find out as to what makes the top political functionaries and the decision makers in the government feel so helpless. (11)
Colluding with Illegal Practices
The local administration is frequently found to socially collude with dominant castes in several areas across the country in cases of caste violence, even in matters relating to illegal practice of untouchability. (NHRC, 2004). An expert group recently highlighted the complete failure of the government to implement instruments like the Panchayat (Extension to Scheduled Areas) Act, 1996 and the Forest (Conservation) Act, 1980 (GOI, 2008). Another government committee described the industrialisation drive in Chhattisgarh's iron-ore rich Bastar, Dantewada and Bijapur districts as the "biggest grab of tribal lands after Columbus’. (GOI, 2009b)
The Constitution’s Mandate to the state:
In the present context when state functionaries are imbibing values and attitudes contrary to the welfare of the people, it is instructive that, a two-judge Bench of the Supreme Court comprising Justice G. S. Singhvi and Justice Ashok Kumar Ganguly thought it necessary to remind about the constitutional mandate in this respect. Delivering two separate but concurring judgments pronounced on January 5, 2010 in a labour case, Justice Singhvi observed, that “the preamble of the Constitution and the provisions contained in Part IV (Directive Principles) thereof “------ which mandate that the state should secure a social order for the promotion of welfare of the people...and also ensure that the workers get their dues.” Justice Singhvi, recalling that in the 1970s, 1980s and 1990s, the courts repeatedly negated the doctrine of laissez-faire and the theory of hire and fire’, observed: ‘The mantras of globalisation and liberalisation were fast becoming the raison d’etre of the judicial process and an impression had been created that the constitutional courts were no longer sympathetic to the plight of industrial and unorganised workers’. Justice Ganguly’s observations were equally forceful. He said: “If the judges fail to discharge their duty in making an effort to make the preambular promise a reality, they fail to uphold and abide by the Constitution”. He emphasised that the court had a duty to interpret statutes with social welfare benefits in such a way as to further the statutory goal and not to frustrate it. In doing so, this court should make an effort to protect the rights of the weaker sections of society in view of the clear constitutional mandate”. Justice Ganguly warned: “Any attempt to dilute the constitutional imperatives in order to promote the so-called trends of ‘globalisation’ may result in precarious consequences. Reports of suicidal deaths of farmers in thousands from all over the country along with escalation of terrorism throw dangerous signal.” (12)
Thus, there is a growing and deep disconnect between the elite behaviour and the poor of the country, even at the cost of the mandate given to the state by the Indian Constitution. The economic policies tend to reshape attitudes and values in the corporate sector and in the state functionaries which can only be described as undemocratic with wide implications of our society and the polity.
Processes for Social Sensitivity and Human Development
In the present context, Mahatma Gandhi’s talisman that the decision makers should ask themselves whether their actions restore to the poorest man a control over his own life and destiny has now been reduced to an empty rhetoric. In reality, the system is promoting internalization of oppressive cultural norms to define the citizens’ worldview. Similarly, peoples’ participation has also become a rhetoric. As Sen (2002: 13-14) remarks, in the context of the economy, “the ability to participate depends on a variety of enabling social conditions”. As the situation stands today, both, structurally and psychologically, it is an exclusionary system where there is hardly any space for inclusion of the people. As we have seen above, and as Murphy (2005: 182) shows, inequality is the enemy of human development; it harms those at the bottom of hierarchy.
Behaviorally, the neoliberal subjectivity precludes human relatedness, involving humaneness, care, compassion, gentleness, respect, and empathy. It is promoting exclusionary social and human processes. The system is creating a new class of Superior and Subordinates. The elite beneficiaries of growth, who also influence government decisions, are at the helm as superior, and the vast population at the bottom, who are at receiving end of the growth paradigm, are the subordinates.
Need for Research and Related Programmes
How do we visualize inter-personal and/or inter-group relationship in general and superior-subordinate relations in particular in the present Indian scenario? What is the role of behavioural science in such a situation when profound changes are occurring at political, cultural and the individual levels? As Freud showed, the role of parental family as a social institution is intrinsic to understanding the inner character and life-fate of the individual. It is also now understood that “interpersonal relations” need to be seen in the broader context in which these, and hence the individual himself, are situated. As culture and politics are now so intimately related, there is a need for us to use sociological imagination for proper understanding of the underlying processes. It is the capacity to shift from one perspective to another—from the political to the psychological. (Mills C. Wright , 1958/ 2009 ; 1959) His concept of sociological imagination is indeed helpful in our present situation. It is necessary to understand the behavioural changes taking place in the present neoliberal socio-political context and, also to undertake other related programmes.
Formerly University Professor and Director, National Labour Institute, New Delhi, Professor Prayag Mehta has worked at senior academic positions in the fields of education, mass communication, psychology, labour and management research. He is author of several research papers and books including A Psychological Strategy for Alternative Human Development and Work, Democracy and Development. Based at New Delhi, he can be reached at [email protected]
Notes
1 . The Financial Express , Oct 06, 2009
2. Several studies of poverty are available. See, GOI, (2006), (2009a); Patnaik, (2010); IFPRI, (2009); UN (2010), Hindu, January 23, 2010; Hindu, Nov 20, 2009
3. UNESCO, (2010); Pratham, (2005 ; 2006; 2010) ; NUEPA, (2010)
4. UGC, (2007); report on The U.R. Rao Committee, Frontline, Volume 21 - Issue 06, - March 26, 2004
5. The fourth ET-Dentsu Top Hits 2009 survey Economic Times, January 02, 2010.
6. Cover story ‘Behind Madhu Koda…’ OUTLOOK November 23, 2009.
7. Times of India, 30 August 2009
8. Satyam and Capitalism. Analytical Monthly Review, MRZine 18/01/2009
9. Financial Times, October 9, 2006
10. ‘A report of a Survey’ The Hindu, Tuesday, Feb 14, 2006
11. Labour conferences and protection of workers’ rights Mukul Sharma, The Hindu Tuesday, Feb 16, 2010
12. ‘Introspection Time’ Frontline, Volume 27 - Issue 04th Feb. 13-26, 2010
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