|
By Aseem Shrivastava Following a short-term exchange crisis in the summer of 1991, the Indian government hurriedly ushered in the era of economic reforms in the country. In summary, it involved the liberalisation of the country's foreign trade, the privatisation of many public sector companies and assets and in general, opening up to the forces of globalisation (LPG). Space prevents us from looking in-depth into the content and experience of the reforms. Here one may restrict oneself to making a set of observations about the socio-economic assumptions underlying the reforms. Consider the pattern of economic relationships in an industrialised Western country. They are founded in formal contracts that are legally enforced and protected by the state. There are strict rules which control the exploitation and abuse of labour, just like there are firm laws which protect property rights, especially the ownership of land and other means of production. There is an extensive and intricate structure of legislation that regulates economic activity, especially in the area of finance. Even after deregulation since the Thatcher-Reagan years of the 1980s there is still a more or less effective framework of regulation which enables the otherwise volatile capitalist economy to remain stable and viable. Now consider the pattern of economic relationships in a country like India. It is true that we have a modern Constitution which defends the rights of labour and property. However, theory is one thing, practice quite another. In actual fact, the abuse and exploitation of labour is rampant and intricately diversified in the Indian setting. From discriminatory wages for women and men to bonded labour, slavery and the superexploitation of child labour, not to mention an impressive diversity of informal labour contracts which have no material proof and thus inevitably involve enormous exploitation, India offers some shocking examples of routine abuses of human rights. The equivalent of children slaving 14 or 16 hours a day at a factory making Diwali crackers or of old women without helmets carrying a dozen bricks on their bare heads at a construction site, or of bonded labourers working without wages at brick-kilns for years on end are not to be found in any modern society, let alone in an industrialised one in the West. These are not things that show up in the national economic growth rate - except that it could be keeping it lower and qualitatively inferior to what the national potential may be if the rights of ordinary people were respected by the neo-liberal economic regime in force. The growth rate is also lower because the efficiency of labour - which is not merely a function of the capital available per worker, which is certainly important - in a feudal setting is much poorer than under a well-arranged capitalist contract which respects the rights of workers. Two economies, each having the same capital available per worker, will experience very different levels of labour productivity in accordance with whether the rights of labour have been duly and fairly secured or not. Not only is it true that labour is exploited in India along lines that remain overwhelmingly feudal (as outlined above), there is something else that marks and mars Indian globalisation: the pattern of acquisition of land and natural resources by the corporations through the high offices of governments, both at the levels of the state and the centre. While this has been happening in India ever since one can remember, it is undeniable that arbitrary appropriation of land and resources from powerless, ordinary people in the Indian countryside has accelerated since the inauguration of reforms in 1991 and takes new momentum from the announcement of SEZs (Special Economic Zones). Just a brief - inadequate - listing of cases of such land-grab would serve to remind the reader of the scale of injustices that are being inflicted all around India today: Narmada, Umbergaon, Kalinganagar, Jagatsinghpur, Bantala, Singur, Chhatisgarh, Jharkhand, Plachimada, Dadri, Raigarh, the list is endless. SEZs: The return of the zamindari system? Only time will tell how the powerful forces of globalisation in a still feudal caste-conscious society play themselves out in the future. What is clear is that the state, far from fulfilling its responsibilities to the people in terms of wisely guiding the process of development, has actually become the real-estate broker for the propertied classes. Recently, under the SEZ Act of 2005, it has been negotiating lucrative terms on land and resources being acquired forcibly by Indian and transnational corporations in various regions of India. This is nothing better than an updated version of feudalism. One may describe the pattern of political and socio-economic relationships enabling such unfree market transactions as "corporate feudalism". The number of jobs that the government is claiming the SEZs will create may be up to 500,000 over the next three years (till 2009). The number of 'jobs' (livelihoods would be a more accurate term) lost may add up to well over that number (possibly double that number), for not only are people displaced by such 'development' projects, many others (such as barbers, cleaners, vendors) whose livelihoods are dependent upon the rural agricultural economy, suffer permanent losses too. The government claims to compensate the losers but, in practice, this often does not happen. Even if it does, the payments made for the transfer of land and resources are rarely adequate and, in any case, can never compensate for the loss of social consumption (for example, loss of use of rural infrastructure, like roads or irrigation) and the breaking down of a whole way of life and culture. |
|
Recourse is taken to an anachronistic piece of legislation - the Land Acquisition Act of 1894 - to take over the land of farmers, grazers and forest-dwelling communities, ostensibly for public purposes of development. There are at least three major problems with such an approach to development. Firstly, in a country in which two-thirds of the population is dependent on agriculture, land is a key factor of production. The 1894 Act was drawn up when the population of undivided India was less than 200 million, less than 15% of what it is today. When the pressure on land is so much more acute, it is even more unconscionable for the state to acquire land in such fashion. There has been some talk recently about making amendments to the Act, but nothing concrete has been achieved so far. Secondly, the 1894 Act was made for colonial purposes, such as acquiring land for building railroads for transporting raw materials to factories and finished goods to ports for shipment to Europe and so on. It really has no place in a free India, committed to the economic development of its own people. Thirdly, while the state is trying to nudge farmers out of agriculture - arguing that it is increasingly uneconomical - and sometimes offering them above-market-price compensations for the loss of land, it is consciously or inadvertently contributing to a real-estate boom in the country: the real estate market in India, according to Goldman-Sachs and Merrill-Lynch, is expected to grow eight-fold in the next decade. The hypocrisy is too obvious to belabour. It also results in some acute economic perversities. For instance, the government has often got large landowners to part with a portion of their land because the latter are aware that the arrival of big capital in the region will inflate land prices (including for the remainder of their land) to astronomical levels. Overall, they would benefit hugely from such deals. However, for the small-holder who has to part with all his land, there are no such windfalls from the real estate gambling den. Prime agricultural land is being acquired for SEZs, when the state could as easily develop the 68 million hectares of wasteland in the country (which constitute 21% of the total land area). The reason for this is obvious. Companies and developers understandably prefer a region in which infrastructure - such as roads, power and water - is already well-developed instead of having to be built from scratch. This is ordinarily the case with areas of fertile agricultural land. In some cases, as with the Ansals in Haryana, real estate developers are being given the authority to tax the residents. These are disturbing signs of the privatisation of the state, of the return of zamindari (in corporate incarnation). Struggles and resistance movements are under way throughout the country to defend the rights of millions of people whose lives and livelihoods are entirely dependent upon access to land and natural resources. As an aside, it is important to note that while everyone is aware of the rights of ownership that are being infringed upon, no one is even mentioning the rights of use that have existed in Indian forests, fisheries, pastures and surface and groundwater reserves since times immemorial. For many millions the appropriation of the material basis for their lifestyles will spell doom in the years to come. Even the British rulers did not go this far in the direction of riding roughshod over Indian customs and traditions of millennia. An important connection between the appropriation of land and resources from powerless millions on the one hand and the exploitation of labour on the other has to be made. All too often, as theory also would predict, those who are exploited have no access to productive assets of their own. It is disingenuous to argue, as is commonly done, that people who are vulnerable to exploitation of labour (in India, China or elsewhere in poor countries) would be even worse off if they were not offered jobs by modern industry, that they might even starve to death. In all such cases people have first been dispossessed, albeit sometimes in some previous generation. The answer to the economic challenges that face them is not to suck their blood with rapaciousness all too familiar to hundreds of millions. It is to make land, capital, education and health accessible to them under a paradigm of development quite distinct from the one in place today. However, the international race of corporate totalitarianisms is leading the world, and each competing country within it, in a very different direction. Under the neo-liberal dispensations that prevail today (and there is neither anything new nor liberal about neo-liberalism, if one's definition of freedom involves something other than corporate freedom) each state is driven to increase its power by enabling the corporations operating within its boundaries to maximise their sales, profits, investment and growth. The competition to attract corporate investment takes place both internationally (say, between India and Indonesia) and nationally (between Madhya Pradesh and Maharashtra or between New Jersey and Nebraska), with all too predictable consequences for the living and working conditions of the poor as much as for the environment which enables industrial production to proceed. | | India's Special Economic Zones (SEZs) Cash cows "They worked in China. But will India's zones boost investment, or just divert it?" "It resembles the rows that have dogged every step taken by the two-year-old government led by Manmohan Singh, India's prime minister. The government's economic reformists, of whom he himself is the most distinguished, promote a liberalising measure that will help boost investment, fix India's lousy infrastructure and create jobs. They find themselves howled down by a coalition of their Communist allies, leftists in Mr Singh's own Congress party and other activists, who accuse them of being anti-poor. The latest confrontation, however, over the development of Special Economic Zones (SEZs), is different. This time the criticism comes not just from the usual suspects but also from some of the reformists, many economists and even some leading industrialists. "The idea is simple enough: SEZs are enclaves with streamlined procedures, tax breaks and good infrastructure that will lure investors in export-oriented industries. Many developing countries, including China, have used them successfully. They are not even new in India. In 2000 eight existing "export processing zones", the first of which dated from 1965, were converted into SEZs. But in February India's Parliament finalised a new SEZ law, offering even more enticements. There has since been the bureaucratic equivalent of a gold rush. Companies, including most of India's most famous firms, have filed more than 400 applications to set up SEZs, and 212 have been approved. "Banging the drum for India as an investment destination in London this week, Mr Singh and his commerce minister, Kamal Nath, were able to point to the SEZs as evidence of India's new openness. Mr Nath's ministry hopes they will attract more than $5 billion in foreign direct investment by the end of 2007-a huge amount for India by historic standards. They are also intended to fix India's 'infrastructure deficit' of pot-holed roads, clogged ports and intermittent power. The government hopes that with the incentives available in SEZs, the private sector will make a big contribution towards the $320 billion-worth of investment in infrastructure that India is looking for in the next five years. "That is a laudable enough aim. But the SEZs are under fire on many fronts. Politically, the most sensitive charge, and the one that will probably lead to some change in policy, is that farmers are being forced to sell their land and lose their occupations, and that state governments and developers are profiteering. Sonia Gandhi, Congress's leader, says that agricultural land normally should not be used for SEZs. But under India's Constitution, land is an issue for state governments, not the centre. "Many of the SEZs mooted may simply be property deals. Developers hope to acquire cheap land, put in a minimum of infrastructure and sell it. Only 35% of the land area of a SEZ must be used for production. Even the central bank, the Reserve Bank, seems to have suspicions, classifying loans to SEZs as 'real-estate' lending, which makes them relatively expensive. "Even some investors planning to manufacture in a SEZ think the terms too generous. They include a five-year holiday on profits tax, and exemption from import and excise duties and from some licensing requirements. Rahul Bajaj, chairman of Bajaj Auto, a maker of two- and three-wheeled vehicles, argues that 'any rational businessman would conclude he is better off being in a SEZ.' Since, to qualify for the benefits, a manufacturer in a SEZ need only be a net earner of foreign exchange over a five-year period, rather than exclusively an exporter, firms such as his can use a SEZ to supply some of their domestic market. "The fear of many economists-including some in the Ministry of Finance-is that rather than promoting new business, the SEZs will merely attract investment that would have been made anyway. Instead of finding fresh sources of money for its infrastructure, India would thereby have made things worse by depriving itself of tax revenue. Raghuram Rajan, chief economist at the IMF, expresses concern that India, with its big fiscal deficit, can ill afford this loss. Earlier this year the finance ministry put it at 1,750 billion rupees ($38.3 billion) by 2011. The commerce ministry counters with its own forecast that the SEZs will generate additional revenues of 440 billion rupees. "One of the big differences between India's SEZs and China's is in size. Although Reliance Industries, India's biggest private-sector company, is planning enormous, town-sized, SEZs near Mumbai and in Haryana, near Delhi, most of the others are tiny. The minimum area for a 'multi-product' SEZ is 1,000 hectares (3.9 square miles), for a 'product-specific' zone, it is 100 hectares, and for information technology, biotechnology and jewellery, just ten hectares. By comparison, Shenzhen, biggest and most famous of China's original SEZs, covers 126 square miles. That scale was a huge factor in its initial success- along with the presence, just over the border in Hong Kong, of labour-intensive manufacturers wanting to lower their costs. Enjoying neither of these advantages, India's smaller SEZs may do more for their promoters than for India." |
InfoChange News & Features, January 2007
|
