Globalisation and Social Exclusion : Experience from
India
Veeraiah Konduri
The contrasting
emergence of two Indias, quite opposite to each other, is clearly evident ever
than before. Though the process of inequality accelerated along with the
implementation of neoliberal economic reforms since way back in 1991, it
started establishing itself its cruel face during the last few years. A series
of reports released by international organizations including Forbes, Global
Wealth Data Book captured this contrasting images of India. The share of richest 1 % increased from 39 % to 49 % of
total wealth produced and share of top 10 % increased from 66% to 74 % during
this period. That means only 10 % of population commands 74 % of nation’s
wealth and remaining 90 % of population distributes left over 36% of nations
wealth, which shows magnitude of income inequalities. The world richest person
Bill Gates and his family needs 218 years to spend all the wealth accumulated
by him.
According to
Oxfom, there are 153000 high net worth individuals in India in 2013 whose
number is estimated to have gone up in 2014. A conservative estimation of world
poor, on per capita income basis, is estimated to be 160 crores and out of that
44 crores are in India only. Thus, under the reforms era, India became home for
about 40 % of world poor. Global wealth inequalities reached such a phenomenal
proportion that a mere 1.5 % of tax
imposed on the wealth owned by the world richest would yield $ 74 billion
income for the governments, as estimated from Forbes data as on August 2014.
This much of income would have helped UNESCO to bridge the education gap in the
world poor countries, whose budget is falling short by an estimated $26
billion. Similarly World Health Organisation estimated that the world health
budget is short by $37 billion. If the amount raised by imposing mere 1.5% of
tax on the world richest is spent in income guarantee schemes for the poor, it
is estimated that an average, 25 million families can be saved from poverty
trap annually. This inequality is the result of finance capital induced
globalization and the deepening intensity of globalization would result in much
more deepening inequalities.
In sum, the
reasons for such inequalities unseen in history
lies in the biased development model that is under implementation in the
world. The policies of globalization favored market over the governments,
capital over the labour, technology over human skills, skilled over unskilled,
cities over villages, industries over agriculture, speculation over
manufacturing. According to the Asian
Development Bank findings, the share of labour income in the net wealth
produced declined from 36.5 % in 1993 to 21.8 % in 2012. The factors and
process’ accelerating the over all inequality varies from country to country.
In each country, these factors will be shaped according to their own political
economy settings. Let us see how this process of inequality is being
manufactured in India of late. Before that a brief presentation about the
levels of inequalities in India
At the time of
beginning of reforms in 1991, there are only two dollar billionaires in India
and they owned only $ 3.2 billion net worth of assets. After two decades of
economic reforms, their number increased to 46 and their combined net worth
also rose to $ 176 billions. 85 people earning on an average 668 million a day
where as 74 % percent of population that amounts to more than 100 crores having
a person who earns Rs. 5000 a month. Net worth of billionaires in India
increased by 15 times which is sufficient to eliminate poverty from India twice
– that means about 70 crores of people can escape the poverty trap, if this
inequality is contained. This is not an analysis by a Left intellectual or a Communist Leader.
The head of International Monetary Fund (IMF) said this while addressing a
gathering during her latest visit to Delhi. The successive governments in India
are following the policy footsteps of the same organization. Starting from
Monteksingh Ahluwalia to Arvind Pangaria, who is heading the newly created Niti
Ayog to Raghuram Rajan, Reserve Bank of India Governor, all did their
apprenticeship by serving IMF in various capacities. They are the people who
crafted the economic policy which deepened globalization policies in India as
well as accelerated the inequality. Results of these policies crafted under the
guidance of neoliberal think tanks are here to see.
At the time of
economic reforms, the percentage of poor, who could not earn daily income of $
1.25 in India hovered around 40% mark which jumped to 75 %. This phenomena is
once again confirmed by the findings of Socio Economic and Caste Census
released recently. Even according to the 70th round of National
Sample Survey Organisation confirmed that for about 41.2 % of rural population,
principle source of income is wage labour where as 57.8 % are rural
agricultural households, whose incomes are less than Rs. 5000 per month. The
SECC survey placed this figure at 74%. Not only that. The percentage of growth
of per capita income slowed down from 25.75 % in 2013-14 to 21.61 % 2014-15, as
stated on record by minister for statistics and program implementation on July
22nd 2015 in Parliament. This reply is based on the revised Central
Statistical Organisation’s data, whose authenticity is in doubt. Even at this
scaled up estimates, per capita daily income could not make out to be half of $
1.25 norm. If we go by the unrevised estimates, it would be more verse. Thus
the accelerating economic reforms and further market integration would result
in increase of widespread inequalities.
Let us consider
below, some more details. In India, over the last twenty years, the cost of
production decreased by 6 % and net profit of companies increased by same
level. That means, the income of employees decreased and income of corporate
increased. In volume wise, this decreased cost of production resulted in saving
of Rs. 2.06 lakh crore rupees. And interestingly, during the same period, the
profit of selected companies have gone up by Rs. 1.50 lakh crores. That means,
what ever the labours loss is the gain for capital during this period. This is
one factor that perpetrates the economic inequality in the country. More over,
it is only the collateral benefit of new economic policies for Indian corporate
and they are in addition to direct benefit handed out to these very corporates.
These direct benefits in the name of tax foregone, became an effective
instrument of wealth transfer from crores of poor people to handful of
corporate companies. Let us try to understand how this is happening and how
this is deepening the growing inequalities from the data available in the
budget documents themselves.
The government
of India granted several benefits that helped the Indian companies establish
their hegemony not only over the domestic market but also having their hold in
much wider world market. Similarly to support corporate sector in the name of
withstanding the ongoing global capitalist crisis, government of India designed
an intelligent policy tool, that is its willingness to forego the tax income
otherwise which should have accrued to the government. Over the last eight
years from 2007-08 to 2014-15, a total of 39, 47,731 crores of tax concessions
were showered on the richest individuals and firms in India. In the table given
in this bulletin, composition of subsidies and tax concessions and their
percentage in GDP clearly establishes the unequal distribution of wealth and
benefits by the government itself. During the same period a total of 14,43,943
crores were spent on account of various subsidies. The amount spent on
subsidies is less than half of what the government stashed in the accounts of
corporate in the name of tax foregone. Similarly the table also establishes the
unequal distribution in terms of percentage to GDP as well. The percentage of
total major subsidies also stand one third of what it is given to the rich and
corporates. All these subsidies are considered to be part of non plan
expenditure. The share of major subsidies decreased by 1.6 percentage in GDP
during this period.
As the
government and economists are passionate to explain the policy implications in
terms of per capita as proof of their success. This is the attempt through
which the neoliberal intellectuals are garnering the support from middle class
and other vocal sections to globalization.
We shall also try analyze per capita implications of major subsidies as
well as the tax concessions by looking at the beneficiary base. According to
official estimates itself, in India 40,38,05,000 are poor. This figure is
derived basing on the Rangarajan committee estimates of poverty. . Though they
are considered to be an underestimation, for the time being let us confine to
this figure only for the sake of argument.
The number of companies that benefited by tax concessions year wise data is also provided in the same table. For
the year 2007-08, per capita benefit accrued to officially estimated poor in
India through major subsidies stands at Rs. 1650.27 only. For the year 2014-15,
the same stands at Rs. 6225.78. Where as for the same year, the benefit accrued
per company due to tax concessions stands out to be Rs. 69,44,800, the same
stands at Rs. 1,04,33,800 for the year 2014-15. In the year 2007-08, the poor
could get only 0.000237th share of what the corporates benefited
under tax concessions and the same stands at 0.000596th share for
the year 2014-15. Because of this unequal distribution of nations’ wealth, the
growth in per capita income also slowed down from 12.3 in 2013-14 to 10.1 in 2014-15.
Thus in 21st
century, government became an effective instrument in the hands of neoliberals
to ensure the reverse distribution of wealth
which is otherwise known as accumulation. The accumulation process
explained above is nothing but part and parcel of primitive accumulation. And
it is the same time the number of billionaires increased abnormally and India
occupied 4th position in growth of number of billionaires. This
clearly indicates the fact that a new section of billionaires that are emerging
in India are only emerging with the government propup and enormous loot of
nation’s resources at the cost of keeping people hungry, undernourished,
stunted and illiterate, jobless and with out minimum standards of dignified
living. The income of billionaires is not increasing because of the growth in
size of production and there by profits. Their income is growing just because
the successive governments adhered to neoliberal understanding of budget
management. Due to this the inequality is not only increasing between rural and
urban but also with in rural and urban households. Thus under the neoliberal
reforms, the wealth and benefits are being shifted from rural and urban, poor
to rich, peasantry to corporates, asset less agricultural workers to asset holding
classes. This shift is causing irreparable stress on rural India and increasing
intensity of rural distress.
The
constitutional mandate for governments in India is clearly enshrined in
preamble which mandates equality of opportunity and the directive principles
which mandates the governments to strive for minimizing the inequalities and an
egalitarian order. But the outcome of the two decades of neoliberal polices in
India is in clear contravention to aims and objective of constitution, which
should be resisted at any cost. Social protection is only the cushion the poor
can have against such growing in equality. Social security schemes and policies
will play an important role in reducing poverty as well as minimizing the
negative effects of inequality. Right to food, right to work, right to shelter
and right to health and education are the key components of social security.
Land distribution confers an economic and social security for the poor.
Sufficient leverage and proper implementation of social protection can promote
economic and social development by ensuring that people enjoy income security,
efficient access to health, ability to
manage risk and empowers them to take
advantage of economic opportunities.
The global
average on social security spending is on an average 8.8 % of GDP where as in
India this is very low and is only 5.2 % of which includes 3.5 % spending by
the state governments. The 12th Plan document recommended for
increase in social security spending to 4.37% of Center’s GDP from existing
levels. The demand for social security as right not as privilege must be widely
canvassed. This is only the way to achieve the Millennium Development Goals by
India. Unfortunately we are having a Niti Ayog members who terms these goals
are unrealizable. This nothing but to disengage the government from its duty of
achieving these goals. This is in tune with the Modi’s governance mantra – minimum government. The minimum
government is going to hurt the rural poor and asset less class of agricultural
workers more severely. The experiences of first year of Modi government is
sufficient proof for that. That is why any struggle against the increasing
inequalities must be organized around the slogan of social security to rural
poor with enhanced public spending. This slogan shall work as basis for the
mobilization of rural poor in coming days. Towards this end, we shall also
mobilise the public opinion in support to the cause of rural poor.
