Thursday, March 3, 2016

Globalisation and Social Exclusion : Experience from India

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.


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