– B. Sivaraman
The NDA has been boastfully trumpeting that there is a “Feel-Good Factor” among voters in favour of the government. Drunk by the victory in the assembly elections, they are going in for early general elections to the Lok Sabha. Behind this propaganda there is a cunning ploy to pre-empt any anti-incumbency sentiment and to ‘manufacture’ a mandate for another term. This “Feel-Good” fraudulence also reveals the arrogance of the NDA circles who are feeling heady about victory even before the election campaign could start. To make a reality check, below we examine six vital areas of NDA’s (mis)governance, viz., agriculture, unemployment, social sectors, dismantling of the role of the state in the economy, poverty and prices. Our analysis reveals that if at all any section “feels good” it is only the nouveau riche crowd that is emerging as the main social base of the BJP. The vulgar attempt to impose the euphoria of a tiny pampered minority on the plight of the deprived and pauperized many is nothing short of a cruel mockery with the masses. Fascist power can only sustain itself on the basis of a cynical combination of violence and fraudulence.
While the food stocks are mounting in the FCI godowns, starvation deaths among the rural poor are multiplying. On the one hand, the country is holding nearly half of the annual production of rice and wheat in public stock, and on the other, every fourth Indian is underfed even by the standard of minimum calorie requirement for a healthy and active life. There is an inverse relation between foodgrain procurement and distribution. Similarly, the country has been facing large shortages of pulses and edible oils and has now to meet about one-fifth of the demand for pulses and close to two-thirds of the demand for edible oil from imports. These imports are, in turn, having an adverse impact on producers in the unfavourable dry-land areas, whereas the surplus of wheat and rice is being disposed of as export at prices below the BPL prices and at a huge cost to the state exchequer. Food and Agricultural Organisation’s (FAO) report the State of Food Insecurity in the World 2003 , indicates that over a fifth of India’s population still suffers from chronic hunger. Starving tea plantation labourers are surviving by eating snakes and rats. On the other hand, mountains of food stocks are rotting in FCI godowns.
There is an acute agrarian crisis in the country and in the absence of procurement by state agencies like FCI, the farmers are resorting to distress sales, selling grains to private traders below the state-declared Minimum Support Price (MSP). The MSP announced by the Commission for Agricultural Costs and Prices (CACP) only remains on paper and the import tariffs on many commodities are not aligned with the MSP in the liberalized trade regime. As it is, the system of state procurement is being followed only in five or six states and the NDA government was out to abolish even that. The government appointed a committee headed by Abhijit Sen that recommended foodgrain procurement throughout the country that the Vajpayee government has not implemented. Rather, the BJP has been toying with the idea of completely abolishing the system of Minimum Support Prices for agricultural commodities which has been in existence since the mid-1960s and even doing away with state procurement of foodgrain, pointing to mountain-l oads of food stocks accumulated with FCI.
In India, capitalism in agriculture was buttressed by heavy state subsidies and support prices, which has now run into an inevitable crisis. The Green Revolution was a case of betting on the strong. Instead of overcoming the crisis by broadening the base of capitalist farming by primarily relying upon small, marginal and medium farmers and increasing public investment in agriculture, the Vajpayee government is further narrowing down the base of India’s crisis-ridden agrarian capitalism to an even narrower stratum of strong kulaks in the name of corporatisation of agriculture. In this scheme of things, only a tiny minority of kulaks will thrive on the basis of capital-intensive farming while millions of small and marginal peasants are liable to get increasingly pauperised.
Even in Punjab the Green Revolution has run into a crisis. The compound growth rates of an average cultivator’s income were 9.52, 8.38 and 1.21 per cent per annum in Punjab during the 1970s, 1980s and 1990s respectively. Taking the country as a whole, production of rice, which increased at the rate 3.48 % per annum in the 1980s, increased only by 1.87% per annum in the 1990s. The rates of growth of wheat output during the same periods were 4.38 and 3.21 per cent respectively. There was no increase in per person cereal production during 1990-91 to 2000-01 and the entire increase in stocks was due to the decline in per capita cereal consumption caused by the steep rise in real prices of cereals in this period. Yet, the BJP wants to relegate food marketing to private trade as big private traders constitute one of the important class bases of the BJP. The FAO has warned of a food crisis in India if the trend continues notwithstanding the present high stocks of foodgrain.
The disposal of foodgrain through the public distribution system, which reached a peak of over 26 million tonnes in 1996-97 (the year before the introduction of the new targeted PDS), plummeted to 11.3 million tonnes in 2001-02. Yet, the Vajpayee government refuses to recognize the present situation as a crisis and have failed to act on a war footing. The total stock of foodgrain as on July 1, 1997 was reported at 21.4 million tonnes. The stock rose to 62 million tonnes by July 1, 2001 and declined somewhat during 2002 because of exports at prices cheaper than BPL prices. Rodents are having a feast in the FCI godowns while foodgrain prices for PDS cardholders – both BPL and APL – were increased repeatedly and hence the off-take drastically declined. The food subsidy, which stood at Rs.5,166 crore in 1996-97, when the public distribution reached a peak of 26 million tonnes, was projected to increase to Rs.13,675 crore in 2001-02, even though public distribution had nose-dived by then. In fact, only a very small portion of the subsidy goes to actual PDS beneficiaries. The rest is the carrying cost of the FCI. The FCI is spending a carrying cost of Rs.2.20 per kg. The carrying cost of excess grain at the rate of 40 million tonnes would work out to Rs.9,000 crore. [The Business Line, March 28, 2002]
The signing of the Agreement on Agriculture in WTO binds India to liberalise its external trade and operate within the rules laid down by the WTO. The farmers are already reeling under their inability to compete with the cheaper imports. Instead of addressing the real issues, the NDA government is introducing some fancy schemes designed to benefit only kulaks. The highlight of the agricultural diversification proposals outlined by Finance Minister Jaswant Singh is a thrust into horticulture, for which a new central scheme with an initial outlay of Rs. 50 crore is to be launched. On the one hand, initiatives by the Centre include the setting up of around 40 agro-export zones for fruits, vegetables, flowers and other crops, food parks for processing and value addition, and transport assistance for export of horticulture and floriculture items. The total sectoral outlay in the budget for this is Rs. 173 crore for 2003-04. On the other hand, however, farmers lack basic infrastructural facilities. Just the lack of proper cold-storage facilities results in an estimated loss of produce worth Rs. 35,000 crore annually. Even as the NDA government is extending concessions to corporatisation of agriculture it has failed to pass any comprehensive legislation for agricultural labourers.
Finance Minister Jaswant Singh announced in the 2003-04 budget a steep hike in the issue price of fertilisers – by Rs.240 per tonne for urea, and Rs.200 per tonne each for diammonium phosphate and muriate of potash, as well as for complex fertilisers – which would have reduced the annual subsidy outgo by over Rs. 700 crore. He had to partly rollback the steep hike in the face of strong public criticism. Actually the bulk of the subsidy goes to fertiliser units than to the farmers. The NDA government was also conspiring to decontrol fertiliser prices and leave the farmers totally at the mercy of the fertiliser barons. Already unit consumption of fertiliser in India is lower than that of Bangladesh.
In 2001-02 agricultural commodity imports was valued at $2.3 billion, two-thirds of which was accounted for by a single commodity namely, edible oil. In recent years, edible oil, accounting for nearly 60-65% of the value of total agricultural imports, has been the single largest import item.
There was a substantial increase in the import of pulses during 2001-02 with its share in total agricultural imports rising to over 28%.
Owing to the removal of QRs the share of agricultural imports to total imports of the country, in recent years, has increased from around 4% to 5%.
Lifting of QRs on imports since April 2000 has resulted in import of a number of agricultural products that include tea, coffee, cotton, rubber, pepper, cardamom and clove etc. As a result, the value of agricultural imports went up from US $1.8 billion in 2000-01 to US $2.3 billion in 2001-02. Agricultural imports as percentage of total imports increased from 3.7% in 2000-01 it to 4.5% in 2001-02. [All figures from Economic Survey, 2002-03]
Needless to say, cheaper imports have forced many plantations to close down while throwing thousands of labour into absolute penury.
10 million large farmers of USA and OECD countries receive over a billion US dollars of subsidy each day. In contrast, the 110 million farming families of India in general struggle to produce under conditions of smallholdings and poor access to technology, farm equipment, capital and remunerative markets. Still, Vajpayee government has buckled before the developed countries’ pressure to remove QRs.
NDA’s Claim : “The flow of institutional credit to agriculture has witnessed a sharp increase of 21 per cent in 2001-02 compared with 14 per cent in 2000-01. This seems to have had a positive impact on capital formation in agriculture in 2001-02. Under the Kisan Credit Card (KCC) scheme, more than Rs. 64,000 crore has been sanctioned till September 2002. The scheme intends to cover all eligible farmers by March 31, 2004, and is also extending personal insurance cover (for accidental death, permanent disability etc.) to its beneficiaries. The National Agricultural Insurance Scheme (NAIS), which extends to all food crops, had covered more than 20 million farmers till rabi 2001-02”. [Economic Survey, 2002-03]
The share of investment in agriculture as per cent of GDP declined from 1.6% in 1993-94 to 1.3% in 2000-01 when the NDA government had taken over. Advances to agriculture also declined from 16.4 % in 1991 to 15.3 % in 2002, well below the target of 18 % of net bank credit. In the year ending March 2003, direct agricultural advances amounted to only 10.8 per cent of net public sector bank credit. Are farmers expected to feel good about this? Let’s look at the NDA’s capital formation in agriculture, in detail.
Gross Fixed Capital Formation for Agriculture rather than Gross Fixed Capital Formation in Agriculture being compiled by National Account Statistics encompasses broader activities fully or partially meant for agriculture such as production of fertilizers and pesticides, development of agricultural markets, rural roads and communication, agricultural education, research and development of agricultural technology etc. The assets considered for compilation of capital formation in agriculture by NAS are only assets created by construction activities, machinery and equipment and change in stock.
In 2001-02, GFCF in agriculture at 1993-94 prices, amounted to Rs.19,880 crore and GFCF for agriculture turns out to be Rs.28,830 crore. The share of ‘GFCF in agriculture’ in ‘GFCF for agriculture’ has declined over the years, from 79% in 1980-81 to 69% in 2001-02.
The broad trends in both GFCF in agriculture and for agriculture are similar during the period 1980-81 to 2001-02. As per cent to GDP, GFCF in agriculture has declined from 3.4% in 1980-81 to 1.6% in 2001-02. The corresponding share of GFCF for agriculture has also halved during this period. The deceleration has been more pronounced in the 1990s as compared to the 1980s. These can be seen from Table 1 below:
|Gross Fixed Capital Formation in and for Agriculture at 1993-94 Prices (Rs.Crore)|
|GFCF||Percent Share in GDP of GFCF|
|Year||GDP||In Agriculture||For Agriculture||In Agriculture||for Agriculture|
The share of GFCF in Public Sector in agriculture has also declined in relation to GDP. The same is true of Public Sector GFCF for agriculture. There has been, therefore, a long-term deceleration in the share of capital formation in agriculture in GDP at both aggregate and Public Sector level. In fact, the shares of GFCF in agriculture and for agriculture in GDP have declined much more sharply in the Public Sector, as would be evident from the two tables
|Gross Fixed Capital Formation in and for Agriculture at 1993-94 Prices (Public Sector) (Rs. crore)|
|GFCF (Public Sector)||GFCE (PS) as % of GDP|
|Year||GDP||In Agriculture||For Agriculture||In Agriculture||For Agriculture|
GFCF in agriculture now accounts for less than 10% of total GFCF. The ratio seems to have declined very sharply during the 1990s.
Currently, GFCF for agriculture at 1993-94 prices account for about 12% of aggregate capital formation. As against this, the contribution of agriculture to the GDP is currently about 24%. Clearly there is a strong case to increase investment in agriculture in total capital formation in the economy. Even in the case of the Public Sector, the share of agriculture in total Public Sector capital formation has declined over the years.
[Source: Report of the Committee on Capital Formation in Agriculture, Directorate of Economics and Statistics, Department of Agriculture and Cooperation, Ministry of Agriculture]
Though the total institutional credit for agriculture increased from Rs.22,032 crore in 1995-96 to Rs.41,764 crore in 1999-2000, it remained much short of Ninth Plan targets. As against this, a draft strategic plan prepared by the Union Ministry of Agriculture, through a working group appointed by the ministry, points out that in order to achieve the envisaged growth rate of 4.5 per cent in agriculture and allied sectors during the Ninth Plan period, 1997-2002, the estimated credit support required from institutional sources (banks) needed to be at Rs. 2,29,750 crore. Of this Rs. 80,350 crore would be for medium and long-term credit and the remaining Rs. 1,49,400 crore for meeting short-term credit requirements. From the above figures it can be seen that the annual credit to agriculture falls far short of the Plan targets. No wonder then that the growth rate of agriculture was -0.6% in 1999-2000, –5.4% in 2000-01 and –11.9% in 2002-03.
For the Tenth Plan period (2002-07), the credit flow into agriculture and allied activities from all banking agencies is projected at Rs.7,36,570 crore, which is more than three times the credit flow during the Ninth Plan. The target for credit flows to agriculture and allied sector for 2002-03 was set at Rs.82,073 crore. However, it was not met.
The definition of ‘credit to agriculture’ is a highly manipulated one and even credit given to agribusiness and to FCI to hold food stocks are included by the banks and the government as credit to agriculture.
The 1999-2000 Budget had proposed the formation of Water Users’ Associations for the sole purpose of collecting water charges from the farmers. The NDA government was also seeking ways and means to privatise irrigation. The plan investment on irrigation during the five years of the present NDA government had been negligible. This means that the NDA government had virtually given up on irrigation in the Central sector as can be seen from the table below.
|Irrigation Expenditure by the Centre (Rs. Crore)|
[Source: Different budget documents.]
The NDA government has been boasting about its insurance scheme for farmers. Let us examine the extent of coverage.
|Season||Farmers||Area||Sum||Total Ins.+||Subsidy to Small|
(+As on 17.10.2000)
According to Census 2001 there are 127,628,287 cultivators in India. Out of them the crop insurance scheme covers only 618544 farmers, i.e. a meagre 0.48%.
According to the Fertiliser Association of India statistics the net sown area in 1995-96 was 18,65,61,000 ha. Out of this, the crop insurance scheme covers only 6,76,595 ha. i.e. a miserable 0.35%.
Moreover, the kulaks are claiming insurance amount on false pretenses.
The story of edible oils under the NDA government is a heartbreaking one. With the Vajpayee government removing QRs (quantitative restrictions) there has been a flood of cheap edible oil imports drowning our domestic farmers. Imports accounted for as much as 60-65% of the domestic consumption. The government has been tinkering with duties without effectively checking imports and enabling the domestic farmers to produce oil seeds at competitive prices. In fact, the country was nearing self-sufficiency in oil seed production in the mid-1990s when the import duties were drastically slashed, destroying the growing domestic capacity. The NDA government is also continuing with the earlier Oil Palm Development Programme, the showpiece of the import substitution plan, which has been a complete failure, while both the outlay and target area have been drastically slashed in the 10th Plan by the NDA rulers. Grandiose policy announcements have rarely been followed up by action to encourage farmers to take up oilseeds cu ltivation and the Technology Mission on Oilseeds is now lying dormant.
The NDA has been flaunting the Kisan Credit Card scheme as its new project. But it is a very cheap tactic. The traditional credit received by kisans is being entered into new cards called Kisan Credit Cards. Only the cards are new. The kisans are the same. The credit is the same. Worse still, lakhs of kisans have been issued only cards but no credit.
Indebtedness has been a major cause behind the growing suicides among farmers. With subsidies disappearing and public investment declining, how long can agriculture remain viable and for how many on the basis of sheer credit even if it is available? How will the kisans repay the credit? The credit cards will by no means ease the debt burden and kisans remain doomed to die under a mounting debt burden.
The Rural Infrastructural Development Fund (RDIF) was established under NABARD in the early ’90s, mainly to provide loans to the state governments to finance minor irrigation schemes and other small infrastructural schemes. Sanctions under RIDF schemes are linked by the Vajpayee government to neo-liberal reforms to be undertaken by states in respect of agricultural marketing, irrigation, electricity supply etc. The states are being forced to privatise these or collect user charges at market rates.
2002 witnessed the worst drought in three decades. 2003 July saw the lowest rainfall in 100 years. Every time there is a drought or floods in some parts of the country, the Vajpayee government engages in some token fire-fighting exercises and has not bothered about any long-term protective measures. The drought was not declared a national calamity to avoid allocating National Calamity Relief Fund to the states. The Centre reacts only if an NDA ally like Chandrababu Naidu rings alarm bells. Agricultural labourers are the worst hit by the fall in farm employment and rise in food prices. The NDA government took only some ameliorative steps. There was no increase in rural development programmes and except for deferring loan repayment there has been no other assistance to farmers. Organising repairs of major canal irrigation systems, drainage channels and medium and minor public irrigation works on an emergency basis was not even attempted. The foodgrain allotted to the food-for-work programmes found their way into the hands of private traders, thanks to corrupt politicians.
It is for the NDA rulers to explain which is the ‘feel-food’ factor – declining PDS off-take or starvation deaths or shortfall in investment in agriculture or cheaper imports threatening the farmers?
The Finance Minister made a pompous announcement of a ‘Second Revolution’ in agriculture after the Green Revolution and declared a “spending” of Rs.50,000 crore without actually allocating a single additional rupee. It was another cruel joke on the voters.
According to an EPW editorial, out of lakhs of candidates who appeared for the selection tests for recruitment of ‘khalasis’ or railway gangmen who needed but an 8th standard pass, in several centres a large number were graduates, postgraduates and engineers. There were riots and stampedes among applicants rushing towards the railway khalasi recruitment centres in Bombay and Assam. Such is the desperation for jobs that when Indian Railways advertised 22,000 posts last month, 740,000 people applied. This gives an idea about the severity of the unemployment problem. Corrupt politicians are making big money from unemployment. According to reports, the going ‘rate’ for the post of a schoolteacher in Kerala, where educated unemployment is unusually high, is Rs.5 lakh. Unemployment is very severe in rural areas. Non-farm employment has declined during the NDA period and the share of agricultural labourers in the country is increasing but their employment opportunities are declining.
The number of jobless has grown to 35 million people, or 9.21 per cent of the workforce, by 2002. Another 20 million people will enter the labour force in the next four years. The figure is expected to rise to 40 million by 2007 or 9.79% of the labour force by 2007. According to the Planning Commission there are 212 million young people (aged 14-24) but only 107 million have jobs. [Feeling Good, But Where are the Jobs, The Economic Times, January 18, 2004] Kerala recorded highest unemployment rate of 20.97% of labour force followed by West Bengal at 14.99% and Tamil Nadu at 11.78% during the NDA period.
|Employment in organised sector|
[Source: NSSO, Planning Commission]
Since 1997, the public sector has shed about 15 per cent of its workforce—four and a half million jobs. The private sector has grown in some areas, but it has also shed a million jobs or so.
Private organised sector reports net job reduction during the NDA period. Companies like Premier Automobiles, where wages were 17% of total costs, became extinct. Survivors like Tisco and Bajaj Auto are slashing their workforces as fast as they can. Tisco has cut its workforce from almost 80,000 to 43,248 last year, yet looks bloated compared with a new rival like Jindal Iron and Steel Co, that employs less than 1,500. In 2003-04, Tisco cuts its workforce by 6.5%, L&T by 4.6%, Century by 4.1%, Bajaj Auto by 8.5%, Ashok Leyland by 10.5%, Madura Coats by 30.1%. [Where will Jobs Come From? -- The Economic Times, February 14, 2004]
The 57th round NSSO data paints a scary picture: only 43 per cent of the rural and 36 per cent of the urban people are gainfully employed! No wonder that a Planning Commission task force report warned that unless steps were taken urgently, unemployment in 2007 will reach 40 million, with severe socio-economic impact. [Outlook, February 2, 2004]
Nearly 20% of the engineering graduates in the country in 1990s are unemployed and the three states – Tamil Nadu, Karnataka and Andhra Pradesh – account for three-fourths of them. And the figure runs into lakhs. India is depending on low-end jobs outsourced by the US.
NDA’s Claim : “Additional 20 million jobs will be created during the Tenth Plan.” [Economic Survey, 2002-03]
Reality : According to the figures given by the Economic Survey, organised sector employment as on March 31, 2001, was 27.8 million. Since the NDA government took over, there was a decrease of 0.6% in employment in the organised sector (about 1.6 lakh jobs) in 2001 as compared to the previous year. Public sector jobs declined by 1.8 lakh in 2001 over 2000. What to speak of an increase and 20 million new jobs?
If India is to create even 10 million jobs the economy has to grow at 10% per annum and under the NDA government the average growth rate was about half of that (5.3%).
The data available from the 939 employment exchanges in the country indicate that as on September 2002, the number of jobseekers registered with the employment exchanges was of the order of 4.16 crore , out of which, around 70% are educated (10th standards and above). The number of women job-seekers registered was of the order of 1.08 crore (26% of total job-seekers). The placement effected by the employment exchange at the all-India level during 2001 was of the order of 1.69 lakh. [Economic Survey, 2002-03]. At this rate it would take 246 years to provide jobs for all! The sons and daughters of great grand children of those who are presently waiting for jobs would be ready by then to take up jobs!!
III. Social Sectors
US spends close to 28% of its gross domestic product (GDP) on social security schemes while UK, France and Germany spend 29%, 45% and 55% respectively. India spends a measly amount of 1.1% of its GDP on social sectors. [ The Economic Times, December 31, 2003]
NDA’s Claim: “Rural electrification has been proceeding fast, with ten states having achieved 100 percent village electrification. The country is slated to electrify all villages by 2007. Apart from electrification, rural infrastructure is being strengthened through the Pradhan Mantri Gram Sadak Yojana (PMGSY), under which more than 10,000 rural roads have already been constructed”. [Economic Survey, 2002-03]
Reality : 1.6 lakh villages remain unconnected by all-weather roads.
About 40% of the rural habitations are not connected by all-weather roads. [Source: Asian Development Bank’s website adb.org]
In order to achieve the objectives of the Programme, a requirement of Rs. 60,000 crore has been estimated for the Programme. For the present, available source of funds, is 50% share of the cess on High Speed Diesel (HSD) amounting to approximately Rs. 2500 crore per annum, which is clearly inadequate to finance a Programme of this magnitude in a definite time-frame (2000-2007). [Pradhan Mantri Gram Sadak Yojana (PMGSY) report.]
“Around 80,000 villages in India are yet to get power connection”. [Planning Commission’s Working Group Report to the Power Ministry.]
It is a matter of shame for all of us that even after 56 years of Independence, 63 per cent of all rural households in India do not have electricity and use kerosene for lighting. Even for those rural areas, which are electrified, there is a tremendous shortage of power supply. Thus it is not uncommon for these areas to have 10-15 hours of blackouts and brownouts every day. [Project Monitor, January 8, 2004]
According to a study, 28% of India’s rural population have no access to safe drinking water. A report by Centre for Science and Environment (CSE) revealed that 12 soft drink brands of Coca-Cola and Pepsi in India contained pesticide residues which exceeded EU norms. If the water sold in the bottles by the cola giants is itself so shockingly impure, what standards do we have for potable water for the rural and urban poor population?
Vajpayee government has been announcing so many fancy schemes on housing. Still, nearly one-fifth of Indian household are living under thatched roof and one-third of them have mud walls, according to the 2001 census. At the current rate of allocation for housing by the NDA government it would take several decades to build pucca houses for all.
Today 30 million Indian children are unable to go to school. Higher education is beyond the reach of poor students. A brief scrutiny of the BJP’s record on the education front.
As against the declared goal of 6% of GDP, the total expenditure on education in India is about 3.3% only. Even Sub-Saharan countries invest 9.6% of their GDP in education.
The Tenth Five-Year Plan allocation for education was Rs.43,825 crore. But the budget allocations by the NDA government fall much short of the Tenth Plan target of an average Rs.8500 crore per year. The allocation in 2001-02 (BE) was Rs.5,920 crore. The allocation in 2002-03 (BE) was Rs.7,025 crore. The NDA is cheating people with bombastic plans without allocating the necessary money.
The Constitutional (93rd Amendment) Bill was passed by the NDA government in 2002. The professed goal is to achieve Education for All by making free and compulsory elementary education a fundamental right for all children in the age group of 6-14 years.
The Truth Behind the Record Forex Reserves
India’s high forex reserves is supposed to be one the “Feel-Good” factors. What is the truth behind this claim?
Claim: Record foreign exchange reserves – $100 billion.
Reality: Foreign debt is also – $100 billion.
Till February 5, 2004, the net foreign institutional investment was US $23.67 billion
NRI investment was US $28.1 billion
With more than half the money being ‘hot’ which can flee out of the country any moment, the NDA government makes a big boast of high forex reserves.
India’s trade deficit per year during the Vajpayee period was around US $6 billion.
According to the Central Vigilance Commission the black money in India stashed away in foreign banks is worth 40% of India’s GDP. A sizable part of the foreign exchange reserves accounts for this black money returning home. It is this money which has fuelled the stock market boom. An article in the Economic Times estimates that 45% of the FII accounts of Indian black money. [The Spectre of ‘Reverse Hawala’, Economic Times, January 27, 2004]
And how the reserves are being spent? A few days before the Interim Budget, it was announced that anybody could walk into the office of a vendor of foreign exchange and buy $25,000 with no questions being asked. This can be done not once but year after year. There is no stipulation how the foreign exchange so acquired will be spent. One may go to Dubai with family for shopping and holiday or to the dream city of Las Vegas to eat, drink and gamble. [Mainstream, February 7, 2004] This is nothing but globalisation of the lifestyle of the rich.
The India forex reserves are also being used to finance the US war in Iraq as they are being invested in low-yielding US treasury bonds.
Out of the estimated population of 193 million in the age group of 6-14 years in 2002-03, nearly 19% did not attend school, the very year when Vajpayee made Education for All a fundamental right in the Constitution. In 1999-2000, nearly 21% in this age group did not attend schools. What then is the meaning of this new “fundamental right’?
The student drop-out ratio at the primary school stage was about 42%.
At the primary level, the drop-out rate increased from 40.3% in 1999-2000 to 40.7% in 2001. At the upper primary level, the drop-out rate was 54.5% in 1999-2000 and 53% in 2000-01. Drop-out rates for girls were 41.9% at the primary level and 57.7% at the upper primary level in 2000-01.
The teacher-pupil ratio at the primary level worsened to 1:43 in 2000-01.
2001 illiteracy rate was 34.6 at the all-India level. It was more for dalits, tribals, Muslims and women. Without bringing about any change in the ground realities the Vjapayee government brought in a Free and Compulsory Education for Children Bill, 2003. [All figures taken from Economic Survey, 2002-03].
The Union Budget 2001-02 proclaimed: Education Guarantee Scheme to provide an elementary school in every habitation, which does not have one within a radius of 1 km. At least 1.8 lakh such schools will become operational during the next three years of the Ninth Plan. Gram Panchayats will play lead role. This turned out to be a total lie.
The Eighth Finance Commission had noted that there were 1,65,848 single-teacher primary schools. They also recommended assistance for 45,255 additional teachers to be provided on the basis that these many were required for the single-teacher primary schools in States where the proportion of such schools exceeded the national average of 35%.
The Ministry of Education published a document titled “Challenges in Education”. According to this report, more than five lakh primary schools were working in conditions of deficiencies and deprivations of various magnitudes. There were hundreds of thousands of schools working without blackboards. The well-known scheme of Operation Blackboard originated out of this analysis of the situation. The Vajpayee government was still allocating funds in instalments to install blackboards in primary schools under the Operation Blackboard scheme. Yet at the same time it was boasting of introducing computers in every school!
Higher education has become an exclusive preserve of the rich in India under the BJP-led rule. Plan expenditure on higher education declined not only in real prices, but also even in nominal terms during the last five years. There was a decline in non-plan expenditures in real prices also. The total expenditure (plan plus non-plan) on higher education has registered a decline in real terms between 1999-00 and 2003-04.
The UGC grants to the colleges are being cut and students are being charged exorbitant fees. There have been certain UGC guidelines to do away with reservation in some areas. Today, we have 300 universities, 12,600 colleges, 3.31 lakh teachers, and 7.8 million students spread across the country. Our higher education system is the second largest in the world and the NDA is out to demolish that. Only about 15 per cent of the total expenditure on higher education was shared by the students in the form of fees till 1999, whereas about 80 per cent of the total expenditure on higher education was met so far by the government. Under NDA government there is a UGC circular that only 50% of the cost of higher education would be met by the government. In 2002 the UGC proposed that faculty appointments in institutions of higher education should be on contract for a limited term. The UGC has also asked the colleges to conduct self-financed courses.
The encouragement accorded by the policy-makers to private sector initiatives in higher education has resulted in the rapid growth of private educational institutions charging very high fees, which a poor student cannot afford. Moreover, except a few genuine philanthropists, the motive of many private managements for entering into this venture still remains business-like; ‘profit’ appears to be at the centre of their operations. Though the SC has stopped institutions from charging capitation fee, the regular ‘tution’ fee in some of these education shops runs into tens of thousands of rupees. The BJP is meanwhile busy saffronising the curriculum and appointing RSS men as heads of premier educational and research institutes. Even Premchand’s books are being banished in the ongoing witch-hunt against the leftists. They also meddled in the autonomy of IITs and IIMs. The NDA government was also dogged by CAT scam – question paper leak for the combined admission tests to the institutes of management.
IV. Systematic Dismantling of the Public Sector
India – An IT Superpower?
The IT euphoria under the NDA government is baseless. The IT industries are driven more by speculation in the share market with a price-earning (P/E) ratio of 300 against an average of 30. The NASDAQ crash is bound to repeat here. The market capitalisation of IT companies are several fold higher in a artificial way than the engineering industries with several times more profits.
The turnover of the domestic IT industry is less than one per cent of India’s GDP (compared to, say, eight per cent in the U.S.). Indian software exports are just about 1/70th or less than 1.5 per cent of the world software market.
India has just been ranked 54th of 55 countries in an IT survey by International Data Corporation-World Times. Its score is 871, compared to China’s 915 or the U.S.’ 5,041. The penetration of Indian households by PCs is under one-fifth the world average. Today, it stands at three machines per 1,000 people.
When it comes to Internet access, India firmly remains a backwater – 0.1 per cent household penetration, or the same as sub-Saharan Africa’s, as compared to Taiwan’s 14 per cent. A computer costs the equivalent of the average Indian’s income for two years, but only a month’s American salary. More than 90 per cent of India’s IT transactions are in English, which is spoken by five per cent of the population.
Indian IT professionals are making a bee-line to the US. In the US there have been protests and signature campaigns to influence the political establishment to reduce the cap on H1B visas from the current level of 1,95,000 to 65,000 from September 2003. In the second week of February 2004, leading Democrats introduced Jobs for America Act in the US Senate to curb BPO.
The NDA government’s basic philosophy has been to curtail the role of the state in the economy. Well, this can be a neo-classical and neo-liberal policy option in the developed countries. Even then, the state plays a very vital role in favour of the bourgeoisie in monopoly capitalism that these countries are usually characterised as state-monopoly capitalism by Marxists. But reducing the role of the state, as promoted by the Washington Consensus of IMF-World Bank-WTO, can only be a suicidal option for developing countries. The public sector in India is being vilified by the pink (business) press and the government circles echo it. The Vajpayee government has demolished the public sector brick by brick, through disinvestments, outright privatisation by strategic sale, reducing public investments, reducing the role of the state in social sectors and even outsourcing government jobs etc. Subsidies in health, education and welfare are being slashed. 20% quota has been fixed for all government departments and eve n public sector units to outsource jobs to private units. On reducing the role of the state, the views of the Congress and the BJP have converged.
To give a concrete example regarding dilution of government’s role, in the Union Budget 2003-04, the health sector has been treated as an industry rather as a public service. The very concept of public health is dying. Health care system as a public service has been afflicted with the terminal disease of liberalisation. The central budgetary allocation for health as a percentage of the total central budget has been stagnant at 1.3 per cent during the eighties and nineties, while that in the states has declined from 7 per cent to 5.5 per cent for the same period [National Health Policy 2002]. There was even a conspiracy by the NDA rulers to abolish ESI for the working class and substitute it with private health insurance. The National Health Policy 2002 and the Pharmaceutical Policy 2002 rolled out by the Vajpayee government would increase drug pricing and make health care a costly affair for the common man. The government has reduced the Drug Price Control Authority to a non-entity since the Pharmaceutical Policy of 2002 provides for control of only 30 irrelevant drugs and the pharmaceutical companies, including multinationals, are free to increase the prices of life-saving drugs as they please. And they do fleece. A close look at the prices of drugs over the last four years shows that there has been a consistent overall rise in drug prices. Drugs that need to be used over a long period, such as those used for tuberculosis and diabetes, are especially affected adversely. [EPW, November 1, 2003].
The Telecom Mess
The NDA has been claiming that they have ushered in a revolution in telecom. What is the truth?
Monopoly: An inappropriate license fee structure that had emerged out of the process of auctioning licences to the highest bidder, adopted before the creation of the TRAI had resulted in monopoly by a few private operators, especially in basic services.
Currently, there is war on between the various telecom monopolies. The issues are limited mobility and “Calling party to pay” in mobile services. Reliance is emerging as the largest monopoly in India, in both basic services and cellular phones. There is also the Birla-AT&T-Tata-BPL combine which have merged to take on Reliance. There is also the powerful Bharati group of Mittals. Hutchinsons, a Hong Kong-based conglomerate has also entered India in a big way. Foreign companies have teamed up with domestic big comprador bourgeoisie.
Revenue Sharing: When Jagmohan tried to introduce the principle of revenue sharing he was transferred from the Communications Ministry by Vajpayee at the behest of private telecom companies.
State assets of BSNL have been placed at the disposal of private monopolies for long-distance connectivity for throwaway prices.
The cellular lobby got the cheaper WLL (wireless in local loop) service scrapped.
Also there is no regulation on five-star hospitals mushrooming in India to cater to the neo-rich, the main class base of the BJP. As per budget 2003-04, private hospitals would be eligible for tax exemptions for long-term capital investments under section 10 (23G) of the Income Tax Act. Customs duty on medical equipment imported by private hospitals was reduced. The Finance Minister has announced his intention to make India an attractive health care destination for rich Arab sheikhs. The proposed promotion of private sector also seems to have been made without giving much attention to the vast diversity of this particular sector. The concessions and promotions seem to be mainly for the posh tertiary sector hospitals and not really for the private general practitioners. A recent study by the NCAER has found that public health subsidies are disproportionately distributed in favour of the richer groups as the better-off utilise health services more than the poor. This skewed distribution of funds is happening when our healthcare sector is still at a resource-starved stage and much more needs to be done to enhance investment in the sector. As the CII-McKinsey study (2002) had estimated, the country needs to add around 7.5 lakh hospital beds by the year 2012 over and above the 15 lakh existing ones to meet the expected demand. But the government hospitals have stopped supplying drugs, they have started charging money even from poor patients for services and some operation theatres are not functioning because of the absence of even suture threads. Health for All by 2000 AD has remained an empty slogan and it is necessary for popular movements to raise the issue of making Right to Health a fundamental right.
The Vajpayee government also adopted a National Water Policy in 2002. That is bound to take the country the Mexican way. Even on the eve of elections the Vajpayee government is disinvesting in GAIL.
Poverty is a multidimensional phenomenon. The NDA has been claiming that the number of people below the poverty line has been decreasing in the ’90s, the years of neo-liberal reforms. By manipulating the recall period in the 55th round of NSS survey in 1999-2000, the Vajpayee government has been showing drastic reduction of poverty in the 1990s and thereby justifies its policies of Saffron neo-liberal reforms. Poverty line indices smudge rather reveal the true picture of poverty. It is difficult to explain how reduction in poverty and increase in starvation deaths can coexist. India has no built-in social security measures (as in the West) against the marauding effects of the market. On the other hand, a nouveau riche class, the main social base of the BJP, floats in affluence: Benzes and BMWs, Ferraris and farm houses, shopping malls and sparkling gems, imported wines, designer clothes and what not. The National Council for Applied Economic Research (NCAER) in Delhi estimates that the “consuming class”, or those with an annual income of 45,000-215,000 rupees, will constitute 75 million households by 2006. Thus there is increasing inequality.
The 55th Round of NSS survey (1999-2000) used a 7-day recall period in its survey compared to the 30-day recall period in the earlier surveys. Hence the 55th Round results are not comparable with the earlier rounds and they showed drastic reduction in poverty between 1993-94 and 1999-2000 and the government started claiming that poverty was reducing during reform years.
Angus Deaton of Princeton University has adjusted the controversial poverty estimates of the 55th Round NSS data to make them comparable with earlier large rounds, particularly with the 50th Round, and given the adjusted estimates of poverty for 1999-2000 which shows an increase in poverty in 1999-2000 compared with the official figures.
|Estimates in NSS Rounds|
Note: The ‘official’ estimates for the 50th and 55th rounds are those published in the Planning Commission’s press releases. The last column is the adjusted figure.
[Sarvekshana, Journal of the National Sample Survey Organisation, Vol.XXIV, No.2&3, 85th Issue, October 2000-March 01]
Even according to the 55th Round data, the head count ratio of poor among the SCs is more (38%) and among STs (48%) in comparison with the head count ratio of 29% average for all rural households. Agricultural labourer households account for an overwhelming 48% of the rural poor while they account for only 31% of the rural population for whole of India. With the highest urban headcount ratio of nearly 50 per cent in 1999-2000 (which was more than twice the average of 23 per cent for the urban population), population in casual labour households accounted for 31 per cent of the urban poor population. And under globalisation there is increasing share of casual and informal labourers.
The percentage of population under poverty line as per BPL surveys conducted at the state level in 2002 and 2003 in West Bengal, UP, Maharashtra and Karnataka were 36%, 36.9%, 36.86% and 56% whereas the NSSO 55th Round (1999-2000) figures for these states were 27%, 31%, 25% and 31.29% respectively. A survey conducted under SERP Scheme (Velugu) in Andhra Pradesh showed a BPL percentage of 48 in 1998 whereas 55th Round NSSO in 1999-2000 showed a BPL percentage of 15! This is not a question of mere jugglery with numbers. Foodgrain allotted to the states by the Centre at BPL rates are based on these reduced percentages of the 55th round.
The Planning Commission has used different criteria for different states and the figures adopted for different states became controversial among some academics. The Planning Commission used a low poverty line of Rs. 262.94 per capita per month for AP and a high poverty line of Rs. 374.79 per capita per month for Kerala and Rs. 327.56 per capita per month for all-India for 1999-2000. No wonder then that poverty in AP drastically “reduced” to around 15% in 1999-2000 – lowest among all states – from above 30% in 1993-94!
The NDA government formed an expert group on assessing below the poverty line (BPL) families which conducted a survey in 2002 and presented its report to the Ministry of Rural Development in August 2002. The incidence of poverty in Gujarat, as per the BPL census, ranged from 28.5 per cent to 36.86 per cent in irrigated villages to 80 per cent to 92.14 per cent in tribal villages. As against this, the estimate of the NSSO was 13.17 per cent for rural Gujarat (1999-2000). (Indira Hirway in 'Identification of BPL Household for Poverty Alleviation Programmes', EPW, November 8, 2003) There is a high degree of unevenness among the states. Even according to the NSSO figures poverty worsened in Assam, Madhya Pradesh and Orissa.
The People’s Union for Civil Liberties (PUCL) filed a case in the Supreme Court against the Ministry of Consumer Affairs and Public Distribution, Food Corporation of India (FCI) and six state governments in May 2001. It demanded that the country’s huge foodgrain stocks be used to prevent hunger and starvation. On November 28, 2001, the Supreme Court passed a significant interim order. This had three components: (1) it converted the benefits of nutrition-related programmes into legal entitlements; (2) it directed all state and central governments to ensure public awareness and transparency of these programmes; and (3) it directed all state governments to introduce cooked mid-day meals in primary schools within six months. The NDA government at the Centre and many BJP-led governments in the states (especially in north India) confined the court directives to paper. Paradoxically enough, UP and Bihar, with highest population, are having lesser off-take than the southern states. In these states, the Targeted PDS scheme, food-for-work programme and mid-day mean schemes still do not exist in many areas. CPI(ML) is fighting a case on ‘red card’ (BPL card) scam by a Bihar minister in the Supreme Court.
The off-take of foodgrains in 2001-02 was below 50% of the allocation according to a standing committee of parliament attached to the Ministry of Consumer Affairs, Food and Public Distribution. A study has put the diversion pf PDS foodgrains to the open market at the rate of more than 30% for rice and wheat and 55% for edible oil.
On January 28, 1999, the earlier Vajpayee government announced a steep increase in the Central issue prices of foodgrains distributed through the public distribution system (PDS). The increase ranged from 29 per cent to 64 per cent. This decision hit hard the poorest of the poor households that drew just 10 kg of foodgrains a month from the PDS. The issue price of wheat for consumers below the poverty line (BPL) was increased from Rs.2.50 to Rs.3.25 a kg; for those above the poverty line (APL) the increase was from Rs.4.50 to Rs.6.50 a kg. The price of rice was increased from Rs.3.50 to Rs.4.52 a kg for consumers in the BPL category. The price of levy sugar was increased from Rs.11.40 to Rs.12 a kg. Again, from April 1, 2000. for the Below Poverty Line (BPL) population, the price of wheat was hiked from Rs. 3.25 paise per kg to Rs. 4.50 paise per kg and the price of rice was raised from Rs. 3.50 paise per kg to Rs. 5.90 paise per kg, marking an increase of 80 and 68 per cent respectively. For the Above Poverty Line (APL) population, the rate of wheat was raised from Rs 6.82 paise per kg to Rs 9.00 paise per kg, marking an increase of 31 per cent. The price of rice was raised from Rs. 9.05 paise per kg to Rs. 11.80 per kg, registering an increase of 30 per cent.
The Food Corporation of India has been selling rice for export at a steep discount to the issue price from the public distribution system. The sale for export has been, on average, at 90% of the issue price for below poverty level families and at 63% of the issue price for above poverty line families, during the last four years. (The Economic Times, December 13, 2003)
Whom do they stoop to serve
For the Rich For the Poor
Excise duty concessions for cosmetics, refrigerators and Additional duty of Rs.1 per litre on diesel.
air-conditioners. Customs duty concessions on gold This is over and above the cess of Rs.1
and silver, on computers and telecom equipment. levied from 1998-99 onwards.
Reduction in capital gains tax and dividend tax. Steep increase in postal rates.
Tax concessions to entertainment industry.
Peak rate of basic customs duty reduced from 40% to 35%. Increase in levy of textiles. Customs duty
Duty on diamonds import reduced from 40% to 15%. on kerosene increased from 30% to 35%.
Special excised duty on two-wheelers, glazed tiles, Sugar price under PDS increased to Rs.13.25 per kg.
mattresses and carpets abolished. Duty of soft-drinks and Duty on diesel increased again.
cars reduced. Duty on matches doubled.
Duties on cars and air-conditioner abolished. Administered price mechanism for petroleum
products dismantled. LPG dearer by Rs.40
and kerosene by Rs.1.50 a litre.
For Big Business: From April 1, 2003, dividends made tax- For Farmers: Issue price of fertilisers was raised by
free in the hands of shareholders. Rs.12 for urea and Rs.10 for DAP and Rs.50 for MOP
All listed equities exempt from capitalgains tax. per bag.Prices of pesticides and diesel increased.
For the Glitterati: Current import duty on diamonds and For Rural Poor: Only Rs.598 crore declared to about
coloured gems reduced from 15% to nil. 25 lakh families through 1.5 lakh new Self-Help
Groups (SHGs) under NABARD.
This too was not implemented in practice.
Bonanza for Real Estate Mafia: Income from For the Working Class: Rates of interest on Pubic
housing projects for construction of Provident Fund and small savings reduced by 1%.
residential units exempted from Income Tax. No housing scheme for industrial workers
and urban poor.
For Jet-Set Crowd: Modernisation of two airports For Professionals: Service tax on professionals
at an estimated cost of Rs.11,000 crore. increased.
Customs Concessions: Peak rate of customs duty For Urban PoorNo money allocated for
further reduced from 30% to 25%. slum improvement or reconstruction.
Customs duty on passenger baggage (goods brought
from abroad) reduced from 60% to 50%.
Duty on imported liquor reduced. Education expenditure
has been made tax deductible, standard deduction
has been hiked, dividend tax and expenditure tax
abolished and hotels exempted from service tax.
2004 Election eve sops in the “Mini-Budget”
Reduction in customs duty on colour televisions, In the same period the prices of petroleum
refrigerators, air-conditioners and washing machines.products and milk were increased.
Reduction in customs duty on colour picture tubes
2004-05 Interim Budget
Free Baggage (goods brought from abroad) The demand of the salaried classes to
allowance is hiked from Rs.15,000 to Rs.25,000 raise the Income Tax exemptionlimit from
and customs duty on value exceeding that is Rs.50,000 not conceded.
reduced from 50% to 40%.Capital gains tax
on equities and acquisition of agricultural land
exempted. Duty concession to capital goods
[Source: Different Union Budgets and 2004-05 Interim Budget.]
Cellular operators have yet to explain why should their services be priced 6-8 times that of the basic service operators when the capital cost is Rs 4,000 per cellular line as against Rs 23,000 per landline.
The government is not allowing a level playing field for its own BSNL and putting a lot of curbs on it to favour private monopolies.
The powers of Telecom Regulatory Authority of India (TRAI) have been emasculated.
Kya hua…tera vaada…
|NDA Government’s Proclamations [2003-04 Budget]||
Actual Record in Implementation
|Antyodaya Anna Yojana
Antyodaya Anna Yojana will be expanded, from April 1, 2003, to cover an additional 50 lakh families raising the total coverage to more than a quarter of all BPL families during the year 2003-04.
|Health Insurance for Poor|
A community-based universal health insurance scheme will be designed during 2003-04 with a premium of Rs.1 per day. It will enable eligibility to reimbursement of hospitalisation expenses up to Rs.30,000, a cover for death due to accident for Rs.25,000, and compensation due to loss of earning at the rate of Rs.50 per day up to a maximum of 15 days. To make the scheme attractive to the BPL families, Government to contribute Rs.100 per year towards their annual premium.
|48 new road projects at an estimated cost of around Rs.40,000 crore, with a quarter of them being made of concrete.||
A ‘concrete’ example of NDA’s lie.
India’s purchasing power has almost doubled between 1999 and 2003 — when the BJP-led NDA government was in the saddle — going up from Rs 7,635 billion in 1999 to Rs 14,862 billion in 2003. But, as was to be expected, the luxury segment grew by 45 per cent in the four-year period, compared to the basic segment, which grew only by 9 per cent.
If this does not tell you that the rich Indians only got richer, consider this information: During these four years the passenger car segment grew by 41 per cent, the two-wheelers market by 48 per cent, and the mobile phone subscription rate zoomed by a whopping 1,163 per cent. [Business Line, February 5, 2004]
The NDA government has been claiming that the prices were under control during its rule. They cite inflation rates based on Wholesale Price Index (WPI). But the prices of essential commodities have increased more compared to the wholesale price index. Below we give a few examples to show the greater price rise in consumer goods.
|1999||2000||2001||2002||2004||% Increase (2004 over 1999)|
|Masur Dal (Split)||19.82||20.82||23.65||24.2||33.5||69.02|
|Milk (1 litre)||11.68||12.29||12.47||12.82||18||54.1|
|Inflation based on|
|WPI for the year||3.3||7.2||3.6||2.6||4.5(2003)||—|
[Source: The figures in the first four columns have been taken from different issues of Monthly Abstract of Statistics issued by the Central Statistical Organisation (CSO). The figures in the fifth column are the local grocer’s in Delhi and also taken from the Kendriya Bhandar Weekly Rates in the New Delhi edition of The Hindu.]
After reduction in duties by the NDA government the consumer durables purchased by the rich are cheaper by…
Consumer Durables: Reduction in Duties and Reduction in Prices (in Rs.)
|Import Duties||Countervailing Excise||Earlier Price||Current Price||Earlier Price||Current Price|
Colour Picture Tubes
Nokia Cell Phone
[Source: The Tribune , November 12, 2001]
Even reading this sordid record of the NDA government doesn’t make you feel good. Does it? So much for the “Feel-Good factor” then! q