Transcript ppt

The Elephant becomes a Tiger
and flies to the Moon:
India’s Political Economy
October 25, 2010
Quiz: How much does India’s
mission to the moon cost?
India Today:
what comes to your mind?
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Global economic powerhouse
Poverty
Outsourcing
Bollywood
Corruption
Religious tension
caste
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Main questions
I.
What was the nature of India’s
‘elephant’ phase?
II. What is the nature of India’s ‘tiger’
phase?
III. How did this transformation come
about?
IV. How does it affect different social
groups in India?
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The change (1)
1950-80
• “Hindu” rate of growth
• Big state and state
interventionism
• License-permit-quota
Raj
• No corporate growth,
low corporate
profitability
• No global role
1980-present
• ‘Miracle’ rates of
growth
• State less
interventionist
• End to license Raj
• High corporate growth
& profitability
• Spectacular global
role
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India now:
The Corporate Sector
• The top 40’s worth is 243 billion, up from
229 billion a year ago, but still shy of the
351 billion record in 2007.
• 4 richest Indians are worth a combined
$86 billion, (down from180 billion 3 years
ago).
(forbes)
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Poverty and Hunger
• Under $1 a day: 34.3%
• Under $2 a day: 80.4%
• Under national poverty line: 37.2% (debated
figure)
• Ranks 67 out of 88 on the Hunger Index; still
worse than Nepal, Pakistan, China, Sudan
• Farmer suicides – close to 200,000 suicides
between 1997-2005 (one suicide every 30
minutes)
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Two questions &
standard answers
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Why this miracle?
• “freedom” from the
state
• Less regulation
• High consumption
• Globalization: free
trade, more foreign
investments, more
active stock market
Why such inequality?
• Still a lot of regulation
• High dependence on
agriculture
• Not enough skills
• Bad governance
• “People are not able
to take advantage of
globalization”
Digging deeper:
Political Economy
• Study of processes through which value or surplus
is produced and distributed across society
• recognizes that there are different social groups
who are involved in the process of value creation
• Recognizes that these different social groups have
different degrees of control over the process of
value creation and distribution. This determines
social relations
• since the processes and structures through which
value is created changes over time, the study of
political economy must recognise these changes.
In other words, the study of political economy must
historically oriented
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Drivers of Growth
Historically, big business has been very profitable in India.
How were profits generated? In the context of World War
I, a well-known Indian historian writes:
“While the war meant misery . . . for the majority
. . . it also contributed to fabulous profits by
business groups taking advantage of the War
demand, the decline in foreign competition, the
price differential between agricultural raw materials..
and industrial goods, and the stagnation or
decline in real wages (Sarkar, 1983, pp. 171–172).”
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The famines of 1943
“Yet war and famine also meant super profits for
some, and as in 1914–18, a major step forward for
the Indian bourgeoisie. . . . The really fantastic
increase was not in production but in profits,
particularly speculative gains through profiteering
in food, share market operations and the black
market in general. The Indian bourgeoisie was a
specific kind of bourgeoisie, characterised by a
‘ravening greed’, and a mania for speculation rather
than initiative or efficiency in production” (Sarkar,
1983, pp. 406–407).
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Big business in Independent
India
• State-business collaboration
• Cheap inputs provided by the state for
development of business
• Nationalized banking gave control over the
savings of the common person to the
government which could then be
channeled to big business
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Big business: 1950-85
• General feature: high corporate profits but
low output, low growth
• large oligopolies
• No domestic competition
• No global competition
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Since 1980: Globalization
• Rajiv Gandhi, the PM, and a number of
other politicians and business leader see
opportunity
• Division within Indian business
re:globalization
• Globalizers win, lots of profit to be made
• Foreign companies eye large domestic
market
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1991: turning point
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Deepening fiscal crisis
Acute foreign exchange crisis
In 1991 in takes a loan from the IMF
Beginning of the process of structural
adjustment and neoliberal reforms
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What are the neo-liberal reforms?
• Easing entry of foreign corporations
• Easing labour and environmental
regulations (especially in export
processing zones)
• Less state regulation
• More competition
• Privatization of public sector companies
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The ‘miracle’ arrives
Drivers of the ‘miracle’:
• Outsourcing and growth of service sector
• Sell-offs of Indian companies
• Low cost production
• Lay offs and restructuring
• Growth of the middle class with
phenomenal growth in salaries
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More ‘miracles’
• Spectacular growth of the ‘informal sector’
• Inequality across caste, gender and
religion
• Issues such as female infanticide
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The agrarian sector
• Has anything changed?
• Big question: could such inequality and
depravation be avoided?
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Tagore, in British India
• “Our villages are dying. If we think we can
just continue to live, that would be a
terrible mistake. The dying can pull the
living only towards death”
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• "Today, it seems to me, some are putting
all their strength and labour into producing
life's necessities and some others are
living off the fruits of that labour. Just as
the moon - illuminated on one side, and
dark on the other", Tagore, "The
Neglected Villages"
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"One day I had to leave the exotic world of
literary enchantment. That day the
extreme poverty of the Indian masses
revealed itself to me: it was heart
wrenching. Such gross depravation of the
human mind and body has perhaps not
occurred in any other modern state. And
yet, this country has been providing the
British with their wealth for a very long
time", Tagore in 'The Crisis of Civilizations'
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Agrarian Crisis today
(photos and stories by P.Sainath)
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Map of Maharashtra
• http://www.mapsofindia.com/maps/mahara
shtra/maharashtra.htm
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What can be done?
A story from Kerala
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