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Dangers that lurk aheadnews
27 November 2006

Even an economist prime minister committed to marrying growth with equity has failed to understand, let alone prevent, the pauperisation that capitalist growth brings in its wake. By Prem Shankar Jha

Prem Shankar Jha At the half-way point of his government Dr Manmohan Singh declared himself very satisfied with its performance. He would have been closer to the mark if he had declared himself satisfied with the performance of the country. For if one were to judge his government alone, the temptation to give it less than a 50 per cent rating would be hard to resist.

A signal achievement is the signature of the Indo-US nuclear deal and its passage, with few adjustments, through both houses of the US Congress. Most Indians and Americans think it's purpose is to allow India to import nuclear power plants, but this is much the less important, or indeed urgent, of its objectives.

The far more important one was to break the ever-tightening noose thrown by the nuclear suppliers' group, which now has 45 members around an ever-widening list of 'dual use' technologies. The statement issued on the occasion of President Hu Jintao's visit suggests that India may be close to doing so.

This has been a long and uphill battle and is one of the very, very few occasions in which an Indian government has deliberately accepted short term discomfiture for the sake of it's country's long term gain.

Beyond this its main virtue has been its abstinence. It came to power a year after the country had found its way out of a six-year long industrial slump, in which the growth of GDP had fallen to 5 per cent. It sensed that the recovery that had begun was not a flash in the pan. It therefore had the wisdom to refrain from making any changes of policy that might have nipped the recovery in the bud.

As a result, the country's economic performance has been little short of dazzling. This will be the fourth year of more than 8 per cent growth. In fact the average for the four years will not be much short of 8.2 per cent. Industrial growth, which is the main employment generator, has finally shot into, and stayed in, double digits. The government's prediction that we can attain a nine percent rate of growth in the future is, as usual, hype. But an 8.5 per cent average can be sustained at least till there is a major turn in the trade cycle and a simultaneous drought. That conjunction may not occur for some years.

But rapid growth creates its own drawbacks. And the most dangerous of these are often the most insidious. One is a creeping rise of complacency in the new, urban, technocratic middle class. There is a palpable pride, which we all share, in India's high growth rate. There is even greater satisfaction that this growth, and the leaner and meaner industrial structure that is responsible for it, have attracted the admiration and envy of the West. And there is an immense satisfaction that, after years of being held up as the counterfoil to China's economic success, India is not only being compared with China, but told that it might have the better long-term prospects.

But complacency breeds insensitivity. Preoccupied with its own success, the new middle class is showing a growing impatience with the problems of those less fortunate or successful than themselves. A glaring example is the public reaction to the Supreme Court's drive to seal more than 40,000 shops and other commercial establishments set up in residential or 'farmland' areas of Delhi.

The new middle class, the media and the judges of the Supreme Court themselves have characterised the stubborn resistance that it has met as a use of brute muscle by the 'powerful traders' lobby' and the Supreme Court has gone so far as to declare that it shall not be intimidated. Hardly a single commentator, and most definitely none of the learned judges of the court, has paused to consider that the 'traders' will not be the only, or even the primary, victims of their high regard for the law.

The main victims will be half a million wage and salary earners who man the counters, load, unload, and keep track of the stock, keep accounts, transport the goods from factories and depots to the shops and deliver the purchases made by customers to their homes. All of these people are now living in dread, waiting for the blow that will end their security, their plans for the future and even the certainty of their next meal.

What is worse, most of these people have families. They have rents to pay and children in schools. They work in the unorganised sector and therefore have no unemployment benefits or social insurance to fall back upon. A huge proportion is from outside Delhi and some have nowhere to return. All in all, a million or more people are facing destitution, but no one has even a word to spare for them.

Some may find alternate employment and some storeowners may be able to find an alternate location. But till the Delhi master plan is amended the vast majority of these stores, their owners and employees will have nowhere to go. By the time that happens the lives of hundreds of thousands, who do not have the financial staying power, will be in ruin.

All this has been happening under the national government's nose but it has been strangely passive. Nor is this an isolated example. It has done nothing to stem the land grab that has made state governments increase the land being acquired to hand over to private developers of special economic zones from 148,000 hectares to almost half a million in less than nine months. Nor has it shown the least sensitivity towards the plight of those who are losing their land every day to mines, power plants, roads and dams.

The conclusion is inescapable: even an economist prime minister committed to marrying growth with equity has failed to understand, let alone prevent, the immiserisation that capitalist growth brings in its wake.

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Dangers that lurk ahead