INDUSTRIALISATION: Which way now? – Medha Patkar and Amit Bhaduri

April 26, 2007

From : Ekak Matra, May issue (vol 7 no 6), Krishi Bonam Shilpo?

If multi-party parliamentary democracy means giving people a wide range of political choices, we have it in plenty in India, parties big or small with a variety of labels. However, if we have to choose also the content in critical areas of economic policy there is hardly any choice anymore. A marked
convergence among political parties is taking place, less apparent in their rhetoric, but unmistakably clear in their actions. One could have believed that
this is the result of compromise of coalition politics at the centre. But when the same thing happens at the level of states, and political parties of different labels follow with equal vengeance the same economic course, no room is left even for illusions. Grand terms like ‘growth, ‘industrialisation’ , and ‘development are used by politicians with abandon these days to hide the poverty of their economics and politics. And, the central question remains unanswered. If a high rate of growth necessarily entails a certain type of industrialisation, is this industrialisation synonymous with development?

The type of industrialisation India is experiencing with recent high growth has three characteristics that are unmistakably neo-liberal. First, it is led by
corporations. Second, they are mostly private corporations. Third, the role that the government plays at the central and at the state level is that of a promoter, an agent of private corporations, not one of a regulator. All parliamentary political parties seem to agree. We are repeatedly told that
sacrifice is needed for this industrialization, but it is conveniently left untold that the sacrifice must be borne by those who are least capable of bearing it, the poor and the most marginalized sections. The rich corporations need not sacrifice, instead they are subsidized by the governments. The estimated subsidy for the TATAS in Singur, West Bengal is over Rs. 850 crores for an investment of Rs. 1000 crores, and also similar deals are said to
have been cut by the two Ambani brothers in Dadri, Uttar Pradesh and, for the Mumbai Special Economic Zone in Raigad, Maharastra.

The traditional political differences have melted away in many respects in a homogeneous neo-liberal mass. In so far as the traditional Left is concerned, first Singur and then Nandigram drove home the point that, many of the left politicians are not that different from the ‘dream team’ of
economic policy makers at the centre, who favour the World Bank, the IMF and the Asian Development Bank. The cultural nationalists of Hindutwa variety uphold violently their culture when it comes to Ram Mandir and ‘Vande Mataram’, but surrender willingly to foreign multinationals. The political double talk everywhere is amazing. Congress has a remarkably short memory about the Sikh massacre of 1984. The left parties rightly breathe fire about the Gujarat massacre of 2002, while BJP covers it up with false propaganda and manipulation of the State machinery. Then Nandigram massacre happens in 2007, and Advani compares it with Jallianwala bagh conveniently forgetting Gujarat, while CPM leaders and some of the supportive intellectuals call it an unfortunate incident that happened accidentally. The unwarranted shooting and land mining of 13 tribals in Kalinganagar in 2006 by the police bears an uncanny parallel. The tribals were refusing to hand over their land to the same TATAs in Kalinganagar, just as in Singur the peasants are resisting, and in Nandigram they have resisted. Should we be erecting a defence of empty words to say how different Navin Patnaik is from Buddhadeb Bhattacharya, only because they go by different political labels? It is evident from a chronological survey of field reports from Kalinganagar and Nandigram that these were premeditated actions by the State authorities to test the waters and see, how far they can go in the service of large corporations.

In this world of neo-liberal harmony parties of different shades insist that corporate style industrialisation with the State as its agent is our only option. And, Indian polity with an increasingly inequitable economy thrives in the name of high growth, industrialisation and development, working ruthlessly against the poor majority. A spectre of despair and popular anger is stalking in all corners of the country. Farmers are committing suicide in hundreds especially in Maharastra, Andhra Pardesh, Punjab because the government wants to usher in a new type of commercial agriculture under WTO with expensive inputs supplied by multinationals but no subsidy, no appropriate price for their produce. In Chattisgarh in the name of fighting extremism,
tribals are being evacuated forcibly in thousands from their villages under Salva Judum to be huddled in Vietnam-style concentration camps, while the
corporations eye greedily their mineral resource rich land. The poorest are the richest in natural resources in this country, but are kept poorest by denying them what belongs to them.

Since land is a state subject according to the Constitution of India whether to acquire or not acquire, and with what degree of coercion, is largely the prerogative of the state government. This is where the political hypocrisy is particularly evident, and rhetoric about centre state division of power, cannot hide it. Land is being acquired by various state governments in a competitive race to the bottom in servitude to win the favour of the corporations. The argument goes, “if we in West Bengal do not do it, Uttaranchal will do it” or, “we can be more ferocious than Orissa” in pleasing the TATAs or the Jindals or whoever else. This has full legal and moral support of the central government, but the state has full constitutional power not to oblige.

Land is being acquired in different guises, for mining, for the location of industries, for large estates and IT parks and finally for Special Economic Zones (SEZ) under the ’eminent domain’ clause which allows the state to override private property right in land in ‘public interest’. Land, the primary source of livelihood in the agrarian economy, includes as per the Act ‘everything’ attached to land – water, minerals. Therefore, it becomes the most obvious case of forcible transfer of resources from common people for whom land and resource base is not property but livelihood to private corporations. Using the same old Act since the British days, amended in 1984, land acquisition is carried out to serve corporate interest, destroying livelihoods, and displacing people. It is often said there are invariably gainers and losers in such economic processes, which the economist Schumpeter had captured with the phrase ‘ creative destruction’ . However, in the present context this is a misleading half-truth. If such creative destruction were just a part of the normal process of capitalistic development, it would have been unnecessary for the state to intervene in the guise of ‘public interest’ on behalf of the private corporations. It involves a transaction between two private parties, namely the corporation and the land owning peasants without level playing field, and the function of the State should be at least to ensure this transaction is voluntary, particularly because one party in the transaction namely the peasant is economically far weaker. This would mean that the corporations can acquire land at a price at which
the peasants are willing to part voluntarily with their land, either individually or through collective decisions, the latter being especially relevant in the case of tribal land. Instead what has been happening is that the state using force and violence under a cloak of secrecy despite the Right to Information Act. Although the SEZ scheme has the most pronounced pro-corporate bias, the difference between acquiring SEZ land in Nandigram, and the land for the Tata-FIAT jointventure in Singur is one of legal nicety, not of relevance in so far as those who derive livelihood from that land are concerned. And, even after Nandigram, what most parties, including the CPM has to recommend is not the scrapping of SEZ altogether, but restricting its maximum size and similar marginal changes!

Although land is the most visible symbol of transfer of resources to the corporations, the problem goes deeper. The bias against the poor in policy making is both direct and indirect. The direct bias is visible in plan allocation. Despite 60% or more of our working population living in agriculture, all the recent five year plans under different governments have allocated less than 5 per cent of planned investment to agriculture. The indirect bias
operates pervasively through a pattern of consumption and production promoted by the state. Mammoth projects create the impression of urban glossiness with fancy malls, underground metros, flyovers etc at public cost. We take it for granted that many of these public utilities are essential for efficiency, saving time in travelling, improving the quality of life, even for attracting investment. These arguments are not false, but one sided. We need, even more desperately, higher efficiency and better quality of life in rural India where the majority lives. In the metropolitan area, we need infrastructure to ensure basic amenities to the most needy. Manhattan like world-class cities are set as our goals, when 25% to 60% of the city population live a subhuman existence in slums. So why this bias, and whom does it benefit? It certainly benefits the urban elite population, and leads to uncontrolled urbanisation and mega cities with growing hunger for energy, water and urban housing space. So slums have to be cleared without providing resettlement with poverty banished only from sight. This large-scale destruction of livelihoods of both urban and rural communities is only the surface phenomenon. The modes of transports we are creating with more flyovers for cars (including TATA’s people’s car), the type of
shopping or housing complex we are promoting are not merely iniquitous. They are far more energy intensive, and the majority of our ordinary citizens who do not consume them also have to pay directly or indirectly for this pattern of consumption. This is why farmers get less water, are staved of electricity in critical periods, clean drinking water or proper sanitation is a luxury in villages.

The idea that industry is more efficient than agriculture is largely because of this pronounced bias against agriculture and the poor. With almost two thirds of our work force in agriculture producing hardly over one fourth of national output, output per worker in agriculture is about 40 per cent of national average. In contrast, industry and services have a labour productivity double the national average. This is also a game of attributing ‘values’ to selected products and services, so that higher growth is achieved by transferring more and more resources to the high productivity sector, and by favouring large corporations which organize this pattern of production for the privileged India. The other India watches in despair and anger, while many have no choice but to commit suicide. Must we not strive for an economic alternative on the basis of new politics?

An economic alternative creating another kind of development is feasible, and elements of it exist even in the present political-economic system. Very briefly, it has to be based on three basic premises. First, we must learn to rely far more on the internal rather than the external market. The biggest driving force of the internal market is the purchasing power of the ordinary people derived from employment growth. India’s record on this score has been dismal in recent years. An eight per cent growth in output has been accompanied by hardly 1 per cent growth in regular employment, and increase in irregular or ancillary employment is marked by flexible contracts loaded against the worker with insecurity and over-crowding of infrastructure. It is foolish to expect that corporate-led growth can do better on the employment front, because corporations are in the game of making profit by cutting costs, including labour costs. And the more we accept globalisation unconditionally, the stronger would be the relative importance of the external over the internal market. This means cutting labour cost to increase export will become even more pressing. Primacy to export also means priorities in production going against the needs of the population here. Growth of the internal market through rapid employment growth, therefore, requires a far more selective approach to globalization.

Second, economic growth must be the outcome of employment growth, not the other way round and the former should never be at the cost of the latter. Our benchmark should be a time bound programme for full employment. How much does the growth in employment contribute to growth in output depends naturally on how productively labour can be employed. India performed poorly in this respect. The main reason is a bureaucratized system of central control which kills local initiative. We have to start at the opposite end of socialist orthodoxy, not by accepting neo- liberalism, but by forging a new combination. On the one hand, we have to get out of the grip of corporate led industrialisation by making agriculture and the rural economy the centre of economic dynamism; on the other, we have to break the grip of current centralised bureaucratic decision making. This can be done by extending the present national employment guarantee scheme to anambitious time bound full employment programme, and delegating much of the decision making power to the panchayats and local bodies to identify, formulate and execute local employment generating productive projects. A pre-condition for this is local control over local resources related to land, and maximum fiscal autonomy for the panchayats. Even the Constitution, through Article 243 provided for a finance commission to support and ensure that village/ward level local bodies become financially viable, which was to be appointed in 1993. No government, central or state followed this up seriously. The record of the Kerala has been the best while that of West Bengal Government has been among the worst. Acknowledging that the Left Front played a role in getting NREGA enacted, it is shocking that only 14 per cent of the money allotted in the poorest district of Purulia for employment guarantee was spent until December, 2006, more than half the money of employment guarantee provided by the centre remaining unspent in the state, and not more than 16 days of employment provided while the legal and financial provision allows for 100 days. (Reports from other states too show similar situation with an exception of certain areas). If the governments had shown the same zeal in making a success of employment guarantee as they have shown in acquisitioning land from the unwilling peasants, we would have taken at least the first step towards a genuine process of development.

Finally, there is the question of finance. Where would the money come from for such an ambitious employment programme, and how to make sure it is spent effectively? The Fiscal Responsibility and Budget Management Act (2003) which ties the hands of the Government in spending money for most pressing needs like employment guarantee must be scrapped. With this Act the Centre pushes privatization to raise money, denies basic health and educational expenditure, and restricts the role of public policy in the name of financial discipline. This suits well the IMF, the World Bank, and the corporations who want the state to promote but not to regulate them. This is where the Left should have its biggest battle, and insist that money that is needed for employment, basic education, health and social security of the unorganised workers must be found within our means, if necessary by revising this law. It went along instead with the neo-liberal economic ideology with only a whimper of protest, and concentrating energy on corporate-led industrialisation.

To ensure fiscal autonomy for local bodies, their budget can be kept in a separate account in nationalized banks with credit line extended to panchayats. This would avoid duplication of institutions, while a system of mutual check and balance between the panchayats and the local branch of nationalised banks can be devised based on their performance as borrowers and lenders. Banks would lend the next round only if the previous project succeeds, and panchayats can borrow the next round only if the money is well spent. It is this mutuality of interest, which has to be strengthened over time in creating the new form of sustained financing for development.

Not withstanding whether the growth is 8 or 10 per cent, these measures would initiate a process that empowers the poor, imparting a genuine democratic content to India’s development. We stand by the belief that development with non-corporate led rural industrialisation at the focal point is the way forward.