Development: Maladies and Remedies

November 9, 2010

By Amit Bhattacharyya

The Hindustan Times, Kolkata carried a news under the caption ‘Her cry turned to whimper’ in its issue of October 6, 2010. Some excerpts from the report are as follows: “Baby Ghatal weighed 4.5lbs when she was born. ‘We did not know there was anything wrong with that’, says her father Santosh. Most of the children born here are of the same size and weight’. ‘Here’ is Kharband village in Jawhar taluka, Thane district—155km from Mumbai’s myriad restaurants and gleaming malls—where one in three children is born malnourished. Baby lived only four weeks. Classified as severely malnourished at birth, her mother was given tonics and iron and iodine tablets to help Baby gain in strength, but they didn’t help. As the infant grew weaker… her loud cries dropped to a constant whimpering sob. The worried parents took Baby to the local health centre, where she was diagnosed with full-blown pneumonia. She was taken to hospital. At the hospital, Baby’s lungs began to shut down. She stopped breastfeeding and her body went cold. She died…on August 6”. These parents were not the only ones who lost their baby in this way. In fact, in August alone, 32 children under the age of six died in Jawahar taluka, most of pneumonia. Jawahar is a tribal area where more than 90 per cent of the 1.27lakh people living here are abysmally poor.

The case of Jawahar is one among the innumerable in our country. According to the UNICEF report, India figures among the top four countries which has the highest rate of underweight children under the age of five numbering 57 million(See ‘India at odds with Unicef kid health report’ in The Statesman 4 May 2006; ‘Govt. contests Unicef claim’ HT 4 May 2006). What about ‘human development’? Many reports have come out in the newspapers over the decades about the undernourishment, disease and death of countless number of people, suicides in the vast stretches of rural Maharashtra, Andhra Pradesh, Punjab and other areas due to indebtedness, government apathy, disappearance of small holdings and the Green Revolution. A new global hunger index has been released in October 2010 by the International Food Policy Research Institute (IFPRI), according to which India is the home to 42% underweight babies while Pakistan has just 5%. According to the same report, the scores are driven by high levels of children underweight resulting from the low nutritional status of women and that she ranks 67 far below Sri Lanka and Pakistan(See The Bengal Post 12 October 2010).There are places like Kalahandi or Amlashole where deaths from hunger are so common in the lives of the hapless people that the media hardly take notice of it at all. In fact, India’s record of human development is quite appalling. With the GDP of $1.16 trillion(of 2008), the Indian economy is 12th largest in US dollar terms and it is the second fastest growing economy in the world. But according to the HDR 2009(published by the UNDP), the Human Development Index for India is 0.612 which puts it at 134th place among 182 countries(TOI, 21July 2010).

Facts such as these prove that the system has been failing to deliver for quite a long time. What is of particular concern is that neither the central government nor any of the state governments gives it any consideration at all. It is only when the resentment towards government policies turns violent, when the long-suffering people of our country raise the standard of rebellion or take up arms either spontaneously or under the direct or indirect influence of political forces such as the Maoists and others that the governments appear to rise from the age-old slumber and start talking about the need of ‘development’ in the country. In fact, when the system itself is threatened by internal conflicts and insurgency that the state enters the scene with a ‘carrot and stick policy’ sending security forces backed by draconian laws such as the AFSPA, UAPA etc(which give them immunity) to maim, molest, rape, humiliate, kill in fake encounters, illegally detain, arrest or make people ‘disappear’ at will, and also talk with a so-called ‘human face’ about ‘development’.

Side by side, the central government boasts in the fact that our country is producing millionaires by thousands. The report reads as follows: “India added more than 42,800 US dollar millionaires last year (i.e, 2009), taking the total number in the country to more than 127,000—and the phenomenon is only going to grow further as high economic growth is sustained”( See ‘Indian millionaires zoom by 42,800’ in HT 29 September 2010). The story makes it amply clear to what extent there is concentration of wealth in a few hands at the expense of the impoverishment of the overwhelming majority of our people.

In the recent period, the government got the worst ever rebuff from the Supreme Court while the apex court was dealing with a case relating to acquisition of tribal land by Mahanadi Coalfields Ltd in the Sundergarh district of Orissa, a centre of Maoist activity, when it found that those who lost their land were not paid compensation for 23 years. Terming the developmental policies as “blinkered”, the SC stated that the promised rights and benefits never reached marginalized citizens, fuelling extreme discontent and giving birth to Naxalism and militancy. “To millions of Indians, development is a dreadful and hateful word that is aimed at denying them even the source of their sustenance”, a bench of Justices Aftab Alam and B.S. Chauhan said. Referring to the case of Sundergarh, the bench asked: “Why is the state’s perception and vision of development at such odds with the people it purports to develop? And why are their rights so dispensable? Why do India’s GDP and human development index(which is based broadly using measures of life expectancy, adult literacy and standard of living) present such vastly different pictures?”(TOI, 21 July 2010). In fact, the term ‘development’ championed with much fanfare through the media and other means by the ruling classes and their political representatives both at the central and state levels is the most dreadful and hateful word to millions of Indians as it is aimed at denying the people of even the source of their sustenance.

Why is it so? Why did the period since ‘the first prime minister of Free India’ declared himself ‘the First Servant of the Indian people, pledged to their service and betterment’ create the condition not for the ‘betterment’ in the living conditions of the people, but of prolonged agony for the basic masses? There must have been some fundamental flaw in the system itself, in the model of development that the Indian ruling classes and their political representatives had introduced and pursued since the ‘transfer of power’ in 1947.

India’s Model of Development: Genesis

The talk about planning started after the success of the Soviet First Five Year Plan following the October Revolution. The October Revolution proved to be a turning point in the history of the world in more senses than one. It was quite natural to see that the capitalist world was shaken by the Russian experience. But they were also both alarmed and influenced by the success of the First Five-Year Plan(1928-32). It enabled the Soviet Union to remain untouched by the global depression at a time when the rest of the world bore the onslaught of the terrible crisis. It made a deep impression everywhere, even among those who were hostile to the land of the Soviets. Russia could achieve this primarily because she had already brought about the total restructuring of the existing property relations. The powers-that-be of UK, USA and the top representatives of the Indian bourgeoisie such as G.D.Birla as also political representatives of such colonies as India, started talking about planning. The fundamental difference with the Russian experience was that in all other countries, the development planning was to be formulated without bringing about basic changes in the existing property relations.

Sir George Schuster, then finance member of the Viceroy’s executive council, was possibly the first to state in June 1932 that the GOI should devise something like a five- year economic plan for India. In April 1934, G.D.Birla also emphasized the importance of economic planning and suggested that such a plan should be formulated for Indian economic development. In 1938, the Congress set up a National Planning Committee with J.Nehru as Chairman and with such representatives as Sir Purushottamdas Thakurdas, A.D.Shroff, Ambalal Sarabhai and Walchand Hirachand with the Tatas forming the secretariat. After the end of World War II, the Post-War Reconstruction Committee was formed in March 1943 by the colonial government and a Planning and Development Committee was set up to deal with the future plans for India. In charge of this GOI-formed committee was Sir Ardeshir Dalal, managing director of the TISCO and member of the viceroy’s executive council. This fifteen-year ‘perspective plan’—described by Hanson as “socialist in character” advocated state ownership of those new and necessary large enterprises “for which private capital may not be forthcoming”.

In the Statement of Industrial Policy issued by the GOI in April 1945, the Planning & Development Department declared that central government would play an important part in the industrial development of the country and would even nationalize twenty vital industries such as aircraft, automobiles and tractors, electric machinery, machine tools, metal industries etc. It is pertinent to point out that there was a remarkable similarity between Nehru’s “socialist pattern” or the pattern of the “mixed economy” with the plans drawn up by the colonial rulers, both of which opted for a public sector and a private sector and intervention by the state.

Then in 1944 the Bombay Plan was formulated by such top representatives of the big Indian industrialists as Sir P.Thakurdas, Sir J.R.D.Tata, G.D.Birla, Sir Ardeshir Dalal, Sir Shri Ram, Kasturbhai Lalbhai and John Mathai. The authors of the Bombay Plan also depended on imperialist capital goods and technology and wanted loan-capital from them for its implementation. It also relied on massive deficit financing—Rs.3,400 crore out of a total plan expenditure of Rs.10,000 crore(at the average of 1931-39 prices)–by the state and on a state-owned industrial sector on the basis of which their private industries would thrive. What the planners had in mind was the creation of a strong, centralized state. The Bombay Plan, like the Nehru plan, had much in common with the GOI plan. As Sir Ardeshir Dalal, who was associated with both the Bombay Plan and the government plan, remarked, “the objectives of the Government Plan and the Bombay Plan are the same”.

In fact, as Hanson stated, there was little to distinguish the Industrial Policy Resolution of April 1945, i.e, of colonial India from the Industrial Policy Resolutions of 1948 and 1956 i.e, of independent India. As Michael Kidron stated, many of the measures adopted after independence were foreshadowed during that period. Essentially, India’s model of development was based on the Western model which advocated investment of foreign capital and technology and state intervention in a large way in areas where private capital was not forthcoming and to create the infrastructure with the state backing for future investment by private capital — both foreign and domestic—in a very big way. All these plans were silent about the need for restructuring the society—the abolition of feudal relations and the confiscation of existing imperialist capital.

The years after 1947 witnessed the continuation of the same policy whose blueprint was prepared before. One important difference was that in that new phase, it was the USA, rather than the UK that emerged as the new global power that sought to rebuild India in its own image and for its own benefit. Important roles were played by Chester Bowles, twice US Ambassador to India, Douglas Ensminger, Ford Foundation, MIT Centre for International Studies, George Rosen, Wolf Ladejinsky, Rockefeller Foundation etc. The Ford staff with Ensminger in charge was closely associated with the Planning Commission and their main purpose was to throw back communism and build up US global hegemony. The Community Development Programme(CDP) undertaken with US guidance was to cover 64 villages in UP to bring about what J Nehru described as a “peaceful revolution” and remove intense discontent among the peasantry and thereby forestall the possibility of a revolutionary transformation similar to what took place in China. The Ford and Rockefeller Foundations lent their support to this programme. The USAID(US Aid for International Development) and the FF(Ford Foundation) worked together on the CDP, trained Indians for the projects and also gave financial support for the setting up of such Indian agricultural universities and research centres as the IndianStatistical Institute (ISI), the Delhi School of Economics, Gokhale Institute etc.

Even for food, India had to depend for many years on the USA. When, in the mid-1960s, the food crisis reached alarming proportions, the Indian ruling classes adopted a technocratic approach to the food problem and opted for the ‘green revolution’ which implied the application of HYV seeds, chemical fertilizers, pesticides and a very heavy quantity of water. The seeds and other things India was forced to buy from the TNCs. This major shift in policy was not initiated by India’s planners but was dictated by US imperialism and the World Bank. As the subsequent developments showed, the GR, far from reducing inequality and removing hunger and food shortage, only accentuated the inequality between class and class, between region and region, and furthered the interests of rich peasants and landowners. It had caused degradation of the soil, destroyed fish wealth and created health hazards of different types through the use of chemical fertilizers and pesticides and the use of a few exotic HYV seeds led to the loss of genetic diversity of indigenous seeds.

As we have pointed out, from the very beginning, India’s plans were heavily dependent on loan capital and investment capital, technology and technical ‘experts’. That of course made her more and more indebted to foreign powers. That such a model of development and dependence on external agencies landed India in debt bondage can be seen in the terms of agreement, nature of foreign ‘aid’, FDI etc.

During the eighties, changes in government policies were noticeable. With relaxation of controls over capital issues, licensing etc., lowering of tariffs over imports and exports, increase in incentives to exporters, relaxation of foreign regulations and so on, India’s trade deficit and adverse balance of payments, chronic since the inception of planning, grew from bad to worse. The steady rise in India’s budget deficit necessitated increased dependence on external debt. The increasing balance of payments difficulties, the soaring external debt, the acute foreign exchange crisis etc.—all of which were the inevitable outcome of India’s ‘development’ planning for about forty years—placed the Indian government totally at the mercy of the IMF and the World Bank.

Side by side, the advanced capitalist countries had been hit by recession since 1978-79. They were very anxious to export more capital goods and luxury consumption goods to Third World countries like India and to have all the existing restrictions on their exports by the Indian government removed. Their interests converged with those of big Indian industrialists. They were also critical of various government controls such as the industrial licensing system, controls over capital issues, foreign exchange regulations, import controls and others which now came to stand in the way of their operations. The irony is that these very controls had earlier enabled them to become what they were and created for their industries a monopolistic market. But now these same controls had become fetters for them. The ‘socialist pattern’ had already served its purpose and for them it had already outlived its utility. There was, therefore, no need of it after that. They had large amount of capital within the country and many more kept in foreign banks. They wanted to bring back part of it as white money to realize their ambitions of more and more expansion. In fact, their dreams could be made real as junior partners of trans nationals based in imperialist countries.

That constituted the essential background to the adoption of the policy of ‘liberalization’, that the dismantling of controls and restrictions—both essential instruments of planning. The World Bank released a report in December 1989 entitled India: An Industrializing Economy in Transition which became the basis of India’s ‘new industrial policy’, and was announced later. The fact is that this report contradicted the guidelines for the industrial policy in the Planning Commission’s Approach to the Eighth Plan which had been approved by the union cabinet a only few days earlier(See BM, ‘Liberalization Lobby’s Attempted Coup’, EPW, 9 June 1990,pp.1237-38). As India’s crisis grew, the IMF, the World Bank and the Aid-India Consortium members demanded more ‘liberalization’ of the Indian economy which implied a steep devaluation of the rupee, more opening of doors to foreign capital, freer imports of capital goods, industrial goods etc, lowering of tariffs, relaxation of Foreign Exchange Regulation Act provisions and of the Monopolies and Restrictive Trade Practices Act, change in India’s Patent Act etc.

What followed was that immediately after assuming office in June 1991, the new government with Narasimha Rao as the prime minister announced policies that actually went a long way to meet the demands of the IMF and the World Bank. The new finance minister, Dr.Manmohan Singh assured the managing director of the IMF in a letter dated 27 August 1991 and the enclosed “Memorandum of Economic Policies for 1991/92-1992/3” that more measures would soon follow. That signalled the beginning of the “Liberalization, Privatization and Globalization” programme. In July 1991, the government abolished the industrial licensing system for all industries except a few related to security, declared the policy of abolishing official controls and promoting foreign investments, assured direct foreign investment up to 51 per cent foreign equity in high priority industries etc. An open-door policy towards foreign capital and foreign technology was adopted. Needless to say, all these were measures were ruinous to the interests of the vast masses of the people and quite beneficial to the interests of imperialist capital and the collaborating Indian big industrialists. The Planning Commission in a paper entitled “Emerging Issues of Planning” had to acknowledge that the essence of the process of planning had been erode (Eighth Five Year plan 1992-97, vol.I,p.19). The talk about the creation of the Special Economic Zones as ‘foreign enclaves’ from the early 2000s was nothing unusual. It was a necessary and inevitable chain in the process of global control by foreign and domestic corporate capital.

Let us now talk about another related development—Operation Green-hunt. Prior to economic liberalization, mineral extraction and refining was done largely by government-run companies. That changed in 1993 with foreign direct investment(FDI)being allowed in the sector and the process for investment was eased further in 1997. Since 2006, 100% FDI has been allowed in mining, prompting a mad rush for deals, most of them violating laws and environmental norms. Much of India’s mineral-rich zones are inhabited by the adivasi people who have been staying there for centuries together and on which they depend for their livelihood and around which their culture had developed. Despite the fact that sale of adivasi land is illegal in the eyes of the law and various court judgements, the central government led by Manmohan Singh-Chidambaran & Co. and many state governments under different political parties are selling out such areas for exploitation and plunder by foreign multinational companies and domestic comprador big capital such as Vedanta, POSCO, Tata, Acerol Mittal, Jindal and others. That led to massive displacement of the adivasi people from their natural habitats. This has naturally led to opposition and resistance from people—either unarmed or armed—and the Maoists as the major political force, are resisting such attempts with arms. Such opposition from the side of the Maoists and other social and political forces are proving to be matters of grave concern to the Indian ruling classes, their political representatives and the foreign MNCs whom they have invited to plunder the country’s resources totally detrimental to the interests of the people of the land. Thus the long march backward from the days of the ‘mixed economy’ to the days of the ‘Operation Green-hunt’ has been a period of prolonged agony for the basic masses.


Alternative Model of Development

Thus the maladies we are dealing with arise out of the existing Western model of development that the Indian ruling classes have pursued over the decades against the interests of the Indian people. . The need of the hour, therefore, is to develop an alternative model of development which should be basically different from the model that the Indian government had been pursuing so far—a model which is based on the Western model and is not rooted in Indian soil. To be a pro-people model of development one should adopt a policy of self-reliance and totally do away with dependence on imperialist capital and technology. It should stand on its own resources. Contrary to what the planners and the Indian big capital and foreign MNCs would have us believe, India is not at all a poor country. In fact, India is a very rich country; and that precisely is the reason why the foreign capitalists come to plunder our wealth and natural resources and they are finding willing accomplices in some among our countrymen.

To be brief, the main features of this alternative model are as follows: First, the wealth generated in India should not be allowed to be siphoned off to foreign countries. India is a rich country with huge human resources, natural and mineral resources; still the people are deep down in poverty. The main reason is that massive amounts of wealth are being plundered by a handful of super-rich elites and imperialists and are wasted on the maintenance of a massive bureaucracy, armed establishment and corrupt politicians who are minting millions out of the sweat and tears of those who themselves are the creators of wealth. There should be confiscation of the vast amount of wealth accumulated by feudal elements, compradors, foreign capitalists and their accomplices. The aim of planning can never be to create millionaires, but bring about the equitable distribution of wealth among the people so that nobody die of malnutrition and hunger, everybody gets free and compulsory education, health and a decent and simple living. Since the overwhelming majority of our people depend on agriculture, we should make plans in a way that helps promote agriculture.

Second, this model should see to it that the purchasing power of over 90% of the impoverished masses is enhanced. That would help create a huge home market in the country itself which will act as the main engine for growth. This could be initiated through land reforms, by the re-distribution of land on the basis of ‘land-to-the-tiller’.

Third, the land reforms will require large investments in agriculture to regenerate the soil destroyed by the ‘green revolution’. Along with these, forestry, poultry, goat farming, fishery will increase the purchasing power of the rural people. This will, in turn, create a market for the basic necessities of life and will help generate local industry resulting in employment generation. Industry should be such that serves agriculture.

Fourth, simultaneous development of agriculture, light industry and heavy industry with stress on the first two on which most of the people depend to make both ends meet.

Fifth, hundreds and thousands of small and medium factories have been closed for decades. These have been closed mainly because state policy does not help them at all; these help only big capital. And the withdrawal of restrictions on the entry of foreign capital has been daily and hourly leading them to their doom and with that the deaths of an innumerable number of workers throughout the country. The new model should say ‘no’ to foreign capital, impose restrictions on their entry and take steps to open all the closed factories. All developments should have to be oriented towards doing good to the people, and not to fatten the purse of the millionaires.

Sixth, in the urban areas also, industrial production would be people-oriented and not luxury-oriented. The opulent expenditure of the super rich should cease to exist and they should part with their surplus and ill-gotten wealth.

Seventh, all colonial acts should be totally scrapped.

In a nutshell, such a development model should be self-reliant and anti-foreign which reminds one of the swadeshi days in colonial Bengal when the national bourgeoisie adopted such a path and fought against imperialist capital.

In the present model of development, there is hardly any scope for human values to take root and flourish. The greed for profits has taken precedence over everything else. To attain people’s development in the true sense of the term, we need to restructure existing property relations, bring about equitable distribution of wealth, uplift in the living conditions of the people, and all-round development of the people. The need of the hour is to create a society where human values triumph over the greed for profits.

The author is professor, Department of History, Jadavpur University, Kolkata and secretary general, CRPP (Committee for release of political prisoners)

1 Comment »

One Response to “Development: Maladies and Remedies”

  1. Kanailal Biswas Says:
    November 15th, 2010 at 04:09

    The author a highly qualified and elitist educated.He can’t see the evolution of human society beyond “creation of surplus value based on investment (capital, labour etc.) and market (demand,necessity etc)”. Equitable distribution – as if all related items (labour,needs etc.) can be measured properly. However,what he is approaching almost all his ideas sincerely implemented in Soviet Russia and failed to achieve neither an equitable society nor an embrionic base of future non-exploiting society where real humanity will prevail.
    Class divided exploiting Society is based on indivisuality. So if we wants a proper equitable society we have to fight to earn a social base of collective wishdom and collectivity.
    How that can be earned or to be achieve that a altogether seperate narration.
    Interested person can contact after 7 PM 9830776716

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