Millennium Post

UPA under big business spell

The United Progressive Alliance has no cause to celebrate as it completes three years in power. It observed the anniversary with self-destructive tactlessness by raising petrol prices by 12 percent and courting strong opposition. UPA-2 shows no real sense of public purpose, and increasingly, even of internal cohesion. As the contradictory signals on a presidential nominee emanating from its constituent parties suggest, they are pulling in different directions.

The UPA leadership is adrift, without energy, and bereft of ideas. There are no signs that it can stop the coalition's further decline before the 2014 elections.

Several things have gone wrong. UPA-2 squandered the opportunity to fulfil the promises it made in 2009, which propelled its return to power. The most important promise was to build an inclusive India, with a less skewed distribution of growth and income, and greater social cohesion, which could give the minorities and the poor a sense of belonging and being cared for.

Instead of pursuing aam aadmi-centric policies, UPA-2 became a slave to neoliberalism, pampered Big Business, and facilitated the plunder of natural resources. It neglected agriculture to a point where it has become unviable for millions of farmers, leading to a spate of suicides. UPA-2 also got mired in ugly corruption scandals.

Inclusive growth by definition means growth that benefits all sections of society, rapidly reduces poverty, establishes access to public services, particularly for the underprivileged, increases employment and incomes, and narrows inequalities in incomes and assets between individuals, groups and geographical regions.  

None of this has happened. The fruits of India's GDP-intensive growth have largely accrued to the top 10 to 15 percent of the population. Poverty, especially resource poverty, has intensified in many parts of the country even as malnutrition and high infant mortality have proved persistent.

Per capita availability of food has decreased. Employment has grown by less than one percent a year—not even one-half of the annual addition to the workforce. Access to public services has become more unequal. Income inequalities have widened and deepened. And opening up retail trade to organised business, and in a creeping manner to foreign investment, has undermined the livelihoods of millions of small vendors and petty traders, who eke out a hand-to-mouth existence.

Despite its crushing defeat in Parliament on allowing 100-percent foreign direct investment (FDI) in retail, UPA-2 hasn't given up on the agenda. Nor has Prime Minister Manmohan Singh stopped pushing the giant Korean-origin POSCO steel project in blatant violation of India's environmental and forest laws—despite its rejection by three official committees on unassailable grounds

Indeed, the Prime Minister's Office is setting up a Special Purpose Vehicle to grant super-fast clearances to numerous infrastructure, mining and industrial projects. This would be understandable if these were held up by mere bureaucratic inertia. But as it happens, they don't conform to India's own rather lax environmental standards and forest laws, in particular the Forest Rights Act, which stipulates that that forest lands cannot be diverted to non-forest use without the informed approval of local forest-dwelling communities.

Indian policy-makers, and the PMO in particular, are obsessed with promoting the 'India Brand Equity' concept to attract FDI at any cost. Anything that detracts from this is seen as 'obstructionist' and signifying a return to 'licence-permit

Industry lobbies have mounted a strident campaign against a fictitious 'policy paralysis'. They want 'second generation reforms', which entail further deregulation, greater privatisation of public enterprises and public services through so-called Public-Private Partnerships, more liberalised investment and trade regimes, and dismantling of such meagre labour protection as exists.

These lobbies and their representatives in the media seize upon every sign of a growth slowdown, and every move to downgrade India's investment rating by agencies like Standard and Poor, as an argument for yet more neoliberal policies. They raise a false alarm about India sliding into a European Union-style recession.

Of course, there is no 'policy paralysis'. UPA-2 is assiduously pursuing neoliberal policies Western credit–rating agencies shouldn't be given too much credence. They deploy politically motivated double standards. If they were to apply to the US the indebtedness norm they use for, say, Spain, the US—the world's biggest recipient of FDI, about $200 billion a year—would become a no-investment destination. Spain's public debt-to-GDP ratio is 69 percent, the US's is 103 percent.

India, with a ratio of under 60 percent, fares much better than France (86), Germany (82), the UK (86), the EU (81), Japan (210) or the US. If total (including private) debt is considered, the US emerges as one the world's most heavily indebted countries. It owes to the world three times as much as it produces in an entire year. Germany's total debt-GDP ratio is 285 percent, Japan's 470 percent. India's ratio is a more modest 129 percent.

India now attracts more than $50 billion in FDI, up from under $5 billion a decade ago. Its savings rate has risen to 33 percent of GDP from 25 percent in the 1990s. The problem is not FDI or GDP growth as such. It is the quality of growth and what it does for the people's living standards.

At the end of UPA-2's three years in power, India has become a more unbalanced, strife-torn and unhappy society, with reduced human security and tattered social cohesion. Rather than correct policy course, the government deals with the resulting discontent with brute force.

This is starkly and painfully evident in the central tribal belt, where Naxalism has flourished, fed by social disaffection and deprivation of millions of people from access to natural resources, especially common property resources such as forests, grazing lands and water bodies. The Indian state is escalating the level of force as it wages war on its own people in this belt

No less significant is the repression of grassroots protests against destructive projects such as POSCO and Tata Steel in Orissa, mining ventures in Chhattisgarh, Jharkhand and Goa, dams coming up like a rash in Uttarakhand, Himachal Pradesh and the Northeast, and nuclear power projects at different sites, including Koodankulam (Tamil Nadu), Jaitapur (Maharashtra), Mithi Virdi (Gujarat), Fatehabad (Haryana), Kovvada (Andhra Pradesh) and Chutka (Madhya Pradesh).    
Yet another UPA-2 failure lies in its inaction over the Sachar committee report on the status of Muslims and the poor design and implementation of programmes for districts in which the religious minorities are numerically important. The UPA won the 2004 election partly because of public revulsion against communal violence. But it has not delivered on the promise of bringing justice to the victims of the 1984 anti-Sikh riots and the 2002 anti-Muslim pogrom in Gujarat.

On foreign policy and security issues, UPA-2's record is poor. It has aligned India closely with the United States, eroding her options for an independent course in world affairs just when a multipolar global order is emerging. Thanks to its obsession with the US-India nuclear cooperation deal, India has locked itself into an inappropriate, extremely hazardous and costly energy path based on nuclear power, while effectively abandoning the agenda of fighting for a nuclear weapons-free world.

India has signed countless bilateral investment agreements, which demand equal 'national treatment' for foreign corporations. On important issues such as Iran, Palestine, Libya and Syria, UPA-2 has taken an unbalanced stand, which has caused a loss of goodwill for India in the Arab world and Iran.

India under UPA-2 has neglected the vital task of substantially improving relations with its neighbours. It has fought shy of taking a bold enough initiative to achieve a breakthrough with Pakistan by resolving the Siachen and Sir Creek disputes, negotiating nuclear risk-reduction measures, taking unilateral steps to liberalise trade, and dismantling visa barriers.

New Delhi lost a precious chance to seal an agreement with Bangladesh on the Teesta waters issue, which would have removed long-standing bitterness over India's unilateral decision in the 1970s to build the Farakka Barrage on the Ganga without consulting Dhaka. India didn't step up to the task of delivering generous assistance to Bangladesh

India facilitated a worthy agreement in Nepal, which eventually deposed the monarchy and brought the Maoists into the mainstream. But through its interference on some issues, and inaction on some others, India has since lost some of the goodwill this generated.

On the mass killings of Tamil civilians in Sri Lanka during the last phase of the anti-LTTE military operation, India's role was downright deplorable. It provided intelligence and logistical support to the Sri Lankan military, crucial to winning the war. But India abjectly failed to use its leverage to prevent the massacres.

India is globally seen as a rising power and has joined many groupings such as the G-20 (comprising the world's 20 major economies), besides BRICS (with Brazil, Russia, China and South Africa), and IBSA (with Brazil and South Africa). It also won a non-permanent seat on the UN Security Council. India's elite relishes global recognition, but it has no strategy to make the world less unequal and violent. This failure is replicated domestically on an even larger scale.
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