Reforms must reduce economic disparities
At a time when there has been enough of eulogising and back-patting to celebrate the 30th anniversary of the 1991 economic reforms, former Prime Minister Manmohan Singh, the main architect of these reforms, has in a statement said: “It is not a time to rejoice and exult but to introspect and ponder. The road ahead is even more daunting than during the 1991 crisis.”
The statement comes at a time when a global study — the first instalment of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) — has sounded a ‘code red’ warning for humanity, with UN Secretary General Antonio Guterres categorically stating: “The evidence is irrefutable; greenhouse gas emissions are chocking our planet and placing billions of people in danger.” What the crucial report fails to acknowledge is how neoliberal economics, treating GDP as a measure of growth, has literally heated up the planet. Or else, how can one explain that the world’s top 1 per cent add twice the amount of emissions that half the world generates.
The warning is to ensure that the world doesn’t breach a temperature rise of 1.5°C in another 20 years. But considering that 1.1°C increase has already been recorded, I don’t know how many more years it will take to raise the heat by another 0.4°C. Nevertheless, the way the world has heated up resulting in the climate going topsy-turvy in the years of industrial growth shows there is something fundamentally flawed with the way the economic growth design was laid out.
Another global study is the successive rounds of inequality reports presented by the international charity Oxfam at the World Economic Forum, clearly bringing out how the rich have become richer, and the poor getting poorer — a strong pointer to the immediate need to rethink reforms. If the top 1 per cent in India holds a wealth that is equivalent to more than four times the wealth held by 73 per cent of the population, the role economic liberalisation played in exacerbating inequality cannot be glossed over. If Jeff Bezos, who recently took a space flight, can earn $8 billion a day and still pay tax less than what a US stenographer does, it tells us how the global model of economic reforms has helped the super-rich amass wealth. In India, like elsewhere, easy money and economic stimulus have gone into the stock market. No wonder, the stock markets are booming at a time when the global economy is struggling.
Inequality is bad economics, and accumulation of vast wealth by a tiny group of people is clearly an outcome of some inherent flaws in the growth prescription. As the advocacy group Public Citizen tells us, the collective wealth of CEOs of US Big Tech companies, which had reached $651 billion in 2021, was enough to wipe out global hunger, get rid of malaria, vaccinate the world with Covid shots, and end homelessness in America. And these billionaires would still be left with enough to splurge.
In India, a tiny fraction of the huge wealth that the top 1 per cent has accumulated should have been enough to wipe out poverty and make hunger history. Economist Surjit Bhalla had some time back stated that Rs 48,000 crore can eradicate poverty for one year from India. If that is true, and considering that hunger is a dimension of extreme poverty, I don’t see any reason why India be ranked at a dismal 94 on the list of 107 countries of the Global Hunger Index 2020. And that too at a time when food stocks have been overflowing for several years in a row. Add to it the growing unemployment; and the continuing agrarian distress, amplified by the farmers’ protest around New Delhi; the time is ripe not for deep reforms but to bring in a humane set of reforms that measure up to the growing needs of public health, education, agriculture, environment protection and reducing economic disparities.
A healthy and dignified life depends on various factors, including a healthy environment. According to the 2020 Environmental Performance Index (EPI), India ranks at a lowly 168 among 180 countries for which the index is prepared. The report says that the countries that ranked higher “generally exhibited long-standing commitments and carefully constructed programmes to protect public health, conserve natural resources and reduce greenhouse gas emissions.” Not that the rich countries have achieved these social and environmental protection goals as would have been required, considering that just 90 companies as per a study have collectively spewed 63 per cent of the emissions since the beginning of the industrial age. This only shows the need for Indian economists and policy-makers to work out a more sustainable and inclusive pathway.
This is something that the chest-thumping original proponents of economic reforms should have focused on, but their sloppy understanding of the phrase ‘reform’ — seen only as a euphemism for privatisation — has pushed us into the same flawed IMF-led global trajectory. Instead, the policy imperative should have been to ensure that the majority population at the middle and bottom of the pyramid too earns more, thereby creating a huge rural demand, and in the process revitalising the rural economy.
Indian policy-makers missed a historic opportunity to look beyond the well-orchestrated ‘Washington Consensus’ design and lay out a desi model of economic reforms that was built treating agriculture as the second engine of growth. Instead of pushing people out of agriculture, the emphasis should be on converting this sector, which continues to be the largest employer, into a powerhouse of economic growth.
It is possible even now. Learning from the devastation that industrial agriculture has brought to the farming landscape in the rich countries, and the huge agrarian distress that globally free markets have resulted in, the key lesson is to redraw reforms bringing in tenets of an economically viable, profitable and ecologically sustainable food farming system where farmers receive an assured income by way of an assured price, and consumers get safe and healthy food.
