[Reader-list] EPW Article By Medha Patkar and Amit Bhaduri on Industrialisation

[Aashish Gupta]

A very well argued piece.

Patkar, Medha and Bhaduri, Amit. *Industrialisation for the people, by the
people, of the people. *Economic and Political Weekly, January 3, 2009. Pg
10-14

http://epw.in/uploads/articles/13034.pdf

Economic, political and social processes are interwoven inextricably in the
course of development. Developmental economics is sterile without an
understanding of the accompanying developmental politics, which involves the
interaction of the State with the major actors. At the core of this
politico-economic process is the role assigned to industrialisation. Thus
the current debate about industrialisation is essentially a debate about how
the economic and political factors would drive, in an interlocked manner,
the transformation of our economy, polity and society, and it should not be
trivialised into statistics about growth rates.



Our dissenting voices about the current pattern of high growth are often
branded as anti-development. Therefore we need  to state why we oppose the
present pat- tern of industrialisation in India, and how an alternative path
can be charted out, starting with a few practical steps. There are five main
reasons for our opposition as political activists, and associated with each
there is a corresponding economic step that needs to be taken to initiate
the alternative process of development within the realm of practical
politics and reasonable economics.



*1 Deepening of Democracy and People's rights*



Politicians, economists and commentators of all sorts from the media treat
it as almost axiomatic that the standard of living of ordinary people cannot
be improved without large modern industries based mostly on the historical
experience of the west taken out of context. They tend to forget that
England took some 100 years (1780-1880 approximately), and a similar time
scale was involved for other western countries. During this period people
had hardly any democratic rights based on universal adult suffrage. The same
applies even to later experiences like South Korea, China, etc, which are
transforming faster. In contrast, India is a poor country where people have
democratic rights, though the institutions that are necessary to secure
those rights malfunction. It is essential to strengthen and expand these
rights, especially for the poor; instead they are being violated
continuously, most visibly through land acquisition by the State with- out
their consent. The role of gram sabhas is not recognised, nor is the legal
process fully and fairly followed. It is not just land but habitat after
habitat, even generation's old, common property resources, such as water
bodies as also tree and forest cover, that is snatched away, resulting in
the poor being deprived of their livelihoods and uprooted from their
socio-cultural milieu. Compensation of all this loss with acceptable
alternative livelihoods and a share in the benefit, rarely come true for
decades, even generations. People resist the resultant trauma and fight for
survival with right to life and livelihood within our constitutional
framework.



We support these resistances against land acquisition *without people's
consent*, we ask for a referendum of the people involved, proper
rehabilitation and resettlement to correct the wrong headed policies of
successive governments irrespective of the colour of the government that
indulges in it. The effect of taking the people's view on land acquisition
would directly influence the pattern of industrialisation, making it
non-displacing or least displacing and truly employment generating, i e,
benefiting the local communities  who would be the investors of land and all
natural resources as against the others who invest non-productive monetary
resources. Moreover, this would also strengthen the democratic rights and
participatory role of the people in planning development and community
management.



*2 Immediate Gainers and Permanent Losers*



It must be recognised that the benefits of industrialisation come
unacceptably slowly to the poor, because creation of jobs in industry
proceeds at a slow pace due to mechanisation and rationalisation of
production in large industries. Labour transfer from agriculture to industry
is a slow process, and in India the contribution of agriculture to gross
domestic product has been falling dramatically, but the percentage of
population in agriculture has been falling extremely slowly. As a result
government policies have turned agriculture and much of the informal
services into a refuse sector where the poor are imprisoned in sub-human
poverty without a reasonable chance of escape into the industrial or formal
service sector. Despite so much hype about nearly double digit growth,
regular employment in the organised sector grew at about 1%, according to
the government's own admission in the *Economic Survey*. Private sector
employment growth did not even compensate for the jobs lost in the public
sector. The two supposedly industrially dynamic states with large direct
foreign investment,

Gujarat and Maharashtra were among the incredibly slower growing states in
terms of employment (NSS 61st round; also, *The* *Times of India*, 7 July
2008).



Nevertheless, this is not the entire story, perhaps not even the most
important part of the story. The whole organised sector to which the
corporate sector belongs, accounts for less than one-tenth of the labour
force. Contribution by the unorganised sector, which includes most of
agriculture, comes from lengthening the hours of work to a significant
extent, as this sector has no labour laws worth the name, or social security
to protect workers. Subcontracting to the unorganised sector along with
"casualisation" of labour on a large scale become convenient devices to
ensure longer hours of work without higher pay. Self-employed workers,
totalling 260 million, expanded the fastest during the high growth regime,
providing an invisible source of output growth. Ruthless self-exploitation
by many of these workers in a desperate attempt to survive by doing long
hours of work with very little extra earning adds both to corporate profit,
and to human misery.



Government policies of fiscal austerity embodied in the Fiscal
Responsibility and Budget Management (FRBM) Act of 2003 largely to keep the
stock market, the foreign investors, the World Bank and the International
Monetary Fund (IMF) happy meant stagnation of public spending as a
proportion of GDP on education and health, and denial of minimum social
security to the poor in almost all unorganised industry. The time scale
involved before the poor people in this country can benefit from
industrialisation by moving into industrial jobs is too long. It involves
several generations that would have lost their land, livelihood and home in
the meantime. How would they survive, how would their children face
eventually the industrialising and globalising world without education,
health and without a community to impart social values? To sacrifice the
weakest members of several successive generations in the name of development
is unacceptable and incompatible with basic democratic values and economic
goals of equity.



This utterly unjust and undemocratic route is also unsustainable in the
longer run, as democratically elected government would lose its legitimacy
in the eyes of the people if it should take recourse to State-sponsored
violence to contain the despair and fury of the people. The symptoms are
already unmistakable – movements in the name of caste, religion,
regionalism, language, and the class anger of the dispossessed poor. They
tend to divide us in numerous ways, and the wrong anti-people path of
industrialisation has been a major contributory factor. We therefore have to
struggle for more public action, more funding for health, education and
social security for the poor, to force governments to abandon the false path
of anti-poor policies in the name of "sound finance".



Sound finance must be targeted at diverting resources from unnecessary
external and internal defence expenditure, less money spent on government
pomp and splendour. This can be achieved by opposing all divisive policies
in the name  of religion, caste, regionalism, by working  systematically for
the poor, not by trying  to fight terrorism of all sorts with blind  military
might, and accepting the legitimate demands of various communities  through
negotiations. The Indian federal structure should be flexible enough to
accommodate economically and politically different degrees of autonomy for
different regions to reflect popular demand.



3 *Corporates versus People*



Until the recent financial crisis, it was an oft-repeated cliché that the
capitalist market economy is good at creating wealth, but bad at
distributing it, while for socialism it is the other way round. Such a
wisecrack avoids facing the real problem. It is overlooked that how wealth
is created determines to a very large extent how it is distributed. Ideas
such as: create wealth by promoting corporations, and then distribute it
through state action like high taxes, or through corporate social
responsibility are wishful thinking, and avoid the real issue. If the state
wants corporations to create wealth, it also has to provide them with the
incentive to control and enjoy that wealth. Corporations would not create
wealth simply to distribute it, except perhaps a minor fraction in some
instances! Therefore we have to oppose corporate-led industrialisation,
which bestows control to the corporations as the wrong track for improving
the living standards of the people; instead a way has to be found by which
wealth created mostly by the people would have an in-built mechanism for
distribution in their favour without depending on a top- heavy bureaucracy.



This alternative way of industrialising would involve the poor, mostly
uneducated and illiterate people as a propelling force for the creation and
distribution of wealth. This involves (a) their participation through moving
towards productive full employment in the shortest possible time, and (b)
not destroying existing livelihoods without the people's consent and
providing them with alternative livelihoods, which, in the present context,
means that industry must come up on vacant/uncultivable land. Economic
growth would be the outcome of this strategy, rather than employment and
other benefits being the "trickle down" outcome of growth. This is a
fundamental difference between our and the official economic perspective in
the formulation of Indian economic policies.



4 *The alternative*



The alternative we envisage essentially requires starting at economically
the most vulnerable points in our poor country with poor, unskilled people
rather than rejecting them as useless for achieving high growth as is
happening now under liberalisation, privatisation and globalisation pursued
by the present government (right now in a denial mood due to the financial
crisis and forthcoming elections). Most of our poor are in rural areas
unable to make a living, and can earn enough in exchange of productive work
that builds up social wealth. This is where we have to start by extending
the employment guarantee scheme everywhere, in urban as well as in rural
areas at a minimum legally stipulated wage for 300 days a year. This must be
done immediately in areas of special need due to catastrophes, like the Kosi
area, and areas of abysmal poverty even by Indian standard, like Kandhamal
in Orissa. No large difference between rural and urban wages should be
allowed so that cities do not gain at the cost of impoverished villages.
Jobs should be available on demand, and would be largely self-selecting
without bureaucratic red tape because, if honestly implemented, only the
very poor with no other reasonable source of income would opt for it. It can
also be seasonally adjusted.



The barrier to this policy is mainly twofold. First, it cannot be
implemented effectively because bureaucratic mechanisms are inadequate for
ascertaining that the deserving poor benefit, and productive work is offered
to improve living conditions rapidly in rural areas. A precondition for this
to happen is decentralisation of power to the lowest level of elected local
government in the spirit of the panchayati raj, not through mere political
pronouncements without intention. Neither the centre nor the states have
been enthusiastic about giving complete autonomy of decision-making and even
less financial autonomy to the local governments. Yet without these measures
no large-scale productive employment generation programme, which would
benefit local communities under their own responsibility, can have any
reasonable chance of success. However, decentralisation is necessary but not
sufficient; all movements of the people must support it in the teeth of
opposition of the vested interest of politicians at higher levels (MLAs,
MPs), higher bureaucracy (the Indian Administrative Service, the state
bureaucracy), so-called economic and developmental experts housed by
organisations like the IMF, the World Bank and the Asian Development Bank
(ADB) working in unison with the Indian government, and hostile
media-persons who pretend to know. The simple guiding principle should be,
"those who hope to benefit from these local projects must take the
responsibility of their decisions". They would gradually bear an increasing
proportion of the cost from local efforts as they become financially
stronger. An essential legal first step is to actualise the 73rd amendment
with the help of Article 243 of the Constitution. The legal framework is
mostly in place, and only an irresistible people's demand will make it a
reality.



*Cost of Programme*

The cost of such a programme works out, at the most, approximately to 6 to
7% of GDP. This we must afford as the highest priority. There is no point in
pretending to be an emerging superpower with nearly half of our population
in extreme poverty without minimum healthcare, sanitation, nutrition, and
education, with the largest number of illiterate and undernourished
children, many crippled by malnutrition. Is this the preparation for
entering the much talked about opportunities of globalisation by our
pro-liberalisation, pro-reform politicians? We can do better by (a)
reallocating government expenditure and by cutting down public expenditure
by politicians, which also has a symbolic value, (b) by raising taxes on the
rich and on corporate profits rather than indirect taxes on the poor, and
expanding the tax base, introducing a substantial tax on speculative
cross-border financial transactions, especially in the light of the recent
financial crisis, instead of pleasing the rich/middle class and the
IMF-World Bank-ADB with capital account convertibility, more foreign
investment, etc, as essential for growth, and finally, (c) increasing the
central government budget deficit as and when necessary to finance this
programme by doing away with the FRBM Act.



The money for this programme would be held in a separate account with the
nationalised banks and a credit line would have to be provided to the local
governments/panchayats without interference from the central and state
governments. The mechanism for supervision would be mutual check and balance
between banks and the panchayats, where successful projects would be
rewarded with more funds at the next round for the implementing panchayat
and bonus for the local branch of the bank, and penalty would be a gradual
reduction of funds and no promotions for the concerned bank employees. The
criteria for success and failure would have to be agreed between the two
parties depending on the nature of the project beforehand. One important
element in this  context, especially relevant for the poor, would be the
social component wage, e g, the first right to access/use to the local
school, primary health centre, watershed, and/or warehouse facility which
the local labourers under the employment guarantee scheme help in building.
This is also the way to improve the "delivery system" to the poor. The
current way of handling it by privatising is vicious; it simply prices out
the poor from the essential services, which is their right as citizens of
this country. We support a system of delivery based on local initiative to
meet local needs with local accountability and responsibility to the maximum
extent possible.



In this way we can produce a large range of goods and services for the local
market created through purchasing power generated locally in the hands of
the poor and used by the poor for local exchanges to suit their needs. Only
through this route they would enter the larger economy with their full
economic rights as both producers and consumers. This means emphasising the
domestic market as the centre of economic policy. Globalisation, trade
liberalisation, etc, insofar as they shift the relative emphasis from the
internal to the external market and the market meant exclusively for the
richer section of the population, are counter-productive. Therefore we are
opposed to the policies of gung-ho liberalisers, foreign investment or
globalisation seekers. At this stage of Indian economic evolution, the
priorities of our industrialisation and growth must be different from what
governments of various colours seem to want. We want them to see reason and
change track, and would continue to fight for it. The current crisis would
have served an unintended historical purpose if it forces the government to
emphasise the importance of developing the internal market for the poor.



5 *Composition of output, and the environment*



There is a misconception that we are impractical romantics, only interested
in persevering the old world and the environment. This is untrue; we are
interested in people, especially people who have almost nothing today and
are continuously threatened with even losing the little they have. The
composition of our GDP must change. It should be produced by the majority
for their own use, while playing their rightful dual role as consumers and
producers. The composition of output, produced in this manner at the local
level would require less energy; no big dam would be needed to provide
electricity nor would expensive and dangerous nuclear power be required;
production in general would become much less intensive in its use of natural
resources  like land, water, forest and mineral products. To reduce the pace
of mindless  urbanisation and day dreams of world class cities that suck in
enormous natural resources for a handful of rich people by destroying the
livelihoods of the poor is a related task which only this alternative
pattern of industrialisation focusing on local  initiatives in rural areas
can achieve. Saving and improving, through popular initiative, common
resources of forests, rivers and the sea coast, cultivable land for the
peasantry and those who now make a livelihood from related agricultural
activities are the way forward for sustainable development without the state
practising developmental terrorism on the poor. We have to fight for all
this here and now to save ourselves, and the generations to come