With acute observation and sharp expression, Dilip Hiro covers Indian production, communication, finance, and culture in a world beset by hectic change and seeming homogenisation, and his attention to laws and policies is salutary. Reminding us that until 1961 India’s policies on trade and foreign investment were relatively liberal, Hiro locates the post-1991 changes in their political and economic context.
Between 1961 and 1977, India prioritised the domestic economy despite the departure of foreign firms which refused to meet the condition that they have Indian participation in their existing equity. Major inflationary problems, however, followed the 1965-66 drought and the expense of the 1965 Indo-Pakistan war; India, also under United States and World Bank pressure, devalued the rupee by 57.5 per cent to pay for food imports, but received a second oil-price shock in 1979, when — according to Hiro — Iran stopped exporting oil to India following the Islamic Revolution there.
That meant Indian exports rose in price. Then Saddam Hussein’s 1990 invasion of Kuwait ended $3-billion worth of remittances from Indian workers; India’s foreign exchange reserves were further depleted by easier external borrowing and foreign-funded loans for consumer-goods production. In 1991, with foreign debt at $72 billion, India asked the International Monetary Fund for a loan of $2.2 billion — and was ordered to pledge all its gold reserves. The rupee was devalued by 22 per cent, and the New Economic Policy of liberalisation, privatisation, and globalisation was born. The result was national upheaval.
A good example was Gurgaon’s metamorphosis from a ‘small nondescript town’ to the Indian headquarters of global corporations; the very rich drive from gated estates to shopping malls where private guards keep other classes out. Hiro details ‘galloping corruption’ in the public and private sectors, open collusion between politicians and businesses, ‘ballooning’ black money in land deals, and the ways non-resident Indians as well as Indian officials launder money; looser regulations have also enabled colossal and illicit cash outflows from India. Hiro names names; the Haryana Chief Minister Bhajan Lal approved licences for construction on agricultural land, and although his successor Bansi Lal cancelled nearly 200 licences, city officials allocated plots to poorer people by lottery. The developers then bought the winners out; in Mumbai’s Dharavi, residents’ groups resisted that.
The Haryana government itself became an exploiter, acquiring land for public purposes and then selling or leasing it to private developers. Yet Gurgaon roads are potholed, sewage flows from new blocks into vacant plots, and piles of rotting garbage are everywhere; unauthorised tubewells have so drained the water-table that slum-dwellers get barely enough, and power cuts are the rule, not the exception. Those in intermediate classes work in call centres; they leave after about two years, burnt out by night shifts and sometimes humiliated by racist abuse from white western callers.
Hiro’s thoroughness brings out the problems. The Tatas and the Ruia firm Essar became major figures in British industry, but such moves were not simple successes. Tata needed a $3 billion bridging loan, and Essar’s India-based subsidiary lost heavily; the firm also had to pay the state of Gujarat $939 million in back taxes. Among the smaller firms, those which retained white British managers coped better; capital is not culture-free.
As for the U.S., square-jawed, steely-eyed Indians have made dizzying fortunes in IT, but this phenomenon has its own underside. The dotcom bubble burst early in the millennium, and failures to meet U.S. standards, for example in pharmaceuticals (Wockhardt also lost $1.2 billion), are public enough. The successful people have put money into temples and gurdwaras in their adopted country — but U.S.-based Hindus are among the biggest funders of the Hindu Right in India. Yet many of the entrepreneurs had a heavily state-subsidised IIT education (in the early 1990s they successfully opposed proposals to privatise the IITs).
Hiro does not mince words. His account of urban slums around lakes of sewage, with decaying plastic turning the stinking air poisonous, is not for the squeamish, and the young women who somehow help each other in their isolation from village and family must have been married off at fifteen or so. For their husbands, exhausted drudges, illicit alcohol offers temporary relief. Almost all slums are ‘quarry for the local police to fill their pockets’, and between elections politicians have no time for the voters.
Sleaze has grown exponentially, and Hiro, who always identifies processes behind events, shows how it has spread since Indira Gandhi started nominating senior party figures facing serious criminal charges to fight and win state elections. The names are familiar, and the numbers make the NRIs’ wealth look like loose change; corruption now permeates the entire system, and one MP tells a U.S. diplomat that he uses bribe money for public goods like community wells.
Many laws worsen corruption; the Rural Employment Guarantee Scheme initially sent funds to village sarpanches for them to distribute to village labourers. It took social audits to bring about a change so that money went directly into labourers’ bank accounts — over 100 million new accounts were opened — but it is not credible that the legislators did not know that sarpanches and other officials would take their cut.
The story of agriculture is heartbreaking, as is Hiro’s chapter on perspectives from the grass roots. Ruling beliefs that India will progress only if it gets people out of agriculture have meant systematic land acquisition by private corporations as well as gross failures to support the Green Revolution with rainwater harvesting and wiser water use. Moreover, incentives for agriculture are often designed only for the already successful; by 2011, 65 per cent of the rural population were below even the official poverty line.
Among those who resist, including able Communist MPs, Hiro finds the Naxalites far more coherent than official or media accounts admit they are; the Naxals analyse policies and military encounters, do not rely on locals for food, and address internal problems. Perhaps echoing John Steinbeck’s Grapes of Wrath , they say the state’s failure to do what it is committed to doing is what has led them to take up arms, and they want the development of traditional local production to benefit the locals. The central government has its own investment in Naxalism too, using a definition of Naxal control which enables it to make inflated claims that over 220 of India’s 600-plus districts are under such.
That leads into an acerbic account of Indian politics. Hiro notes that three quarters of India’s banks are in the public sector, and were therefore largely unaffected by the 2008-9 global financial crash. The rest borders on the surreal, for example with whole castes demanding downward reclassification so as to benefit from reservations law; the castes concerned know they are free of the social stigma of Dalit or Adivasi status. Hiro outlines other bizarrerie too, concluding that the BJP and the Indian National Congress are both committed to more neoliberalism. He has achieved a remarkably comprehensive analysis of contemporary India.
