Growth has resulted in some decline in poverty, but the condition of those at the lower levels remains pathetic
Among the many recent publications evaluating the performance of the Indian economy since the commencement of the economic policy changes in the 1980s, especially during the past two decades since ‘the Reforms’ were launched in 1991, Kohli’s work deserves special attention for the conclusion it arrives at and the approach it makes. What has been most celebrated about the new economic regime is that it has stimulated growth taking India to be among the fastest growing countries in the world — something that could not have been thought possible a couple of decades ago. But there has been a flipside too, points out Kohli right at the outset: “[T]his ‘new’ India remains a country of numerous poor, illiterate, and unhealthy people. How the apex of the political economy in India, but not the bottom half, has undergone some basic changes since 1980 is the subject of this book.” Why so? “The argument is that, over the last three decades, the Indian state has prioritised economic growth as a goal and established a partnership with Indian business groups in order to achieve this growth. This pro-business ruling alliance has facilitated both rapid economic growth and widening economic inequality.” It is the political economy approach that the author has adopted that brings him to this conclusion.
That the shift in economic policy has resulted in much higher level of growth — of a sort — has been generally recognised. The growing inequality has not received equal attention, particularly the growing inequality in wealth. But Kohli points out: “[I]f you were fortunate enough to be among the wealthiest 5 per cent in 1991, your wealth at that time was 758 per cent of that of the median individual; by 2002, your wealth when compared to that of a median individual had grown to 814 per cent”. This is because the new development policy has privileged those with access to capital and skills.
Growth has resulted in some decline in poverty, but the condition of those at the lower levels remains pathetic. “In spite of declining rates of poverty, the share of the Indian population that consumes less-than-adequate calories … has been going up. If some 65 per cent of the population consumed less than adequate calories in 1983, by 2005 this figure was as high as 76 per cent … The health indicators for children and women are truly depressing … Most of India’s children remain underweight and anaemic, and nearly one-third of women suffer from a low body mass index.” In sum, India, after nearly three decades of ‘high growth’ finds herself among the most under-nourished countries in the world!
It is this paradox that Kohli deals with. He finds the explanation in the new ‘state-capital alliance for growth’. According to him, “the Indian state in recent years has become an active supporter of the Indian business groups, protecting their interest here, subsidising them there, willingly succumbing to their pressure elsewhere, and promoting public-private partnerships in a variety of arenas”. A new ‘two-track polity’ has emerged, an electoral track that ensures that there is always some highly publicised scheme for the weaker sections that ensures support from them when elections come; and an economic governance track under the control of the pro-business technocrats. The two-track is most vividly demonstrated by the Sonia Gandhi-Manmohan Singh combine. At the same time with the ‘socialist’ rhetoric gone out of the political arena, electoral politics is now dominated by regional and caste considerations, finding expression in the coming to power of regional parties in many of the States. Growth and developmental measures in the States take very different patterns.
A detailed and perceptive analysis of the post-reform performance of the States is an important contribution of the book. The dominance of caste politics in the States is seen as an attempt to make growth, seen to happen and remain at the top, more inclusive.
Kohli does well to point out (as some others have also done) that the shift in economic policy came not with the ‘reforms’, but somewhat hesitantly in the early 1980s under Indira Gandhi who, for electoral purposes, posed as the friend of the poor in the 1970s, but easily, though not too overtly, changed track when she came back to power in 1980. Rajiv Gandhi had, by the mid-1980s boldly claimed that he was launching a New Economic Policy. Indeed, though there was a great deal of ‘socialist’ rhetoric in the early years since independence — emphasis on the ‘small man’ in the Second and Third Five Year Plans, Garibi Hatao in the Fifth Plan, and so on — objectively speaking, India has followed a capitalist path of development all along. The public demonstration of the intimate embrace between the state and the capitalist class, of course, is new, partly because the socialist suitor who used to come calling had disappeared about the same time as the launch of the ‘reforms’!
But Kohli has not recognised that non-inclusiveness finding expression as increasing inequality is the essence of capitalist economic growth, especially that of the 21 century global capitalism, which simultaneously generates wealth for the few and ‘illfare’ for the many. The polity has to do something to hide it — because it cannot overcome it — by dedicating all economic policies to the poor, for instance, and throwing some crumbs here and there.
The failure to grasp this crucial aspect of capitalism leads Kohli to some very obvious hair-splitting. The discussion whether the ‘reforms’ have been pro-market or pro-business is one of them implying that in the former the state withdraws from economic activity while in the latter the state becomes an active partner with business in economic matters. Business enterprises, market and state are all required for a capitalist economy to function.
Also, with the vast majority of the people at or around sheer survival level, is it a case of “Poverty amid Plenty”, or “Plenty amid Poverty”?