Thursday, August 23, 2012

Perils of catching up game

Sankar Ray

Colossal negligence towards the rural economies spells trouble for the country

Sixty year since independence, India continues to be an agriculture-based economy, where around 45 per cent of its people are engaged in agricultural and allied activities. Agriculture, along with other related fields like forestry and logging, provides employment to an estimate 60 per cent of India's population and accounts for nearly 20 per cent of the Gross Domestic Product and close to ten per cent of the country's total exports.
Over 70 per cent of Indians live in the countryside but the rural economy generates 56 per cent of India's gross domestic product. This reflects a disproportionate sharing of growth for which 800 million rural people must not be blamed. Rural people and their potentials in optimizing economic growth have never been considered by the government seriously.
The policy of neglecting over two-thirds of our people - especially after the International Monetary Fund-inspired Structural Adjustment Programme and their subsequent derivatives for the last two decades - now backfires. During the last decade and a half manufacturing and services sector grew by about 10 p.c. a year contrast to just over 2 p.c. growth in agriculture . This gigantic folly has deprived the agricultural and allied sector to play their role. The most-menacing-ever crisis in the price situation - especially prices in essential commodities - is to a great extent due to the continued and colossal negligence towards the rural economies.
The other day, the Congress MP and former Union minister Mani Shankar Iyer came to Kolkata to address a two-day programme, organized by the Indian Chamber of commerce. The acid-tongue politician presented a contrasting feature of development process. " We talk of 8 or 9 per cent economic growth in India and China, but the growth of anti-poverty programmes is 0.8 per cent. That's the real effect of economic reform." .
He made sarcastic observations to those who never-failingly lament for India's failure to catch up with China where the same mismatch exists.
John Bellamy Foster and Robert W McChesney in an article, The Endless Crisis ,in Monthly Review a couple of months back , pricked the balloon of China's miraculous growth. They wrote, "The giant corporations developed ever more complex supply chains extending to low-wage countries, with the final goods aimed primarily at markets in the global North, and the surplus seized in considerable part by the omnipresent multinational firms themselves. .The biggest question mark generated by this new phase of accumulation today is the rapid growth of a few large emerging economies, particularly China and India. The vagaries of an accumulation system in these countries based on the exploitation of massive reserve armies of workers (in China a "floating population" of peasants) in the hundreds of millions, which cannot be absorbed internally through the standard industrialization process, makes the future of the new Asia uncertain. The imperial rent exacted by multinationals, who also control the global supply chains, means that emerging economies face what may appear to be an open door to the world market, but must proceed along paths controlled from outside. The vast inequality built into a model of export-oriented development based on low-wage labor creates internal faultlines for emerging economies. China is now the site of continual mass protests, occurring on a scale of hundreds of thousands annually"
Shouldn't India's Planning Commission take lessons from the eerie of a mammoth crisis awaiting our militarily powerful neighbour?

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