Here Comes The Gravy Train

-- By Dasu Krishnamoorty

Muckrakers of the world in hundreds, heads of state and finance ministers of several countries and CEOs of Fortune-listed corporations will all converge in New York this month-end and make a beeline for the ‘venerable’ Waldorf Astoria Hotel where one of the six major issues that they will focus on is Reducing Poverty and Improving Equity. The host is the World Economic Forum, funded by 1,000 powerful multinational firms, which shifted its traditional venue from Davos in Switzerland to the Big Apple to send, according to forum chief Klaus Schwab 'the strongest message against terrorism.” But there are some who see this bash as ‘partying on the Sept. 11th wreckage'.The agenda is designed to imply a common and overpowering concern for poverty and its constituents. Andhra Pradesh Chief Minister Chandrababu Naidu also will be there, with an open-ended memorandum. The New York police have deployed 40,000-strong riot police to keep at bay the voices of the poor and the deprived and to ensure that Davos, Seattle, and Washington do not repeat.

Assuming that the forum has the credentials, the summit cannot begin a discussion on poverty without some kind of an understanding on what constitutes poverty; who are to blame for poverty, the rich or the poor; is poverty linked to internal factors or external agencies also; whose responsibility is it to alleviate poverty etc. Answers of no single country or corporation or an international agency can be the same to these questions. Economists of the same country differ in their perceptions of poverty. Then there are categories of poverty like income poverty, chronic poverty; absolute, relative and non-income poverty and so on. There are definitions by the National Sample Survey, National Accounts and by the World Bank. This constant refinement of definition has yielded nothing but controversies.

Nobel laureate Amartya Sen, for example, defines poverty in terms of widespread illiteracy, poor healthcare system, incomplete land reforms, gender differences, deprivation of women and neglect of children. Amita Shah of the Gujarat Institute of Development Research says: “Poverty is the sum total of a multiplicity of factors that include not just income and calorie intake but also access to land and credit, nutrition, health and longevity, literacy and education and safe drinking water, sanitation and other infrastructure facilities.

Eminent economist C.T. Kurien makes fun of the jargon employed by economists saying that 'a stage has been reached where, even on a topic like poverty, economists could talk only to fellow economists'. Banter apart, Kurien situates poverty in the context of the onslaught that a capitalist system was making on pre-capitalist economic arrangements. He explains capitalist economies as want-based and pre-capitalist economies as need-based. Poverty, for him, is a situation where some people lose their place and claims within need-based economies as a result of the aggressive penetration of the want-based economy on them. In short, he characterises poverty as a situation where the many cannot have their needs satisfied while the wants of the few are growing and being met.

The poor in India and elsewhere do not know that they and their ilk are being discussed and defined at world forums and multi-star hotels. All they know is to suffer and play into the hands of politicians who promise them to reconstruct the Babri masjid or the temple at Ayodhya or name half a dozen national institutions after Ambedkar. Illiteracy is the main cause of this gullibility and naiveté, which congeal the poor in their suffering. Poverty does not need articulation or evidence, statistical or otherwise, because of its persistent visibility and ubiquity. The poor do not have the linguistic skills to outline their own misery except in material terms like roti, kapda our makaan (food, cloths and house).

Let us assume overpopulation as a major factor contributing to poverty. If the rate of population growth outpaces that of growth in food production, it obviously means more people eating less than before. There are always limits to increasing the quantum of the national cake, especially when more and more land is appropriated for urbanisation and unplanned industrial development. Our over-publicised food surpluses are directly related to the increasing inability of large sections of our people to buy food. And, large sections of the poor are to blame for ignoring well-meaning appeals and efforts of government and non-government agencies, which bring to their door the message of small and sustainable family. Politicians are no less responsible for negating official and non-official campaigns by arguing that such efforts are a denial of the fundamental right of the people to practise their religion. In any assessment of the national disaster, the politician is as ineluctable as the commercial ad on the TV.

If there is a class which is responsible for poverty, is it the rich or the poor? Both. Though we cannot quantify the contribution of the rich to the poverty of the poor, it cannot be denied that the rich organise themselves into lobbies and pressure groups to exercise political power by proxy, the power to set the legislative agenda of the government. Our budget, everyone knows, is the outcome of negotiations between the finance minister and FICCI, CII and ASSOCHAM, etc. Many of the anti-labour laws enacted both by Parliament and state legislatures are at the behest of the factory owners. In very popular parlance, the votes come from the poor and the notes go to the rich. The poor, indeed, do not have a role to play in budget-making though they bear the brunt of its anti-poor thrust.

Try to match, for example, the emphasis of the World Bank and the International Monetary Fund strategies on development of infrastructures with the central and state governments’ commitment to improving infrastructures: you will get a clear picture of the beneficiaries of such arrangements. Not the poor, anyway. But the price of the entire economic reform, done at the bidding of the Brettonwoods twins, comes from the poor because the WB-IMF remedies insist on programmes, which directly hurt them.

These formulas are known as the Washington consensus defined in these words by Nobel laureate Joseph Stiglitz: “It is a set of policies formulated between 15th and 19th streets by the IMF, U.S. Treasury, and World Bank. Countries should focus on stabilisation, liberalisation, and privatisation. It's based on a rejection of the state's activist role and the promotion of a minimalist, non-interventionist state. The analysis in the era of Reagan and Thatcher was that government was interfering with the efficiency of the economy through protectionism, government subsidies, and government ownership. Once the government "got out of the way," private markets would allocate resources efficiently and generate robust growth. Development would simply come.”

The Washington consensus insists on liberalisation: freer imports and freer exports. We have opened our gates to imports of manufactured goods. However, we can export only commodities at prices fixed by western cartels. What happens then? 'Developed countries grow rich by selling capital intensive (thus cheap) products for a high price and buying labour-intensive (thus expensive) products for a low price. This imbalance of trade expands the gap between the rich and the poor. The wealthy sell products to be consumed, not tools to produce. This maintains the monopolisation of tools of production, and assures a continued market for the product,' says J.W. Smith. At home, these policies cripple local industry and enterprise leading to a rise in unemployment.

The third proposition arising from Amartya Sen's and Amita Shah's definitions of poverty is vindicated by a study made by John Samuel contesting government claims on the decline in poverty levels. The study says that public expenditure for social development has consistently declined during the decade of economic reform, further marginalising the poor and making the poorest more vulnerable. As percentage of GDP, public health investment fell from 1.3% to 0.9% in 1999. The National Health Policy for 2001 unabashedly admits that economic liberalisation has resulted in a fall in the allocation state of resources for the health sector.

This has further increased the vulnerability of the poor, says Samuel study. The proposed user fees for primary health care virtually edges the poor out of the public healthcare system. In the education sector, while the national growth rate of enrolment was about 2.5% annually, between 1995-98 it declined to about 0.41% followed by a fall in the share of public expenditure. Not only were the allocations for social development inadequate but also a large chunk of them remained unspent. The rural development ministry surrendered Rs 1,380 crores; the health and family welfare department Rs 1,107 crores. Last year saw a shortfall of Rs 600 crores in social services, Rs 1,000 crores in rural development and Rs 680 crores in agriculture. The decline in social sector expenditure is directly linked to IMF conditionalities, which reckon without the social and economic realities of the country.

Even in a need-based economy, if we take income as an indicator of the economic status of a person, the increasing privatisation of medicare and withdrawal of the state from that sector deny the entire middle class of Medicare benefits. Despite being salary and wage earners, 90% of working women are powerless in taking economic decisions as a result of undemocratic family structures. Funds meant for eradication of illiteracy do not reach the targeted beneficiaries. The extortionate fee structure in schools and universities denies several strata of the society benefits of higher education. Despite their incomes, these groups are poor in every sense because their basic needs of education and health are not within their reach. Starvation on the urban fringes and the rural side makes a mockery of the country’s food surpluses and economic theory unrelated to reality.

This fine economic mess and social deprivation is a sequel to our pro-reform policies, pursued to keep the want-thirsty classes happy. It is naïve to believe that the corporate honchos attending the World Economic Forum’s annual meeting understand these realities and will work out strategies to reduce poverty and improve equity. However, the agenda of the Indian public and private sector leaders, attending the annual meeting, would be to 'make deals',according to Associated Press, with the representatives of the multinational corporate sector offering them spaces in our economy for questionable public gains.