TWENTY YEARS OF GLOBALISATION: A BOON OR A BANE

TWENTY YEARS OF GLOBALISATION: A BOON OR A BANE

Twenty Years of Globalization: Poverty, Hunger, Unemployment and Corruption
Government of India adopted new economic policy (NEP) in 1991. They termed this policy as a policy of liberalization, privatization and globalization (LPG). Though new economic policy claimed to be the policy of LPG(liberalisation,Privatisation and Globalisation) but in essence this policy was mainly the policy of globalization.
Globalization and its Advocacy
Globalization is the process of integrating various economies of the world without creating any hindrances in the free flow of goods and services, technology, capital and even labour or human capital. The term ‘globalization’ has, therefore, four parameters:
(i) Reduction of trade barriers to permit free flow of goods and services among nation-states;
(ii) Creation of environment in which free flow of capital can take place among nation-states;
(iii) Creation of environment, permitting free flow of technology; and
(iv) Last, but not the least, from the point of view of developing countries, creation of environment in which free movement of labour can take place in different countries of the world.
The advocates of globalization, more especially from developed countries, limit the definition of globalization to only three components, unhindered trade flows, capital flows and technology flows. They insist on developing countries to accept their definition of globalization and conduct the debate on globalization within the parameters set by them. However, several economists in the developing world believe that this definition is incomplete and in case the ultimate aim of globalization is to look upon the world as a ‘global’ village, then the fourth component, unrestricted movement of labour cannot he left out.
Advocacy of Globalization
Advocates of globalization support their defence of globalization on the following arguments:
(i) Globalization will promote direct foreign investment and, thus, it enables developing countries to raise capital without recourse to international indebtedness.
(ii) Globalization enables developing countries to make use of technology developed by advanced countries without investments in Research and Development.
(iii) Globalization widens the access of developing countries to export their produce in the developed countries. Simultaneously, it enables the consumers of developing countries to obtain quality consumer goods, especially consumer durables, at relatively much lower prices.
(iv) Globalization introduces faster diffusion of knowledge and thus enables developing countries to raise their level of production and productivity. It, therefore, generates the momentum to reach international standards of productivity.
(v) Globalization reduces costs of transport and communication. It also reduces tariffs and thus enlarges the share of foreign trade as a percentage of GDP.
In nutshell, globalization is considered as the engine of growth, technical advancement, raising productivity, enlarging employment and bringing about poverty reduction along with modernization.
Impact of Globalization on India – Growth amidst Deepening Poverty
In terms of standards of globalization, we find pace of globalization as per its definition, we have had a fast pace of globalization of Indian economy that is integration of Indian economy with the rest of the world. This is depicted from the data, which shows that exports increased from 5.8 per cent of GDP to 14.4 per cent of GDP between 1990-91 and 2010-11. Imports increased at a faster pace from 8.8 per cent of GDP in 1990-91 to 23.1 per cent of GDP. This resulted in an increase in Balance of Trade deficit from 3.0 per cent of GDP to 8.7 per cent of GDP. Foreign investment (FDI + FIIs) increased from US$ 103 million in 1990-91 to US$ 70,139 million. In the last ten years (2000-01) foreign investment was US$ 314.6 billion. The pace of foreign investment was so fast that India has increased from negligible in 2000-11 to nearly 3.4 per cent of total global FDI inflows as on date.
But the claims of advocates of globalization have not just been proved false; rather globalization has made life miserable for masses.
FACT SHEET 1: SHOCKING UNDERNOURISHMENT
Given the fact that contribution of primary sector in total GDP has declined from 33.53 percent in 1993-94 to 22.97 percent in 2004-05, how can we imagine any better position for poor living in rural areas. National Family Health Survey conducted by Ministry of Health and Family Welfare also supports the hypothesis that vast majority of population is still reeling under poverty. The survey says that 46 percent of all children are underweight and 38 percent are stunted (too short for their age) and 19 percent are wasted (too thin for their height). National Family Health Survey has been conducted for three times in these 15 years, conclude that some of these indicators have actually worsened over the years.
According to National Sample Survey Organisation, nutritional intake of India is declining. NSSO says that between1993-94 and 2004-05 calorie intake in both rural and urban India has declined by 4.9 and 2.5 percent respectively. Protein intake in rural areas is down by 5 percent. More than two-thirds of rural Indians and 70 percent in urban Indians are reporting that they don't get a full intake of 2,700 kilo calories, defined to be a minimum norm. The percentage of people reporting that they don't get two square meals a day is still relatively large. The levels of undernourishment and malnourishment continue to be shockingly high as per the NSSO data.
FACT SHEET 2: PACE OF POVERTY REDUCTION SLOWING DOWN
We witnessed a high rate of GDP growth in the post 1991 period, which is claimed to be a big argument in favour of economic reforms. But, even the most vocal supporter of economic reforms Montek Singh Ahluwalia also concedes that reforms have not resulted in desired level of poverty reduction and decline in poverty is less than what the government had perceived. His confession is supported by the findings of NSS 61st Round data, which clearly speaks out that in the post reform period the pace of poverty reduction has not only been much lower than the official assessments made after NSS 55th Round, it is also less than the actual pace of reduction recorded during 1970’s and 1980’s. Thus, it is ample clear that the high rate of growth of GDP recorded in the post reform period has not made lives better for poor in the same proportion. Rather, in the post reform period inequalities have accentuated as shown by higher ‘Gini Coefficient’ (a measure of inequality), which shows an increase in ‘Gini Coefficient’ from 28.6% in 1993-94 to 30.5% in 2004-05 for Rural India and an increase from 34.4% in 1993-94 to 37.6% in 2004-05 in Urban India. Most notable is the fact that it is a reversal of the trend seen in the previous decade (1983 to 1993-94). These figures imply that poor have less claim on growth and rich have taken the bulk of the benefits from the GDP growth. These figures are not only true for all India, but are applicable for almost all states except a few. If we go on riding this high growth- pro reform phenomenon, it is an alarming signal for times to come.
FACT SHEET 3: AGONY OF JOBLESS GROWTH
The paradox of galloping growth and with deepening poverty in the country is explained by the phenomenon of jobless growth. No doubt GDP is rising and rising at a fast pace, but no enough jobs are being created. This has resulted in rising rate of unemployment in the country both in the rural and the urban areas. We note rate of unemployment which was 7.3. percent in urban areas and 7.2 percent in rural areas (males) in the year 1999-2000 as per 55th round of NSSO, which increased to 7.5 percent and 8.0 percent in urban and rural areas respectively. Similar is the condition with regard to females where rate of unemployment increased from 9.4 percent and 7.0 percent in 1999-2000 year as per 55th round of NSSO to 11.6 percent and 8.7 percent in the years 2004-05 in the urban and rural areas respectively. Between 2004-05 and 2009-10 total addition in employment has been only 2 millions as per 66th Round of NSSO.
FACT SHEET 4: DETERIORATING QUALITY OF EMPLOYMENT
Recently NSSO released report of its 66th Round. According to the report, number of casual workers increased by 219 lakhs in five years; between 2004-05 and 2009-10. On the other hand self-employed workers, mostly farmers, small and cottage industrialists and merchants have shown a decrease in their number by 251 lakh. This increase in number of casual labour is much higher than the previous rounds.
Number of salaried workers increased by only 58 lakh between 2004-05 and 2009-10; which is less than half of increase in salaried workers between 1999-00 and 2004-05. We find that casual labour as a percentage of total workforce increased to38.6 percent in rural areas and 17.5percent in urban areas in 2009-10. This was only 35.0 percent and 15.1 percent in rural and urban areas respectively. in 2004-05. It is noticeable that in even in 1993-94 casual labour constituted 35.6 percent and 18.3 percent in rural and urban areas respectively. Thus there is only a marginal decline in casual labour between 1993-94 and 2004-05 in urban areas but that trend has also reversed in 2009-10. Needless to say that casualisation of labour implies decline in incomes of workers.
Low Wages of Casual Labour
NSSO categorizes three types of wage earners. Wages of casual labour are low is evident from the fact that wages of salaried workers in rural areas was Rs 232 per day while in urban areas it is Rs 365 per day; Casual labour hired by the private sector is only Rs 93 and Rs 122 for rural and urban areas respectively. Labour hired for public (government) works was Rs 98 and Rs 86 for males and females respectively. Wages for labour hired for MNREGA was only Rs 91 and Rs 87 for males and females respectively.
Advocates of globalization and new economic policy are not prepared to believe that this policy could be wrong. They always try to boast of high rate of economic growth. It may be important to note that maximum deterioration in the quality of employment took place during the period when rate of growth was highest. Rate of growth of GDP accelerated to 8.5 percent between 2004-05 and 2009-10 and this is the period during which pace of casualisation was higher than the earlier period. Rather casual employment had dropped earlier. Normally employment should increase with economic growth. There is unanimity among economists that economic growth being experienced today is actually jobless growth because growth of employment is not commensurate with GDP growth. Whatever growth in employment had been there was limited to growth of casual labour at the cost of self employment. Not only that employment is not growing fast, employment has been shifting from regular and self employment to casual employment. In fact, period between 2004-05 and 2009-10 has been a period of growth of low paid jobs. Thus whatever increase in employment had been there it was limited to low paid casual employment. If we look at the composition of GDP over the years, we get the answer. We understand that more than half been constantly declining and has come to a low of only 14.4 percent. Whereas other sectors of the economy have been growing at the rate of 8 to 12 percent agriculture is lagging behind with zero to three percent growth rate. Growth has been limited to only a few sectors especially in the corporate entities. Even in corporate sector only a limited number is engaged in high end jobs and rest are getting low paid jobs of guards, drivers, cleaners etc. and that too as a contract labour.
FACT SHEET 5: NO RELIEF FROM CORRUPTION DESPITE GROWTH IN GDP
Recently published report by Transparency International states that transparency index of India has come down from 3.5 to 3.3 and ranking of India in terms of transparency has come down to 87 in list of 178 country. This has been mainly attributed to corruption in organising Common Wealth Games.
Ironically, the world's most corrupt countries are poor ones. Generally in rich countries we find more transparency due to compliance with law & order. This implies that with development transparency (integrity) index goes up, as institutional frame work would be put in place with regard to compliance with law and order. But contrary to international experience, in India, despite growing national and per capita income, corruption index is also growing. Progress due to genius and hard working Indian’s is being eaten away by unscrupulous politicians and bureaucrats and thus benefits of the development are not fully reaching the general public. Countries wealth is being cornered by these elements.
Revenues also get to see phenomenal growth, thanks to growing production and incomes of rich. For example, the central government tax revenue which was only Rs.9390 crores in 1980-81 increased to Rs. 5,34, 000 crores in 2010-11, that is, 55 times in just 30 years. But non-tax revenue could increase by only 43 times in the same period. This could have increased much more had these scams not been there. Surprisingly public sector enterprises, which are blamed for their incompetence, are contributing much more to the exchequer. Telecom sector has been a house for the worst scandals, starting from former Union Communications Minister Sukh Ram to A. Raja, another Union Communication Minister

FACT SHEET 6: INFLATION AND RISING DEBT BURDEN
These scams have a direct connection with the common man's life. Lack of revenue compels the governments to go for deficit budget. In 2010-11Finance Minister planned for a fiscal deficit of nearly Rs. 4 trillions. Last year this deficit was more than Rs. 4 trillion. Such a big deficit, could be filled by government borrowing, which would increase the burden of debt on our future generations. If the government is unable to raise sufficient loans from the public(including financial institution), it has to borrow from RBI. RBI in turn would print more currency notes to finance this lending to the government. This would result in growth of money supply, which is the main cause of inflation today. Therefore it is simple one to one relationship between corruption and inflation. Had the government been able to take this amount of Rs.1.76 trillion to its kitty, scenario of price rise would have been different. Neither the government had to print additional notes nor would debt burden on future generations have increased so much.
Education and health for all still a distant dream
Some time back a law was enacted by the parliament in the name of Right to Education. It’s a known fact that as per Directive Principles of the State Policy, as enumerated in the Constitution of India the government was expected to provide for universal primary education. Even after 60 years of the promulgation of the Constitution, to implement Right to Education. This amount is only one sixth of the loss to the exchequer, due to only 2G scam.
Provision of health is the primary responsibility of the government. The government has even declared its objective to achieve health for all in Millenniun Development Goals (MDGs). But due to paucity of funds government has been taking its hands off from public health services and common man has been left to the mercy of private institutions. According to Union Budget 2010-11, a provision of only 23,530 crore has been kept for Public Health and Family Welfare. According to a rough estimate if the government spends an additional amount of Rs.30,000, reasonable health facilities may be provided for the common man. Today, 230 out of one lakh mothers die while giving birth to their child. 66 out one thousand children do not live on their 5th birthday. We can bring revolutionary changes in all these conditions, provided we win over corruption.
FACT SHEET 7: GROWTH IS ALSO NOT DUE TO GLOBALIZATION
If we are one of the fastest growing nations in the world it is not because of globalisation. If we have a look at the composition of GDP and its growth, it is dearly indicated that agriculture has been completely neglected under the influence of foreign investment. Government has reduced its expenditure on agriculture.
Budgetary allocation for agriculture has been reduced from 27 per cent in the pre globalisation era to only 6 per cent now. Contribution of agriculture has come down from more than 25 per cent to less only 14.4 per cent. Sector which has grown fastest, that is service sector, is mainly due to growth in IT, BPO sector etc. This at best can be attributed to technological factors and Indian genius. If India has emerged as a hub for medical tourism it is because of the excellent human resource in the field of medicine, surgery and other related fields. India has pushed the established centres far behind and made its position on the top on the basis of excellent service at competitive prices. No country whatsoever has ever willingly provided us with any technology with regard to space, nuclear sciences or others. It is our scientists who have made it possible. To conclude we can say nobody can stop India now to become a global superpower. What we require is a self confidence, consistent efforts to educate our people at all levels, build understanding that world needs us more than we need them.
20 years of liberalization: Prof. Bhagwati Prakash
said it is an illusion that the economy is moving forward. In fact 64 years after independence, the Government also like to “NAREGA” kind of 84 artificial employment schemes are being undertaken outdated. Foreign trade deficit which was 1.5 billion dollars is more than $ 125 billion today. The losses are 65 billion dollars of Indian origin. To cover the rest of amount our reliance is increasing on foreign investment because of this our country’s benefit as money going out to foreign countries. Tax collection and the GDP ratio are low that’s why the government having a lack of fund. As a result, goverment is not taking interest in people welfare schemes and passing the buck to companies whether they are schools, colleges, hospitals or roads or civil services. Our defense spending of GDP prior to 1991 was 4 per cent and today it is down 2.5 per cent while our neighbor China is spending 6 percent. Our total production of small enterprises has reduced and increased the foreign control over the entire production system.Increased imports and an export has declined. Small scale industries has said that they have to stop production due to 62% Chinese goods industry. Local industries were the first brand is now Menufeccring contract. Jmbidvsvhl Kmamsvcumdj bit because of all has stopped. C Kwaj example, in telecommunications, the government did not make headway with Pळ Jmbidvsvhl telecommunications equipment bought from foreign companies. ळcch 62 per cent in the services sector of the country. Many Thj to. Through foreign investment, it is getting ready to open. This picture is 20 years of liberalization, the government is hiding. (DR ASHWANI MAHAJAN)

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