25 years of globalization

Bhagwati prakash sharma wrote an excellent article on this topic.
Rethink- Economic liberalisation

Reform policy is completing its 25th year on 24th July 2016. We believe that twenty five years of implentation of lieralisation and globalisation policies call for a serious assessment and analyse the impact of India’s economic policy framework on its citizens.

The biggest issue our nation is facing is the impact of globalisation on our people and their livelihood.Indian agriculture is in big crisis. According to the National Crime Record Bureau’s report, between 1995-2014 (20 years) 3,08,798  farmers have committed suicide.48% of farmers in India are indebted and 40% of them want to quit farming.But the government is not ready to do anything to protect farmers and agriculture sector, while it is proactivelywriting off  lakh crores of loans of corporate houses.

In the name  of reform and development central and many state governments are shamelessly facilitating the corporate agenda. They make and break the law for the benefit of corporate houses. The government is coming out with inhuman land acquisition amendments to facilitate corporates, while crores of landless mass is wandering for a piece of land and livelihood. Labour laws are being amended or not being implented effectively for the benefit of corporates.

In India, globalisation started with the promises of more growth and employment. In the last twenty years of globalisation, Indian GDP never overtook the pre-reform record of 10.2 percent of 1988-89.  Now there is neither growth nor employment opportunities. In the pre-reform period annual growth rate of employment was 2.1% (during 1981 to 1991), and next decade (from 1991 to 2001) annual employment growth rate was only 1 percent, and from 2001 to 2011 it was 1.11 percent (current daily status basis). It is clear that globalisation policies negatively affected employment and growth rate. Now the economy is facing three major crisis that are Fiscal crisis, Current Account crisis and Currency crisis.

India's fiscal position went bad from 2008 onwards; the government encouraged the corporates in 2008 and 2009 by giving tax concessions to come out of the so-called recession. But after that they are not ready to withdraw the concessions due to the pressure from the corporates.Revenue foregone due to sops given to corporates is massively increasing  every year. Exemptions given  to corporate income tax increasing year by year. Revenue foregone on account of elimination and reduction of customs duty is also steadily increasing.

Revenue foregone in the 2013-14 is 5,72,923.3 crore (about 33% of total budget). In this custom duty exemptions are 2,60,714 crores (about 15% of total budget).Revenue foregone in the financial year 2014-15 is 5,89,285.2 crores (about 33% of total budget). In this custom duty exemption is 3,01,688 crores (about 20% of total budget).Under foregone revenue, customs duty exemption is the biggest head. Every year we are reducing the customs duty based on legally binding commitments undertaken through free trade agreements we have signed with other countries.This is creating big revenue deficit. This is one of the reasons for inflation.

The main reason stated by proponents of globalisation to initiate reforms was 3% current account deficit (CAD) in 1990-91(pre-globalisation); in 2012-13 (20 years after globalisation) CAD reached 4.8 % of GDP. The trade deficit is in alarming stage,in 2012 -13 year the trade deficit was $191 billion, in 2013-14 it was $138.95 billion and in 2014-15  it was  $137 billion.

The Index of Industrial Production (IIP) for the 2013-14 contracted by 0.1 percent over corresponding period of previous year.Current year first quarter IIP is also in negative territory. The actual reason for the low industrial production is not the low consumer demand but the cheep import from many parts of the world.

Currency crisis is the most debated issue at present.Before globalisation, economic reform in 1990, rupee value was 17.01 rupee per dollar. Vector Grader.com last month's table says that market value of rupee is 67% lower than its actual value.Rupee has slipped from 45.7 to 67.8 rupees per $US in the last year of UPA government, which was a record falling. 2014 May rupee Value was 59.44. The rupee started weakening inthe time of NDA government.2016 February it reached 68.82, the lowest level since September 2013 and  it is the Asia's worst performing currency.  Fall of the rupee has created lot of problems in the economy. Continued increase of petroleum product prices has lead to sky rocketing retail prices: its impact on the common man is very high, inflation has been ruining the life of our people, shooting up prices of basic raw materials including metals which make industrial production very costlier.

Globalisation also caused erosion of Indian ownership of industries significantly. Presently, most of the products in the market, right from industrial to consumer/toiletries, are foreign branded, and literally owned by foreign companies. The Indian companies have either vanished or sold out, because they were not able to compete with global companies due to government's promotion of MNCs.
Globalisation is not bringing any visible benefit, all these policies are creating more troubles in India, not only India but to all those countries which promoted liberalized-free market policies. More integration to the world market will only bring more troubles. All the countries who preached free market policies have now thrown out the policy when they are in trouble and are taking policies that are just opposite to the free market policy. In the crisis period US pumped tax payer’s money to the loss making banking sector. US did this to avoid the takeover of its banks  by foreigners. In case of Vodafone takeover of AT&T telecom and Dubai Port takeover of major six US ports, they took extreme swadeshi policy. But at the same time they preached free market policy to get market access to their companies. Same is the case of European Union, Canada and other developed economies. It is the end of globalized economic policies. No country is ready to go with free market policy. One by one, economies of these countries, have been falling. If we are not ready to follow India centric  policies our economy also will collapse.

Instead of assessing the impact of  globalisation policies, government is pursuing similar policies that causing hardship and affecting livlihood of millions of people.

In the  Nairobi WTO ministerial meeting rather than taking the role of leadership to defend the rights of LDCs and developing countries, India meekly surrendered its interest which will affect food security and agriculture, not only in India but across developing countries and LDCs. Subsequently, India ratified the Trade Facilitation Agreement(TFA), that will seriously affect the farmers and our PDS system.  Not only that India’s commerce minister Nirmala Sitharaman declared to recommence the stalled Indo-Eu FTA discussions, the most dangerous 16 country Regional Comprehensive Economic Partnership (RCEP) free trade negotiations is in the final stages and the government of India is planning to sign new Bilateral Investment Protection Agreements (BIPA) with US.

This means that the government is planning to liberalise more. At this junture, it is important to asses the impact of 25 years of liberalisation policies and the impact of globalisation. And it is times to prepare an action plan to stop this pro-corporates and anti-people economic policies.