On Republic Day
About Nine decades since M.K Gandhi was sentenced to six years imprisonment, under the colonial law of sedition by the British, it is a matter of grave concern the abysmal nadir to which our judiciary has convoluted to, when the Raipur high court sentenced Dr. Binayak Sen for lifetime imprisonment, under the same colonial law, without even a fair trial. Dr.Binayak Sen, a man who walked bare footed into the lowest strata of society and took up issues of basic health, social security and human rights of the people of Chhattisgarh, ended up being a prey to the vendetta of the fascist police state of Chhattisgarh , for his bold opposition against the state sponsored canniballic anti-maoist onslaught of Salwa Judum, which forced tens of thousands of civilian tribals abandon their homes . On the 62nd anniversary of Indian Republic, it is time for all believers in democracy to raise up their voice against the draconian laws like that of sedition, and the miscarriage of Justice against Dr.Binayak Sen.
A Trickle Down that Never Happened
An analysis on why trickle-down of wealth to the proletarians does not happen in a liberelised economy.
The year 2010 ended with good news and a bad news. The good news is that India is showing signs of economic recovery and is moving up fast in the spiral of growth with its GDP for the year estimated as 8.5 p.c. The sad news is that in this year of economic resurgence, the latest report released by Crime Records bureau shows a sharp increase in the number of farm suicides compared to the previous year, with over 17,368 farmers killing themselves. It is quite natural the question of why this is happening when the nation is flying high in the development trajectory, to arise in the minds of any mediocre Indian.
The GDP figure is often looked upon as the sum total of entire development of a nation. Many a times, the overall progress of a nation is measured in the terms of GDP rates. By logic, a larger GDP enables the State to garner larger resources through taxation, and hence to spend more for the benefit of the poor. The economists give explanation for how a growth in GDP of a nation improves the standard of living of the lower strata of the society through a concept called ‘trickle-down-effect’. But plight of the lower strata of the Indian society over the years in which Indian economy proudly boasted its steady GDP growth makes it clear to any layman that the process of trickle down is actually not working. Dr.Prabhat Patnaik in one of his papers calls this concept intellectually untenable and morally questionable.
The Manmohan effect, as some people call it, Indian economy has been growing steadily since economic liberalisation. There is no doubt that liberalisation has brought about a lot of good to the country. Under liberalisation, the state stared diluting the strict policies it took earlier in public interest, to regulate private activity and started acting as an agent to promote private investment. This resulted in large scale private investments to take place in our country which resulted in an increase the inflow of foreign money. But liberalized regime was also associated with large instances of corruption. For example under-pricing of public-assets in the process of disinvestment of public-enterprises became a common scenario.
According to Mr.N.Vittal, former Central Vigilance Commissioner (CVC),in an interview given to Frontline “Liberalisation has led to mega corruption. Earlier, under the permit-license raj, it was retail corruption because individuals were trying to get licenses. After liberalisation, politicians can make money only by mega corruption, which can come only through policymaking.” As a result of such policy makings which are meant to safeguard the interests of private investors, what that is expropriated for the sake of economic development went out of the reach of the proletarians. So instead of trickling down, the benefits started moving up by capillary effect.
The accelerating growth and accumulation of capital is associated with a phenomenal increase in share surplus. The hope that this surplus of shares could be taxed and be utilized for the welfare of the poor never gets realized. Instead what happens is the illicit flow of wealth from our country to abroad. And this becomes much easier under liberalised economy. According to a recent paper of Global Financial Integrity program of the Centre for International Policy titled “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008”, the money that had flown out of India illicitly to accounts abroad over its post-Independence history stretching from 1948 through 2008 was around $213 billion. The adjusted present value of those historical flows has been placed at $462 billion or around 36 per cent of India's GDP in 2008. This paper also states: “68 per cent of India's aggregate illicit capital loss occurred after India's economic reforms in 1991, indicating that deregulation and trade liberalisation actually contributed to/accelerated the transfer of illicit money abroad.”
Exclusion of one section of the society from the benefits of Economic growth under the liberalised regime, by all means is violation of human rights. Welfare of people should be the primary aim of any legislation. It should be understood that welfare is not a gift given to the people by the state, but a basic right of a citizen. The pseudo rights that the bourgeois government in India projects that it is giving to the people like a Right to Education Act, with no access to proper quality state- run schools in rural areas and a Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with no guarantee of minimum wages (Read ‘A Political Agenda to Minimise Wages’ – Economic & Political Weekly, Vol XLV No.50) are not enough.
What we need is a complete reform in policymaking with a clear cut understanding what the term ’development’ intend to mean for a nation, an understanding that what we need is an ‘inclusive growth’. What we need is a reform in policy making which actually guarantees the rights of every citizen and prevents the illicit flow of wealth that is meant to reach the proletarians, that has the capacity to initiate the trickle-down and not just a mere effort to maximize the value of the equation ‘GDP= C+ Inv +G +(eX-i)’.
References
A left Approch to Development – Prabhat Patnaik
Interview given by N.Vittal, former Chief Vigilance Commissioner (CVC) to Frontline, published on December 17th 2010 issue.
“The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008” - http://www.gfip.org/storage/gfip/documents/reports/india/gfi_india.pdf
The year 2010 ended with good news and a bad news. The good news is that India is showing signs of economic recovery and is moving up fast in the spiral of growth with its GDP for the year estimated as 8.5 p.c. The sad news is that in this year of economic resurgence, the latest report released by Crime Records bureau shows a sharp increase in the number of farm suicides compared to the previous year, with over 17,368 farmers killing themselves. It is quite natural the question of why this is happening when the nation is flying high in the development trajectory, to arise in the minds of any mediocre Indian.
The GDP figure is often looked upon as the sum total of entire development of a nation. Many a times, the overall progress of a nation is measured in the terms of GDP rates. By logic, a larger GDP enables the State to garner larger resources through taxation, and hence to spend more for the benefit of the poor. The economists give explanation for how a growth in GDP of a nation improves the standard of living of the lower strata of the society through a concept called ‘trickle-down-effect’. But plight of the lower strata of the Indian society over the years in which Indian economy proudly boasted its steady GDP growth makes it clear to any layman that the process of trickle down is actually not working. Dr.Prabhat Patnaik in one of his papers calls this concept intellectually untenable and morally questionable.
The Manmohan effect, as some people call it, Indian economy has been growing steadily since economic liberalisation. There is no doubt that liberalisation has brought about a lot of good to the country. Under liberalisation, the state stared diluting the strict policies it took earlier in public interest, to regulate private activity and started acting as an agent to promote private investment. This resulted in large scale private investments to take place in our country which resulted in an increase the inflow of foreign money. But liberalized regime was also associated with large instances of corruption. For example under-pricing of public-assets in the process of disinvestment of public-enterprises became a common scenario.
According to Mr.N.Vittal, former Central Vigilance Commissioner (CVC),in an interview given to Frontline “Liberalisation has led to mega corruption. Earlier, under the permit-license raj, it was retail corruption because individuals were trying to get licenses. After liberalisation, politicians can make money only by mega corruption, which can come only through policymaking.” As a result of such policy makings which are meant to safeguard the interests of private investors, what that is expropriated for the sake of economic development went out of the reach of the proletarians. So instead of trickling down, the benefits started moving up by capillary effect.
The accelerating growth and accumulation of capital is associated with a phenomenal increase in share surplus. The hope that this surplus of shares could be taxed and be utilized for the welfare of the poor never gets realized. Instead what happens is the illicit flow of wealth from our country to abroad. And this becomes much easier under liberalised economy. According to a recent paper of Global Financial Integrity program of the Centre for International Policy titled “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008”, the money that had flown out of India illicitly to accounts abroad over its post-Independence history stretching from 1948 through 2008 was around $213 billion. The adjusted present value of those historical flows has been placed at $462 billion or around 36 per cent of India's GDP in 2008. This paper also states: “68 per cent of India's aggregate illicit capital loss occurred after India's economic reforms in 1991, indicating that deregulation and trade liberalisation actually contributed to/accelerated the transfer of illicit money abroad.”
Exclusion of one section of the society from the benefits of Economic growth under the liberalised regime, by all means is violation of human rights. Welfare of people should be the primary aim of any legislation. It should be understood that welfare is not a gift given to the people by the state, but a basic right of a citizen. The pseudo rights that the bourgeois government in India projects that it is giving to the people like a Right to Education Act, with no access to proper quality state- run schools in rural areas and a Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with no guarantee of minimum wages (Read ‘A Political Agenda to Minimise Wages’ – Economic & Political Weekly, Vol XLV No.50) are not enough.
What we need is a complete reform in policymaking with a clear cut understanding what the term ’development’ intend to mean for a nation, an understanding that what we need is an ‘inclusive growth’. What we need is a reform in policy making which actually guarantees the rights of every citizen and prevents the illicit flow of wealth that is meant to reach the proletarians, that has the capacity to initiate the trickle-down and not just a mere effort to maximize the value of the equation ‘GDP= C+ Inv +G +(eX-i)’.
References
A left Approch to Development – Prabhat Patnaik
Interview given by N.Vittal, former Chief Vigilance Commissioner (CVC) to Frontline, published on December 17th 2010 issue.
“The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008” - http://www.gfip.org/storage/gfip/documents/reports/india/gfi_india.pdf
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