by Mark Tully
India began to change course in the late 1980s, when economists presented to the government plans for breaking the shackles of the socialist system. Initially, politicians feared there would be a backlash if such plans were to be implemented, as they would be seen as being ‘anti-poor’. The politicians were also reluctant to lose the powers they enjoyed in an economy that was so dominated by the government.
The first major reforms came in 1991, when the new Prime Minister, Narasimha Rao, took advantage of an economic crisis to start opening up the Indian economy. When he came to power, India was on the verge of bankruptcy, and the International Monetary Fund (IMF) told Rao that it wouldn’t come to the country’s rescue unless the government started to relax its control over the economy. So Narasimha Rao was able to tell his ministers that he had no alternative, and his reluctant colleagues were forced to accept that their sacred socialist model had to be overhauled. But the Finance Minister at the time, the distinguished economist Dr Manmohan Singh, although a strong advocate of the reforms, wisely insisted that – even after accepting the need to allow the market to play a bigger part in deciding economic priorities – the government still had a crucial role to play in economic affairs. He argued that a country such as India, with its vast problem of poverty and its stark disparities in per capita income, had to maintain a balance between government and the market.
And that remained Dr Manmohan Singh’s message when he became Prime Minister in 2004. While continuing to free commerce and industry from outside interference, he launched schemes to provide work for families living in rural areas and to improve education. In 2006, two years after assuming office as Prime Minister, he urged the Annual Conference of the Confederation of Indian Industries to ‘give more attention to questions of social and economic discrimination, to the educational and health status of the people’, and stressed that ‘these are important social responsibilities of both Government and business’.
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Transport illustrates the strength and weaknesses of the market in India. There is no doubt that the success of the automobile industry is due to its joining the global market and welcoming foreign investment, which brings in the latest technology. There have been enough Indians able to afford cars – or if not cars, motorcycles and scooters – for the domestic market to expand rapidly. However, bus passengers in Delhi still have to travel in decrepit and dangerous vehicles, because public transport can only improve if the government intervenes in the market.
Passengers getting off at the bus stop at the entrance to Nizamuddin East, where I live, often take cycle rickshaws for the last stage of their journey to the railway station at the other end of the colony. Nukun sits by the bus stop, in his shabby rickshaw with its torn seat and narrow uncomfortable saddle. A cotton cloth is tied round the handlebar for mopping the sweat from his brow. His passengers sit under a tattered canopy, but he has no shade as he pounds the pedals, often having to stand on them to keep going. The temperature in Delhi can reach 45°C, but he can’t afford to take a break, even when the sun is at its fiercest.
Nukun is a small yet wiry man, with close-cropped black hair and a lined face. I guess he is about forty-five years old. ‘No, more like thirty or thirty-two,’ he corrects me.
He comes from a village near Morena, in the state of Madhya Pradesh. When I ask him why he came to Delhi, he explains, ‘I had to earn money and there was no work in the village, nor do I have any land. I have to keep my family, wife and four children.’
Nukun earns about one hundred rupees a day (which is not much over a pound sterling) if he waits for passengers from seven o’clock in the morning until seven in the evening. He has to pay the rickshaw owner twenty of those rupees, and most of the rest he sends back to his family in the village. That doesn’t leave him enough to rent any accommodation, so he sleeps in his rickshaw and eats at a roadside food stall. Yet, for all that, he is dressed in a clean t-shirt and there are no tears in his trousers, which are neatly rolled up above his ankles to prevent them getting entangled in the rickshaw’s chain.
Nukun is lucky because he has one of the newer models of cycle rickshaw, ‘It’s lighter than the old ones,’ he tells me, ‘but it’s still heavy to pull.’ Heavy indeed, I found. I tried and had to stand on the pedals to get the rickshaw started. This new model is only a marginal improvement on the old, of which there are still plenty in Delhi. There are no major improvements such as gears or light aluminium frames. The market hasn’t provided rickshaw pullers with modern vehicles because they can’t afford to buy them for themselves, and the rickshaw owners don’t create a demand as there always are plenty of men willing to pull the existing models.
The market hasn’t helped people like Nukun when it comes to health either, although it has improved facilities for those with the money to pay for them. Since the economy was opened up in the 1990s, medicine has become big business. The rich of Delhi now demand ‘five-star’ hospitals, and they get them. Equipped with the most modern equipment and staffed by highly trained doctors, these hospitals have now also entered the health-tourism business. The website health-tourism-india.com advertises orthopaedic surgery, eye care, heart surgery, gynaecology, cosmetic treatment, dental care, all in India. And why should anyone choose India? The website says ‘price advantage’. It has even coined the jaunty slogan ‘First World treatment at Third World prices’. Apparently, a joint study by McKinsey and the Confederation of Indian Industries has estimated that the health tourism market in India could be worth one billion dollars by the year 2012.
Without Rita Varma and the mobile clinic she was inspired to run by Mother Teresa, most patients living in the GB Road area of Delhi would get only Third World treatment. Early one summer morning, I sat beside her in the bright white van that she has converted to her clinic, as we drove down the GB Road, the red light area of the city. As we passed, a sex-worker standing in a grubby doorway waved at us; a young man who had just arisen from a night’s sleep on the pavement stretched; a dog covered in sores stretched and yawned too; and a barber sharpened an old fashioned cut-throat razor as he waited for his first unshaven customer. But Rita’s patients were already up and about, waiting for her in an orderly queue as we drew up.
For nearly three hours her doctors treated patients. One sex worker complained of being tired and was found to have low blood pressure. Another’s baby had a bad cough. Many of the men had made themselves ill. Mohammad Aslam had chronic bronchitis from smoking. Kishan, an alcoholic who pulled a handcart in the market, had damaged his liver. Sunil Das, a sweeper, was trying to get off smack. Smack is one of the most common drugs taken by the poor in India. Also known as ‘brown sugar’, it’s low-grade heroin, which has been heavily adulterated with anything from citric acid to rat poison.
Rita had been allocated a building in which she will be able to establish a permanent clinic. When I was taken to view it, I saw at first hand why these men and others like them were driven to drink and drugs. Squeezed between the dilapidated building and the yard of Old Delhi Railway Station were two rows of tin and cardboard shacks – the homes of rag-pickers. The area was littered with waste paper and garbage, and, with their grubby sacks slung over their shoulders, the rag-pickers were setting out for a day’s scavenging. A man crouching under a handcart smiled furtively at me when I noticed him trying to light up a blend of smack and tobacco.
The only individual with a secure job seemed to be a grey Langur monkey, who leapt nimbly from a ledge of the building onto the cross-bar of a bicycle, tucking his long tail neatly over the handlebar. The cyclist told me with pride, ‘He’s going on government duty!’ The duty of the langur and his minder was to ‘fight the monkey menace’ posed by the red-brown Rhesus macaques. Rhesus macaques are terrified of langurs and therefore the latter patrol the Rhesus-infested corridors of the highest offices of the government of India in the grand, pink sandstone secretariat buildings that flank the approach to the President’s palace. Langurs also patrol Parliament, where many red-b
ottomed Rhesus macaques scamper around the corridors, although they have never yet, at least as far as I know, managed to get into the Chambers of the Upper or Lower Houses.
The defeat of socialism and the victory of the market have led to another economic imbalance: the triumph of globalisation, which turns the whole world into a market. It’s significant that globalisation came to prominence in the 1970s, just as socialism was collapsing, which makes it part of the swing from one economic extreme to another. It has become another economic certainty.
After 1991, when India started to seek foreign investment, the United States insisted that the new globalisation had to mean the return of Coca Cola. Coke had closed down its Indian operations in 1977 rather than agree to the Janata Party government’s demand that it reveal the recipe for its soft drinks. The members of the newly elected Janata Party wanted to prove that they were even better socialists and patriots than their opponent, Indira Gandhi. The expulsion had been very popular. Kicking Coke out had become a symbol of India’s independence and her refusal to cow-tow to the United States. So Coke’s return was bound to be seen as a surrender. I remember asking an American diplomat why his country was insisting that Coca Cola should be allowed back at this early stage, when it was a gift to the opponents of the reforms who were already making life very difficult for the Prime Minister and his Finance Minister. The diplomat replied, ‘We say all in or none in.’
But it hasn’t been ‘all in’. There are still restrictions on foreign companies in some sectors, and businessmen from abroad continue to complain about the complexities and corruption involved in investing in India. That said, a visit to any market in Delhi will demonstrate that no one now needs to buy second-hand clothes or used lipstick from diplomats leaving the country. International brands of consumer goods are widely available and Indian brands that are just as good have also been developed. Indeed, modern India could market itself as a retail therapy destination, as well as a centre for medical tourism, because there are plenty of First World brands available at Third World prices.
India has certainly benefited from globalisation. At first, it was its IT, business-process outsourcing and call centres that found a ready international market. Now, Indian manufacturing is also becoming an international player. But there are many voices who say that we need to look at the issue of globalisation again. They question whether globalisation has been fair to the poorer nations, whether it leads to greater rather that less inequality, whether it allows governments sufficient autonomy to do what they see as best for their own people, whether it is a threat to an open society and, finally, whether it brings with it the threat of a monoculture.
Some Indians are suspicious of this questioning. The Indian Prime Minister Dr Manmohan Singh’s spokesman, Sanjaya Baru, is an economist too. When I told him that I was reading some interesting critiques of globalisation in preparation for writing this book, he commented dryly, ‘I am suspicious of these Westerners who don’t want us to gatecrash their exclusive club.’ I can well understand that suspicion, especially as there are already murmurings in America and Britain about job losses to Indian call centres and business-process outsourcing. When businessmen in those countries lose out to India, they say they’ve been ‘Bangalored’.
But those critics whose works I have read, and who have experience of putting economics into practice, do not see globalisation in black and white terms. They recognise that there is a certain inevitability about it, that it can bring benefits to developing as well as developed countries, but it must be balanced against other considerations and it must not become an overriding principle.
Jeffrey Sachs, who acted as Special Advisor to Kofi Annan, the former Secretary General of the United Nations, and who has also worked in many developing countries, including India, was an advocate of Big Bang globalisation in Russia after the collapse of the Soviet Union. The Big Bang resulted in a free-for-all, a mad scramble to grab the state’s assets, and the worst form of crony capitalism. Sachs changed course, and by 2005 he had published his book The End of Poverty: How We Can Make It Happen in Our Life Time, which warns against becoming too dependent on the economic theories that underpin globalisation. Describing the task of eliminating poverty as ‘a collective one’, he goes on to say: ‘Although introductory economics text books preach individualism and decentralised markets, our safety and prosperity depend at least as much on collective decisions to fight disease, promote good science and widespread education, provide critical infrastructure, and act in unison to help the poorest of the poor.’
In The Roaring Nineties, Joseph Stiglitz also warns that ‘economic globalization has outpaced political globalization … nor have we yet come to a clear vision of which decisions ought to be made at the national level, and which at the global level’. He lists a number of ‘myths that desperately need debunking’ about the economic prosperity of the 1990s. One myth is ‘that American-style globalization will inevitably lead to global prosperity, benefiting financial markets in America and also the poor in the developing world’.
Many leaders in Britain and the United States nevertheless seem to believe that myth and assume that it gives them the right to lecture developing countries on free trade, as though they themselves have never practised protectionism. In 1981, Margaret Thatcher told an audience in Mumbai, ‘In a way one of the great contributions that we in Britain try to make to international prosperity is to keep our markets open, and to persuade other countries to keep their markets open.’ Perhaps she had forgotten, or perhaps she didn’t know, that cheap cotton goods produced in the northern English city of Manchester had destroyed the Indian textile industry. And perhaps she wasn’t aware of the quotas that still restricted Indian textile exports to Britain at the time.
As one of the most successful practitioners in global financial markets, the international financier and philanthropist George Soros should understand globalisation if anyone does. He was stimulated to write his book On Globalization because of what he saw as ‘an unwitting alliance between market fundamentalists on the far right and anti-globalization activists on the far left’. By taking extreme positions, and by allowing themselves to become involved in a shouting match, they are – according to Soros – muddying the issues and undermining those international institutions who should hold the balance between the two sides in the globalisation argument. George Soros argues, ‘We need stronger international institutions, not weaker ones. We need to form a different coalition whose aim is to reform and strengthen our international arrangements, not to destroy them.’
Much of the debate about globalisation hinges on the question Joseph Stiglitz raises about getting the balance right between decisions that ought to be made at the national level and those that ought to be made at the global level. The international institutions George Soros wants strengthened are there to maintain that balance. It’s not surprising that agriculture is among the most difficult subjects that one of those institutions, the World Trade Organisation, has to deal with.
If you pass through the Indian countryside in a train, you will see land neatly parcelled into small fields. Recently, when I was in a village in northern India, I asked a farmer with ten acres of land whom in his view should be classified as a big farmer. ‘Well,’ he replied, ‘in this part of India there are no farmers with more than twenty acres, so we call them the big farmers.’
A few weeks after that visit, I was gazing out of the window of a Eurostar train as we shot through northern France at a speed no Indian train gets anywhere near emulating yet. I was struck by the sight of mile after mile of yellow corn. The landscape was flat; there was barely a tree in sight, and no hedges, no fences, no sign of fields. ‘And France,’ I thought to myself, ‘is said to be a land of small farmers.’ They must have been located in other parts of the country, because all the agriculture I saw was typical of modern mechanised manpower-free farming. ‘How,’ I wondered for the umpteenth time, ‘can there ever be a level playing field for peasant and mechani
sed agriculture?’
India justifiably maintains that if the global market is given too much freedom, and Indian agriculture is not adequately protected, there will be a catastrophe, because its cities are already choked with villagers who, like the rickshaw puller Nukun, can no longer earn a living working on the land. And at the opposite end of the scale, the mechanised farmers of America want to retain the subsidies that effectively keep produce from the developing world out.
But balanced globalisation could still help a country like India. A few years ago, when I was in Punjab, I was told that two problems might lead to a revival of the separatist movement. They were the lack of jobs for the young and the lack of water for farmers. I argued that perhaps Punjab didn’t need so much water, but that wasn’t a point of view that would ever appeal to a farmer. Nevertheless, because India has tried to feed itself rather than trading in agricultural produce, Punjab has been growing rice, and this needs a great deal of water. The Sikh farmers have sunk wells so deep that the subsoil water level is dangerously low and much of the land is suffering from salination. If Punjab had gone in for horticulture and exported its products, then India could have bought its rice from Thailand, which is a country that is suited to growing this crop.
Retail is an example of the dilemmas globalisation can pose. The British, American and other governments put pressure on India to open its retail trade to supermarket chains such as Walmart and Tesco. The supermarket chains promise that ‘modern efficient retailing’ will reduce prices for consumers; that they will pay remunerative prices to farmers, helping those farmers to improve the quality of their produce; and that they will provide millions of new jobs. But what sort of jobs are these? And what about those jobs that will be lost in the process, such as the jobs of the vast army of small shopkeepers they will put out of business?
