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Mainstream, VOL LIII No 1, December 27, 2014 - Annual Number

Incisive Analysis of India’s ‘Skewed’ Rise in Contemporary Times

Saturday 27 December 2014

by Nirupam Sen


Indians in a Globalising World: Their Skewed Rise by Dilip Hiro; Harper Collins India; 2014; pages: 375; price: Rs 699.

Indians in a Globalising World ranks with the best of Dilip Hiro’s books and with the best of books written on India in recent times. The reader is carried along the absorbing flow of research and reporting, facts and events, narrative and analysis with no essential detail or statistic missing, but never weighed down by these— a bright and sparkling stream moving to its inevitable and thoughtful conclusion. The fact that the book is finely structured and the style is ‘not the cloak of the author but his skin’, enable it to range effortlessly from Gurgaon to Dandakaranya and reinforce the impression of complex scholarship lightly carried.

The Preface is a succinct summary of the book, and the Introduction of its analytical framework. The subtitle of the book is more important than the title: “Their Skewed Rise”. Dilip Hiro celebrates the rise of Indians in a globalising world, but the power and value of the book derive from analysing and demons-trating how this is ‘skewed’. He correctly traces it to the New Economic Policy inaugurated by Dr Manmohan Singh as the Finance Minister in 1991 which, he says, reversed the Directive Principles of State Policy in the Constitution. Though Hiro does not use this phrase, this makes 1991 a constitutional coup. The RTI and MNREGA (for which he justly gives credit to Left pressure) somewhat mitigated the devas-tating social impact but did not modify the underlying logic of neoliberalism with its shar-pening inequalities—which skewed the rise.

Given the cogent and comprehensive nature of this powerful book, it may sound like carping criticism to mention some of the deficiencies of its analytical framework. The distinction between what happened before and after 1991 is not drawn sharply. Perhaps, this is because of describing 1991 as a crisis year without analysing the nuances and details of the crisis. In 1991, all macro-economic indicators of the real economy were excellent: GDP growth was over five per cent and both agriculture and industry posted good results (contrast their dismal performance today). Growth of per capita real income was a record 3.6 per cent. Growth of investment was impressive. Thus there was no crisis in the real economy. There was a payments crisis, but this could have been resolved without imposing the IMF conditiona-lities and a full scale Washington Consensus (Liberalisation, Privatisation and Globalisation). This was done deliberately and consciously, using the payments crisis as an excuse and a camouflage. Naomi Kline calls this phenomena disaster capitalism. Thus, there is no arithmetical progression from Rajiv Gandhi’s liberalisation: there is a quantum jump. Here and there, the so-called Licence Permit Raj may have hardened into rigidity and some internal liberalisation may have been needed, but this is a far cry from the wholesale Washington Consensus imposed by Dr Manmohan Singh. Again, the ‘growth’ that Hiro attributes to liberalisation is mostly due to the exceptionally favourable external environment from 2000-2008. Once this turns adverse and the stimulus of MNREGA wears off, growth plummets.

Again, a strength of this remarkable book is its description of ‘primitive accumulation’ (though Dilip Hiro does not use the phrase) but it does not lay bare the mechanism and dynamic: the freedom struggle was a Gramscian passive revolution after which the capitalists were not strong enough to control the state, which was able to protect the peasantry and petty producers. 1991 shifted the balance of economic power decisively in favour of the corporate rich, who became strong enough to dominate the state and unleash primitive accumulation. Had Dilip Hiro taken a tiny step forward, it would have carried him into the Marxist analytical framework. One must admit that it is just as well that he did not: it is better that the book have much wider acceptability and positively influence a much wider segment of opinion in India and the world than it otherwise would have.

Every chapter of the book is a proof of the correctness of Marx’s analysis of the logic of capitalism that ‘an accumulation of misery’ at one pole is ‘a necessary condition, corresponding to the accumulation of wealth’ at the other pole. This is even truer under neoliberalism. Dilip Hiro’s chapter on Gurgaon is titled “Gurgaon: Shining City with a Dark Belly”, which he rightly characterises as ‘Dickensian’, for it clearly reproduces the horrors of the mid-Victorian city in the age of industrial capitalism. Dilip Hiro informs us that a helper in a clothing factory earns Rs 2500 a month while the CEO of a multinational gets Rs 600,000 a month and comments that “the differential of 240: 1 between the highest and lowest incomes verges on the obscene”. There is a sharp contrast between Nehru and Indira Gandhi’s India and the post-1991 India. Thomas Piketty, in his Capital in the 21st Century has, with meticulous empirical research, demonstrated that in India the top centile’s share of National Income was 15-18 per cent in 1922-1950, five-to-six per cent in 1950-1980 and 12-15 per cent more recently. Post-1991, we have reverted to, and exceeded, the sharp inequality of colonial times. As was to be expected, Dr Manmohan Singh and his successors have recreated successfully some of the other features also of a free trade colonial economy: agrarian crisis, deindustrialisation and substantial unem-ployment.

DLF’s super profits, as Dilip Hiro has shown, were the result of neoliberlism and the entry of multinationals that sharply raise the demand for residential and office space. He graphically shows how villages lost lands and turned into crowded slums. He documents, with facts and statistics, how land was acquired for public utilities (even forest land was diverted) and then sold for a song to real estate developers, the foundation of both corruption and uncons-cionable profits. The Haryana Government breached laws, broke every promise and violated every principle of public good. The ruling Congress party was decimated in the Assembly elections of 2014 but the people voted, tragically, for a party committed to precisely the same policies. This is the real failure of the Left.

The chapter on India’s corporate acquisitions in Britain has a wealth of facts and statistics and the analysis is balanced. Dilip Hiro recognises “poetic justice on a grand scale” in Tata’s acquisition of the Anglo-Dutch Corus Group Plc, the owner of all British steel mills, in 2007, exactly a century after India’s first steel mill was established in 1907 with the help of Pittsburgh (USA) consultants, since British steel-makers had refused to help. He similarly recognises Lakshmi Mittal’s technical achievement in reducing the cost of production and capital outlay through an original techno-logical innovation which enabled him to buy and turn around steel mills in Britain and other parts of the world. Hiro also appreciates the foreign technical and managerial skills that Tata and other corporate houses put to good use in India.

At the same time, he states that the $ 74.3 billion outflow of investment capital from India, in the second half of the 2000s, alone created massive employment in the UK. He also mentions Mittal’s acquiring a $ 128 million mansion in Kensington Palace Gardens. He lets the facts speak for themselves. One can infer that there was a loss in terms of investment and employ-ment for India, besides wastage of resources in terms of buying expensive real estate in Britain. Most important of all, Hiro shows how Mittal’s and Tata’s foreign acquisitions fuelled their drive to acquire huge swathes of iron ore-rich terrain in central and eastern India. This led to large scale dispossession and loss of livelihoods, and swelled the ranks of the Maoists. Analytically, one can see that neoliberal globalisation encouraged and made possible these foreign acquisitions, which in turn intensify primitive accumulation and unleashed civil war. Perhaps Hiro could have analysed this cycle further.

In a vein similar to his chapter on Britain, he recognises the immense achievement of India’s engineers, especially IIT graduates, in the USA’s Silicon Valley, including the Pentium P5 micro processor ‘with its unrivalled speed of computing’ and hotmail. He also recognises the contribution of Nehru’s India that established the IITs. At the same time he bemoans the fact that “India’s brightest engineers, educated at great expense by the taxpayers of a poor, developing nation, were being exported to the globe’s richest and most technologically advanced country”. Hiro mentions the role of India’s diaspora in making India a software products and services hub and in strengthening relations between the economies of the USA and India, but does not analyze the role of the Indian diaspora in the USA in strengthening Indian neoliberalism and reactionary politics, as well as the USA’s strategic domination of India.

Dilip Hiro has a valuable chapter on the ‘scandalous neglect of India’s agriculture’. He clearly shows the role of neoliberalism in precipitating an agrarian crisis through starving agriculture of investments and winding down agricultural extension and research activities. He highlights the role of the WTO and IMF in the Indian governments curtailing subsidies, incentivising switching to cash crops and liberalising agricultural imports, including highly subsidised American cotton (a crushing irony). Expensive Bt cotton seeds with excessively high water requirement did the rest. The result was inevitable—declining per capita food availability and nutrition levels, rural indebtedness and farmers’ suicides. The role of primitive accumulation, in sharply exacerbating land hunger, could have been more closely examined. Here, one may mention that even the present Land Acquisition Act (which is in imminent danger of being substantially diluted) may address the problem of acquiring land from rich and middle farmers but cannot address the role of small and marginal farmers whose landholdings are not viable and on whom, therefore, there is enormous economic pressure to sell. Without moving to collective or cooperative agrarian property relations there does not seem to be any solution. In fact, the issue of land is likely to be at the heart of enormous future struggles.

The Maoists are only the first scudding clouds of a larger storm that may be brewing. In fact, Dilip Hiro’s chapter on the “Maoists in the Minerals-rich Heartland” is probably the best in the book. For anybody wanting a succinct and yet comprehensive analysis of the issue, which includes all significant dimensions, this chapter is enough: there is no need for any of the books devoted to this issue. One of the most valuable parts of the chapter is the meticulous care with which Hiro describes the legal foundations of primitive accumulation laid by the 1991 and post-1991 governments: in 1994, the Narsimha Rao Government amended the 1957 Act to allow private domestic and foreign capital to explore and extract minerals. The Naxalites held a protest rally of one lakh in Hyderabad but got no response. In 1997, the United Front Government introduced automatic approval for FDI up to 50 per cent equity in mining. In 1999 the BJP Government authorised the state authorities to acquire land for mining and permitted 100 per cent FDI in mines and processing of minerals. As one of the subtitles of this chapter accurately puts it, “More mining, more Maoism”.

The book’s conclusion is reasonable—in the immediate future, neoliberalism will continue; so will Maoism; there would be some space for Supreme Court activism and National Alliance of Popular Movements; nothing much will change. In the medium to longer term, however, a popular upsurge could radically transform the situation. Dilip Hiro quotes Dr. Manmohan Singh’s famous statement that Left wing extre-mism is the single greatest security threat to India, but does not mention that Dr Singh forgot a still greater internal threat—Dr Manmohan Singh and his policies.

A noted diplomat (now retired), Nirupam Sen was India’s Permanent Representative to the UN in New York.