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Mainstream, VOL L, No 1, December 24, 2011 (Annual 2011)

Manmohanomics Today: Towards Perpetuation of Poverty

Tuesday 27 December 2011, by Diptendra Raychaudhuri


After experiencing twenty years of the ‘Reform’ process Manmohan Singh started in 1991, it seems the ‘messiah’ wants to be remembered in future only by the elite of the country as their greatest champion. Perhaps he does not care for the rest, and will be least perturbed if they remember him as someone who harmed their existence in many ways. But, the social cost the country will have to pay in future for the insensitive part of the reform process may turn out to be huge. Singh’s recent bold assertion on FDI in retail brought the insensitiveness to the fore once more. He has backtracked for the time being out of fear of losing power, but no doubt he will pull out all his resources to strike back at the appropriate moment, maybe after the UP elections.

Manmohan Singh wanted to be an economist messiah by blindly following a Western model developed for exploiting the markets of the less developed world. Consequentially, he and his followers (including many in the BJP and the Left) could hardly do a bargain while opening up. Unlike China, our discredited ‘leaders’ could never ensure enough safeguards for the poor. Manmohanomics has served the rich and upper middle class totalling about ten to fifteen per cent population, and often harmed the bottom seventy per cent. Naturally, votaries of Man-mohanomics, like the big media houses and the upper middle class, were always over-joyous about the achievements of Singh and his followers, and they are now pushing him hard to finish his unfinished task, that is, carrying out the cruder part of the reform package at the cost of the poor. Their agenda includes FDI in retail, labour reforms and corporatisation of agriculture. These are the fields that desi and foreign corporate houses now want to occupy to augment their profit which is otherwise dwindling.

Singh is in a hurry to please them, for his days at the helm are now numbered. His economic policies, a.k.a. Manmohanomics, is now facing all-round failure after living a glorious life for twenty years on borrowed ideas. Unfortu-nately for him, now there is no easy escape from bearing the burden of basic social responsibilities like providing food to the hungry people. Occasional outbursts of totally discredited lots, like Sharad Pawar, will not help to shirk such responsibilities, because the judiciary will not let that happen. To shoulder the burden of social security, current account and fiscal deficit will go up. Despite the tall claims of ‘resurgent India’, that for a decade have hogged the headlines, neither is foreign investment coming in a big way, nor is even Indian investment in India growing. The super-rich Indians are transferring their money to foreign countries through foreign private equity (PE) and other routes. The value of the rupee is falling. Industrial output is going down. Internal resource generation is not matching the expectations. The magic of Manmohan Singh is finally turning into a big bluff. A balance of payments crisis may not be very far if the Euro Zone crisis worsens, and in case it happens not an iota of Manmohanomics will remain credible.

Facing this stark reality, Manmohon Singh has become desperate to attract foreign investment and show that he has not failed miserably. Unfortunately for him, he is now trapped. His recent attempt to allow 51 per cent FDI in multi-brand retail, an attempt to attract FDI, has exposed him, for this was a naked attempt to perpetuate the poverty of the masses and ensure huge profits for a few. The Indian organised retail did not get much success so far and now it wants a foreign partner to meaningfully intervene in the market. To please them, the government decided to hurt the weaker people of the country savagely.

Profit Transfer to the Super-rich

COUNTING the retailers, persons employed by them, the suppliers, and the families of all these people, we can assume that about fifteen per cent of our population is dependent, fully or partly, on retail or wholesale trade. According to an NSSO report, the retail sector employs 3.1 crores and 52 per cent of this employment is in the urban areas. Wholesale trade employs 47 lakhs and 68 per cent of that is in the urban areas. If foreign and Indian retail chains, be that Walmart or Reliance, get any success in future and take away any sizeable chunk of the market from the present mechanism, a significant section of the population will be hurt. And why should this be allowed? To transfer a part of the profit from the total volume of business, said to be of the tune of Rs 22,50,000 crores, to the immensely rich Indians and foreigners. Now this profit, in ninety per cent cases, goes to the middle and lower middle classes, who do not spend it for a cruise in South Africa or to make another few million dollars, but to feed their families.

To cover its real intention, the decision to ‘restrict’ the entry of foreign investors to 53 cities was projected as a ‘safeguard’, while actually this was the most dangerous clause. These big cities offer the maximum share of the pie within a small area, that is, about one-third of the market within less than one-hundredth area of the country. This is a huge advantage to the big sharks. If they are told to go anywhere they want except these 53 cities, no one will show any interest. So, Manmohan Singh was actually camouflaging surrender into a bargain!

It cannot be so that when a slice of the pie is taken away by the big players, it will not hurt the small shops. If a consumer buys 10 kgs of potato from a big retailer, it means the sabzi-walah in the neighbourhood has lost about thirty to fifty rupees that he would have earned as profit and spent on his family. It cannot be anything different, for consumption of vegetables, fruits, rice and flour, pulses, biscuits or cookies, spices, egg-fish-meat or tea-coffee is not elastic. So the big chains can grow only by hurting the interests of small vendors, grocers, and stationary shop owners. According to one estimate, the number of retail shops in the big cities stands at 1.12 crores. So it will hurt, immensely or partially, a dependent population of at least five to six crores.

This is the essence of Manmohanomics now. To hold the glory and prove that ‘India’ is still ‘shining’, Singh is planning to implement such policies that will hurt the lower rungs of society. In return, his India will get snazzy malls, high-rises and flyovers in all the big cities and so on. To camouflage this sick idea, the government talked of job creation. In the last fifteen years we have seen jobless growth. We have heard so many times the Prime Minister lamenting about the fruits of growth not reaching the lower sections. So amazing, just after uttering those words the PM goes forward to implement policies that will hurt the lower section more!

Self-employment to Slavery

AS far as job creation in the organised retail is concerned, it is tantamount to just the transfer of job from unorganised retail to organised retail. Probably it will not create as many jobs as it will wipe out. That is often the case even in the US (study by David Neumark of the University of California and his colleagues in 2007). Again, those who will lose jobs will be of the poorer sections (the helper in the shop or the delivery boy), while those who will get those will be slightly better-off.

Secondly, the income of the poorer sections will also shrink because tens of thousands of van-rickshaw-pullers or three-wheeler drivers will lose jobs as bulk purchase for the giant chains will be carried by bigger vehicles employing lesser people. There is no study in the world that has ever examined such impacts on small retailers and people associated with them, for India is unique in this regard. So, we do not know how big will be the impact.

Probably, keeping in view all these, the Congress leadership stopped the government from what they internally described as ‘ill-timed misadventure’. Before that, a petty politician like Anand Sharma had put forward the argument that farmers want FDI. No one knows whether Sharma knows the number of farmers in this country. No one knows whether by the word ‘farmer’ Sharma understands the rich farmers of Punjab and Haryana only, or of the whole country and of all categories. He did not even understand that his statement (that farmers believe FDI will do away with middlemen and bring better price for agricultural products) is just contradictory to the claim that big organised retail will not harm the mom-and-pop shops. Either the organised retail will fail to penetrate deep, and consequentially will not harm our unorganised retail much. In that case not even one per cent of our farmers will be benefited. Or organised retail will go deep, and will harm millions of unorganised retailers. Only in that case perhaps some of our farmers will be benefited. In fact, Sharma tried to drive a wedge between the farmers and retailers and thought by dividing the masses he would be able to rule. Poor man.

This argument of wiping out the villain, that is, the middleman, was also aimed at instigating the well-off urban consumers who would get things cheap at giant retailers. Brilliant idea. But who are these middlemen? A handful of big fishes who can store hundreds of tonnes and hoard these? Or many hundred thousand individuals who buy from the farmers and ferry those to local markets? Those individuals may be categorised as ‘middlemen’, but they are poor chaps on whom an entire family depends for food and clothes. They may not be important for some petty politician, but turning them into paupers will entail a great social cost. This category of ‘middlemen’ in a civilised society has to be protected. The big ones may well be replaced by international giants. If the govern-ment is so considerate about the farmers’ interest (after 2.5 lakh farmers committed suicide in the last fifty years), it should go all out and invite FDI for such B2B (business-to-business) giants. They will buy vegetables from farmers of remote areas of Chhattisgarh and Madhya Pradesh and Vidharbha and carry these to the retailers in Mumbai or Pune, and the same pattern should follow for cities with two million plus population. However, they should be barred from buying from about a fifty kilometre radius of the city to protect small individual middlemen. Thus centring around thirteen or fourteen big cities, crores of farmers will be benefited. For unknown reasons, the decision-makers do not go for that despite their heart crying for the welfare of farmers. Instead, they want to instigate a fight between different segments of the population.

Assuming that 15 crores of people live in those 53 cities (identified by the government) and around them, they can consume only one-tenth of the farmers’ produce. If big chains can capture half the market of these cities, the crops going through these chains will be one-twentieth of the gross product of the farmers. So, one out of every twenty farmers will be benefited. Many of them will be big ones (who, unlike big middlemen, never attract, the wrath of people like Anand Sharma), but there will be small and middle farmers too. These latter sections will become bonded farmers of the giant retailers. If for some reason the giants change their business model, or if they lower the procurement price, these farmers will stand nowhere.

Altogether, the government is selling an idea that will make many, many millions from independent bread-earners to slaves of the Indian and foreign super-rich.

The Hard alternative

WE are not pundits. Thank God, we are not. We feel the only way to bring some prosperity to farmers is to organise them, make good stable chains of supply from the fields to the market, proper facility of storage, and whenever possible making arrangements for export. This should not be done keeping in mind only the big farmers. The country can ill-afford another Sharad Pawar rising out of the fields of another cash crop benefiting the rich farmers and mill-owners and keeping innumerable smaller farmers at the mercy of the former. The country needs, very urgently, the making of a network that benefits the poor and middle farmers, and also contributes significantly in raising the wages of the landless labour.

The prosperity of the average rural folk is dependent on two factors: firstly, creation of such a net for agriculturists, and secondly, on successfully developing thousands of small but important townships all across the country (in every block) as centres of agro-industries, manufacturing, and trading of all goods and commodities produced in the local area, including artisans’ works and so on. This plan of development is a hard alternative, but the social benefit is immense. It calls for government initiative, and participation of cooperatives and small and middle entrepreneurs. But planning and implementing this grand scheme calls for a visionary, a statesman who knows the country that he has come to rule. Manmohan Singh and his followers in the Cabinet stand far, far away from that category. They think (do they really?) FDI in retail will benefit this country!

On FDI in retail, votaries of Manmohanomics have talked a lot about safeguards. The only safeguard it can have is that the big chains will not be allowed to sell any product that per piece/kg/litre costs less than Rs 500. It will protect the small players, and the competition will be among the big individual traders and brand retailers. But, as long as people like Manmohan Singh are at the helm, the government is not expected to do so.

Various Attempts to Perpetuate Poverty

THE Manmohan Government wants to delay welfare projects for the poor while taking measures that will perpetuate the poverty of 70 per cent of the population.

First, they tried to wish off poverty by fudging figures, claiming less than one-fourth of the people are poor. When it was challenged by sensitive people, including members of the NAC led by Sonia Gandhi, they tried to say only a handful of food and almost no other facility takes a man out of poverty. When this joke met universal rejection, they realised eradication of poverty (that they falsely claimed they have achieved) was not something they are capable of achieving.

So, now the government is working for the perpetuation of poverty.

The next in the government agenda is demolition of the security network of the organised workers. Manmohan Singh wants to ‘reform’ labour laws so that hire-and-fire becomes the order of the day. This idea is also borrowed from the West. It is suitable for only those countries which have a social security network for protecting the retrenched persons. It is brazen to go for it without making that security network.

Our present Union Government is also an expert in making way for bypassing laws. While proposing SEZs, they planned that labour laws will not be applicable there. Still now, the scenario is pathetic for the labour force in these SEZS, thanks to Manmohan Singh’s policy. Now once more, they have planned a rerun of it in the manufacturing zones they are planning. The National Manufacturing Policy (NMP), aimed to increase the percentage share of the sector in the GDP to 25 by 2025 from the present 16, initially planned to relax all labour laws in the National Manufacturing Zones (NMZs). The Labour Ministry has been successful to retain a part of it. But, with the pressure of the business lobbies and pink newspapers growing, soon we may see an about-turn. Anyway, by putting the CEO of the NMZ as the designated officer to enforce and inspect labour laws, the government has virtually made these zones free from the hold of labour laws. The government has claimed that these NMZs will create 100 million jobs over a decade. Ninetynine per cent of these ten million (if ever the number comes true) will hardly get the minimum wages. So they will not only be in the clutches of poverty, they will not have the courage to protest. This is the quint-essential target of Manmohonomics.

Next on the agenda is corporatisation of farms. It too aims at making farmers totally dependent on the big corporates who have become restless to enter this business. No doubt Manmohan Singh will soon bow before their wishes. It will lead to further loss of jobs, particularly for the agricultural labour.

All these attempts have one basic goal: to make the rich richer in the process of growth of our economy. It has a single consequence: making many, many millions either jobless or involved in slavery, that is, in jobs that will pay them meagrely and just keep them physically alive. The situation is similar to that of Dickensian Europe. Manmohanomics, to survive now, has now only this option left before it. It will make 70 per cent of our population poor for many more decades. When the situation is studied along with the high rate of inflation and rising interest rates, it puts forward bleak prospects for the future.


WHEN the flamboyant and profligate owner of Kingfisher Airlines steered his company to a huge loss, our very honest Prime Minister Manmohan Singh on his own showed interest in bailing his company out. Here it should be mentioned that Kingfisher has not paid income tax either. That probably does not matter to our Prime Minister. Probably he imagined himself in the place of Barack Obama who salvaged Citi Bank and others.

Unfortunately for him, Singh is not the President of the US, but the PM of a poor country which he now plans to make poorer. After stalling the preparation of the food security legislation for two-and-a-half years, he will now discuss a draft Bill in his Cabinet, a draft that is at best a sketchy outline of the legislation. Meanwhile, his trusted friend Sharad Pawar has dashed off a letter to him asking him to suspend MGNREGA during the harvest season so that poorer people cannot get a little higher wage! If Sonia Gandhi was not around, Singh might have obliged.

The growing divide between the rich and poor that Manmohonomics has brought about will have a great social cost. Nowhere in the world has such an exceedingly wide gap been tolerated by conscious people. Indian people too are becoming conscious thanks to two things: the democratic institution of voting, and television channels showing the snazzy malls and life-style of the filthy rich. The bottom 70 per cent will not tolerate this manhandling by the rich politicians for long. It may give birth to a high degree of social strife, or even anarchy in the coming decades.

At that point of time, neither Manmohan Singh, nor the other votaries of Manmohonomics will be around. Those who will suffer for decades together are our sons and daughters and their children.

Diptendra Raychaudhuri is a journalist by profession and the author of the novel, A Naxal Story. He can be contacted at e-mail:

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