> The inhumane face of India's reforms
It's nobody's claim that the prereform Indian economy had a human face. So what is specifically inhuman about India's reforms?
> To put things in perspective, let's compare the GDP growth data
> during
> the 1980s and the post-reform period to date. During the 1980s
> (the
> period under consideration being 1980-81 to 1990-91), India's GDP
> grew
> at a CAGR (compounded annual growth rate)of 5.62%, while in the
> post-reform period, it was 5.71% - an increase of a mere nine
> basis
> points. Surprisingly, the impact of reforms on GDP growth has not
> been a
> few percentage points but a few basis points, and that, too, in
> single
> digit. Surely, after one-and-a-half decades of reforms, one would
> expect
> better numbers.
If theleftwing mythology is to be believed, reforms have ruined Indian economy. Growth rates of 5.62% or 5.71% over 25 years doesn't support that mythology.
> In China, while the pre-reform (prior to 1978)
> economy
> had seen an annual growth of 6%, the post-reform average real GDP
> growth
> has been more than 9% annually.
China's annual exports are equal to India's annual GDP. No developing economy has similar market access to US, Japan and the EU. Africa could be as well as China if Africa had similar export opportunities. What is so difficult about exporting textiles and shoes with the blessings of Imperialism.
> contribution of
> this sector to GDP rose by a whopping 10% in this period, thereby
> drastically reducing the contribution of the two other major
> sectors. A
> sectoral analysis reveals industrial revolution has bypassed India
> as it
> jumped from a predominantly agrarian economy to a service economy -
1.How reforms are responsible for this state of affairs?
2.Industrial production has doubled during reform period, the decline is relative. Indian manufacturing growth has been driven domestic markets. Other economies with larger share of manufacturing in the GDP, have gained due to export orientation.
> Can a country, 70% of whose population depends on agriculture and
> 35% is
> illiterate (that, by the most conservative of estimates), afford
> to have
> a development skewed against employability of its millions? It's
> simply
> impossible to provide alternative employment to an unemployed
> farmer in
> the services sector.
Manufacturing is equally capital intensive. How manufacturing would create more jobs than services?
> Clearly, the reforms process has failed to deliver. The aim of the
> reforms was to ensure sustainable growth in agriculture and
> manufacturing, the two major sectors on which most Indians depend
> for
> their livelihood. The impact of the services sector was more
> incidental
> than intended.
The aim of reforms was to adapt Indian economy policies to new global realities (economic, political and ideological) after the collapse of fSU, without giving relative autonomy of Indian capitalism.
> As things stand, reforms in India have failed to ensure a more
> equitable
> economic development.
China's gini coefficient is worse than that for India. China has not produced more equitable development despite higher growth rates.
> Can a country with such vast unutilized
> resources
> afford to have growth with rising inequity as the agricultural and
> the
> manufacturing sectors continue to languish? The answer is an
> unqualified no.
Indian manufacturing is not languishing. e.g. India produced 35 million tonnes steel in 03-04. This is twice the number for the prereform period. Indian steel companies are now drawing up plans to increase steel capacity to 60 mln tonnes by 2010. Compare this with, say, the Soviet steel production in 1940. It was 10 million tonnes.
> The basic difference between achievements of the reforms in China
> and
> India has been the unbelievable pace of growth in China's
> infrastructure. In India, though everybody realizes just how
> inadequate
> the physical infrastructure is, there has been more rhetoric than
> real
> action on the ground.
Chinese economy is bigger, they have larger resources and better infrastructure, particularly on the Pacific coast. China has been a close ally of Imperialism for 30 years, unlike India.
Ulhas