For everyone who is perplexed by the peculiarly schizophrenic state of India’s economy, here is some good news: you will shortly be able to read a book that cuts through the hype to tell you what is going on, and where it is leading. The book is called Churning the Earth: The Making of Global India, (forthcoming from Penguin India in 2012) and it is the only work I know of that provides a comprehensive account of the enormous social and environmental costs of the developments of the last fifteen years.
The writers are Aseem Shrivastava, an economist, and Ashish Kothari, a prominent environmentalist. Early in the book, they write: “Queried about his impressions of the Indian economy in recent years, a visiting overseas economist replied: ‘Imagine a puppy which is fed a special kind of diet which distorts his growth so that one of his legs grows astonishingly fast, while the other three get stunted to various degrees. Now imagine that the puppy grows into a dog of sorts, gets drunk and begins to spin around the house in ecstasy – the hangover and the diseases lying in wait…”.
Staying a little longer with this image, think of the bloated dog stamping on everything in sight with that one overgrown leg and you will have a fairly accurate idea of the picture that emerges from the book.
Churning the Earth is densely argued, and substantiated with a great deal of data. It becomes obvious fairly quickly that the story we are usually told about foreign direct investment is deeply misleading: ‘It is crucial to note the parasitic character of most of the capital inflows into India. The bulk of it is not used for real investment in the Indian economy. According to the GoI’s Economic Survey, the gap between domestic saving and domestic investment was close to zero between 2002 and 2008, suggesting that India’s investment was financed almost entirely from domestic sources. This means that the net capital inflows from abroad during these five years, amounting to over $120 billion, actually drew massive returns from India without contributing in any way to the creation of new productive capacity. What were these surplus foreign funds used for? They added to the dollar reserves of the RBI, helping finance surplus imports. India was, in effect, seduced into living beyond its means.’
The authors cite a large body of evidence to show that the figures for poverty are hugely understated and that the economic changes of the last few years have made things worse for the poor, in many important respects. ‘A very large section of India’s population is going through severe and multiple crises: food insecurity, water shortages, inadequate fuel availability, and dislocation of livelihoods with limited alternative options. In some form or the other, these have all existed prior to the current phase of globalization, and even prior to modern forms of ‘development’. But such deprivations are precisely what ‘development’ and globalization are meant to have alleviated; on the contrary, they have been exacerbated, or have stayed as severe, for many people and regions.’
The authors’ summation is alarming: ‘Even if a lot of well-meaning businessmen and policy-makers in powerful decision-making positions wish it to, the benefits of the unprecedented economic growth that India has been experiencing over most of the past decade can never trickle down to the mass of the people. Based as it fundamentally is on a “club membership” system, it will keep further enriching the already rich and fail to make any dent in poverty. Unless its pattern and direction are radically changed by conscious, collective, ecologically sensitive democratic political processes, growth will continue to be exclusive and will create more unemployment. It will continue to worsen the destructive social tensions, the growth of corruption, crime and insurgency that we have already been witnessing. It will resemble the growth of dying cancer cells rather than that of a healthy child, leading possibly to a violent dismembering of the Indian nation as we have known it.’
Ashish Kothari was at Delhi University when I was teaching there in the 1980s. I remember him as one of the brightest students ever to cross my path. He has since become an important figure in the environmental movement so it comes as no surprise that the chapters on the environment are amongst the strongest in the book. They are also the most alarming. The problems are so numerous as to be almost impossible to grasp: soil degradation, forest clearance, water insecurity, the unrestrained looting of natural resouces by corporate interests – and so on.
The authors do not neglect to point to the ecological costs of tourism. In a section called: ‘Tourism: Nothing ‘Eco’ About It,’ they write: ‘Even areas supposedly under strict protection for wildlife are not spared. Tiger reserves and other protected areas like Kanha, Bandhavgarh, Corbett, Periyar, Ranthambhor, Bandipur, and Nagarahole, are ringed by resorts that put enormous pressure on the staff and facilities of the reserves, repeatedly violate both the letter and spirit of regulations meant to minimize tourism impact, and contribute virtually nothing to the upkeep of the reserves. Ironically, these are often the same areas from where villagers have been evicted or their access stopped.’
This is one matter in which they have, if anything, under-stated the case: what has happened in India (as in many parts of Africa) is that a kind of ‘ethnic cleansing’ has been effected in the name of forest conservation, with the people who live on the land being shunted out to make room for the tourist industry (for more on this see Raymond Bonner’s remarkable study of the World Wildlife Fund, At the Hand of Man: Peril and Hope for Africa’s Wildlife. New York: Knopf, 1993).
Aseem and Ashish make it clear that they have no interest in grinding the usual ideological axes. ‘This book makes an argument not just against market capitalism, in which TNCs compete for political influence and economic dominance. We stand as much against state socialism, in which nation-states compete for economic influence and political dominance. Under the competitive conditions of industrial modernity, the race towards a socialist utopia paves the way to ecological dystopia no less than the paradise dreamt by enthusiastic neo-liberals. The ecological debris left behind by the carcass of communism after its official end in 1990, stands as testimony to this observation. It is also all but inevitable that if societies and their leaders are devoted to maintaining or obtaining dominance, and power becomes the overarching value, justice and sustainability are casualties. Vulnerable populations – both within and outside a country – pay for this, often with their very lives.’
The best thing about Churning the Earth is that it is not merely an exercise in doom-saying. The last part is called : ‘Dawn: There are many alternatives’, and here the authors provide innumerable examples of small-scale initiatives that have succeeded in making things better, for people as well as the environment. Here is one example: ‘In the low-rainfall region of Zaheerabad, Andhra Pradesh, Dalit women have brought about an agricultural revolution in 75 villages. Mobilised under the banner of the Deccan Development Society, an organization started with the purpose of promoting sustainable agriculture, women’s sanghas (assemblies) have used a mix of strategies to achieve food security, economic independence, and social transformation. Organic farming and pastoralism, with a diversity of seeds and livestock, is one fulcrum of their work. Others include economical water-use, community grain reserves, celebration of biodiversity as part of cultural events and festivals, and outreach through locally generated media.’ (246)
Their conclusion: ‘We are learning that small is not just beautiful, it may be the only thing sustainable and ecological, and may be more consistent with the requirements of human freedom. If one thinks of the viability of democracy, for instance, face-to-face neighbourhood assemblies are far more conducive to it, than mass societies living off a technologically over-developed edifice of unsustainable mass production. And regionally and locally grounded economies – as opposed to globally networked ones – may be both the precondition and the result of such a grassroots democracy.’
Churning the Earth is not without its faults. The prose is often turgid and it does not help that the pages are bedeviled by the twin Shaitans of Indian publishing: abbrevations and acronyms. I will never understand why editors, even at the best houses, allow writers to use so many of these: they betoken nothing but laziness and worse still, they create the impression that the authors are writing only for the initiated, people who are already in the know. If so why bother with another such book?
I don’t for a moment doubt that Aseem and Ashish are broadly correct in their diagnoses and prognostications – yet I do think that they paint a picture that is, in some respects, too monochrome in its darkness. Take the Information Technology sector of the Indian economy for example: this is a non-polluting, knowledge-based industry; the compensation is usually fair and the working conditions are generally safe. This sector has been a godsend for hundreds of thousands of young people and it has served to decentralize economic power in India, moving it away from its traditional locations to other towns and cities. It is also a fact that the people who run this industry are on the whole much more thoughtful and socially conscious than other industrialists. I see nothing to bemoan in the success of this sector, limited though it may be: on the contrary I think it offers much cause for celebration.
In today’s India it is very rare to hear a word spoken in defence of what is often derisively called ‘the socialist era’, meaning the period between the 1950s and the late 1980s. The cheerleaders of liberalization always point to the ‘reforms’ of the early 90s as if they marked the advent of a new world, one that had no connection to the old. It does not seem to occur to them that there would be no high-tech industries in India today if not for state-supported institutions like the Institutes of Technology, all of which were founded and nurtured precisely in the ‘socialist era’. It is also remarkable that the cheerleaders of liberalization seem not to notice that the Indian sub-continent of the post-independence era offers a perfect case-study for the comparison of contrasting economic models. While India was doing boring things like creating a public sector and setting up technological institutions, Pakistan opted for a joyful embrace of a free-enterprise oriented system…
Well, that turned out nicely, didn’t it?
Aseem and Ashish offer a spirited defence of some of the policies of that earlier era: they point out for example that it is the regulatory regime of that time that has shielded India from the current recession in the West. They are certainly to be commended for swimming against the tide – but I can’t help feeling that the effort may have occluded their view of the waters as they appeared to those who were upstream at that time. They were perhaps too young to fully appreciate how dismal the outlook was in the 1970s and 80s for those of us who came of age then. There was a besetting sense of stagnation, a widespread feeling of despair. Every doorway was guarded by gatekeepers; if you didn’t have the werewithal, or the connections, to win their favour, you were locked out.
It must be acknowledged I think, even by those who are not indifferent to the ills of liberalization, that it has also led to an enormous upwelling of human energy in India. As a writer I see this most clearly in the part of the economy that I happen to be connected to: the book world. In the ‘70s and ‘80s there were hardly any bookstores; nor did people have money for books. We considered ourselves lucky if we could afford the tattered second-hand paperbacks that were sold by pavement booksellers. Publishers were very few and mostly dealt in textbooks. Translations from regional languages were difficult to find. Book readings were unheard of, as were festivals.
So greatly transformed is the Indian book world of today that it might well be on another planet: publishers abound, readership is growing exponentially, there are bookshops everywhere and every week brings news of a yet another festival – and, most of all, there has been a great outpouring of creative energy, in many languages and many different fields. I see nothing to mourn in any of this: walking into bookshops in India now, I often marvel at the contents of the shelves.
All this being said, I have no doubt that Ashish and Aseem are broadly correct, in their general description of the Indian economy and in pointing to the possibility of a bubble. I am no economist but I keep my eyes open and talk to a lot of people: I have no doubt at all that a massive bubble has already formed at the heart of the economy, in the property market. Friends in New Delhi speak of being offered fifty crore Rupees (about ten million US Dollars) for houses in middle-class neighbourhoods. Those sums would buy not one but two or three apartments in some of the most expensive parts of London and New York. Indeed a back-of-the envelope calculation suggests that the land values of a few New Delhi suburbs, put together, would exceed all of New York or London. These are of course exactly the sorts of things that used to be said of certain streets in Tokyo before the crash of the 90s.
In Mumbai the values are even higher. I know people there who inherited thriving businesses and have now lost interest in them: there is much more money locked up in the land values of their derelict old godowns than they could ever hope to generate by running their firms. You don’t have to be a businessman to know that this is not how a productive economy functions.
Where is all this money coming from? A lot of it is loot of course, siphoned off through corruption. But a significant proportion of the foreign investment that is flowing into India is probably also pouring into the property market. This is why it has become common to hear people in Delhi and Mumbai repeating the phrases that were often on American lips in the years before the crash: ‘real estate prices will never fall’ etc.
What will happen when the bubble bursts? What can be done?
You’ll have to read Churning the Earth.