Liberalisation: The 21st Century Fix

‘SHOCK THERAPY’ may be the buzzword for the 90s, but the fixation with the mantra of liberalisation is already a decade-old affair. All through the 80s, especially the latter half, we have seen the government relax and scrap one after another the so-called controls it had imposed on domestic industry and foreign trade over the first thirty years of independence. What has been the net outcome? The self-congratulatory official answer is that the country has notched up an impressive 5.6% average annual growth rate in the 80s, which is almost double the 3.1% that marked the stagnant 70s.

But like most economic data, this general graph of growth too conceals more than what it reveals. On a closer sectorwise view we find that this overall growth rate of 5.6% splits up into

  • an agricultural growth rate of just 3.7% and a foodgrains growth rate of only around 2%, the net result being a stagnant or even declining per capita availability of cereals and pulses,
  • an average 6.3% annual swelling of the largely unproductive but highly decorative services sector comprising categories like defence, administration, trade, transport, banking, insurance, travel, tourism and so on,
  • an annual rise of 6.9% in industrial output, propelled primarily by consumer durables (23.9%), while machine tools and transport equipments reported as lower growth in the latter half of 80s, cotton textiles stagnated with a ‘growth’ rate of 1%, and
  • what is most alarming, employment recorded an average annual growth rate of less than 2% in the public sector and an average annual fall of 0.12% in the private sector.

‘High Technology’ of Imperialism!

Goods produced/marketed of MINC Associate

Bata India : Shoes, socks, readymade wear, leather bags

Brooke Bond India : Tea, coffee, spices

Cadbury’s India : Chocolates, biscuits, ice cream

Colgate Palmolive : Tooth paste, tooth and shaving brushes, shaving cream, soaps, cold creams

Godfrety Philips : Cigarettes, tea

Hindustan Lever : Soaps, tooth paste, margarine, shampoos, detergents, cleaning powder

ITC Ltd. : Cigarettes, hotel services, vegetable oil

Johnson & Johnson : Ear buds, baby soaps, baby lotions, sanitary napkins

Madura Coats : Threads, textiles

Nestle India : Coffee, tea, baby foods, dairy products, chocolates, noodles, ketchup

Pepsi Food Ltd. : Soft drinks, potato chips

Recckit & Carbide : Boot polish, antiseptic lotion, soaps, barley

Thomas Cook : Travel agents

Union Carbide : Dry cells, poisonous gases, skeletons

WIMCO Ltd. : Matches, salt

For a more comprehensive picture let us look at some more details. The chart below will tell its own story.

‘Qrowth’ During the 80s

Assets of top 20 business houses : fourfold, from Rs. 8,500 crore in 1981 to Rs. 34 000 crore in 1989

The queue of sick industries : nearly 10 times, tram 27,000 in 1981 to 2.5 lakh in 1989

No. of foreign collaborations : threefold, from 2,700 in the 70s to 7,500 between 1981 to 1990

Remittances to foreign companies : fourfold, from Rs. 204 crore in 1980 to Rs. 813 crore in 1986

Deficit in foreign trade account : twice, from Rs. 5,800 crore in 1980 to Rs. 10,600 crore in 1990-91

External debt : nine times, from Rs. 11,298 crore in 1980 to Rs. 99,458 crore in 1990

Internal debt :< nearly six times, from Rs. 30,000 odd crore to over Rs. 1,70,000 crore

Fiscal Deficit : five times, from Rs. 8,540 crore in 1980 to Rs. 43,331 crore in 1990

Defence budget : five times, from Rs. 3,500 crore in 1981 to Rs. 17,000 crore in 1990

Consumer price index (1960 = 100) : twice, from around 400 in 1981 to nearly 800 in 1990

So, this is the true face of growth under liberalisation – capital-intensive and labour-displacing, pro-affluent and anti-poor, imported and borrowed. And today even as the intoxication of this wonder-drug wears off, we are being advised yet another dose of the same, and a stronger one at that!

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