Saturday, March 06, 2010

India's New IMF Economics (and it will kill millions of poor)

I'm not a trained economist. But I sort of understand it from a grassroots, human rights pov. I hope you have time to read my little column. Feedback and circulation welcome. For more articles on this very important subject, look up .
opinion (Outlook India, March 15, 2010)
The Khaas Aadmi Budget: It’s time people got—or took—direct charge of budget-making
By Partha Banerjee

[Note: I used some info from online articles and blogs.]

In a euphoric moment, when the country was celebrating Sachin Tendulkar’s double century in ODIs, Pranab Mukherjee, finance minister and International Monetary Fund’s governor-designate for India, presented his budget. And we might say, “It’s not cricket!”

In a non-election, no-risk year, he announced the following important news for his fellow countrymen. (1) Rich Indians will get Rs 26,000 crore of tax break in 2010-11; (2) food subsidy for the poor will be decreased by Rs 424 crore; (3) fertiliser subsidy for low-income farmers will be pared by Rs 3,000 crore; and (4) real estate magnates and hotel owners will get huge tax concessions. Then, he announced even more important news. In an already high-inflation situation, petrol and diesel prices will be increased. Everyone knows what that would do to the urban/rural poor and lower middle class.

Major corporate media, following a new-found, ‘successful’ US model, praised the budget. They said that following the announcements, India’s stockmarkets jumped. “The market lapped it up and the Bombay Stock Exchange benchmark Sensex boomed,” a Financial Times article said. Big NRI businessmen too made positive statements.

But wait a minute. I’m an NRI too, living in the US for 25 years. I teach blue-collar American labourers coming back to get a college education. I see how corporations here are laying off these workers in thousands and yet getting themselves millions of dollars in bonuses using the Obama government’s bailout money. I see how American media is completely bypassing the suffering poor workers. And now I see how a section of Indian media houses is following the footsteps of their American mentors, and suppressing the real stories around this major, extremely skewed budget. I find it unbelievable that nobody is questioning and challenging the so-called democratic government of Pranab babu, Manmohan Singh and the Gandhi dynasty on how the 80 per cent poor—rural and urban—would now be able to find food or kerosene for their families, pay rent, or get healthcare for ageing parents. Does anybody really care?

Let’s look at the history of Indian budgets since the so-called post-Soviet, post-non-alignment, liberalisation days. Since then, the series of policy measures launched by the Indian government are part of the so-called structural adjustment programmes (SAP). Indian governments have since taken up the following IMF-World Bank-dictated measures to implement SAP: (a) Massive devaluation of rupee; (b) new industrial policy allowing more foreign investments, thereby destroying traditional Indian businesses; (c) rampant disinvestment of government equity in profitable public sector enterprises; (d) ‘reforms’ of the financial sector by allowing in private banks; (e) cuts in social spending to reduce fiscal deficit; (f) market-friendly approach and less government intervention; and (g) liberalisation of the banking system.

Twenty years ago, the World Bank secretly submitted the above SAP elements to the government; we now know that the group of senior officials in the finance ministry—all ex-World Bank/IMF employees—who were involved with this memorandum did not disclose it to the then PM, Chandra Shekhar. Have we heard about this from Pranab babu or his predecessors P. Chidambaram or Manmohan Singh?

Clearly, the focus of the new budget is to provide more help to the corporate sector and the rich, with an illusion that the new growth would percolate down to the downtrodden—what is called “trickle-down economics” in the US. It has now crashed the US economy, and it’s going to crash India and its vast middle class in the coming days.

If Indian leaders were not so indebted to Western institutions, they’d have come up with a people’s budget following the successful model of Brazil’s Lula De Silva: a transparent economic blueprint where ordinary people have open access to create and modify it based on their own national, regional or local needs.

In a truly democratic, transparent, people’s budget that India should have developed over the recurrent, five-year plans, we’d see serious investment in small-scale industry, agriculture, education, healthcare, land/water reform, training for unskilled workers, incentive for poor women’s entrepreneurial efforts and ‘Grameen’-type banking, development of a sustainable environment and sports for young Indians with tangible goals. On that list, we’d now definitely add disaster preparedness and evacuation strategies, given what we’ve just seen in Haiti and Chile. I shudder even to think of the extent of possible destruction in the event of a large earthquake in Calcutta, Delhi, Mumbai or Bangalore.

Pranab babu’s IMF budget has no clue on any of the above. Who can answer correctly? Soniaji, or maybe, the next media-predicted prime minister—Rahul Gandhi?


Partha Banerjee
New York-based human rights activist

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