Imperative of redefining reforms

Reform has been a buzzword since India embraced the reforms in the 1990s. However, even after three decades of enunciation, the economic reforms continue to be embroiled in controversy. The ruling class believes that irrespective of the occasional grumbling about liberalisation, Indians want more reform. They propagate that the paradigm shift in public perception is the greatest guarantee that the reforms process is irreversible.

In reality, reform is among the monster list of commonly most misused words, which have been butchered for years together. The nation is still bemused about the true definition of reforms that can boost consumer sentiment, the welfare of the masses, improvement in the standard of life, and ensure growth with equity.

The positive connotation for “reform” probably dates back to October 31, 1517, when Martin Luther, distressed by the Pope’s practice of charging a price for forgiving sinners, nailed his 95 “propositions” to the door of a church in Wittenberg, sparking off the Protestant “Reformation”. The Oxford English Dictionary has imprinted its approval on the word by defining “reform” as “make changes in (something, especially an institution or practice) in order to improve it”.

Not only does “reform” mean different things in different countries, but it may also mean different things in the same country at different points in time. For instance, “labour reforms” in the 1950s in India generally meant giving workers the right to form unions. Today, however, they mean the opposite: giving employers’ greater flexibility in hiring and firing workers.

However, the so-called economic reforms encompass the IMF and World Bank dictated liberalisation, privatisation, and globalisation.  Globalization is the process by which ideas, knowledge, information, goods, and services spread around the world. In business, the term is used in an economic context to describe integrated economies marked by free trade, the free flow of capital among countries, and easy access to foreign resources, including labour markets, to maximize returns and benefit for the common good.

However, what we see is financial globalisation which is defined as global linkages through cross-border financial flows, the market of one country integrating financially with the rest of the world. However, liberalisation is more local in nature. It is the process or means of the elimination of control of the state over economic activities. It provides greater autonomy to the businesses, corporate honchos in decision-making and eliminates government interference.

The so-called economic reforms, otherwise known as neo-liberal policies were never for the interest of the masses. It was a Washington consensus imposed on developing countries to open their economy to the plunder and pillage of multinational companies. In brief, it involves deregulation of various kinds, reduced taxation or more tax concessions to rich and corporate, privatisation of public sectors, public expenditure cuts, measures to curtail subsidies and reduce the fiscal deficit, a lax monetary regime with low-interest rates, dilution of labour laws, and many combinations of these.

The grievous blunder associated with so-called reform was: using of capital and technology to displace jobs, increase the profit of corporates instead of displacing unemployment. When there was the need to focus on innovation to support the job market but innovation was primarily made to cut costs, boost companies’ profit, and increase consumerism. The reforms made the dream for a quality of life for all shattered. When there was a need to make companies responsible, accountable for job creation, they were made scot-free to retrench workers and maximise profit by the hook or crooks. Reforms did not spawn an ecosystem that will disrupt unemployment.

The bitter truth is that in the name of reforms, many anti-people, anti-labour, and pro-rich, pro-corporate measures are implemented. India becomes servile to imperialism and obsequious to multinational companies. When IMF, World Bank, or WTO advocate pro-rich, pro-corporate, anti-people policies like privatisation, labour law changes then our government is quick to implement the same. But when the same organisations /institutions advocate any pro-people or legitimate policies, then our government never implements the same. That reform is misused by all governments around the world. The sweet word “reform” is used to hoodwink the people and outweigh any opposition and make anti-people policies acceptable to people.

Today`s economic reforms are not aimed at making poor people rich. Instead, they are meant to create oligarchies of the rich and affluent. Buttressed by powerful opinion-makers, the voice of corporate-controlled media, the definition of India’s economic reforms is unobtrusive in such a way that it has only spawned crony capitalism in the name of making the government look less intrusive. This has resulted in the scams and scandals reach new heights that the calculators go tizzy calculating the national losses.

All decisions meant to push different sectors to the private players and transfer of national assets to individuals without any protection for vulnerable sections of society were defined as reforms by the successive governments. All those means: “reform” as an action that lets market forces set the prices of goods and services as well as interest rates. In other words, it means having the state abdicate its social responsibilities and play a lesser role in economic affairs leaving the well beings of the poor and downtrodden to the capriciousness of the market. However, states are playing the dominant role when protecting of interests of the rich, corporates come into question. Profits of corporates are privatised (corporates enjoy all profits) while their losses are socialized (state bears the losses by giving packages).

What is most worrisome is that reform in India has been accompanied on the one hand by a significant worsening of income inequality and on the other by a drop in the welfare programmes designed for the poorest of the poor. Neoliberal reform has become an instrument for a harsh, engineered redistribution of income and wealth in favour of the rich. Hence, after more than three decades of reform, the majority of the people in India are no longer believed that it can make much of a difference to their lives. Lower-income Indians are less satisfied with reforms.

Further, the growing inequality between countries and within a country, rising global debt and public debt of various countries, the inability of governments to cope with the aftermath of a pandemic, America resorting to protectionism, clamour for minimum global corporate tax after the competition for reduction of corporates tax for many years shows how so-called reforms have failed. Hence, there is an urgent need to re-examine the pros and cons of “unequal” reforms which have helped the “haves” to increase their wealth while at the same time the “have-nots have been denied their basic subsistence or bare minimum placing India abysmally in Human Development Index (HDI), Global Happiness Index and Global Hunger Index.

Reforms have made India so dependent and have destroyed self-reliance in such a way that nobody will find a household in India without any China products. Of course, our government gives slogans against China every day to deceive people.

The so-called much-trumpeted growth witnessed pro -reforms periods is not because of reforms but the credit-driven consumption splurge and rapid exploitation of our natural resources by Indian and foreign companies and benefits of demographic dividend arising due to large population. The humongous black money invested in the real estate and automobile sector has spurred growth too.

India might have witnessed high GDP growth for the post-reforms’ periods, yet unemployment levels have climbed. India has still the highest number of hungry and poor people in the world. The supply of essential services like water, sanitation, and electricity to the country’s rural and urban poor has dwindled. Health and education have become not only too much costlier but beyond the reach of the poor. However, simply GDP has not increased only because of globalisation as propagated.

A quick look at such data suggests that the growth rate in the colonial period was virtually close to zero and that there was growth momentum after Independence. But GDP growth was accelerated not after reforms but before reforms (i.e., in the 1980s.). For example, average GDP growth was 3.6 per cent in the 1950s, 4 per cent in the 1960s, 2.9 per cent in the 1970s. During 1980-1990 average GDP growth accelerated to 5.57 per cent while in 1991-2000, it was nearly same at 5. 59 per cent.

The average GDP growth, which was 5.96 per cent in 2001-2010 has declined to 5. 05 per cent in 2010-2020. One may argue that due to negative growth of 7.3 per cent in 2019-20 triggered by corona pandemic induced recession, GDP might have been less than what actually it should have been in absence of pandemic. Actually, the Indian economy was in the doldrums, tenterhooks, and tizzy and slowing down before the pandemic afflicting it. The GDP growth rate steadily fell from over 8.3 per cent in 2016-17 to 6.8 per cent in 2017-18, 6.5 per cent in 2018-19 to 4 per cent in 2019-20 before contracting by a massive 7.3 per cent in 2020-21.

In Indian history, even before liberalisation highest GDP growth was achieved 10. 20 per cent in 1988-89. After liberalisation highest growth was achieved in 2006-07 when Indian economy clocked 10.08 per cent (in new series), 9.57 per cent (old series.) The Indian economy has performed well during UPA-1 when left had influence and there was not much economic liberalisation and disinvestment.

Ever since Narendra Modi became Prime Minister, and the recent pandemic induced crisis has led to the raucous call by neo-liberalist, corporate, multinational corporations to accelerate the process of economic reforms such as expediting disinvestment, privatisation process, lifting any restriction on movement of foreign capital, opening of economy further to FDI. For Prime Minister Modi, reforms mean resolving the retro tax issues and honouring corporates as wealth creators, catering to their demands rather than tackling poverty, hunger, inequality, and unemployment.

But expediting the reforms means implementing the advice of the same faith healers who guided it into today`s crisis. In other words, a doctor prescribing the same medicine with higher doses which did not cure illness rather aggravated the disease.

 It is highly imperative to formulate policies which can lift more people out of their poverty line. The poverty line does not mean the starvation line as used now. Unless this is achieved reforms for the poor will remain a mere chimera. But the so-called reforms dictated by the US and its agencies such as IMF, World Bank, WTO cannot eliminate inequality, rather will exacerbate it.

Reforms should not mean present unbridled, unfettered disinvestment, privatisation of public sector and essential, public services, monetization of assets to transfer the national assets to individuals or bridge the fiscal deficit. Reforms do not mean unregulated flow (inflow, outflow) of foreign capital, withdrawal state from welfare activities, social responsibilities but intervening for the interest of corporates. So-called economic reforms had made our economy susceptible to the vulnerability of global finance capital and the vicissitude of the world economy.

Hence reforms need to be redefined in our own context.  It must aim at qualitative lives for all. Economic reforms should be pro-people and aim at curbing price rise of essential commodities, ensuring transparency in governance, swift judicial process, making villages and slums more liveable and reducing the poverty, inequalities, and unemployment and the finally not what the market wants but what is good for our economy.