The Economics of Asia, Essay Example

The decrease in India’s economic and social development from the 1970s onwards, in particular, in the 1970s and 1980s, has been described by Bardhan as the result of a certain internecine conflict between dominant groups within the Indian system. (Political 1984) In other terms, the Indian government’s focus was no longer entirely centered on development, but, instead, was directed towards the pacification of such group conflict, attempting to remain favorable to the respective interests of each of these segments. According to Bardhan, these conflicting groups may be reduced to three general categories of proprietary groups: an industrial bourgeois class, the affluent farmer class, and the professional class. (Political 1984)

With regard to the first class, the industrial bourgeois plays a role somewhat analogous to the industrial bourgeois class in Western countries. (Bardhan, Political 40) Hence, “in 1976 the top 20 business houses are reported to have controlled nearly two-thirds of the total productive capital in the private sector.” (Bardhan, Political 42) Whereas Bardhan also notes trends towards diversification of those who control capital after this period, the influence of private capital still remains a distinctive feature of Indian economic life. The Indian government has not conceived this to be problematic, but has rather encouraged it through policy decisions. Hence, although private capital has practiced, for example, explicit licensing violations, the Indian government has not performed any regulation. (Bardhan, Political 41) Furthermore, the Indian government has also acted as a type of financer of private capital, taking on losses from private businesses, thus, in a sense, bailing out and keeping afloat business failures. (Bardhan, Political 41) Expanding upon this notion, what has been created in India is essentially an oligarchic class, consisting of private sector and the government, which uses the political apparatuses to further private interests.

Further complicating the Indian economic landscape is the presence of the affluent farmer class. The shift from “upper-caste landlords” to “enterprising rich farmers” has created a situation, whereby, with support from the Indian government in the form of, for example, policies such as, “price support” this class has grown in wealth, while they have not reciprocally been taxed on these same gains. (Bardhan, Political 46) The interests of these farmers are primarily class related, intending to preserve their economic status. However, as Bardhan also notes, these interests are tied to socio-cultural normativities, such as caste and ethnicity. (Bardhan, Political 49) The case of the farmer proprietary class is thus a complex interweaving of tradition, history and government support for capital, without appropriate policy measures in areas such as taxation, so as to ensure that wealth gained in the agricultural sector is more equally distributed on a broader social level.

The third class is the professional. Bardhan observes that in traditional analysis the professional class would not be included in an analysis of proprietary classes, in so far as the latter is concerned with physical capital. (Political 51) Nevertheless, their inclusion in the case study of India is appropriate for two main reasons. Firstly, the professional class has been complicit with the success of the other two proprietary classes, the former, because of factors such as “human capital” and education, occupying positions of power in government. (Bardhan, Political 52) Secondly, in so far as India remains a majority illiterate country, education is a key to mobility and social power. (Bardhan, Political 52) What has occurred in India is a certain alliance between the professional class and the aforementioned previous two classes, for example, through the enactment of shared policies which have not sought to improve education, but rather preserve hegemony of these proprietary classes. (Bardhan, Political 52)

In this regard, the decrease of Indian development is the result of each of these proprietary classes pursuing their own interests, but, simultaneously, each of these classes, owing to their power in Indian society, working together to maintain their social hegemony.

According to Bardhan, perceived advancements in social indicators in the cases of China and India, are not the result of the current reform period, but rather policies pursued in the pre-reform period. (Awakening, 91) Bardhan, using empirical data such as surveys of Chinese and Indians living under the poverty line, notes the radical improvements in this area, with substantial diminishment noted in both countries. (Awakening 91-92). Whereas the dominant interpretation is that this is the result of globalization, Bardhan believes this is overstated, for example, using statistical data so as to note a decline in poverty already, in the case of China in the 1980s, and in India, in the 1970s and 1980s. (Awakening 93-94) Further arguments which Bardhan supplies include a failed lack of improvement in healthcare in the “globalization” period. (Awakening 94) From this perspective, Bardhan’s argument is that improvement had already been achieved, and, through the rhetoric of globalization, i.e., the opening of the Indian and Chinese economies to the world, the latter has retroactively claimed credit for advancements that already existed.

Bardhan is not isolated in his conclusions. With regard to India, Dutt and Rao argue that while globalization has seen increases in “international trade and capital transactions”, growth in these areas have not been reflected in, for example, social growth (48). Other problem areas include increasing trade deficits and the decline of the agricultural sector. (Dutt and Rao, 49) The liberalization of the Indian economy has thus overlooked key issues such as “cooperative action in economic and social reform”, (Dreze and Sen, India 63) instead remaining overtly centered on issues of “narrow” (Dreze and Sen, India 63) economic reforms, which, it can be added are related to the liberal and neoliberal views of economy. As Dreze and Sen argue, “economic growth is indeed important, not for itself, but for what it allows a country to do with the resources that are generated, expanding both individual incomes and the public revuene that can be used to meet social commitments.” (India 63) It is precisely in these areas that India, although having experienced economic growth, has not improved state of poverty and social well-being. Arguably, the key to this disjunction is the misinterpretation that the liberalized or globalized form of economy is the ideal economic form. Dreze and Sen, for example, note the growth of India in the 1980s, above helped by “a major recovery in the agricultural sector” ,  precisely one of the sectors which, as mentioned above, has declined in the context of globalization and the opening of the Indian economy to the world. (Uncertain 27) The effects of the agricultural growth were also decisive for poverty reduction, as “agricultural wages grew at an unprecedented rate of about 5 per cent per year in real terms.” (Dreze and Sen, Uncertain 27) Furthermore, this also coincided with a decline in urban poverty. In contrast, empirical data demonstrates that real wages in Indian manufacturing have declined in the period of 1990-2010. (Dreze and Sen, Uncertain 31) Real wages in India overall have shown a negligible improvement over this same time period. (Dreze and Sen, Uncertain 31)

From this perspective, the apparent growth inaugurated by globalization, as the above authors convincingly argue, has not been felt throughout Indian society. Instead, it has been relegated to a few indices, which are reflective of what this same paradigm of liberalism and globalization, considers as economic success. Endemic reforms to the agricultural sector in the 1980s resulted in the widespread positive social changes, as noted above. This has not been realized in the current economic policy, as the empirical data emphatically states. Accordingly, the case of India in as sense debunks the myths associated with globalization, demonstrating that without a wider reinvestment of gains made in Indian society as a whole, the current economic reforms, intended to open countries such as India to the world, are merely beneficial to classes such as the proprietary. Radical social change has not been inaugurated and, arguably, as the data seems to indicate, quality of life has even declined as a result of such policies.

Works Cited

Bardhan, Pranab. Awakening Giants, Feet of Clay: Assessing the Rise of China and India. Princeton, NJ: Princeton University Press, 2010.

—. The Political Economy of Development in India. Oxford, UK: Oxford University Press, 1984.

Dut, Amitaya Krishna, and Rao, J. Mohan. Globalization and Its Social Discontents: The Case of India. New York: Center for Economic Policy Analysis, 2000.

Dreze, Jean, and Sen, Armatya. An Uncertain Glory: India and Its Contradictions. Princeton, NJ: Princeton University Press, 2010.

—. India: Development and Participation. Oxford, UK: Oxford University Press, 2002.