January 18, 2015

Changing Policies and the Way Forward: A Discussion in AIDWA

Smita Gupta

USHERING in the new year with the recognition that for this to be a happy year for the mass of working and poor women and men, and indeed the entire country, strong popular resistance against the aggressively authoritarian pursuit of neo-liberal policies and bigoted communal polarisation by the NDA government has to be launched. If the first week is anything to go by, 2015 will bring even greater economic hardships and social discord for the people through anti-constitutional means. The slogan of ‘development and prosperity’ by the Modi government has proved to be a chimera. The economic situation is a matter of great concern and the Modi government has initiated a ten percent cut in all non-plan expenditures resulting in lower expenditures on social sector and employment programmes like MGNREGA etc. It has spent less than 30 percent of the budget allocations in several key sectors. Six ordinances have been promulgated in quick succession undermining land and livelihood security of farmers and others. Social harmony is vitiated by the Hindutva forces on a daily basis with full State support. Both secularism and democracy are under attack. To understand the implications of the policy and to strategise, AIDWA organised a discussion on the impact of the Modi government’s economic policies on the people on January 12, 2015. Noted economist Prof Jayati Ghosh, Centre for Economic Studies and Planning, JNU was the main speaker at the event which was chaired by Brinda Karat, patron of AIDWA. The meeting started with condolences and silence in memory of Professor Jashodhara Bagchi a pioneer in women’s studies in India, a leader of the women’s movement and formerly chairperson of the West Bengal Commission for Women. SHROUD OF SECRECY Prof Ghosh pointed out to the highly secretive and centralised manner in which the new central government functions, with even senior bureaucrats and ministers kept out of the loop when key policy decisions are taken. The PM has centralised all powers and only deliberate news feeds are supplied from here, with any off the record bytes from others becoming near impossible, according to most senior journalists. So the media releases are carefully planned and orchestrated but nobody really knows what is going on till after the decisions are implemented. CUT IN SOCIAL SECTOR SPENDING Unfortunately, the closing years of the United Progressive Alliance (UPA-2) government were marked by just such unacceptable tendencies. As December approached, with just one quarter of the fiscal year remaining, former finance minister P Chidambaram would decide that fiscal targets (in terms of fiscal deficit to gross domestic product (GDP) ratios) were in danger of being overshot and would arbitrarily announce cuts to allocations of different ministries – sometimes even blanket cuts of 20 percent that the ministries would then have to beg to reduce even partially. These cuts also fell in some important areas of public social spending, including the UPA’s “flagship schemes”, which would thereby be squeezed of resources. The Modi government has stealthily imposed sweeping cuts on important areas of public spending. The finance ministry has informed various ministries that there will be significant reductions in allocations in the remainder of the financial year until March 2015. The average reduction is around 15 percent compared with the previous year. Even in areas where the nominal amount remained unchanged, this implied a cut in real terms because of inflation. Now on top of that, if media reports are to be believed, health sector plan expenditure is to be cut by Rs 7,000 crore. “The hugely important spending of departments such as rural development, panchayati raj and drinking water and sanitation are to face cuts of around 25 percent. (The last is particularly ironic given the prime minister’s much publicised brouhaha over the Swachh Bharat campaign.)” One of the most harmful cuts is in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which this government has in any case sought to undermine in innumerable ways. The proposed cut is reportedly Rs 3,000 crore to the already low budget estimate. This is both wrong and illegal. As long as there is demand for employment, state governments, and therefore the central government, must provide work, and there should be no question of a budget cap on this scheme. “Yet the central government (unfortunately, even the UPA-2 after 2011-12) has effectively exercised such a cap by keeping the budgetary allocation for this scheme nearly constant at between Rs 30,000 and Rs 33,000 crore. This obviously implies a decline in real terms.” In the current budget year, there was an amount of Rs 9,000 crore worth of unpaid wages left over from the previous year. This will kill the scheme. She pointed out that even for budgetary savings, such cuts should not be necessary because of the fortuitous sharp drop in global oil prices, which should reduce the subsidy burden and lead to significant savings. “And if the real GDP is growing by more than 5 percent in the current year, why should spending on health, nutrition, education, etc., be cut at all? At the very least, it should grow by a minimum of 5 percent”. And, she pointed out, this strategy of imposing fiscal austerity will not even deliver higher growth since spending cuts will reduce people’s real incomes and aggregate effective demand, resulting in deceleration. THE CHIMERA OF ‘MAKE IN INDIA’ Jayati Ghosh criticised the “Make in India” programme which is being presented as a major new initiative intended to assist investment, promote innovation, augment skill development, defend intellectual property and build cutting edge manufacturing infrastructure. But there is really no new strategy for this. In any case, she pointed out, the main component of women’s work that grew in the Gujarat model was surrogacy. Prof Ghosh pointed out that the essential proposal seems to be that all that is required is more far reaching and efficient implementation of the failed UPA strategy. Basically, “further deregulation of various policies associated with remaining licences and permissions for private investment, including allowing the entry of more foreign direct investment into sectors such as defence and insurance, combined with loosening of environmental standards and easing of rules preventing easy access to cheap land.” Credit in banks will be re-directed to private companies even as NPAs mount and are renamed or restructured as the capitalists refuse to repay these loans. This is all money from the public exchequer which is going as credit to these companies even as credit for farmers etc dries up. The most objectionable part of this is the thrust towards even greater reliance on public-private partnerships, or PPPs by incentivised private investment, a model that utterly failed during the two UPA tenures. As we saw, this is more fiscally demanding as far as public spending is concerned and is productively inefficient and fails to attract the investment in crucial infrastructure areas. WAGES AND WORKERS’ RIGHTS Prof Ghosh pointed to the alarming reversal in the slow but steady rise in real wages of workers, largely on account of the MGNREGS, since 2011. Not only have real wages declined, but the gender gap has increased. This is accompanied with the repeated policy utterances on ‘reforming’ labour laws and further flexibilising the labour market. This may at first sight seem odd because from the point of view of profits, labour costs today constitute barely 2.4 percent of total costs. Over 92 percent of labour is unorganised, so further labour flexibility is unlikely to result in a manifold increase in wages. What this will do, though, is to send out the strong political message that this government has abandoned all protectionist and welfarist pretensions and is willing to fully and openly ally with capital. This will create animal spirits and investor confidence. THE WAY AHEAD Brinda Karat highlighted the importance of focusing on women’s work, nutrition, health and education by launching resistance against the government’s anti-people policies. She suggested that in rural areas AIDWA should focus our struggles on rural employment. The acute resource crunch makes it even more important to work on the issue of credit and SHGs. MNREGS has been a focus area in our work but it is now time for us to form unions of workers under the scheme. She also pointed to the imperative for addressing the impact of loss of land rights and access to common property resources on women especially after the changes in government’s land and resource policies. The food security act which was a result of our struggles too must be taken up especially with falling procurement and a huge role for the private sector in this. Jagmati Sangwan, AIDWA general secretary said that we need to work together and create a strong culture of collectivity and solidarity to resist these policies in the days to come.