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Mainstream, Vol XLVI, No 12

Increasing Prosperity, Growing Insecurity

Monday 10 March 2008, by Girish Mishra


It is beyond dispute that, in recent decades, the prosperity of a large segment of the Indian middle and upper classes has increased rapidly. With accelerating average annual rate of economic growth, these segments have cornered most of its fruits. Looking at high-rise buildings, opening of fashionable malls and the increasing number of four-wheelers in towns and cities, one may easily discern this.

With this growing prosperity, however, has come a sense of insecurity to haunt the well-to-do. This is reflected in the frantic construction of high boundary walls, erection of fences with barbed wires and the round-the-clock deployment of private security guards in the colonies inhabited by them. Their dependence on the public security apparatus has, rightly or wrongly, diminished because of a growing feeling that it is neither adequate nor sincere. Yet, the incidents of kidnapping, extortion, theft, robbery and murder dominate the headlines of newspapers and electronic media. Why is this so? Why are the social segments benefiting most feeling unhappy and insecure?

In recent decades, the Indian economy has grown rapidly and the annual average growth rate is somewhere near 9.5 per cent. A claim is being made that, in the near future, it may be in double digits. In the world, India has become the fastest growing economy, next only to China. Yet all social segments and geographical parts of the country have not equally benefited, notwith-standing the hymns eulogising the effectiveness of the trickle-down-strategy by the so-called experts and scholars, influenced by the proponents of the Washington Consensus. Whereas western UP, Haryana, Punjab, Gujarat, Maharashtra and the southern parts of the country have derived most benefits in terms of increased employment opportunities, incomes, infrastructure facilities and rising living standards because most of the indigenous and foreign investments have gone to them, other parts have found themselves rapidly lagging behind. Since the acceptance of the policies informed by the Washington Consensus, the state has gone back on its commitment of giving special heed to the development of backward areas. This is a direct result of the state giving up its active role in economic development and privatising existing public sector enterprises. This has made the policy of providing quota or reservation in job opportunities redundant because no new employment opportunities are being created in the state sector, nay, there is a net decline in employment opportunities in government departments and state enterprises. The private sector is not enthusiastic about reserving jobs for the Scheduled Castes, Scheduled Tribes and Other Backward Classes. Thus the so-called affirmative policy brought in with great enthusiasm has been practically consigned to the dustbin. Both the ruling conglomerate and the Opposition know that pressurising the private sector beyond a point may lead it to shift its activities somewhere else and in the present globalised world, it is impossible to stop it and going back to the pre-1991 dispensation cannot even be imagined in the prevailing circumstances. One of the mentors of the present-day Indian reformers, Alan Greenspan, who, till a year or so ago, headed the Federal Reserve of America, has devoted no less than five pages (pp. 318-322) of his recently published book The Age of Turbulence, showering praises on the Indian evangelists, propagating the gospel of the Washington Consensus-based reforms. He has concluded his discussion by lamenting that India has failed to open its doors fully to the entry of foreign direct investment. To quote:

The reason FDI has lagged badly in India is perhaps no better illustrated than by India’s unwillingness to fully embrace market forces. That is all too evident in India’s often statist response to economic problems. Faced with rising food inflation in early 2007, the response was not to allow rising prices to prompt an increase in supply, but to ban wheat exports for the rest of the year and suspend futures trading to “curb speculation”—the very market forces that the Indian economy needs to break the stranglehold of bureaucracy.

Obviously, the mentor wants the disciples to go ahead with the roller of their reform agenda, but he forgets that it may lead to disastrous political consequences to the ruling dispensation. Already these have been reflected in the massacre in Gujarat, attacks on migrant labour in Assam and Maharashtra, burning of the houses of poor Christians in Orissa and irresponsible statements by so-called responsible people in Punjab and Delhi. All of these have been rooted in ill-informed resentments against people belonging to different regions, religions, and castes, and speaking different languages, “stealing” economic oppor-tunities from the locals.

SINCE the 1990s, Indian market has been wide open for the entry of foreign goods. From food- grains, vegetables and fruits to all kinds of manufactured items like safety razors, washing machines, microwave ovens, motorbikes, cars, plastic utensils, and tractors have been entering the Indian villages without any restraint. Consequently Indian producers have been adversely affected and they are going out of their age-old vocations. From the weavers of the Banarasi sarees to rural carpenters, blacksmiths, goldsmiths, locksmiths, potters, oilmen, ploughmen, weavers, carders, washermen, barbers, etc. are fast becoming redundant and are forced to migrate to urban areas and to more prosperous States in search of livelihood. Cotton textile and jute textile mills and sugar factories that used to employ a large number of workers have collapsed. The same has been the fate of old engineering works. One can easily discern the devastating impact on both workers and farmers growing cotton, jute and sugarcane by visiting Kanpur, Delhi, Indore, Ahmedabad, Mumbai, Kolkata, Solapur, Bihar and eastern UP and areas around them. One may rationalise this, a la Greenspan, by evoking Joseph Schumpeter’s theory of ‘creative destruction’.

Under the new dispensation, jobs are available only to those who have acquired the requisite skills. These skills are not within the reach of people at large because for them proper schooling is indispensable. Thus, by and large, only the young men and women from the well-educated and well-off families get into the institutions imparting modern skills in engineering, medical, management and information technology. Consequently, in India, two different worlds have been emerging. Unlike the old times both the rich and the poor do not live together. The rich live in posh colonies while the poor are in the slums. One sees posh colonies alongside the slums in the same city, yet culturally they are poles apart. They are economically dependent on each other. The slums are indispensable to the rich as they provide domestic servants, drivers, electricians, plumbers, guards, gardeners, carpenters, masons, washer-men, barbers, etc. and, in return, the latter get wherewithal for their survival. Yet, culturally they live in two different worlds. The slums lack roads, sewer facilities, proper sanitation and health care, schools, potable water and electricity and are breeding ground for all sorts of diseases and crimes. Since the slums are not ‘authorised’ settlements, municipal services are rarely provided to them. On the other hand, posh colonies have no lack of clean drinking water, electricity, sanitation, health care and education facilities and parks for walks and cultural activities and sports. Sewers are seldom open and there is a regular sprinkling of insecticides. In case, there is shortage of water, tubewells are provided and the inhabitants resort to inverters and generators for uninterrupted electricity. Roads are well main-tained and the public transport system is in good shape.

The slum dwellers, in the course of serving the rich, witness their living standards and the goods and services consumed by them. They see the newer and newer gadgets, imported clothes, liquors, shoes, food, etc. and witness how the elite have been throwing lavish parties and eating, drinking and making merry. This arouses an irresistible envy and urge to acquire the means to enjoy similar life-style. On the basis of their earnings, they cannot have them even in their next seven lives. Thus, they are so entrapped by the ‘demonstration effect’ of ‘conspicuous consumption’ that they resort to crimes like theft, robbery and murder. Following Thorstein Veblen, Harvey Leibenstein described this phenomenon as ‘bandwagon effect’.

They resort to all kinds of pretexts to acquire information and enter the houses of the rich at opportune moments when they are empty or only old men and women are there. They impersonate themselves as postmen, couriers, electricity or water meter readers and indulge in looting and, in case of resistance, murders. They enter into a league with domestic servants or drivers to kidnap children or even adults for ransom. With women going to work during daytime, the children are entrusted to the care of servants who are quite often won over by the criminals and made accomplices in kidnapping and robbery. Our neo-rich people, unlike in the Western world, possess washing machines, microwave ovens, vacuum cleaners and other modern gadgets but they quite often do not use them and try to imitate the rajas and maharajas of the bygone days. This leads to their growing dependence on the servants who are available cheap in plenty, thanks to the increasing incidence of unemployment and poverty.

Among the neo-rich there is a substantial proportion of those who have accumulated wealth and derived incomes from various kinds of criminal and illegal activities. These people try to show off their prosperity by indulging in lavish living, wearing expensive dresses, shoes and ornaments, driving luxury cars, drinking imported liquors, and carrying the latest models of mobile phones. Their indulgence in ‘snob effect’ naturally leads to ‘bandwagon effect’, encouraging criminal activities to acquire money.

The ill-treatment meted out to domestic servants prevents most of them from having any attachment or loyalty to their masters. Besides, they are not granted any leave, not to speak of leave with pay, and provided medical facilities. Their hours of work have seldom any limitation. They have neither any union nor law to protect their interests. Quite often very young boys and girls are employed as domestic help in contravention of the legal stipulations but seldom any effective action is taken by the law enforcing agencies.

The author, a well-known economist, used to teach Economics in Kirorimal College, University of Delhi before his retirement a few years ago. He can contacted at e-mail:

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