No Indian Miracle


Paul Jay: So there’s a lot of talk about the growth and expansion in India and China, and especially India these days.  We’re hearing again about the Indian miracle.  Whose miracle is it, anyway?  And is it such?

Jayati Ghosh: No, it’s not actually a miracle.  First of all, let me clarify.  India and China are very, very different.  We really can’t compare them.  And all this talk about Chindia and so on, it’s nonsense, because China is a fundamentally different country.  It’s not just that it has had much more rapid growth for a longer period and been more successful in poverty reduction, but it’s a whole different institutional system.  It still has much more substantial state control, especially over finance.  It is still able to manipulate the nature of the growth of the economy more directly through the central state than India is.  And because it had a revolution and because it had land reform and egalitarian income distribution it was operating on a much more equal asset base, which then allowed economic policies to have different effects.  India is different.  In India we never did the hard work in terms of the major transformations, like asset redistribution, land reform, and so on.  We still have a very unequal society.

Paul Jay: Well, before we go to India, let’s just back up to China for a second, because we’d been hearing that a lot of that income distribution, land reform, has been undone over the last 10-15 years, and this kind of rise of state-managed capitalism in China is going back the other way.  Is that not the case?

Jayati Ghosh: To some extent.  But remember that the base on which it was operating was still fundamentally more egalitarian.  And that’s important because, you know, the major episodes of poverty reduction in China, if you look at it, are the early 1980s and the mid-1990s, and these were periods when agriculture prices rose and benefited the farmers.  Now, that helped poverty reduction and income distribution, because there was egalitarian land distribution — it was the peasant households that benefited and became less poor.  So poverty reduction had been closely related to that feature of China, which is very different from India.  But you’re right that the pattern of growth from the early 1990s has been inequalizing, has been one which has focused on this export-led growth paradigm in the coastal region, neglected the west and the central regions, brought in migrant workers, often in terrible conditions, by suppressing growth in the countryside.  All of that did happen.  Again, I think the difference is that from about 2002 you find that the Chinese state has become more aware of this, so there’s a shift in terms of public investment towards the central and western regions.  The latest stimulus package — disproportionately they’re spending in the west and the central regions of the country.  There was an attempt to give more rights to migrant workers who are normally denied all the rights that are available to urban workers.  There is now the attempt to revamp the health system and make it once again something which is affordable for all Chinese citizens.  So there has been a shift in the recent past in China.

Paul Jay: So in India you’re saying there never was major reform and it’s getting worse.

Jayati Ghosh: Absolutely.  If you look at the pattern of Indian growth, it’s really more like a Latin American story.  We are now this big success story of globalization, but it’s a peculiar success story, because it’s really one which has been dependent on foreign capital — you know, we don’t run trade surpluses.  We don’t even run current account surpluses, even though a lot of our workers go abroad to Saudi Arabia and the Gulf, to California, as IT workers.  We still don’t really run current account surpluses.  So we’ve been getting capital inflow because we are discovered as this hot destination.  You know, we are on Euromoney covers.  We are seen as this place to go.  Some of our top businessmen are the richest men in the world.  They hit the Fortune top-ten index.  All of that kind of thing.  This capital inflow comes in, it makes our stock market rise, it allows for new urban services to develop, and it generates this feel-good segment of the Indian economy.  Banks have been lending more to this upper group, the top 10 percent of the population, let’s say.  It’s a small part of the population, but it’s a lot of people, it’s about 110 million people, which is a pretty large market for most places.  So that has fuelled this growth, because otherwise you cannot explain how we’ve had 8-10 percent growth now for a decade.  Real wages are falling, nutrition indicators are down there with sub-Saharan Africa, a whole range of basic human development is still abysmal, and per capita incomes in the countryside are not growing at all.

Paul Jay: So I guess part of that, part of the secret of what’s happening in India, is that the middle, upper-middle, class, in proportion to the population of India, is relatively small, but it’s still so big compared to most other countries — you were saying 100-150 million people living in this, benefiting from the expansion.  And it’s a lot bigger.  It’s like — what is it?  Ten, fifteen Canadas.  So it’s a very vibrant market.  But you’re saying most of the people in India aren’t seeing the benefits.

Jayati Ghosh: Well, in fact it’s worse than that.  It’s not just that they’re not seeing the benefits.  It’s not that they’re excluded from this.  They are part of this process.  They are integrated into the process.  And, in fact, this is a growth process that relies on keeping their incomes lower, in fact, in terms of extracting more surplus from them.  Let me just give you a few examples.  You know, everybody talks about the software industry and how competitive we are.  And it’s true.  It’s this shiny, modern sector, you know, a bit like California in the middle of sub-Saharan Africa.  But when you look at it, it’s not just that our software engineers achieve, it’s that the entire supporting establishment is very cheap.  The whole system which allows them to be more competitive is one where you are relying on very low-paid assistants, drivers, cooks, cleaners.  You know, the whole support establishment is below subsistence wage, practically, and it’s that which effectively subsidizes this very modern industry.

Paul Jay: What’s happening politically?  Do you see a reflection of resistance as a result of all this, coming from the impoverished people?

Jayati Ghosh: Well, you know, unfortunately, I think that there is a tendency now in India for these very major income distribution shifts and this very significant increase in exploitation and destitution not to have a political voice.  It’s surprising to me.  Food prices have been going up by 20 percent now for two years.  When this was happening in the 70s, you had food riots all over the country.  You had major social instability.  You don’t have that today.  You don’t have that same outcry.  We’ve had a big crisis where lots of workers lost their jobs.  People’s money wages are falling.  You don’t find the outcry.  What you do find is the increase in all kinds of unpleasant social and political forces, where people turn against other linguistic groups, they turn against other caste groups, they turn against other religions, you know, because you can’t hit at the system — it’s too big.  So you pick on somebody your own size, or preferably smaller than you, so you can actually bash them up.

Paul Jay: But why is that in a country like India, which is one of the few countries that have had a kind of left political tradition that has more or less remained intact?

Jayati Ghosh: Well, I wish I could say it’s intact.  I think the Left in India is still a very vibrant and very important political force, but it is under attack, and it is under attack from both the Right and Left.  It’s under attack from imperialist forces who want to suppress a genuine left movement in India.  And it’s been queried by a lot of confusion by all kinds of conflicting, you know, political groups that are based on caste or on religion or on other kinds of identity politics.  I do believe, though, that the future of the Left is integral to the future of India as we know it, which is to say a secular democracy.  So it’s absolutely critical to keep that Left voice not just alive but expanding in India.

Jayati Ghosh is Professor, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi, and Executive Secretary of International Development Economics Associates (IDEAs).  This video was released by The Real News on 24 April 2010.  The text above is an edited partial transcript of the interview.  See, also, Jayati Ghosh, “Poverty Reduction in China and India: Policy Implications of Recent Trends”; and Bernard D’Mello Interviewed by Asian Pacific Forum, “Maoist Movement in India.”

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