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ECONOMIC REFORMS

Whose reforms are these anyway?

Chittaroopa PALIT

Friday 18 June 2004, by PALIT*Chittaroopa

Whether it is Andhra Pradesh or Madhya Pradesh, the scripts for reforms are written by the World Bank and the ADB and their consultants. And they invariably exclude the poor and benefit the corporate houses, Indian and international.

THE results of Elections 2004 show that the vast majority of the Indian population has decisively voted against the policies of "economic reforms" brought into India by the World Bank, the International Monetary Fund and the Asian Development Bank (ADB) in the last decade. The electorate has also voted against the communal violence that brutalised the polity during these very same years, expressing a preference for peace and co-existence.

The icons of the reforms process - N. Chandrababu Naidu in Andhra Pradesh and S.M. Krishna in Karnataka - have been ignominiously defeated. The poor showing by the National Democratic Alliance (NDA) in many States, including Gujarat, and the huge gains of the Left parties also confirm the mandate against economic reforms.

It was these very same reforms policies that were responsible for the ouster of the Congress governments in Madhya Pradesh and Chhattisgarh six months ago. The continuing momentum of the popular rejection of the earlier regimes saved the day for the Bharatiya Janata Party governments in these States. Of course, the new BJP governments in these States are also committed to anti-people economic reforms, besides undertaking alarming experiments in communal and cultural engineering.

So where do these so called "reforms" come from and whose agenda are they? The story of how reforms evolved in one State may help us understand them better. In November 1999, the Congress government in Madhya Pradesh took a loan of $250 million through the NDA government at the Centre from the ADB for the "Madhya Pradesh Public Resource Management Programme". The availing of the loan and the launch of the programme were not preceded by any public discussion or information. One of its main tasks was to carry out the "restructuring, merger and closure" of 14 public sector enterprises in Madhya Pradesh and the retrenchment of more than 16,500 workers.

Secretly, and with no public mandate, the State and Central governments accepted these humiliating and damaging conditions, dismantled scores of public sector enterprises and retrenched thousands of workers. The ADB’s conditions for the loan even detailed policies and legislation to be passed in the State legislature and the contents of the State government’s budget speech.

One main objective of the loan, as stated in the loan document, was to enable private sector involvement in public services - of course by decimating the Madhya Pradesh public sector - so that public services such as transport and power could all be opened to Indian and global corporates as exciting new business opportunities. Another clause in the ADB loan agreement specified that the proceeds of this loan could not be used for "expenditures in the currency of the borrower or of goods supplied from the territory of the borrower". Since the borrower was India, this meant that the proceeds of this approximately Rs.1,100 crores loan were to be used exclusively to bolster the sagging markets of global corporates.

But the story does not end there. In 2000, the governments of Madhya Pradesh and India took yet another loan from the ADB - of $350 million to reform Madhya Pradesh’s power sector. This time, too, the people of the State were kept in the dark. In fact, even the Regulatory Commission states in its Tariff Order of 2002 that the government withheld the ADB loan document from it.

Contrary to expectations, the power sector reforms did not result in cheaper or more reliable power, better efficiency or increased access to electricity for the people of the State. The loan conditions first ensured that thousands of poor consumers dependent on free single-point connections were disconnected. As per government documents, the 10.5 lakh families of Madhya Pradesh which used to have the facility of single-point connections used only 2.5 per cent of the total power in the State and cost the government around Rs.35 crores in subsidy. This facility was cancelled, ostensibly to improve fiscal discipline and check financial profligacy. However, it was the same government that signed a spate of one-sided and expensive deals for power generation with private companies, guaranteeing them large returns on equity, and compulsory payments from the treasury. It was also the same government, which gave tax concessions of over Rs.350 crores to a handful of road contractors and multinationals, including Coca-Cola, during these years. Obviously, fiscal discipline is for the poor, and not for the multinationals.

Power tariffs for farmers were also hiked in 2001 and 2002 several times over as a condition of the reforms. As a result, farmers all over the State were disconnected, because they were not able to pay their inflated electricity bills. In June 2003, the White Paper of the Madhya Pradesh government on the power sector reported that out of 12 lakh agricultural connections in the State, six lakh connections had been stopped. The loss of electricity for irrigation implied pauperisation and death for these lakhs of farmers already struggling with markets flooded with cheap imports, drought and debt.

In 1999, the ADB had called for the creation of an "independent" Electricity Regulatory Commission, insulated from the realm of public control and accountability, to take decisions about the power sector. Presumably, it was in order to keep this "independence" intact that the overseas development wing of the British government, the Department for International Development (DFID), stepped in with a technical assistance (T.A.) grant - their favoured mode of intervention - and appointed multinational firms as consultants for all the three major power-related institutions in the State: PricewaterhouseCoopers for the Madhya Pradesh Electricity Regulatory Commission, KPMG-IPA for the State Energy Department, and SNC Lavalin, a Canadian consultancy firm, for the State Electricity Board. The T.A. was for ?10 million. Madhya Pradesh’s "independent" power agenda is now determined by these firms.

Nor did the reforms increase the efficiency of the sector. Despite close monitoring by the ADB, and the expensive foreign consultants in the last three years, almost half of all power generated continues to be lost in transmission. The Board has repeatedly fallen short of the benchmarks for the decreases in transmission and distribution (T&D) losses laid down by the Regulatory Commission. Thus, although the sum of the total power generated in the State and the power available from the Central pool as Madhya Pradesh’s share exceeds the electricity demand in the State by a comfortable factor, this electricity is not available to the people.

With the onset of the reforms, the power situation in the State descended into chaos. Extended blackouts and brownouts during the reform years caused even the judiciary to raise its eyebrows. The Gwalior Bench of the High Court asked for an inquiry by the Central Bureau of Investigation (CBI) into the power failures in the State. Little wonder that the people of Madhya Pradesh voted out the government in December 2003.

NOW a BJP government rules Madhya Pradesh. In reality, the rule of the World Bank-ADB combine continues. Their gaze is now turned on water - the very basis of human life. The Madhya Pradesh government has now taken a loan of $200 million for urban water supply and environmental management improvement in six of the State’s largest cities - Bhopal, Indore, Ujjain, Gwalior, Ratlam and Jabalpur. Apart from other expenditures, the loan is also slated to pay for 3,882 person-months of consultancies!

One of the most crucial requirements of this loan is that all public water standposts, in these cities must be either phased out or metered by 2009. In the hot and dusty cities in the heartland of this semi-tropical country, inhabited by millions of street people - poor migrants who have come in search of food and work, homeless pavement dwellers, beggars and mendicants - all dependent on public sources of water, this will mean eking out of a non-existent income to buy water as well as food. The experience of Niger and other countries, where the corporate takeover of the water sector has led to deprivation or death for thousands of thirsty cattle and people, is before us.

The power reforms agenda also continues. The BJP government is currently negotiating for two more loans from the ADB - an infrastructure loan and a change management loan, which will take the power sector from the stage of preparation to privatisation itself. And as a prior condition, the State government is dismantling the State Electricity Board and transferring its assets, threatening the access to power and livelihoods of more farmers, tribal people, poor consumers and retrenched workers. Can this exclusion of millions be called reform?

So why are we telling this story now? Because Madhya Pradesh could be Andhra Pradesh or Karnataka or any other State. The script remains the same. The Congress could be replaced by the BJP, the Telugu Desam Party or any other party that believes in economic reforms. The scripts everywhere are being written by the World Bank and the ADB and their consultants. The same step-by-step prescription of the sectoral road maps, laws, policies, the same life-threatening conditionalities, the same interference with our sovereignty, telling us which laws and policies to follow, even what to say in our speeches. The Sangh Parivar brigade obviously failed to appreciate the deep irony and the superficiality of its talk of patriotism when it gave a call recently to create a movement of "national self-respect" to oppose the choice of Sonia Gandhi as the Prime Minister. Was it not the BJP-Shiv Sena government, lasting only 13 days in 1996, which set aside powerful technical and financial considerations to clear and to provide sovereign guarantees to the Dabhol Project promoted by the (then) all-powerful U.S. corporate Enron? The project is now lying idle, abandoned for the last three years because of its high cost and expensive power, jeopardising at least Rs.6,000 crores of Indian public money, to become the single-most powerful icon of foreign control and wilful destruction of the Indian economy under liberalisation policies.

Was it not the NDA government that initiated and supported these destructive reforms, not only in Congress-led Madhya Pradesh but in every single State in the past six years, by linking funds with reform goals? Is it not the Uma Bharati government that is implementing the ADB’s urban water project that seeks to deny the poor access to even drinking water, only so that global corporates can take over the water market that will be thus created?

It is this surrender of successive governments to foreign control and a self-seeking global corporate agenda masquerading as reforms that requires the response of a national self-respect movement.

The BJP has never expressed any real concern or shame at the open erosion of India’s sovereignty because, along with the Congress(I), it is a co-architect of these economic reforms. The sword of patriotism of the Sangh Parivar activists is unsheathed only when their party interests are hurt. Not when millions of Indians languish and die because of increasing foreign control of India’s policies and resources. The so-called swadeshi camp has a selective and shallow vision of Indian nationalism, where only what is seen to be anti-BJP becomes anti-India.

Meanwhile, the real foreign domination, the corporate takeover, gets ignored. Large chunks of India’s policies and draft legislation are now being written by multinational institutions appointed by the World Bank, the ADB or the British government to be consultants to the Indian Central and State governments. The ADB-World Bank consultants are embedded, on an ongoing basis, in our bureaucracies under different names, sometimes as special members of Technical Secretariats and sometimes as consultants funded through Technical Assistance given by the DFID or other multilateral or foreign agencies.

Whose is the agenda that these economic reforms or this army of consultants are fulfilling? These policies of economic reforms do not represent progress or prosperity for the large majority of Indian people. They are only the extended fingers of the process of corporate globalisation desperately prospecting worldwide for new markets and ways of keeping the super-profits going. These policies of economic reform, which corporate India is so desperate to continue, are policies of global control over India’s vast resources and markets.

The "economic reforms" written for us in Manila or Washington, hurting and damaging to the Indian people, were born in secrecy and slavery, not out of a desire for India’s progress. They are fundamentally flawed, fundamentally and exclusively structured for the growth of corporate and global capital, not of the whole Indian economy. They must go. As must go the conflation of this multi-cultural Indian nation with the identity of an intolerant and narrowly defined Hindutva.

A very large amount of our taxes and revenues go to make nuclear bombs and funding conflict at the borders. Another significant share, steadily increasing, goes towards repaying the plethora of the dignity-destroying and destructive loans that bring only unemployment, darkness and death to millions of Indians. The question is whether we can afford this anymore.

Economic policies that support crucial but crisis-ridden sectors, such as agriculture and small industry in the context of the damaging World Trade Organisation regime, and those that address the employment and livelihood needs of the majority of the people are important not only for the continued coherence of the nation, but for the fulfilment of nationally strategic goals like food sovereignty and economic self-reliance in a global order increasingly based on the manipulation of dependence.

Contrary to the vulgar understanding of the corporate media, good or popular politics that addresses the needs of workers, farmers and the poor is also very good economics. After all, the only way to sustain markets in the long run is by creating effective demand and widespread purchasing power. If public resources are freed from mindless wars and huge interest repayments, then they can be used as investments and subsidies to create large-scale employment and support the popular sectors of the economy to stimulate a broad-based growth and demand rather than becoming sops for only one or two business houses or foreign companies..

P.S.

Pic 1: V. SUDERSHAN ; Former Madhya Pradesh Chief Minister Digvijay Singh.

Pic 2: Madhya Pradesh Chief Minister Uma Bharati.

Pic 3: A.M. FARUQUI ; Children from Bhopal slums protest against the Madhya Pradesh State Milk Federation’s decision to increase the price of milk.

in Frontline, volume 21, Issue 12, Jun. 05 - 18, 2004.

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