India's Unending Journey_Finding Balance in a Time of Change

by Mark Tully

  Retail is an example of the dilemmas globalisation can pose. The British, American and other governments put pressure on India to open its retail trade to supermarket chains such as Walmart and Tesco. The supermarket chains promise that ‘modern efficient retailing’ will reduce prices for consumers; that they will pay remunerative prices to farmers, helping those farmers to improve the quality of their produce; and that they will provide millions of new jobs. But what sort of jobs are these? And what about those jobs that will be lost in the process, such as the jobs of the vast army of small shopkeepers they will put out of business?

  My local grocer is proud of his trade. He tells me, ‘This is no easy business. I have to keep stock of 5,000 different items manually, and I know the price of most of them in my head!’

  ‘So what’s the price of a packet of ginger biscuits?’ I ask him.

  ‘Sixty-four rupees,’ he says confidently. And, when I check, there it is – printed on the packet by the manufacturers – sixty four rupees. In his shop there is none of that marking it up to the nearest hundred in order to make life easier for the cashier, nor that trick of stopping just short at ninety-nine to deceive the customer into thinking something is cheaper.

  The Indian small shop is a true convenience store. My grocer offers free credit and home delivery, no matter how small the purchase. Similarly, my butcher cuts all his meat to order before his customers’ eyes, holding his knife in the traditional Indian manner, between his toes. The neighbourhood fishmonger sits behind a knife shaped like a scimitar, fixed horizontally to the floor just a few inches from his legs. He fillets my fish on the blade without losing a millimetre of the flesh. If the grocer, the butcher, and the fishmonger are put out of business by firms such as Tesco and Walmart, who have already decimated small shopkeepers in their countries of origin, these Indian shopkeepers will lose not only their jobs but their source of self-respect. And that really can’t be replaced by stacking shelves in a supermarket or swiping bar-codes at a till.

  Retail is the second largest source of employment in India after agriculture, and a large percentage of those working in shops are self-employed. These small shopkeepers form a notoriously volatile section of society that is particularly prone to nationalism. They are the backbone of nationalism, which all too easily tips over into the Hindu nationalism of Togadia.

  Globalisation already feeds that nationalism because nationalists portray it as a threat to Indian culture. They say it’s a campaign by Western industrialised countries and their allies, the multinational corporations, to impose a materialistic culture on India – a culture that would have no time for the Indian spiritual tradition that the BJP and, even more overtly, other Hindu organisations associated with the BJP claim to be protecting. This claim that globalisation is an alien culture, not just an economic doctrine, has some basis.

  The Australian economist Clive Hamilton, a political scientist who has headed his country’s foremost public interest think tanks, observes in his book Growth Fetish: ‘At its heart globalisation is not so much about the deepening of global economic and financial networks or the extension of the international reach of corporations. It is about the restless spread of the ideology of growth and consumer capitalism.’ He goes on to describe globalisation as ‘a culturally specific ideology, constituted as an independent force [that] has spread and colonised the world’. According to Hamilton, the very situation has arisen which Nehru feared – the old colonial powers have emerged in a new shape to dominate the world. That fear led Nehru down the self-reliant socialist path and convinced him of the need for the Non-Aligned Movement, in which over 100 states declared themselves as not formally aligned to any major power block.

  Hamilton‘s view of globalisation should not just be dismissed as far-fetched scaremongering. Anyone who lives in India cannot but be aware of the force of the ideology of globalisation, and the direction from which it is coming. It involves much more than merely the return of Coca Cola and the arrival of other multinationals. Indian business is following the outsiders’ example. Reliance Industries, a vast Indian conglomerate, has announced plans to create its own version of a Tesco or Walmart. It’s talking not just of setting up supermarkets but also of establishing a direct product line ‘from farm to fork’, as Reliance’s Chairman Mukesh Ambani put it when he announced his retailing plans.

  Except for the government-controlled television and radio networks, the press and the electronic media are now run by proprietors who, like their counterparts in Britain, regard shareholder value as the supreme value. Media proprietors aren’t likely to act as effective watchdogs, warning about the dangers as well as the advantages of globalisation, because advertising is their main source of revenue and advertisers want to promote global brands. But they do protest when international media groups claim that globalisation means they should be allowed to enter the Indian market.

  So television networks that slavishly imitate the style of Western TV help to promote the consumerism that goes with globalisation. Relentless advertising pushes goods and services, the majority of which are out of the reach of the poor. Bank advertisements urge viewers to borrow money and offer credit to buy goods, though only those considered credit-worthy need apply. The branded clothes culture has also swept through the middle classes, with fashion houses from even the very top of the range, such as Louis Vuitton, opening shops in the big cities.

  However, India is fighting back on several fronts, one of the notable examples being fast food. Chains selling Indian fast food have spread throughout the country. One of my favourites, Saravana Bhavan, which serves South Indian dishes, even has outlets in eight other countries, including Britain and the United States. On a weekend evening near Connaught Circus, in the heart of New Delhi, I have often joined the families outside Saravana Bhavan’s restaurant queuing for a table to eat south Indian fast food. Just down the street, MacDonalds is generally half empty.

  The government is under constant pressure from developed countries to globalise more rapidly. There is a stream of what are always described as ‘high-powered’ visits by ministers from abroad, who represent their countries’ business interests, and there is ceaseless diplomatic activity in Delhi, which has one of the largest diplomatic corps in the world. Foreign businessmen demand changes in the laws on investment, employment, the environment and anything else that they think stands in the way of making life easier and more profitable for them. Added to this is the continued pressure from the international financial institutions such as the International Monetary Fund (IMF), the World Bank and the Asian Development Bank.

  Indian politicians do not put up a very effective resistance to this pressure. There seems to be a consensus among them that the spread of the present dominant Western global culture is inevitable, and there is not much they can do to resist or even influence it. When there is resistance, it usually springs from the short-term political interests of a party which, for instance, thinks that a particular privatisation will be unpopular with voters, or a minister who doesn’t want to lose control of a particular part of his empire. Only the Communists actively resist globalisation, and their resistance usually does more harm than good, because it is based on discredited dogma. And even the Communists are softening their stance on globalisation in the states where they are in power.

  There is, however, one influential politician who has consistently warned that India must pursue the middle path and must not be swept off its feet by globalisation. He is, as I have already noted, Dr Manmohan Singh, the Prime Minister since 2004. When I interviewed him for the Alumni magazine of Cambridge University, where he got a brilliant first as an undergraduate, I found the same softly spoken, modest person I had met in earlier encounters. Dressed in a white kurta pajama, with his trademark blue Sikh turban, he admitted that he was uneasy about anything that smacked of a personality cult and was not a great public speaker. ‘But,’ he added with a smile, ‘I am improving.’

  Although Manmohan Singh still describe
s himself as a socialist, he told me that he had learnt from the great Cambridge economist Nicholas Kaldor that capitalism could be made to work. As Finance Minister in the early 1990s, when he launched the economic reform programme, and as Prime Minister, this is a goal that he has been trying to achieve – to make capitalism work, but to make it work in order to meet India’s particular needs. This has meant making ‘calibrated reforms’, introducing reform gradually; taking a step, watching and waiting, before taking the next step, in the same way that trade in the rupee has gradually been liberalised. (The rupee is still not fully convertible.) But this softly softly approach has earned him the wrath of both the globalisation and the anti-globalisation lobbies. He remains philosophical about this, and once told a journalist, ‘When you take the middle path you get hit from the left and the right.’

  But do we need to be a little more radical than Dr Manmohan Singh? Some years earlier I had, with some trepidation, given a lecture on a small cruise liner about the need for market capitalism to take a dose of compassion. The first person to come up to me after the lecture was a leading light in the Conservative Party in the north of England. The second person was the head of a property firm. Both, not surprisingly, disagreed with me. When a third person came up and told me he had just retired from teaching economics at the London School of Economics I thought to myself, ‘I’ll have to hide in my cabin for the rest of the cruise!’ But when we sat down together he was very sympathetic. Instead of exposing my limited knowledge of his subject, he said, ‘I think what you’re talking about is moral economics and you needn’t despair. Don’t forget how lonely market economists were during socialism’s heyday – now it’s the socialist economists who are lonely. There is no reason why the turn of the moral economists shouldn’t come and the market economists become lonely again.’

  When I mentioned this recently to an Indian economist, Rajiv Kumar, I was delighted when he said, ‘“Moral economics” – that’s a very good statement.’ But then Rajiv Kumar is an unusual economist. As an economics undergraduate at St Stephen’s College, Delhi, he compared all the privileges students enjoyed with the way most Indians had to live and determined to do something about what he saw as ‘this injustice’. But he didn’t just join leftist university politics (as most students who felt that wrong should be put right might have done). Instead, he became a Naxalite.

  The Naxalites are an underground group who describe themselves as Marxist Leninists. Mao is their inspiration and they believe that the entire political and economic system in India should be uprooted. They set up alternative governments in remote parts of India where the official writ barely runs, and try to introduce communist egalitarian societies there. Landlords are one of their main targets, as Naxalites believe they should be annihilated.

  When Rajiv went to work with the Naxalites in a village in Bihar, he was told there was no landlord, only a ‘big farmer’. Some of the brick kiln labourers he was working with used to be employed on the farmer’s land from time to time. This experience marked the beginning of the doubts about Naxalite doctrine that eventually led Rajiv back to the study of economics. But it wasn’t until he went to Oxford as a post-graduate that he finally lost his faith in Marxism. Describing his conversion, he said, ‘I read a book called The Secret Life of Plants, which proved to me there is something beyond matter – there is a spirit; there is an energy; plants speak and are alive.’ Suddenly he realised the limits of the economics he had believed in.

  I talked to Rajiv in his office in Delhi, where he is now the Director of the Indian Council for Research on International Economic Relations, a leading think tank. When I asked him what ‘moral economics’ meant to him, Rajiv said, ‘If you’re an economist it means there’s a profession called “economics”, which you get from the West. That doesn’t have anything to do with religion. My case is different – I now recognise I am a spiritual person.’ He hesitated and then continued almost as if he were slightly embarrassed, ‘I’m trying to become a spiritual person through the practice of Sahaja Yoga. You might be surprised to hear it was founded by Shri Mataji Nirmala Devi Srivastava, the wife of a member of the Indian Civil Service (ICS) who was knighted by the British government. Because of her teaching, some of the human values like compassion are beginning to become more important in my economics – not just profit maximisation, or purchasing power and things like that.’

  For Rajiv Kumar, moral economics doesn’t necessarily mean doing away with market economics, but it does mean a guided market. He compared the market to a donkey, saying, ‘If you walk behind it and let it lead you, you will get kicked. If you ride on it and direct it, it can take you where you want. It’s a set of rules which enables you to distribute goods and services efficiently. To get it to deliver what you need you must specify your objectives and work to develop consensus for them.’

  ‘And what should India’s objectives be?’ I wanted to know.

  ‘Japan and Korea got the market to deliver good education, and India should set that as one objective – a vital service the market can deliver. When it comes to goods, the market should deliver the cheap goods the poor want and can afford. Our export-led growth tends to meet the needs of the elite and disconnects from the domestic economy, which will demand cheap goods.’

  Like Rajiv Kumar, Joseph Stiglitz doesn’t believe that globalisation has necessarily been directing the market the right way. Towards the end of The Roaring Nineties, he argues:

  We [America] have been pushing a set of policies that is increasing inequality abroad and, in some cases, undermining traditional institutions. There is an alternative vision, one based on global social justice and a balanced role for the government and the market. It is for that vision we should be striving.

  But this doesn’t mean completely rejecting globalisation. Elsewhere Stiglitz notes, ‘We cannot go back on globalisation, it is here to stay. The issue is how we can make it work.’ Another Nobel Laureate economist, the Indian Amartya Sen, has also said: ‘The one solution which is not available is stopping the globalisation of trade and economies.’

  So what is the solution and how can globalisation be made to work? The answers may lie in keeping the correct balance between decisions made at the global and the national levels, in strengthening the international organisations (which are there to maintain that balance), in ensuring that the market doesn’t lead us by the nose, and in keeping the role of the market and the government in balance. To maintain that balance there need to be regular reviews and discussion, not the sort of shouting match between market fundamentalists and anti-globalisation activists that George Soros has warned us against.

  GURGAON: NEVER-ENDING GROWTH

  IN 2004, WHEN the leaders of the ruling Bharatiya Janata Party (BJP) decided to call an early general election, I wrote an article for BBC On Line suggesting that in so doing they had taken the temperature of India incorrectly. They had used gross domestic product as the thermometer of the nation’s health and the reading was very favourable – somewhere near eight per cent growth per annum. The BJP believed that this reading of the national temperature meant that ‘India is shining’, words that they took as their election slogan. But they forgot that the sun was only shining on the beneficiaries of that growth rate: the middle class and the rich. Life was still anything but bright for those living in rural India, where farmers were committing suicide because they couldn’t pay their debts. Nor was the prospect particularly sunny for the urban slum dwellers who were threatened with eviction to make way for development projects that promised little or nothing for them. Eventually the farmers, the slum dwellers and the many others who saw the BJP’s slogan as a bad joke did just as I had predicted and refused to return the ruling coalition to power.

  The BJP leaders had been seduced by a ‘certainty’, one which, like globalisation and market capitalism, had come to be a dominating force in the economic debate once socialism had gone out of fashion. That certainty is the belief that maintaining and, if possible
, accelerating the rate of growth measured by GDP should be the overriding ambition of every government. At first glance it would seem difficult to criticise the BJP for measuring the nation’s health by this method. Redistributing the present wealth of the nation is never going to remove its poverty, in spite of Mahatma Gandhi’s famous saying that, ‘There is enough for everyone’s need but not everyone’s greed.’ The Mahatma’s words might be true if the wealth of the entire world were redistributed, but that seems a pipe dream given the reluctance demonstrated by richer nations to fulfil the targets they set themselves for redistributing wealth through aid, debt relief and pro-poor trading terms. So isn’t growth the only answer to providing for everyone’s needs?

  The Indian economist Surjit S. Bhalla has no doubt about the importance of economic growth. In his book Imagine There Is No Country: Poverty Inequality and Growth in the Era of Globalization, Bhalla puts what he believes is the success of the last twenty years down to growth and maintains, ‘Growth is good, growth makes the world go round. Growth is a many-splendoured thing.’ He argues that these years have been ‘the twenty best years in the history of poor people’ and so denies the validity of what he admits is the received wisdom that there has been a large increase in world inequality. The book ends with Bhalla posing the question: ‘Can growth alone be sufficient for poverty reduction?’ He answers firmly that, yes, it can. What’s more, he dismisses the need for ‘actions beyond the economic domain’ to combat poverty. ‘Growth is sufficient, period’ are his final words.

  On the other side of the argument stands Australian economist Clive Hamilton, the author of Growth Fetish. He says: ‘Growth fosters empty consumerism, degrades the natural environment, weakens social cohesion and corrodes character. Yet we are told ad nauseam that there is no alternative.’ Hamilton’s argument is that we should not be concerned about wealth but about contentment. He would no doubt support the King of the small Himalayan kingdom of Bhutan, who measures his country’s health by its Gross National Happiness.