Two reports have appeared simultaneously. One report has been carried by the American magazine Forbes and the other by the German journal Der Spiegelâ€™s English version. These two reports underline that India, despite being one country, is getting divided into two worlds, which may have disastrous consequences.
The Forbes has been publishing a list of worldâ€™s billionaires for twenty years. In the very first year the list contained the names of just 140 billionaires from the entire world. Three years ago there were 476 billionaires, but last year their number rose to 690 while this year there are 792 billionaires. From this emerges that not only the number of billionaires has been going up rapidly, but also the pace of increase has been gaining momentum. These billionaires are worth $2.6 trillion, which has increased by 18 per cent since March 2005. Booming stock markets around the world have contributed to this rise in the wealth of the billionaires. It is obvious that this is more due to a redistribution of wealth in the favour of the rich at the secondary level.
It emerges from the perusal of the list that as many as 27 billionaires are from India, who include 10 new entrants. No other country barring the US has so many new billionaires. China in spite of a much faster and sustained rate of economic growth has contributed only 8 billionaires. In the case of India too, rise in stock market prices by 54 per cent over the year have thrown up so many new billionaires. It is interesting to note that the list of new entrants include Tulsi Tanti, a former textile merchant whose alternative energy company owns Asiaâ€™s largest wind energy farm, Vijay Mallya, a liquor tycoon who also owns Kingfisher airlines, K. P. Singh, the owner of DLF, which deals in real estate, and Anurag Dikshit whose online gaming company has brought him enormous wealth. Indiaâ€™s Lakshmi Mittal is now the fifth richest man in the world. Other notable billionaires from India are Azim Premji, the Ambanis, Sunil Mittal, Kumar Mangalam Birla, Shiv Nadar, Pallonji Mistry, Ravi and Shashi Ruia, Godrej family, Indu Jain, N. R. Narayan Murthy, Uday Kotak, Subhash Chandra, and Habib Khorakiwala. In the list of Asiaâ€™s richest persons 40 are from India alone.
It needs to be noted that most of these new billionaires and millionaires from India are from the services sector. They have been dealing in information technology and financial services. Only a handful of them have anything to do with the production of goods. The massive inflow of hot money from the FIIs (Foreign Institutional Investors) over the year has pushed up the share prices and increased these peopleâ€™s wealth. Obviously, their wealth is not the result of great entrepreneurial struggle over years. If one concludes that the Indians at large have become prosperous, one should take note of the other report that appeared a day before the Forbes published the list of billionaires.
The German newspaper Der Spiegel carried a report from its Bangalore correspondent Thomas Schmitt, entitled â€˜Forgotten in Bangalore: Meet the Losers of Globalizationâ€™. At the very outset it stressed: â€œEconomists predict a rosy future for the Indian economy, with the stock market rising from one record to the next. In boomtown Bangalore, the nouveau riche proudly flaunt their wealth. Unfortunately, this dazzling display often obscures the losers of the countryâ€™s economic miracle.â€
The report begins with the concrete case of Ramakrishna Murthy, who after working for 10 years as a food chemist has just been thrown out by his employer, Hindustan Lever, a subsidiary of the Anglo-Dutch multination, Unilever. The company has told him that, at 52 years of age, he is â€œtoo old, too inflexible and too expensiveâ€ for it to afford him. Finding no alternative but to vacate his apartment he has moved to a long abandoned dilapidated house. To quote the report, â€œNow he and his family are living without any kind of appreciable social safety net in an abandoned house that is falling apart on the edge of Bangalore. They struggle to make ends meet with his wifeâ€™s salary.â€
Murthy regards himself â€œas one the victims of the â€˜Indian economic wonderâ€™ and, as such, one of the â€˜losers of globalizationâ€™ â€“ those who have lost their jobs as a result of Indiaâ€™s economic liberalization.â€ Murthy is not wrong when he holds the government responsible for going in for globalization without ensuring safeguards for the employees as well as the people at large. Even now a fairly substantial number of people both inside and outside the government regard a rising rate of economic growth, based on foreign direct investment as the panacea for all the ills of the country. Let us give just two examples to illustrate this. First, only the other day, Indiaâ€™s finance minister, P. Chidambaram told the M.P.â€™s of the Left parties: â€œI beg you to throw away ideological and political blinkers and support the endeavour that can create employment also.â€ He thought higher and higher rate of economic growth could solve all the problems from unemployment, poverty, illiteracy, homelessness, illness and so on. In fact, Chidambaram was echoing the views of his leader, Dr. Manmohan Singh, who, in an article in the Global Agenda magazine, said, some time ago, on the eve of the World Economic Forum meet at Davos: â€œThe reforms implemented over the past 15 years have laid the foundation for rapid growth. Industrial policy, which in the past imposed too many restrictions on the private sector, has been completely restructuredâ€¦. The market-friendly environment created by recent reforms has stimulated vibrant growth.â€
Further, â€œThe economy is â€¦ open to foreign direct investment (FDI), which is now freely allowed up to 100% of equity in most sectors.â€
Second, Ms Mrinal Pande, a noted writer and editor of a Hindi daily with a huge circulation wrote in her weekly column, soon after Bushâ€™s departure from India: â€œWhatever the comrades may say, after travelling so far, we must bring necessary changes in our economic system so that the rate of growth of the country gets accelerated. It is not important whether indigenous or foreign capital is invested. What is more important is the rate of growth.â€ It is needless to add that this suffers from her utter ignorance of economics. Had she been aware of â€˜multiplier effectâ€™ and read what Lord Keynes had written she would not have flaunted her â€˜wisdomâ€™. Besides, this statement suffers from the fallacy of slippery slope argument. She may have to answer the question: what was wrong with foreign capital that Indian national movement and Tata-Birla Plan campaigned for putting constraints on it?
On the surface, Der Spiegel finds the economic reforms in India seem to be a resounding success, the growth rate has crossed 7% per cent and is poised to reach 10%. As per the estimates the Deutsche Bank Research, Indiaâ€™s GDP is to double in the next 12 years, which will make it the third largest economy of the world, trailing only the United States and China and pushing Britain, Germany, France and Japan down. This is reflected in the confidence of foreign investors, which is â€œso great that the most important Indian stock index, the Sensex, recently passed the 10,000 point mark for the first time.â€
But as the newspaper report shows, people like Murthy do not agree. They hold: â€œIndia is far, far away from becoming an industrialized nation. Only every second person can read and write and the situation with environment is getting worse and worse.â€ â€œWages are stagnating as the cost of living increases.â€ Concurring with these views the report sums up the situation as follows: â€œBut the constant news of stock market successes overshadows the social problems in Indiaâ€™s economic wonderland. Salaries for those working in modern service jobs may have risen palpably in recent years, but wages in other sectors have grown at a much slower pace and have, in some areas, even stagnated. Thatâ€™s an unfortunate reality for the vast majority of workers in India, who are faced with an annual inflation rate of more than 4 per cent and have to contend with a decline in purchasing power each year as a result.
â€œThatâ€™s a situation that wonâ€™t change quickly either. Workers in the industrial sector seldom earn more than 7,000 rupees per month, and a daily labourer is lucky to even earn 1,500 rupees in the same period. Thatâ€™s not enough to put a reasonable roof over oneâ€™s head or to even buy decent groceries. As in the past, child labour is still commonplace and the poorest segments of the population donâ€™t have adequate access to healthcare.
â€œThe unpleasant side effects of Indiaâ€™s push for growth are especially apparent in the booming metropolises. According to the World Bank, they are the fastest growing cities in the world. Despite a plentitude of parks and broad boulevards, the cities are increasingly choking on air- and noise pollution.â€
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