Sitaram Yechury
The country was subjected to a nauseating propaganda blitz by the DAVP commemorating the 4th anniversary of P.V. Narasimha Rao’s prime ministership. Full page advertisements proclaimed that these four years have brought about “a remarkable turn-around in economy” and “giving more than equal status to the underprivileged”. Claiming that India is poised for a big leap these advertisements obviously were part of the greasing of the official propaganda machine in the run-up to the coming general elections.
Bombastic claims have been made to convey the impression in the true Goebellian style, that the lot of the people has indeed improved during this period. The reality however, as we shall see, is quite the opposite making such claims probably the most preposterous ever made by the ruling party.
Since the adoption of the new policies, the CPI(M) had all along maintained that on the one hand these policies would mortgage our economy and jeoparadise our economic sovereignty. On the other the conditions of the vast masses of Indian poor would continue to deteriorate while the benefits will accrue only to a minuscule minority. Thus, the claims made by the government need to be thoroughly examined.
The growing incidents of starvation deaths that have been periodically reported in the national press have all been dismissed by the ruling party as isolated cases are attributed to specific local factors. But the latest data that is available shows that within the first two years of the reforms the number of people living below the poverty line has disturbingly increased.
Table I
Percentage of Population below Poverty Line
Areas 1989-90 1990-91 Jul-Dec’91 Jul-Dec’92
Rural 33.7 35.0 40.0 41.72
Urban 36.0 37.0 37.6 37.74
Combined 34.3 35.5 39.4 40.69
Sources: S.P. Gupta “Recent economic Reforms and their inpact on the Poor and Vulnerable Sections of Society”. mimeo 1994.
It needs to be noted that the poverty line itself is defined at a very low level. The planning commission has fixed the poverty line at Rs. 49.10 per month per head for rural areas and Rs 56.60 for the urban areas at 1973-74 prices. This is fixed on the assumption that this much money is required per person to consume 2400 calories in rural areas and 2100 calories in urban areas. This assumption is untenable given the price rise. The poverty line by definition therefore does not include any other expenditure by an individual. If this much money is required for consumption of the minimum calories the actual incomes must be substantially higher considering expenditure on other necessities of life including shelter and clothing.
The latest UNESCO report shows a rise in the incidents of malnutrition in India which affects over 250 million people. While the UNICEF reports that 63 percent of children between 3 and 5 years suffer from acute malnutrition.
The rate of domestic savings has declined from 24 to 20 percent during these four years, meaning that people are spending more than before for their existance. Interestingly however, the rate of growth of real private consumption, which grew at 5.2 percent between 1988-91 fell to a mere 1.54 percent in 1991-92 meaning that though people are spending more their real consumption levels are falling. Further the latest round of the statistics given by the National Sample Survey (NSS 48th round), the only statistics available in India, relating to consumption patterns of the people, reveals that during the first two years of the reform the share of consumption of the bottom 30 percent of the population both rural and urban has declined. While for the middle 40 percent there is a decline in the rural areas and near stagnation in the urban sector. It is only the top 30 percent of the population where there is a increase and the bulk of this is attributed to the increase in consumption of the top 10 percent. (See Table II)
Table II
DECILE WISE SHARE OF CONSUMPTION
% of Rural Urban
Popu- 90-91 1991 1992 90-91 1991 1992
lation (jul-Dec) (Jan-Dec) (Jul-Dec) (Jan-Dec)
0-10 4.15 4.16 4.05 3.38 3.25 3.30
10-20 5.43 5.62 5.33 4.76 4.35 4.58
20-30 6.38 6.01 6.22 5.60 5.29 5.37
————————————————-
15.96 15.79 15.60 13.74 12.89 13.17
————————————————-
30-40 7.39 7.04 7.00 6.42 6.01 6.16
40-50 8.22 8.10 8.95 7.29 7.09 7.09
50-60 9.04 8.64 9.08 8.62 7.98 8.56
60-70 10.15 10.16 9.89 10.08 8.99 9.89
————————————————-
34.80 33.94 33.92 32.41 30.07 31.70
————————————————–
70-80 12.05 10.84 11.59 11.89 11.41 11.42
80-90 14.62 13.39 14.63 14.95 13.96 15.52
90-100 22.57 26.04 24.26 27.01 31.67 28.19
————————————————–
49.24 50.27 50.48 53.85 57.04 55.15
————————————————–
Source : NSSO 48th round
Note : The deciles are the percentage of population based on their income status. The first row represents the poorest 10 percent of the population while the last row represents the richest 10 percent.
These statistics clearly show that the living conditions of the poor are getting worsened while that of the minority of the rich has somewhat improved. These are the actual conditions of livelihood for the vast millions of the Indian people today.
Such fierce economic onslaughts on the livelihood of the Indian people is due mainly to the crippling price-rise which is reducing the real incomes of the people.
Notwithstanding the official claims made by the government of the declining inflation rate the prices of all essential commodities have dramatically risen during these four years. (See Table III)
Table III
(Since the New Economic Policy)
(Kendriya Bhandar Prices)
Items April 91 April 92 April 93 April 94 22.7. 95 22.7.95
(opn mkt)
1.Rice Permal 5.50 6.45 6.80 7.80 8.20 11.00
2.Sugar 9.30 9.40 11.10 14.20 13.60 14.00
3.Dal Chana 9.00 9.25 10.50 15.10 11.40 14.00
4.Dal Arhar 13.10 15.10 14.00 15.40 26.10 29.00
5.Rath 1kg
pouch 34.95 30.50 32.95 39.00 38.50 45.00
(Dhara)
6 Hafed M/Oil
1kg/Ltr. 38.00 41.00 36.00 43.00 — —
7 Atta 10kg 41.50 45.00 46.00 50.00 55.50 62.00
8 Salt 1 kg 1.85 2.95 3.30 3.30 4.10 4.00
9 Brokke Bond
Tea 500gms 30.90 31.40 41.95 41.00 43.00 56.00
10 Lux Soap 4.50 4.80 5.35 5.75 6.40 —
Source: Data from 91 to 94 : Rajya Sabha unstarred question No. 7317
of 13.6.94. 1995 figures are from Pioneer, 22 July 1995. Last Column
are the prices on that day in Gole Market, New Delhi.
Food today constitutes 78 percent of the total consumption needs of the rural population while it is 61 percent for the urban population. Such a rise in prices has adversely affected the living conditions of the people dramatically within the short span of these four years.
Therefore the net result of these policies have been the worsening of the living conditions for the poor and widening of the rich-poor divide in the country.
One of the main features of these new economic policies has been the virtual withdrawal of the State from fulfilling its social obligations to the people. In all vital sectors of the economy where only through the State’s intervention would it have been possible to safeguard the livelihood of the poorer sections, the State has virtually abandoned even its earlier minimum role. In health, education, public utility services etc the unbridled privatisation has virtually put the services beyond the pale of reach of the common man. In an effort to reduce its fiscal deficit, in tune with the IMF dictates the government has progressively reduced its expenditure in these sectors so vital to the existence of the people.
The most cruel and graphic of this policy of abandonment is in the sphere of food security.
With much fanfare the government had announced in January 1992 of a revamped public distribution system (RPDS) covering 1752 blocks in 257 of the most backward districts. This RPDS was supposed to be the safety net for the underprivileged of the country.
But has it really been any safety net? During the four years from 1990 to 1994 the central issue price of rice in the PDS increased from Rs. 2.89 per kg to Rs. 5.37 and that of wheat from 2.34 to Rs. 4.02. The actual price for the consumer is more than this and in states like Maharashtra it is higher by 24 percent. As a result of this the offtake from the PDS outlets has drastically reduced. 84.09 percent of wheat was bought by consumers in 1991-92 which dramatically declined by the end of the first half of 1994 to 47 percent. In the case of rice it was 88.52 percent to 39 percent. The so-called RPDS was to sell wheat and rice at 50 paise less than the other PDS outlets yet even in these outlets the offtake has reduced.
Table IV
RISE OF CENTRAL ISSUE PRICE IN PDS
1990 1994 Increase
(Per kg)Rice 289 537 2.48
Wheat 234 402 1.68
Note : The prices for the consumer are “marked up”.
In Maharashtra the price is 24% more than this.
DECLINING OFFTAKE FROM PDS
(Percentage bought by people from available stock)
Wheat Rice1991-92 84.09 88.52
1992-93 79.86 81.44
First half of 1994 47.00 39.00
Thus we find a situation where the poor are unable to consume their requirements precisely because they do not have the purchasing power to do so. Nothing illustrates this fact more dramatically than the record 32 million tonnes of foodgrains in the government godowns. With 7 consecutive good monsoons such a stock piling has been possible. But yet even if the government were to release part of this stock the people who need it the most do not have the capacity to buy.
The irony of the situation is that with such massive stocks of food the per capita availability of foodgrains declined from 510 gms in 1991 to 474 gms in 1994. What is worse is that the per capita availability for cereals including those held in the godowns declined from 467 gms in 1991-92 to 429 gms in 1993-94. Corresponding to this the per capita consumption has also been declining both in the rural and urban areas while the cost for the same has been relentlessly escalating. (See Table 5)
Table V
Average Monthly per capita Consumption of Cereals
Year Rural Urban
———————————————
Quantity Value Quantity Value
(Kg) (Rs) (Kg) (Rs)
1989-90 14.0 45.4 11.0 42.3
1990-91 14.1 49.6 10.8 45.5
Jul-Dec-91 13.8 58.2 10.7 51.5
Jan-Dec-92 13.5 65.1 10.7 59.4
Source : NSS 48th Round, 1994
Unless the selling price through the PDS is drastically reduced by 50 percent for atleast rice and wheat the people who need food the most to eliminate their hunger and starvation will not be in a position to purchase this. Further all the 14 essential commodities that constitute the consumption basket of a normal individual will have to be brought under the net of the public distribution system if the conditions of the people are to be improved.
The government however has used the specious plea that 50 percent reduction in the prices of rice and wheat would increase the food subsidy by Rs. 1600 crores. This it says is not affordable. It is indeed a shame for the government that continues to foster a system of institutionalised corruption and particularly those who have been guilty of looting atleast Rs 25000 crore in the three scams that have rocked the country since these new polices should say it does not have Rs 1600 crores to feed India’s starving millions!
With such huge accumulated food stocks, the government must release them for a massive “food for work” programme, which is the only way the problems of poverty and unemployment can be tackled at least partially. But Mr. P.V. Narasimha Rao refuses to do this entertaining illusions of exporting these stocks! While he has refused to reduce the prices of PDS grain, the government has sold 1.8 lakh tonnes of wheat to Modern Food Industries Ltd, an exporter of wheat products at a price which is Rs 100 less than the issue price! The government’s class bias needs no further exposure.
With much fanfare the finance minister had announced that India is not succumbing to the IMF dictates but has increased the food subsidy for the current year. The budget for 1995-96 had earmarked Rs 5250 crore as food subsidy. Which in real terms (taking into account inflation) meant no additional increase from the last year.
Even so where is the bulk of this subsidy going? It has been estimated that the “carrying cost” (i.e. for storage, transportation etc) for every tonne of foodgrain stored in the government godowns is Rs. 1400. If there are 32 million tonnes in the government godowns then the government is spending Rs. 4480 crore for maintaining this stock leaving a mere Rs 770 crore for any subsidy that can be given to the poor.
Thus on the one hand the people continue to starve and the incidence of poverty is growing and on the other the government continues to be the biggest hoarder of foodgrains. The stocks that are held today, it is estimated are more than 75 percent of what is required for this time of the year.
But as we noted earlier even if the government were to release a part of this stock it would be meaningless to the people that really matter unless this is also accompanied by a reduction in the prices by at least 50 percent. This situation has once again shown that it is not the lack of availability but the lack of purchasing power amongst the Indian people that is the main cause of continued poverty and this is increasing dramatically since the new economic policies have come into force. In this connection it is also necessary to note that merely improving the income status of the people does not automatically improve their living conditions. A recent study of the urban poor in the slums of Bombay has shown that a rise in the private incomes is not sufficient to eliminate deprivations. (Madhura Swaminathan — Aspects of Urban Poverty in Bombay). The slum households live in conditions of great deprivation and squalor and an increase in private incomes alone cannot improve the living conditions. Public action i.e. intervention by the government is imperative to raise the standard of living.
But it is precisely such intervention that the government is not only refusing to undertake but is withdrawing from as we shall see subsequently in other vital areas as well.
For the vast millions of Indian people therefore, Mr. Narasimha Rao, these policies do not constitute a new vision or a new hope. They are policies that spell their doom, condemn them to a wretched existence.