Arun Shourie: Long on Facts but Short on Truth

 Sitaram Yechury

(This is an expanded form of the two-part article that appeared in The Indian Express on September 12 and 13, 2003. This was written before the Cancun WTO meeting began- Editor)

IN his three-part article last month, Arun Shourie has, once again, confirmed that he is more a minister for disinformation than for disinvestment. He has sung paeans to the current model of globalisation

(and, of course, to the consequent domestic liberalisation/ privatisation regime of his government),

which is inseparable from the WTO regime. Coming a scant three weeks before the Cancun inter-ministerial negotiations of WTO, it raises suspicions that this PR exercise for WTO and globalisation is a prelude to a sell out there a public display of Mr Shourie's disagreement with the official government position of not succumbing to the West on the crucial issues on the agenda at Cancun. Why on earth would a senior minister otherwise undermine the official position of the government of India and the consensus in the country that the WTO regime has benefited the advanced countries far more than the developing ones?

The discomfort level grows when one sees the examples that Shourie gives regarding the benefits of the current regime of globalisation. He has given us reams of statistics from his friends in the CII and FICCI to show how sections of Indian big business have made lots of money in the international market. But we wait in vain for him to trot out similar statistics for the peasantry, landless labourers, the workers, small industries and other sections of the Indian people. If one is uncharitable, one may conclude that Shourie has friends only in  the big business houses (or their trade associations). Or, is

 this a deliberate omission, as the impact of globalisation on big business is quite different from that of the vast majority of the Indian people?

THE MOOT QUESTION

Before going into the details of Shourie's arguments, some basic confusion needs to be cleared up. Very few of the critics of current policies have criticised globalisation pear se . Repeatedly in these columns, we had told that in the present-day world, no country can remain either insulated or isolated from the global economy. The moot question is the terms on which such integration of the global economy will take place. Our critic has, all along maintained that the Indian government, particularly this Vajpayee government, has been proceeding with such an intervention whose terms are more favourable to foreign capital and multinational corporations and correspondingly inimical to India's interests.

We have, therefore, instead they have been critical of the current model of globalisation, in which large global corporations, backed by the governments of the US, EU and Japan, are prising open the economies of the developing world while protecting their own. The WTO negotiations are not about globalisation: they are about imperialist globalisation in which a few get the goodies, while the vast majority get the short end of the stick. Obviously, it is not just a few global corporations that benefit. The beneficiaries include some of the third world’s corporations and a global over-class including a

Yuppiethe up mobile sections of the Indian middle class. But it also creates a huge global underclass that is sinking into joblessness and abject poverty. The hardest hit around the world are those who weare already marginal. In India, this means the landless labourers, poor peasants, unorganised workers, artisans and the tribal population. The alarming rise to reports of starvation deaths and distress suicides attest this.

Globalisation is not just about integrating the global economy but also about the terms under which this integration is taking place. And this is what the earlier GATT and the current WTO negotiations are all about. Let us look at what the rich countries promised the developing world during the Uruguay round of GATT negotiations. They promised that the developing countries --- if they opened their markets and accepted the patent regime that the rich countries wanted --- would be allowed access to the markets of advanced countries for agricultural goods and in areas such as textiles. This was the basis on which the Uruguay round was completed and the WTO formed in 1995. If we fast-forward to the current situation, we find that the subsidy given by the rich countries to their farmers has increased from about 180 billion to more than 300 billion dollars. Sugar is one example: just the subsidy given by the rich countries is more than the entire export of the developing countries. This makes it virtually impossible for the poor countries to enter the market of the advanced countries for agricultural products. To make it worse, they also face ruin in their own markets since rich countries dump their heavily subsidised products therehere.

REALITY OF TRADE NEGOTIATIONS

The case of textiles is particularly important for India. The Multi Fibre Agreement had fixed export quotas for countries such as India in the US and EU markets. The US and the EU admitted that their domestic industries were not competitive and wanted this protection to continue, scaling it down to zero in 10 years. Unfortunately, the West has refused to honour this commitment. It is using various measures to continue to protect their textile industry --- while asking others to give up protection of their domestic economies in other areas.

This is the reality of trade negotiations: “You open up your economy while we protect ours.” The Cancun negotiations, as in Doha earlier, have therefore to address a central issue: why should developing countries open their markets further when the advanced countries still continue to protect theirs? By talking about globalisation in general, Shourie obfuscates the real content of current globalisation. Globalisation should be a matter of give and take. But the rich countries are doing all the taking while the poorer ones do all the giving!

Without inflicting a barrage of statistics, let us set the record straight. We did not oppose the new patent regime because the global pharmaceutical MNCs would “finish the Indian drug companies,” but because it would make life saving and essential drugs prohibitively expensive. The anti-retroviral treatment required by an AIDs patients in India costs about Rs 10,000 to 15,000 a year. If India had earlier introduced the patent laws that WTO has forced on us from 2005, this would have cost 20-30 times as much --- between Rs 2 to 4.5 lakh. The danger of the new patent laws is that a future AIDS-like disease could leave large sections of the people to die, as medicines to treat them would be too expensive. The current fight in WTO is about how the poorer countries can protect themselves from such public health disasters. Let us not forget that the US fought a bitter, two years long battle to prevent access to the poorest of African countries to cheap drugs that they could import from generic manufacturers. Even today, there are so many conditions involved, that even though these countries can theoretically import such life saving drugs at low costs, for example from India, in practice they will find it extremely difficult.

ILLUSTRATIVE EXAMPLES

Shourie's list --- of industries that have made good in spite of the current skewed terms of globalisation --- makes interesting reading. The list is full of industries that received protection under the license-permit raj that Shourie and company love to hate. In computers, India was one of the few countries that decided to develop both hardware and software indigenously. It kicked out IBM. Shourie's colleague, the erstwhile socialist Mr Fernandes, can perhaps enlighten him on this. The result was that when the US market required software skills on UNIX in a hurry, only India could provide such skills. And this is what gave India the initial boost. Without the policy of protection of its nascent computer industry, Indians, like others, would have been users of IBM machines, not developers of software.

The pharmaceutical case is even more illustrative. The multinational drug companies were charging exorbitant prices for antibiotics and other essential drugs. This was revealed in a US senate committee (Kefauver committee) investigation in the mid-fifties. Shourie claims that the MNCs share of the pharmaceutical market coming down from 75 per cent in 1971 to 35 per cent today is a great victory for globalisation. But perhaps because of forgetfulness, he neglects to tell us how this was achieved. The framing of the Indian Patent Act took place in 1970. The new act allowed only processes to be patented. Without this protection of the Patent Act, the Indian pharmaceutical industry would never have got off the ground. A major role in India achieving substantial self-reliance in this field has been due to the public sector IDPL. This crucial infrastructure is today being starved to death by Mr Shourie and his ministry. And development of innovative processes for drug manufacture, Indian drug companies would have found it very difficult to develop the new processes required.

It is tedious to examine all the so-called facts that Shourie has produced to argue for globalisation. We will take up just a few of them. The government godowns are overflowing with stocks, not because of high support prices but because of high prices of PDS rations, which the poor cannot afford. It is a matter of national shame that while our godowns are overflowing, people are going hungry and the per capita intake of calories is going down. Shourie also forgets to mention that the opposition to disinvestments in the public sector was also because public assets were given away at rock bottom prices, and, the general public suspects, to friends and relations. What else can explain the selling of the Centaur Hotel at Rs 83 crore to the Batras who sold it at a profit of Rs 32 crore within six months? Or selling cash-rich VSNL to the Tatas who immediately decided to siphon off Rs 1,200 crore for their telecom ventures? Or creating a monopoly in polymers by selling parts of IPCL to Reliance, a course that even the leaders of free market economics, the US, would not have allowed? No wonder the wags are talking of India’s policy of self-reliance now as one of “self” and “Reliance.” Earlier, in these columns, we had reported the comments of a pro-RSS journalist who once quipped that the PMO is "RH+" (a la blood group), 'R' here stands for Reliance and 'H' for Hindujas!

DISTURBING PART OF SHOURIE’S ARGUMENT

However, let us move on to the big picture. India and China, according to Shourie, are the new kids on the block and will outperform the rest of the world because they have whole-heartedly absorbed the new mantra of globalisation. Shourie’s argument might be convincing --- except for the fact that these are the two countries that sheltered their domestic economies and built up a large indigenous industrial and skill base at a time that most other developing countries had opened up their economies. The Nehruvian model had a lot of problems; it sheltered inefficient monopolies at the expense of the people. It did not pursue land reforms, thus failing to create a large rural market. But let us give also the devil its due. India developed a domestic industry that was truly wide ranging. It developed the IITs, engineering colleges, and medical colleges, and expanded its higher education, particularly in the sciences. Today, we have both the skills sets and the industrial base to compete with the best in the world. Shourie fails to recognise from where India draws its strength, just as he fails to understand the true nature of the global economy. In a world of fair trade, Indian industry would be globally competitive. It is the unfair nature of global trade promoted by the WTO that needs to be fought, rather than singing hosannas to globalisation.

  Finally, we come to the most disturbing part of Shourie’s argument. He has found, like many others of the neo-liberal orthodoxy, a disjunction between the need for rapid development and the need for democracy. Ram down unemployment, starvation and pesticide-laden colas down people’s throats and all will be hunky dory. This is the message with which Shourie ends. In other words, a police state, perhaps with Narendra Modi at its head, where protests are stilled, while massacres and multi-nationals are welcome. This is the RSS/BJP's version of Ram Rajya!