Impact of Neo-liberal Policies
Supporters of neo-liberal policies point to the strong GDP growth in India after the 1980s. The average rate of growth over the entire neo-liberal period has been over 6 percent, even going up to 8% over occasional short periods. This is no doubt impressive during a period when most developed countries have shown lower growth and only China has registered regular high GDP growth of 9-10 percent over an extended period of 30 years.
The issue, however, is not just GDP growth, but the nature and composition of growth, and its implications for different socioeconomic classes. First, it is the service sector that is growing most rapidly. The share of the manufacturing sector in GDP has been stagnating at about 16 percent of GDP, whereas the share of agriculture and allied activities such as forestry and fishing, and mining and quarrying, has declined to around 17 per cent. This has serious implications for job creation. The services sector contributes 58 percent of GDP while its share of employment is only 30 percent or lower. Job creation has been the lowest during the neo-liberal period than in the preceding decades. Moreover, almost all increase in employment has been in informal jobs that not only offer very low wages, but involve long working hours under poor conditions, no welfare benefits, and are completely insecure with poor labour rights. The last two decades have seen huge and continuing distress in the agricultural sector and the rural economy. More than 300,000 farmers have committed suicide between 1997 and 2015. Growth in agriculture and food grain production has been the lowest since independence during the neo-liberal period, with the annual growth rate being just 0.6 per cent between 1995 and 2005. Agriculture and the rural economy have been devastated by the neo-liberal policies that include severely reduced subsidies to agricultural inputs, removal of restrictions on imports of agricultural produce, reduced credit flows, sharply curtailed government expenditure on rural infrastructure including irrigation, agricultural research and extension services, and weakened food security by imposing a targeted public distribution system, excluding millions of the poor from access to food at affordable costs. Neo-liberal policies have also not made a significant impact on poverty in terms of its depth, severity and wide spread, even though governments have often claimed the contrary. Recent research shows that per capita income decreased between 1994 and 2005 in places located more than 5 km away from urban settlements, such regions accounting for over half the population of India. With the global economic crisis and its impact on the Indian economy, small increases in employment between 2005 and 2015, and continuing sharp cuts in subsidies, the extent of poverty is likely to have gone up in recent years. Food insecurity is a widely prevalent condition in India. There has also been no significant reduction in malnutrition, and the indicators
8Development for the Rich
even show a worsening in some parts of the country especially among socially and economically vulnerable sections.
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