The Social Science Collective




Globalisation in a Historical Perspective
The doctrinal basis of today’s globalisation is provided by the “neo-liberalism” that represented
revival of economic liberalism propounded by Adam Smith in 1776 in his famous book titled,
“Wealth of Nations”. Economic liberalism advocated the abolition of the government intervention
in economic matters; it considered fee trade was the best way for a nation’s economy to
develop. These ideas were “liberal” in the sense of no controls. Underneath their democratic
façade, promotion of individualism and encouragement of free enterprise, they came to mean
free hand for the capitalists for exploitation of labour and to make huge profits at any cost.
These ideas ruled the world through the 1800s and early 1900s till the great depression of the
1930s eclipsed them with the theory of a British economist named John Maynard Keynes. This
theory propounded that full employment is necessary for capitalism to grow and it can be
achieved only if governments and central banks intervened to increase employment. It worked
well through the post World War II reconstruction period and thereafter through the mid sixties.
The USA which had emerged as the major economy of the world long before the World War II,
immensely benefited from the state-coordinated wartime economy so as to assume the reigns
of global capitalist order. It zealously guarded the capitalist system against the radical
nationalism sprouting at many places, invariably with the use of force under the peculiar
terminology of falsehood like “protection against the threat to stability” (a case of overthrow of
the first democratic government of Guatemala in 1954 or a blatant military intervention planned
in Italy in 1948 in the wake of election results sensing the undesired outcome). With over half of
the world’s wealth, the USA performed the role of world’s banker in the post-World War II
system. However, with the increasing financial crisis of the debt-ridden countries, the Nixon
administration decided to dismantle this system, giving rise to huge explosion of unregulated
capital flows that totally marginalized the real economy. The composition of the international
financial transaction shifted from real economy to speculation. Within just two decades form
1971 to 1990, the percentage of transactions related to real economy came down from 90 % to
paltry 10 % and further declined to 5 % over next five years.
The plethora of literature on globalisation paradoxically seems to induce more confusion than
clearing out the true nature of its dynamics. For many, it is not at all a new phenomenon; it has
been there in essence in the cross border trade that went on centuries ago and in an identifiable
form in the nineteenth century capitalism insofar as it lent both labour and capital substantially
mobile, gave fillip to international trade and when national economies were kept in kilter by the
operation of the gold standard. This attempt at universalising the theory as well as praxis of
globalisation tends to imply futility of resistance to globalisation. Many proffer a TINA (There Is
No Alternative) argument as per which despite adverse impact of globalisation on masses of
people, there is no alternative for the world than adopting the globalisation model. This
argument, while reflecting the admission of the adverse impact of globalisation and therefore
sounding more credible, tends to indicate accrual of more benefits than costs. It tends to
neutralise the theoretical arguments against globalisation and therefore cripples the resistance
movement much before its articulation. Then there are sponsored authorships that ceaselessly
contribute multi-dimensional arguments in support of these policies. They could range from out
right theoretical distortions to empirical amplification. The sheer number of such studies claiming
all kinds of success stories as attributes of these policies and all kinds of failures as due to
absence of them overwhelms and enfeebles the truth to the contrary. The main theme of
globalisation is pivoted on the promise of development and its “trickle down” to the subaltern
sections of the society. Notwithstanding the total contrary evidence, the glitter created by the
free markets misleads one into believing that the benefits of globalisation reached the weak and
poor of the society. After nearly a decade of adoption of these policies in our country and on the
eve of the launch of so called second phase of Reforms, it is time that we examined the
magnitude and direction of the impact of these policies on the dalits representing the oppressed
people in India. This paper seeks to attempt this task with the help of available statistics.


The capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate
elite to revive economic liberalism into neo-liberalism. This neo-liberalism is opeartionalised
through “the Washington Consensus”. This phrase significantly refers to the structural
adjustment programmes designed by the government of the United States and the international
financial institutions that it largely dominates. These institutions are the core of a “de facto world
government” representing the interests of transnational Corporations, banks and investment
firms in a new Imperial age. With regard to the operational features of the neo-liberalism, none
other than its patron saint Adam smith had exposed its inherent class bias. Writing about the
society of his times he pointed out that the “principal architects” of policy in England were
“merchants and manufacturers”, who used state power to serve their own interests, however
“grievous” the effect on others, including the people of England. The “principle architects” of the
neo-liberal “Washington Consensus” are the masters of the private economy, mainly huge
Corporations that control much of the international economy and have the means to dominate
policy formation as well as the structuring of thought and opinion.
The institutional structure through which the globalisation is being promoted is basically
subservient to the interests of big capital, particularly that of US who seeks to leverage its
dominant role in global economy through essentially a short-term, profit-maximization model. Its
anti-labour, anti-people characteristics are deeply embedded in its architecture that is incapable
of anything but perpetuation of poverty, inequality and environmental degradation.
‘Crisis Driven’ Reforms: India into Global Order
The Brettonwood institutions have been the main instrument to spread the wings of
globalisation. However, it came be adopted by every nation state in the form of some kind of
local initiative, euphemistically called as Reforms. The conditionalities accepted as a rescue
package were declared here as economic reforms by the government. These Economic
Reforms launched in July 1991 in India were in nature of a crisis management response to the
economic and political crises that erupted in early 1991. The economic crisis comprised a steep
fall in the foreign exchange reserve, galloping inflation, large public and current account deficits
and mounting of domestic and foreign debt. In politics, the fall of two governments in a short
span of four months, from November 1990 to March 1991; deferment of presentation of the
union budget, fairly long political interregnum till the elections, the assassination of a former
prime minister Rajiv Gandhi in their midst and the emergence of a minority government with a
leader sans charisma, reflected an unprecedented crisis. These events led to a sharp erosion of
confidence in India among lenders, down gradation of India’s credit rating and consequently
snapping of international credit lines from private or commercial sources. Indian Reforms thus,
were essentially of a ‘crisis driven’ variety. They did not represent strategic choice with a vision
of long-term development of Indian people.
The blue print for the Reforms was provided by the combination of macro-economic stabilisation
and structural adjustment programme of International Monetary Fund (IMF) and World Bank
respectively, which had been adopted by many countries before in similar situations. The typical
measures under these programmes are:
Macro-economic Stabilisation
• Devaluation of currency for making exchange rate more realistic,
• Withdrawal of restrictions on imports,
• Reduction/ elimination of fiscal and balance of payments deficits,
• Removal of all controls on prices, exchange and interest rate,
• Elimination/ reduction of all subsidies,
• Introduction of financial structure reforms and free entry of foreign financial institutions,
• Complete autonomy of the central bank to pursue independent monetary policy.
Structural Adjustment
• Decontrol of industries,
• Privatisation of government-owned entities,
• Structural changes in the economy aimed at export-led growth,
• Free entry of foreign capital and technology without any let, hindrance or conditions,
• Free entry and exit of foreign firms including financial and services industries,
• Free cross border movement of capital and other funds,
• Legislative safeguards for protection of intellectual property rights,


• Creation of legal climate for enforcement of legal contracts, private property rights, and free
entry and exit of business, industrial and financial firms.

The underlying economic philosophy of these programmes stems from the theories of neo-
liberalism that propounds the rule of market, reduction in the role of State, cutting public

expenditure on social services and eliminating the concept of public good; deregulation, and
general replacement of public with private. It is based on the premise that the public sector
leads to inefficient allocation and utilisation of economic resources and that the enterprise of
private sector overcomes it through the dynamics of free market.
Dalits in India
Dalits, as the ex-untouchables prefer to be called, are a very distinct social group (see Table 1,
2 and 5 in Appendix for their salient democratic characteristics) While belonging to a broad
class of have-nots they suffer an additional disability of social oppression. Economically, most of
them are still the poorest of poor. The balance minuscule minority has managed to escape
poverty limits and to locate itself on to a continuum ranging up to a reasonable level of
prosperity. The main factor that has catalysed this transition is the reservation policy, which has
provided them a basic opportunity to enter the modern sectors of economy. In social terms
however, all dalits, irrespective of their economic standing, still suffer oppression. This social
oppression varies from the crudest variety of untouchability, still being practised in rural areas,
to the sophisticated forms of discrimination encountered even in modern sectors of urban areas.
Although the statistics indicate that dalits have made a significant progress on almost all
parameters during the five post-independence decades, the relative distance between them and
non-dalits seems to have remained the same or increased. More than 75 per cent of the dalit
workers are still connected with land; 25 per cent being the marginal and small farmers and
balance over 50 per cent are the landless labourers. In urban areas, they work mainly in
unorganised sector. Out of the total dalit population of 138 million, the number of dalits in
services falling in the domain of reservations does not exceed 1.1 million; a mere 0.8 per cent.
Organisation of Study
Corresponding to dual disabilities of the dalits, the main body of the paper is divided in two
parts, (i) the impact on dalits as a part of the class of have-nots and (ii) the impact on dalits as a
disadvantaged social group. In the first part, impact of the Reforms in relation to the three most
critical factors affecting the poor people is studied. They are (i) food security, (ii) inflation and (iii)
employment. Poverty, which represents the combined influence of all deprivations, is also
reviewed separately. In light of the vast data available on the impact of similar reforms in other
countries, this section is sub-divided so as to outline ‘Indian experience’ and ‘international
experience’ separately. The second part focuses on the influence of the Reforms on the specific
three disabilities suffered by the dalits in addition to their poverty. They are (i) educational
backwardness, (ii) discrimination in employment, (iii) atrocities and (iv) socio-cultural
suppression. The last concluding part sums up the study with the observations regarding certain
prerequisites for the Reforms to be more responsive to the problems of people, particularly the

    Impact of the Reforms on poor people can be assessed along several dimensions but here the
    study confines itself to the three most predominant ones, viz., food security, inflation and
    employment. Implementation of the Reforms over the last five years in India has generated
    huge data so as to enable meaningful and autonomous assessment of our native experience.
    This is covered in the first part. The Reforms however were implemented many years before
    and in many countries. This vast treasure of information that is available can be used to validate
    or correct the inferences from the study. This is covered in the second part.
    Indian Experience
    Food Security
    Food security mainly relates with the production, distribution and pricing of food grains and thus
    brings agriculture, Public Distribution System (PDS) and the subsidy structure in to focus. The


Reform measures that predominantly affect them are reduction in fiscal deficit, reduction in
subsidies, devaluation of Rupee, export orientation and reduction in agricultural credit.
Considering the pattern of the budgetary outlays of the government, the fiscal contraction
inevitably resulted in a disproportionate cut in capital expenditure. The capital expenditure slid
from 5.10 per cent of GDP in 1990-91 down to 2.74 per cent in 1995-96. In terms of percentage
of total expenditure, it fell from an average of 32.8 per cent during the preceding five years of
the Reforms, to average of 22.05 per cent during the succeeding five years of the Reforms. In
1995-96 (BE), it was as low as 17.82 per cent.1 Agriculture sector also bore the share of this
cut. The average annual increase in public sector outlay on agriculture and irrigation during
1985-90 fell from Rs. 1.3 billion to an average of Rs. 0.68 billion during 1990-92. This cut is
bound to have a depressing effect on the agricultural production in coming years.
The subsidy on fertiliser had played a crucial role in quadrupling food grain production from 46
million tonnes for a population of 363 million in 1951 to 170 million tonnes in 1991 for a
population of 832 million. But, after the launch of the Reforms, the subsidy was reduced. It slid
from 0.82 per cent of GDP in 1990-91 to 0.75 per cent of GDP in 1995-96. The prices of the
phosphatic and potassium based fertilisers were decontrolled and that of nitrogen based
fertilisers were reduced by 10 per cent. The prices of phosphatic and potassium based fertilisers
soared to international level resulting into sharp fall in their consumption. Consumption of
phosphatic one fell from 3.3 million tonnes of nutrients in 1991-92 to 2.7 million tonnes in 1993-
94 and that of potassic fell from 1.4 to 0.9 million tonnes in the same period. Some amount of
substitution effect raised the consumption of nitrogen-based fertiliser from 8 million tonnes in
1991-92 to 10.8 million tonnes in 1995-96 resulting in skewing of the nutrient balance. As
against the consumption ratio of a mix of nitrogenic, phosphatic and potassic fertiliser of
5.9:2.4:1 in 1991-92, closer to the deemed ideal of 4:2:1, it deteriorated to 9:3:1 in 1994-95.
This imbalance is said to have an adverse effect on soil quality and in turn on its productivity.
The nutrient imbalance apart, a study of Andhra Pradesh, Maharashtra and Karnataka by Gaiha
(1994) has noted a significant reduction in per hectare fertiliser consumption during the Reform
period, which expectedly showed up in the decline in food grain production. 2
This inherent threat to food security is further magnified by the devaluation of rupee by about 25
per cent effected in July 1991. It resulted in making our food grains cheaper in the international
market. As a result, even the ordinary (non-aromatic) rice (besides the usually exported
superfine aromatic (basmati) rice was exported in huge volumes. The policy impetus to export of
rice and wheat is reflected in the actual exports overshooting the targets. For example, in 1995-
96 (October- September) actual rice export had reached 5.51 million tonnes as against the
target of 2.5 million tonnes. Increasing exports and free market sales of foodgrains have
contributed to a drastic reduction in the stocks of foodgrains with the public procurement
agencies. For example, by September 1996, there was a whooping reduction of 10 million
tonnes in the stock of foodgrains. In case of wheat, it dipped down to 10.36 million tonnes, even
lower than the prescribed minimum norm of 13.1 million tonnes. The policy thrust on agricultural
exports has moreover resulted in diversion of land to the export production of non-food primary
products. There has been a spurt in corporate farming for export horticulture and floriculture
products, etc. As per one FAO report, this trend of shifting land for exportable non-food grain
crops had already set in even in the decade ending 1991. The prospects for this trend lies in the
fact that there is a huge demand in the developed countries for some 9000 varieties of edible
non-food grain primary products which grow in sub-tropical and tropical regions of the
developing countries. Likewise, there is an exportable surplus of foodgrains and dairy products
in the developed countries that craves for markets. Surely, as some economists apprehend,
India may turn to be a net importer of foodgrains in not so a distant future.3
The international market for agri-products being a oligopsony of three to six giant companies
whose control over the market extends to 80 to 90 per cent, 4 export thrust in this area may not
moreover be cost effective. As the experience of some African countries shows, the increasing
export of foodgrains for same level of foreign exchange earning certainly impairs the food
security of people.
The reforms in banking led to a severe squeeze on agriculture lending. The share of agriculture
in net bank credit consistently declined and fell from 17.4 per cent to 12.4 per cent during March
1990 to March 1995. Expressed in constant (1980-81) rupees, it fell from Rs. 81,470 million in
1989-90 to Rs. 70,500 million in 1994-95. Considering, the hike in input costs, the impact of this
squeeze could have only been deleterious on food grains production.


As a measure of ensuring food security to the large mass of Indian population, public
distribution system was instituted in India in the wake of the calamity of the Great Bengal
Famine of 1942-43 and the World War-II. The system comprises over 4,24,000 fair price shops
spread all over the country in rough proportion of the population. The food distributed through
PDS is subsidised by the Government to the extent of the difference between the issue price of
foodgrains and their economic cost to Food Corporation of India (FCI) – the agency that incurs
the cost of transportation, storage and administration in respect of the stock of food grain. It
devours a significant part of the government subsidy. For example, in 1990-91 out of total food
subsidy of Rs. 26,000 million, FCI -costs amounted to Rs. 10,000 million, which works out to a
whooping 38.5 per cent. With the FCI-costs ever increasing, the impact of any reduction in
subsidy has to hit the poor directly.
For ensuring supply of foodgrains to the PDS system in face of export attraction due to the
devaluation of rupee, for maintaining their level of production in spite of sharp rise in input prices
and for political consideration of assuaging the rich farmers’ lobby, the government had to
increase the procurement prices of rice and wheat. The procurement prices of rice and wheat
were raised by 67.56 per cent and 62.8 per cent respectively between 1989-90 and 1993-94.
This rise was passed on to the consumers by increasing the issue prices of these commodities
by 85.81 per cent and 75.14 per cent respectively between June 1990 and February 1994,
apparently for reducing the food subsidy. The impact of this rise was reflected in a significant fall
in the off-take of food grains (see Table 8 in Appendix). After the Reforms, off-take of wheat and
rice as a percentage of the allocation has shown considerable decline. In the years from 1990-
91 to 1992-93 this percentage was generally over 80 but in the next three years from 1993-94 to
1995-96, it came down to below 50 per cent in case of wheat and to little over 60 per cent in
case of rice. The export – attraction of wheat has already led to shortages from situation of
surplus, which had to be met with expensive imports. The promising income from wheat crop
has resulted in wheat extensively substituting coarse cereals – the main food of poor people in
many parts of the country, as can be seen from the dwindling output of the latter. The latest
available figures show that it fell from 36.6 million tonnes out of a total foodgrains output of
179.5 million tonnes in 1992-93 to 30 million tonnes out of a total output of 185 million tonnes in
Since, the difference between the consumer-end PDS retail prices and market prices became
marginal, the not-so-poor left the PDS and owing to unaffordable prices the poor cut their
consumption. The resultant effect on nutrition and hunger had to be borne by the people in
direct proportion to their poverty. One study revealed that the families of landless labourers and
marginal and small farmers reduced their off-take by over 50 per cent.5

Considering their
extremely low level of food consumption, below or around the subsistence minimum calories
defined by the poverty line, the impact of further reduction of intake by over 50 per cent may
have led many people to starvation deaths.
Recently, on the advice from the World Bank, the government has decided to make the PDS
targeted at the real poor. The real intention however appears to be the reduction in food
subsidy. With the narrowing spread between the market and the PDS retail prices, the so-called
non-poor are already out of its net. Even the back-of-envelope kind calculation will show that the
people below the poverty line (at the 1991 level) require 46.5 million tonnes of foodgrains as
against the actual distribution of only 16.6 million tonnes, a mere 36 per cent of the requirement.
The new scheme based on the executive reluctance to acknowledge poverty is bound to push
many more people to starvation.
The cumulative effect of the above could be clearly seen in a trend of falling per capita net
availability of cereals per day for the Indian population. During two years of the Reforms, there
was 8.43 per cent fall in per capita availability of cereals and 12.02 per cent fall in that of pulses
(see Table 7 and 9 in Appendix). Considering the acute inequality of Indian population, the
impact of this declining trend on the poorer and particularly the disadvantaged sections like the
dalits would be far more severe than revealed by the averages. Pulses being the only source of
vegetable protein for poor people, a sharp decline in their availability certainly indicates
malnutrition. The incidence of malnutrition further would be disproportionately injurious to
women and children because of the male preference in Indian tradition. The evidence of this
disaster has already come in the form of malnutrition deaths of over 350 children in the
Amaravati district of Maharashtra – the most industrialised and relatively progressive state in


Inflation hits poor people the hardest. Being employed mainly in the unorganised sector, they do
not have even the partial protection that their counterparts in the organised sector have by way
of dearness allowance. Most of their earning is spent on the basic needs like food, clothing and
shelter, and hence any price rise directly dampens their level of consumption. The policy
measures unleashed under the Reforms that directly contributed to inflation are: (i) reduction in
the budget and fiscal deficit, (ii) devaluation, (iii) privatisation, (iv) elimination or reduction in
subsidies and (v) export promotion.
The reduction in the budget and fiscal deficits predominantly resulted in curtailment of capital
expenditure and consequently in the decline in capital formation. Between 1990-91 and 1993-94
the real fall in capital expenditure was 31 per cent. The real gross fixed capital formation as
percentage of GDP reflects a consistent decline from 21.3 in 1990-91 to 19.8 in 1993-94. Its fall
for the public component is far more precipitous, from 8.6 to 7.8 for the same period. This could
lead to fall in future output and with inelastic wages, would cause an inflationary pressure in the
Reduction in budgetary support to the public sector effected under the Reforms serves dual
objective. One, it contributes to containment of the budgetary deficit and two; it constitutes a
step in the direction of privatisation. The budgetary support to the PSUs was reduced by 6.1 per
cent over the balance budgetary period of nine months in the very first post- Reforms budget of
1991-92 and consistently thereafter. The budget prescribes the supplementary resources and
their sources to the PSUs. For example, in 1992-93 it showed a marginal increase in the
amount to be mobilised through sale of bonds but a growth of 320 per cent in the costlier funds
obtained through commercial debts and suppliers’ credit. These methods are not always
feasible and hence the PSUs had to resort to increasing prices of their products to make the two
ends meet. For example, in the same budget, the impossible target given to Sail Authority of
India to raise its internal generation from Rs. 4,910 million to 9,720 million was met by the 15
per cent increase in steel prices, giving significant fillip to the inflationary spiral in the economy.
Devaluation of currency directly contributes to inflation by raising the cost of imports that enter
into domestic production or consumption. Large part of our import comprises petroleum crude
and its products; chemicals, machinery, iron and steel, etc. which enter as raw or intermediate
materials in our production processes. Most of these products are of common use in the
economy. Any escalation in their cost therefore directly contributes to the rise of general price
level. The last administrative price rise of petroleum products could be a case in point. The
devaluation of rupee made it dearer domestically, causing deficit in the oil pool account to
mount. Eventually, it entailed hefty price rise of petroleum products. Insofar as petroleum

products are consumed directly or indirectly by all, their price rise impelled the general price-
level to go up with a multiplier effect.

All the studies on the Economic Reforms are unanimous in their conclusion that the Reforms
have significantly contributed to inflation. A recent study by the EPW Research Foundation
revealed significant price rise all across. Based on the wholesale Price Index (WPI), the price
rise of the primary articles of consumption ranged from 42 per cent to 93 per cent.6

The WPI for
all articles increased by 44.4 per cent registering an annual compound growth of 10.3 per cent.
In the decade preceding the Reforms (1980-81 to 1990-91) this increase was only 7 per cent,
despite the 17 per cent growth in money supply. Prof. Kurien’s study isolates four periods of
significant price rise from 1950; viz., (I) 1964-65 to 1968-69, (ii) 1972-73 to 1976-77, (iii) 1979-
80 to 1983-84 and (iv) 1991-92 to 1995-96. He clearly finds extraneous force majure situations
being responsible for the price rise in the three periods before the Reforms but no such tangible
reason for it in the fourth period. There were severe famines in the first and the third periods and
huge increase in the international prices in the third period that caused the prices to rise. On the
contrary, during the post-Reforms fourth period, there was an unprecedented long spell of good
monsoons for continuous seven years, and relative stability in international petroleum prices.
Therefore, the only inescapable inference Prof. Kurien reached was to attribute the price rise to
the steps taken under the Reforms.7

For example, it is the Reforms that caused the price of
chemical fertiliser to rise by 100.6 per cent, electricity by 65.9 per cent and coal by 58.1 per
cent. Devaluation of rupee and emphasis on the export-led growth caused pressure on the
prices of products depending on their import content. The exact effect of simultaneous reduction
of customs duty and excise duty is not easy to assess but as some micro studies indicate, they


also added to the rise of general price level. For example, there being no significant customs
duty on the imported medicines before the Reforms, the reduction therein did no difference to
their prices. However, the devaluation of rupee pushed them sky rocketing. The aggressive
export promotion of many primary articles also resulted in their price-rise in the domestic
market. The increase in money supply resorted to thwart the revaluation of rupee in the face of
huge inflow of foreign exchange during 1992-93 to 1994-95 also contributed to elevating the
general price level.
The price rise of food grains owing to the cuts in food and fertiliser subsidies and consequent
adjustments have particularly been harsh. In the preceding decade of the Reform the per
annum price of rice had risen by 7 per cent and that of wheat by 3.3 per cent. But in the next
four years of the Reform period, they registered the rise of 13.5 per cent and 18.1 per cent
respectively. Other foodgrains also behaved approximately in similar fashion. The price-rise for
pulses has been 97.2 per cent; that for vegetables 163.4 per cent, for fruits 74 per cent; and for
eggs, meat and fish group 102.5 per cent. The free market ethos unleashed by the Reforms
also indirectly but significantly has contributed to the price rise.
The rate of growth of employment in the organised sector dropped from more than 1.7 per cent
per annum in the late 1980s to 1.2 per cent in 1991-92 and to 0.6 per cent in 1992-93. Creation
of jobs in the public sector fell from 11.0 million in the preceding four years to the 6.2 million in
the succeeding four years of the Reforms. For the Private Sector, the corresponding figures
showed a slight rise from 2.08 million to 2.49 million on account of free market euphoria. In the
Central Government establishment there were 4.03 million jobs on 1st March 1991, which went
up next year to 4.14 million. But for the next two years, they came down to 3.97 million and
3.84 million respectively.
Similar picture of declining employment opportunity is held out in the statistics of Employment
Exchanges. The notified vacancies had come down from 0.59 million in 1989-90 to 0.4 million in
1992-93 and to 0.38 million in the subsequent year. Similar decline is seen in the statistics of
appointments. The appointments issued during the above three years were 0.29 million, 0.23
million and 0.22 million respectively. The ratios of appointments to the notified vacancies for
these years also shows a striking decline, viz., 8.5 per cent, 7.9 per cent and 6.7 per cent
The contraction in public expenditure and the consequent reduction in aggregate demand could
not but adversely affect employment in the unorganised sector, whether non-agricultural rural
employment or urban informal sector employment, given the casual nature of such
The policy reforms made benefits of the small sector available to the big industrial houses.
National Council of Applied Economic Research had cautioned that the Reforms relating to
deregulation of the big industries, withdrawal of the licence system and global reduction of
custom duties would exert adverse impact on the small industries.9

The statistics of the
industrial sickness show a marked deterioration during the Reform period (see Table 10 in
Appendix). For example, in 1990, there were 2,21,097 sick industries, which represented a 8.86
per cent decline from the previous year. But after the Reforms were launched, this figure went
up to 2,23,809 in 1991 and further to 2,47,724 in 1992 indicating the 1.23 per cent and 10.69
per cent growth respectively, over previous years. Entrepreneurship Development Institute of
India, Ahmedabad had surveyed the impact of the Reforms on small scale industries in 1993,
and saw clear deterioration in their situation.10 It attributed this deterioration to three factors (i)
general recession in 1991-92, (ii) reduction in the budgetary support to the public sector and (iii)
liberalisation of imports of the capital goods. The cumulative impact of these factors has been in
the total collapse of demand for their products. Small-scale industries based on imports had a
tough time due to devaluation of rupee. Increasing competition, increasing costs and pressure
on prices has made the very survival difficult for many. Today more than 4,00,000 small-scale
industries are either sick or closed. The reforms in financial sector permitted the banks to
charge interest as per the credit rating of debtors and manage their profitability. This also added
to the difficulty of small-scale industries. For, getting loans from banks at affordable interest
rates now became a formidable task for them. One study clearly concluded that the Reforms
had an adverse impact on the new job opportunities in the small-scale industries.11


In rural areas there has been a significant cut in the bank credit to the agriculture and non-
agriculture industries (see Table 11 in Appendix). The bank credit to these sectors was 40 per

cent till the launch of the Reforms. It came down to 38.7 per cent in 1992 and 35 per cent in July

  1. The bank credit to agriculture as a percentage of net bank credit fell consistently to 12.4
    per cent in March 1995 from 17.4 per cent in March 1990. It has had an adverse impact on
    these industries and in turn on rural employment. A study on the unemployment in 1993
    estimated that out of 25 million unemployed, approximately 10 million came from the
    unorganised sector of urban areas and the non-agricultural sectors of the rural areas and were
    identified as the victims of the Economic Reforms.12
    The Economic Reforms lay excessive reliance on foreign investment not only for industrial
    development but also to solve the unemployment problem faced by the country. In this context,
    the observation of United Nations, in the Human Development Report of 1993 is quite revealing.
    It says that the TNCs and their associate companies had made significant investments in
    developing countries but it could not generate significant employment. The amount of jobs
    created by the foreign investment in the entire third world during 1990 to 1993 is not even
    equal to the number of people entering the job market in India in a single year! The companies
    in the Fortune 500 list of 1992 together said to have had 5,472 billion dollars sales and 25
    million jobs in 1992. Although this sales figure is 27 times India’s GDP, the employment figure
    does not reach even its one third.
    The impetus to export agriculture in the Reforms is bringing in corporate and contract system in
    the agriculture sector. The government has already declared that the Land Ceiling Act identified
    as the main obstacle in the process, would be suitably changed. Directionally, the emergent
    corporate farms will gobble up smallholdings of the marginal to middle farmers and push them
    into the herd of job seeking millions. Corporatisation of agriculture always leads to
    depeasantisation and simultaneously reduction in labour absorption. The cropping pattern of
    these capitalist farms makes unskilled agricultural workers redundant. This emergent scenario is
    certainly going to aggravate the unemployment problem further rather than solving it.
    The theme of export-led growth emphasised by the Reforms will expose the Indian industry to
    the vagaries of international markets, which can have very negative effect on employment in the
    long run. Export thrust, unmindful of the demands of the domestic requirements can be quite
    harmful as has been experienced in the case of cotton thread case. In this case, large scale
    export of the coarse cotton thread had catapulted 110 weavers in Andhra Pradesh to starvation
    deaths.13 There are many such case studies in the international repertoire of experience with
    such Reforms.
    The import of modern technology and investment constitutes an important rationale for the
    economic Reforms. Many facilitating provisions have been adopted for attracting the same. It is
    a different matter that the flow of both technology as well as investment follows the capitalist
    logic of maximisation of long-term profits. This logic is evident when Pepsi brings in its great
    technology to convert our potatoes and sell them in chip form at a price 80 times over. There is
    a virtual boom in strategic alliances, joint ventures, technological collaborations etc. that act as
    vehicles for bringing in foreign technology and capital. They invariably depend upon the
    marketing muscle of the foreign partner represented in their powerful brands. The influx of
    foreign brands is bound to displace Indian brands, not by virtue of their intrinsic superiority but
    because of their sheer financial and organisational muscle. The process will virtually spell
    deindustrialisation of the domestic industry. The modern factories replacing them cannot
    generate even a fraction of the employment lost in displaced manpower. The imperatives of
    global competitiveness moreover, will increasingly impel companies to reengineer their business
    processes that necessarily results in ‘down sizing’ of the company rendering the millions
    jobless. The relative mobility of capital vis-à-vis labour also holds an ominous prospect for future
    The buzzword of competition has suddenly awakened one and all in the business world to the
    necessity to restructure their companies. Since, this exercise is envisaged to prepare the
    companies to face global competitions, every one engaged a foreign consultancy firm that
    claimed the requisite experience and know how for millions of dollars. Already this phenomenon
    has threatened the well-meaning native consulting firms into seeking some kind of alliance with
    these foreign firms for sheer survival. These exercises overtly aimed at creating sharper
    customer focus essentially end up in cutting jobs. Strangely, more than the private companies
    the State owned units operating as monopoly or oligopoly seem to feel greater pressure to so


reorganise. Nationalised banks have already threatened to declare 4,00,000 persons surplus,
Railways have stopped recruitment, Department of Post and Telecommunication intend to
retrench 2,00,000 workers.14 The examples indeed are legion. A study conducted by EPW
Research Foundation in early 1994 found that the total employment which showed an increase
in first two years of the Reforms, had slumped thereafter; that the bulk of employment had
occurred in contract and other forms of non-regular employment, the share of which in total
employment had gradually risen to one-third by March 1993, and that regular employment fell
by 3.3 per cent in 1992-93 even as the value of fixed assets of the sample companies rose by
some 27 per cent.
The competitive pressure of the free market scenario has impelled managements to adopt
labour flexibilisation strategies as noticed by the International Labour Organisation as early as

  1. The spurt in restructuring exercises in corporate India already reflects the trend towards
    ‘reengineering’ by concentrating on core or flagship businesses and spinning off non-core
    businesses through subcontracting or outsourcing. It is reinforced with an HRD strategy that
    envisages workers to develop new skills and get exposed to various aspects of work so that
    they can become multi-skilled and can do varied tasks in a flexible work environment. This is
    leading to ‘individual contact’, thereby eliminating the vary basis of the trade unionism. The
    directional thrust of the Reforms is already evident in the tremendous growth of the informal
    sector, which is characterised by the rampant use of casual labour, hiring and firing practices,
    and all kinds of exploitation of labour.
    Poverty is a sum total of all the deprivations. In India governmental definition of poverty is based
    on the sole criterion of minimum food requirement for survival. Thus the poverty line is decided
    by the income sufficient to buy food equivalent of 2400 calories in rural and 2100 calories in
    urban areas. The database for poverty estimates is provided by the quinquenial surveys of NSS.
    NSS also collects the consumer expenditure data by decile group on an annual basis.
    The Reforms have reversed the two decades long declining trend of poverty (see Table 12 in
    Appendix). The rural poverty went up from the pre-reform low of 33.7 per cent to 41.7 per cent
    in 1992 and slightly declined to 40.2 per cent in 1993-94. The urban poverty also showed the
    same trend shooting up from the pre-Reform low of 36 per cent to 37.8 per cent and then
    coming down to 36.2 per cent. The ratio of ultra poverty (i.e., extreme poverty) to total poverty
    showed a marked increase after the Reforms. In 1990-91, this ratio was 68.95 %, it went up to
    71.04 % in 1991 and to 74.64 % in 1992. The corresponding figures for urban area were 72.99,
    73.14 and 74.20 per cent.15
    In 1992, the rural workers in secondary and tertiary sectors showed a decline of 6.3% and 1.3%
    respectively from the pre-Reform level in 1989-90. Curiously, the primary sector showed a hefty
    increase of 10.1 % in the same period. In rural area nearly 50% farming households have less

than one acre land (see Table 4 in Appendix). They need supplementary work in non-
agricultural sector for meeting the two ends. In absence of this work however, they land up

engaging themselves with the sundry work related to their tiny farms and declare themselves as
the agriculture workers. This increase in the primary sector jobs thus indicates partial
unemployment of workforce. The decline in non-agricultural jobs and the overall employment
are attributed to the cut in the government expenditure on various poverty alleviation
programmes, during the Reform period. Notwithstanding their extremely low transfer efficiency
16 and ineffectiveness in targeting the poor, these programmes played a role in poverty
reduction during the eighties. They are operated on the 80:20 basis by the Centre and the
State. In the first flush of enthusiasm the government effected drastic reductions in all of these
programmes till it was alarmed by the havoc it created and its political implication in the ensuing
general election. It attempted to reverse this trend in 1994-95 and 1995-96 budgets under the
much-propagandised ‘human face to reforms’. Even after taking all these increased outlays into
account its resultant effect barely equals provision of less than 20 days work at Rs. 21 for a
person, in a year.
The central transfers constitute a major resource for the states to conduct the programmes
under the Social sector. These transfers show consistent decline during the Reform period on
all the heads except for the payment of interest, over a period 1990-91 to 1993-94. This decline
amounts to whooping 18.52 per cent. The central assistance to states for some specific
schemes likewise has been on consistent decline from much before the start of the Reforms but


the states seem to have managed the expenditure profile. However, the Reform-ethos has
eroded this expenditure after 1990-91. The maximum cut was effected in the expenditure on
disease-prevention and control programme which relate with the poverty prone diseases like

T.B., Malaria, Fileria, Leprosy etc. Its direct manifestation has been aplenty, in form of re-
emergence of the epidemics of Plague, T.B., Malaria, Jaundice, Influenza, Pneumonia and very

recently, Dengue.
Inequality is a corollary of growing poverty for the upper layers seldom suffer degradation.
Based on the available data on consumption expenditure, the share of the bottom 30 % people,
which was growing consistently from 1987-88 up to 1990-91, both in rural as well as in urban
areas, had a sudden reversal soon after the Reforms were launched. In rural area, it was 15.57
% in 1987-88, which rose up to 15.96 % in 1990-91, but thereafter slid down to 15.79 % in 1991
(July – December) and further to 15.60 % in 1992 (July-December). For the urban area, the
corresponding figures are 13.33 %, 13.74 %, 12.74 % and 13.17 %, indicating a slight upturn in
the terminal year. The share of the middle 40 % population also dwindled in the same manner in
both rural and urban area. The loss of these 70 % population appears to have benefited the top
30 % population. Their share for the pre-Reform period was on consistent decline, which has
suddenly jumped up in the Reform period.
Experience Of Other Countries

Many protagonists of the economic Reforms tend to discount the Indian experience as pre-
mature. Fortunately, there are many countries in which similar Reforms are being worked for

many years. There are numerous studies assessing their efficacy and impact on various
sections of population. Most of them are unanimous in noting the precipitous fall in standard of

living of the majority population of the subject country that has led to widespread riots and socio-
political unrest 17.

The thrust of the Reforms is on economic growth, which as per their apologists would ‘trickle
down’ to the people. Notwithstanding the metaphorical argument that trickle can never be equal
to outpour that may be required in terms of distributive justice to the poor, the growth generating
capacity of these Reforms itself appears to be in question. In Latin America, after adoption of
the Reforms economic growth rates had actually fallen. In the pre-Reform period, Latin
America’s economic growth rates had exceeded the average growth rate of the industrial
countries and that of USA for over a decade. But, it suffered a historical reversal soon after the
Reforms were launched. From 1980 to 1985, the average real growth rates of per capita income
in Argentina, Brazil, Chile, Mexico and Peru were negative and per capita income levels had
gone back by a decade to those prevailing in the 1970s. For Peru and Chile, they had slipped
back even to pre-1970 levels18 . Although, the growth rates of GDP in cases of Argentina and
Chile appear to have risen in 1992, the reasons therefor do not quite belong to the standard
Reform-package. In Chile, the government’s huge investments in copper mines projects,
forestry, and paper projects; extension of cheap credit to the new export industries and other
such interventions during 1973 to 1990 came to fruition, in form of the spurt in economic growth
rates. In Argentina, a totally different phenomenon seems to have caused the economy to look
up in 1992. The fall in the American interest rates had caused the dollars stacked in the
American banks by the Argentinean capitalists, to flow back to Argentina into its emerging
financial markets. Besides these examples, there are many countries where the GDP-growth
rate seems to have deteriorated in 1992. In Brazil, it fell down from 9.1 % in 1980 to 7.9 % in
1985 and further to – 0.9 % in 1992. For the same years, the GDP- growth rates for Columbia
were 4.1 %, 3.3 % and 2.7 %; those for Peru were 3.1 %, 2.1 % and -2.8 % and for Mexico they
were 8.4 %, 7.9 % and 2.6 % respectively. In some other countries like Ghana, Indonesia, Ivory
Coast etc., notwithstanding their individual economic characteristics, the growth rates appear to
be simply erratic. Contrary to the assertions of the IMF and the World Bank, there is thus no
concrete evidence that these type of Reforms really lead to incremental economic growth in the
subject countries.
There is enough evidence however, that these Reforms have heaped many kinds of miseries on
the majority of population of these countries. In Latin America between 1980 and 1984, open
unemployment went up from 7 to 11 per cent. In Chile, Columbia, Peru and Venezuela, the
unemployment rates jumped by 50 and 100 % 19. A sizeable decline has taken place in
industrial wages in the same period in African and Latin American countries. It fell by 40 % in
Tanzania, 33 % in Zambia and Mexico and 24 % in Peru. This decline ranged from 30 to 60 %,
between 1980 – 87 in Argentina, Bolivia, Chile, Costa Rica, Egypt and Kenya. The real wages of


the government employees have fallen almost everywhere. The decline is of the order of 30 – 40
% in the African countries during 1975 to 1985 and between 10 – 120 % in Latin America
between 1980 to 1987 20.
Most of the countries (e.g., Argentina, Brazil, Chile, Columbia, Ivory Coast, Mexico, Peru,
Philippines etc.) that adopted these IMF/World bank sponsored Reforms showed a clear decline
in Gross Domestic Investment during the period from 1980 to 1992. There was a sharp decline
in the share of social expenditure in the Latin American countries and West Asia. In the former,
it fell from 36 % to 24.3 % and in the latter, from 20.3 % to 17.2 % between 1980 and 1987. In
terms of share of capital expenditure, investment in social infrastructure has suffered in Sri
Lanka; the spending on health, education and food subsidy having declined from 38 % of
current expenditure in 1977 to 22 % during 1980 – 82. There was a relatively sharper decline in
similar expenditure in Turkey, Guyana and Sudan. In Somalia and Tanzania the share of
primary education in such expenditure further declined. Per capita expenditure on education
and health was reduced by 11 % and 5 % respectively in Morocco, by 29 % and 35 % in
Ecuador and by 20 % in Chile 21.
The former Soviet Russian countries and the east European countries have been implementing
these Reforms since 1989. Whatever may be the pitfalls of the socialist regimes in these
countries, it had provided its entire people with basic necessities of living. What has become of
these countries after the Reforms were launched is very well documented in a report published
by UNICEF. In Bulgaria 53.6 % families were living in poverty in 1992. In 1989, Hungary had
10.1 % poverty, which within next two years of Reforms had more than doubled to 21.3 % in

  1. In Czech Republic it went up from 5.7 % in 1989 to 18.2 % in 1992. It jumped from 21.8 %
    to 41.4 % in Poland during the same period. It went up from 27.3 % to 51.1 % in Rumania; from
    5 % to 43.8 % in Russia and from 8.9 % to 30.2 % in Slovakia. In Poland 57.6 %, in Rumania
    70.1 % and in Slovakia 41.3 %, children live in poverty. In Mongolia the Reforms catapulted 25
    % population below the monthly 10 dollars – poverty line. The mortality rate between 1989 and
    1993 also increased significantly in these countries due to drastic decline in living standard.
    Unemployment rates have soared in most of the east European countries. About 6.5 million
    people were registered as unemployed in December 1992 – a rise from 5 million a year ago.
    Inflation is still a major problem. In Poland, which was the pet success story of the Reforms for
    free market advocates, more than 50 % people say that the Communist system was better.
    More than 16 % are unemployed in industrial cities and more than that in the rural areas; almost
    14 % of the people in the country are on doles and about one third of the total families now live
    below the official poverty line.
    The notable exception to the above is the experience of East Asian countries. The proportion
    below the poverty line in this region, comprising People’s Republic of China, Indonesia, Korea,
    Malaysia, Philippines, Thailand and Indochina declined from 35 % to 10 % over this period 22.
    The key social indicators, viz., life expectancy, infant mortality, adult literacy and population
    growth for these countries also improved very impressively. However, it is not the Reforms that
    have caused this miracle. The real reasons have been analysed as their specific historical
    setting, their creation of pre-conditions for success and the strategies they employed 23. For
    instance, almost all of them had undertaken effective land reforms, achieved high levels of
    literacy, particularly female literacy; and substantially better health standards. Better female
    participation in the labour force led to rapid increase in household and overall domestic saving
    rates. The higher level of social consumption with relatively better distribution of incomes and
    wealth vastly widened the demand of those economies and facilitated more broad based
    development. Higher literacy and health standards were the most crucial factors in enhancing
    labour productivity, which in turn went to facilitate significant import substitution and export
    promotion 24.
    Under the influence of these Bretton Wood institution sponsored reforms, inequality in the world

has been consistently growing. Between 1988 and 1993, the per capita income of the low-
income countries of the world fell by 35 % from $ 584 to $ 380. As against this the same for the

rich countries went from $ 17,080 to 23,090. The share of the low-income countries in total
income also fell from 5.44 % to 4.83 % in the same period. For the block of Latin American
countries famous as the test bench for these reforms, the picture is strikingly dismal in terms of
inequality. In Brazil, the ratio of income or consumption of the top and the lowest 20 % people
increased from 26.1 % to 32.1 % between 1983 and 1989. In Columbia, between 1988 and
1991, the same had gone up from 13.3 to 15.5 %. In all these countries the consumption of the
bottom 20 % population as a share of total consumption ranged from paltry 2.1 to 8.7 %. The


gap between poor and rich of the world has increased by 30 % over the last decade along with
the spread of these kinds of Reforms. During 1987 to 1994, the number of billionaires in the
world showed a remarkable increase. In USA, it went up from 49 to 120; in the Asia Pacific
region, from 40 to 86; in Europe, from 36 to 91 and in west Asia and Africa, it went up from 8 to

  1. The brief life sketches of these billionaires given in the Forbes magazine of July 18, 1994
    illustrate how these Reforms have been instrumental in enriching them.
    The social disadvantage suffered by the dalits in India was taken note of in the Constitution of
    India, which was drafted under the chairmanship of Dr. Ambedkar – a person who had
    spearheaded the most momentous anti-caste movement of the depressed classes. It provided
    the dalits with many safeguards, viz., (i) social, educational, cultural and religious safeguards,
    (ii) economic safeguards, (iii) political safeguards and (iv) safeguards for employment. The free
    market ethos unleashed by the Reforms, conceptually can neither confirm to the democratic
    spirit of the Indian Constitution of ‘one vote, one value’, nor can it coexist with the system of
    positive discrimination embodied in these safeguards. For, the market grants moneyed person
    more value, and overtly believes in the jungle law of ‘might is right’. To a large extent, the
    primary motivation behind these Constitutional provisions was liberal democratic aspirations that
    characterised the freedom movement. However, these aspirations and the initial ideological zeal
    of the founding fathers withered away in no time and what survived was its utilitarian dimension
    for the electoral politics. The sorry state of the executive compliance with these Constitutional
    provisions amply bears out the fangs of the intrinsically iniquitous Indian society. The Reforms
    will bring a kind of legitimacy to this attitudinal resistance of the upper castes and classes to the
    movements for change by the downtrodden. These safeguards will stand eroded as the
    Reforms gain in momentum. Influence of the Reforms is bound to be all pervasive. However,
    only a few issues of importance to the dalit masses have been picked up for discussion here.
    Reservation and Financial Assistance in Education Institutions
    Reservation in the educational institutions and the financial assistance in the form of
    scholarships and freeships constitute perhaps the most important factor in the development
    scheme for dalits. For, it is primarily responsible to make the basic input of education available
    and affordable to them. Without education, all the constitutional safeguards including the
    reservation in services would be infructuous. Under this scheme the dalit students whose
    parental income is below a specified level, get freeship, reservation in admissions to all the
    colleges getting grants-in-aid from the government, and scholarships. Without this assistance,
    even today, it would be difficult even for the second-generation educated dalits to send their
    children to school.
    The Reforms have already resulted in freezing the grants to many institutions and in stagnating,
    if not lowering, the expenditure on education. The free market ethos has entered the
    educational sphere in a big way. Commercialisation of education is no more a mere rhetoric; it is
    now the established fact. Commercial institutions offering specialised education that signify
    essential input from utilitarian viewpoint, have come up in a big way from cities to small towns.
    Their product-prices are not only based on the demand-supply consideration in their market
    segment but also are manipulated by their promotional strategies. In a true spirit of
    globalisation, many foreign universities are invading the educational spheres through hitherto
    unfamiliar strategic alliances with non-descript commercial agencies, of course at hefty dollar
    equivalent prices. Many elite institutions like IIMs and IITs, suddenly facing fund crunch had to
    resort to raising their fee structure and other prices many fold. They were already beyond the
    reach of the dalits. When they eventually turn self-financing, their prices would be benchmarked
    against their international counterparts, which any way would be affordable to the same top
    market segment that constitutes the focus of all the Reform-talk. As the job markets become
    acutely competitive, owing to a sharp decline in job opportunities, the polarisation between the
    elite and commoner would also sharpen. Various kinds of price barriers would be erected to
    thwart the entry of downtrodden to the portals of development.
    Even the sphere of primary education the coverage of which has been so miserably inadequate
    as to leave out multitude of children in villages as illiterate, could not remain unaffected,
    notwithstanding its already existing divide between the vernacular and English schools.
    Corporatisation has entered this arena, transforming the education into an enterprise for profits.
    The quality of input these expensive schools will provide will benchmark the products in the


contracting job markets. Even today, because of preponderance of the English language in
business circles, the divide between village and towns is almost complete in the field of
education. It is so difficult for a village student, educated in vernacular medium to compete with
his convent educated (now an understatement!) counterpart in cities and towns. If this is the
situation of general village population, the plight of the dalits who besides being the poorest of
the village population carry additional burden of social discrimination, is indeed a worrisome
matter. Despite several kinds of State assistance, the dalits are plagued with alarming rate of
school dropouts. This may be explained out as much by the need for dalit children to
supplement their meagre family incomes for making the two ends meet as also by the erosion of
their faith that education could be the instrument to change the pathetic course of their lives.
This sense of alienation is going to grow with the progress of the Reforms, giving rise to
increasing lumpenisation and criminalisation of the dalit youth.
Reservations in Services
Whatever may be the other costs, the government policy of reservations in employment sphere
has undoubtedly played an important role in the process of advancement of the dalits. The
policy broadly envisages representation of the dalits in proportion to their population in all the
public services, which includes the government, the public sector, autonomous bodies and other
institutions that receive grant-in-aid from the government. A cursory glance at the figures of this
representation is enough to get a pathetic state of implementation of this policy.
Howsoever, unsatisfactory the results of implementation may be, (see Table 13, 14 and 15 in
Appendix) the importance of reservations from the dalit viewpoint cannot be overemphasised.
As could be evidenced by the organised private sector, where it would be difficult to find a dalit
employee (save of course in scavenging and lowliest of the similar jobs), without reservations
the dalits would have been totally doomed. The importance of reservations thus could only be
assessed in relation to situations where they do not exist. Whatever be their defects and
deficiencies, they have given certain economic means of livelihood and some social prestige to
the sons and daughters of over 1.5 million landless labourers. Whether they get real power or
not, over 50,000 dalits could enter the sphere of bureaucratic authority with the help of
reservations. More importantly these tangible benefits to few have instilled a hope in entire dalit
people to strive for their betterment. This hope predominantly manifests in the form of spread of
education among them. Their emotional bond with the nation and its Constitution despite heaps
of injustice and ignominy they bear every moment of their life may also be significantly
attributable to the Reservation Policy.
The winds of privatisation under the Economic Reforms have already shaken the very
foundations of Reservations. The Reforms clearly envisage the minimalist State. Wherever the
Reforms patterned on the Structural Adjustment Programme of the World Bank were carried
out, denationalisation and privatisation of the public sector have come in a big way. Being a
late starter, India has not reached the scales achieved by others, say, the Latin American
countries. However, the start has not been any less impressive. Within a short time, almost all
the sectors of economy stand opened up for private investment. The disinvestment in existing
public sector companies has already been allowed up to 49 per cent by the policy. The public
stake being more than 50 per cent, the ‘public sector’ as such is not yet dismantled in the policy.
It continues to be the State as before, and hence attracts application of the reservation policy.
However, the Reform package has already endangered, if not abolished, the reservations
through numerous back doors.
In the name of preparing the Public Sector Undertakings (PSUs) for global free market regime,
the PSUs are being allowed / encouraged to have strategic alliances with private companies
from India and abroad. As such, over the last five years, many profit making PSUs have formed
the joint venture companies (JVC). Most of the PSU investments continue to be channelled
through the JV route despite repeated failures of the joint ventures. These JVCs are
strategically structured so as not to fall in the ambit of the PSU-framework. The typical equity
stake for the PSU and private could be 49:51. There appears to be a great deal of receptivity for
this scheme in the government circles. There are no policy barriers on the business to be
pursued by these JVCs. Theoretically, an existing PSU can hive off its business divisions into
private JVCs and transform itself into a financial holding company with a Board of Directors and
skeleton staff. Even if such an entity technically remains a PSU and follows the reservation
policy sincerely, it would still have little or no scope to absorb the dalits in its staff. Whatever
may be the strategic considerations, the fall out of this process practically amounted to shutting


the doors of these new age companies to the dalits and to potential neutralisation of the
reservation policy.
The policy of limited disinvestment of the PSUs not being in conformity with the spirit of the
Reforms, is bound to be relaxed in favour of privatisation any time. But still, all the PSUs may
not get privatised at once. The better ones would be gobbled up by the bigger sharks. The worst
ones may be closed down or distress-sold. And the middle ones may for quite some time,
continue to be the relic of their past. Whatever the scenario, the residual structures of the
‘reformed’ PSUs are never going to be the same, as far as the dalits are concerned. The ethos
of privatisation and the excuse of global competition, superimposed on the traditional caste
prejudice, will never allow reservations to happen, any more.
Other public services are also bound to slip out of the reservation policy. Most of the sectors,
which were the traditional domain of the government investment, have already been released
for the private investment.
The caste atrocities are an integral feature of the dalit life. The government machinery keeps on
collecting their statistics year after year and issues it in a report of its Commissioner for the SCs
and the STs (now the National Commission for the SCs and the STs). There are at least three
Articles (15,17 and 23) in the Constitution of India, which seek to mitigate the evil. To give effect
to these Constitutional provisions the following acts also have been in operation:

  1. The Untouchability (Offences) Act, 1955, later amended and re-titled as the Protection of Civil
    Rights Act, 1955
  2. The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities Act) 1989 and The
    Bonded Labour System (Abolition) Act, 1976
    Despite this, the statistics of the registered atrocities read like a balance sheet of a blue chip
    company with consistent rise every successive year (see Table 16 in Appendix). It is pertinent to
    remember that owing to the dependency relationship of the dalits with the perpetrators of
    atrocities, not every occurrence of the atrocity gets registered. Rather, it can be safely assumed
    that behind each registered atrocity over ten atrocity cases go unreported. As per the latest
    statistics, every day nearly 50 cases of atrocities are registered all over the country. Over three
    dalit women are raped and six are disabled on each day round the year. The National
    Commission analysed the causes of each of the atrocities in a sample of 45 cases. The analysis
    shows that out of 45 cases 13 are clearly attributable to the economic reasons. The balance can
    also be explained out by some kind of weakness of the dalits. Coupled with the weakness of the
    dalits, their growing assertiveness and the refusal to submit to the casteist dictates of the village
    lords, rebellion ethos assimilated through the Ambedkarian struggle and the process of general
    awareness, also cause atrocities to increase.
    Atrocities are basically a rude reassertion of power over the powerless by the powerful in the
    wake of threat. It is thus an expression of insecurity by the powerful who perceive power
    slipping their hand. In the pre-colonial closed loop production system of a typical village since
    everyone followed his or her calling under the divine authority of religion, there were no
    atrocities of the kind we experience in the saner age of globalisation today. If any one
    questioned or defied this system, the religious code provided for the punishment. In this
    scheme, it was more important to fortify the religious control on populace than physically taming
    them to comply. Although the emphasis was on enslavement of mind, physical punishment did
    exist as a contingency measure. Atrocities on the dalits today are in essence a physical
    punishment for their act of forsaking the bondage. The physical punishments or atrocities
    presuppose material power in the hands of perpetrators of atrocities. Not only that the dalits lit
    the fire of anger in materially powerful upper castes by defying their notion of caste authority but
    also they added fuel to it by coming in competition for partaking scarce resources. The
    emergence of the land owning middle castes during the post-independence development
    process who at the one end replaced the traditional upper castes and wore their mantle of
    superiority but who at the other end found itself in competition with the dalits for resources like
    education and employment moreover led to accentuation of atrocities. These middle castes
    lacked the cunning and sophistication of the upper castes and enraged themselves into physical
    response on slightest provocation. They could not stomach the dalits who were utterly
    dependent on them in the village setting asserting their human rights or competing with them on


equal platform for scarce resources and eventually winning them away in some cases with the
help of reservations. This commonplace experience is amplified by the vested interests of the
ruling classes to make out all the dalits as robbers of the share of these middle castes. Thus,
the essential ingredients for atrocities on the dalits can be identified as the existence of material
power in the hands of perpetrators of atrocities, enduring sense of social superiority, increasing
scarcity of resources, and growing pauperisation of the masses. The directional impact of the
Reforms on the atrocities on the dalits therefore can be inferred from the effect it would have on
the existing dependency relationship in the villages that the dalits are engaged in with the
powerful middle castes; on the caste system itself; on the availability of certain critical resources
like jobs; health care, education etc.; and on the income distribution to the people.
Atrocities are seen to occur where the dependency relationships are more pronounced.
Villages, where the dalits as landless labourers depend upon landlords or rich farmers for their
livelihood and where the traditional caste equations have a potential to yield economic surplus
to the latter, provide ideal setting for atrocities. What impact would the new regime have on the
socio-economic setting of Indian villages? In face of it, this relationship cannot be altered till the
dalits get land. Can the new regime afford this economic empowerment of the dalits? Can it, for
instance, grant them land? The answer to all these questions will be in negative. Instead of
talking about land reforms, the new regime will promote depeasantisation of Indian agriculture
and consolidation of their holdings to start corporate farming. The capital influx in the rural areas
will have natural ally in the rich farmers who have hegemonic hold over their areas. These
sections will be the main beneficiaries of the improved terms of trade and capitalist development
in the rural areas. The form that the new system may take will have the corporate structure of
management and beneath the local vendors to provide various inputs and services. While the
rich farmers may assume the roles in this organisation as big or petty capitalist, the erstwhile
landless labourers, marginal and small farmers shall together constitute the vast army of
jobseekers. Although in notional terms the dalits might get rid of the old relationships, in reality
they will still be dependent on their upper caste employers and certainly far more vulnerable
than before.
With regards to impact of the economic Reforms on the caste system, the optimists and
protagonists rely upon an old rhetoric of contradiction between feudalism and capitalism. The
problem of annihilation of castes subsumes the change in the economic structure of the society
in favour of the dalits and simultaneously a massive cultural movement to cleanse the minds of
people of the caste notions and implant in its place the attitude of scientificism and virtue of
liberty, equality and fraternity. Having seen that far from striving for economic equality, the
Reforms are going to accentuate the existing inequalities, we can just examine its attitude
towards the caste system. Will the Reforms promote the cultural movement for social equality?
Does it have the wherewithal or motivation to catalyse struggles against the caste system? The
answers to these questions will also have to be in negative. The old rhetoric that capitalism will
completely displace feudalism evokes positive expectations in some people about the prowess
of the Reforms to annihilate castes. They would argue that the unbridled capitalism inherent in
the Reforms is not compatible with any feudal structure and hence implementation of the latter
should remove these last blots of the caste system. This simplistic thumb rule does not seem to
be entirely validated by the developmental experience in India. The capitalism in India did not
have to sprout through the bedrock of contradictions of feudalism as in Western Europe. It was
planted in the fertile soil of the Indian feudalism. It has grown here on its nutrients. The caste
institution has defied the classical mould of feudalism by possessing many unique features, the
most important being its resilience and adaptability. What we experience in the mysterious
growth of casteist politics today in India is precisely this ability of caste to adapt to changing
times. The vast army of unemployed created by the developmental dynamics of the economic
Reforms will need appropriate instruments for being controlled. The history bears ample
testimony to the fact that whenever the people tended to come together with a common identity,
the ruling classes have deftly used the time-tested weapon of castes to divide them. Caste with
its divisive potential will never be abandoned by any iniquitous regime. Its resilience may diffuse
its contours but in its essence the caste would coexist with the Reforms.
Privatisation and free market components of the Reforms are certainly impacting very adversely
on the job situation as seen in details above. Many resources for public consumption shall also
be scarce, as they would be produced in private enterprises for profits. They would be beyond
the reach of common people. The impact of the Reforms in terms of increasing inequality has
been established beyond doubt. Therefore, it can be inferred that the Reforms are potentially


incapable to alleviate the pain of dalit masses. In sum, the atrocities on the dalits not only shall
continue but may also be increased on account of the Reforms.
Socio-Cultural Suppression
Privatisation, which is the pivotal component of the Economic Reforms, will eliminate the very
basis of the reservation policy in its present form. Since the Reforms envisage minimalist role
for the State, the space for the public domain and therefore for the reservations shall be greatly
constricted. Reservation policy that represented the strategic response of liberal bourgeoisie to
the aspirations of the dalit movement not quite unlike that of the colonial State at the time of its
inception, was never swallowed by the civil society as rightful share of the dalits. Its response
initially reflected feudal magnanimity but once the first generation of the dalits started pouring
out of the university portals into the job markets and claimed their share of pie, the reaction
reflected feudal ferocity. The cunning of upper caste dominated State apparatus was evident in
full measure in the manner the circulars proclaiming this policy were issued. Their convoluted
language facilitated the unwilling bureaucracy to thwart it to the possible extent and judiciary to
belabour over several years on what should have been so evident. The broad statistic on the
implementation of this policy is enough to reveal the extent of prejudice of the State machinery
as well as the civil society. One of the provisions of the policy states that a dalit candidate
qualifying without any concession should not be placed in the reserved seat, implying thereby
that the percentage representation of the dalits in services or the educational institutions would
be more than its prescribed value. But, over the five decades of implementation of the
reservation policy it refuses to reach even the prescribed levels confirming the casteist notion
still prevalent in society that the dalits are intrinsically an inferior specie. Despite this vile attitude
of the establishment the reservations by far has been the sole contributor to advancement of the
dalits. Privatisation is meant to directly hit it.
The benefits of the reservation policy to the dalit community have been more indirect than
direct. Directly it benefited a few but indirectly it has created hope for advancement in the entire
dalit population. This hope is already faded even when not much of privatisation has happened
so far. Their ideological armour is proving insufficient to resist it. There is a visible alienation,
hopelessness and dejection setting in among them, which is getting manifested in increasing
lumpenisation and criminalisation of dalit youth. This trend portends doom not only for the dalits
but also for the entire oppressed people thirsting for some radical change. For, no radical
change is possible in this country without dalit participation. The dalit consciousness formed
over centuries of struggle is getting obliterated by the contemporary compulsions created by the
Reforms. This phenomenon will catapult dalit masses back onto the vicious spiral of
backwardness and fortify reactionary regimes in the similar proportion. This irrevocable loss
would prove dearest to the dalits.
While privatisation might set in slowly, the free market ethos that it engenders much before
could hit the dalits really harder through the legitimacy it grants to the base instincts against any
emancipation project. For, the likely victims of the privatisation is still a miniscule part of the dalit
population but the impact of these social ethos would engulf entire dalit population. Howsoever
base the individual conviction might have been, the ethos of yesteryears had nearly forbidden
them from surfacing openly. But, now the emergent free market ethos is not only permitting but
also promoting the vilest and venomous discourse against the dalits and the minorities. The
vehemence with which the reservations or any kind of subsidy or any positive discrimination are
derided today has a qualitatively distinctive edge. It is interesting to note that there is not yet a
dalit voice raised against this fascist hegemony. It would indeed be difficult for the dalits to resist
this onslaught. The emergence of right wing politics to national prominence is merely a corollary
or consequence of this transformation.
Social consequences of the economic miseries associated with these Reforms are indeed
ominous for the dalits. On one side they shall be subject to increasing pauperisation and on the
other stand in competition with the multitude of masses in the job market. Increasing tendency
of businesses to downsize, virtual abolition of the reservation system through privatisation, the
strategies of flexibilisation and informalisation of labour; corporatisation and depeasantisation of
farming etc. will release vast numbers of people to the job market. The resident caste prejudices
in such situations will certainly get activated to the detriment of the dalits.



The economic reforms in the mould of macro-economic stabilisation and structural adjustment
programme of IMF and World Bank have essentially a pro-rich bias. Wherever they were
implemented, they have worsened the situation of the masses of poor people in absolute as
well as relative terms. Some contrary data to this general observation (say, of the east Asian
countries) are rather attributed to the departures from the standard blueprint given by the
Bretton Wood institutions. The dalits in India, being the poorest of the poor have been hit the
hardest. Their social disabilities, largely reinforced by and sustained on the economic
deprivations, are bound to get accentuated with these policies. The Indian reforms were
essentially ‘crisis driven’ and not ‘strategy driven’ when they were adopted. There have since
been changes in the formation and key persona. The new government for instance has
imparted them a form of ‘strategy’ through their Common Minimum Programme. However, there
has not yet been any evidence of this strategy being any different from the course followed by
the previous government. The complete discourse of the Reforms appears to be either grossly
off the mark of Indian reality or to assume out its momentous features.
The broad Indian reality is that India has too many poor. As per the Human Development
Report, 1996, there are 229 million income poor but more than twice as many, 554 million are
capability poor. In terms of capability poverty, its 61.5 % population is poor. Its rank according
to descending poverty among the 174 countries of the world is 135. Even today India is
predominantly an agrarian economy, with over 70 per cent of its population living in villages. No
statistics moreover can adequately capture the heinous socio-cultural inequality that is an
abiding part of the Indian reality. It has acute inequalities not only in economic terms but also in
the socio-cultural terms.
The free market oriented reforms ought to take this grave Indian reality into consideration.
Unless there is a wide spread purchasing power in the economy the market can never be free
and sustainable. The reform strategy thus should embody sustainable economic empowerment
of the rural masses; investments to enhance their capability and effective measures for
accelerated development of the disadvantaged sections like the dalits. The pre-requisite to
reforms therefore could be the radical land reforms, massive investments in rural areas into
agriculture-related infrastructural projects, universalisation of primary education, primary health
care system and reinforcement of positive discrimination in favour of the dalits. The devil of
casteism could be tamed only by freeing general masses of the people from the anxieties and
uncertainties about basic survival. The general condition of deprivation has rendered them
vulnerable to be the preys to the frequent machinations of the vested interests that make them
see the enemy within their own class. The relative equality thus can be the bedrock for
launching the socio-cultural offensive in the form of mass-education programmes. But this all
may still not be enough. The policy of positive discrimination in favour of the dalits will have to
be reinforced much more vigorously in all the sectors of economy, than ever before. They need
to be reframed and simplified for the effective implementation. Unlike the current provisions, this
may be stopped once their representation in services comes on par with the general population.
The specific reform package can be formulated in terms of the conditions existing then.
There arises a question of capital. Where will the capital for the investment in basic reforms
come from? Not an easy question to answer, indeed. But some pointers may not be impertinent.
It is acknowledged since number of years that India has a parallel economy in black money. The
recent spate of scams is a mere corroboration of this hypothesis. The Reforms appear to have
given them a boost. Whatever little has surfaced can be likened to a tip of iceberg. Some five
years ago, an unofficial estimate by the World Bank had put the unaccounted money of Indians
kept in various tax havens at $ 100 billion. As per Finance India, (an article in the September
1995 issue) the range of capital outflows was from $ 1065 million to $ 370 million just in one
single year – 1993. Much of the $ 10 billion money in the non-resident account is said to be
belonging to the resident Indians. The evidence of this kind abounds. As against this vast sum
of our own money, what the government aims at out of the Reforms is the paltry sum of some
four to five billion dollars of foreign direct investment a year to come in the country! The size of
the money indicated above, that rightfully belongs to the people of the country, may be good
enough for the task. But to unearth this treasure certainly requires a political will. India does not
need capital as much as it does the political will to better its destiny.

  1. Centre for Monitoring the Indian Economy (1996): Public Finance in India, June 1996,
    p. 32.


  1. Gaiha, R. (1994): Impact of Structural Adjustment of State Level – A Comparative
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    Studies, University of Delhi, August, Mimeo.
  2. Bandyopadhyay, D. (1995): “Impact of SAP: Hunger and Jobless Growth”,
    Mainstream; May 13, 1995, p.12.
  3. United Nations Conference on Trade and Development (1995): UNCTAD Statistical
    Pocket Book, p. 69.
  4. Mukherjee, Amitava (1994): quoted in Bandyopadhyay D., op. cit. (3), p.13.
  5. EPW Research Foundation (1995): ‘Myth of Inflation Control’; Economic and Political
    Weekly, January 7, 1995, p.21.
  6. Kurien, C.T. (1996): ‘The Real Impact ‘, Frontline, February 9, 1996, p. 97.
  7. Bhaduri, Amit and Deepak Nayyar (1996): The Intelligent Person’s Guide to
    Liberalisation, Penguin Books, New Delhi, p.100.
  8. National Council of Applied Economic Research (NCAER) and Friedrich – Naumann –
    Stiftung (1993): Structure and Promotion of Small Scale Industries in India – Lessons
    for Future Development, New Delhi, December 1993.
  9. Entrepreneurship Development Institute of India (1993): Research Report on Impact of
    New Economic Policies on Small and Tiny Industrial Sector, Ahmedabad, November
  10. Bhattacharya M.(1994) : Impact of Liberalisation on Small Scale Sector, Office of the
    Development Commissioner, India, New Delhi, EPW, p.1312.
  11. Mundle, Sudipto (1993): ‘Unemployment and Financing of Relief Employment in a
    Period of Stabilisation: India, 1992-94’, Economic and Political Weekly, January 1993,
  12. Research Unit of Political Economy (1994): ‘The Warped Logic of Globalisation’,
    Aspects of India’s Economy (No. 14), July-September 1994, pp. 14-18.
  13. Shah, Nandita et al (1994): quoted in Bandyopadhyay D., op cit. (3), p.15.
  14. Dev. S. Mahendra (1995): ‘Economic Reforms and the Rural Poor’, Economic and
    Political Weekly, August 19, p.2085.
  15. Joshi, Vijay and I.M.D. Little (1996): India’s Economic Reforms: 1991-2001, Oxford
    University Press, Bombay, pp. 238-9.
  16. Deshpande, Ashwin (1995): ‘Rethinking Strategy for Global Debt Crisis’, Economic and
    Political Weekly, May 27, p. 1247.
  17. Ibid (17), p. 1247.
  18. Singh, Ajit Kumar (1993): “Social Consequences of New Economic Policy”, Economic
    and Political Weekly, February 13, 1993.
  19. Ibid (19), p..
  20. Ibid,(19), p.
  21. Johansen, Frida (19993): Poverty Reduction in East Asia – the Silent Revolution, World
    Bank Discussion (papers, 203)).


  1. EPW Research Foundation (1994): Three Years of Economic Reform in India, EPW
    Research Foundation, Bombay, pp.6-9
  2. Ibid
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