The real costs of India's economic liberalisation


Since 1985, the Indian government has been implementing a neo-liberal economic program opening up industry and agriculture to competition. This has generated enormous profits for some and equally enormous costs for the poor, particularly women. Job cuts, privatisations, the employment of women in the lowest-paid jobs and cuts in food subsidies and credit have all contributed to a decline in women's health, nutrition and literacy standards and an increase in their workload. SUJATHA FERNANDES argues that neither the pre-1985 planned, bureaucratically-controlled economy nor the "liberalised" economy have provided women with any genuine reforms. On the brink of an economic crisis in the late 1980s the Indian government sought help from the World Bank and the International Monetary Fund. In return it agreed to an IMF "stabilisation" program which cut expenditure and imports and adopted a longer-term structural adjustment policy (SAP) to increase production and efficiency. Together, the government argued, these policies would boost the economy. SAPs are designed to open up the economy to international competitiveness. The rationale is that the unfettered operation of the market is the best way to achieve efficiency and growth. However such policies not only impact negatively on women, they set in place longer-term structural problems which block any real development. From the 1950s the Indian government encouraged the public sector while heavily regulating the private sector; subsidies provided a safety net for the poor. High tariffs protected Indian industry from outside competition and import-substitution policies promoted self-reliance. In the 1970s and 1980s the "self-reliance policy" came under increasing attack. Mounting deficits, a persistent current account deficit and falling credit ratings in the international capital markets, sparked off by the Gulf War, led to an economic crisis in 1991. Faced with the prospect of defaulting on its international commitments, the Indian government adopted began to implement the SAP recommended by the World Bank. The SAP economic reforms introduced in July 1991 included the privatisation of public enterprises, the devaluation of the rupee by 25%, the scrapping of the 1969 anti-monopoly laws, the abolition of subsidies and price controls and cuts to social programs and the public sector.


These economic reforms adopted by Prime Minister P.V. Narasimha Rao and his Congress Party government were designed to benefit Indian big business. S.P. Gupta and Padmasini S. Raman in Economic Liberalisation and its Social Impact estimate that the July 1991 economic reforms caused prices to rise by 4%. A fall in real incomes meant that private consumption dropped from 5.2% per annum in 1988-91 to 1.54% per annum in 1991-92. Arun Gosh in Who's Afraid of Liberalisation? states that food grain consumption declined from 510 grams per day in 1991, to 465 grams per day in 1993. Gupta and Padmasini estimate that 6 to 7 million people fell below the poverty line, in contrast to the relative success of the previous decade. The privatisations, closures and shift to an export-oriented production has given rise to a major increase in unemployment. The Employment Exchange Data's 1991-92 figures show that over 1990-91 unemployment increased by more than 5%, 17 million more than in the same period the previous year. SAP proponents argue that the "reforms" operate in a gender-neutral context. However, given the discrimination and institutionalised oppression women already face in India, this is simply untrue. The increase in unemployment, a direct result of privatisation and closures, impact badly on women as they are usually the first to be sacked and find it harder to re-enter the organised work force. Women employed in the public sector — mainly in services, transport and communication, trade and commerce and manufacturing — have been worst hit. At the end of 1985, 1.9 million women were employed in the public sector, compared to 1.3 million in the private sector. Besides the privatisation of banks, the postal and telegraph department, there is also a plan to close "sick units" — 98% of which are in the small-business sector — which will affect 1.5-2 million workers. An export-oriented investment plan has been adopted by the Indian government. While it argues that export promotion will introduce flexibility into industry and generate jobs that will benefit women, the reverse is true. The establishment of food-processing industries with foreign capital has resulted in a major change from subsistence to cash crop production. Women often perform the "casual" seasonal work in the agricultural sector. There has also been an increase in the number of home-based workers. The use of female labour for beedi-making, food processing and lace-making, is already well established. The official 1981 provisional census put the number of workers listed in this industry at 8.8 million, but under the SAP this is expected to expand. While some argue that the SAP will introduce technology to India which will relieve women of monotonous, strenuous work, the trends already show an increasing sexual division of labour and an increasing de-skilling of workers. Women are largely employed in the coir, food processing and electronic industries through the home-based system. As international trade expands through the SAP it is likely that more women will be drawn into this type of production. In its 1992 budget, in order to reduce the budget deficit, the government severely cut development programs in favour of user-pays charges for health and education. Cuts to health and education programs will increase the already high mortality rates among Indian women and as state services such as child care are cut more women are being forced to bear the double burden of housework and of paid work. Cuts to subsidies, especially in fertiliser and food, have also been a feature of the SAP. Joy Ranadive in "Gender Implications of Adjustment Policy Program in India" in Economic and Political Weekly argues that women have largely buffeted the costs of the SAP . Cuts to the water supply, food, energy sources and sanitation put greater pressure on women who usually bear the responsibility for providing these in the household. When the cost of food becomes more expensive the pressure is on women to find cheaper alternatives, or to make more trips to the market, or to cut down on the purchase of other commodities or spend longer hours in processing food. Since the existing sexual division of labour does not change, the burden often falls to the children, in particular young girls. As the maintenance of children becomes more difficult, the nutrition of girls is subordinated to boys who are more highly valued.

Resource rights

The SAP has also promoted the non-sustainable use of natural resources. In the face of mounting competition for natural resources, locally-based resource management systems are under pressure. Joint trade ventures shift resources from local and national to international agencies, with the latter having little concern for the welfare of tribal and peasant communities. The natural resource base is closely linked to the livelihood and survival of poor rural households. An example of the threat that the market forces pose to the subsistence economy is the use of paddies for prawn farming. In the coastal regions of Andhra Pradesh and Tamil Nadu small-scale paddy farmers are being displaced from their land by large export-oriented prawn fishing companies. Prawn farms not only absorb very little labour but the inlet of brackish water degrades the earth. Resource rights have been granted to foreign companies in the fisheries sector. As part of the SAP, the government has removed all barriers for foreign companies to invest in India's exclusive economic zone (EEZ). It argues that these ventures are 100% export-oriented and so will help generate foreign earnings. India's coastline is about 6100 kilometres and it has an estimated annual potential of about 4 million tonnes. Fishery and allied activities are a source of livelihood for more than 7.5 million people. To date, nearly 170 licences have been issued to about 800 vessels. The threat to fish resources has been well documented. Overfishing among trawlers is common. Large-scale operators are unconcerned about the depletion of these resources as they can shift capital out of the area very quickly. The fisherfolk, however, do not have this option. The stress on exports is hands over resources from those who need for their survival to those who can provide the foreign exchange earnings. Since these fishing activities are 100% export oriented, the Indian people will be denied fish for domestic consumption. Many varieties of fish included in the Indian diet are now exported to make animal feed. As a result it is likely that malnutrition will increase. There have already been cases of Vitamin A deficiencies among children of fishing villages. Women play a crucial role in subsistence farming and in maintaining sustainable farming systems. The granting of resource rights to foreign companies with the resulting environmental degradation not only deprives women of their role in environmental management but reduces their status to labourers or worse, leaves them unemployed. The lack of access to food and other resources leads to a decline in women's health and nutrition standards.

Population control

Under the SAP, national and international agencies are also pushing the line that women's reproductive capacity needs to be curtailed in order to stop the rise in population. They say that this will halt the "drain on natural resources". These arguments provide the rationale for research and investment in reproductive technologies. In the 1991 budget the only increase in funds for women was for "population control". Massive sums have been provided by USAID to push controversial contraceptives like Norplant/Net-O-En which are banned in the West. In July 1993, the Indian government drafted a population policy package proposing the introduction of hormonal contraceptives, imported from the US, including Cyclofem, NETEN and Depo-Provera. The policy package proceeds upon the assumption that contraceptives are the key to development, rather than development being the best contraceptive. The state of Kerala has proved that family welfare schemes were far more effective than fertility control programs. Economic progress, public welfare measures like pre-natal maternity care, post-natal maternity and infant care, proper sanitation, raising health and nutrition standards and education and employment of women have dramatically reduced that states's net reproduction rate in recent years.