Imagine There No Heaven

imagine there no heaven

DEVELOPMENT THEORIES

Darshini Mahadevia (Course: Theories and Evolution of Planning) Semester II Faculty of Planning and Public Policy CEPT University, Ahmedabad

WHY STUDY DEVELOPMENT THEORIES AS A STUDENT OF O PLANNING A G? Planning is for Change and in the modern world we talk of planned change, through planners. | Deliberately engineered social change oriented to specific goals. | But, But in development theory, theory there is also now a new major strand (stream of argument) that challenges the assumption of superiority of planned change in contrast to change through open political debate (negotiations of the stake holders) |

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CHANGE VS. STABILITY IIn history, hi t over short h t period i d off ti time, one fi finds d rapid and continuous change | On the other hand, hand over long period of time time, one finds long periods of stability | What is p primary? y Change g of stability? y | That depends upon one’s world view, whether it is optimistic or pessimistic, optimistic view looks att change h and d pessimistic i i ti view i llooks k att ‘G ‘Good d Old Days’ |

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CHANGE VS. EFFECTIVE CHANGE Change is something that is permanent (a statement that is a paradox) | Term T effective ff ti change h iis value-laden l l d |

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AND SO THERE IS ETHICS OF CHANGE Most important ethical term associated with discussion of change is ‘Progress’ | Term T ‘Progress’ ‘P ’ has h many versions. i | There are three versions of term ‘Progress’ (Now even four from the perspective of the South) |

These are:

version

(i)

Eighteenth Century version

(ii)

Nineteenth Century version

(iii)

Post-Second World War

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Major development theories are informed about the Western ethics of ‘Progress’ as the Change g from the industrial societies of the indeed begun West. Now, when the developing world is industrialising, question of ethics has become i important t th here as well ll and dh hence thi this course.

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Broadly, B dl there th are ttwo main i positions iti ffrom which ‘Progress’ is analysed (i) Liberal Liberal-democratic democratic – Change as evolution, evolution in which man viewed as ‘consumer’, that is humankind is seen acting in selfish wants (desires) A fairly pessimistic position. (desires). position (ii) Radical-democratic – Sees humans as doers (actors) and humankind acting in light of social goals, l arguing i that h positive i i change h is i possible. ibl A fairly optimistic position.

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Change, Social Change is viewed with two perspectives (metaphors) (i)Continuity, (i)C ti it th thatt iis evolutionary l ti change h – Social S i l evolution, that is the survival of the fittest, which Darwin had stated in ‘Biological evolution’ (ii) Rupture, that is radical change

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EVOLUTIONARY SOCIAL CHANGE PERSPECTIVE

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Very convenient argument for those arguing for a ‘laissez faire’ in economics, that is those pursuing indiscriminate pursuit of wealth. Summarized in five points p (i)The object of enquiry is the whole (ii) Idea of cumulative change – that there is no sharp discontinuity (iii) Idea of endogenous change – that the change arises from within the system and not through external impetus (i ) Idea (iv) Id off increasing i i complexity l it – there th iis shift hift from f simple i l forms to complex forms (v) Idea of unitary direction of change. Liberal-democratic theories fall here. 9

RUPTURE AS A PERSPECTIVE OF SOCIAL CHANGE

Very y different from evolutionary y | Predominantly Marxist – Society is inherently build of groups that have conflicting interests and hence are in social i l conflict. fli t These Th conflicts fli t provide id motor t for f change. | For example, example Marxists argue that capitalist entrepreneurs destroyed the local historically outmoded social forms and created new forms of social organisation i ti iin a society. i t | Radical-democratic theories of change fall here. |

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Liberal-democratic theories (i) Liberal-market theories (ii) Social-market theories

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Liberal-market theories – These are earlier group of theories. Within these there are three streams: (a) An ea early y UK/UN U U line ew which c iss heavily eav y influenced ue ced by economics (b) A line mixed in more sociology with economics, which is more US product (c) Neo-classical (resembling early economic theories) which emphatically asserted the priority of market in human affairs and sub-ordination of ‘state’ state to market market. (State is considered external intervention in market processes) Development or progress is equated with economic growth y Amenable to technical characterisation y A relationship of super and sub sub-ordination ordination legitimated y Development theories coming from those who are developed, through experts of the developed countries y

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Social-market S i l k t theories th i – Reject R j t th the above b model and sociologized economics. Progress is not jjust s eq equated ae w with economic eco o c growth g ow but w with planned, ordered, social reform. | Progress is ordered social reform | Produced by other than economists and is pragmatic, humane and plausible |

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Radical-democrat R di l d t th theories i – Democratic D ti ethic thi and historical materialism strategy of analysis. Marxist. Historical materialism is: society under constant t t change, h moving i from f one level l l off material well-being to another, the move carried out through conflict of classes. | Human is considered a doer or an actor in this social change process. Process of change built around ‘objective objective conditions conditions’ of change and ‘subjective forces’ of change. |

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The liberal-market and social-market theories g are called orthodox theories together | They tend to take the whole business of development as technical or/and obvious. | Liberal-market see development as a matter of building appropriate physical, social and economic structures, largely as a matter of acquiring characteristics familiar with the experience of developed nations. nations | Social market see development as a business of organising decent lives for people living in the Third World, mainly disadvantaged groups among them. |

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But, the notion of development is not purely technical and is certainly not obvious (that is development will take place). place) It is an ethico ethicopolitical notion. Hence, the process of bringing change, c a ge, ‘planned p a ed change’ c a ge o or ‘planned p a ed p progress’ og ess is s not technical.

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METHODS OF CHANGE (i) either through political action by a range of agents (ii) or through planning intervention for ordered change

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ACTIONS FOR ORDERED CHANGE i) State action to secure change – Intervention by the State. It is the approach of agencies committed to planning in pursuit of development goal. Pursued by international agencies linked to UN, by governments of new nations. Was an influential approach during early phase of decolonisation decolonisation. Approach centres around agencies of planned change.

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ii) Spontaneous through market – Argues for spontaneous order and development generated through free market. The markets are self-regulatory (not regulated by the state) and there is mimimal rule rulesetting by the state. Development (economic growth) through maximization of economic, social, political and cultural lt l benefits. b fit Institutions promoting this approach are the international financial institutions such as the IMF, World Bank, Asian Development Bank, etc. This approach has failed to promise realisation of maximum i benefits b fi to the h poor off the h Thi Third d World. W ld But, B has a strong intellectual backing, as development institutions continue to be dominated by the 19 economists.

iii) Political power for development – Central role is allocated to public sphere within which rational dialogue can lead to change change. The institutional vehicles for change are the NGOs, charities, and social ove e ts. In Europe, u ope, suppo supportt has as co come e from o media, ed a, movements. political activism and academia. Critics point out that this approach cannot resolve the situation when conflicts arise. A radical version of this is Marxist version of class struggle. But, that does not remain a planned change. The process to attain state po power er becomes a political struggle which is radical, and subsequent ordered actions are by the state agencies. 20

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RISE OF SOCIAL SCIENCE

1 Planning is an extension of Social Sciences - Town Planning has antecedent (ancestry) in Physical planning and greatly influenced by architects/engineers - Modern, democratic society, we use term urban and regional planning and not town planning and is seen as an extension of Social Sciences for the success of the discipline - Today, urban and regional planners work in different capacity than just town planners and hence, this overview of history of social science discipline is 21 essential essential.

2 Rise of social sciences is rooted very much in the European experience, particularly of three streams through 17th to 19th centuries: i) English enlightenment – Hobbes and Locke ii) French enlightenment – Rousseau and SaintSimon iii) Scottish enlightenment – Adam Smith These efforts resulted in rise of modernist paradigm (theory) of development and urban and regional planning l i emerges as epitome it off modernist d i t paradigm. di

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ENLIGHTENMENT MOVEMENTS IN EUROPE i) René Descartes – Early 17th century. A French mercenary (some one working only for money). | Descartes gets a dream. The dream says, (a) doubt everything that presents itself to mind mind, (b) dissect the problem into many parts as possible, (c) reconstruct the whole process through step-by-step inductive process (reasoning developed from observed examples or from empirical observations and (d) enumerate and record everything. | Descartes sets the h stage ffor abstractions, b i analysis, l i synthesis and control. | Descartes Descartes’ss vision was unitary (formed of singular units added up together), universal and absolutist (complete and final without any alternative). 23

He said, H id there th iis only l one answer tto any problem bl and d there is only one truth. | This is very y much modernist p paradigm, g , which stated that there is only one way development can take place and there is only one definition of development. | This is the beginning of scientific reasoning and rationalism. Prior to that, knowledge was controlled by theology. Science had not developed. | By B mid-20th id 20th century, t this thi Cartesian C t i vision i i was att the th unconscious level as the fundamental assumption of a global culture of modern institutions and bureaucratic d i i making. decision ki Human H societies i ti are abstracted b t t d as expanses of space awaiting planning, inputs, and infrastructure, to be arranged and rearranged according to circumstances i and d calculations. l l i | Cartesian vision was a very much mathematical and geometric vision of human society. 24 |

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ii) Sir Francis Bacon – Early 17th century. C t Contemporary off D Descartes t | Emphasises use of human reason in inquisition of things, that is use of deductive logic, unlike inductive methods th d (empiricist ( i i i t method) th d) off Descartes. D t | Development of logic as a discipline is attributed to Bacon. | Bacon argues that h the h method h d off understanding d di anything is to analyse it by breaking it into pieces, and by due process of exclusion and rejection lead to inevitable conclusion. conclusion The purpose is not to win argument with academician (like Indian philosophers have been portrayed doing it), but for commanding nature in action. action | He suggests that only with the division of labour and specialisation “men will begin to know their strength, when instead of great numbers doing all the same things, one shall take charge of one thing and another of another. 25

He emphasises instrumental role of reason and knowledge (Once again, knowledge. again in theology controlled system of knowledge – one where India is now moving to – reason has no place and the knowledge is given). | For Bacon acquisition of knowledge is for purchasing everything, including power. Bacon’s vision of modern knowledge was one of power, of domination of nature g knowledge). g ) and domination over others ((those lacking (This indeed was stated by many colonialists, for example, Sir Cecil Rhodes who conquered and created a country called Rhodesia – now called Zaire – said th t th that through h hi his k knowledge, l d h he wanted t d tto civilize i ili the th barbarians.) | Bacon argued that what makes some humans (men) g d over others god th is i the th invention, i ti the th ttechnology. h l g Hence, Bacon is called prophet of technocracy. | In Bacon’s vision, the knowledge and technology are only in the hands of the few few. His knowledge is equated with utility (control over nature and people) and power. |

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ENGLISH ENLIGHTENMENT - ISAAC NEWTON (1643-1727) ( ) Defined parameters of western science. Later half of 17th century was a period of unprecedented scientific discoveries, and setting up of British Royal Society and y of sciences. ((This was also a p period of French Academy setting up of state-sponsored institutions to promote economic development and Bank of England, first national central bank founded in 1694.) | Newton moves Aristotelian metaphysics to modern physics, h i the th move ffrom religious li i and dA Aristotelian i t t li reasoning about world to modern stress on attention to natural world as route to knowledge. knowledge 27 |

Move from - theistic to materialistic explanation of nature of human and other living creatures’ existence, - medieval scholasticism to modern rationalism and empiricism as nature of knowledge - abstract theoretical reflection to the use of experimental method ethod of ge generating e ati g k knowledge, o ledge and a d - contemplative acquiescence (acceptance) to generating knowledge g to a notion that effective action flows from the deployment of practical reasoning. The Newtonian science gets tied to the rise of bourgeois (middle-class) mercantile (commercial) capitalism. The new rising bourgeoisie needed natural science against the church-led church led feudal status quo. quo The French Enlightenment shrugged off religion completely from public sphere. 28

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FRENCH ENLIGHTENMENT |

French Enlightenment produced a series of thinkers who were committed itt d tto political liti l change h iin F France and d th they saw th themselves l as in alliance with the rising bourgeoisie in France.

Rousseau (1712-78) R (1712 78) is i one known k face f off French F h Enlightenment. E li ht t - Rousseau affirmed general rationalism and determinism. (Determinism is theory that actions are determined by forces independent of will, will that is actions are a result of objective conditions and not subjective will). - He argued that human freedom depended on clear understanding of the laws of nature and society society. And any deviation form these laws would have negative impact on the individual. -

He looks for an ideal moral/social order.

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He believes that the social contract,, that was originally g y designed to protect members has become twisted into inegalitarian forms. He argues for a social reform for the citizenship in republican democratic politics. (Republic is where the supreme power is held by people or their representatives). Notion of equality brought. - Rousseau is considered the theorist of the French Revolution. -

French Enlightenment was followed by French Revolution, which incidentally was very bloody. There was time in Europe when p people p who considered themselves as democrats were viewed with someone who had blood on their hands as a consequence of French Revolution. It gave way to Napoleon and through who bourgeoisie came to power and there was a gradual shift to industrial liberal democracy through the nineteenth century. Same thing happened in UK and liberal democracy began with the beginning of the industrial societies. In USA, with an open continent, economic growth and liberal democracy went straight into practice. 30

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SAINT-SIMON – THE FIRST PLANNER (1760-1825) |

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Saint-Simon – a French count, named Claude Henri de S i Si Saint-Simon. Mission to work for the improvement of humankind. Material industrial production Material, production, and technology would be the means to accomplish this improvement, and for him, these three words became synonymous. Thi meant totall reorganisation This i i off society. i Saint-Simon was truly the modernization project. Like Descartes and Bacon, Bacon who displayed desire to control nature, Saint-Simon, believed in it and not only that he did not find anything wrong with it. He declared “d i tto d “desire dominate i t which hi h iis iinnate t iin all ll men h has ceased to be pernicious, or atleast, we can foresee an epoch when it will not be harmful any longer, but will 31 b become useful”. f l”

- Saint-Simon and his followers envisaged g a society y reorganised to channel human aggression into massive development projects and incessant industrial growth. They y envisaged g g government as applied pp economics,, and politics to be replaced by technocratic, instrumental reason, by science of production. - Key to this transformation was to be the organisation of all material activity in the society through a unitary and directing bank, which would be depository of all riches total fund of production riches, production. This bank would oversee, credit institutions that would be responsive to localised production needs. - He H can b be called ll d th the fi firstt d development l t planner. l H He travelled to USA to participate in American Revolutionary War in 1783. Then he went to Mexico to unsuccessfully f ll convince i the h S Spanish i h Viceroy Vi to invest i in plan to construct a canal across Isthmus of Panama. - He proposed European unification. 32

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- After his death, his followers initiated a journal, Le Globe which was read over whole of Europe Globe, Europe. - Saint-Simon had a vision of creating a ‘Supreme Council of Newton’, in which 21 men of science and artists would govern the world and assume the moral authority, which was at that time was with the Church. Saint-Simonians, too floated a vision, through p union of Le Globe,, to have economic and political Europe and Far East, linked together by a system of railroads and canals and to be financed by new industrial development banks. (Does this sound f ili ?) familiar?) - Many Saint-Simonians were engineers, graduates of École Politechnique in Paris, as we as chemists, g l gi t and geologists d fi financiers. i IIn hi history t off E European development, particularly with respect to railroads and banking, their influence was immense. - Saint-Simon Saint Simon unleashed a technocratic utopia, utopia (technocratic faith or what one now calls modernisation ideals). 33

- But But, they also had realised that in fulfilling these ideals, private property and inheritance laws came in the way. Thus, Le Globe invented the new philosophy ‘ i li ’ iin 1832. ‘socialism’ 1832 And A d the th Le L Globe Gl b took t k a tturn towards socialist principles, mainly based on the gy of abolition of p private p property. p y ((Remember ideology that the French enlightenment movement considered owning of private property as a natural law, which was getting challenged somewhat later in France France, through the ideology of Siant-Simonians. Saint-Simonians Simonians is found in - Tremendous influence of Saint the leaders of the Third world, after the independence of these countries from European colonial rules. (Which we will see later.) later ) 34

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ADAM SMITH (1723 (1723-90) 90) Known for economic thought, thought called classical economics | He affirmed Newtonian method of proceeding from first principles to reconstruct the complexity of the observed world. |

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Key ideas of Smith’s economic system are: a)Division of labour, where specialization in production coupled with technical innovation allows vastly increased production and economic growth. growth b)The notion of market, where products are offered to consumer and which acts as an institutional structure where the buyers and sellers meet and agreements on price of land (through rent), labour (through wages) and capital (through profit) give signal to all parts of the economic system of how the future is to be rationally ordered. c) The postulate of economic rationality, the ideas that the buyers and sellers are rational agents (actors) who know their wants. wants 36

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d)

e)

The notion of spontaneous order whereby the pursuit of individual satisfactions generates via the mechanism of the invisible hand optimal societal benefit. The invisible hand is the social structure. The idea of economic progress over time as the market freed of mercantilist restriction worked to secure wealth of the nation. nation Smith’s work pre-dates industrial revolution and does not anticipate industrial society. society

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Impact of Smith’s work on social sciences is that: a)The sphere of market can be investigated naturalistically li i ll b because iit iis the h realm l off economic i causes and effects b)Th ttechnical b)The h i l knowledge k l d off economic i science i will ill enable actors to order their activities better. c) His notion of rational economic man is still used in economics as an ideal type whereby economic activity y can be analysed.

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i) ii)

Adam Smith Smith’ss theory articulates the interests of the rising industrial capitalists. They were attracted to the following arguments of Smith: The free pursuit of private gain can act to raise the levels of living of the entire community. How individuals in a community can be pursued to take up activities that would benefit both the individuals as well as the whole community. With regards d to t wages off the th workers, k he h says that th t the th wages should be natural wages. Natural wage was a rate that just allowed the workers to survive and reproduce. If wages fell below subsistence levels than the workers would die and there would be fewer workers whose wages would then have to increase and by that wage rates would increase. increase If more wages then improvement in living standards and more workers (either by more of their children surviving as he said or more becoming workers), ), that would bring g down the wage. g 39

(i)

Smith was also father of Public Finance, which was then picked up by Pigou. Smith did say that there was role of government. He said how the government could raise its revenues. revenues That was done to generate high economic growth rate. That was to be done through taxation. He laid down four maxims/ i / rules l for f ttaxing i the th public: bli Taxes should be proportional, every one should pay the same proportion of their income as taxes (unlike today as many of the taxes are progressive) (when Smith was writing, most taxes were regressive and a proportional ti l tax t would ld h have reduced d d th the ttax burden on the low income families)

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(ii) Tax payers should not be kept in dark about their taxes, they should know in advance how much they have to pay and that the tax laws should not be changed radically from year to year. (iii) Taxes should be levied at a time and in a manner that h iis most convenient i ffor people l to pay. Eg. E Current practice of levying capital gains tax when it realised and not when it is accrued is best example of this maxim. (iv) Best tax was the one that was least expensive to collect.

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Smith s political economy Smith’s i) There is increasing interdependence of people within a society as the production system advances. ii) W l h was derived Wealth d i d from f creative i h human llabour b working on available natural materials in order to produce useful objects. (Labour theory of value subsequently b l d developed l db by M Marx). ) Th The value l off goods d traded in the market place derived from the labour embodied in them. iii) The key to increase in wealth of nations is the rise in labour productivity associated with the increasing division of labour. labour As the tasks of production are broken into specialist parts on the basis of advances in productive techniques and machinery then both the overall output of the economy increases and the interdependence of the various elements of the economy increases. 42

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iv) How were these individual actions ordered (organised) so that h there h was no anarchy h and d the h overall ll harmony h was maintained? That was through the market place, through the rewards of land, labour and capital. v) How are the prices of each of the factor of production, land, labour and capital determined? Aruges Smith, through what is the social circumstance of each of the actor t in i concerned, d the th labour, l b the th capitalist it li t and d the th landowner. Smith is dividing the population into different classes and analysing their position in the overall economy (This class analysis, economy. analysis Marx takes forward to give his analysis of society and social change.) Orthodox economists look at individual behaviour and not classes. Smith’s economics is called classical economics. From there the term neo-classical comes, one who pick up the market k t partt off Adam Ad S Smith’s ith’ th theory and d nott th the political liti l economy part. (The classical economics grapple with the grasping of structural dynamics underlying surface 43 market phenomenon). phenomenon)

Neo classical economists or what is called the New Neo-classical Right emerges from the Adam Smith’s theory of free market. This is a misleading treatment of Adam Smith. They make an overarching claim that the free markets maximize human welfare. They argue that: i) Economically, E i ll free f markets k act efficiently ffi i l to distribute di ib knowledge and resources around the economic system and that leads to maximization of material welfare (The current regime of IPRs do not efficiently g ) distribute knowledge) ii) Socially, as action and responsibility for action resides with the person (individual), then the liberal, individualistic social system ensure that the moral worth is maximised. 44

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iii) Politically, as liberalism offers a balanced solution to problems of deploying, distributing and controlling power then liberal polities ensure that political freedom is maximised. maximised iv) As the whole package is grounded in genuine positive scientific knowledge then in such a system there would be effective deployment of positive knowledge. Free market comprises of atomistic individuals who know their own individually arising needs and wants and who make contracts with other individuals through the marketplace to satisfy their needs and wants. The market is a neutral mechanism for transmitting information about needs and wants and goods that might satisfy them. 45

According to the New Right, this model is a satisfaction-maximising asocial mechanism in which: ) is legally g yg guaranteed p private ownership p of a)There means of production, b)There is pervasive perfect completion amongst the suppliers who operate in complex division of labour. Perfect market is where there is abundance of suppliers li and d consumers, there th iis perfect f t iinformation f ti of buyers and sellers and commodities and there is no monopoly. monopoly c) The suppliers are aiming to meet the demands of g ((independent) p ) consumers sovereign d) Everything is ordered through the market. 46

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Track record of the New Right. The World Bank and the IMF are part of this New Right. Right i) In UK and USA, that has led to unemployment, reductions in general welfare, declining manufacturing production and g that has begun g to happen pp in mountains of debt. ((Something I di ) India). ii) Other alternative models have succeeded, such as social market system, which is based on consensus-centred corporatism, or east Asian experiment of state state-assisted assisted development, the latter being particularly being cites as a great success. iii) In the third world, post-1980s, the neo-classicism has governed the policies of the government, which was not so immediately after the second World War War, when the newly independent third world country governments were aware of their politicaleconomic, social-institutional and cultural weaknesses. iv) Increase in hunger g ((see Africa)) through g p permanent damage g done to the h fragile f il economies i off the h Third Thi d World. W ld (Susan (S George’s G ’ work) These programmes of liberalisation liberalisation, have usually required parallel programmed of political repression. (In India, it is accompanied by communalism, a method through which political freedom get curtailed, of the minorities directly 47 and of the majority through shrinking of political space.) space )

KARL MARX - Dialectics of Historical Change Dialects is investigation of truths in philosophy. The dialectal method assumes that everything is under constant change g and only y thing g that is the final truth or universal or permanent is the constant change. (This sounds paradoxical). And hence, there is nothing that is given. In contrast, there is opposing view in philosophy hil h that th t says that th t there th are certain t i truths t th th thatt are permanent (constant) and which do not change and one of that is ‘God’. ‘Dialectics of Nature’ written by Fredrick Engels Engels, talks about this constant process of change in the daily processes of nature. At the end of a process of change, a thing transforms itself into its pp ((Day y becomes night, g , hot becomes cold,, and so opposite. on) 48

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- Materialism ((Historical Materialism)) Materialism as a science argues that there is material basis for everything. That is, the people make their lives in their routine productive activity. This productive activity is taken to be the central business of human social life and around it more abstract concerns, such as law, religion, art, etc. cluster.

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“In the social p production of their life,, men ((and women)) enter into definite relations that are indispensable and independent of their will. relations of production which correspond to a definite state of the development of their material productive forces. The sum total of these relations of production constitutes the economic structures of society, the real foundation, on which rise a legal and political superstructure and to which correspond definite forms of social consciousness consciousness. The mode of production of material life conditions the social, political and intellectual life processes in general. l It is i nott th the consciousness i off men th thatt determines their being, on the contrary, their social g that determines their consciousness” ((In preface p being to A Contribution to the Critique of Political Economy in 1859) by Karl Marx). 50

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Religion is the superstructure superstructure, that he calls is opium of the masses. Know a person through his/her actions and not words as the true identity is in the material being (material actions) and not in consciousness. Marx has a materialist conception of History, where is makes k h human production d ti tto analysis l i off human h life. lif The history is interpreted through physical evidences found and not from the epical works written by saints, etc. t H He argues that th t human h beings b i make k th their i own patterns of life. (A book called Man’s Worldly Goods by David Liberhan that is the materialist interpretation off hi history). ) Thi This materialist i li thesis h i off history hi is i now widely and routinely accepted as a basis of social science except p the religious g fundamentalists of all hue, 51 Hindu, Muslim, Christian, etc.)

- Marx gave a philosophical and economic critique of the capitalist economic system, which was the economic y of his time. The new industrial economic system system was based on capitalism. He uses his materialist philosophy to argue out that capitalism is not the h final fi l economic i system and d it i was not given. i It I is bound to change and move towards socialism. (Remember socialism as a philosophy had come into (Remember, being in France with the work of Rousseau and then ) Saint-Simon followers).

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- Marx’s critique of capitalist economic system is that in thi system, this t th labour the l b b becomes a routine ti f t factor off production and the worker’s labour is controlled by the others. Because of the division of labour, work specialization routinization of work, specialization, work and the external control of labour, the worker gets alienated from the product of his labour (that is alienated from the product he makes). p ) This leads to destruction of human creativity. And hence, worker becomes an element in the capitalist production system. And hence, the labour goes to work for wages and not because he/she id tifi identifies with ith this thi work. k This Thi alienation li ti off worker k from the work is the essence of capitalist system of production. Also human beings are alienated from their ‘species species being being’ as capitalist social relations degrade the collective human creation of self and society. Thus, there is an overall alienation that takes place in the system. p y 53

- But, this alienated labour in the capitalist system is nott voluntary, l t b butt in i a sense iis fforced. d (This alienation process, in the current world is addressed by law and order machinery. In the earlier f forms off society, i t it was th the id identity tit off iindividuals di id l with ith the production system and by that with each other, that kept society in stability. What we now call social controls ) controls.) But, this alienation also frees the labour from societal controls. The labour becomes a free labour, not tied to land or any asset. asset Labour becomes a proletariat (those earning from wages by selling their labour). Proletariat having no other asset but their own labour power to sell. p - According to Marx, the production system in capitalism is social, that is through social ( one individual produces p any y division of labour,, (no single i l commodity di or product), d ) but b the h value l produced through labour is appropriated (taken by force) by individuals, that is by capitalists, the 54 owners of capital. capital 27

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Marx’s economic analysis, y , that is analysis y of economic dynamic of capitalism. The main features are: i) Capitalism is historically novel because in it the production is oriented not to the satisfaction of social or human needs but to the requirements of the market exchange of commodities. ii) Each co commodity odit ha has a use e value al e (the ffunction ctio of commodity) and exchange value (the value of commodity in market). iii) Value is created by expenditure of labour (like Adam Smith). iv) In a day day, the labourer sells his labour (calls labour power) at the market price produces a surplus over his replacement needs. v)A )A labour (worker) ( orker) sells his power po er to labour and hence it is the labour power that has value and not the worker who has value. 55

vi) A labourer (worker) gets the price for his labour power that is just enough to provide the labourer’s conditions of existence (food, housing, basic welfare, and so on). on) vii) The labourer gets the wages that are much lower than the value created by the labour power of that labo e That iis, the labo labourer. labourer e ccreates eate value, al e oover e a and d above value required to subsist that labour. viii)) The additional value created by y the labour in this process is called surplus value of labour and that is the basis of profit in a market place, which is earned by the capitalist, p , one who deploys p y capital p in the production system. ix) The capitalist system therefore is inherently exploitative Ratio between labour necessary to exploitative. reproduce labour (called necessary labour) and surplus labour, is called the rate of exploitation. 56

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x)Capitalist system is competitive and thus technically innovative. In the process, the system reaches a stage where the technical innovations lead to more and more deployment of capital and becomes capital-intensive. capital intensive The labour is replaced by capital. On one hand, the p value of labour decreases by y this addition of surplus and hence the profits fall. On the other hand, the labour are squeezed and their wages (value given to the labour)) ffall due to surplus labour in the market. It leads to reduction in purchasing power of commodities by the labour. labour This leads to a situation of overproduction in the capitalist system. This leads to g , closure of factories,, production p decline fall in wages, and thus depression. The great depression of the thirties is the result of the over production in the 57 capitalist i li system.

This overproduction leads to capitalist seeking newer and newer market k (which ( hi h the h colonialists l i li did through h h capture off the third world). By the First World War, the globe was divided by the colonialists in their colonies. Germany was the new entrant t t in i th the capitalist it li t system t by b early l 20th century. t A And d so was Japan. To be able to have a share of the global cake of colonial countries, Germany wages the Second World War, under the leadership of Hitler. Hitler Today’s system is also a crises of global capitalism. There is overproduction d i off various i goods d and d services, i iincluding l di ffood, d but, there are no buyers. People do not have adequate wages to buy even food, which leads to hunger deaths in many parts of th world. the ld T Today’s d ’ technology t h l has h reached h d a stage t that th t it can produce everything in abundance, but, the economic system is such that there are no adequate buyers of these goods. (Hence, the system of privatisation in services, services e.g. e g of water supply, supply sanitation, etc. in cities, would lead to situation where there would be no buyers of these goods) 58

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xi) The crises in capitalism on the other hand causes misery for the proletariat, which fosters class consciousness in them and which would ultimately lead them to organising to over throw capitalism. xii) The basic contradiction in the capitalist system is, as mentioned, ti d th the production d ti iis social i lb but, t th the profits fit and property ownership is private. Through g the labour would overthrow such a organisation, system and remove this contradiction, and create a system where there is no private ownership of property. property

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Marxian view of state,, party p y and revolution Each dominant economic class of any system, has the state through its law and machinery, working in the benefit of the dominant economic class. And the ideology or the theory of that dominant economic class becomes the ideology or the theory of the state. This is why, in the pre-industrial periods, the feudal classes and then the mercantile classes had theories to support their dominance. Which, Adam Smith overturned and whose theory the rising industrial class made their own. Thus, executive of the modern state is a committee for managing the common affairs of the whole bourgeoisie. “State is a machine in the hands of the few wealthy to oppress the majority in the process of appropriation (taking by force) the benefits produced by the majority.” Lenin, the father Russian Bolshevik Revolution gave this theory of state and used the same in establishing proletarian state in Russia. It is argued that the overthrowing of the bourgeois state is the only way to establish a state of the proletariat. And this overthrowing of bourgeois state would be necessarily violent. (Overthrowing of feudal state in France was through French Revolution, that established the power of industrial capital over the feudal lords). lords) The theory of state gets the name Marxism-Leninism, implemented in a new way in China by Mao-tse-tung. 60

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Impact p of Marxism i) This Marxist approach to analyse a societal system is something that is new and has captured the social scientists. That is, looking at the system as a whole and analysing the society from the perspective of class analysis. analysis The system of exploitation as inherent in the capitalist system is the beginning of the economic analysis of a society. ii) Role of state was what has gripped the planners. Only in socialist countries the cities are planned as the way planners have countries, planned. iii) The middle path between socialist state and capitalist state g is the welfare state where the state acts as a welfare distributing mechanism, h i thereby h b capitalist i li k keeping i the h controll off state and d thereby over the private property whereas ensuring that the labour are not pushed to such a stage of penury that they g on class lines to over throw the state. organise iv) Marx’s work encompasses a body of social scientific ideas and related subsequent social movements. Social movements often do not take place spontaneously. Leaders, that is, subjective forces are required for any social movement to take place place. An organisation is required to carry out social movement. The leaders and cadres in such organisation come with this new understanding of the social reality, the reality of exploitation, that leads to a social movement. 61

v)) Marxism has been a very yp powerful ideology gy that has attracted the oppressed, the Third World Countries (all national liberation struggles in the third world were led by leaders influenced by Marxist ideology of socialism and communism), the labour movements and even women’s movements, women s movement. movement Within each movement, women’s movement, environmental movement, which has led to changes in development paradigm globally, there is a y strong g presence p of Marxists. very vi) Academics, throughout the world, especially in Europe and the Third World, have been influenced by these ideas. A stream of social scientists, called the structuralists emerge from the Marxist school h l off thought. h h vii) Theories of imperialism ‘as highest stage of capitalism’ were mounted by the Marxists. It is from this understanding, theories off ‘finance ‘fi capital’ it l’ and d currentt global l b l economic i system t comes. From here emerges the core-periphery theories in global development. viii) Theories for analysing cities, cities the primate cities, cities the global cities, settlement hierarchy, and city planning efforts, are all Marxist legacy (much as we may not like to acknowledge it). 62

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DAVID RICARDO (1772 (1772-1823) 1823) 1.

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Theory of Comparative and Absolute Advantage Th Theory off Diff Differential ti l Rent R t Smith said, trade occurs when there is absolute advantage. advantage Ricardo’s contribution is about comparative advantage and he said that trade will occur even if there is comparative advantage and not g absolute advantage.

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Automobile Rice US 1 (per worker per year) 1 (per worker per year) Japan 3 (per worker per year) 2 (per worker per year) US has 200 workers and Japan has 100 workers and are equally divided between car production and rice production US 100 cars 100 tons Japan 150 cars 100 tons Total 250 cars 200 tons If US only rice and Japan only cars US 0 cars 200 tons Japan 300 cars 0 tons 300 cars (world output higher by 200 tons Total 50 cars than before) Who gets the extra output? Depends on the exchange rate. If 100 cars = 100 tons of rice US 100 cars 100 tons Japan (Japan 200 cars 100 tons gains more) Total 300 cars 200 tons If 150 cars = 100 tons of rice 100 tons US (US gains 150 cars more, gain extra 50 cars) Japan 150 cars 100 tons Total 300 cars 200 tons 64

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Japanese workers are more efficient at producing cars. US workers are less efficient in producing car and producing rice rice. But, But US workers are relatively less inefficient in producing rice. | US and Japan will benefit from specializing in what they are relatively better at producing and then trading with each other. |

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Differential Rent Theory i) Most productive land always brought first into use. E.g. Land A of 1 hectare produces 100 tons of wheat. When next best (B) is brought into use use, which produces 75 tons/hectare of wheat then the value of Land A will be 25 tons worth of wheat. When land C is brought p y being g 60 tons/ha,, the value of into use,, its productivity l d A will land ill b be 40 tons and d off B will ill b be 15 tons. A And d iit goes on. More the land brought into use, higher will be the value of A In urban land, the most productive land is the most accessible, with best facilities, etc. When next best l d is land i brought b ht into i t use then, th the th price i off best b t land l d goes up. With city expansion, price of best-located lands go up. Cecil Pugh 66

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ARTHUR CECIL PIGOU (1877 (1877-1959) 1959) Welfare Economics & Concept p of Public Goods | | |

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For some goods, all production costs are borne by the consumer price of the g good via the p For some goods, part of the costs of the goods is passed on to the society in the form of social costs. E.g. pollution. If that is possible, then firm may produce too many goods that would create pollution, which will increase the pollution. Firms may use old technology so that pollution continues. There is no way the firm can be made to change the technology. These are called ll d negative ti externalities t liti There are goods whose production can exceed the benefits that the consumer gets. E.g. Police, fire protection, national defence, health care spending, spending education spending spending. If an individual buys a medicine for cold, to remedy his/her cold, the individual benefits. But, this person’s taking of medicine stops infecting others, others then there are social benefits of private benefits. benefits67

Divergence g between social costs and p private costs are called ‘externalities’, ‘spill-over effects’ and ‘third-party effects’. Divergence between private and social costs might justify government intervention in the market place. When there are large positive externalities, people gain whether they pay for it or not. This ability to obtain benefits without paying for it is called ‘free rider problem’. If I do not pay, it will g t done get d iin any case attitude. ttit d If no one pays but everyone gains then there is loss to every one in the long run. To overcome this, government must tax everyone so that such public goods are provided by the government. government In case of privately provided goods, if there are negative externalities, that good is taxed. If there are positive externalities then that good gets subsidy. subsidy Costs of externalities have to be internalised in the cost of production of goods. Sometimes non-economic measures, Sometimes, measures such as legal measures are adopted for negative externalities 68

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JOHN MAYNARD KEYNES (1883 – 1946) Called the practical saviour of capitalism, capitalism proposer of short-run solutions to economic problems. Inflation | Warned of practical problems of inflation. Said that central government must intervene in the issues of inflation by controlling money supply. supply Some economists opposed it saying that inflation will take care of itself in the long run. Keynes said: “In the long run we all will die”. | Keynes said that short-run interventions are necessary in the economy and these interventions have to be by the government. Some economists have criticised him for thinking about short-run solutions. Keynes 69 believed that it is better to solve the problems now.

Unemployment | If there was more demand, for goods, then, economies would prosper, businesses would expand, and hire more workers (create demand for more workers) and unemployment would cease. If demand is low, the firms would be forced to cut back on production and then on hiring and there would be lay-offs and unemployment and then depression. | Great depression of 1920 to 1930s in US was handled by Keynes | Keynes K asked k d for f comprehensive h i socialisation i li ti off investment decisions, which a government take g the central bank through g interest rate through policies, high interest rate will reduce investment and by that production would decline and vice versa. 70

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Some thought S th ht that th t K Keynes was asking ki ffor ttotal t l control t l of government over business investment decisions. What Keynes was asking for is government spending policies li i to stabilise bili aggregate level l l off iinvestment in i the economy. | Keynes Keynes’ss contribution is important for the macro economy. | Way out of depression is to create more of housing, more schools schools, more hospitals, hospitals more roads roads, etc etc. When private investments in these was low, government must invest. If government does not have money then government must borrow (and run budget deficit) and engage in public investments in construction. | When business investments were high, government must cut-back b k spending di and d borrowing. b i |

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GUNNAR MYRDAL (1898-1987) | | | |

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Considered the main architect of Swedish Welfare State Myrdal convinced the then Finance Minister of Public Works and to run budget deficits in order to reduce unemployment Theory of Cumulative Causation as an alternate to Equilibrium Analysis Introduced Ex-Ante and Ex post distinction in economic analysis. Ex Ante or expected is before hand; before the event analysis that Ex-Ante gives estimations and forecasting. Ex-post is after the fact, analysis. Ex Ante gives estimates of expected outcomes and Ex post gives measures of the actual outcome. outcome Theory of Cumulative Causation – involves a positive or negative feedback involving two or more variable. It can be contrasted with uni directional causal change uni-directional change, in which which, A causes change in B, B but B has no further impact on A; the change stops at B. The system reaches new equilibrium with changed values of variables A and B. 72

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Cumulative C l i Causation C i means that h variables i bl A and d B impact i each h other in a process of change. Variable A impacts B and Variable B in turn impacts A and both reach a new level. The system is under d constant t t change h and d th there iis no equilibrium ilib i att any point. i t When A and B both increase, they are in virtuous cycle of positive feedback loop; when A and B both decline then we have vicious i i cycle l or negative i feedback f db k loop. l He H used d this hi idea id to explain poverty and race relations. He showed that how entire American society suffered from low socio economic situation of the Black Americans, now called African Americans. He said, discrimination breeds discrimination. This analysis showed that this situation can be remedied in one of the h many ways and d improvement i in i any one area would ld initiate i ii the virtuous cycle of improvement. But, where to start? He looked to American institutions to break into this vicious cycle of di i i ti against discrimination i t th the bl blacks. k Measures M he h proposed: d 73

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Organisations O i i such h as churches, h h schools, h l trade d unions and the government to play an important role in improving the socio socio-economic economic conditions of the blacks. Expansion of the role of the Federal government in the h areas off education, d i housing h i and d income i security. i Laws making it easier for the blacks to vote. Ad Advocated t d migration i ti from f the th South S th to t the th industrial North, the latter having more jobs in the p new economic sector than the latter that provided jobs on the farm land. Use of fiscal policy to achieve full employment (like K Keynes) ) 74

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1. 2. 3. 4.

Myrdal used this theory to explain poverty in South Asia (Asian Drama, 1968). A way out was suggested: To spend more on education To spend more on sanitation and, by providing clean water and p g other p public amenities. developing Income support programmes to address the problem of income inequality. While most economists argued that there was trade-off between equality and growth growth, Myrdal held that there was no such trade trade-off off and that greater equality would lead to more rapid growth (A good example of that is China, in the hind-sight – not stated by Mrydal). He said that inequality leads to slower growth because of physical and psychological consequences of poverty, poverty as the poor are unable to utilise their talents. A welfare state that redistributes income would lead to higher demand and hence more rapid economic growth. Myrdal criticised the social scientists in general and economists in particular for not being able to speak and write in the language that the ordinary person can understand. He also criticised the economists’ attempt to hide their value or normative assumptions economists behind the façade of objectivity. He was not opposed to economists making value judgements but was opposed to their refusal to accept that. 75

MILTON FRIEDMAN (1912- 2006) Two main themes of his work (i) Money matters – Because only changes in money supply can affect economic activity and inflation results from too much money in the economy. (ii) Freedom matters – Because economies run better when the governments do not attempt to control prices, exchange rates or entry into professions. | Known K ffor his hi work k against i t Keynsianism. K i i He H argued d against i t the use of stabilisation policies to control either inflation or unemployment. He said that the fiscal policy would not work and a monetary policy would worsen the business cycle and lead to greater inflation. | Friedman has opposed all forms of government intervention in an economy economy, as that is viewed as curtailment of political freedom. He argued that capitalism is the best economic system because it promotes political freedom and market can help 76 offset political power. power

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He opposed all government programmes that came in the way of individual decision-making. Such as: ((i)) Wage g and Price Controls (ii) Social security (because it breaks down family bonds and is actually a transfer from the less well-off to the wealthy, the latter tend to live longer than the former. (iii) Government support for higher education (because it primarily benefit the well-off). | In contrast he has supported: (i) All volunteer army (ii) Education vouchers to all parents to allow them to select l the h school h l where h they h would ld send d their h i children. hild |

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THE NEW RIGHT – NEO-LIBERALISM IN 1980S | | |

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This is called counter revolution by some, especially by those coming from the left and centrist traditions Thi iis eclipse This li off th the welfare lf state. t t Roots in the crises of the metropolitan heartland of the global capitalist system that emerged in 1970s. In 1973, US took a Woods system y and allow its decision to come out of the Bretton W dollar to float. This went hand in hand with collapse of US authority globally by the emergence of Japan in the east and European economy. Since then, Asia has risen, reducing global p of USA. importance After the election of Reagan in US and Thatcher in UK that the New Right firmly took power. [In a way it can be seen as protecting one’s own turf, if New Right is seen as a regressive movement ] Progressive view of it is that this provided new ideas movement.] of democracy, relieving people from the clutches of the state. The New Right theorists claim that the modern free-market capitalist system is maximally effective in producing and equitably it bl distributing di t ib ti the th economic, i social, i l political liti l and d intellectual necessaries of civilised life. 78

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THE CLAIMS OF NEW RIGHT ARE: |

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Economically – free markets act efficiently to distribute knowledge and resources around the economic system, then the material t i l welfare lf will ill b be maximized i i d Socially – as action and responsibility for action reside with the person of the individual, then liberal individualistic social systems will ensure that moral worth is maximised. maximised Politically – as liberalism offers a balance solution to the problems of deploying, distributing and controlling power, then liberal polities ensure that political freedom is maximised. maximised Epistemologically – as the whole package is grounded in genuine positive scientific knowledge, then in such systems the effective deployment of positive knowledge is maximised.

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THE NEW RIGHT |

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The substantive Th b t ti core off the th thinking thi ki g is i that th t free f market k t comprises i of atomistic individuals who know their own autonomously arising needs and wants and who make contracts with other g the mechanism of the marketplace p to satisfy y individuals through those needs and wants. The market is a neutral mechanism for transmitting information about needs and wants, and goods which might satisfy them around the system. A minimum state machine provides a basic legal and security system to underpin the individual contractual pursuit of private goals. This position has informed the policies of the World Bank, the IMF and the US government. government When the World Bank and the IMF forced these policies on the borrowing governments, these were called Structural Adjustment Programmes. The World Bank forced upon the borrowing countries to privatise their structures and d the h IMF forced f d them h to reduce d fi fiscall d deficit fi i ((through h h minimising the role of state in the economy and society). The latter resulted in cutting down of government expenditures even on public goods. goods 80

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THE POLICY PACKAGE THAT CAME TO THE DEVELOPING CO COUNTRIES S WAS AS:

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Any regulation of the market has to be avoided, save for crises and the removal of malfunctions or inhibitions to full functioning. functioning Any intervention in the market is to be avoided, save to remove causes of price distortions, so subsidies should be abolished should be abolished, tax rates adjusted to encourage enterprise enterprise, tariff barriers removed along with nonnon tariff barriers or disguised restrictions. Any government role in the economy should be avoided, as private enterprise p p can usually y do a better jjob,, and when governments do become involved it should be both marketconforming, short-term and involve a minimum of regulations Any collective intervention in the market should be avoided, avoided so labour unions must be curbed. International trade should be free trade with goods and currency freely traded. 81

ALTERNATIVE SUCCESSFUL MODELS Needless N dl tto mention, ti the th developing d l i g countries did not benefit. Instead, two alternatives models that were successful were being b i di discussed. d | Social market system of Germany in place of consensus-centred corporatism. p | State-assisted development, or ‘Developmental State’ Model of Japan and East Asia, that brought in much higher economic growth rates than what market would have. The ‘Developmental State’ model also comes out of Bismarckian State of Germany and ‘Meiji Meiji ‘Bismarckian’ Restoration’ in Japan, where the State took on role of welfare as well as promotion of rapid economic growth. growth

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TRACK RECORD OF THE NEW RIGHT Th W The World ld B Bank k and d the h IMF are part off this hi N New Ri Right. h |

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In UK and USA, that has led to unemployment, reductions in general welfare, welfare declining manufacturing production and mountains of debt. (Something that has begun to happen in India). Other alternative models have succeeded,, such as social market system, which hi h is i based b d on consensus-centred d corporatism, i or east Asian experiment of state-assisted development, the latter being particularly being cites as a great success. In the third world, world post post-1980s 1980s, the neo-classicism neo classicism has governed the policies of the government, which was not so immediately after the second World War, when the newly independent third world country governments were aware of their politicaleconomic social-institutional economic, social institutional and cultural weaknesses. weaknesses Increase in hunger (see Africa) through permanent damage done to the fragile economies of the Third World. (Susan George’s work)

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MAX WEBER |

Weber's ideas are complex and about many dimensions of development. He is primarily concerned with analysis of capitalism but at the same time sceptical of modernist project. p j For example, p , the modernist institutions have become bureaucratic. And "bureaucratic administration means f d fundamentally ll domination d i i through h h knowledge" wrote Weber.

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He sees th H thatt patterns tt off social i l relationship l ti hi would ld be b stable and that is because it is believed that these relationships are in a legitimate order. | That there are three types of legitimate orders and these orders of authority are accepted. These are: a) Traditional authority, b) legal authority and c) charismatic authority | According to Weber, the modem capitalism is governed by legal authority authority. The social institution that embodies such legal authority is the modem bureaucracy. | Contemporary capitalism cannot function without the b bureaucratic ti organisation. i ti He H thinks thi k that th t the th bureaucratic authority tends to be conservative and expansionary. In modem capitalist society, ever greater areas off social i l lif life are subject bj to llegal-rational l i l rules. |

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This is the key to understanding modem capitalism. H calls He ll b bureaucracy a gatekeeper t k off the th capitalist it li t systems, who provide or deny opportunities to individuals to access the benefits of the system. | Politically, he speaks of the iron-cage of bureaucracy. He is sceptical of bureaucracy. | Weber also found that the formal organisations that grew out of modernity's desire to power, are highly bureaucratic structures. The thrust of these organisations is towards greater calculability, calculability effectiveness and control. But, in this process, these organisational issues become more important than the substantive (important) values and ends that the organisation can serve and are meant to serve. In fact, the bureaucracy in these organisations subvert the substantive values and ends it might serve in light of the functional efficiency of the organisation for which they are there. |

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World Bank is a great example of such a bureaucracy, argues Bruce B Ri Rich h in i his hi book b k titl titled d 'Mortgaging 'M t i th the Earth'. For example, World Bank might consider the issue of staff leaking the documents more serious organisational i ti l matter tt th than th the organisation i ti it itself lf taking up projects that have horrendous, often foreseeable, environmental and social consequences. In f fact, the h World W ld Bank B k has h b been quick i k to tack k on to the h prevailing development philosophies, for example, poverty alleviation under McNamara, to global environmental management in the recent years. But, if there are failures on this front or if the World Bank's intervention has led to worsening g of the situation (which it has in many instances that have been well recorded), then no one is accountable. But, these themes crop p up p in the Banks' activities because these fit well into Bank's formal logic and institutional needs. 87

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And the Third World countries, through their bureaucracies started borrowing from the World Bank for huge projects to realize the "ideals of modernization", no one had heeded to Max Weber's g gloomy y warnings. g Most Third World leaders dreamed of and even dream of now, of replicating Tennessee Valley Authority, great highways and public works of American cities and other public works of world's most powerful and economically successful nations, argue Bruce Rich. A way out of the grip of this bureaucracy is emergence of a charismatic leader,, according g to Weber. From time to time,, a charismatic political leader is thrown up, who would be elected by the masses, and who would correct the bureaucratic controls on modem institutions. This is Weber's belief in individualism, that an individual will correct the system from time to time. That finally the values will rule over facts. For o Webe Weber,, itt iss from o the t e ranks a s of o the t e bourgeoisie bou geo s e that t at the t e leader eade would be thrown up and not from the working class as Marxists argue. 88

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CRITIQUE OF MODERNITY |

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Although Alth h modernity d it had h d its it origins i i in i the th 17th century, t it triumphed worldwide in social and economic transformations only two centuries later, in the 20th centur Also, century. Also inherent in the implementation of modernist paradigm were many contradictions. Though, freedom and democracy was a part of the philosophy hil h off modernity, d it but, b t that th t was subverted b t d from f within. The modernist paradigm was the building of empire of man over things and was from the beginning rooted in th will the ill to t power and d domination. d i ti It entailed, t il d empire i off men over other men and men over women, of Western societies over all others. (Now we use the term North over South ) South. The liberation of individual and society from previous constraints left the world and society empty for new, more t t l fforms off control. total t l

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Max W M Weber b found f d th thatt iin th the project j t off modernisation d i ti and d rationalisation, bureaucratisation has taken place. And "bureaucratic administration means fundamentally g knowledge" g wrote Weber. domination through Weber also found that the formal organisations that grew out of modernity's desire to power, are highly bureaucratic structures. The thrust of these organisations is towards greater calculability, effectiveness and control. But, in this process, these organisational issues become more important than the substantive (important) values and ends that the organisation can serve and are meant to serve. In fact, the bureaucracy in these organisations subvert the substantive values and ends it might serve in light of the functional efficiency of the organisation for which hi h they h are there. h 90

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CRITIQUE OF MODERNITY – CONTD. |

World W ld B Bank k iis a great g t example l off such h a bureaucracy, b argues Bruce Rich in his book titled 'Mortgaging the Earth'. For example, World Bank might consider the issue g the documents more serious organisationa1 g of staff leaking matter than the organisation itself taking up projects that have horrendous, often foreseeable, environmental and social consequences. In fact, the World Bank has been quick to tack on to the prevailing development philosophies, for example, poverty a11eviation under McNamara, to globa1 environmenta1 management in the years. But,, if there are failures on this front or if the recent y World Bank's intervention has led to worsening of the situation (which it has in many instances that have been well recorded), then no one is accountable. But, these themes crop up in the Banks' activities because these fit well into Bank's forma1logic and institutiona1 needs. 91

CRITIQUE OF MODERNITY – CONTD. |

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And the Third World countries, through their bureaucracies started borrowing from the World Bank for huge projects to realize the "ideals of modernization",, no one had heeded to Max Weber modernization Weber'ss gloomy warnings. Most Third World leaders dreamed of and even dream of now, of replicating Tennessee Valley Authority, great highways and public works of American cities and other public works of world's most powerful and economically successful nations, argue Bruce Rich. Technically large project~ have invariably led to displacement, be it in developed world or the developing world. For example about 60000 people were displaced for construction of 7 mile Cross Bronx Highway in New York City in 1952. This was because of Robert Moses, a public planner in the city city, whose built his empire from 1930s onwards to 1960s 1960s. This project is typica1ly a 20th century technocracy at work. According to Lewis Mumford, in the early 20th century, influence of Robert Moses on the cities of America was the greatest. F Foundations d i off Moses M Empire E i was lack l k off political li i l and d financial fi i l accountability and control through withholding of information (something sounding familiar to us?) Moses empire was built through numerous autonomous development agencies i that th t generated t d their th i own revenues. Robert Moses was a developer with his empire spanning over nearly half the area of New York City at that time. 92

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CRITIQUE OF MODERNITY – CONTD. |

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This approach to development, Bruce Rich compares with the way th W the World ld Bank B k functions. f ti It creates t numerous independent i d d t autonomous project authorities in the developing world, for example NTPC in India. These agencies were not often open to normal legislative and judicial scrutiny, operated according to their own charter and rules (mostly coming from the World Bank) and staffed with technocrats (bureaucrats) often sympathetic, "even beholden" (pp. 227) to the bank. In globalisation phase, development is being pursued through such special institutions. Modernisation proceeds on the path of technological t transformation f ti off nature t and d society. i t T Technology h l and d technocracy t h as organising principal of a human society appear to take an autonomous dynamics of its own.

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CRITIQUE OF MODERNITY – CONTD. |

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Modernisation and its application on human societies and ecosystems is - abstraction, analysis, reconstruction and control. (Control through bureaucracy) It is control of man over nature, of capital over people ( (represented d through h h ideology id l off economic i growth h over improvement in human quality of life), of men over women, of developed world (North) over South, of urban over rural, of core over periphery. This analysis comes out the consciousness and analysis l i off those th nott b benefiting fiti ffrom modernity's d it ' projects, j t such h as type of urban development, type of infrastructure development, etc. Modernisation has worked through a potent combination of rationalized bureaucracy, economic organisations (that favour capitalism with its philosophy of neo-classical economics) and technological organisations that are politically unaccountable. Nature has revolted against the gains of modernisation. modernisation For example, real looming threat of climate change, imbalanced food security, rising health burdens because of wide spread use of hazardous materials, etc. 94

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The local communities dependent on nature, that is the indigenous societies i ti dependent d d t on th the ecosystems t h have revolted. lt d Environmental degradation is severe. Minimum of environmental resources, such as water, is on the decline. Per capita water availability is on the decline a time will come in Third World countries when there will be nearly no drinking water. India is one of them. Many small Third World Countries have devastated public finances as they are highly indebted to the World Bank, finances, Bank in the process of pursuit of modem projects. Instead of economic progress, many Third World countries are steep in debt. Instead of selfsustained growth, these countries are upto ears in debt. Problems of unemployment housing unemployment, housing, human rights rights, poverty and landlessness are increasing. Global inequalities have increased. In 1960, the ratio between the world's riche and poor countries was 20:1, which increased to 46:1 i 1980 and in d wentt up to t 60:1 60 1 in i 1989.200 1989 200 h hundred d d years ago, thi this ratio was 1.5: I! This is the achievement of modernization process! Third world countries also have devastated environment. For example, long famine in Ethiopia, which has resurfaced this year. 95

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In any case, the modemisation did not take place in most Third World Countries. It did not bring in scientific temper, even though many of th Thi the Third dW World ld leaders, l d immediately i di t l after ft their th i iindependence d d embarked on large modem technocratic projects. For example, Nehru said; "Industries are the temples of modem India". And in India, "We have taken a Tryst with Destiny Destiny".. "Long years ago, we made a tryst with destiny and now the time comes when we shall redeem our pledge, not wholly or in full y substantially. y A moment comes,, which comes but measure,, but very rarely in history, when we step out from the old to the new. "That future is not one of ease or resting but of incessant striving so that we may fulfil the pledges we have so often taken and the one we shall h ll take k today. d The Th service i off IIndia di means the h service i off the h millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. .. To bring freedom and opportunity to the common man man, to the peasants and workers of India; to fight and end poverty and ignorance and disease; to build up a prosperous, democratic and progressive nation, and to create social, economic and political institutions which will ensure justice and 96 f ll fullness off lif life tto every man and d woman. "

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CRITIQUE OF MODERNITY – CONTD. |

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The scientific temper did not emerge and on the contrary, religious fundamentalism is on the rise globally, globally more so in the Third World. Poverty has not been eradicated and it is on the rise in many parts of the world. Hunger deaths are on the increase inspite of f d surpluses. food l Improvement in quality of life of people all across the Third World has not taken place. For example, IMRs, MMRs, are quite high. There is no full literacy achievements. After SAP, there have been reversals in achievements in these indicators in many African countries. The decade of 1980s is therefore called a lost decade from the perspective of development. Neo classical economics Neo-classical economics, pursued in all developed countries countries, (with shades of mix ofwelfarism), and communism are both perceived as modernist projects of control over nature, etc. Feminists have revolted through calling 'modernist project', modern d d development l t projects j t as ''white hit C Caucasian i men llocated t d iin the capitalist countries of the North' dominated projects. 97

POSITIVE ACHIEVEMENTS Could C ld we h have d done without ith t modernism? d i ?N No. This modernism, its economic system as capitalism and its political system as liberal d democracy ((with ith its it li limitations), it ti ) is i th the b beginning i i of much radical transformations. | It was necessary y to move away y from agrarian g systems, which are very closed and irrational systems, with mind sets based on religious and super-natural super natural beliefs. On more scientific than theological basis of knowledge. |

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ALTERNATIVE THEORIES

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WHAT IS DEVELOPMENT |

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Neo-classical economists would say y that development p is economic growth. That is, per capita increase in income (Per Capita Income -PCI) How is income measured? Wages * Workers Production = Sum total of all production

It is assumed that with increase in income, | people will have more resources at their command and that they would consume more that would lead to utility and therefore satisfaction. | Income will give people command over resources that will lead to people peop e spe spending d g oon basic bas c needs, eeds, including c ud g education, educat o , health ea t and a d housing. | Income will increase the self-esteem and self-respect of the people and which will also give satisfaction 100

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ALTERNATIVE VIEW |

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Economic E i growth th or increase i iin per capita it iincome does d nott mean increase in welfare and improvement in either quality of life or improvement in well being or improvement in human capabilities. capabilities Improvement in capabilities women as much as of men Development p has to be viewed from only y one p perspective p and that is development of people and not of things. That is development takes place only when people's development or human development takes place.

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OTHER ALTERNATIVE CONCEPTS/ MEASUREMENTS OF DEVELOPMENT | |

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Social Statistics, Social Accounting and Social Reporting - These are statistics on social aspects of development L Level l off Living, Li i Living Li i standards d d and d State S off welfare lf Index I d -These Th are statistics that represent standard and level of living enjoyed by people, represented by various consumption related indicators. Quality of Life - the quality of life people enjoyed in the context of environmental pollution, deteriorating safety and security and declining living standards. Quality of life concept also includes psychological factors and individual perceptions. "How do you do?" PQLI (Ph (Physical i lQ Quality lit off Life Lif Index) I d ) - This Thi iis a Q Quality lit off life lif Index I d referring to LEB, IMR and basic literacy - primarily meant to measure poverty of developing countries. Social Progress Index -Genuine Genuine Progress Index etc. - That is only positive parameters of development are added to the income and negative parameters are deducted. Therefore, expenditure incurred on military and war would be deducted. Of violence, genocide, etc. would be deducted. Of environmental degradation would be deducted. deducted But, But of care, care affection, affection etc. etc would be added. It is important p to know what gets g added and what does not get g added to 102 the income. The debate between Lester Thurow and Robert Chambers.

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HUMAN DEVELOPMENT |

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Human u a Development eve op e t iss the t ep process ocess oof eexpansion pa s o oof cchoices o ces in life. e. i.e. HD enhances capabilities of people that enables them to lead the life they value (and want) HD is not just quality of life - It is a development paradigm (approach), a development mode. It is not a static concept, but it is a dynamic concept that refers to a development path that ensures human development. Human development is a goal as well as a paradigm. Economic Growth does not automatically get translated into human development It needs an enabling environment development. environment. In development theory, this is a new area that is being developed by scholars.

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HUMAN DEVELOPMENT INDEX (HDI) ( ) |

This is a measurement of the choices available to people through improvement in their capabilities. (HDI) - A composite index of three basic human capabilities: biliti i) Capability to lead a healthy life (LEB) ii) Capability of enjoying knowledge (adult literacy rate and average number of years of schooling, and iii) Access to good standard of living: per capita income

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GDI/ GEM Gender Related Development Index (GDI): - It is the HDI adjusted for gender equity. It measures the same basic capabilities in the context of gender inequity Gender Empowerment Index (GEM): - It measures women’s empowerment in the context of the same of the men. It I iis a composite i iindex d off 1. Women’s power over economic resources (share in per capita income) 2. Access to professional opportunities and participation in economic decision making. ( % of women in technical, professional, managerial job) 3. Access to political decision making (% of women in the national parliament) li t)

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OTHER INDICES OF UNDP Capability Poverty Measure (CPM): - A measure of the lack of three basic capabilities, a measure of human poverty 1. % of underweight children (under 5 years) 2 % of births unattended by trained personnel 2. 3. % of females illiterate Human Poverty Index (HPI): - A composite index of basic deprivations. 1. % of people not expected to survive to age 40 years 2 Adult Illiteracy Rate 2. 3. Deprivation of economic provisioning - % of people without access to safe drinking water - % of people without access to basic health services - % of underweight children under five

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Three Rules of Promotingg Social/Human Development p 1. Enabling development path - employment l intensive i i - equitable - environment friendly 2. Persistent direct efforts for decades - Kerala and Gujarat (wide gap) - Some Saurashtra districts 3. Synergies in policies/programmes - literacy and health (female literacy and IMR, MMR) - environment and health/education - capital and revenue expenditure

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This concept draws heavily from a very famous saying of Gandhi: "There is enough in this world for every persons' need but there is not enough in this world for even one person's greed. Number of alternative development 'approaches, such as small is beautiful (E.F. Schumacher), have this Gandhian influence.

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GENDER DEVELOPMENT |

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If advances in welfare (utility) (utility), education education, health and general quality of life, self-esteem and self-respect of women does not take place, then, it is not development. Gender Analysis y is a Bi-focal view of society. y It is believed that: a) The development benefits are not equally shared between men women. Men have benefited more from the modernist approach to development. Hence, in all development indicators, women are behind men. This is not a biological outcome but a social construct. b) The development burdens also are not equally shared between men and women. Women share more burdens of mal-development th men. F than For example, l in i ti times off di displacement l t or environmental i t l degradation, it is women who suffer more than men.

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GENDER INEQUALITY |

Whatt unites Wh it countries t i across many .cultural, lt l Religious, Ideological, Political and Economic divides is their Common Cause Against Equality off Women. W i) Right to travel ) g too marry a y ii)Right iii) Right to divorce iv) Right to property and inheritance v)) Right Ri ht to t acquire i nationality ti lit vi) Seek employment

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COMPARING HDI WITH GDI GDI Values

HDI Values

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INDICATOR VALUES IN GDI

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SOME STATISTICS | |

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Estimated 1.3 billion people live in poverty in the world and 70% of them are women. women In South Asia and Sub-Saharan Africa, the men live longer than women (longevity measured by LEB). In rest of the world, on an average women live longer by five years than men average, men. There are more than 100 million women missing in the world. These missing women are mainly in China (FMR 940) and India (FMR 933). 933) In I restt off the th world, ld iincluding l di S Subb Saharan S h Africa Af i (1020), FMR is above 1000. This is indication of killing of women or neglect of health of women so that women die. O off every three Out h illiterate illi in i the h world, ld two are women.

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SOME STATISTICS – CONTD. |

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Women earn less W l than th men. a) In agriculture, women earn 3/4 that of men. b)) In Bangladesh g women earn 42% that of men. In USA 75%, in Vietnam 91.5% and in Sri Lanka 89.8% There is occupational segregation. Only 14% of the total administrative and managerial jobs in the world are held by women. vii) Only 5% of the multilateral banks' rural credit reaches women allover the world world. In India India, only 11 % of the borrowers of the major banks are women.

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Term Gender is a Social Construct. Terms men and women indicate biological differences between two sexes. sexes But, But the term gender indicates social relationship between the two. | Gender relationship has been such that in the social relationship between men and women, women are systematically subordinated. (Most people do not want to believe this). |

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Gender Relations

Politicoeconomic system

Social and Cultural System y including Ethnic & religious Socially Constructed Relationship

Women

Men

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GENDER RELATIONS |

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Men and Women perform distinct roles in society with respect to th three spheres h off interaction i t ti i) Production sector ii) Reproduction sector (Social reproduction sector) iii) Community sector These distinct roles are performed because of the above mentioned framework Gender inequality stems from gendered division of labour in the above three mentioned fields. Mental labour is more valued than physical labour Most important labour is valued the least Productive labour is more valued than reproductive labour (What p labour?)) is reproductive

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Why? Because development is economic growth and hence economic activities that bring income are more valued than activities that are of importance for ‘making of a human being’. Are there economic activities that do not bring g income? Many y in the developing countries. For example, subsistence agriculture. Collection of water, fodder and fuel. And so on. Manv of the activities carried out by women are essentially economic in nature but are not paid for and hence not considered economic and by that the output of these activities do not get into the national income statistics. Women performing these activities are not considered workers and hence are not paid for and hence also do not receive that respect/status. respect/status

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Secondary S d status t t off women or unequall gender d relations are because of: i) Socialisation process ii)Religious sanction iii) Unequal resource allocation in development programmes iv) Definition of what is value because of the definition of development itself

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WHY WOMEN (FEMINISTS) ARE CRITICAL OF MODERNISATION PROCESS? |

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Scientific S i tifi k knowledge l dg b brought ght control t l off man over nature. t But, it indeed was man's control and not control of all human beings. Women have not enjoyed as much loot of the nature as men have as women's consumption of goods and services have been much less than that of men. See any of the indicators. Modernisation brought mechanisation in some areas but in many activities that women taken up, have not benefited out of mechanisation. Classic example is agriculture. Also, women are engaged in labour-intensive and low paid activities ti iti in i the th manufacturing f t i sector. t

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Modernisation has brought in expansion of capitalism capitalism, which has subjugated the countries of the South. This has led to increase in inequality. Wherever overall inequalities have increased gender inequalities have increased much more. Whenever there is deprivation, the burden of deprivation has been passed on to the women. And modernisation has increased deprivations in many parts of the world, mainly through the transfer out of natural resources from the Third World to the First World through various mechanisms. Capital and natural resources are transferred out, directly during the colonial period and indirectly in g trade rules and markets. the current era through Modernisation has not reduced women's double burden, of productive sector and reproductive sector responsibility.

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Modernisation has segregated productive and reproductive sectors of the economy and relegated the reproductive sector to the secondary position iti as thi this sector t d does nott produce d national ti l iincome b because off the very definition of income and hence, women, who are predominantly found in the reproductive sector are relegated to the secondary' position. secondary It has brought bureaucratisation and women not much literate are unable to get through the bureaucratic labyrinth for benefiting form p p programmes g and p policies. development Modernisation has also pitted people against the people and in this increased conflicts women suffer the most. Rape is used as a powerful weapon during the ethnic conflicts to humiliate the other. Modernisation has adversely affected environment and women who are more directly connected to the environment are worse sufferers.

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Gender inequality starts from the household sector or the domestic sector and gets extended to other sectors. Modernisation brought separation of household reproduction sector from economic production sector and that brought in sharp division of labour b t between men's ' work k and d women's ' work. k Women being made solely responsible for reproductive sector (social reproductive sector) of the society, found it hard to perform these dual tasks. tas s. Hence e ce tthey ey got further u t e a and d farther a t e away from o tthe ep productive oduct ve sectors, ones termed as productive sectors by the capitalist economy. The gender inequality is not only confined to the household and family, but is also reproduced across a range of institutions, including international donor agencies. agencies the state and the market market. Institutions ensure the production, reinforcement and reproduction of social relations and thereby social difference and social inequality.

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Institutions are framework of rules for achieving certain social or economic-goals Organisations refer to the specific structural economic-goals. forms that the institutions take In the widely accepted definition of development, "a major section of working women of the world disappear into a 'black black hole hole' in economic theory." The planning interventions therefore do not recognise and therefore value the non-market activities of the women, which are otherwise of economic and social relevance but are nott iimportant t t off GDP/GNP estimates. ti t In cities, there are no interventions to support these activities of the women. On the contrary, planning tools, such as landuse planning make clear distinction between work place and residence place, emphasis on pricing of basic services, and so on.

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There is hierarchy of production and which influences and then g resource allocation in a hierarchy. y legitimizes Women are underrepresented in activities at the 'tip of the iceberg', where development efforts and resources are concentrated; they appear in large numbers in informal sector and d subsistence b i activities. i ii Th They are pre-dominant d i ... in i the h reproduction and activities (labour) nurturing of human life, the neglected sectors in policy domain. Thi skewed This k d representation t ti demonstrates d t t graphically hi ll the th convergence of power and ideas in the field of development. It ensures that women are positioned within the policy debate as unproductive 'welfare' welfare clients clients, and that their claims on the national development budget. based as they are on activities and resources which are excluded from calculations of the GNP, are y heard in debates over budgetary g y allocations. rarely

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Development theories and practice should start from the vantage point of the poor women in the Third World, World taking their viewpoint as that from the below. | Thus, Thus gender planning comes in as a new concept. |

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WHAT IS GENDER PLANNING? Planning is three things: i) Policy P li making ki -which hi h is i a process off political liti l d decision i i making ki about allocation of resources among various activities. ii) Programme interventions - that is, the resource allocations are converted into programmes through which the resources are distributed. Government has a role in the process as the resources come from the government. iii) Implementation - the organisation of the process of implementation, the administration of the programme, who participates in it and so on. A Gender Perspective is required in each of these three activities.

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i) Resource allocations do not consider women's needs. For example, resources are not easily allocated for services that benefit women, child care services services, battered women women'ss homes, homes etc etc. Why Why, because welfare is not economically productive, neo-classical economist's perspective. ii) Programmes do not consider women's women s needs. For example, transportation policy. Transport routes and schedules might totally overlook women’s needs with respect to timing, security, location of bus-stands, street furniture, etc. Other examples of missing women are in i th the h housing i programmes, agricultural i lt l programmes, and d so on. iii) Process of implementation exclude women. Most programmes are designed by planners and where people do not participate and hence the processes, like we discussed about the World Bank projects, are not transparent. If there is some local participation participate p and hence their needs g get than women do not p overlooked. 128

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FIVE TYPES OF POLICIES As far A f as policies li i are concerned, d there th can be b five fi types of policies: i) gender-blind policies ii) gender-neutral policies iii) gender-aware gender aware policies iv) gender specific policies gender redistributive p g policies v))

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FIVE APPROACHES TO GENDER PLANNING Within gender planning also, there are five approaches b based d on what h one llooks k at role l off women. These h fi five approaches are: i) Welfare approach – Where women are looked at as mothers and their welfare is considered as society’s welfare. ii) Anti poverty approach – It argues for Anti-poverty increasing the productivity of poor as high poverty leads to women engaging themselves in highly low productive d ti activities. ti iti High poverty t among g women iis a problem of under-development

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iii) Efficiency approach - Argues that women's participation brings efficiency. For example, at household level, women's income benefit the household as they spend the same for household welfare, for example on children's education and not on alcoholism as men tend to spend. i ) iv) E it approach Equity h - Women W should h ld b be equall recipients i i t off benefits in a development process. In other words, women should equally benefit from a development process in a suitable manner. v)) Empowerment E approach h - Argues A for f empowering i women for f greater self-reliance and self-esteem.

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EXAMPLE OF DIFFERENT APPROACHES Example of how different approaches lead to different arguments, in say an environmental programme. programme i) Welfare approach - Women are altruistic (charitable) and work without material gains for the welfare of the family. Natural resource management, management which has been traditionally been women's responsibility, in whose honour women have rose from time to time (Chipko movement, Greenbelt movement Kenya). Hence women should be given this responsibility. Hence, responsibility ii) Anti-poverty approach - Removing poverty of the women would remove poverty of the household and hence make free access to natural resources such as the CPRs possible. possible This will bring income to women.

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iii) Efficiency approach - Women are honest and hence will give 'Best for the Buck'. Women are the efficient managers of the atu a resources esou ces and a d hence e ce g give ve them t e tthiss responsibility espo s b ty for o natural increasing efficiency of natural resource management programmes. Land management in subsistence fanning is women's responsibility and hence enhance these capabilities for efficient land management. management iv) Equity approach - Women's equal participation should be there in all programmes, such as energy programmes (including nuclear energy programme). programme) v) Empowerment approach - Women's participation brings them out of the households into the public sphere that empowers them and they start demanding their well being and respect. Women can then put their needs as priorities in public policy. Women can get access to and control over assets and resources.

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Patriarchy is a system that systematically denies women access to assets and resources through g religious g and social p practices. Notion of economic growth enhance & this process of denial. Women can be empowered only through changing the gender relations. That their development in true sense would take place when this rigid gender division of labour and all inequalities emanating from that disappears. Gender planning is a new tradition, tradition a new goal goal, that is to ensure that women, through empowering themselves, achieve equity and equality with men.

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GENDER SENSITIVE PLANNING IS THAT WHICH ENSURES:

i) adequate availability and accessibility of all basic services, that would ld include i l d h housing, i water t supply l and d sanitation, it ti ttransportt ii) right to employment at adequate wages, including vending and living in the informal sector without being displaced, iii) clean l environment, i t iv) safety and security and availability of feminist services to address the problem of violence against women, v) availability of child care and other care facilities so that women are empowered to participate equally in all the urban activities, vi) democratic polity in true sense and not just token electoral d democracy, and d vii) creation of institutions of women's empowerment at all levels, from private to public spheres.

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It is now mandatory that all development programmes and projects are analysed with a bifocal lense and that what would be the impact of any of these programmes and projects on women is observed.

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GANDHIAN PHILOSOPHY |

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Ga d was already Gandhi a eady practising p act s g alternative a te at ve deve development op e t model ode in South Africa, through his 'Tolstoy farm in South Africa. Here, he has also participated in anti-apartheid movement, issues of equal rights. g He was called a 'practical dreamer’ by his first biographer, Rev. Joseph Doke Gandhi saw that the general people were not participating in the Freedom movement. Only the Congress party and its workers were active in a noticeable way. He had also noticed that even the bearings of the Congress Party workers were not in the masses. masses

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He g gave a call to his followers in Congress g Party, y, the Congress g Party y workers, to go to the rural areas and mobilise the people for participating in the Freedom Movement. Being a practical man, he suggested that the best entry point to mobilise people for freedom struggle was to take up g constructive activities in the villages. The youth inspired by the call of Gandhi indeed went to the rural areas and begun constructive development activities. (This practice is there even today. Many NGOs undertake income-generation programmes or education programmes to begin organising a community for political action.) Gandhi had realised at that ‘independence’ did not mean political p alone but also economic independence p from the imperial p independence global economic system. For India, it meant reconstruction of the entire society that was poverty-stricken. Independence for India meant, independence from poverty. Thus, for India, both, political and economic p had to g go together, g , argued g Gandhi. independence Population was concentrated in rural areas in India and so was the poverty. He therefore asked his followers to go to the rural areas, where people and poverty were concentrated and work for development activities. activities

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GANDHIAN PHILOSOPHY |

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Gandhi condemned the western civilization. He believed that it dehumanised. He believed that the machines, which were for the purpose of easing human burden and to increase production for satisfying numerous human wants of the modem human beings "mutilated the working man, cancelled out his body, conscripted only his hands". Gandhi saw that the modem civilization would mean multiplication of wants and moral impoverishment of man. He laid out his vision of Indian society in his work Hind Swaraj, written in 1908. He expressed the opinion that the western civilization was irreligious and d it had h d ttaken k hold h ld on people l in i E Europe. F For hi him civilization i ili ti pointed i t d human beings to the path of duty and observance of morality and not to the path of increased consumption and lack of morality. Gandhi's condemnation of western civilization and with that of the i d industrialisation i li i promoted d by b western countries i was a reaction i to imperialism of the west. For him industrialisation and colonialism went hand in hand.

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He expressed H d the th opinion i i th thatt th the western t civilization was irreligious and it had taken hold on Europe. For him civilization pointed human b i beings to t the th path th off d duty t and d observance b off morality and not to the path of increased consumption and lack of morality. Gandhi’s condemnation d i off western civilization i ili i and d with ih that of the industrialization promoted by western countries was a reaction to imperialism of the west. For hi him, iindustrialization d i li i and d colonialism l i li went hand in hand.

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ECONOMIC VISION – VILLAGE MOVEMENT |

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Gandhi did not believe that economics was a natural science. He considered id d it as morall science, i which hi h h had d tto d do with ith spiritual i it l and d moral being and not just the rational, utilitarian human being. Gandhi’s economic programme for India was revival of the village economy He stated that the economic vision for a thickly economy. populated country such as India had to be different than that for thinly populated countries such as the United States. He saw that y way y to bring g good g living g to the p people p in rural India was the only to make rural areas central piece in economic programme. Gandhi saw urbanization as a process that sponged on the rural areas.

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He promoted the idea of 'Bread Labour', idea that he had borrowed from Tolstoy. It means living by one's own hands. He believed that: (i) the life of labour, that is that of the tiller and handicraftsman was only life worth living; wo v g; (ii) ( ) there e e has as too bee eq equal a value va e for o a all types ypes oof labour a o (lawyer, barber, etc.) and (iii) good of individual is contained in the good of all. By this, he strongly disagreed and discouraged the idea of hierarchy in the division of labour labour. His emphasis was to create employment for all in the rural areas through home/hand production, which is also decentralized production that would employ unemployed rural labour. Small products would get absorbed in the rural economy itself and th b increase thereby i employment l t as well ll as demand d d att th the village ill llevel. l Gandhi was in search of practical means of alleviating India's wretchedness and misery. Charkha and Khadi programme became the y of this p practical p programme. g He introduced spinning p g as a basic symbols programme. He believed that every one had to spin, that is every one had to be engaged in the activities of production of basic necessities. Only then there would be real home rule or independence, he said.

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He said that the problem for India was how to employ the hands that remained idle for about six months in a year and part of the working day. Charkha became a symbol of subsidiary economic activity at the village level. level | After independence, Gandhians influenced the Government of India (GOI) to set up Khadi and Village I d t i Commission Industries C i i (KVIC), (KVIC) an organisation i ti for f promoting employment among rural weavers and artisans. The KVIC provided grants for setting up mainly i l units/infrastructure i /i f ffor h home-based b d ((also l called ll d cottage industry) production. |

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PEACE AND NON-VIOLENCE |

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Gandhi believed that any good end could not have a wrong means; cruelty lt and d blood bl d bath b th involved i l d in i the th violent i l t means cannott achieve fair social order and means are as important as goals. Any struggle to be fought therefore had to be through peaceful means in which persistence of truth (Satyagraha) was seen as a main weapon. He viewed the caste-ridden Indian society as one perpetrating violence on the lower social strata. A non-violent social order was such that would be non-violent on the lower social strata. He asked for a total social transformation to achieve peaceful and non-violent society and means for such a struggle were also promoted to be peaceful. peaceful

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TRUTH |

Gandhi considered truth as the most powerful but also a most difficult weapon in the fight for justice He believed that only the fearless could justice. use this weapon.

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SARVODAYA |

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Sarvodaya is Gandhian way to welfare economics. It means welfare of all all, which does not happen if the welfare of the last strata does not take place. Sarvodaya is a comprehensive vision of Indian society, a village level movement and building of society from below. It is not a utilitarian approach but a moral approach. I iincludes It l d iindividual di id l as well ll as collective ll i and d encompasses all ll dimensions of social existence and not only economic. He argued that it is more important to have allegiance to the d ti th duties than th the rights i ht if Sarvodaya S d h d to had t b be achieved. hi d Thi This means that sacrifice is important dimension of human practice. Fearlessness, sacrifice and truth are the three ways to achieve Sarvodaya. Lastly, such a world order was non-competitive and humane, which was based on absolute acceptance of purity of means of g noble ends and not on conflicts and exploitation. p achieving

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ANTYODAYA |

Antyoday means the development of the person who is last in the social and economic hierarchy. Any development that did not reach this last stratum of society was not development according to Gandhi.

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SELF-GOVERNANCE ((SWARAJ) | |

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Gandhi's concept of democracy was self-governance. This was democracy off the masses and not electoral democracy as we visualise now. Ideally, self-government would mean no State in which every one's opinion and interests mattered and not only of the majority and that could be installed only through consensus and negotiations negotiations. He said that the democracy practiced in the world was electoral democracy, which is the rule of the majority that coerced minority to accept the decisions of the majority. However, till such a democracy was installed, in the interim period, period one could do with a democracy in which the government was elected by the majority. He gave Swaraj (self-rule) as his political programme and Panchayati Raj as programme for governance. In place of the State and its i i i institutions h he canvassed d that h the h village ill level l l institutions, i i i such h as the h Panchayats would address the issues of governance.

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VOLUNTEERISM |

He believed H b li d th thatt th the ttrue d democracy could ld only l be built from the grassroots, through voluntary efforts e o sa and moral o a a authority. o y. Co Community y development activities therefore have been always visualised as voluntary activities in India, especially for those who come from Gandhian ideology. This practice gave currency to the term 'voluntary organisations' whose mandate was development activities with community support.

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NEW EDUCATION (NAI TALIM) |

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Gandhi believed that education is the basic tool for the development off consciousness i and d reconstitution tit ti off society i t and d therefore th f an important tool of social change. Also, education was for livelihood and for becoming a good person. He argued that Education was not for bringing in a new Brahminical order. He believed that the education in India had alienated the educated people from their society and these people did not give back to the society what society had given them. His New Education (Nai Talim) was woven around the work so that the cost of education can be taken care by remunerative work. Education consisted of imparting skills, along with promoting capability to read read, write and count count. This he called basic education. education He said that basic education and bread labour would bring equality between rural and urban areas and between different classes of y society.

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imagine there no heaven

TRUSTEESHIP |

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Gandhi himself denied property for himself, but did not come out fully against private property and capitalist accumulation accumulation. Nor did it consider it wrong to increase wealth through productive activities. But, instead of holding that wealth privately, he suggested that it should be managed by the capitalists who should consider themselves as the trustees of the property t created t db by llabour. b IIncrease iin wealth lth b by the th capitalists it li t was to t be not for their own sake but for the sake of the nation. Similarly, he believed that the landlords were the trustees of a the land gp peasants and therefore he did not emphasise p much on land for the tilling reforms. This concept of trusteeship evolved from his deep religious conviction that everything belonged to God and human beings could hold property or talent only as the trustee of God. This principle of trusteeship was imbibed in the Trade Union movement. movement First such trade union was started by Gandhi in Ahmedabad in 1918 and this was called Textile Labour Association (TLA). This was in a way a non-violent method of conflict resolution.

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Forgive me Forgive me not Forgive me Forgive me not Forgive me Forgive me not Forgive me Forgive me Why can't I forgive me?

Set sail to sea But pulled off course By the light of golden treasure How could he know This new dawn's light Would change his life forever?

New blood joins this earth And q quickly y he's subdued Through constant pained disgrace The young boy learns their rules With time the child draws in This whipping boy done wrong Deprived of all his thoughts The young man strugggles on and on he's known A vow unto his own That never from this day His will they'll take away-eay

Lay beside me, tell me what they've done Speak the words I want to hear, to make my demons run The door is locked now, but it's open if you're true If you can understand the me, me than I can understand the you. you

How can I be lost, If I've got nowhere to go? gold Search for seas of g How come it's got so cold? How can I be lost? In remembrance I relive So how can I blame you When it's it s me I can can'tt forgive?

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Perspectives NURM and the Poor in Globalising Mega Cities The central government’s National Urban Renewal Mission is expected to convert select cities into “world class” urban centres. The submission for basic services that falls under the NURM would benefit the poor only if they have security of tenure and their settlements and dwelling units get connected to these networks. The land question is central to making affordable housing available for the poor. Since the mission does not address this question, how would a city become world class without reaching out to half its population? The mission will instead encourage processes that would displace the poor, rather than include them in the process of city transformation. DARSHINI MAHADEVIA

T

he Jawaharlal Nehru National Urban Renewal Mission (JNNURM – henceforth NURM) is expected to convert select cities into “world class” ones. The term “world class” is now being used more as a paradigm for urban development, signifying cities with international standard infrastructure, particularly roads, airports, public transport, open spaces, and real estate projects. A large amount of funds, in a relative sense, have been committed for this mission. In itself, such a transformation of a city is not disagreeable, if it would benefit all or benefit some and not adversely affect others. But, given the trend of displacement of the poor in the last decade, particularly from the mega cities, it is necessary to take a closer look at the NURM. The reality of Indian mega and large cities over the last decade has been: forced evictions of slums, hawker removal, removal of “unwanted economic activities” such as banning of dancing in beer bars, displacement of poor through infrastructure projects and speculative property markets, and displacement because of environmental hazards and political violence. For example, in Mumbai, 90,000 to 94,000 slum units were demolished between November 2004 and January

2005. Demolitions continue. In Delhi, 27,000 families in the Yamuna Pushta area and about 1,00,000 families all over the city were evicted from slums in last eight years. Those rehabilitated have been shifted far away on unserviced plots, given on a five to 10-year lease.1 In Ahmedabad city, the Sabarmati Riverfront Development (SRFD) scheme will displace 30,000 households. Four thousand households have been offered rehabilitation in 20 sq yard apartment units, along with a loan of Rs 60,000, in a location not clearly stated. A hundred thousand homeless people in Delhi were in dire conditions in the winter of 2005-06, inviting attention from the National Human Rights Commission (NHRC). This article asks the question as to whether the NURM would address the burning issue of the urban poor’s access to shelter and basic services (as without shelter, access to basic services is not possible). Is this the right question to ask, given that NURM is supposed to convert mega and large cities into “world class cities” and not necessarily serve the poor? This question, however, is relevant given that a very large section of urban residents, poor and non-poor, continue to live in substandard housing with very poor access to basic services and the NURM has a submission for the urban poor.

Economic and Political Weekly August 5, 2006

The NURM would cover 60 cities: seven category A or mega cities, 28 category B or other metro cities and remaining the 25 of the 28 listed in category C as urban agglomerations (UAs) with less than one million population. The prime minister of India, on the launch of this first major urban development programme of the central government, stated that the NURM was in line with the national common minimum programme (CMP).2 Rationale: The rationale for the mission is based on the expectation that overall reforms would lead to high economic growth and to a higher rate of urbanisation (40 per cent by 2021). Cities thus covered would in turn act as “growth engines” for the entire economy and urban areas would contribute 65 per cent of the total gross domestic product (GDP). For all this to happen, infrastructure services such as power, telecom, roads, water supply and mass transportation, along with civic infrastructure, such as sanitation and solid waste management in the cities have to improve. NURM is to begin with select cities, where investments would be increased in the next seven years, starting from year 2005-06. Since the cities and state governments are not able to do so on their own, the central government will step in with financial support. The other stated rationale is to achieve the targets of the Millennium Development Goals (MDGs) in these cities – with five of the eight MDGs on poverty, health and gender equality being addressed. The unstated rationale is to force state governments to implement urban sector reforms more seriously than before, which was not possible through the City Challenge Fund (CCF) and Urban Reform Initiative Fund (URIF). Lastly, if it is not a mission then no programme gets implemented. Components: The NURM has two submissions: (a) Submission for Urban Infrastructure and Governance (UIG), which will be administered by the ministry of urban development (MUD), and (b) Submission for Basic Services to the Urban Poor (BSUP), which will be administered by the ministry of urban employment and poverty alleviation (MUEPA).3 Projects such as road and associated infrastructure, public transport, trunk networks of water supply, sanitation and storm water drains,

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parking lots and city beautification, would be taken up under the UIG. For those related to slum improvement – shelter and all basic services – and enhancing access of urban poor to other social services, the BSUP submission would be tapped into. The NURM will be implemented first, by formulating a city development plan (CDP) indicating policies, programmes and strategies, and financing, followed by the preparation of detailed project reports (DPRs) for the identified projects by urban local bodies (ULBs)/parastatal agencies. Each project would have its life cycle costs – capital outlays and attendant operation and maintenance (O&M) costs to ensure that assets are in good working condition – recovered. Project preparation, evaluation, capacity building, etc, would be done by empanelled consultants listed by the central ministry of urban development. Detailed guidelines for CDP, project preparation, etc, are also made available. Finances: It is expected that central financial assistance would leverage additional funds for the projects. Central and state

government funds would be hosted in a state level nodal agency, which can be an existing agency or a new agency, as grantsin-aid, part of which would be treated as revolving fund – 25 per cent for the UIG projects and 10 per cent for the BSUP projects. At the end of the mission period, the revolving fund may be upgraded to a state level urban infrastructure fund. For the identified projects, funds would be disbursed to the ULBs/parastatals as soft loans or grant-cum-loans or grants. The ULB/parastatal has to get the rest of the funds, for which it can seek private sector participation or borrow from the market and/or financial institution. It is expected that Rs 17,219.5 crore per year (Table 1), that is Rs 1,20,536 crore over the seven-year period, would be invested in the cities, of which Rs 50,000 crore over the whole period, or Rs 7,698 crore per year, would come through central government assistance. For mega cities, the central grant contribution would be 35 per cent of the total project cost in case of the UIG submission (Table 2) and would go up to 50 per cent

for BSUP submission. For the next two categories of urban centres, the central government grant contribution remains the same for both the submissions. For the BSUP submission, the only change from Table 2 is that the state government’s grant contribution is taken away and the state government, ULBs, parastatals and beneficiary contributions make up the rest of the financial requirements. Thus, in cities with one to four million, in UIG, grants would be 70 per cent whereas in BSUP, grants would be 50 per cent; in NE states and J and K, grants for UIG would be 100 per cent and for BSUP would be 90 per cent and lastly for all other non-metro UA, grants for UIG would be 90 per cent and that for BSUP, 80 per cent. In essence, in all except the mega cities, the UIG submission has a higher grant component than the BSUP submission! Conditions: The most contentious part of the NURM is the conditions/prerequisites for accessing central funds. There are a set of mandatory reforms for the ULBs/ parastatals and for the state governments, and there are a set of optional reforms,

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Economic and Political Weekly August 5, 2006

to be accomplished during the mission period. Some of the mandatory reforms at the ULB/parastatal level are: (a) adoption of modern accrual-based double entry system of accounting; (b) reform of property tax with tax collection efficiency to reach at least 85 per cent within the next seven years; (c) levy of reasonable user charges with the objective of full cost recovery of O&M or recurring costs; (d) internal earmarking, within local bodies, budgets for basic services to the urban poor; and (e) provision of basic services to the urban poor including security of tenure at affordable prices, improved housing, water supply and sanitation. Some of the mandatory reforms at the state level are: (a) Implementation of decentralisation measures as envisaged in 74th Constitutional Amendment Act (CAA); (b) repeal of Urban Land Ceiling and Regulation Act (ULCRA);4 (c) reform of rent control laws, balancing the interests of landlords and tenants; (d) rationalisation of stamp duty to bring it down to no more than 5 per cent; (e) enactment of the public disclosure law to ensure preparation of the medium-term fiscal plans of ULBs/ parastatals and the release of quarterly performance information to all stakeholders. The important optional reforms expected to be undertaken by ULBs/parastatals and state governments are: (a) simplification of legal and procedural frameworks for conversion of land from agricultural to non-agricultural purposes; (b) earmarking at least 20-25 per cent of developed land in all housing projects (both public and private agencies) for economically weaker sections (EWS) and low income group

(LIG) categories with a system of cross subsidisation; and (c) introduction of computerised process of registration of land and property.

NURM and the Urban Poor NURM is the first comprehensive mission for urban renewal, albeit in select cities, which is in line with the ongoing changes in mega cities particularly, and for which they have been clamouring for funds. It is a realisation that cities would not be able to undertake this renewal on their own, given the Indian system of vertical fiscal imbalance. The mission, if the funds were made available from the central government as promised, would certainly change parts of some cities (not whole cities). There are doubts whether the central government would get an additional Rs 7,698 crore per year on top of its annual planned outlays for the two ministries concerned. For the urban poor, besides the BSUP submission, two mandatory reforms for the ULBs/parastatals are important; (i) internal earmarking within local bodies’ budgets for basic services to the urban poor; and (ii) provision of basic services to the urban poor including security of tenure at affordable prices, etc. While the former may be achievable, it is not clear how the latter would be achieved, particularly, as there is no mention of how land prices would be made affordable. Certainly, the market is not expected to do so, as envisaged under the mission through the repeal of ULCRA. In fact, the repeal of ULCRA is the first major concern. With its repeal, theoretically there is no other instrument through

Table 1: Investment Requirements for NURM (in rupees crore) Category Cities with over four million population Cities with one to four million population Selected cities with < 1 million population* Total

Number of Cities

Investment Requirement (Over Seven Years)

Annual Funds Requirement

7 28 28 63

57,143 57,143 6,250 120,536

8163.3 8163.3 892.9 17219.5

Note: * Of this only 25 would be taken, as the total cities to be covered would not exceed 60. Source : From the preface of NURM.

Table 2: Contribution by Different State Agencies for UIG Submission (in per cent) Category of Cities/Towns/UAs Cities/UAs with four million population Cities with one to four million population Cities/towns/UAs in north-eastern (NE) states and J and K Cities/UAs other than those mentioned above

Centre

Grant State

ULB/Parastatal Share

35 50 90 80

15 20 10 10

50 30 0 10

Source: From guidelines for the Submission for Urban Infrastructure and Governance.

Economic and Political Weekly August 5, 2006

which affordable land can be made available to the urban poor. People’s movements for housing rights have now begun asking for the strengthening of ULCRA rather than its repeal. If it does get repealed, we would be back at the pre-1976 situation in this area, that is the prevailing scenario before the UN Habitat Conference held in Vancouver. If the land tenure issue does not get addressed, which is the case with nearly half the population in the megacities, their access to basic services would also not get addressed. In that case, the BSUP sub-mission may not help the poor much. The second important concern is that the CDPs are to be framed by consultancy firms, without any public debates. CDPs would not be people’s plans, when there is indeed a dire need to democratise urban plan-making and development processes. One does not have an issue with the NURM benefiting consultancy firms, but their documents may not be covered under the Right to Information (RIF) Act. Thus, while the city master/development plans could be available for public scrutiny, CDPs may not be. In that case, even if implementation of the 74th CAA has been made mandatory, it might be so just for the purpose of cost recovery for the NURM and other projects and not for deciding city development priorities, which would be decided by consultants. There is also no idea as to how the RIF Act and Public Disclosure Law would work in coordination. Further, is it not ironical that the 74th CAA has not yet been fully adopted by state governments and that this has to be made into a mandatory requirement for the NURM? The situation indicates the lack of interest on part of the state governments to decentralise power on one hand and a streak of non-transparency on the other. This is how most new projects on urban renewal are being implemented in the cities. Citizens do not know that their local governments are borrowing, and may be mismanaging such funds, and they are then suddenly confronted with the reality of increased charges and taxes. Citizens also do not know that international funding institutions such as the World Bank, the USAID, and the ADB are assisting their governments to “reform” and what conditionalities such a reform process bring. In a democratic country such as India, these financial institutions would demand the state and local governments to “reform”? It is known that these financial institutions are more interested in recovering their funds and are thus only asking

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for such reforms, for their mandate would not permit them to demand political reforms. The most important fear is that the NURM would lead to more slum demolitions and displacement, as we have seen happening across cities. This might especially happen when the relocation and rehabilitation tasks of project affected people are extremely complicated, in an Indian society that tends to be highly fragmented and corrupt. This along with an official policy of non-recognition of slum dwellers who are squatting or living in unauthorised settlements would make the situation more precarious. Land costs are not to be covered in project costs. How would the city governments make land available? Most likely by freeing lands from the slums. Lands would also be required for raising financial resources. Earmarking at least 20-25 per cent of developed land in all housing projects has been suggested as an optional reform and hence, the state and city governments have no tool at their disposal to make lands available for the housing of the urban poor. In states where urban planning is done through town planning schemes there is such a provision but it has never been made use of. Land and property costs are spiralling. Given that a large proportion of the urban population, even in mega cities, still works at low wages in the informal sector, it would not be possible for this section to buy a formal house from the market. This indeed is the reason that they have resorted to living in slums and will continue to do so. The land question is central to making affordable housing available to the poor along with other facilitative mechanisms such as microcredit and affordable basic services provision. Since this question is not to be addressed by this mission, how would a city become a “world class city”, without reaching out to half of its population? Would conditions attached to NURM funding deter state governments from accessing central funds? Newspaper reports suggest that the major metros, in particular, are quite enthusiastic about NURM and many states have already prepared CDPs for the cities covered under the mission. It is likely that not all the cities listed would be covered and only those with the capability to raise their own resources would come forward. There is also concern about the type of projects selected by the city and state

governments. For example, Ahmedabad’s CDP states that the city would spents 16.6 per cent on roads and bridges; 20.1 per cent on storm water drains and sewerage;12.7 per cent on housing and slums; 30.8 per cent on other projects, most likely to be city beautification projects; 6.41 per cent on water supply, 7.44 per cent on social services, just 1.03 per cent on solid waste management; 3.66 per cent on city management and the rest on other activities, of the total Rs 3,900 crore of projects proposed over the seven-year period.5 Some cities, such as Mumbai and Bangalore might just spend on road and transport projects. In fact, Bangalore Municipal Corporation has been spending more than half its budget on such projects in the last few years since water supply and sanitation are provided by a parastatal, which has now moved towards privatisation, assisted by the USAID. Further, in the proposed budget for 2006-07, the Ahmedabad Municipal Corporation’s capital budget has increased by 179 per cent to Rs 8506 crore from Rs 305 crore in the previous year, because of the NURM. Further, 47.9 per cent would be spent on city level basic infrastructure such as water supply, sewerage and storm water drains, whereas a whopping 37.6 per cent would be spent on road projects such as widening, flyover construction and making of footpaths. It is likely that most NURM cities would come up with such priorities. It is likely that the selection of projects would be susceptible to the working of pressure lobbies such as the IT lobby in Bangalore and the Bombay First and middle income households organised under resident welfare associations. Summing up, the problems that the urban poor are facing in the mega cities of India today, mainly the lack of shelter with a secured land title and access to basic services at affordable costs, do not get addressed by the NURM. The BSUP

submission and other infrastructure projects would benefit the urban poor only if they have security of tenure and their settlements and dwelling units get connected to these networks. Attaching the name of the first prime minister of India, Jawaharlal Nehru, does not automatically make the mission pro-poor. NURM might well turn out to be a mission for improving a certain type of infrastructure, which is being demanded by the business class and middle class lobbies in the mega and large cities. It will certainly expedite the process of transforming the 60 large cities into “world class cities”, more by encouraging processes that would displace the poor from them. This has been witnessed since last 20 years, the poor have been displaced rather than actively included in the process of city transformation. EPW Email: [email protected]

Notes [Based on discussions held at a workshop titled ‘Right to Shelter and Basic Services in Globalising Mega Cities of India’, in Ahmedabad on February 10, 2006, under the Indo-Dutch Project on Alternatives in Development (IDPAD), jointly organised by Centre for Development Alternatives (CFDA) and Institute of Social Studies (ISS), The Hague, the two project partners of a research project titled ‘Inclusive Mega Cities in Asia in a Globalising World’.] 1 From a presentation made by Lalit Batra of Hazards Centre, New Delhi titled ‘Trajectory of Urban Change in Neo-liberal India: The Case of Delhi’, on February 10, 2006 at this workshop. 2 http://pmindia.nic.in/speech/content.asp?id=235. 3 For the details of the mission, sectors and projects eligible for funding under both the submissions, and mandatory and optional reforms see: http:// urbanindia.nic.in/moud/programme/ud/ jnnurm.htm. 4 In respect of people-oriented schemes relating to water supply and sanitation, UCLR Act repeal and reform of rent control laws may be taken as optional reform. 5 Based on data from Gujarat Samachar, February 4, 2006. 6 Ibid.

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Economic and Political Weekly August 5, 2006

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NURM Pani http://economictimes.indiatimes.com/articleshow/1516810.cms

Dressing up the urban crisis NARENDAR PANI [ FRIDAY, MAY 05, 2006 12:25:20 AM] The vision underlying the National Urban Renewal Mission could result in a huge expenditure on under-utilised infrastructure, even as access to basic services gets more difficult and urban taxes increase inequity. One of the pitfalls of policy making in a crisis is that the dire situation tempts us to uncritically accept virtually any response. This is perhaps nowhere more true than in the case of the Jawaharlal Nehru National Urban Renewal Mission. There is no doubt that the infrastructure in most of our major cities is under severe strain. There is then great relief that the government is willing to pump in huge sums of money to address this challenge. And under the barrage of projects worth thousands of crores of rupees, there is little scope for a critical analysis of whether this is the most efficient response to the crisis. In the process we could be left cheering a Mission that is actually making the situation worse. The Mission itself does not go beyond a simple, popular notion of the urban challenge. In essence, the argument is that liberalisation will cause a huge spurt in urbanisation, leading to a greater demand for urban infrastructure. This demand can only be met by huge, expensive projects. While the government can contribute to the setting up of these projects, they have to run themselves. The users must then be made to pay the costs of operation and maintenance. And if the cities have to contribute they must raise local resources, particularly property taxes. The trouble is that this popular notion is based on fudging a number of less convenient facts on the ground. The very contention that liberalisation will lead to a rapid spurt in urbanisation is not as clear-cut as it seems. The National Urban Renewal Mission insists that the proportion of urban population will rise from less than 28% of the population in the 2001 census to 40% by 2021 as a result of liberalisation. But in the first decade of liberalisation, from 1991 to 2001 the proportion only increased by around two percentage points, from just a little less than 26% in 1991. It is then by no means certain that the rate of urbanisation will be trebled over the two decades following 2001. Indeed, given the fact that economic growth in cities like Bangalore or Hyderabad is more linked to foreign markets than it is to the hinterland, the growth may well be more in terms of the expensive elements of urbanisation rather than the number of people involved.

The tendency to exaggerate size influences the choice of projects as well. Nothing less than systems that deal with much larger numbers, in the largest cities in the world, will do. These symbols of development have to be introduced regardless of cost. The experience of Delhi and Kolkata may show that the people using the metros are much less than estimated, but that will not stop urban policy makers, as well as the popular mind, from believing that these are essential for urban development. The preference for large glamorous symbols of development also diverts attention from the specific requirements of infrastructure that the economic development of each city needs. An Information Technology led industrial growth for a city would generate a demand for an infrastructure that emphasises telecommunication. On the other hand, a garment industry led growth would emphasise other more rudimentary infrastructure on a much larger scale. These nuances will only be understood if there is a critical place for the economic impulses in each city. Since the Mission has no significant place for local economic impulses, it can at best offer standardised infrastructure for all cities. There is then the very distinct possibility of expensive infrastructure not being fully utilised since it is not consistent with the direction in which the local urban economy is moving. The only check that a market economy would put on such projects is that sooner or later they will be seen to be economically unviable. But one of the major objectives of the National Urban Renewal Mission is to offer assistance to ensure such a stage is never reached. Apart from the usual assistance to enhance the bankability of long-gestation infrastructure projects as well as to enhance resource availability, the Mission will also fill the viability gap of projects. In other words, once the Mission decides a particular project is essential, it can put in any amount of public resources to make an unviable project viable. This unchallenged right to throw good public money after unviable projects necessarily constrains the resources available to the urban sector. This increases the pressure to raise user charges on basic services. While there is undoubtedly a need to ensure that prices are used to prevent the misuse and wastage of scarce resources like water, a situation cannot also be created where urban citizens cannot afford basic services. The Mission’s response is to create a sub-Mission to provide basic services to the poor. These projects will typically focus on slums. But often, particularly when the poor migrate to the cities, they settle into clusters of huts that are not recognised as slums, thereby keeping them away from these benefits. And there is also the challenge of meeting the needs of those who are not below the poverty line but are not rich enough to be unaffected by spiralling prices of essentials like water. The possible inadequacies of user charges has contributed to the National Urban Renewal Mission looking for other urban sources of revenue, with property tax being a prime target. But here again the effort could be hurt by a lack of sensitivity to local economic impulses. The real economic growth in a city like Bangalore has been occurring around

the IT industry on its periphery. But since the general tendency in property tax is to place a premium on the city centre, there is a real possibility of this tax being iniquitous. The vision underlying the Jawaharlal Nehru National Urban Renewal Mission could thus very easily result in a huge expenditure on under-utilised infrastructure, even as access to basic services gets more difficult and urban taxes increase inequity. In other words, existing urban problems can get worse even as they are hidden behind expensive infrastructure projects.

Perspectives Whither Urban Renewal? The Jawaharlal Nehru National Urban Renewal Mission is an ambitious programme to build infrastructure in India’s cities and towns. However, the mission does not sufficiently recognise that the core urban deficit is not the lack of infrastructure but the lack of local self-governance. PARTHA MUKHOPADHYAY

T

he common minimum programme (CMP) committed the UPA government to “a comprehensive programme of urban renewal and to a massive expansion of social housing in towns and cities, paying particular attention to the needs of slum dwellers”.1 In apparent pursuance of this objective, the government of India launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) on December 3, 2005. JNNURM aims to create “economically productive, efficient, equitable and responsive cities” by focusing on “(i) improving and augmenting the economic and social infrastructure of cities; (ii) ensuring basic services to the urban poor including security of tenure at affordable prices; (iii) initiating wide-ranging urban sector reforms whose primary aim is to eliminate legal, institutional and financial constraints that have impeded investment in urban infrastructure and services; and (iv) strengthening municipal governments and their functioning in accordance with the provisions of the Constitution (seventy-fourth) Amendment Act, 1992”.2 It is divided into two submissions, one for urban infrastructure and governance and other for basic services to the urban poor, which will be administered by the ministry for urban development, and urban employment and poverty alleviation respectively. JNNURM will support 63 cities, which include seven 4-million plus mega cities (the four metros, Ahmedabad, Bangalore and Hyderabad), 28 million plus cities, e g, Indore, Jamshedpur and Pune and 28 other sub-million cities, which are either state capitals or cities of particular cultural, historical or tourist significance, such as Pondicherry, Gangtok, Shillong and Ujjain. JNNURM is still an evolving programme, Economic and Political Weekly

e g, cities like Jamshedpur and Gangtok, listed as eligible for JNNURM, do not yet have elected local bodies, which is a precondition for eligibility. Over the next seven years, a major portion of the outlay on JNNURM will be in the form of central grants. Two questions arise in this context. First, do we really need to focus national resources on our cities and second, if so, is JNNURM the right way of focusing it?

Characteristics of Indian Urbanisation Over 1991-2001, our urban population rose by about 68 million, to 284 million (see the table). Of this, only 20 million was migration from rural areas. The contrast with China, where migration accounts for 90 per cent of the increase, is striking. Global experience indicates that rapid economic growth results in agglomerations with large populations and high levels of poverty. So, if growth is to continue at the current high levels, India will have to learn to live with many “big and poor cities”. These will be resource intensive, as all big metropolises are, but even more so since they will lack the ameliorative concerns for environment that tend to appear only at higher levels of income.

Thus, if one thought that urbanisation in India is producing problems, the real big wave is yet to hit, and our cities are as yet unprepared for this eventuality. There are two ways of responding to this. One is to try and stop it from happening (or at least slow it down – which has been the policy of government so far).3 The other is to accept that “our urban economy has become an important driver of economic growth [and]…the bridge between the domestic economy and the global economy” and that “urbanisation is a relentless process, which has come to stay and has to be factored into all our developmental thinking and development processes”4 and prepare to manage the consequences. One should also recognise that Indian cities grow because they have poor people, who lubricate and drive urban growth and also keep it manageable and relatively inexpensive. Over 81 per cent of urban male slum dwellers are literate as compared to 86 per cent of all urban residents and about three-fourths of them are workers compared to about two-thirds of all residents. Further, there are strong links between rural and urban incomes that go beyond remittances. Rao et al (2004) shows how urbanisation enhances and stabilises agricultural incomes by providing a market for diversified agricultural production. It can also raise income for rural labour, e g, the ratio of wage income to total income for Chinese farmers has risen from 13.2 per cent in 1985 to 30.4 per cent in 2001 [Angang et al 2003]. This requires attention to local transport links and, over time, investment in rural education, beyond simple literacy (79 per cent of rural literates have a sub-secondary education, compared to only 58 per cent of urban literates). To summarise, the rise

Table: Urbanisation in India and China Popn Growth (Per Cent) China 1990-01 India 1991-01

11.4 21.5

Urban Change Increase Urban Migration Other Natural Popn in Urban in Urban Growth to Urban Urban Urban (2001) Share Popn Rate Areas Increase Growth (in Million) (Per Cent) (in Million) (Per Cent) (Million) (in Million) (Per Cent) 450 285

9.9 (36.1)# 2.2 (27.8)#

157 68

53.5 32.6

141 (90.0)* 20 (28.6)

16 58**

5.3 16.2

Notes: Figures in brackets are percentages. # share of urban population in total, 2001. * migration as a share of increase in urban population. ** See Kundu (2003). This includes about 13 million due to newly classified towns, expansion in area and merging of towns, which is removed for calculating the natural urban increase in the next column. Chinese urbanisation data is often criticised for not clarifying the extent of growth due to reclassification.

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of big cities in India is an inevitable consequence of growth, but these cities are productive, even if poor, and also have strong existing and potential linkages to rural areas. The choice is between retarding urbanisation by slowing down growth or accepting the challenge of managing the urbanisation consequences of rapid growth such that the benefits from growth are optimised. Indian cities do not as yet have the fiscal strength to cope with this test. This is in part due to their limited taxation powers due to insufficient decentralisation and inadequate use of user charges5 . Furthermore, their administrative capacity is low because the cities have not been expected to take major decisions. As such, both the political leadership and bureaucratic machinery have a low profile compared, for example to China, where many members of the central leadership have served as mayors of major cities, and consequently do not attract suitable talent. Thus, the challenge is to manage rapid urbanisation with limited financial and administrative capacity. Hence, an intervention that responds to these gaps is sorely needed, but is JNNURM the one that we are looking for?

Basic Features of JNNURM The JNNURM walks on two legs – one of reform of legal, institutional and financial constraints and the other of providing funding for infrastructure building. The reforms are separated into mandatory and optional,6 which apply to both state and urban local bodies (ULBs). They can be conveniently grouped into a set of key objectives. In addition to (a) decentralisation through implementation of the 74th amendment and assigning to or associating elected ULBs with city planning, which is a state level reform condition, the other conditions seek to (b) increase participation and transparency, through accounting reform and e-governance at the ULB level,7 and a public disclosure law and community participation law at the state level; (c) increase ULB revenue through reform of property tax and levy of reasonable user charges and reduce cost with the help of VRS, so as to recover full O&M costs; (d) improve services to the poor through budget earmarking, enhancing security of tenure at affordable prices, and earmarking of land for the economically weaker and low income categories in all housing projects “with a system of

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cross-subsidisation”8; (e) reform land management with the repeal of the Urban Land Ceiling and Regulation Act (ULCRA), reduction in stamp duty, reform of rent control, streamlining of building approval, transparent procedures for conversion of agricultural land, computerising property titling and land registration; (f) conserve water resources through laws for rain water harvesting and the use of recycled water and finally; (g) undertake “structural reforms” (an open description which is another example of an evolving JNNURM) and encourage publicprivate-partnerships (PPPs) to improve services and reduce cost. The other leg, i e, provision of additional central assistance for infrastructure, is to be based on a city development plan (CDP). The CDP is aimed at helping the ULB to (i) develop a vision for its city; (ii) ascertain the gap between existing infrastructure and investments; and (iii) set out priorities, sequencing and timelines for undertaking various reforms and specific investments, including the means of financing them. The two legs are joined by the execution of a tripartite memorandum of agreement (MoA) between state governments and the ULBs (including parastatal agencies where necessary) and the government of India, which will indicate the state and ULB’s commitment to specific milestones for the legal, institutional and financial reform conditions mentioned above. Detailed Project Reports (DPRs) for the identified investment projects would be submitted along with the MoA. These DPRs would be scrutinised by the technical wings of the ministry or, if necessary, by specialised/technical agencies before being considered for sanction by a central sanctioning and monitoring committee (CSMC) in the ministry of urban development, chaired by the relevant secretary and comprising solely of officials in the central government and the chairperson of HUDCO.9 Projects of urban renewal, water supply including sanitation, sewerage, solid waste management, drainage, and urban transport including roads would be accorded priority by the CSMC, as would projects with private sector participation. Larger ULBs (cities with a population above 4 million) are expected to contribute (this can be in the form of loans from financial institutions) 50 per cent of the total cost, while the other million plus cities need to contribute only 30 per cent. The central government would contribute 35 per cent and 50 per cent respectively

and the state government is to make up the balance. For urban transport projects, the central share can be even higher. In the case of basic services to the urban poor, the central share ever for the larger ULBs is to be 50 per cent (there is no increase for the other cities) and the contribution of the state and the ULB are clubbed together, i e, if the state is willing to provide the necessary funds, the ULB need not raise any resources, beyond a minimum stipulated beneficiary contribution of 12 per cent (10 per cent for weaker sectors). Central funds would be released as grant to the state governments who have the flexibility to disburse it to ULBs or parastatal agencies as a soft loan or grantcum-loan or grant, taking care to ensure that 25 per cent of central and state grant put together is recovered. At the end of the JNNURM, this recovery can be converted to a state urban infrastructure fund. The first instalment of 25 per cent will be released on signing of the MoA. The balance amount shall be released upon receipt of the utilisation certificates subject to achievement of milestones agreed in the MoA. In each state, a steering committee, which will be assisted by a state level nodal agency (chosen by the state), would decide and prioritise projects under JNNURM. The composition of this steering committee, chaired by either the chief minister or the housing minister and comprising ministers, mayors, MLAs and secretaries, has been prescribed in the JNNURM guidelines. For infrastructure projects, the state level nodal agency will also submit quarterly monitoring reports to be reviewed by designated central government officers and CSMC. The monitoring of reform implementation would be outsourced to specialised agencies. In the case of basic services to the urban poor, “the schemes of health, education and social security will be funded through convergence of schemes and dovetailing of budgetary provisions available under the programmes of respective sectors (health, human resource development, social justice and empowerment and labour, etc), but will also be monitored by the ministry of urban employment and poverty alleviation”. This is an innovation in inter-ministerial co-ordination! On completion of JNNURM, the cities are expected to have (a) a city-wide framework for planning and governance, (b) transparent and accountable local

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services with e-governance in core functions and modern and transparent budgeting, accounting, financial management systems, and (c) financially self-sustaining (through reforms to major revenue instruments) agencies for service delivery to provide a basic level of urban services, especially to the poor.

Will JNNURM Succeed? The JNNURM has been criticised, e g, by Raghu (2005), for a adoption of a neoliberal reform trajectory and forcing uniform policy conformity among ULBs through an executive instrument, overriding efforts at different types of decentralisation in various states. A major objection is to the effort to move towards full cost recovery, commercialise urban and civic services, introduce private participation and make land management flexible. It is useful to consider these in detail. The cost recovery of infrastructure through user fees is sometimes seen as an anti-people measure. However, without user fees, infrastructure will have to be paid for through taxes. State level taxes are usually regressive and thus fall disproportionately on the poor. The use of general state taxes to finance the provision of infrastructure in urban areas, especially to the non-poor,10 is particularly egregious because taxes collected from the poor are spent to provide subsidised services to those who have the ability to pay. It is necessary to realise that the non-poor need to pay for provision of urban services through property taxes and user fees – not just for commercial sustainability, but also for equity. A concomitant benefit of imposing higher financial charges on households that have high levels of consumption is to help conserve resources such as water and help to increase environmental sustainability. While the poor can be provided subsidised services, many residents of lowincome slums, can meet the costs of O&M (and sometimes even more). User fees at this level will not only give them a stronger voice as a revenue contributing consumer, it will also safeguard against the deterioration of the network, which forces them to go to alternatives at much higher cost. Experiments have now started with innovative payment models targeted to poorer residents. In this, community models cannot only improve the level of urban services, e g, metered water supply to slums in Bangalore, they can also provide Economic and Political Weekly

livelihood opportunities, such as the outsourcing of solid waste collection to women SHGs by ULBs in Andhra Pradesh and Kerala. Before lamenting the introduction of private participation in urban services through PPP, it is important to recognise that most expenditure on urban capital investment is already executed by the private sector, usually through the use of small item-rate civil works contracts. The use of such contracts allows the private sector to escape accountability, for it bears little responsibility for the facility after construction. More often than not, water and sewerage treatment plants lie unused, consume much more electricity than expected, and roads are pitted with potholes. The already strained budgets of the ULB bear the burden of increased maintenance cost and the citizens bear the burden of bad service. By contrast, in a PPP, the private operator is contractually bound to bear the risk of service provision and its revenue flows depend on meeting pre-specified performance parameters. Used wisely, it can be a strong tool for increased accountability and better service provision, especially to the poor since private providers are more responsive to financial penalties as compared to public providers. Furthermore, the introduction of private participation brings a higher degree of oversight from regulators,11 media and more importantly, consumers, who are unfortunately, otherwise blasé about poor service delivered by publicly-owned authorities. The effort must therefore be to ensure that this additional tool of accountability does not become blunted. One wonders, however, if JNNURM’s approach to PPP is tokenism. For all the emphasis on “effective linkages between asset creation and asset management”, the focus on DPRs to be submitted with the MoA, and utilisation certificates for monitoring projects, lead one to suspect that their approach is still mired in the bog of civil works contracts. Monitoring is extremely important if the private sector has to have the right incentives. With credible oversight, long-term concessions combining investment and operations and management can be effective for water supply, wastewater and solid waste treatment, roads, transport services and service level agreements can be used for citizen interfaces. Such management has major implications for human resources at the urban government level. Allowing mixed development of ULBs in JNNURM, along with the requirement

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to repeal the ULCRA, has led to fears of capture by the “land mafia”. The “land mafia” has prospered by exploiting the scarcity of land, which is often an administrative artifice, and their ability to have deviations approved from often unenforceable land use regulations and city plans. The approach so far has been to abandon the older and inner cities and for the development authority (usually a state and not a ULB entity) to acquire land to develop new urban areas. This benefits the “land mafia”, who are able to corner adjacent land in anticipation of development. Not only does this lead to tension between the city and those whose land is being acquired, it also increases the cost of service because only limited benefits of agglomeration are realised. The alternate option of allowing mixed development in existing older urban areas, is likely to weaken rather than strengthen the hold of the urban “land mafia”. Another concern of some commentators, like Kundu (2003), is the growing concentration of urbanisation, which is now focused in the more developed states. To some extent, with the onset of liberalisation and the greater freedom afforded to market forces in economic choices, e g, industrial location, a certain increase in concentration is to be expected as agents respond by exploiting the benefits of agglomeration economies. What should be avoided, however, is a flight to the more developed urban areas that is driven not by their economic pull, but because the lack of any viable alternative in the less developed areas pushes economic activity away. JNNURM, by focusing on all the millionplus cities, makes such push-driven primacy less likely, which will improve the options for economic activity at these non-traditional locations. So, if these concerns are misplaced, can it be expected to be a success? Unfortunately, there appear to be other problems, which are fundamental to the implementation of JNNURM. To begin with, there is a basic disquiet with reform conditionality based financing. First, if the same agency is responsible for both monitoring the progress of reform and for financing, the tendency is to emphasise one objective or the other and usually, the financing objective gains prominence. When that happens, conditionality is no longer credible since money will be disbursed even though conditions are not met, as has happened with, for example, the World Bank.12 Hence, to stop inappropriate projects from happening, it

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is important to bring the due diligence exercised by financial institutions (who admittedly will only consider the financial appropriateness of the project) to achieve separation of financing and conditionality and the JNNURM is doing this to some extent. Second, at the other end, a strong conditionality focus may filter out good interventions with the potential to benefit the poor, from happening in unhelpful environments. This is an admittedly more risky strategy (for it is difficult to sustain even well-designed approaches in such environments) but, if successful, can lead to the establishment of institutions that are insulated from their environment – and can, by their very presence and activity, create a constituency for positive change. Third, a salutary lesson from World Bank’s conditionality experience is that reform is unlikely if there is no strong intrinsic constituency for change. If so, the primary benefit of conditional finance is that they provide a means by which reform-minded ULBs can distinguish themselves from others by being able to publicly commit to a set policy measures. Given the tendency of financiers to relax conditionality, such commitment can be measured by its willingness to meet certain preconditions before disbursement. It is here that JNNURM’s principle of MoA before money is important, but its strength is diluted since ULBs are permitted to commit to a schedule of implementation rather than undertake up front reform. However, in what follows, we will consider issues that go beyond these concerns and focus on issues relate more to implementation. The beginning of any sensible planning exercise is good data. The investment programme of JNNURM is critically dependent on the quality of the CDP. As of today, few ULBs (Bangalore is a notable exception) have a digital cadastral map13 of reasonable accuracy and none have a process of updating it, were such a map available for such a process would require a complete digital property titling and computerised land record registration – one of the objectives under the JNNURM. The creation of such a map in any major city is not expensive (of the order of a few crore rupees), but it is beyond the budget of any preparatory support from JNNURM. Thus, a ULB has either to spend its own money or go through the quasi-subterfuge of proposing to commission a cadastral as part of a property tax enhancement project. In the absence of a cadastral, the CDP submitted by the city can only be based

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on broad parameters. Thus, if a city were serious about effecting a change in its planning and project identification and development process, it is unlikely to be able to prepare a CDP and submit DPRs in the next few months, for a good cadastral survey itself would take some time, even if done expeditiously. By contrast, CDPs, for cities such as Indore, have reportedly cleared the state approval process and have been sent onward to the central government for consideration.14 It is difficult to envision how sensible DPRs can be prepared without an accurate cadastral. However, business-as-usual DPRs are possible and the JNNURM, by ignoring the need for a good cadastral appears to encourage this. This appears to be a dangerous tradeoff in favour of speed of implementation over the quality of infrastructure investments.15 This may be an example of the bias towards financing mentioned above. However, it is not that JNNURM cannot be operationalised until cadastrals are completed. Not all types of projects are critically dependent on such information. For example, installing sewerage treatment plants at the outfall of existing nullahs may possibly be a sensible project requiring limited data to justify. Similarly, the longterm contracting out of maintenance for roads that form the core transport corridor is also possibly a good decision in terms of investment priorities. But, planning any major transport investment or investment in water distribution or sewerage collection networks would be much better if the relevant decision-makers had access to accurate information. A benign interpretation of this neglect of data is that JNNURM continues the hoary Indian tradition of decision by Delphi rather than by data.

‘Centre Knows Best’ A less charitable interpretation would argue that, despite the call for decentralisation, the short shrift being given to the CDP reflects, in part, a tendency of the central government to arrogate the responsibilities of the ULB. The focus of JNNURM is more on the provision of the infrastructure projects, rather than the strengthening of municipal governments, which incidentally is the last of four objectives in JNNURM. A reading of the emerging documentation from JNNURM16 seems to indicate the implementation of the programme looks no different from a standard centrally sponsored scheme for

supporting capital works. The relationship between the central government, state government and the ULB is similar to that of a refinance institution, a lending institution and a borrower, rather than that of three levels of government working in tandem to provide services to urban citizens. Even the composition of committees at the state level to decide on projects is specified by guidelines issued by the central government.17 Rather than building genuine decision-making capacity at the ULB level, the impression created by the JNNURM project approval process is still that “centre knows best”. As an example, consider the JNNURM mission objective to plan development such that “urbanisation takes place in a dispersed manner”. Indian cities are much less dense than other cities elsewhere in the world [Bertaud and Malpezzi 2003]. Since the fixed cost of service provision per unit area can be spread over a larger number of consumers, some amount of “concrete jungle” may be more cost-effective to provide essential services in dense areas as compared to dispersed settlements. A significant part of urban renewal is to redevelop existing areas and equip them with the kind of infrastructure that is needed to cope with higher densities, e g, wider roads, electricity, water and sewerage lines that can bear a heavier load, etc. But the guidelines convey the impression that this decision on density is not the domain of the ULB but that of the central government. On the ground, if ULBs are allowed to decide, some may increase density while others will not. This decision would ideally emerge out of a constructive debate between proponents on either side, in the context of local conditions. Nurturing such decision-making capacity is critical to the sustainability of the urban renewal process. Some would argue that it is premature to talk of decentralisation when the central government is providing most of the finance. But, while own sources of revenue for ULBs are an integral accompaniment to decentralisation of authority, it is important to remember that the need for financial devolutions from state and even central governments arise because the Indian tax collection system is centralised at the state or central level, unlike for example, China, where the city collects the taxes and sends it up the administrative hierarchy.18 In this context it is important that the central support be viewed less as a handout, and more as an entitlement and

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it is precisely this that central and state finance commissions seek to achieve. Furthermore, for those who argue for stronger conditionality and a simple but significant financial incentive, it may be difficult to impose too many conditions on ULBs until they acquire sufficient authority, i e, after the state decentralises the administrative machinery. For example, APRDP-type incentive payments (as used in the electricity sector) for own revenue increases or reduction in unaccounted for water (UFW) may not be useful if the ULB has only limited revenue sources (as a result of inadequate decentralisation by the state) or if the water supply system in the ULB has been constructed and is being managed by a state-level water utility, outside the administrative control of the ULB. It would therefore appear that there is no substantial case for continuing with the current slow and measured pace of decentralisation in JNNURM. There are at least two other areas where the design of JNNURM leaves a feeling of discomfort. Consider its attitude towards the poor. Is separating JNNURM into two submissions, one on urban infrastructure and governance and the other on basic services to the urban poor a matter of administrative necessity, given the political need to have two separate ministries? Or does it separate the poor and the city by failing to recognise them as an integral part of the urban economy and reflect the old mindset that the rich need infrastructure the poor need amelioration? It is particularly worrying to note that, though JNNURM does refer to security of tenure as a key reform, putting in place mechanisms to ensure the continued supply of low cost housing19 does not appear to be of high priority, beyond a misplaced suggestion for financing through “crosssubsidisation”. This lack of thought is also evident in designing a uniform central share of grant (i e, 35 per cent) for all large cities, regardless of their population composition, which varies from over 50 per cent slum population in Mumbai to less than 1 per cent (!) in Patna.20 However, the proposed single-agency (MoUEPA) monitoring mechanism can be a singular institutional innovation. Finally, beyond a desultory nod to sustainable development, there is little mention of environmental issues in JNNURM. However, the prioritisation of water, sewerage, solid waste and transport projects holds out hope that better sense may prevail during the project preparation process. Economic and Political Weekly

As noted earlier, given the state of data of our cities, environmentally sensible projects, like sewerage treatment plants are perhaps among the few least likely to become stranded.

Conclusion It is evident that our cities do not have adequate infrastructure. That is merely the symptom. The disease is that they do not have a government that can enable the citizens to decide to provide themselves the infrastructure they need and the financial powers to pay for it, if they so decide. In an ideal situation, an elected ULB would base its investment programme on a datarich CDP, work out the financing mix of taxes (including statutory devolutions from the state finance commissions) and user fees based on their citizen’s response and participation. They would be supported by a cadre of professional urban managers, who will be capable of responding to the expressed wishes of the urban citizen. The role of the state and central governments would be to provide additional funds, especially for specific projects of regional or national importance and transitional support for the ULBs as they take on move to full self-governance.21 While it may be utopian to expect this transition to happen overnight (as other countries are discovering in an international context!), and while it may be unwise to immediately hand over all decisionmaking to an elected ULB with patently little capacity, we can surely trust our democratic ethos a bit more. Managing a big and poor city requires voters to have the political will and the ability to punish. The right to information and public disclosure laws should help in this process (JNNURM’s own document dissemination policies are a good beginning22 ), but currently, the urban voters cannot vote out the real decision-makers for their locality, since the critical decisions are still being taken at the state level. A clear and short road map to genuine participative democracy in the ULB where a strong and powerful elected government is responsible for its own successes and failures is what is needed for sustainable urban renewal. It is this fundamental transformation in governance, where it is conceivable that a politician would rather be mayor of Bangalore than chief minister of Karnataka, which will bring sustained urban renewal. Such change is unlikely to emerge from the bureaucratic processes of government. One

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must look for it in the political processes of democracy. As mentioned earlier, a salutary lesson from World Bank’s conditionality experience is that reform is unlikely if there is no strong intrinsic constituency for change. The beginnings of such a constituency are already evident in many cities, but it is as yet out of the mainstream agenda of political parties, where the current electoral system, focused at the state-level, produces political leadership and an agenda that is more reflective of the rural electoral base. But, just as panchayati raj has come to be seen as essential for better rural governance, it needs to be appreciated that the core urban deficit is not the lack of infrastructure but the lack of self-governance, as envisaged in the 74th amendment to the Constitution. Until that happens, the legacy of JNNURM, focused as it currently is on infrastructure provision, may unfortunately be limited to water and sewerage treatment plants that remain unused, and iconic metro railway systems that do not address the transportation needs of the poor. One hopes to be proven wrong. EPW Email: [email protected]

Notes 1 “Urban renewal”, which came to be associated with the redevelopment of inner city neighbourhoods, has often been criticised for the relocation of the poor and powerless, without adequate thought to alternative opportunities for these communities. The CMP is sensitive to this aspect for it goes on to say “Forced eviction and demolition of slums will be stopped and while undertaking urban renewal, care will be taken to see that the urban and semi-urban poor are provided housing near their place of occupation”. 2 Preface to the JNNURM Toolkit. See http:// www.urbanindia.nic.in/moud/programme/ud/ jnnurm/Preface.pdf 3 A sophisticated version promotes dispersed urbanisation, but by many standards, e g, Henderson (2003), India is already quite dispersed, with only a quarter of the urban population in the million-plus cities. Indeed, it may be at a sub-optimal level of primacy for its level of development. Trying to design urban growth in India such that they reflect small and genteel European towns is not only unlikely to succeed, it may also not be desirable as it implies dispersed provision of urban infrastructure, which may not be affordable at this stage of India’s development. 4 Quotes are from the prime minister’s speech at the inauguration http://pmindia.nic.in/speech/ content.asp?id=235. See also Mohan (2006). 5 ULBs are particularly disadvantaged because land taxation invites relocation to the periphery, leaving few factors of production to tax as capital is already internationally mobile and labour has low income. Between 2001-02 and

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7

8

9

10

11

12

13 14

15

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2002-03, their revenue (both own and total) declined by over 15 per cent and consequently, expenditure, including revenue expenditure, declined by over 12 per cent. The nomenclature of mandatory and option reform is misleading since both have to be implemented over the duration of JNNURM. The schedule of implementing mandatory reforms has to be pre-specified by the state in its MoA while the timing of optional reforms is flexible within the seven-year duration of the mission. Technology is critical to planning and monitoring, e g, digital cadastral for land use and property taxes, planning for road improvements based on traffic flows, etc. The guidelines for the two JNNURM submissions are available at http://muepa.nic.in/ programs/bsup.pdf and http://urbanindia.nic.in/ moud/programme/ud/jnnurm/ guidelines_jnnurm.pdf. Unattributed quotes are from them. The CSMC chaired by the secretary (urban development) would comprise the secretary (urban employment and poverty alleviation), the principal adviser (housing and urban development) in the Planning Commission, the joint secretary and financial adviser, the chief planner, Town and Country Planning Organisation, Adviser, CPHEEO, chairman and managing director, HUDCO and the joint secretary (urban development) as member-secretary. The urban poor rarely benefit from these services. According to the Census of 2001, less than half (49.7 per cent) of urban households have a drinking water tap within premises, even less have a water closet (46.1 per cent) and just over a third (34.5 per cent) have closed drainage. Monitoring is extremely important if the private sector has to have the right incentives. With credible oversight, long-term concessions combining investment and operations and management can be effective for water supply, wastewater and solid waste treatment, roads, transport services and service level agreements can be used for citizen interfaces. Such management has major implications for human resources at the urban government level. See World Bank (1998), which argues that the effort of donor agencies “buy reform”, by offering assistance to clients that were not otherwise inclined to reform, has failed. A cadastral survey is one on a scale sufficiently large to accurately show the extent and measurement of every field or other block of land. See ‘JNNURM okays City’s Development Plan’, Hindustan Times (Bhopal editon) January 29, 2006. http://hindustantimes.com/news/ 5922_1611101,0015002100020000.htm Another issue is that the CDP is not at the level of an urban agglomeration, but at the level of city. At this time, JNNURM is not contemplating any institution to coordinate the CDPs of ULBs in a single urban agglomeration. This is likely to become a problem sooner than later. See http://urbanindia.nic.in/moud/programme/ ud/main.htm There is some limited attempt to ensure that the capital works being financed emerge out of a consultative process (including a national advisory group headed by a technical adviser drawn from civil society) and the projects are focused on addressing key gaps in public transport, water and sanitation and providing services to the urban poor.

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18 During the initial period of post-1978 reform cities like Guangdong and Shanghai were allowed to keep very high shares of revenue collected. See Wong (1997). 19 For example, in relocating existing slums, it is important to focus on building neighbourhoods instead of simply building houses. A neighbourhood, along with appropriate financial and administrative mechanisms for allotment of housing, decreases the probability that the persons would re-sell a subsidised allotment and reestablish a slum. Furthermore, the continued supply of low-cost housing that is usable by the poor is an issue of land management, transport networks and financial mechanisms to target subsidies, all part of overall urban governance. 20 Besides, the challenges in each ULB will be different. In some, special effort will be needed to reach water, sanitation, health and education to the slums, in others the general service delivery mechanism will do. Decisions as to the mix of user fees and taxes and extent of community development will also differ from one ULB to another. 21 ULBs should be able to decide the extent of public transportation, the choice of mass rapid transit systems, whether high capacity bus systems or metro rail, and use the transport networks to try and shape what their city looks like. They should have the capacity to decide whether to build flyovers or hire better trained traffic police instead. To finance all these, they should have, for example, the ability to tax gasoline purchase in the ULB. 22 See http://urbanindia.nic.in/moud/programme/ ud/jnnurm.htm and http://muepa.nic.in/rti/ rti_index.htm

References Angang, Hu, Hu Linlin and Chang Zhixiao (2005): ‘China’s Economic Growth and Poverty Reduction (1978-2002)’ in Wanda Tseng and David Cowen (eds), India and China’s Recent Experience with Economic Growth, Palgrave Macmillan. Bertaud, Alain and Stephen Malpezzi (2003): ‘The Spatial Distribution of Population in 48 World Cities: Implications for Economies in Transition’, University of Wisconsin at Madison, Centre for Urban Land Economics Research. Henderson, J V (2003): ‘The Urbanisation Process and Economic Growth: The So-What Question’, Journal of Economic Growth, 8, 47-71. Kundu, Amitabh (2003): ‘Urbanisation and Urban Governance’, Economic and Political Weekly, July 19. Mohan, Rakesh (2006): ‘Managing Metros’, Seminar, January. Raghu (2005): ‘Urban Renewal Mission: Whose Agenda?’ People’s Democracy, December 4, Vol XXIX, No 49. Rao, P Parthasarathy, P S Birthal, P K Joshi and D Kar (2004): ‘Agricultural Diversification in India and the Role of Urbanisation’, IFPRIMTID Discussion Paper No 77, November. Wong, Christine P W (ed) (1997): Financing Local Government in the People’s Republic of China, Oxford University Press. World Bank (1998): Assessing Aid: What Works, What Doesn’t and Why, Oxford University Press.

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Special Article

Space Relations of Capital and Significance of New Economic Enclaves: SEZs in India Swapna Banerjee-Guha

This paper examines the evolution of the new development enclaves – special economic zones – in India in the light of the space relations of capital. The process of establishing sezs in India is essentially a classic unfolding of the process of “accumulation by dispossession” which is part of the recent strategy of global capital to overcome the chronic problem of over-accumulation. The paper throws light on the ongoing reorganisation of the space relations of capital in India.

Swapna Banerjee-Guha ([email protected]) is with the Tata Institute of Social Sciences, Mumbai. Economic & Political Weekly  EPW   november 22, 2008

“Space is political. It is a product literally filled with ideologies.” – Lefebvre 1991: 101

Introduction

A

large number of erudite, critical writings are being produced on the current economic growth process in India and the official policy of establishing development enclaves in different parts of the country. Most of these writings have deftly exposited the fallacy of the present path and its exclusionist framework that has largely been seen as a part of the contemporary process of economic globalisation. This paper, while sharing the critical perspectives of such writings, attempts to examine the evolution of these new economic enclaves/spaces in the light of spatiality and space relations of capital. The interrelationship that exists among space, spatiality of capital and the globalisation process happens to be the premise of this paper. In several states in India, specific areas – large and small, rural and urban, are being identified as special economic zones (SEZs) to carry out modern hi-tech corporatised activities with promised (sic) returns at a high rate. They are mostly located in functionally active spaces, barring a few that have less habitat or occupations. Essentially global, these new economic spaces, are being carved out from agricultural areas, forests or coastal fishing zones, at times located near big cities or communication networks, in semi-rural areas, in the outer peripheries of metropolitan regions, in villages, also in slums, dilapidated/less-used areas in cities of all sizes. In the process of converting old/active economic spaces into newer ones, a large number of farmers, agricultural labourers, fisherfolk and allied workers are getting displaced from land and livelihoods that is leading to fierce resistance movements in different parts of the country and resultant state atrocities and violence. According to the official argument, as India cannot grow fast without foreign investment for which “world class infrastructure” is an imperative and which the state possibly cannot provide throughout the country in a short time, it is necessary to invite private capital to provide it initially in chosen pockets. While private capital agrees to do undertake this task, it becomes obligatory on the part of the state to offer them various concessions and subsidies in their pursuit of establishing economic and allied activities within such zones. In several states, land acquisition for creating SEZs is being undertaken by regional governments by invoking the colonial Land Acquisition Act (LAA), 1894. As per the provisions of this Act, the state is the ultimate owner of the land and it can take over any tract for “public purposes”, if it pays reasonable compensation.

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Special Article

Enclave development, that was once a mainstay of the colonial state, has thus surfaced as a major policy of the contemporary Indian state with the latter emerging as an active partner in corporate growth. The above process of opening up of new territories – within old ones by replacing the existing land uses – to not just capitalistic development but to capitalistic forms of market behaviour – needs to be viewed as a part of a larger process of progression of global capital and its strategy to industrialise the south. The obvious contradictions of these spaces should not be seen as one between industry and agriculture, or modern and backward, as it gets officially projected, but more importantly as one between the nature of industrial development in the less developed part of the world and the historically evolved region-specific socioeconomic activities and related livelihoods; the latter, in other words, a niche, an interrelated cultural landscape that is now becoming expendable in the name of “creative destruction” by citing a “globally hegemonic discourse”. The depth of this discourse and its intensive regulatory power resides in its ability to restrict serious, responsible, alternative viewpoints of a larger body, and also specify a parameter of the “practical” and “sensible” among linked groups of theoreticians, policymakers and practitioners [Peet 2002]. Following this, I would argue that the entire process of establishing SEZs in India needs to be seen as essentially a classic unfolding of the process of “accumulation by dispossession”,1 the recent strategy of the global capital to overcome the chronic problem of over-accumulation. How does one look at this process as a part of the ongoing reorganisation of space relations of capital? For that, there is a need to revisit the concept of space and spatiality that have always been a key construct of capital’s operational framework and therefore a key element in the understanding of the process of accumulation by dispossession in contemporary times.

Space Relations of Capital and Globalisation The last 100 years of capitalist development have involved production and reproduction of space at an unprecedented scale. The renewed importance of geographical space is reflected in the drastic redrawing of economic and political boundaries based on international political economic relations. Phrases like “shrinking of the world” or evolution of a “global village” thus need to be understood in terms of the specific necessity of a mode of production based on the relation between capital and labour expressing a time-space compression. The universalising tendency they project, primarily concerns the goal of equalisation with unhindered movement of goods, services, technology and selective humanpower, for the need of a constantly expanding market. I argued earlier [Banerjee-Guha 2002a] that it is essentially a levelling of the globe at the behest of capital, exacting equality in the conditions of the exploitation of labour [Marx 1867 (1967)] in every sphere of production. The above phrases, begotten from such levelling, project a one-dimensional geography of sameness in which actually all facets of human experiences are degraded and equalised downward [Smith 1986], hiding the fact that the premise of this equalisation rests on a strategy of dividing relative space into many absolute spaces of differential development, all

52

tuned to the requirement of global capital [Banerjee-Guha 2002 a]. The international economic space thence created is characterised by a divergent use of space and spatial attributes reflecting contradictory tendencies of concentration and dispersal and hence a space-specific valorisation and devalorisation,2 as seen in the recent statist logic in India supporting land acquisition in agricultural areas for establishing SEZs. Space in such cases needs to be seen as absolute, relative and relational – all three together in dialectical tension with each other and in interplay, depending on circumstances [Harvey 2006]. In the light of this, the rapid and dramatic changes that are taking place in the regional space economies in India due to national and international restructu­ ring of capital become extremely relevant. As capitalist activity is always grounded somewhere, it is found that the diverse material processes in a given spatiality continuously get appropriated by the process of capital accumulation. The construction of globalisation thus is found to have largely depended not only on geographical reorganisation of economic activities but also historically evolved cultural landscapes. In the process, it has built and rebuilt geography of regions in its own images, creating newer socio-economic landscapes with produced space of infrastructure and institutions for the purpose of facilitating capital accumulation [Harvey 2000]. In analysing the SEZs in contemporary India, the post-1980 operational strategy of global capital can be the base point. The strategy tangibly represented a contradictory, uneven and crisis ridden process that incessantly explored the possibility of reorganising space relations to create more surplus that could be subsequently undermined or even destroyed for newer accumulation [Banerjee-Guha 1997]. It brought in its wake dynamic changes in production and labour processes. While the pre-1980 relocation process of production from cores having skilled and highly priced organised labour to peripheries with skilled but cheaper organised labour aimed at higher profit by way of reduction of input cost (that on its turn led to labour aristocracy in poorer countries), the subsequent reorganisation rested on disaggregation and fragmentation of a single production process into different modes accompanied with a rigid and centralised corporate control. Because of technological innovations and revolutionary development in transport and communication over which global capital had a total control, production could be made more fragmented, homogenised, suitable to many sub-processes and spatially separated too [Banerjee-Guha 1997]. This “partial” production process distributed at various locations became the hallmark of the post-1980 spatial organisation of global capital [Thrift 1986] involving large-scale and simultaneous small batch production, achieving efficiency by externalising economies of scale (in complete contrast to largescale, factory-based mass production achieving efficiency through internalisation of economies of scale). Because of its simultaneous accommodation of modern and pre-modern production systems than having a unilinear, evolutionary progression of production and technology together, Ettlinger (1990) preferred the term “non-Fordist” than post-Fordist for the newer strategy. Its success lay in subcontracting, making the non-capitalist territorial production areas coexist with capitalist november 22, 2008  EPW   Economic & Political Weekly

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production complexes as equally important entities that drastically brought down the cost of production, more importantly the cost of reproduction and worked towards an absolute exploitation of surplus [Chandoke 1991]. The geographical see-saw of closing down production at one place and opening up elsewhere, especially in a totally different mode were its common features. The lost organised jobs of the rich countries did not necessarily get relocated in the modern organised sector of the poorer countries; fragmented and disaggregated, they got accommodated in the unorganised sector. It did become a part of the process of annihilation of space3 – the primary aim of the globalisation project – but with a simultaneous division and reconstruction of absolute spaces, disjointed from one another in terms of wage and quality of life variations. Thus, on the one hand, technological innovation made it possible to reduce manpower requirement [Basu 2007] in skilled jobs located in modern production complexes with developed infrastructure, and on the other, with simultaneous disaggregation of production and outsourcing of a large part of the same production process, the possibility of engaging low paid, subcontracting, “footloose” workers on flexible terms, increased by leaps and bounds. Tension between fixity and movement of capital was internalised in the above framework resulting in a distinct space-specific devaluation that went to form a part of an internationally operative human cost, social wear and tear and accumulation through underdevelopment. Further, through deskilling of labour and functional and physical separation of production, specific “roles” were created for places in the world economy [Wright 2002]. The basic tenet of the above framework and the associated new international division of labour (NIDL) rested on disaggregation of production and wage differentials. For the purpose of increasing profit, greater mobility of capital, goods and services was pitted against the lesser mobility or near immobility of labour of poor regions and a transnational economic space was carved out in which a phase-wise separation of production between capita­ list and non-capitalist modes surfaced as a basic methodology. There was a massive divestment of capital in old manufacturing plants in the UK, USA, Germany, France and other countries associated with a restructuring of mass production methods towards a “flexible” model of customised production. In this global industrial restructuring, the capital-labour relation and production relations between the global core and periphery underwent a drastic reconfiguration. ILO (1981) noted that global corporations operating in Asia, Africa and Latin America, since the 1970s, increased the size of unskilled workers at the cost of large-scale displacement of production workers. During late 1980s, General Electric’s employment reduced by 1,00,000 while its revenue increased by $ 13 billion, Fiat removed around 15,000 workers from employment while its revenue rose by 12.4 billion lire [Lowe 1992]. In Unilever, cost per worker in Asia was drastically brought down while profit per worker rose by 50 per cent [Elshoff 1988]. In the early 1990s, in Procter and Gamble in India, the entire production of certain products like Crest tooth paste, Clearasil medicated cream or Ultra Clearasil facial cream was undertaken by contract labour located in Andhra Pradesh, Gujarat or Maharashtra. During the same time, in the organised Economic & Political Weekly  EPW   november 22, 2008

garment unit of Hindustan Lever while the number of workers was 250, it was 500 in the subcontracting units. Similar was the situation in H L footwear units [Banerjee-Guha 1997]. Such negative correlation between increase in production and decrease in organised factory employment distorted the concept of increase in labour productivity and created a new labour divide in which the concept of labour aristocracy got diluted with expendability of labour. It worked towards a narrow sectoral development of a high technology and information-based order thwarting redistribution of income and economic benefits over an expanded space [Kundu 1997]. The UNDP 1993 Human Develop­ ment Report noted that many parts of the world started witnessing a jobless growth during this period. The pattern of income distribution showed that 20 per cent of the world’s population had 83 per cent of the world’s income, i e, five times the purchasing power of the poorest 80 per cent [UNDP 1993]. A number of countries during this period started adopting supply side economic policies seeking to derive efficiencies in service delivery by privatising public services. State-capital alliances started becoming a common practice and as a supportive mechanism, neoliberalism flourished, subsequently to emerge as an unchallenged model of economic efficiency with its spite for those who dared to challenge its revealed realities [George 1999]. Blind faith on the market was preached with a religious fervour throughout the world [Conway and Heynen 2006], emphasising state fiscal austerity, market liberalisation and public sector privatisation for the South, the three pillars of the “Washington Consensus” [Goldman 2005]. It was accompanied with a consistent assurance from the global North and the international institutions that economic growth and expansion would come only from the above strategy. “The myth of the global market place” [Sachs 1999] was finally institutionalised with signing of the 1994 Uruguay round of General Agreement on Tariffs and Trade (GATT) and the emergence of the World Trade Organisation (WTO). Neoliberal structural adjustment “solutions” further exacerbated impoverishment, increased exploitation of extractive resources of the South and heightened iniquities in their comparative advantages vis-à-vis the advanced capitalist core countries and their transnational corporate partners [Conway and Heynen 2006].

Opening Up of New Economic Spaces: SEZs in India As a natural outcome of the above process, in a number of countries of the global South including India, through globallocal interplay, a newer form of capitalist development gradually came to emerge, using the dynamics of absolute space within the parameters of relative and relational spaces and depending upon globally networked flows of information, finance, technology and a supportive neoliberal hegemonic discourse. It went beyond the previous practice of production disaggregation and strategised on a total appropriation of space and its attributes for a newer form of exploitation. Set to mutate all existing social relations, it modified the non-Fordist labour process, transformed relations between the dominant and the dominated and alienated specific space-economies from their respective social realities to construct an economic system conforming to its description in

53

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pure theory [Bourdieu 1998]. The common, collective interest and the public good started getting negotiated away by ideological, political and economic power-plays that privileged indivi­dual accumulation subordinating the common people and their rights Figure 1: Sectorwise Distribution of Approved [Cox 1999] to the dominant SEZs in India 2008 power of market exchange Biotech IT/ITES Pharmaceutical [Hardt and Negri 2004] 5 % 62% 4% that even went to underTextile 4% write justification for excesMulti products 5% sive militarism and state violence. Emergence of SEZs in India and associOthers 20% ated contradictions need to be viewed in the light of the above process. Source: Government of India, 2008 The contemporary space relations of capital represents a thorough reworking of innumerable “regionalities” that had once been produced by the convergence of molecular processes of capital accumulation in countries located in different parts of the world, characterised by territorialisation of resources, labour and mode of production. In all these regions, over the years, hege­monistic class alliances were formed as did a working class alliance, encompassing cultural and social values, attitudes, beliefs, religious as well as political affiliations. As India is largely agricultural, many of the above “regionalities” are embedded in agriculture-related activities and livelihoods, identity of which cuts across the above characterisations. Drastic reorganisation of economic space and activities due to the establishment of SEZs is lending an ambiguous identity of placelessness [Harvey 1982] to the above “regionalities”4 which is evident in the conversion of active farmlands in many states into areas of high-tech corporate activities, in dissociation from the rooted regional socio- economic formations. It rests on a contradictory framework of inclusion (of few) and exclusion (of many) and gets directly related to the materialisation of uneven development at various scales involving integration of selective regions/areas and sections of societies in the globalised framework [BanerjeeGuha 1997]. A destructive ensemble of obsoletism and rebuilding, ephemerality and reinterpretation diffuses across the old spaces, displacing the existing use values and altering the discursive as well as the material geography of such spaces. “Space” in this construct is used in a diverse manner giving rise to contradictory tendencies of integration and segmentation, creating a solid and material background for intense conflicts [BanerjeeGuha 2002] that goes to form, inter alia, a part of a global hegemonistic cultural discourse [Gramsci 1971]. A typical neoliberal construction of space, place and scale takes place that goes to reconstruct a new geography of centrality and marginality making the issues of production and capitalisation of space extremely crucial. Landscapes of conflict that are produced as a result, however, stand to be resisted and contested from below [Conway and Heynen 2006] by those whose livelihoods get jeopardised and who are systematically coerced by the state apparatus in diverse ways thereby proving their vulnerability in the current order. One thus finds no mention of the issues of displacement, rehabilitation or compensation in the government

54

web sites [GoI 2007] on SEZs that are bursting with details on the requirements and potential of these zones. Most of the SEZs are gigantic, requiring huge land areas (minimum 1,000 hectares for multi-product zones and 100 for the service sector ones). One must note the congruence of SEZ functional policy of keeping only 25 per cent land reserved for multi-product SEZs and 50 per cent for sector specific productive purposes while the rest for development of real estate, potentially creating speculative real estate bubbles in an effort towards absorbing surplus value, with the help of “neoliberal” urbanism [Smith 2002]. This arrangement explains the urgency from the part of the government to set up such zones. The speed with which they are being approved is alarming: 462 formally approved (Figure 1) till May, 2008 since the enactment of SEZ Act in 2005, comprising about 1,26,077 hectares. Out of these 462, Maharashtra accounts for the largest number (89), followed by Andhra Pradesh (75) and Tamil Nadu (59) (Figure 2) (see the Table, p 55) [GoI 2008]. Figure 2: Statewise Distribution of Approved SEZS 2008

Punjab 7

Chandigarh

2 Uttaranchal 3 Haryana 38 Delhi Rajasthan 7 8 Uttar Pradesh 26 Gujarat 39

Madhya Pradesh 13

Zharkhand West Bengal 1 22 Chhattisgarh 1

Dadra and Nagar Haveli 4

Maharashtra 89

Karnataka 42

Kerala 1

Nagaland 2

Orissa 9

Andhra Pradesh 75

Tamil Nadu 59

Pondichery 1

Source: Government of India, 2008.

In 2000, the first SEZ policy in India was drafted and the SEZ Act came up in 2005. The said zones systematically are being projected as “carriers of economic prosperity” that would (i) boost economic growth at an extremely fast rate, (ii) usher in affluence in rural areas, (iii) provide large number of jobs in manufacturing and other services, (iv) attract global manufacturing and technological skills, (v) bring in private and public sector investment from both home and abroad, (vi) develop infrastructural facilities, (vii) make Indian firms more competitive, and (viii) help slow down rural-urban migration. In short, they are the officially acclaimed carriers of India’s modern industrialisation that would create an all round transformation and lead the country towards november 22, 2008  EPW   Economic & Political Weekly

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a modern mode of living. A number of state governments in India, irrespective of their political ideology, are vying with each other to woo investors to come into their respective territories for which large-scale concessions and incentives are offered at both state and the central levels. To mention a few: (i) recognition as duty free zones and foreign territory in terms of trade operations, (ii) exemption from income, sales or service tax: 100 per cent tax exemption for the first five years and 50 per cent exemption for the next five years, (iii) exemption from examination of export/ import cargo by customs, (iv) allowance to subcontract to any extent, (v) freedom from environment impact assessment (EIA) regime, (vi) allowance to bypass state electricity regulatory commissions and state taxes on raw material, (vii) exemption from import licence rules, and (viii) assurance of all basic infrastructure on priority. Section 49 of SEZ Act, 2005 empowers the government to exclude any or all SEZs from the control of any central law. This means that SEZs will not be governed by the law of the land. The incentives essentially speak of a distinctive status that the SEZs enjoy as “spaces of difference” [Berner and Korff 1995] that signifies them as autonomous functional units, delinked from the surrounding areas on functional terms, simultaneously having such links with faraway places through global networks. In reality, they reflect spatial imbalances at local level associated with economic decline, social inequality and fragmentation at wider territorial scales. It is argued [RUPE 2008] that because balance between requirements and incentives is grossly skewed in these zones that are heavily subsidised by both the government and public, huge loss to exchequers in tax revenues will occur.

Growth, Development and Distribution The logic of establishing SEZs is resting heavily on concepts like “growth” and “competition” and the supposed economic magic they can achieve. It is now widely accepted in official circles that to succeed in the global market a country must have competitive advantage that they should utilise to the fullest. But who does not know that competition in the globalised world itself is unequal? While poorer countries find themselves pitted against global corporations having the necessary technological advantages of negotiating distance and locating economic activities anywhere, the former only have a huge reserve of workers, at various educational levels, whose wage rate is extremely low compared to the prevailing rate in the west. This may lead to high return on capital but not with an associated increase in real wage and personal income, as stated by several critics [Bhaduri 2007; Mitra 2006]. It has already been seen how the operational strategy of fragmenting production at differential spaces of development became a tremendous source of profit for global capital all the world over and a factor towards exacerbating immiserisation of labour. The latter while acting as a factor for the drastic profit rise, remained out of the growth target. Thus as growth does not necessarily ensure equitable distribution of well-being, the more important questions are how growth is achieved and how far it gets distributed and reaches people at a per capita level. A brief mention of the contradictions between growth and well-being in China will not be inappropriate here. The latter is acclaimed as a country signifying tremendous Economic & Political Weekly  EPW   november 22, 2008

growth with a booming export sector. However, she is a successful exporter because her effective wage rate is significantly lower than in the west. If this gap in wages between China and the west got closed, or even significantly narrowed, then her growth stra­tegy will no longer be successful. In the west, in the current epoch of “globalisation” the wage rate of workers has been virtually stagnant. As a result, Chinese wage rates, which necessarily have to remain persistently lower than the western ones for the success of her export-led strategy, cannot increase much either. No matter how high the rate of growth of labour productivity in China in the export sector, since this rate of growth of labour productivity is more or less what obtains in the west (because China is not an innovator and only adopts technologies innovated in the west), the growth rate of China’s wage rates cannot move out of sync with that of western wage rates. If the latter are stagnant then so must China’s be, even though labour producti­v ity everywhere is rising at a fantastic rate’ [Patnaik 2007]. Harvey (2005) notes that hourly wages in textile production in China in the late-1990s stood at 30 cents compared to Mexico’s and South Korea’s $ 2.75. This incredible wage labour advantage made China compete against other low-cost locations, such as, Mexico, Indonesia, Vietnam and Thailand in low value added production sectors and emerge as the major supplier of the US market in consumer goods. From 1990s she started moving up the ladder of value added production to electronics and machine tools and competing with countries like South Korea, Japan, Taiwan, Malaysia and Singapore that helped her earn the status of an off-shore production centre of these countries, besides the US, in a big way [Harvey 2005]. Also as low wage rates made capital saving innovations possible, highly productive Chinese factories reversed the process of Table: State-wise Distribution of Approved SEZs in India (May 2008) Sr State Total Area Percentage Share of Major Types No in Hectares IT/ITES Biotech Pharma- Textile Multi- ceuticals Product

  1 Andhra Pradesh

10,825.4938

  2 Chandigarh   3 Chhattisgarh   4 Dadra Nagar Haveli   5 Delhi   6 Gujarat   7 Haryana

Others

13.18

0.47

6.19

58.4566 100.00

–

–

–

–

–

10.77 100.00

–

–

–

–

–

–

– 67.94

1,17.75 3,86.04

11.99

19.38 17.83 31.92

3.73 63.15 13.28

–

– 20.07 – 30.87

33,803.1705

4.37

0.04

0.17

0.32 48.70 56.40 6.80 42.49 13.06

16,87.223

34.16

3.49

–

  8 Jharkhand

36.00

–

–

–

–

– 100.00

  9 Karnataka

27,12.2099

39.72

2.70 32.04

8.60

– 16.94

6,19.1683

31.44

1.94

–

–

– 66.62

5,47.207

63.23

–

–

– 18.27 18.50

11,361.0385

12.75

1.91

6.17

4,50.00

–

–

–

10 Kerala 11 Madhya Pradesh 12 Maharashtra 13 Nagaland 14 Orissa

1,953.36 3,46.00

–

–

16 Punjab

2,84.07

18.33

–

541.10

18.33

–

–

58,500.724

58.44

–

–

18 Tamil Nadu 19 Uttarakhand 20 Uttar Pradesh 21 West Bengal 22 India

22.4

– 88.89 11.11

9.58 51.01 39.41

15 Pondichery 17 Rajasthan

7.04 48.73

–

– 100.00

8.33 35.67 19.11

–

– 35.67 – 68.56

0.17 3.95 37.44

468.20

6.10

–

–

8,47.6706

37.50

–

– 12.23 12.23 38.04

521.521

80.81

1.99

–

– 93.90 –

--

– 17.20

1,26,077.1732

Source: GoI, 2008.

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using expensive automated systems by taking capital out of the production process (the total capital required was reduced by one-third) and reintroducing a greater role for labour. How was it done? Between 1998 and 2002, the state-owned enterprises (SOE) reduced their workforce by 1,03,000 and the net loss of manufacturing jobs reached around 15 million. But, inside the SEZs, number of jobs, albeit contractual, started to grow. In these zones, overtime is usually compulsory and unpaid. Clark (2008) mentions, for example, that overtime may last from 6 pm to 6 am in peak seasons in the toy factories of Donguan in the Pearl River Delta where 80 per cent of the world’s toys are made by 3,00,000 Chinese workers, many of whom are children. A minute’s delay in reporting for work may reduce pay by two hours and never any compensation is given for any work related accident or disease. Non-payment of wages and pension obligations in China have led to fierce labour protests in many areas. In 2002 in the north- eastern city of Liaoyang more than 30,000 workers from some 20 factories protested for several days that came to be known as the largest demonstration of its kind since the Tiananmen crackdown [Lee 2004]. What needs to be stressed is that China, one of the world’s fastest growing economies (with 9 per cent growth rate), has also become one of the most unequal societies. The benefits of growth have reached only a small section of the urban society. Some studies compare China’s social cleavage unfavourably even with Africa’s poorest nations [Wu and Perloff 2004]. Regional inequa­lities, including intra-rural and intra-urban inequalities, have intensified in China with a few southern coastal cities surging ahead. At the same time, the interior areas and the “rush belt” of the northern region [Harvey 2005] and many rural areas get almost no support. They are forced to tax local farmers and impose enormous fees to finance physical and social infra­ structure like schools, hospitals, road building, even the police. Poverty and the resultant unrest are seen to be intensifying.5 There have been far-reaching shifts in Indian policy in the last few decades facilitating large-scale entry of global corporate capital in almost all economic sectors, downsizing of labour, outsourcing of industrial and other economic activities and promotion of an aggressive urbanisation by modernising cities of different size, through direct policy interventions. Such policies are systematically keeping out a large section of the population from the growth process, creating a distinct space of the marginalised that has been steadily on the rise. A close connection is seen among these policies and that of the international financial institutions like the World Bank, the International Monetary Fund, Asian Development Bank, the global corporate sector, and quite significantly, the major capitalist countries. The role of the state has also been redefined into a modern, vociferous one facilitating private sector operation and a developmental governmentality, a “politically neutral” practice, pitched heavily on the rationality of experts and professionals [Sanyal 2007]. An increasingly irreversible production structure in favour of the rich has started consolidating and economic activities catering to the rich are being handed over to large corporations. Simultaneously a typical jobless growth is seen to flourish. To cite a few examples: the number of workers in the Jamshedpur steel plant of the Tatas came down from 85,000 in 1991 to 44,000 in 2005

56

while production rose from one million tonnes of steel to five million tonnes. This means output increased by a factor of five while employment decreased by a factor of half. Similarly, Tata Motors in Pune reduced the workforce from 35,000 in 1999 to 21,000 in 2004 while increasing production from 1,29,000 vehicles to 3,11,500. Bajaj motor cycle factory in Pune reduced the number of workers from 24,000 in the mid-1990s to 10,500 in 2004 while doubling the output with the help of Japanese robotics and Indian information technology [Bhaduri 2008]. In Maharashtra, the leading state in terms of foreign direct investment (FDI), the number of factory workers came down from about 1.22 million per day in 1989-90 to about 0.77 million per day in 2003-04, although the industrial output increased from around Rs 78,000 crore in 1992-93 to over Rs 2,36,000 crore in 2003-04. Even today Maharashtra is the leading state in the factory sector in terms of investment, gross output and net value added; it is only factory employment that has declined [Singhvi 2008]. This is only possible with a huge rise in labour productivity, as mentioned earlier, that again is largely contributed by the unorganised sector accounting for more than 90 per cent of the country’s labour force. Ruthless exploitation of labour has thus become the source of increased corporate profit as well as international price competitiveness in a globalised world [Bhaduri 2008]. While the country’s growth roars ahead at 8 per cent, growth in regular employment is found to have exceeded not even 1 per cent in recent years. Quite logically India accounts for the largest number of homeless, illiterate and ill-fed in the world [Bhaduri 2008]. A culmination of all the above processes, as argued by many, is the recent decision of establishing SEZs – the largest in number among all countries – that will help the corporate sector directly appropriate land and resources and open up the possibility of having a huge army of cheap labour, a large section of them comprising the dispossessed. Surveys have found that workers in SEZs work 5.3 per cent more hours than those in non-SEZs and at hourly wages that are 34 per cent lower [Sen and Dasgupta 2008], obviously to offer labour power at a “competitive price” in the global production system. To facilitate this, SEZs are declared as “public utility services” with several exemptions from the labour laws, including the Minimum Wages Act and the Contract Labour (Regulation and Abolition) Act, and where strikes will also be made illegal. To recall, the Chinese state used its own uneven geographical development as a competitive edge over other countries and became a vociferous partner in facilitating the expansion of global capital by using its incredibly low-wage labour advantages. In a unique fashion, the state in China internalised welfare arrangements and social provisions within provinces, cities and local governments and relegated the rural dwellers as the least privileged citizens, physically separating them from the urban population by introducing residency permit systems. A state-mani­pulated market economy was created that delivered specta­cular economic growth for a long period for a significant pro­portion of the population which, however, brought in its wake mounting social inequality, declining per capita foodgrains availability for the rural masses [Patnaik 2007], severe environmental degradation, and finally, a revival of capitalist class power [Harvey 2005]. In november 22, 2008  EPW   Economic & Political Weekly

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India too, against a background of pervasive agrarian crisis, conversion of farmland into SEZs will clearly aggravate the problems of declining foodgrains availability. Already with a sharp decline in the public investment rates and public development expen­diture in the primary se- ctor, the consumption of the poor in the country is sacrificed. The agra­rian crisis is getting mani­fested through a sharp inc­rease in the number of landless rural households (in Kerala, the rise was from 5.8 per cent in 1992 to 38.6 per cent in 2002-03) and the large number of farmer suicides underlying which is a steep fall in the profitability of production engineered by neoliberal policies [Patnaik 2008]. The nature of the land that is being earmarked for the purpose of establishing SEZs in different states in India indicates to a large extent the vulnerability of the rural poor engaged in primary activity. The overall trend in all the states has been to acquire agricultural lands for SEZ activities that are located close to transport lines, highways or other infrastructures. Large tracts of land in agricultural areas in various states like Maharashtra, Orissa, Punjab, Haryana, Kerala and West Bengal (including multiple cropped lands) have been earmarked for the purpose. The above process of acquisition of farmlands for corporate sector, accor­ ding to Patnaik (2008), will facilitate the entry of foreign corporates into agriculture and related activities through contract systems and domestic corporates into urban food retailing by sourcing from agriculture that will aggravate the problem of declining foodgrains availability and intensify the problem of unemployment among petty traders, in the long run. Acquiring wastelands for SEZs is also not a simple issue. Wastelands (India has 55.2 million ha of wasteland) can be land with scrub, grazing land, pasture or land on which shifting cultivation is carried out. Who does not know that the poorest and the most marginalised depend on these lands for their survival by way of collecting firewood, fodder for animals and minor forest produce? Much of the officially declared wastelands are actually common property resources [Down to Earth 2006]. To cite examples, in Mahara­ shtra, ‘dali’ or ‘gairan’ lands, classified as wastelands and now earmarked for SEZs were being allotted since long to landless tribals or dalits for cultivation purposes. Similarly in Gujarat, common grazing lands are being taken away. The LAA of 1894 seems to have superseded all such rights of the people along with relevant progressive legislations like the panchayati raj (73rd Amendment) Act of 1992 entitling rights to villagers to decide their own course of development or the panchayats (Extension to the Scheduled Areas) Act, 1996 empowe­ring the indigenous peoples for self-rule. In compensation debates too, the above user rights over land are bypassed while only owner rights are mentioned. The preamble to the National Relief and Rehabilitation Policy (NRRP), 2007 states that while acquiring land the state needs to minimise displacement and promote, as far as possible, non-displacing or least-displacing alternatives for which projects may be set up on waste lands, degraded or unirrigated lands. Acquisition of agricultural or irrigated land for non-agricultural use may be kept to the minimum and multi-cropped land may be avoided. Also, while acquiring land, adequate rehabilitation packages especially for the weaker sections need to be ensured and speedily implemented [NRRP 2007]. As none of these has Economic & Political Weekly  EPW   november 22, 2008

been followed in reality, fierce resistance struggles against “land grab” have erupted in different parts of the country leading to state atrocity and violence.

Underlying Logic: Legitimising SEZs This brings us to the strategy of negotiating the contradictory spaces that are intertwined with the process of establishing these zones and its underlying logic. A careful analysis of the current development patterns in the country will make things clearer. There are three interrelated issues to take note of. Let us first look at the type of activities being developed in the SEZs. Only 5 per cent of the approved SEZs [GoI 2008] are multi-product while information technology (IT)/information technology enabled services (ITES) SEZs are 62 per cent (Figure 1). According to Upadhya (2007), providing lucrative employment opportunities for the above workforce contributes only to the reproduction and consolidation of the middle/upper class from whom this workforce is drawn. The total employment that the IT/ITES SEZs will create is negligible and if the number of potential jobs is put against the volume of investment one finds that one job will require an investment of Rs 1 to 1.5 crore or even more [RUPE 2008]. In 2006-07 the IT/ITES sector (including engineering services, R & D and software products) accounted for 4.3 per cent of the country’s GDP, of which 80 per cent was from exports. But it accounted for only 0.3 per cent of the country’s employment. Even if employment in this sector doubles by 2010, it will still account for a mere 0.7 per cent of the total employment but accounting for more than 6.5 per cent of the country’s GDP which will be nine times its share in the workforce [RUPE 2008]. This is in addition to the fact that firms in this sector have strong external but weak domestic linkages, with 75 per cent of their output exported. What else can be an enclave within the economy? Larger income generated in this sector will mainly boost demand for elite consumption like better housing, automobiles, organised retail, hotels and entertainment, banking and share marketrelated activities, etc, that will generate very low domestic employment, even though there may be an addition of some indirect jobs. Its enormous effect on real estate is evident which brings us to the second issue, i e, the special status that real estate enjoys in contemporary times in the country, in general, and in SEZs, in particular. A major part of the growth envisaged in the SEZs is through real estate and infrastructure. Huge tracts of lands within SEZs are being reserved for real estate projects involving “luxury constructions” that are being projected as infrastructural development. For example, the 5,100 acres of land to be given to the Salim group (of Indonesia) in West Bengal where the investors will bring Rs 44,000 crore will mainly go for making golf courses, hotels, recreation, commerce and world class residential complexes, generating employment to not even 5,000 people [Mitra 2006]. The requirement of surplus capital or profit to regenerate itself through fresh investments, given the coercive laws of competition, is thus met through real estate and/ or “infrastructure development”. One may recall Baran’s (1958) argument that the effect of infrastructural facilities would be nix if they remain alien and do

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not become a part of an economic environment or a socioeconomic structure into which they have been built. In such cases, they would only accelerate disintegration of the peasant economy and contribute towards a more intensive mercantile exploitation of the rural interior. Along with “industrialising” the countryside, such infrastructural development serves to urbanise and modernise the countryside as well, helping in the process, the expansion of the space of consumption. In case of China, “real estate” development in and around large cities and inside the export processing zones became another privileged path towards amassing immense wealth in a few hands. Since peasant culti­ vators did not hold title to the land, they could easily be dispossessed and the land converted to lucrative urban uses, leaving the cultivators with no rural base for a livelihood and forcing them out of the land and into the labour market. As many as 70 million farmers may have lost their land in this way over the last decade [Harvey 2005]. Acquisition of peasant lands in India currently for the corporate sector and for SEZs has been identified as a new phase of primitive accumulation [Patnaik 2008] whereby lands are used more for real estate development and land speculation than for new manufacturing activities. The idea that urban real estate redevelopment has become a central motive force in the age of neoliberalism [Smith 2002], fits well with the fast pace of real estate development in SEZ enclaves and in many large cities. The township of New Rajarhat in Kolkata, West Bengal, built upon the displacement of an agrarian community or the Maha Mumbai SEZ coming up on agricultural lands in western Maharashtra in the periphery of Mumbai or the 2,500 acre new township being built in the Ghaziabad district of Uttar Pradesh by the real estate developer Ansals are pertinent examples. Merryl Lynch has recently stated that the growth of real estate sector in India will be up to $ 90 billion in 2015. In 2005 it was $ 12 billion. Finally, in close association with the above two, comes the final issue of opening up of the internal market and helping a consumer class grow, mainly in large cities, that would act as a forerunner of the contemporary modernity and preclude large-scale social unrest that may arise out of the displacement and dispossession that the contemporary growth process leads to. Budget allocation for large cities is a good indicator to understand this pheno­ menon. Enormous capital is pumped into the cities especially the larger metropolises that are experiencing drastic restructuring [Banerjee-Guha 2002] in order to be developed as an ideological base of corporate capital that would work towards lending a logic to the aggrandisement of economic globalisation in a garb of modernity. One may recall the hype created about the importance of mega cities by the introduction of the Mega City Programme in 1991, that renewed the flow of investment into these cities and their regions. The same cities are now in the priority list of the central government for large-scale gentrification through World Bank-aided central government’s urban renewal programme, the Jawaharlal Nehru Urban Renewal Mission (JNURM). Huge funds are being allocated for the National Highway Project connecting larger metropolises and facilitating expansion of interstate automobile travel. The fenced off eight-lane Mumbai-Pune Expressway, maintained by a private firm, cuts across agricultural

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fields lying on its two sides, preventing villagers to reach their field located across. The same is the case with the fenced off Bangalore-Mysore Infrastructure Corridor Project Expressway. Similar road rage [Low and Banerjee-Guha 2003] is seen in the reorganisation of intra city transport focusing on flyovers, metros and elevated channels bypassing the development of the basic public transport system on which more than 80 per cent of the residents in each city depends. A surging consumer culture is engulfing these cities [Harvey 2005] in which material manifestation of inequalities like “gated communities”, “edge cities” of hi-tech activities, spectacular consumption zones, shopping malls and theme parks heightens the logic of aesthaticising urban development [Kipfer and Keil 2002] and dissociating it from public discourses. The related cultural implications works towards justifying a unified urban planning vision that is significant for the construction of hegemony [Lefebvre 1991] and a “dominant” culture comprising competition, modernity and exploitation [Banerjee-Guha 2002]. With a flexist imposition of global imperatives, these cities act as links between global capitalist culture and local spatial formations prioritising grandiose projects of infrastructure, cultural and commercial facilities, all representing gentrification. Perpetrated in the name of urban planning, in the present time it is helping to reconstitute bourgeois hegemony and resonate an intensely polarised capita­ list urbanisation process having a range of impact. In India, it is also reflecting the contradictions of state institutions that are essentially a crystallisation of uneven development, indicating towards a process of “rescaling”, “decentralising”, “localising” and “internationalising” – a unified and a larger process of neoli­beral restructuring of contemporary times. It partly rests on existing inequalities, but largely on the reproduction of newer areas of decline and growth, based on contemporary forms of economic momentum. Together they work towards a process of accumulation by dispossession at different socio-spatial scales and simultaneously lend a theoretical justification to contemporary development patterns. “With its monopoly of violence and definitions of lega­lity, [the] state plays a crucial role in…promoting these processes” [Harvey 2005: 159]. Concomitantly, it brings in its wake, various institutional realignments and political adjustments, imposing newer forms of market discipline upon global, national and local social formations. Amidst the process of creating an “utopia” of a free market, in practice it shows up a dramatic intensification of a coercive disciplinary form of state intervention to impose market rule. Interestingly, while the majority of the people, by this process, are subjugated to the power of market forces, social protection is kept reserved for the strong [Gill 1995]. As Lipietz (1992) suggests, it is taking place on an aggressively contested institutional landscape in which newly emerging “economic spaces” interact conflictually with inherited regulatory arrangements, providing a political arena through which sub­sequent struggles over-accumulation by dispossession and its associated contradictions are getting articulated and fought out [Brenner and Theodore 2002]. It, therefore, needs emphasis that the contextual embeddedness of the above processes as they are being produced within national, november 22, 2008  EPW   Economic & Political Weekly

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regional and local scales in India, are getting defined not only by the nexus of policy regimes, disciplinary political authorities and their regulatory practices, but also by resistance struggles, consolidated grassroots movements and mobilisation of progressive forces towards challenging the corporatised development paradigm.

Notes 1 Accumulation by dispossession, according to David Harvey (2005) can take several forms in the present time. Escalating depletion of natural resources like land and water and their privatisation, degradation of land and settlements by capital intensive farming that results from commodification of nature, patenting of general material and using them against people who contributed in developing them, corporatisation and privatisation of public assets, withdrawal of social welfare laws (that were earned through long struggles) protecting labour rights and rights of the poor, pension benefits, national healthcare all indicate towards practices and policies of dispossession pursued in the name of neoliberal orthodoxy. For further clarification, see David Harvey, The New Imperialism, Ch 4, Oxford University Press, UK, 2003. In a recent article on Indian SEZs, Sampat (2008) has clarified the process. 2 The process denotes removal of all spatial barriers to international production and exchange and simultaneously entails space differentiation and uneven development to exploit region and country specific characteristics, such as levels of income, wage rate, labour laws, laws related to environmental impact assessment, etc. The upshot is that the development of the space economy of capitalism is beset by counterposed and contradictory tendencies. See Swapna Banerjee-Guha, Spatial Dynamics of International Capital, Ch 2, Orient Longman, 1997; David Harvey, The Limits to Capital, Ch 13, Basil Blackwell, 1982; Henri Lefebvre, The Production of Space, Basil Blackwell, 1991. 3 The point that needs to be stressed here is that these changes in relative space are neither accidental nor arbitrary but integral to the production of the national scale and its differentiation into rising and declining regions. See Neil Smith, Uneven Development, Ch 5, Basil Blackwell, N Y, 1984; Also, A Markusen, Regions: The Econo­ mics and Politics of Territory, Rowman and Littlefield, 1987. 4 For a detailed analysis on Neoliberalism and China, see David Harvey, A Brief History of Neo­liberalism, Ch 5, Oxford University Press, 2005.

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Enforcement of market rule over a wider range of social relations and the impact of the ongoing “creative destruction” of politicoeconomic spaces at multiple geographical scales need to be understood in the light of the contradictions generated there from. It then becomes clear that the nexus stands challenged.

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