Guest post by ADITYA VELIVELLI
The Modi government’s actions over WTO are a case of much ado about nothing. They have pointedly created a false perception over a non-issue so as to appear pro-poor. Modi said “Do we choose feeding our poor or getting good press world-wide?” Turn this statement around and one gets to see the truth of the matter. The real attempt here is “How to masquerade as pro-poor and get good press in India by using WTO?”
This demonstration of concern for the poor helps Modi’s government in implementing ultra-neoliberal economic policies in the coming months. To understand the game-plan one should only look at the people guiding Modi’s economic thinking.
According to Business Standard (July 12, 2014)
[Modi] is being guided by economists Arvind Panagariya and Bibek Debroy … Then there is the India Foundation, a think tank where … Jayant Sinha and former RSS spokesperson Ram Madhav are directors, … known to advise Modi on economic and strategic issues. It [India Foundation] interacted with foreign investors and conveyed their expectations on tax laws and other issues to North Block.
The business media is only stating the obvious, that Mr. Modi is being guided by Jayant Sinha, a director of India Foundation and former MD of Omidyar Network. This was pointed out by Mark Ames of Pando Daily in May and by Kafila in early June. As noted earlier, Mr. Modi lobbied for FDI in e-commerce the same day he addressed a foreign investors meeting organised by Jayant Sinha, a known proponent of FDI in e-commerce and a former employee of Pierre Omidyar. Pierre Omidyar is the largest shareholder in eBay, which strongly lobbied for FDI in e-commerce on 3 different occasions. See here, here and here.
Mr. Jayant Sinha’s growing importance is also demonstrated by the fact that he was chosen as the lead BJP speaker during the budget discussion in the parliament.
Jayant Sinha and Bibek Debroy’s links to microfinance
One of the more shameful episodes in recent times is that of suicides caused by inhumane debt-collection practices adopted by microfinance companies, mainly SKS microfinance. Instead of addressing these inhumane practices, both Bibek Debroy and Jayant Sinha defended the microfinance companies. In Mr. Sinha’s case, he wrote an article with a SKS board member attacking the AP Govt.’s anti-microfinance bill. Mr. Debroy went even further and (against evidence) stated that the links between the suicides and microfinance were anecdotal!
… fed on journalistic and anecdotal accounts of coercive recovery, high interest rates, multiple lending and suicides by borrowers
In his article, Debroy affiliated himself to the Center for Policy Research (CPR). However, he failed to reveal his affiliation to Indicus Analytics that conducts research on financial inclusion. This was not the first time Debroy failed to mention his associations. During an interview with Business Standard, Debroy advocated Government leniency toward direct selling, but failed to mention that his company Indicus Analytics was sponsored by Amway to write a white paper on direct selling.
Jayant Sinha’s defense of microfinance is motivated by his former boss Omidyar’s philosophy and investments in microfinance. Omidyar said that such investments were to be “evaluated as commercial investments and, no different than any other business opportunity” and demanded that “social impact not serve as a shield for underperformance.”
Omidyar’s demands meant that SKS microfinance was under pressure to lend in abundance (no matter the borrowers were already in debt) and then resort to all kinds of tactics including shaming to get repaid.
Sinha wanted to apply the Omidyar philosophy to the budget – “our focus is on following an investment led approach and allocation of resources”. Sinha also called the previous government’s approach as “mindless populism”. The “mindless populism” tag was meant for the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and food security schemes.
By no stretch of imagination is MGNREGA found to be a ‘charity’ or a ‘dole’ as pronounced by Prof. Debroy. The poor have worked in plantations, rural connectivity, water conservation, irrigation channels, land terracing and development of school playgrounds and have contributed to creation of assets and environmental goods.
With regard to food security schemes, Debroy said “No one who is in the working age group should be given subsidies. If at all anyone is to be subsidised then it should be children and poor women in female headed households.”
Bibek Debroy also told Reuters that Modi “shared his market-driven policy platform and opposed handouts.”
Already Sinha and Debroy’s ideas are being put into action. Frontline magazine reported that the recent budget attempted to weaken and ultimately scuttle the MNREGA scheme.
While hapless daily-wage labourers languish for months without payment for work they have already done, Jaitley chooses not to recognise this even to the extent of adding this unpaid amount to his budgetary calculation.
Clearly, this government is choosing to wind down this important programme that has acted as a life-saver for many rural poor despite its limitations and problems of implementation.
Modi and Debroy
Mr. Modi recently launched a book edited by Debroy. In the beginning of his remarks, Mr. Modi stated, seemingly in jest, that his burden had been lowered because all the work had been done by the authors in the book. In jest too, people reveal their thoughts.
Mr. Debroy’s influence on Mr. Modi is significant. In 2011, Debroy hinted that India’s planning commission should be done away with.
If we are removing all transfers to states through Planning Commission and also getting it out of research, what will Planning Commission do? That’s a good question.
Three years later, Mr. Modi did just that. Without consulting the Parliament, Mr. Modi said during his Independence Day speech, “We will very soon set up a new institution in place of Planning Commission”.
Following Modi’s speech, the economic times reported that the planning commission would be replaced by a think-tank that includes the microfinance suicide-denier and planning commission enemy Bibek Debroy.
The association between Debroy and Modi goes back a long way. While working as director of the Rajiv Gandhi Institute for Contemporary Studies (RGICS) in 2005, Debroy co-authored a report supposedly measuring “economic freedom of Indian states”. Gujarat topped the list. This praise was taken to town by Modi with advertisements in newspapers, followed by fawning media coverage. The association of Debroy with the Rajiv Gandhi Foundation (RGF) through RGICS created a false perception that RGF headed by Sonia Gandhi had acknowledged Modi’s so-called economic development of Gujarat.
The public gained an impression that Modi’s economics were so good that they were commended even by his political enemies. Overnight, Debroy turned Modi into an economic superstar.
According to economist Reetika Khera (who lived in Gujarat), Gujarat’s development pre-dates Modi considerably.
Both Debroy and Modi failed to mention that the data used in Debroy’s paper was from before 2002, when Modi was not Chief Minister of Gujarat. More importantly, Debroy’s paper was a completely flawed one based on the methodology developed by a Libertarian rightwing think-tank, Fraser Institute. Fraser Institute is part of the State Policy Network (SPN), “an umbrella group of thinktanks acting as a largely beneath-the-radar lobbying machine for major corporations and rightwing donors.”
Its policies include cutting taxes, opposing climate change regulations, advocating reductions in labour protections and the minimum wage, privatising education, restricting voter rights and lobbying for the tobacco industry.
The network’s $83.2m annual warchest comes from major donors. These include the Koch brothers, the energy tycoons who are a mainstay of Tea Party groups and climate change sceptics; the tobacco company Philip Morris and its parent company Altria Group; the food giant Kraft; and the multinational drugs company GlaxoSmithKline.
Mr. Debroy published the freedom index report after he was inducted into the secretive Mont Pelerin society in December 2004. Mont Pelerin society was founded by Friedrich Hayek who helped the billionaire Koch brothers to invent Libertarianism in the late 1960s.
Debroy had to resign from RGICS for his flawed report and for embarrassing his benefactor of the last 7 years by publishing a report clearly sponsored by outside entities. Mr. Debroy has continued to publish this flawed economic freedom index with funding from Friedrich Naumann foundation and Cato Institute.
Debroy is also associated with the Liberty Institute in Delhi and is an active participant in their activities and meetings. Barun Mitra, who wrote a chapter in Bibek Debroy’s book, is the managing trustee of Liberty Institute, a partner of the Atlas Network. According to journalist George Monbiot, “Mitra and Liberty lobbied hard for commercial approval for Monsanto’s GM cotton, claiming there should be ‘free access’ to new technologies without any government interference.”
Atlas Network based in the UK is a forerunner of the State Policy Network based in the US. Antony Fisher founded the Atlas Network in 1981. Before that Fisher headed the Institute of Economic Affairs (IEA). According to Atlas Network,
When she [Thatcher] ascended to the role of Prime Minister, she wrote to the General Director of the Institute of Economic Affairs: “It is primarily your foundation work which enabled us to rebuild the philosophy upon which our party succeeded.”
Britain under Thatcher followed the policies prescribed by the IEA and this led to disastrous results. Monthly Review reported:
Since Margaret Thatcher first came to power in 1979, the number of people living below the official poverty line in Britain increased from 6 million to II.7 million by 1986. Employment in manufacturing industry has decreased by almost 2 million, while the number employed in the service sector has increased by 746,000; as a writer in the Guardian (London) put it tersely, there has been a “passage from an iron and steel economy to one of hamburgers and chips.”
Debroy’s association with the Liberty Institute includes writing forewords for Cato Institute books and for Ayn Rand related books. The Ayn Rand book was edited by Tibor Machan. Mark Ames recently wrote about how the Libertarian Reason magazine published a Holocaust deniers issue in 1976. Tibor Machan was senior editor of Reason magazine at the time.
It is also well worth reading Mark Ames’s article on Ayn Rand. A short extract:
[Ayn] Rand not just worshipped a serial killer, but Rand also despised democracy, writing that, “Democracy, in short, is a form of collectivism, which denies individual rights: the majority can do whatever it wants with no restrictions.”
Rand’s philosophy can be summed up by the title of one of her best-known books: The Virtue of Selfishness. She argues that all selfishness is a moral good, and all altruism is a moral evil, even “moral cannibalism,” to use her words. To her, those who aren’t like-minded sociopaths are “parasites,” “lice” and “looters.”
Before joining RGICS, Debroy was an unknown entity in the field of economics. Mr. Debroy developed links within the Indian Government when he became a coordinator for external consultants on a project set up by the finance ministry to examine legal reforms (1993-1998). Debroy’s knowledge of law was so limited that a book reviewer had this to say:
With little knowledge of the law and with virtually no research on why the various provisions he has profiled for examination were enacted and how they have worked, he has simply followed the sound of his own laughter and his sense of incredulity.
Debroy was appointed to RGICS in 1998 by Abid Hussain (vice-chairman of RGICS), a former bureaucrat responsible for the first wave of neoliberal reforms under Rajiv Gandhi. These reforms were a disaster for India as they led to a “debt-led growth that ended in a macroeconomic and balance of payments crisis in 1991 as the First Gulf War broke out and oil prices went through the roof.” The balance of payments crisis was used by Prime Minister Rao to push through the second stage of neoliberal reforms.
In the mid-to-late 1990s, RGF was the largest non-governmental organization in India with powerful patrons from all over the world. Debroy obtained many contacts after being made the director of RGICS. This explains his rise from an obscure economics teacher to the economic adviser to Modi.
Aditya Velivelli is originally from Hyderabad, India. He currently works as a thermal applications engineer in Detroit.