Unrestricted globalization - boon or hazard?In 1998, the BJP had led the NDA"s electoral campaign with a "swadeshi" propaganda thrust. Many of the NDA"s voters had truly believed that unlike the previous regimes, the BJP-led government would not succumb to international pressures - particularly US machinations, and protect the nation"s economic and national security interests. Finance ministers closely associated with neo-liberal economic programs - like Manmohan Singh and P. Chidambaram were defeated in the polls and there was an expectation that there would be a noticeable shift in direction. But long-time critics of the BJP had already warned that the BJP was insincere in it"s commitment to "swadeshi" and it"s turnaround in the ENRON case was more likely to serve as a model for it"s future actions. Although neo-liberal forces were kept somewhat at bay in the BJP-led NDA"s first term, a more comfortable majority in the second round has given the promoters of neo-liberalism in the coalition more confidence that they can get away with unpopular policies without much concern about political stability. That every successive administration in the last decade has eventually succumbed to the pressures of globalization suggests that regardless of how different political formations package their policies in advance of the elections, there is a powerful and very vocal lobby for globalization in India. This is because for some sections of Indian society and the Indian diaspora, globalization has come as something of a bonanza. NRIs look forward to new business opportunities in a globalized India. English-language (or even local language) media outlets who expect globalization to increase advertizing revenues have also been eager supporters of globalization. (A recent Economic Times survey of the nation"s top CEO"s indicated that most major India businesses anticipated considerably higher allocations for marketing and advertizing campaigns in order to survive in the globalized Indian economy. Some estimate that the advertizing industry has been one of the fastest growing industries in India - growing as much as 25-30% in some years.) Another outcome of globalization has been a huge increase in salaries of senior managers, accountants, lawyers and public-relations personnel working for MNCs or their local competitors. For the IT-literate, job opportunities have been plentiful, and there are also opportunities to live and earn abroad. For the English-speaking upper middle-class, this has come as a boon. With greater access to disposable income, the seduction of consumerism becomes hard to resist, and the demand for unrestricted globalization inevitably follows the attraction for new and ever more advanced consumer goods. This new and more prosperous class of Indian consumers associates India"s progress with the availability of the latest automobile models and consumer goods. The local availability of imported European cosmetics and fashions, imported drinks and confectioneries - these have all become important to those who have sufficient disposable income to purchase such items. Globalization has other champions too. Importers have a strong financial interest in a globalized economy. But so do exporters dependent on imported parts and machinery. Industrialists with interests in ports, shipping, international warehousing and other aspects of international trade and commerce may also see globalization as beneficial to their sectors of the economy. Indian industrialists who have so far failed to invest in research and development and are losing the battle for market share are also becoming amenable to globalization in the fond hope of partnering with an MNC that will enable them to stabilize or expand their sinking business ventures. Although these sections of society are in numerical terms a very small minority in the country, they are able to wield considerable authority on account of their financial clout. Their voices are far more likely to be heard in the Indian media, and they are much more likely to be able to influence important political decisions in the country. Because of their familiarity with English, and privileged access to major media outlets and institutions of higher learning, they are taken to be more credible, and are thus able to exercise tremendous influence on public policy. But it should be noted that the interests of a particular section of Indians need not match the real interests of all other sections of Indian society. Other sections of society may benefit only to the extent that a fraction of this new prosperity trickles down to them. Some may not benefit at all, while some may even be adversely affected. In addition, globalization may have hidden consequences that may negatively impact the quality of life even of those prospering through globalization. But the greatest danger posed by unrestricted globalization is that it may exacerbate the problems of nagging poverty and uneven development, and create grave infra-structural mismatches. It is already evident that the Indian economy has become more dependent on imports which has brought with it constant pressure on the value of the Rupee, leading to recursive bouts of high inflation. And rather than expand India"s manufacturing strength and develop new capabilities and technological development in India, globalization may in fact put India at a global disadvantage in key sectors of modern industry leading to an economy that is always chasing scientific and technological advances that occur in other nations. Globalization and Technology Transfers Take the argument that globalization brings in new technology. On a selective basis, globalization indeed brings in new technology and opposition to globalization is not tantamount to becoming technologically isolated from the rest of the world. But today, almost no advocate of globalization is calling for selectivity. For instance, Coca-Cola and Pepsi were welcomed into the country even though they offered little in terms of new technology. Cosmetic manufacturers and manufacturers of designer label clothes have also brought in little new technology of any consequence. The same can be said of advertising companies and manufacturers of consumer non-durable goods like soap, detergent, toothpaste, cereals etc. And although there has been significant investment in the manufacture of automobiles and consumer goods, the capital equipment and the assembly lines for their production is imported. Little of the design and development work takes place in India. And in many instances, all that happens is the local assembly of knocked-down kits. So far, globalization in India has not been tantamount to an all-around technological upgradation of Indian design and manufacturing. Some offer a counter-argument for unrestricted globalization arguing that only if India liberalizes unconditionally will India be able to attract high technology and capital investment in the areas it really wants. In other words, if we let the Cokes and Pepsis of the world to come in, the INTELs, the AMDs, and the CISCOs will follow. But the experience of the last decade belies such claims. While it is true that INTEL, AMD and CISCO have all invested in India, the sum total of their investments has been minuscule in relation to their other investments abroad. And rather than bring in new technology to India, they are actually sucking out technology from India. All their investment has been on divisions that either develop software on demand, or provide research assistance to their US counterparts. None of them has set up any manufacturing plants in India or signed any technology transfer agreements with any Indian company. All the technology that is developed is owned and marketed by the parent company, and other than the slightly higher than average salaries that accrue to a small minority of Indians working in the sector, few benefits accrue to India as a nation. What is worse is that these companies are provided all manner of perks and privileges to exploit India"s intellectual capital. They are given tax breaks and tax write-offs. They are given preferential treatment in the allocation of scarce resources like land, and round-the-clock electricity supply. In a July 20 Times of India report titled "IT expert warns against digital divide in country" the author wrote: A leading information technology (IT) expert has cautioned against a "digital divide" in the country and creation of disparities between the IT haves and have-nots. The report quoted M. Anandakrishnan (vice-chairman of the information technology task force of the Tamil Nadu government and the vice-chairman of the Tamil Nadu state council for higher education) as saying: "You cannot have a high-tech facility and have 50,000 people within a few kilometres who don"t have any access to computers. Availability of computers in every village did not mean accessibility and accessibility does not mean assimilation. Unless there is "localisation of content" this technology could not be used by 97 per cent of the population." The article goes on to question the euphoria surrounding the growth of the IT sector and again quotes M. Anandkrishnan: "We speak of 57 per cent growth of the software sector and 100 per cent growth of the hardware sector. We must take into consideration that the figures include hardware and equipment imports. We are talking of someone else"s products. We are still dependent on imports, and even now we have to use servers abroad to get to the Net". (Although there are some companies that assemble personal computers in India, India"s share of world hardware manufacturing is less than that of Taiwan, Korea, Malaysia, China, or Singapore - even lower than Thailand or the Philippines). M. Anandkrishnan was also quoted as saying that the productivity of Indian labour was very low - that Indian workers earned one thirtieth of what a Japanese worker took home, concluding that the burgeoning of IT could be termed a "revolution" only if a "high intensity of growth," was indicated. The absence of any significant investment in the local design and manufacture of advanced electronic components, computer chips or telecommunication hardware must be seen as a significant failure of this decade of rapid globalization. Advocates of globalization have often made the claim that globalization rather than destroy Indian industry would instead accelerate the growth of new industry and cause India"s economy to grow faster. But a detailed analysis of Foreign Direct Investment (FDI) in the last few years indicates that a sizeable portion of this investment has not gone into the creation of new productive capacities. Much of the investment has simply gone into into takeovers of existing Indian enterprises or towards speculative investments in the Indian stock market. Moreover, other than India"s "hot" IT companies and select MNCs - the vast majority of Indian stocks have not benefited from such highly volatile FDI flows. In addition, several MNCs have deliberately launched new 100% owned ventures that consciously undercut already existing partnerships with Indian manufacturers. Ironically many of these predatory ventures are funded by Indian banks and financial institutions! An Economic Times report (Dec 25 1999) cited Gouri Prasad Goenka, who took over as the Federation of Indian Chambers of Commerce & Industry (FICCI) president last month as complaining that MNCs were using Indian capital to take over Indian industry! He had said that the grant of approvals for 100 per cent subsidiaries in areas where the multinational already had a venture with a local partner was a danger signal for shareholders as well as industry. Amit Mitra, Ficci secretary, supplemented Goenka"s objection by saying that in the United States, an agreement between joint-venture partners had a conflict of contract clause. Goenka also complained that MNCs were able to get loans from Indian financial institutions at interest rates lower than those offered to domestic industrialists and pointed out that nowhere in the world was a 100 per cent subsidiary allowed in non-technical areas. A report in the Hindustan Times by Nitya Chakroborty pointed to the case of Pfizer - the US pharmaceutical major lobbying to set up a 100% subsidy in direct competition with it"s existing Indian venture that was partially Indian-owned. She also mentioned the tobacco giants as lobbying hard for permission to set up 100% subsidies. MNCs and "transparency" and "ethical practices" Arguments favoring globalization have often centered on how multinationals practice "transparency" in their business dealings and are more "ethical" than their Indian counterparts. Although rarely substantiated with any thing other than anecdotal testimonies, such praise for the MNCs is common in the Indian media. Yet, there are numerous instances where multinationals have not only displayed a lack of ethics and "transparency" but have actually broken the law. Consider an October 2, 1998 report in the Hindu titled: Large-scale tax evasion by MNCs unearthed. The author of that report, Sujay Mehdudia wrote: "Income-Tax officials have alleged that these companies evade taxes with impunity as the tax laws of the country are "inadequate and ineffective" to deal with such cases." He wrote of multinational giants flouting tax laws knowing very well that they could not be arrested or criminally prosecuted against under the Indian legal system and could get away by paying the tax dues when caught. Violations were neither rare nor exceptional, since all the companies surveyed or scrutinized by the Income-Tax authorities in the recent past had shown a tendency to violate the
