Economic Reforms and Social Exclusion: Impact of Liberalization on Marginalized Groups in India


K. S. Chalam

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    List of Tables

    • A1.1 Assets of Top 25 Business Groups, 2005–06 8
    • 3.1 Macroeconomic Indicators 33
    • 3.2 Central Government Social Sector Expenditure (Plan + Non-plan) to Total Budget Expenditure, 1992–93 to 2006–07 37
    • 5.1 Special Component Plan Outlay and Expenditure 55
    • 5.2 State-wise/UT-wise Special Assistance (SCA) Released/Utilized during 1992–93 to 2007–08 62
    • 5.3 State-wise/UT-wise Central Share Released for SFDCS from 1990–91 to 2005–06 64
    • 5.4 Representation of SCs and STs in Central Services 67
    • 6.1 Percentage of Landless Tribal Households and Those with Marginal Land Holdings (Tribal Area), 1988–89 85
    • 6.2 Work Force Participation Rate (WFPR) and Unemployment Rate for Tribal and Non-tribal Population in Each State/UT, 1988–89 87
    • 6.3 Percentage of Tribal Population with MPCE Less than 125 in the States/UTs of the Two Regions, 1988–89 90
    • 6.4 Flow of Funds for State Plan in Tribal Sub-plans during 1990–91 to 2004–05 92
    • 6.5 State-wise/UT-wise Targets and Achievements during Plan Period regarding Economic Assistance to ST Families below Poverty Line (Number of ST Families Economically Assisted) 95
    • 6.6 Proportion of People in Poverty among SCs and STs in India, 1993–94 to 2004–05 97
    • 6.7 Educational Status of STs in 1990 and 2004 99
    • 7.1 Distribution of Workers in Each Socio-religious Category by Activity 108
    • 7.2 Incidence of Poverty by Socio-religious Groups in Percentage, 1987–88 to 2004–05 109
    • 8.1 Income and Educational Background of Weavers (in Percentage) 118
    • 8.2 Size of the Family by Income Group (in Percentage) 119
    • 8.3 Use of Outside Labourers 120
    • 8.4 Availability of Raw Material 120
    • 8.5 Value of Handlooms and Other Implements 122
    • 8.6 Frequency of Sale of the Finished Product (Saris) 124
    • 8.7 The Status of Credit Obtained by Weavers (in Percentage) 125
    • A8.1 State-wise Distribution of Handlooms and Powerlooms 126
    • 9.1 Employment in Public Sector, 1960–2004 130
    • 9.2 Number of Factories Registered under Factories Act in Visakhapatnam District as on 31 December, 1994 131
    • 9.3 Organization-wise and Community-wise Distribution of Voluntary Retired Workers 136
    • 9.4 Number of Dependents in the VRS Family (Caste-/Category-wise) 136
    • 9.5 Educational Status of VRS Workers by Community 138
    • 10.1 Faculty-wise Enrolments in Higher Education in India (Percentage to the Total) 153
    • 10.2 Central Government Budget Expenditure on Education (Plan and Non-plan) and Social Sectors as Percentage of GDP, 1984–85 to 2006–07 155
    • 10.3 Status of Higher Education in the US, 1965–2005 159
    • 11.1 Health Status Indicators (in Percentage) 173
    • 11.2 Proportion of Spells of Ailment Treated during 15 Days by Source of Treatment for Each Household by Social Group, 2004 175
    • 11.3 Average Hospitalization Expenses, 2004 176
    • 11.4 Per Capita Net Availability of Cereals, 1951–2005 178
    • A11.1 Health Conditions and Disability Adjusted Life-Years (DAILYs) Lost in India, 1998 180
    • A11.2 Trends in Health Expenditure in India, 1950–51 to 2003–04 182
    • A-I Average Value of Total Assets by Social Groups, 2002 205
    • A-II Budget Expenditure on Technical Education 206
    • A-IIA-III Government Expenditure on Higher Education in India 207
    • A-IV Public Expenditure on Higher Education per Pupil 208
    • A-V Social Sector Expenditure to Total Expenditure in States 208
    • A-VI Percentage of Population below Poverty Line by Social Groups in States, 2004–05 210

    List of Abbreviations

    ATIAuxiliary Training Institute
    AUAndhra University
    BHPVBharat Heavy Plates and Vessels Ltd
    BIFRBoard of Industrial and Financial Reconstruction
    BJPBharatiya Janta Party
    BOPBottom of the Pyramid
    BPLBelow Poverty Line
    BSEBombay Stock Exchange
    CAGComptroller and Auditor General
    CIIThe Confederation of Indian Industry
    CRRCounseling, Retraining and Redeployment
    CTBCentral Tribal Belt
    CVCCentral Vigilance Commission
    CVDcardiovascular disease
    DGE&TDirectorate General of Employment and Training
    DLBDock Labour Board
    DWACRADevelopment of Women and Children in Rural Areas
    EACEmployee Assistance Centres
    EASEmployment Assurance Scheme
    EGFEmployment Generation Fund
    FERAForeign Exchange Regulation Act
    GATSGeneral Agreement on Trade in Services
    HDIHuman Development Index
    HSCLHindustan Steel Works Construction Ltd
    HSLHindustan Shipyard Ltd
    IAYIndira Awaas Yojna
    ICDSIntegrated Child Development Services
    ICPRIndian Council of Philosophical Research
    IMFInternational Monetary Fund
    IMFLIndian Made Foreign Liquor
    IOLIndian Oxygen Ltd
    IRDPIntegrated Rural Development Programme
    ITIIndustrial Training Institute
    JRYJawahar Rozgar Yojana
    LAMPSLarge-size Adivasi Multipurpose Co-operative Societies
    MACEMarine and Communications Electronics (India)
    MFImicrofinance institution
    MNCMultinational Company
    MPMember of Parliament
    MRTPMonopolistic and Restrictive Trade Practice
    NAACNational Assessment Accreditation Council
    NABARDNational Bank for Agriculture and Rural Development
    NEPNew Economic Policy
    NGONon-governmental organization
    NIPNew Industrial Policy
    NISTADSNational Institute of Science, Technology and Development Studies
    NREGANational Rural Employment Guarantee Act
    NRFNational Renewal Fund
    NRGFNational Renewal Grant Fund
    NRHMNational Rural Health Mission
    NSCFDCNational Scheduled Castes Finance and Development Corporation
    NSSNational Service Scheme
    NSSONational Sample Survey Organization
    OBCOther Backward Classes
    PACPrimary Agriculture Society
    PCRProtection of Civil Rights
    PDSPublic Distribution System
    PFProvident Fund
    PMRYPrime Minister's Rozgar Yojana
    PPPpublic-private partnership
    RILReliance India Limited
    SAPStructural Adjustment Programme
    SCScheduled Caste
    SCDCScheduled Castes Development Corporation
    SCPSpecial Component Plan
    SEZSpecial Economic Zones
    SHGself-help groups
    SSISmall Scale Industries
    STScheduled Tribe
    UNDPUnited Nations Development Programme
    UPSCUnion Public Service Commission
    VPTVisakhapatnam Port Trust
    VRSVoluntary Retirement Scheme
    VSPVisakhapatnam Steel Plant
    WFPRWork Force Participation Rate


    Economic reforms in India were introduced in the year 1991. There were several compelling reasons that impelled the government to adopt the prescriptions of the international funding agencies. The reform package consisted of structural adjustment policy in the neoclassical framework, liberal industrial policy with an emphasis on withdrawing of the state from several economic functions and relying on the market for economic efficiency etc. The unique Nehruvian emphasis on the public sector to build modern India was given ephemeral treatment. It was alleged by several scholars and activists that the public sector that has provided a socialist base in a pluralistic society was not considered important in the spectre of globalization. The social history and the distinctive Indian cultural background of an exclusive character of the country were given a sordid handling by policy makers who were more concerned with the balance of payments crisis than anything else. There is no doubt that there were serious internal social and religious disorders in the country at the time of adoption of the new economic policy which the policy makers thought could be sidelined with this sudden shift in policy. Some scholars and commentators have opined that it was a shrewd move to marginalize the emerging social proletariat.

    Realizing the social consequences of counter-attack by the leaders of the marginalized sections of the society who were affected by these policies, the government under the bearing of funding agencies has declared some safety nets. Some of the existing schemes have been renamed and a few others have been formulated to safeguard the vulnerable groups from the adverse effects of these reforms. The efficiency and efficacy of these schemes in catering to the needs and requirements of the poor has been assessed by several studies during the last few decades. However, none of these studies is cognizant of the traditionally marginalized social groups like scheduled castes, tribes, etc. in India. Most of the studies have either eulogized or blamed the policy makers from the neoclassical or Marxian framework. As the European or Anglo-Saxon knowledge base is of limited use to understand the complexities of India, the cohorts who were trained by them have totally failed in understanding the agonies of the real victims of the so-called economic reforms. There are several socially disadvantaged groups in India who have been marginalized by the mainstream society with age-old practices. The reforms have further strengthened the deprivations of the already marginalized. The concepts of poverty and the poor are universal categories, and have limited application to Indian situation. Further, the programmes of economic reforms have created some more marginal groups like the voluntary retirement scheme (VRS) workers, handloom weavers, rural artisans, etc. Therefore, a need is felt to analyze the impact of the economic reforms on the socially neglected and disadvantaged groups in India. An attempt is made in this study to develop an interdisciplinary framework in the context of European concepts of socially excluded so as to incorporate the Indian categories to asses the adverse effects of a policy which is alien to Indian ethos. In order to provide concrete examples of the impact of the reform agenda on vulnerable groups, some case studies have been added to the study from Andhra Pradesh, a state that was in the forefront in implementing the policies.

    I prepared a major part of this study when I was at Andhra University, Visakhapatnam. I have thoroughly revised and added up-to-date data to the papers published in Economic and Political Weekly, Seminar, and South India Journal of Social Sciences. The study was related to the period 1991–2005, though the impact of the policy was studied for a longer period for which data are available. The recent processes in the area of social development and the programmes like National Rural Employment Guarantee Scheme (NREGS), National Rural Health Mission (NRHM), etc. are not taken into consideration for the study (due to lack of appropriate data). The basic aim of the study is to point out the social deficit in economic reforms. As the concept of social deficit is used by sociologists and social psychologists in a different context, I have refrained from using the term in the title of the book.

    I was benefited by my interactions with several scholars and colleagues. The Vikas Adhyayan Kendra, Mumbai, has published some parts of the study as Economic Reforms and Missing Safety Nets in 1999. It was translated into Telugu in 1999. But the present book is entirely different in terms of scope and coverage. I had interactions with colleagues in the Indian Political Economy Association such as Prof. Kamal Kabra, Prof. V. Upadhayay, Prof. K.S. Chalapathi Rao; and colleagues in the Institute for Studies in Industrial Development (ISID) including Prof. S.C. Goel, Dr S.R. Hashim, Prof. M.R. Murthy, Prof. S. Majumdar, Prof. Ranganath, and others on issues relating the theme of the book.

    Shri Digvijay Singh, Chief Minister of Madhya Pradesh, gave me an opportunity to participate in the deliberations of his ambitious diversity programme as a member of the state planning board. I have attended seminars organized by the Vikas Adhyayan Kendra and exchanged ideas with Prof. Gopal Guru, Dr Anand Teltumbde, Dr Ajit Muricken, and the South Asia Alliance for Poverty Eradication (SAAPE) group on poverty. Prof. K. Ramakrishna Rao, Shri Abid Hussain, Shri B.N. Yugandhar, Prof. B.L. Mungekar, Prof. S.K. Thorat, and others have made encouraging comments when I made a presentation on the methodological dichotomies of social exclusion at the joint conclave of Indian Institute of Advanced Study and Planning Commission at Shimla in 2008. My former students Prof. D. Pulla Rao, Dr D. Francis, Dr M. Ram Mohan Rao, and Dr Janardhana Rao have helped me in getting the relevant data for analysis.

    I have moved to a new environment in 2005. My colleagues Shri K. Roy Paul, Ms Parveen Talha, and Dr Bhure Lal have provided me an academic ambience in a bureaucratic set-up through a process of discussion on important issues. An anonymous reviewer has made useful comments that helped me to refurbish the work before giving it for publication. I am grateful to all of them for their support and kind gesture of encouragement to complete the study. Shri Raj Kumar has provided excellent secretarial assistance. He was aided by my personal staff Shri Vinay and Shri S.S. Sarma.

    The opinions expressed in the work are personal and do not reflect that of the Union Public Service Commission (UPSC).

    K.S.Chalam, New Delhi
  • Appendix

    TABLE A-I Average Value of Total Assets by Social Groups, 2002
    Social GroupRural ()Urban ()
    198141 000
    1991144 000
    Source:Sarvekshana, December 2007.
    TABLE A-II Budget Expenditure on Technical Education (100 Crore = 1 Billion)

    TABLE A-III Government Expenditure on Higher Education in India (100 Crore = 1 Billion)

    TABLE A-IV Public Expenditure on Higher Education per Pupil ()
    TABLE A-V Social Sector Expenditure* to Total Expenditure in States

    TABLE A-VI Percentage of Population below Poverty Line by Social Groups in States, 2004–0 5


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    About the Author

    K.S. Chalam is Ex-Member, Union Public Service Commission, New Delhi, India. He is a well-known political economist and educationist. He was the Vice Chancellor of the Dravidian University, Kuppam, Andhra Pradesh. He has also taught in the Department of Economics, Andhra University, as a lecturer, reader and professor between 1976 and 2005. He was the recipient of the UGC Young Social Scientist Award in Economics in 1984.

    He is known as the founder of the Academic Staff College Scheme in the country and was its first Director. He was on the Planning Board of the Madhya Pradesh government during 2002–04. He has published books in English and Telugu and his research papers have been published in reputed journals. He has travelled widely and has participated in and chaired sessions at various international conferences.

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