Neo liberal offensive and challenges for development in Himachal

मैं इन पथरान दे ढेरन दा की करूँगा, मेनू एय लोढ़ नहीं चाहिदा

“What will I do with these loads of stones, I don’t require them”

These are the words of Pratap Singh Kairon former chief minister of unified Punjab with reference to Kangra, Kullu and such other places, while the state of HP was being carved out. (On Yashwant Parmar by Hem Chand Sharma) [i]. He would have never imagined that the stones to which he was pointing out would become one of the famous destinations of the world.

Himachal number 1 Since then the journey of development in the state has been noteworthy and by bourgeois parameters remarkable one! If we glance back we would find the reasons therein. In the field of education, health, electricity, road connectivity and certain other social indices the state has gained laurels nationwide. But as assessed in the white paper circulated by the government in December 1999, the state is in a deep crisis and it continues to augment further. The development in the state has been lopsided and is been hit by the inception of neo liberal offensive particularly after the 1990s to which I will come a little later.

How was this development possible?

1. As the state came into being a fact that many political commentators miss is the importance and relevance of land reforms. Their focus generally is on the benevolence of New Delhi and their affection that has benefitted the state. This is not true. Though not to the extent as radical land reforms took place in West Bengal, Kerala and Tripura, in Himachal some reforms in land relations did take place. In a layman’s language it enhances the buying capacity of the people. In classical terms, it creates a market for the industrial goods.

Land reforms coupled with some state support provided the largest employment in the state. Let me share the statistics of apple production in the state. And it is primarily the small and marginal peasant who has the larger share. The total land under apple has increased from 75, 469 hectares to 94, 438 hectares in the period of 1994 -95 to 2008-09 and the total fruit producing area has increased from 1,89,689 hectares to 2,04,829 hectares for the same period. The noteworthy feature is that apple economy alone constitutes about Rs 2000 crores annually. (Economic survey 2009, pp 17) [ii]. Had the land not being owned by the peasants such an economy would have never thrived!

2. Investment in health, education and other services: The state has witnessed considerable investment in the social services sector. During the early period of the state, emphasis was laid on building schools, health centers, roads etc. this did not happen in an isolated form. At the global and national level, the international finance capital was on the back foot which enabled the working class or the people in general to achieve some gains, though momentary.(On party Programme, page 18 Prabhat Patnaik) [iii].

3. Special category status continued till the 9th finance commission that snatched this financial benefit to the state. This status was rightfully enshrined due to the basic reason during the formation of the state. The state had no resources of its own, Forest being the only one was transferred to the concurrent list after the Forest conservation act of 1980 thus putting a blanket ban on this resource.

Challenges and the issues of development.

Is Industrial package the only alternative?

1. The challenges are immense, especially after the neo liberal policies, the state government has passed the fiscal budgetary and management act (FRBM act) which was overwhelmingly supported by both the Congress and the BJP. The then leader of opposition in the assembly even stated “ this is a historic act”. The successive governments have systematically withdrawn from investing in developmental activities and the social sector has been the hardest hit. The fiscal situation of the state is in doldrums and over the years it has deepened. Instead of meeting the challenge, successive governments have actually worsened the situation. In 1999 the then BJP government had brought out a white paper on the fiscal situation. It states,

For the year 1999-2000 revenue deficit to reach Rs 1382.52 crores and the current year debt would reach 965.33 crores. Five years total revenue debt would reach Rs 13391.77 crores and the total debt burden would reach Rs 15164 crores. By 2005 it will reach Rs 27000 crores.

Despite correct estimation of the reality, the successive governments failed to address this issue. Though another white paper was brought out in 2004 but the fiscal health of the state continued to worsen.

The situation now is so bad that the state’s debt to GSDP percentage is one of the highest in the country at 63.8% which is a matter of serious concern. Even in terms of per capita debt, the state has a very high debt level that stands to Rs 26,860 crores as of 2006-07

(RBI publication: 2006-07, State finances. A study of budget of 2006-07) [iv]

The government while presenting the memorandum to the 13th Finance commission had rightly pointed out the importance of the grant in aid to the state to meet its expenses. The CPI(M) too had supported the cause and in fact had demanded an enhanced amount as shown in the table below:

S. No. Heads Rs. in Crores
1. Pre-devolution revenue deficit 60,000
2. Environment protection grant 15,000 x 5 =75,000
3. Grants for PRIs and Urban Local Bodies(ULBs) 1500
4. Special purpose grant 2000
Total 1,38,500

However the government is not serious at all to take up this issue seriously. No doubt the issue has to be taken up with the Center and the UPA government has an important role to play in it. A strong movement for the rights of the state needs to be built .Unfortunately both the Congress and BJP have never taken up this matter seriously. The governments are not prepared to take up the fiscal matter seriously.

2. The state has immense hydel potential and can harness up to 25000 MW of electricity. This capacity to generate resource for the state has been sold out to many private and public sector companies at throw away prices with virtually no share for the state. The state gets a paltry 12% royalty though the people have to face the wrath of the upcoming hydel projects. Wangtoo Karcham project by the Jaypee group is the classic example.

The state has also failed to impress its case of 7.19% share under the Punjab Re- organization act . The state was supposed to get this share from five hydel projects in the state. These are Dehar, Pong, berasul, Thein and BSL and Bhakra dams. The state presently gets a mere 2.12 %. Till 31 March 2001 the balance amount from these projects amounts to Rs 3862.39 crores. According to current estimates the amount would heap to more than Rs 6000 crores. The people of the state have been facing the brunt because of the construction activities and so called developmental activities. According to the speech of the then electricity minister in 1980 in the state assembly, “the state has already lost 1 lakh hectares of land in dams, canals and projects, the state has 5,82,000 hectare land left for the plough”.

3. The FRBM is a major threat to the state of HP. The basic philosophy is to bring down the fiscal deficit to 2%. The road to do this is by heavily cutting down the social services expenditure, levying user charges, not to fill vacancies and to scrap the posts .As soon as the act was passed with an unprecedented support from both the Congress and BJP, more than 35000 posts in the services sector was scrapped at one stroke. This is a major tool with neo liberalism. It is after this act that the offense on the people’s livelihood was mounted sharply. The prime targets have been health, education and other services sectors. This will not help the state and instead would crack down the people who are in acute distress.

4. The attack on the social services sector. Though the total number of health institutions has gone up and the state leaves no stone unturned to sing carols of being the first in the country on the parameters of social indices, but the reality sings sad on the health of the people. The government has gone hedgehog to ensure that the private players in the market take over the health services in the state. The budgetary speech is in itself a pointer towards that. Public private partnership is the hallmark of the new health policy. It means a step towards privatization. The attack on public health is multipronged. Firstly the government has squeezed the public health domain by not providing sufficient funds. The second comes in the wake of public health centers turned into primary private centers by outsourcing many of the para medical work. The laboratories were the first to be hit, then came kitchen in hospitals, followed by sanitation and the nail came from the Rogi Kalyan Samitis (RKS) which charge everything from the patient except the fees of the doctor.

The government did not stop there and promulgated green field projects to open 3 private medical colleges and as a gift they would use the district hospitals of Mandi, Hamirpur and Una as their adjuncts for their MCI clearance. What a green field project!

5. Similarly education faces the gravest of all challenges. More than 18 private universities have been given a go green signal. Deliberately the government has shelved from its responsibility of providing higher education. This sector is being laid open to the private entrepreneurs. Not only these universities are against the people of the state, also the quality of higher education is being seriously compromised.

Those who have opened these universities include some erstwhile sweet shop owners, owners of tuition academies, industrialists and likewise.

The sole motive of such universities is to mint money and not to provide any service to the people of the state. Another important factor that is being undermined is the dilution of section 118 of the Tenancy Act that does not allow a non agriculturist to purchase land in the state. Mushrooming of so many universities turns the act redundant.

6. Ecology: The ecology of the state is consistently being targeted under the rapacious loot of the natural resources without any consideration to the law of the land. Glaring examples are Wangtoo karcham in Kinnaur, Bagha cement plant in Mangal, Ambuja cement plant in Darlaghat and almost all the hydel projects in the state . The Jaypee group has got the permission to chop down more than 15000 trees in the alpine belt of Kinnaur district for laying down the transmission line. The forest department has stated that “it is estimated that over 9 lakh trees have been cut during the last one decade , of which 3 lakh illegally.” (TD Adhikar ko Hasil Karne ke Liye, 25th February,2010, page no. 4) This has been done by the various ‘so called’ development agencies i.e. hydel projects,cement plants etc.

7. The industrial package: in the above light we have to see the industrial package. The total investment according to government figures is Rs 7799 crores. During this industrial package 6683 major units , 291 medium and large units came to the state. It has accordingly generated employment to 86,925 people .

Though the figures sound impressive but this does not tell the real story. There is no doubt that the package should be extended but to solace with the package would not help. Further, the real picture about the industrial package must also reach the common people. The government states it has not conducted any review of the package, the benefits that the state has accrued etc.

The industries have been heavily subsidized in varied forms and one such form is the supply of electricity to them. According to the Economic survey, total electricity generated in 2008-09 is 2075.138 million units(mu). Electricity purchased from BBMB and neighboring states is 6047.497 mu. Total electricity consumed during this period is 5460.506 mu and of this 3385.303 mu are consumed by the industries at a subsidized rate.

What an irony of planning is this that the state banks upon other states to meet its demand inter alia demand of the industries, purchases it at a heavy price and then subsidizes it for the industries.

What a pity that these poor industries require so many subsidies?

As far as the employment is concerned, the economic survey of the state government demolishes the claim. On page 18 it reveals the true picture of employment. Consistently since 2003 since the package was announced the figures of unemployed in the live register remains almost consistent. It remains close to 9 lakhs. Whereas the total number of vacancies notified in the employment exchanges does not show a jump. These remain from 2009 in a year to 7257 the highest in one year.

In addition, the employment generation has taken place in the periphery of the state, the core remaining unaffected. There is another startling figure from the Audit report for the year 31 March 2009, it states the difference in between the budget estimates and the actual receipts which shows a negative 15% fall from the industries.

In the end I would like to conclude that the state has come up over the years but faces the severest of the challenges which inadvertently every state faces in a neo liberal regime. The road to come out of such a crisis is to develop a movement on the issues of the state and get its rightful cause accepted. Mere singing rhetoric of the past would not do. It is high time that the two major political parties realize this.


i. A book on Dr Yashwant Singh Parmar by Hem Chand Sharma

ii. Economic survey 2009 released by government of HP, pp 17

iii. Prabhat Patnaik commentary on party program.

iv. RBI publication: 2006-07, State finances. A study of budget of 2006-07

This is a guest post by Tikender Panwar, member secretariat CPI(M). Tikender is based in Shimla and writes on social and community issues.

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8 Responses to "Neo liberal offensive and challenges for development in Himachal"

  1. Geetali   June 18, 2010 at 7:01 am

    Excellent piece, Tikender.

    Let me share a few facts with you. HP gets only 9% of the share of union taxes. The only other state which gets less than 10% is Haryana. By contrast, inefficient Bihar & UP net 50% and 43% respectively. And we all know where those funds go!

    HP per capita expenditure on social services is among the highest in the country. Shamefully low, some will say, but it’s still higher than “VIP states” like Bihar (0.6%) and UP (0.7%) and higher than the so-called developed states such as TN (1.2%), Karnataka (1.2%) and Gujarat ((0.9%). At least the latter three fare better in terms of net amounts spent.

    HP shows good figures in the assets to liabilities ration – being among the top five states whose assets compare favourable to their liabilities.

    I agree that the biggest test for the state lies in the way it deals with ecology and industry. These are two areas where neither the political, nor the bureaucratic class have shown any boldness.

    May God protect the Devbhoomi.

    Reply
  2. Geetali   June 18, 2010 at 7:01 am

    Excellent piece, Tikender.

    Let me share a few facts with you. HP gets only 9% of the share of union taxes. The only other state which gets less than 10% is Haryana. By contrast, inefficient Bihar & UP net 50% and 43% respectively. And we all know where those funds go!

    HP per capita expenditure on social services is among the highest in the country. Shamefully low, some will say, but it’s still higher than “VIP states” like Bihar (0.6%) and UP (0.7%) and higher than the so-called developed states such as TN (1.2%), Karnataka (1.2%) and Gujarat ((0.9%). At least the latter three fare better in terms of net amounts spent.

    HP shows good figures in the assets to liabilities ration – being among the top five states whose assets compare favourable to their liabilities.

    I agree that the biggest test for the state lies in the way it deals with ecology and industry. These are two areas where neither the political, nor the bureaucratic class have shown any boldness.

    May God protect the Devbhoomi.

    Reply
  3. Geetali   June 18, 2010 at 12:31 pm

    Excellent piece, Tikender.

    Let me share a few facts with you. HP gets only 9% of the share of union taxes. The only other state which gets less than 10% is Haryana. By contrast, inefficient Bihar & UP net 50% and 43% respectively. And we all know where those funds go!

    HP per capita expenditure on social services is among the highest in the country. Shamefully low, some will say, but it’s still higher than “VIP states” like Bihar (0.6%) and UP (0.7%) and higher than the so-called developed states such as TN (1.2%), Karnataka (1.2%) and Gujarat ((0.9%). At least the latter three fare better in terms of net amounts spent.

    HP shows good figures in the assets to liabilities ration – being among the top five states whose assets compare favourable to their liabilities.

    I agree that the biggest test for the state lies in the way it deals with ecology and industry. These are two areas where neither the political, nor the bureaucratic class have shown any boldness.

    May God protect the Devbhoomi.

    Reply
  4. Abhishek   June 19, 2010 at 2:48 pm

    Serious threats are looming in near future i.e. ecology devastation by private entities, depleting agricultural land, tainted health service scenario, sell off of higher education, . Now how could common man help & initiate his part? We do not want to be left as a mere spectator and watch it happen.

    Reply
  5. Abhishek   June 19, 2010 at 2:48 pm

    Serious threats are looming in near future i.e. ecology devastation by private entities, depleting agricultural land, tainted health service scenario, sell off of higher education, . Now how could common man help & initiate his part? We do not want to be left as a mere spectator and watch it happen.

    Reply
  6. Abhishek   June 19, 2010 at 2:48 pm

    Serious threats are looming in near future i.e. ecology devastation by private entities, depleting agricultural land, tainted health service scenario, sell off of higher education, . Now how could common man help & initiate his part? We do not want to be left as a mere spectator and watch it happen.

    Reply
  7. Literate   June 24, 2010 at 4:10 am

    Dear Tikender,

    It would be good if you were aware that Sardar Kairon was not even alive when Himachal was carved out. Infact, if you had researched before writing you would have learnt that infact he had fought for united Punjab. HP was made in 1966 he was assassinated in 1964. Your quote could not have taken place because the subject was not alive.

    Reply
  8. Literate   June 24, 2010 at 4:10 am

    Dear Tikender,

    It would be good if you were aware that Sardar Kairon was not even alive when Himachal was carved out. Infact, if you had researched before writing you would have learnt that infact he had fought for united Punjab. HP was made in 1966 he was assassinated in 1964. Your quote could not have taken place because the subject was not alive.

    Reply

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