CONCLUDING OBSERVATIONS
CONCLUDING OBSERVATIONS
World-wide, the operations of the International Financial Institutions (IFIs) undermine national and local planning processes, and domestic potential for resource mobilization as well as genuine sustainable development; more importantly, they also undermine domestic democratic processes. In
the name of poverty reduction and ‘good governance’, the ADB too, as informed by this study on the Indian state of Kerala, has intensified priva- tization programs, particularly with respect to essential services, in effect marking the end of a widely recognized social model of development. This in turn serves the interests of transnational elites, their local bureaucratic- authoritarian classes, broadly, the social structures of accumulation, all of which co-ordinate themselves into a new power block. Given the fact that post-ADB, the fiscal health of the state has only worsened – a fact that is partly admitted by the ADB itself but not by the Left government – a per- sistence with the structural adjustment measures only strengthens these new power relations.
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Even a casual observer of the Indian economy can see the apparent con- tradictions in driving the state to foreign loans, particularly when the coun- try has actually begun to prepay certain high-cost loans from multilateral
REVIEW OF INTERNATIONAL POLITICAL ECONOMY
agencies as part of its effort to reduce the burden of interest and to rein in the fiscal deficit, and has also now become a lender-member of the Finan- cial Transaction Plan of the IMF to meet the Balance of Payment needs of other countries. Perhaps a developing country like India should have put its forex reserves to more judicious use as part of good public policy – to plough it back into its domestic economy, to increase the steadily declining public investment, correct the fiscal deficits, plug the surplus drain and to strengthen state-level finances. This is particularly true with respect to Kerala, which on the one hand makes the single largest contribution to the federal forex in terms of migrant-remittances, while entering into a state of high-cost debt overhang on the other, being subject to multiple channels of surplus drain.
Within the larger agenda of the ADB-driven reforms, what is being en- visaged is a uni-dimensional pushing of neoliberal regulations and what has been swept under the carpet is the fact that, as a system of governance, democracy easily betters the rest; mis-governance in democracy asks for correction rather than rejection, particularly when the global political sys- tem redefines aid and credit with its goal of more effectively integrating national economies into the global capitalist system. If the Kerala govern- ment were to adhere fully to ADB-driven governance, it would culminate in social divestment, commodification of critical sectors such as education and health and, thereby, a reversion of whatever remains of the Kerala model of social development: what Polanyi would have called ‘disembed- ding’ from social bonds and civic engagements. Kerala and other ADB- focal states in India on their part would do well to re-examine their stand on the ADB and on Center–State relations and to, first, stop further bor- rowing from the ADB and not to pursue with the ADB policy package and, second, renounce the path of externally driven neoliberal reforms. Other- wise, the state would find itself ‘mortgaged’ for generations to come; the Kerala Model of Social Development would gradually disintegrate, in effect
wiping out one of the welfare state models which has often been quoted as an example for the rest of the world. While the recent resurgence of the Left in Latin America offers fresh hopes of social development, the Left in Kerala, and in India as well, follows the destiny of the socialist system in eastern Europe. What is likely to ensue is a double collapse: the collapse of a reasonably successful model of social development and the demise of an iconized Left.
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