Episode 23      26 min 51 sec
India and China, Globalized

Dr Pradeep Taneja and Dr Salim Lakha discuss how globalisation is shaping India and China. With Sian Prior.

Guests:
Dr Pradeep Taneja, School of Political Science, Criminology and Sociology
Dr Salim Lakha, School of Social and Environmental Enquiry

Topic: The effects of globalization on India and China

"It is leading to a widening of the rural-urban gap. And, I think, to some extent it is also creating a gap between those who are well-off in the urban areas and those rural migrants who come to urban areas." - Dr Salim Lakha




           



Dr Pradeep Taneja
Dr Pradeep Taneja

Dr Pradeep Taneja teaches in the School of Political Science, Criminology and Sociology at the University of Melbourne. Educated in India, China and Australia, Pradeep has been an astute observer of economic and political developments in both China and India for the past 25 years. His current research interests focus on the political implications of China!|s energy security policy, and the rise of China as a regional and global power. He is also interested in government-business relations in China. Pradeep has lectured throughout the Asia-Pacific region and was a senior consultant on an AusAID-funded project in China. He has extensive experience advising business and government organizations in Asia and Australia.

Dr Salim Lakha
Dr Salim Lakha

Dr Salim Lakha's area of specialization is India, and he has published extensively on industrialization, labor relations, and the economic and cultural aspects of globalization. His current research interests include migration, transnational identities, and the international division of labor. He has recently completed a study that examines how transient Indian IT professionals negotiate cultural difference in a transnational organization in Australia. Salim is also interested in the work of non-government organizations (NGOs) in developing countries and has served on the projects committee of a leading NGO in Australia.

Credits

Host: Sian Prior
Producers: Kelvin Param, Eric van Bemmel and Sian Prior
Audio Engineer: Craig McArthur
Theme Music performed by Sergio Ercole. Mr Ercole is represented by the Musicians' Agency, Faculty of Music
Voiceover: Paul Richiardi

Series Creators: Eric van Bemmel and Kelvin Param

Melbourne University Up Close is brought to you by the Marketing and Communications Division in association with Asia Institute.

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The Effects of Globalization on China and India

VOICEOVER
Welcome to Melbourne University Up Close, a fortnightly podcast of research, personalities, and cultural offerings of the University of Melbourne, Australia. Up Close is available on the web at upclose.unimelb.edu.au That!|s upclose.u-n-i-m-e-l-b.edu.au.

SIAN PRIOR
Hello and welcome to Up Close, coming to you from Melbourne University, Australia. I am Sian Prior. In 2007, India is celebrating its 60th year of independence. One of India!|s most notable achievements during this time has been the endurance of its democratic institutions, despite internal and external challenges to its governance including the rapid advance of globalization. As this multicultural state with over a billion people picks up pace at the start of the 21st century, we thought it was timely to take a look at the impact of globalization on democratic processes in India and compare that with the impact of globalization on China !V the world!|s largest non-democratic nation. Joining us in Melbourne University Up Close are two guests today, Dr Pradeep Taneja, an expert in Chinese politics and international relations in the Asia Pacific region and a lecturer in the Department of Political Science at The University of Melbourne, Australia. And, Dr Salim Lakha, a senior lecturer in developmental studies in the School of Social and Environmental Inquiry, here at The University of Melbourne, Australia. The geographical focus of Dr Pradeep Taneja!|s work is on China and India. Pradeep lectures on Chinese politics, political economy and international relations in the Asia Pacific region. Dr Salim Lakha!|s area of specialization is India and he has published extensively on industrialisation, labour relations and the economic and cultural aspects of globalization. Welcome, both of you, to Melbourne University Up Close.

PRADEEP TANEJA
Thank you.

SALIM LAKHA
Thank you.

SIAN PRIOR
Salim Lakha, let!|s talk about the impact of globalization on India in the last decade and a half. The economic liberalization program started in earnest, back in 1991, courtesy of pressure from the International Monetary Fund, what have been the broad economic and social consequences of that process of liberalization?

SALIM LAKHA
Okay, well let!|s look at it from the positive angle to begin with. And I think one area where globalization has made a big impact is in the IT sector for instance. Now, what has happened there is that Indian companies have provided computer services, software development for international companies. Indian companies have expanded their operation overseas. There has been some transfer of technology to India. There is the circulation of IT workers between India and the rest of the world, particularly USA, Britain.

SIAN PRIOR
And Australia.

SALIM LAKHA
And Australia, exactly. And these people, when they migrate overseas and they decide that they are going to come back to India at some point, they bring in the skills. So, there is a brain circulation, rather than just a !¢FDbrain drain!|, you might say. Also, what is happening is that a number of these Indian IT workers in places like Silicon Valley, have set up their own businesses and are outsourcing work to India. Providing expertise regarding Indian conditions and recruiting IT workers in India for software development. And so, I think they!|re providing a very important function in terms of building a bridge between India and the advanced countries. That is one of the very positive outcomes. At another level, you also have a sort of influx of foreign companies into India, into sectors like IT, for instance. So, what we are seeing is that this influx of investment into India is creating a lot of jobs in the upper echelons of the corporate sector. Even in the middle sector. And I guess, where you have, for example call centres. A lot of young graduates are finding employment in that area. Now, in terms of creating employment, the positive factor is that it has raised the salaries. It has given incentives to graduates to stay in the country. On the negative side, I think we must take into account the employment that is created is not really helping people in the rural areas so much. I mean it is more urban-centered employment, in the corporate sector, for the educated and highly educated, skilled people.

SIAN PRIOR
So, this is leading to a widening of the urban-rural divide?

SALIM LAKHA
That!|s right. It is leading to a widening of the rural-urban gap. And, I think, to some extent it is also creating a gap between those who are well-off in the urban areas and those rural migrants who come to urban areas, let!|s say, who can!|t find proper employment and have to be employed in the so-called !¢FDinformal sector!|, in small scale activities that you normally get in the large cities and small towns in India. And I think that is creating a degree of disenchantment both in the rural areas and in the urban areas. And this is something many observers have pointed out, not just in recent years but since at least 1991 when the liberalization process started. So, I think India will have to consider how its huge source of underemployed labour is going to be absorbed. Now, the services sector cannot absorb large sections of those underemployed people. Industrialization, while it is growing, but it is not creating as much employment as it should be. And, as you know, India is not the manufacturing workshop of the world, whereas China is and I!|m sure Pradeep can talk more about that.

PRADEEP TANEJA
If I can come in there!K In terms of the positives of globalization and Salim mentioned how Indian graduates who used to earlier live and work overseas for multinational companies, and that has turned around. For example, the prestigious Indian Institutes of Technology, in the past, before these new economic policies came into effect, nearly 60 to 65% of the graduates of these IITs, used to end up working in the United States or Japan or Europe or even Australia.

SIAN PRIOR
So, it was a serious brain drain problem!K

PRADEEP TANEJA
It was a serious brain drain problem. It was interesting that last year, of the 3,000 or so graduates from all the IITs in India, only 18 went to work overseas. That!|s an extraordinary turnaround. Because globalization and the new economy has created opportunities for most of these educated people, whether they are management school graduates or technology graduates, there are good jobs. The problem is, with globalization, you really need the right set of skills to benefit from the policies that globalization fosters. And in India we have seen that the skilled people are actually quite happy with globalization. If you go to cities like Bangalore, Hyderbad, Gorgon - near New Delhi, you will find that most middle-class boys and girls are very happy, because they don!|t even have to apply for jobs. Companies come to recruit these young workers. They are fuelling this urban economy. There is an urban boom going on. You go to these cities and you find that there are new service industries developing, there are new cafes, new shopping malls, new bars. And all of this is being fuelled by this new urban middle class, but at the same time, as Salim rightly pointed out, there are tens of millions of those people who are coming into the city attracted by all the shining new buildings, new roads and new bridges and then discovering that it is very hard to get a job in the city, because they don!|t have the right set of skills, which globalization requires.

SIAN PRIOR
And this has been one of the major anxieties and sources of tension over globalization, hasn!|t it? It has been the idea that !¢FDunder globalization, the rich get richer, the middle class are even happier, but the poor don!|t necessarily get richer.!|

PRADEEP TANEJA
This I think is a major challenge. There is no doubt in my mind that globalization does promote economic growth, but quite often, unless there is the active involvement of the state, globalization creates growth, but this growth, in distribution terms has very negative consequences because it leaves a lot of people behind. And that is why you need the state involvement to actually have programs, active programs, to pull these people out of their poverty and that is why state intervention is very important with globalization.

SIAN PRIOR
I!|m Sian Prior and you!|re listening to Melbourne University Up Close, where today we are discussing the impact of globalization on the people and the politics of India and China with Dr Pradeep Taneja and Dr Salim Lakha. Pradeep, how is the coalition government responding to this anxiety, this patent lack of equity in the distribution of the benefits of globalization?

PRADEEP TANEJA
Well, in 2004, the coalition parties, the twelve parties which are part of the government, and the Marxist parties, they came together and drew up a program. An important part of the program was to have schemes which would require significant amounts of government funding to actively support the poor, the marginalized. Both in the rural and in the urban areas, but the focus was primarily on the rural areas, because that is where the majority of India!|s poor live. And, an important part of this program was to initiate a scheme to provide guaranteed employment to over 100 million people.

SIAN PRIOR
And this is the National Rural Employment Guarantee Scheme?

PRADEEP TANEJA
Exactly. And this scheme, the National Rural Employment Guarantee Scheme, was one of the major initiatives of the coalition government in 2004. A very ambitious scheme. It aims to spend nearly 1% of the GDP on providing employment to the poorest people in India. And, when the implementation started, they simply said !V they obviously want to cover all the districts of India; India has over 600 districts !V initially they said, !¢FDwe!|ll start with 200 districts!|. And they started rolling it out in 200 districts in early 2006. And, this financial year, they have extended the scheme to 330 districts all over India.

SIAN PRIOR
What kind of work are we talking about?

PRADEEP TANEJA
Much of this work is labour intensive work. Digging trenches. Digging holes. Working on construction sites.

SIAN PRIOR
Building roads?

PRADEEP TANEJA
Building roads is actually a major part of it because India is currently in the middle of a very ambitious plan to build national highways. And much of the highways go through rural areas, so, quite often people are able to find work not too far from their place of residence. And workers are being paid, a guaranteed minimum wage. Now, India has minimum wage legislation since 1948. But quite often, workers did not receive the minimum wage. Under this scheme, the legislation guarantees that every worker who is involved in the scheme, will be paid the guaranteed minimum wage, which is roughly around 80 rupees. 80 rupees is about $2.50 Australian. And much of this is being directed through local governments, both at the state leve,l and at the village level. Village councils are involved in the scheme. Like any other scheme, there are problems with it. There are workers who complain that they are not getting a job in this scheme.

SIAN PRIOR
It!|s also not every day of the year employment is it?

PRADEEP TANEJA
It!|s 100 days a year. But, what happens is that quite often you find that in many parts of India, during the harvest season there is more work and they can actually earn more than 80 rupees per day during the harvest season. And many of them actually have their own farms or work on their relatives farm. Therefore, they actually want to go back to the village and work on the farm during the harvest season, during the sowing season.

SIAN PRIOR
It!|s interesting, Dr Lakha, because one of the anxieties about the impact of globalization is that it leads to the intrusion of market forces into what were, traditionally, government run public services like health, education, road building, presumably. And yet, from what Pradeep has been telling us, in fact, this hasn!|t happened in India, is that right? That the government has continued to pour money into employment.

SALIM LAKHA
Yes, but what we need to realize is that it is one thing to initiate these schemes, it is another to ensure that they are working effectively and to enforce the minimum wage requirement. And it really depends on state governments !V

SIAN PRIOR
To police it !V

SALIM LAKHA
Exactly. How capable they are. That they have the administrative capability to enforce that kind of legislation. Just turning to your reference to health, education !V now, in recent years, since liberalization, economic liberalization, globalization, as some people refer to it, what is happening is that there is more investment going into private education, private health schemes, we now see that, you know, very highly qualified doctors have set up, and business people have set up private hospitals. People from the developed countries are going to India - what is called !¢FDmedical tourism!|. But that is also creating those inequalities between those people who can afford to get first world medical care and those who can!|t. And I think, what we need to realize that the majority of the Indian people still live in rural areas. And these are not as well serviced as urban areas are. So, we are going to see these inequalities not just in health but in education as well.

PRADEEP TANEJA
I think it is inevitable that with the new economic policies, you will see that the middle classes, the newly rich classes, they want better education, they want better institutions. So, you will see, whether it is engineering colleges, medical colleges, you will see an increasing participation of the private sector in those. And in some ways, I don!|t have a problem with that !V if the rich are willing to pay for private education that!|s fine. What is important is public investment in health and education for those who can!|t afford to go to those schools.

SIAN PRIOR
So the growth of one doesn!|t lead to the shrinkage of the other.

PRADEEP TANEJA
What!|s important is for the state to invest in health and education and to look after the needs of the ordinary people who can!|t go to those private institutions.

SIAN PRIOR
You!|re listening to Melbourne University Up Close, I!|m Sian Prior and today we!|re discussing the impact of globalization on the people and the politics of India and China with Dr Pradeep Taneja and Dr Salim Lakha, here at The University of Melbourne, Australia. Can we turn now to China, as a contrast: from the world!|s largest democracy, to the world!|s largest non-democracy? Broadly speaking, Pradeep Taneja, what have been the benefits of globalization for the Chinese economy and the Chinese people?

PRADEEP TANEJA
China had a head start over India in opening up its economy and attracting foreign companies, foreign investment and therefore creating more employment. China has certainly benefited from all of these policies, in the sense that there are several hundred millions of people in China who have been lifted out of poverty as a result of some of these policies. But China also faces some similar challenges to India. In terms of large influx of rural migrants into the cities, in search of jobs and when they can!|t find work or they can!|t find sufficient work, they become the underemployed in the city and they contribute to other social problems that you find in other major cities in the developing world. China has become the factory to the world, as has often been said. And, hundreds of millions of people around China, not just in south China now, but also in the interior are employed in many of these factories which produce goods for export, so, unlike India, as Salim pointed out earlier, manufacturing hasn!|t done as well in India, but China has created hundreds of millions of new jobs in the manufacturing sector. So, we!|ve seen people getting employment. Also, because of mechanization of agriculture and efficiencies in agriculture, many of these peoples in the rural areas are no longer needed on the farm. So, we!|ve seen a lot of people being employed and, therefore, that has contributed to consumption. Although new jobs have been created, there are social problems. There are pressures on government services, in the past for example, in China, the public sector provided many of the basic health and education services. Most people living in the cities in China, they depended on state owned enterprises, for basically, cradle to grave welfare. State owned enterprises provided kindergarten services, they provided high school services, they provided hospitals. Now, many of these activities are privatized. So even state owned companies, who in the past would provide these services not only to the employees, but also to the local community, now they are charging their employees, they!|re charging the local community for these services. As a result we are seeing growing pressure. Growing social unrest in China, both in the rural areas and in the urban areas. In the urban areas we have social unrest, because a lot of the new migrants from the countryside - they feel that they!|re being treated as second-class citizens. For example, one of the burning issues in China at the moment in big cities is the education of the children of these new migrants. The tens of millions of migrants who are moving into the cities, their children are not entitled to go to state schools. So, when a migrant family moves from villages into a city like Shanghai for example, their children are not allowed to go the state schools.

SIAN PRIOR
Is that because there is an expectation that they are schooled back home in their village?

PRADEEP TANEJA
No, because the urban education infrastructure can!|t cope with the increase in demand.

SIAN PRIOR
So, it!|s just a problem with numbers.

PRADEEP TANEJA
Exactly. And the local governments that run these schools in the cities, they argue that they!|re not being funded to provide education to these children. But there is a tension between the central government and the local government because educational funding is largely the responsibility of the local government. And the local governments say, !¢FDWhy should we support it?!|

SIAN PRIOR
Well, yes, and as we know, China is a one party state and therefore the government doesn!|t usually face the same kinds of pressures that Indian governments face in responding to political discontent and marginalized groups like this and presumably don!|t need to work quite so hard to keep the different interest groups and communities happy, but as you say, nevertheless, political discontent has been growing and has been taking the form of actual demonstrations.

PRADEEP TANEJA
Oh yes, there has been an increasing number of incidents of what the Chinese government calls !¢FDcivil unrest!|, !¢FDsocial unrest!|. As I said, in the cities, it is because, there are unemployed workers. Workers who have been made redundant from state owned enterprises, particularly, middle aged workers who can!|t find any other job, who have no other skills. They feel very frustrated because they still have families, they still have needs. But there is no support. The government has started a basic social security system, so unemployed workers in the cities in China do get some social security, unlike in India. In India, if you!|re unemployed and if you haven!|t worked for the government, you have no pension. But, in China, the government has started a pension scheme. But the amount of pension is so small that many people feel very frustrated. So, you!|ve got the unrest created by the unemployed. In the rural areas you have people who stage protests and demonstrations because quite often they accuse the local government of confiscating their land. For example, if the government wants to build a new power station, they will take away the land from the peasants. Because, technically, the land in China, all land belongs to the state.

SIAN PRIOR
Salim Lakha, is there a sense in which governments who try to control the impacts of globalization on their national economies and on their people are like the little Dutch boy with his finger in the wall of the dyke? This is a force more powerful than any individual nation or state, you know, be they democratically elected or a one party state. And there really is only so much any one government can do, to ameliorate those impacts.

SALIM LAKHA
I tend to be more positive on that count, I feel the governments !V particularly India, China, big countries, the governments have much more clout when it comes to negotiating with, for example, global corporations, with international institutions like the International Monetary Fund or the World Bank. I don!|t think it is as powerless as it is sometimes made out in the popular press and even amongst certain academic writers. I think the important thing is that governments, particularly in a country like India, which is democratic, that it allows enough scope for various organisations, political parties to express dissent, to express different points of view. And we have seen that in India for example, through the electoral process there has been a change of government. People have been able to vent their frustrations. I!|m not exactly sure, how this will work out in China, where there isn!|t as much scope for dissent.

PRADEEP TANEJA
Well, that!|s the biggest unknown in China because the future of China!|s economic reforms and these current economic policies will really depend on how these political issues are resolved. I mean, the famous New York Times columnist, who wrote that book [The] Lexus and the Olive Tree, he compares India and China to two cars, driving on two different roads. He says, India is like a car driving on a bumpy road at about 60-70kmph. China is like a car driving on a very nice expressway, very smooth expressway at 130-140 kmph. But the difference is the China car has a speed bump ahead, but the driver has no idea where the speed bump is. He is going very fast and there is a speed bump. India on the other hand, is driving on this bumpy road, but he knows every single pothole in the road. It is a very familiar road. So, I think in China!|s case, how China negotiates that speed bump, that political speed bump is going to be a real test of China!|s economic policies. Because you have a communist party, essentially building a capitalist economy. And in the longer term, I think it will actually become increasingly untenable. I mean, ideologically, it is already very difficult for the Chinese Communist party to continue to justify their economic policies in ideological terms. And I think in the longer term it will become difficult to justify it to the Chinese people, particularly the growing middle classes in China. The growing middle class is going to question the right of the Communist party to continue to rule without sharing power, without giving the new middle class, the new civil society the right to have a say in the selection of the government.

SIAN PRIOR
Well, I think we!|ll all be watching out for that speed hump to see what happens. Many thanks to both of you for joining us today.

PRADEEP TANEJA
Thank you.

SALIM LAKHA
Thank you Sian.

SIAN PRIOR
I!|m Sian Prior, and my guests in Melbourne University Up Close have been Dr Pradeep Taneja an expert in Chinese politics and International Relations in the Asia Pacific Region and a lecturer in the department of Political Science, here at the University of Melbourne. And, Dr Salim Lakha, Senior Lecturer in Developmental Studies in the school of Social and Environmental Inquiry, here at The University of Melbourne, Australia. Melbourne University Up Close is brought to you by the Marketing and Communications Division in association with Asia Institute of The University of Melbourne, Australia.

Relevant links, a full transcript and more information on this episode can be found on our website, at upclose.unimelb.edu.au
We also invite you to leave your comments or feedback on this or any episode of Up Close. Simply click in the add new comment link at the bottom of the episode page. This program was produced by Kelvin Param, Eric van Bemmel, and myself, Sian Prior. Audio recording is by Craig McArthur and the theme music is performed by Sergio Ercole. Melbourne University Up Close is created by Eric van Bemmel and Kelvin Param. Until next time thanks for joining us. Goodbye.

VOICEOVER
You!|ve been listening to Melbourne University Up Close, a fortnightly podcast of research, personalities and cultural offerings of the University of Melbourne, Australia. Up Close is available on the web at upclose.unimelb.edu.au, that!|s upclose.u-n-i-m-e-l-b.edu.au. Copyright 2007 University of Melbourne.


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