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30 Mar









24 Mar


 By Shraddha Kakade


Every year 15th of March is observed as the World Consumer Rights Day, the minute I hear the term consumer rights, I instantaneously recollect the melody of series of advertisements issued by PrasarBharati in public interest, with the vigilant jingle, ‘JagoGrahakJago’(wake up consumers wake up). Despite these efforts by the Government of India and numerous other voluntary organizations which strive to create awareness about consumer rights among the public, how many of us are aware of our consumer rights?, the legislations available for protection of the interest of the consumers? ¬¬ very few. Majority of us continue to overlook or silently suffer the unfair dealing in our day to day lives, be it the adulteration of food, misleading advertisements, poor quality of services or be it paying more than the MRP price for products, or allowing the vegetable/fruit vendor to use stone instead of weight among others. With increasing number of people shopping online new set of challenges have developed, where consumers no longer see the seller or the product .

Thus this blog is my attempt to understand what rights as consumers we have in India and what are the laws pertaining to the protection of consumer interest.

Why 15th of March?

It was on 15th of March, in 1964 John F Kennedy the then President of United States of America called upon the US congress to accord its approval to the Consumer Bill of Rights. During his speech Kennedy equated National interest with protection of ordinary American consumer rights and remarked, “If a consumer is offered inferior products, if prices are exorbitant, if drugs are unsafe or worthless, if the consumer is unable to choose on an informed basis, then his dollar is wasted, his health and safety may be threatened, and national interest suffers.”  The rights provided through the bill are: i) Right to choice, (ii) Right to information, (iii) Right to safety and (iv) Right to be heard.

Thirteen years later President Gerald Ford added one more right, i.e. the right to consumer education. Other rights were gradually added; Consumer International (Umbrella Organization for 240 consumer organizations in over 100 countries) expanded the rights to further include right to healthy environment and right to basic needs.

Ultimately it was on 9th of April 1985, United Nations General Assembly adopted a set of general guideline for consumer protection and the UN Secretary General was authorized to persuade member countries to adopt these guidelines through policy changes or laws. These guidelines constitute a comprehensive policy framework outlining what governments need to do to promote consumer protection in following seven areas: Physical safety;  Protection and Promotion of the consumer economic interest; Standards for the safety and quality of consumer goods and services; Distribution facilities for consumer goods and services; Measures enabling consumers to obtain redress, Measures relating to specific areas (food, water and pharmaceuticals) and Consumer education and information programme.

Though not legally binding, the guidelines provide an internationally recognized set of strategy, particularly for governments of developing and newly independent countries for structuring and strengthening their consumer protection policies and legislations. (Singh &Chadah)  


Source: Foreign Policy

Consumer Protection Act 1986

In India the Consumer Protection Act was accordingly passed on 24th of December 1986 based on the guidelines provided by the UN. The objective of this Act was to better protect Indian consumer’s interest, to make provision for establishment of consumer councils and establishment of authorities to settle consumer disputes and address their grievances.

As per the Act, a ‘Consumer’ has been defined as

-Any person who buys goods for consideration, and any person who uses goods with the approval of the purchaser.

-Any person who hires any service(s) for a consideration and any beneficiary of such services, provided the service is availed with the approval of the person who had hired the service for a consideration.

Moreover, the consideration for either the goods or services may be either paid or promised, or partly paid or promised, or provided under a system of deferred payment.

Other than the consumer other complainants may include a registered consumer organization, central or State Government & one or more consumers, where there are numerous consumers having the same interest.

The Act enshrines the following Rights for consumers:

1. The right to be protected against the marketing of goods which are hazardous to life and property;

2. The right to be informed about the quality, quantity, potency, purity, standard and price of goods so as to protect the consumer against unfair trade practices;

3. The right to be assured, wherever possible access to variety of goods at competitive prices;

4. The right to be heard;

5. The right to seek redress against unfair trade practices or unscrupulous exploitation of consumer; and

6. The right to consumer education.

The complaint can be handwritten/typed by the complainant and no stamp or court fee is required, also the rigors court procedures have been done away and replaced with simple procedures allowing consumers to seek easy and inexpensive means of redress.

The C.P. Act applies to all goods and services, excluding goods purchased for resale or for commercial purpose & services rendered free of charge & under contract of personal service. The provisions of this Act cover ‘Products’ as well as ‘Services’.  The products are those which are manufactured or produced and sold to consumers through wholesalers and retailers.  The services are of the nature of transport, telephones, electricity, constructions, banking, insurance, medical treatment etc. etc.  The services are, by and large; include those provided by professionals such as Doctors, Engineers, Architects, and Lawyers etc.

The Act provides a three tier, quasi-judicial consumer disputes redressal Authority (Consumer Courts) at District, State and National level. They are known as District Forums, State Commissions and National Commission. Depending upon the compensation claimed by the complainant he/she can file a case, i.e. For consumer claims up to 20 lakhs District courts, State Commission for above 20 Lakhs but less than one crore and National Commission for claims above one crore.

The Act also provides for councils at district, state and national level, with the aim to help the respective governments in adopting and reviewing policies for promoting, protecting the rights of the consumers also for the purpose of spreading consumer awareness. This council has a broad composition including citizens and number of interest groups, constituted on basis of public-private partnership for better feedback and thereby reviews of the policy.

 How does the Act empower you and me?

The consumer protection Act in India is considered as notable social welfare legislation, as we studied above under the provisions of this Act, a complainant can ask for protection of his interest in a wide range of subject, say against bank which refuses to give back fixed deposit after the maturity period, defective electronic appliances, wrong medical treatment being administered, or against educational institutions on the grounds of it being a fake university, for examination not being held or results not given out or against the builder who failed to provide amenities assured in the construction project etc. Thus let us now look at some recent cases in which this Act has helped protect consumer rights:



In Kanpur, in mid-January 2002, a complainant Prince, son of Santosh Kumar had visited Dr R C Gupta while he was suffering from fever. Dr Gupta examined the patient and gave him prescription and advised him to visit the clinic in a week for check-up. However the complainant claimed that despite a week the medicines did not provide any relief and on visiting Dr Gupta’s clinic on stipulated time he complained the same however Dr Gupta only enhanced the dose of medicine prescribed in old prescription. After consulting another Child Specialist the complainant was told that so far he was being given wrong treatment, he is suffering from Meningitis. On January 29, complainant again consulted Dr Gupta and he referred him to a home (Nursing). During examination doctors observed that he was suffering from meningitis and brain TB and so far he received wrong treatment. Owning to the wrong treatment, the complainant got handicapped and lost his eyesight. The complainant had sought a sum of Rs 19 lakh as damages caused by the wrong treatment given by Dr Gupta. The District forum President LB Singh and member Sumanlata Sharma observed that doctor was negligent towards his duties and his act comes under the preview of dereliction of duty, therefore he was liable to pay a sum of Rs 2 lakh as damages to the complainant.

 Is awareness enough? What about consumer responsibilities?

It is commendable at one level that we have Acts and Organization which work conscientiously to protect and promote interest of the consumers. We observe that several efforts are made by the Government in this direction, like establishment of National consumer Helpline to inform consumers on actions they can take on consumer protection related issues, establishment of ‘Consumer Online Resource and Empowerment Centre (CORE Centre)’ for providing consumer related information, guidance and consumer complaint guidance mechanism through the online medium, or involving academic institutions in conducting research and programs to enhance public awareness, this all is noteworthy. But education and awareness does not in itself solve problems of apathy. A larger attitudinal change is necessary in our consumption habits thereby making all these changes effective.



Consumers today are not sovereign as much as we would like to believe, we make consumption decisions not always guided by rationale but by factors like branding and marketing. Hence our responsibility as consumers does warrant a mention here. For example: Studies have revealed a large percentage of adolescents in US suffer from obesity owning to growth of fast food culture. Marketing of such food stuff creates association between consumers and the perception of happytimes, enjoyment without quite highlighting the consequences of daily junk food consumption. Today Fast food culture is seeing steep growth in Indian market too, thus it is essential for young consumers to assess what our needs are, eating junk food in moderation (without getting addicted to its fat and sugar) and importantly going beyond spurious marketing veil.

Secondly women consumers have a larger responsibility as they make not only half the world consumers but also make 80% of all purchase decisions for home and children. Marketers being aware of the working women pressures have come up with instant, two minute snacks and similar ideas amidst such developments it is essential for buyers in general and particular women to ensure the nutritional merit of the food product before making the purchase decision.

Having consumer protection legislations and organizations or even aware populace is not enough though.  What we need is a consumer culture opposed to unfair dealing, both small and big. ‘Awareness’ accompanied by ‘Alertness’ enables the ‘consumer to be king’ in the true sense.



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Government of India.(n.d.). Retrieved from

Government of India.(n.d.). Retrieved from

Singh, S., &Chadah, S. (n.d.).Consumer Protection in India some Reflections.


24 Mar

The recent revolution famously dubbed Egypt spring showed that cyberspace provided secure and relatively uncensored platform for the people who successfully toppled the dictatorial regime of Hosni Mubarak. The role played by social media in Egyptian revolution has been hailed across the world as success of cyberspace in bringing civic participation, mobilizing popular protest for democracy. 

The term cyberspace was first used by Canadian writer William Gibson, a science fiction writer.Hesuggests that cyberspace should be regarded as a qualitatively new world-a frontier in which electronic communication becomes a place. Cyberspace demanded a new set of metaphor a new set up of rules and behaviours. Space created by cyberspace allows people to communicate with others; as Sterling notes, this place is not real but it is serious and earnest.

Cyberspace proved useful in Egyptian revolution mainly because of four important factors which are not applicable to traditional mass media: 1) Anarchic nature of internet;  2) Interactive features which allow direct feedback to individual articles and opinion; 3) Longevity of material; and 4)  Citizen journalism i.e. possibility for website to create  contents through contribution of its readers or common citizens. Cyberspace bridged the gap between resentment against government in people and inability of traditional controlled mass media to effectively mobilize people against government by providing them much needed communication space. This revolution is considered by many as Facebook or twitter revolution. These scholars and media persons cite the importance and valuable contribution social media in Egyptian revolution as a proof for their hypothesis. However the cyberspace- virtual world is not the only factor which led to thisrevolution. On the contrary social media was only an effective tool and technical platform which helped Egyptian to communicate with each other, organised and mobilize peoples without much control of government. However entire credit of this change is rested with fearless people rather than social media as such.

 In Egypt during the Hosni Mubarak regime, traditional mass media was controlled and censored by the government. No dissent whatsoever was allowed against Mubarak regime. However ironically, social media internet and mobile phones were not only allowed even effort was made to increase their penetration in society in order to boost the national economy. In Egypt 15% to 17% of the population who are active internet users are mostly youths, who were the driving force behind the Egyptian revolution.


Internet played a very important role in the mobilization of people by spreading their resent against regime among and making them confident enough to protest.This was important as earlier participation was low due to the fear of police crackdown. But when it became evident that a large number of people were against the regime, people’s participation increased; they felt secure in large numbers. Cyber activism wasalso a major trigger for street activism.

Egypt was experiencing protest movements and street marches even before Tunisian revolution. The most vivid failure of previous protest and marches was theirinability to mobilize public on massive scale. A group called April 6 movement realized in their first effort the trouble of using social mediaalone as medium for democratic movements i.e. many online sympathisers but unable to organise them offline. There was a need to find missing link between public anger and actual public mobilisation to bring about real change.


Cyber activism during Egyptian revolution:

The National Coalition for Change used a well organised communication network that includesFacebook, Twitter and YouTube to spread the message about protest. Facebook’s largest impact was in the mobilization of protesters.  April 6movements“We Are All Khaled Said” Facebook page invited people to join the protest to be organized on January 25, 2011. More than 50,000 people responded. Facebook enabled organizing the protestor by spreading information to of people and in an instant and this shared between their friends. Facebook was far faster than leaflets with added benefit that receiver is trusted source. Google Moderation and Tweeter allowed anyone to comment on the subject and voting on subject. Tweeter allowed users to create a subject for discussion and post a comment. The “We all are Khalid said” Facebook page become the important sources of information and advice for protester’s. Face book was used as an advocacy and press management tool by certain opposition groups. For example protester used their hand held mobile devices to document any incident of suppression and to upload them immediately to face book and attracting attention and rolling support. Twitter was used for citizen journalism and mobilisation during the revolution. On Tweeter images were posted showing satellite maps marked with arrows indicting where protester could go to avoid pro-government mob. As Mary Joyce stated Egyptian activist used digital technologies to broadcast general information, mobilise protester and evade censorship and surveillance.

Egyptian revolution was not only a political struggle but also a communicationstruggle between government and activist. On January 28, 2011 Egyptian government shut off the internet and mobile phone service for entire country that lasted almost a week. It forced activist to find more innovative solutions such as setting up fine transfer protocol, using landlines to connect internet services to neighbouring countries for posting tweet, Mores code, fax machine and ham radio. They also posted ground reality on ISP Noor, the Egyptian stock exchange website. In every case protestors wereresilient and creative in circumventing these blockages. The outside world mainly US NGO, other internet groupshelpedEgyptian protester to circumvent blockages. Citizen journalism also played a major role in Egyptian uprising. Idle andNunn’s noted that activist were not only tweeting to other Egyptian but also to international community. Protesters uploaded rawvideos of police brutality to YouTube and other videos sharing site. The events which traditional journalists werehesitant or unable to report citizen journalist, bloggers and tweeters report them correctly. Therefore cyber activism, civic engagement and citizen journalism played a very important role in Egyptian revolution.

Cyber activism after Egyptian revolution:  Transition to democracy.

Cyber activism did not end even after Mubarak stepped down; in fact the referendum for new amendment to constitution is vivid example for ongoing online activism. Though many online activists were opposing this referendum the voters overwhelmingly passed it. On 7th September 2012, in general election people elected Mr. Mohammad Mors as their new president. He enjoys the support of Muslim Brotherhood, biggest political organization that survived Mubarak regime. Egypt’s new president Mr. Morsi and Muslim Brotherhood are going in direction that is opposed to democracy in Egypt. The growing influence of MuslimBrotherhood,radical Islamic extremism, stronghold of military elite and delayed transition to democracy put the success of revolution in doubt. Women, who played important role in revolution, are being pushed back into their traditional role and now largely absent from the public sphere.

There is growing demand by extremists and fundamentalists to implement “Shariat” law. Mohammad Morsi government is facing protests and these are being met with heavy hands of state. These protesters demand the gradual transition to democracy and it does not appear to happening. Military elitists are striving to maintain complete control over power.

Thoughcyber activism is up in arms against these recent developments it unfortunately seems to be ineffective in controlling these slow but firm footsteps towards extremism. Economic structure of post revolutionary Egypt is mainly influenced by corporate and military elitists. This control is depriving Egyptian educated youths from achieving their potential. European economists are in favour of open economy with special industrial zones for revival of Egyptian economy. This will never allow Egyptian youths to achieve their potential as it will establish strong hold of International and national business groups and elites on Egypt government which will focus on economic growth and profit making rather than employment generation. Egypt is an important ally for US to safeguard its own interest in the Middle East. Therefore US intervention in newly elected Morsi government is just a matter of time. There is strong fear that this US intervention will eventually undermine the capacity of Egypt government to address problems of Egyptians as it happen in many regimes where US intervene. This all draw very gloomy picture about future of Egypt after revolution. Online activism is proving increasingly inefficient to direct post revolutionary Egypt towards what they aspired during revolution.

Is Cyberspace the new place of protest?

Cyberspace is considered as an alternative to traditional institution of political mobilization. It is non-hierarchical, anarchic in nature and canundermine real world exclusionary criteria and rigid differences. It is a platform for public participation, for civic engagement and hailed as competent to revive vibrant democratic culture in the world.  Jasmine revolution in Arab world and role of cyberspace inform of cyber activism which toppled totalitarian regime in Egypt, Tunisia and Libya are now widely consider as a success story of cyberspace. Some of the scholar’s called this as a Facebook revolution.  However this revolution cannot be called as a Facebook revolution as such. As aptly shown by many scholars in Middle East and from across the world it is the grievances of people, their ability to withstand suppression by the regime, readiness to sacrifice for the freedom and bravery is the leading factor in Jasminerevolution and not the Facebook as such. Social media, no doubt, provided the much needed link between public anger against regime and actual mobilisation of people but it is flawed to considered social media as the catalyst of change. Virtual worldcan play and do play a supplementary role in transformation. However, it is naive to label virtual world as amedium of revolution or transformation.

In fact there are enough evidence to show that commercialization of virtual world is gaining pace. Manyextremists’organisations utilize cyberspace for spreading its own agenda. In virtual world, national boundaries, ethnic and cultural status, economic interest, political and ideological inclination, historical events are creating new forms of hierarchies andstrengtheningexisting hierarchies of real world. Deliberation and serious discussion in cyberspace is relatively much smaller in quantity than expected. Pornography, cybercrime, identity theft, cyber bullying are indications of undemocratic nature of cyberspace.

Though many scholars still believe that cyberspace have potential to revive vibrant political and democratic culture but the event in Egypt especially after revolution, America and world over proved otherwise. In America, president Barak Obama’s innovative methods of e-campaign and public support gathered by it was also held by many as success of cyberspace in democracy. Obama’s e-campaign was far more active and vibrant in compare to other presidential candidate’s campaigns.  His popularity and opinion reached to general public via internet where deliberation and two way-direct communications via video-conferences and town hall meetings. This trend was a proof of civic engagement and itmade Obama a president who acts in accordance with public opinion. However this Obama administration is not an anti-establishment in nature. In fact it supports and strengthen the establish pattern.Obama’s choice of Chuck Hegel as a new Secretary of State, a known supporter of War on Terrorism, increased drone attacks in many parts of the world, continued support for totalitarian governments in Egypt, Tunisia and Libya until the rise of strong anti-regime sentiment, covert attempts of regime change in Libya and Egypt under the guise of NATO intervention, deliberate escalation of internal conflict in Syria, hesitation to increase level of taxes on super rich in America, coming under the influence of various business associations and interest groups, adoption of not so people friendly economic policies in US shows  how Obama successfully pretends to act in accordance with public opinion. But in reality he serves the interest of establishment. This indicates that cyberspace may generate strong civic engagement and people participation on various important issues but is not effective in converting that success in form of policy formation in accordance with public opinion. Events in post revolutionary Egypt also indicate similar failure of cyberspace.

Cyberspace is coming under increasing threats of censorship all over the world. Many governments, democratic and totalitarian alike, are striving to censor and control cyberspace with various legal and statutory provisions. New and advanced technology isallowing governments to censor and control the so called ‘anarchic’ cyberspace more and more. The cyberspace or internet make over centralization possible, rejecting decentralised region specific governance in the world as Internet enables thecentral authority the ability to evade geographical and territorial obstacles.  Further itenables governments across the world to constantly surveillance citizen and thus making them as a subject rather citizens. Cyberspace also provides a tool to control and interfere in the privacy of citizen to an unimaginable level; with each passing day it is gradually becoming a medium which serve the interest of establishment rather than bringing back vibrant democratic culture in the world.

Cyberspace and virtual world is necessarily depends upon the real world for its existence. Any change in virtual world is necessarily flown from the real world and not vies versa. Virtual World by definition cannot exist without the support of and influence by real world. Therefore it is wrong to consider cyberspace as a medium to revive a democratic culture.

Transformation and change in existing exploitative power structure must happen in the real world. Virtual world may encourage and supplement real world activism but cannot supplant latter and exist without it. This phenomenonwas aptly shown by the study of Egyptian revolution. Political change is therefore a must and technology cannot solve the problem. In fact the idea that technology can bring about change is part of neo-liberalism which depoliticizes the issue and glorifies technical solution to political problems.



1)    Dr. KhamisSahar and Vaughn Katherine, “How Civic Engagement and Citizen Journalism Tilted the Balance”


2)    Phelps Edmund, “Corporate Threat to Arab Spring”,


3)    SaadEddin. Ibrahim, “Historic Elections in Egypt”, at


4)    Shlomo Ben-Ami, “Egypt’s Revolutionary Coup”,


 March 18th 2013 is last date of accessing both  and websites.

Brazil Without Misery?

23 Mar

This article is an attempt to scrutinize the current ‘Brazil Without Misery (Brasil Sem Miséria)’policy of President Dilma’s administration. In doing so, I’ll be looking into the various initiatives under the policy like Busca Ativa; Brasil Carinhoso; Pronatec; Unidades Básicas de Saúde; and Bolsa Verde. Synchronously; I’ll deliberate into the benefits and loopholes of this policy. I’ll conclude by making some recommendations about this policy and provide a final response to my article title.

“We want to eradicate extreme poverty by 2014 and make Brazil the first developing country to achieve the first of the UN millennium development goals”

– Tereza Campello (MSD) [Langellier Jean-Pierre, 2011]


The policy, ‘Brazil Without Misery’ is a poverty alleviation program aimed at eradicating poverty by 2014. It was launched in June 2011 by Dilma Rousseff, the President of Brazil.  It is an extension of the Bolsa Familia policy initiated by Rousseff’s  predecessor Luiz Inacio Lula da Silva. In addition to Bolsa Familia, Brazil Without Misery has introduced a number of programs such as Bolsa Verde, Brasil Carinhoso, Busca Ativa etc. In the following paragraphs, I’ll be critically looking into the various initiatives/programs under Brasil Sem Miséria and its attempts at eradicating poverty.

“I did not have a job card or an elec­toral card, and my daughter’s birth certificate was wet. I did not even know I had the right to receive the Bolsa Família”

–      Beatriz [MSD, 2012, p.10]


As a result of Busca Ativa, Beatriz now receives the Bolsa Família and David is enrolled in a Pronatec course.

Source: MSD, 2012, p.10

One such initiative under Brasil Sem Miséria is the Busca Ativa. The Busca Ativa or The Active Search is the strategy adopted by Brasil Sem Miséria to find and register all extremely poor families. This has proven to be a success as it also acts an impetus for the Bolsa Familia program. The Busca Ativa has registered 687 thousand families [MSD, 2012, p.6] who were previously not included in such schemes. This was done through the Cadastro Único (Single Register). The Cadastro Único provides access to such schemes and hence  a number of families are reaping the benefits of such schemes. Out of the 687 thousand families located, 39% are in municipal­ities with over 100 thou­sand inhabitants, 75% are in urban centers, 58% are in the North and Northeast regions, and 14% belong to spe­cific populations [MSD, 2012, p.9] like Indians, quilombolas (descendants of  Afro-Brazilian slaves), family farmers, pick­ers of recyclable ma­terials, the homeless, etc.

“The positive impact is even greater on those in early childhood: 2.7 million extremely poor children 0 to 6 years of age will be lifted out of extreme poverty”

– Tereza Campello (MSD) [SECOM, 2012]

The Brasil Carinhoso (Brazil that Cares) aims at increasing the investment in early childhood (0 to 6 years) as a means to reducing poverty. It has extended Brazil’s Family Grant benefit to extremely poor families with children 6 years of age and under, thus guaranteeing a monthly income of at least R$ 70 a month per person. The initiative has reduced the number of families living in extreme poverty in Brazil by 40 per cent [SECOM, 2012]. This program shows that Brazil is concerned about her future generation. Furthermore, the work done by Brasil Carinhoso will help Brazil in achieving the fourth millennium development goal of reducing child mortality rates.

“We face the prospect of a rigorous process of economic development and we need skilled labor to maintain this growth in a sustainable manner”

– Dilma Rousseff, President of Brazil [Mari Angelica, 2012]

Pronatec (National Program of Access to Technical Learning and Employment) was developed by the City of Rio Branco through a partnership by the Secretaria Municipal de Cidadania e Assistência Social (Semcas) with Senai. Pronatec Brasil Sem Miséria offers initial and con­tinued formation courses, which take from 160 to 240 hours/class. It is the municipality’s responsibility, through the Social Assistance Unified System (Sistema Único de Assistência Social, Suas), to identify through the Single Register (Cadastro Único) the potential candidates for the qualification cours­es. Today, Pronatec Brasil Sem Miséria is oriented to those registered in the Cadastro Único who live in munici­palities with over 50 thousand inhab­itants in the North, Northeast, and Center-West regions, and with over 80 thousand in the Southeast and South regions [MSD, 2012, p. 27]. Such skills will increase the employability of individuals; thus, culminating to a resource rich population.

Pronatec will help Brazil to provide technical skills to its population. Formerly, such technical education training schools were mainly seen in the states of São Paulo, Rio Grande do Sul, Minas Gerais and Rio de Janeiro etc. However after the implementation of Pronatec, technical education and training has reached even the poorest, particularly people in the Northeastern states. Besides job capacity generation, this program has also led to social equality among states. However a major problem facing this program is the inequality of education in terms of quality and subsequently opportunity. Thus, when it comes to searching for a job, many of the students from Pronatec schools are unable to compete with their counterparts. However on the upside, this program aims to create 200 new schools and generate 8 million opportunities for professional training by 2014.


Dona Maria do Amparo and her grandchildren have health at home and in the UBS

Source: MSD, 2012, p.23

Unidades Básicas de Saúde (Basic Health Units) or UBS are established in territories with the highest social vulnerability. The idea is to fight the vicious circle where poverty leads to disease; disease reduces working ca­pacity, which makes the earning of livelihood more difficult  and this in turn leads to more poverty, which, in turn, increases the likelihood of disease. [MSD, 2012, p.23]. To deal with this Brasil Sem Miséria has collaborated with the Family Strategy (Saúde da Família). Hence, teams consisting of doctors, nurs­es, dentists, and community agents  take care of the patients in their respective households or UBS.

“The Green Grant is above all a recognition by the federal government that it is essential to offer an incentive that combines guaranteed income with preservation of the environment”

Dilma Rousseff, President of Brazil [Ortiz Fabiola, 2011]

The Bolsa Verde (Green Grant) was launched on September 28th 2011 by President Dilma Rousseff . The policy seeks to overcome extreme poverty in rural areas through sustainable family farming production. An amount of R$ 300 is paid in every quarter to families. Grants are transferred through the Bolsa Familia card [Portal Brasil, 2011]. Bolsa Verde aims at instilling sustainable practices in people living in the forest area. This is done by giving poor families financial aid under the condition of preserving their surrounding environment. In doing so, the policy envisions that Amazon will be protected by the families dwelling their.

Critics of Bolsa Verde argue that in order to receive this subsidy, families have to live within conservation areas or extractive reserves (sustainable use protected areas). Furthermore R$ 100 a month is very little remuneration for families to conserve the rainforest. Many families who have registered under this scheme are still awaiting their status. This is because more than 8,000 families are already included in the list of applicants. This has resulted in a lack of faith in this policy and thus families are going into commercial activities such as cattle ranching

Overall, the federal, state and the municipal levels of government have to coordinate so as to ensure the smooth functioning of the plan. For example, in the city of Rio de Janei­ro, the poorest population is receiving the Bolsa Família (federal), the Renda Melhor (state), and the Família Carioca (municipal). In addition, Brasil Sem Miséria requires greater social participation. The elimination of extreme poverty can only happen when citizens become conscious of their environment. Hence, being primarily a people driven plan, the success of it will only come from the people. Thus, it becomes imperative for Brazilians to continue supporting such initiatives which will result to the achievement of the ‘greater’ good.

“Brazil turns a decisive page in our past history of social exclusion. On this page, it is written that over 2.5 million Brazilian men and women are leaving extreme poverty.”

– Dilma Rousseff, President of Brazil [SECOM, 2013]

In conclusion, I do believe that Brazil is Without Misery and the program has proven to be a blessing for the Brazilians. The Brazilian Government remains one of the few governments committed towards the achievement of the first millennium development goal. In doing so, it has also address other millennium development goals as well. Such an initiative should indeed be encourage in other countries. As seen by the Brazilian experience, a similar experiment or policy will help countries to deal with the various loopholes in the achievement of their millennium development goals. Furthermore, Brazil can play an active role in the international sphere. IBSA Dialogue Forum, BRICS can be an effective starting point to cooperate on issues like poverty and development. Nonetheless poverty still exists in Brazil. However in the minds of the Brazilians it has disappeared thanks to the successful implementation of such policies. This makes one to ponder whether ‘Deus é brasileiro (God is Brazilian)’.

By: Kester Pereira



Langellier Jean-Pierre (2011): ‘Brazil declares war on ‘chronic poverty’, The Guardian, June 7th

Mari Angelica (2012): ‘R$1bn technical education program launches’, < > (last accessed March 21st 2013)

Ministry of Social Development (2012): ‘Brazil Without Extreme Poverty Plan’, Ministry of Social Development and Fight against Hunger, Government of Brazil

Ortiz Fabiola (2011): ‘BRAZIL: ‘Green Grant’ May Do Little to Protect Amazon’, Inter Press Service, Oct 11th < > (last accessed March 18th)

Portal Brasil (2011): ‘Brazil launches National Poverty Alleviation Plan’, < > (last accessed March 18th)

SECOM (2012): ‘Brazil Without Extreme Poverty celebrates its one-year anniversary with 687,000 new families enrolled in Family Grant Program’, The Secretariat for Social Communication, Government of Brazil

SECOM (2013): ‘Brazil lifts 22 million people out of extreme poverty since 2011’, The Secretariat for Social Communication, Government of Brazil

United Nations Development Programme, Human Development Report (2011, HDRO (Human Development Report Office) United Nations Development Programme,

India China bilateral trade and India’s Fiscal Problem

22 Mar



The first decade of 21st century witnessed rapprochement of India China relations which were stagnant since the Sino-Indian war 1962. Bi-lateral trade between the two nations became  the main driving force towards normalisation of relations. Since 2000 there is steep rise in bilateral trade and is expected to reach US $ 100 billion in 2015. But the increasing lopsided balance of trade in China’s favour has become a source of anguish in Indian policy circles, and has played an important role in increasing India’s balance of payment woes. This year the trade deficit increased a record high to US dollar 29 billion despite of 12% fall in bi-lateral trade compared to last year. In this article I have made an attempt to understand the cause of trade deficit, its implication on India’s economy and what India should do to create a better balance.

Trade and economic relations

India and China officially resumed trade in 1978 and in 1984, the two sides signed the Most Favoured Nation (MFN) Agreement. From 1992 both nations began active bilateral trade which made satisfactory progress by 1994.In the same year both countries signed a Double Taxation Avoidance Agreement and the prevention of fiscal evasion with respect to tax on income. In three years from 1999-2000 to 2002-03, India’s export to China increased at an average of 50.2% per year, and imports from China at 26.6% per year. Further by deciding to offer some trade benefits to each other both countries signed the Bangkok Agreement in 2003. According to the Agreement, China extended concessions on 217 products from India while India offered concessions on 188 products exported by China. After this deal India-China bilateral trade got a boost and it surpassed US $ 10 billion in 2004, China became India’s largest trading partner by 2008, and in 2010 both proposed to achieve US $ 100 billion by 2015 as a result by 2011-12 the trade between both countries reached 73.9 billion.

The flip side is that much of the trade has been in China’s favour, leaving India with a deficit of $27 billion in 2011-12 and this year it reached US $ 29 billion despite 12 % fall in bilateral trade. For every $100 item that India sells to China, It buys back goods worth $320.



As shown in the above figure India’s export to China mainly consist of raw materials, whereas China’s export consists of manufactured and value added goods. Though India has urged Chinese government to better the lopsided bilateral trade nothing much has happened. It is not easy for Indian goods to enter China and the most restrained are the Indian pharmaceutical products which find it difficult to reach the Chinese market.  According to Som Mittal, President, Nasscom (a trade association) Indian companies struggle in China due to non-tariff barriers such as requirements to obtain security clearances before doing business with government backed companies.

On one side Indian firms and value added goods are restricted from entering China and on the other hand Chinese manufactured goods are invading Indian markets this has adversely affected growth of manufacturing Industry in India. The image below shows the adverse affect of this bilateral trade on Indian economy.



Indian manufactures are unable to compete with cheap Chinese goods. The main problem is that China doesn’t have any strong Intellectual property rights laws. As a result whenever a new product is launched in international market Chinese firms are ready with their cheap replicas which look more or less similar to the original.



Today 60% goods in Indian local markets are of Chinese origin raging from stationary, household, decorative, fine arts, God idols, firecrackers etc. This has resulted in stagnation of Indian cottage industry; according to a report in the last 10 years nearly 50 % of cottage industries in towns like Bhiwandi have shut down. It has also giving tough time for major manufacturing industries in India. For instance, Bharat Heavy Electricals a US $ 13 billion New Delhi- based producer of power equipment is struggling to compete against lower-priced products from Shanghai Electric and Dongfang Electric.

The main concern on India’s side is dumping of large number of Chinese goods in Indian markets. India has been most disgruntled by Chinese trade manipulations and has lodged a total of 137 cases with the World Trade Organisation (WTO) against China in the last 15 years. India imposed banned on a number of Chinese goods in India e.g. import of milk and milk products such as chocolates in 2008 and since then it has been extended. India also imposed ban on import of Chinese toys for six months in 2010 which was lifted after two months when China warned to take up issue in WTO. In 2011 India also imposed ban on import of Chinese telephone equipment. Even after celebrating 2012 as a friendship year, in January 2013 government of India has imposed safeguard duties on import of certain insulators from China   for a period of two years; 35% for the first and 25% for the subsequent year. India has also imposed a 20 % tax on imports of hot rolled flat products of stainless steel from China to protect local producers which is said to last for 200 days.  But these moves by government has not helped as despite a decline of trade by 12% between two countries the Fiscal deficit has still increased by US $ 1.79 billion taking it to a record high US $ 29 billion dollar; it means these moves have constrained competition rather than the competitor. Today china accounts for a fifth of India’s overall fiscal deficit.

How to tackle with this fiscal problem

India’s economic development is based on IT and Service sector whereas China’s development is based on manufacturing. As a result India dose not produces much that it could export to China and in case of IT and Service sector language becomes a problem; our specialization is English and not Mandarin which is phonetically different from English.  Hence the best way to tackle this trade deficit is to improve manufacturing and industrial sector which is on decline as Indian markets are becoming more dependent on Chinese products and if this dependency increases Indian markets will soon be monopolised by Chinese goods. On the other hand China is aggressively developing its service sector and if the growth continues it is likely to take over Indian service sector in future.

The image below shows the decline of 3.7% in industrial production this fiscal year compared to same period of 2011-12.



The image below shows the increase in China’s service sector



Hence it’s high time that India rebalances its economy by developing Industrial sector, which is plagued in low productivity. If India is successful in building infrastructure for producing ancillaries it will dent India’s imports from China; this will not only reduce fiscal deficit but, in the long run help India to become self-sufficient in manufacturing, and will complement its service sector.

The main hurdle is India’s underdeveloped infrastructure and the rising cost of land, non-availability of electricity and water whereas on the positive side it has a large human resources and an increasing middle class that has emerged as a large global market. If India wishes to become a developed nation it’s over dependency on service sector will take it nowhere. If taken into account Indian government’s record in policy framing and its implementation it will take two decades from now to make India self-sufficient in manufacturing.

For the time being India should ask Chinese companies wishing to remain major suppliers to Indian companies start manufacturing in India. India should also ask Chinese companies and Banks to invest in India’s infrastructure. This will increase Chinese investment in India.

Further India must demand higher market access for Indian value added goods in China and should plug into the Chinese supply chain by exporting goods not found in China which will help decrease the fiscal deficit.

By taking into account China’s ability to produce low cost manufacturing goods and India’s inability to do the same, the fiscal deficit is likely to persist in near future. As a result in the current decade, India’s top economic priority should focus on infrastructure building to develop its industrial sector. The sooner the infrastructure deficit gets addressed, the faster India will start competing with China on the manufacturing front.

By Sumedh Lokhande













Criminalising Dissent

21 Mar

“Why do people protest?” I have been thinking about it for some time. I do think they do so because they are angry and hurt.  They protest against the government because are convinced that it is not performing and they are hurting because they are being deprived of what is rightfully theirs. It is due to this that my main contention is that all protests are issue based.  While the issue might concern a larger section of the society it is only a small section that is really sensitive that actually protests actively.

India has a long history of protest; the relatively peaceful freedom struggle being one such instance. Satyagraha, non-cooperation and civil disobedience are means of protests that have been used successfully to achieve varied goals.  This is in contrast to protests like dharnas (fast), rail rokos (stop the train) and bandhs (shut downs) that have been completely taken over by politicians for seemingly trivial reasons. Situations have changed; seems like people have started to assert once again. Examples in the recent past are the anti corruption movement for passing a strong anti corruption law and the protest after the gruesome rape in Delhi. One such struggle that we have been witnessing is the long drawn protest over natural resources.  In India, natural resources and places where they are found are important in people’s lives. Many worship these places as the very abode of God. However the unrestricted exploitation and commodification of these resources by the government has angered a lot of people. In this paper  my focus is on the anti POSCO protest that is going on in Odisha for nearly a decade.

Tracking the History:

On June 22, 2005, the Orissa State Government signed a Memorandum of Understanding (MoU) with POSCO-India, subsidiary of the POSCO Corporation of South Korea. The MoU pertains to setting up of an integrated iron ore mine, steel plant and private port. The estimated investment was Rs. 51,000 crore or $12 bn. Those critical of this project point out that:

  • There was almost no linkage with local and national economy.
  • Royalty for the extraction of Iron ore is very low.
  • Steel was going to be processed without paying full land, water and electricity tax (due to the SEZ status) and exporting it.

As per the MoU, 4,004 acres of land was allocated for the steel plant in Jagatsinghpur District. Of these, 3,000 acres were officially classified as forestland despite the fact that betel vine, cashew nut and other cash crop were being cultivated.  To make matters worse, this project will displace approximately 4,000 families though, due to the above mentioned manipulation, only 270 odd will be officially entitled to compensation.

In wake of this, in August/September 2005, the POSCO Pratirodh Sangram Samiti (PPSS) was formed to oppose the project.Though most of the protests in that region gets to be projected as having links with the Maoist, in reality the  anti POSCO struggle is a genuine  people’s campaign. Immediately after this, peoples blockade was declared in three-gram panchayats affected by the plant. This blockade did not allow the entry and exit of government officials and POSCO employees.   A series of protests followed the blockade. The Union and State governments took different decisions. Some of the major decisions and actions are as follows:

  • In December 2009, Ministry of Environment and Forest (MOEF) cleared the diversion of forestland without following the mandatory procedures. A major one being that gram sabha (means a body consisting of persons registered in electoral rolls at village level.) did not certify the clearance though it is an obligatory condition.
  • In May 2010, 25 platoons of police descended in the district areas of Jagatsinghpur and attacked and injured the protestors.
  • In July 2010, the Odisha government began to take over the forestland being cultivated by some people and paying them compensation cheques. The Ministry of Environment constituted a special four-member committee chaired by former Environment Secretary Meena Gupta to look into the ‘relief and rehabilitation’ and ‘settlement of rights under Forest Rights Act’.
  • In August 2010 the sub committee on Forest Rights Act confirmed the issues raised by PPSS and the letter written by D. Raja Member of Parliament belonging to Communist Party of India (Marxist). It recommended the Environment Ministry to withdraw the illegal clearance and halt the on-going process of takeovers. MOEF issued a ‘stop work’       order to Odisha Government on POSCO but allowed the clearance of the land to stand. PPSS wrote to the MOEF seeking the withdrawal of the illegal forest clearance and rejected Meena Gupta Committee.
  • Three members of the committee presented detailed documentary evidence to show that forest clearance was illegal and that the provisions of the  Forest Rights Act had not been implemented. It was noted that the  state government had given false statements and the environmental clearance was farcical. They recommended that the clearances should be withdrawn. Meena Gupta had a dissenting opinion and according to her the forest clearances can stand.
  • In March 2012, the National Green Tribunal (NGT) delivered a judgement that suspended the conditional environment clearances and directed the Ministry of Environment to carry out ‘fresh review’ of the POSCO project. The NGT bench consisted of Justice CV Ramulu and Devendra Kumar Agarwal. The tribunal observed: “A close scrutiny of the entire scheme reveals that a project of this magnitude, particularly in partnership with a foreign country, has been dealt with casually, without there being any comprehensive scientific data regarding the possible environmental impacts. No meticulous scientific study was made on each and every aspect of the matter, leaving lingering and threatening environmental and ecological doubts unanswered.”

Before the tribunal’s verdict the Comptroller and Auditor General (CAG) pointed out irregularities in the allocation of land to private promoters, misuse of emergency provisions for land acquisition and under-valuation of compensation by the Odisha Government.

The NGT’s judgment had come days after Prime Minister Manmohan Singh, promised business leaders in Seoul that government was “keen to move forward with the project,” while adding, “India is a stable and profitable long-term investment opportunity.”

Impact on the Protestors:

PPSS that has spearheaded the protest continues to oppose the acquisition of land for mining by POSCO. The people of Dhinkia, Nuagaon and Gadakujung gram panchayats have fiercely fought the Odisha government and POSCO project to acquire land for the project. The villagers say they are constantly under the threat of either the police or the company goons.

Hundreds of false cases have been filed against the protestors and villagers. The filing of false cases curbs the fundamental freedom of the people. The cases and warrants against 2000 people has targeted the entire village and they are under constant threat and unable to leave. The paradoxical part is that most of the complaints have left the number of accused open ended;  any person can be implicated in any case. Government officials have filed large numbers of these cases during peaceful demonstration by the members of PPSS.  One example is that of Shri Abhaya Sahoo, the President of the PPSS, who was arrested on two occasions and has over 50 cases registered against him. In some cases he has maintained that he was not even present in the village on the day of the alleged offence.

The inability to leave the village has impacted access to health and medical help. There are no doctors, no health centers in the vicinity and virtual siege prevents them from taking medical assistance from outside the village. Most of the arrests that have taken place because people were forced to take medical help.

In all this what I cannot understand is why is the government so insensitive to peoples demands and wants. At the end of the day the government is ‘supposed’ to cater to the welfare of the people. I was further taken aback when I read about the recent developments in Jagatsinghpur district.

Last month (February 2013) the state government started forcibly acquiring land for POSCO steel plant. The state deployed about 16 platoons of police personnel at different areas of the project. In what is seen as a calculated and strategic move by the police hundreds of police personnel barged in to  Gobindpur village before sunrise and razed 13 betel vineyards to the ground. During this process police could not escape a clash with members of PPSS. The police officials including male police beat villagers particularly women and children causing serious injury. Many villagers were taken into custody without any information and sent to Kujang sub jail.

On March 2, 2013 hired musclemen of POSCO in compliance with Odisha police threw bombs    at the anti POSCO activist in Pantana village. The bombing killed three people Manas Jena (32), Nabanu Mandal (35), Narahari Sahoo (52) and severely injured Laxman Paramanik even while they  were attending the anti POSCO meeting.  This happened  because police refused to arrive at the spot of bombing or arrange an ambulance to take people to the hospital.  They arrived at the site 15 hours after the incident and took charge of the bodies. The Superintendent of Police (SP), Satyabrata Bhoi, declared in front of the media that the people who died were “agitators … taking to violence and making crude bombs. The three died while making bombs,” It is due to this that it is alleged that the  entire incident appeared to be scripted by the police.

I fail to understand why use bombs when the protest was peaceful in the first place. The people who were killed and injured in the attack were leaders of the PPSS. I feel the attack is nothing more than an act to scuttle the protest by killing the second string leaders. It appears as if the police will stoop down to any level to ensure the land acquisition even if it means killing a few people. It is amazing how Indian government reacts to killings of Indians, even if it is accidentally, by foreigners or in foreign countries, but fail to look inward. Matters of our own backyard where police and other state machinery is involved in killing our people is treated with disdain. .

A more saddening incident  occurred on the March 7, 2013. Two mothers of Dhinkia and Gobindpur villages in Jagatsinghpur went naked before the paramilitary station in Mangalpada near Gobindpur village. A rally that was led by mothers and children went to a temporary paramilitary station. While taking off their clothes, they constantly shouted, ‘why have you come here?, what do you want to see?’. Why should women be pushed to  take such a drastic step? This was reminiscent of what had happened in the North East of India. It was seen as an expression of anger and protest over the intrusive presence of police and paramilitary forces in the area. In response to this, the police instead of being shamed, lathi charged (baton charge) the protesters and used tear gas. Thirty-five women received serious injuries in their legs, chest and backs. The police did not think it necessary to seek treatment for women who sustained injuries; instead it registered cases against 31 people.

This act is a gross indication of the provocation by the police and paramilitary forces that led to women taking such a drastic step. The one thing I realized and learnt from this incident is that the protestors would do anything to protect their land and the authorities anything to acquire it. It appears that such dissent and protests are going to be witnessed more and more and every attempt will be made to tarnish every dissent as a criminal act.

As a citizen I am ashamed of what happened and how things were handled by the state machinery. As a society we have collectively failed and let matters reach such a level. I begin to question as to what kind of state I am living in?:

  • A state where people are put in jails, beaten up, killed because they protest and don’t agree with the government’s decision.
  • A state where the police has complete immunity to act the way they want.
  • A state where a tribunal suspends the environment clearance and it is disregarded and yet no attempt is made to book the violators for contempt of court.
  • A state where the media is more or less silent about the protest and  NGT had suspended the environment

It is here that I could not but think of the Preamble that states:

WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a _[SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC] and to secure to all its citizens:

Justice, social, economic and political;

Liberty of thought, expression, belief, faith and worship;

Equality of status and of opportunity; and to promote among them all

Fraternity assuring the dignity of the individual and the [unity and integrity of the Nation];

In our Constituent Assembly this twenty-sixth day of November, 1949, do hereby Adopt, Enact and give to Ourselves this Constitution.

Seems like we have let ourselves down, it is a collective failure.  The values of liberty, equality and fraternity enshrined in our constitution, is being violated time and again. What is happening in Odisha is just one instance of many such incidents. . In the neo liberal age I don’t think the laws of the land ensures it. May be it’s a good time to introspect the role of the state and even the highly ambitious preamble of ours. To begin with, the government should ensure that at least those responsible for the killing and other brutalities are punished and paramilitary forces are withdrawn. It is time that state takes in to account people’s views and opinions and respect them as fellow humans.

 By: Ashwin Parthasarathy


Anti-Posco activists booked for semi-nude protest

Anti-POSCO agitation: Livelihood, mobility of the villagers under threat, says Fact Finding Report

Bomb Atack by POSCO backed Mafia kills Farmers

Captive Democracy

Crude Questions about Crude Bombs: Biju Mathew

Dhinkia and Govindpur Mothers go Naked to Protest against Forcible Land Acquisition for POSCO: Minati Dash

POSCO’s Steel Dreams Laid To Rust

Posco Protests: A Cause Divided

Pre-dawn police crackdown on village at POSCO site

Protest Against Killing of Anti – POSCO Activists and Forcible Land Grabbing in Odisha

Stripping for protest: What drove women villagers in Odisha to go semi-nude in fight against Posco

The rediscovery of protest

Timeline of Events Relating to Forest Rights in POSCO Area

Voices of the People Vs POSCO: Updates from Jagatsinghpur District, Odisha

Violence at POSCO site

Why dissent?

European Union Crisis: An Evaluation

16 Mar

The history of modern Europe from 1600 onwards to late 1980s was one of conflicts, two great wars, bloodshed and continuous armament race on the one hand and great scientific and technological development, better quality of life, industrialisation and ever increasing prosperity and regional co-operation on the other. At the end of the Second World War, European economic and political cooperation was seen as an important element in the post-war reconstruction and was therefore supported by the U S. As wholesale abrogation of sovereignty was not practical, focus shifted to co-operation between France and Germany and prevention of war between them. This resulted in European Coal and Steel community (Treaty of Paris, 1951) among the so called original six. The co-operation created by the European coal and steel community and importance of increased trade to economic growth provided impetus for broader and further integration. Treaty of Rome 1957, established the European Economic Community and Euro tom.

European Economic Community quickly becomes the focal point of efforts for European integration. It was hoped that the tangible economic benefits of common policies would provide ongoing impetus for the integration process. This resulted in establishment of European Community. In 1993 the official title of European Community was changed to European Union; European Economic Community is its pillar. European Union is the most thoroughgoing example of regional economic and political integration. As an international organisation, it goes beyond traditional intergovernmentalism in policy making and has substantial elements of supranationality. The various Union treaties contain fairly open-ended commitments to closer Union among 27 member states. EU had three pillars, namely, European Economic Community, Common Foreign and security policy and Justice and Home affairs. However, now European Economic Community is the most significant one and it absorb other two pillars. EU membership has increased from 6 to 27 and not surprisingly the policy jurisdiction of EU has deepened dramatically. Rapid Trans- boarder integration of national markets, foreign and military co-operation, and co-operation on immigration, asylum and criminal matters are significant development. The most radical step so far is the Economic and Monetary Union that began in 1999. It involved the adoption of the euro as the single EU currency with a single monetary policy run by European Central Bank and a degree of macroeconomics policy co -ordination. The introduction of Euro  accelerated the process of market integration, building on the single market programme and propelled  the process of integration and has seen the European Union emerge as an increasingly state like entity in international system.

Scholars’ like Jurgan Habermas, Andew Linklater and many more consider EU as success story and possible role model of supranational government. Neo-liberals often portrayed EU as a success story of economic integration and as an example of triumph of their theory. Worldwide EU has been hailed as role model of regional co-operation and success story of Neo-liberalism. However, post euro era and after 2008 economic slowdown, European Union is facing various problems viz., rising inflation, unemployment, slow economic growth, increasing poverty and falling standards of living and political turmoil associated with such economic sufferings. Though European Union is still very strong and nowhere near disintegration, it is it nonetheless, in deep trouble. Considering one of the main motives behind EU formation was economic growth crisis on that front could easily lead to disintegration of EU.

It should be noted that the main economic impetus behind EU’s policies are broadly in conformity with the neo-liberal agenda. EU has a strong and free single market with emphasis on common external tariffs, customs Union and free flow of goods, capital and labour in EU. European Union members reduced various subsidies, spending on social sectors like health, education and made room for more privatization. European Central Bank established political and business community is more worried about budget deficit and tax reforms for economic growth rather than rising unemployment and increased hardship for people in EU. Recently, Greece faced a number of economic problems and it even appeared before the recent election that it would secede from EU. Spain, Italy, Portugal and Ireland are also facing severe economic crises. Unemployment is 13% and rising and harsh cut on essential public sector is making life difficult for in those countries. It is becoming increasingly clear that free market fundamentalism is aggravating the problems.

A)     Reasons behind EU crisis.  

1) Single currency without single government.

The main reason behind the in EU crisis is its monetary policy. By introducing a single currency without the institutions needed to make that currency work Europe effectively reinvested the defects of the gold standards. This means the same flaws that played a major role in causing and perpetuating great depression was been re-enacted. Worse still, creation of the Euro fostered a false sense of security among private players unleashing huge unsustainable flows of capital into nations all around Europe’s periphery. As a consequence of these inflows costs and prices rose, manufacturing become uncompetitive and nations that had roughly balanced trade in 1999 began running huge trade deficit.

If the peripheral notions still had their own currencies, they could and would resort to measures such as devaluation to quickly restore competitiveness but now they cannot do so. This means they are in for a long period of mass unemployment and slow grading deflation. Their debt crises are mainly by-product of this sad prospect because depressed economies lead to budget deficits and deflation magnifies the burden of debt.

The single currency without any single institution to control it is fundamental structural flow of EU. United States worked more effectively because it has a strong central government which provides automatic bailout to states that get into trouble. Florida, for example, which is facing the aftermath of a housing bubble, gets Federal bailout on a scale, no European nation could dream of. Florida is not expected to manage its social security programme with its dried up revenues. In contrast in Europe there is no single institution to manage euro. So crisis ridden Greece does not have anyone to bail them out and have to take care of things.

2) Unnecessary austerity and spending cuts.

EU is in crisis and the mandatory emphasis on austerity, budget deficit control and spending cuts is not only slowing down the recovery of EU but also aggravating the problems. Yet established political actors and policy makers believe that austerity measure will bring economy back on track.

Ireland was considered success story of austerity measures twice in early 2010 and again in the fall of 2011. However, the supposed success turned out to be mirage; three years into its austerity programme, Ireland has yet to show any sign of real recovery from the slump that had driven unemployment to 15%. Similarly for years Spain and other troubled European nations were told that they can only recover through a combination of austerity and “internal devaluation” basically meaning wage cut. It’s now completely clear that these strategies do not work unless there is strong growth and moderate amount of inflation in European core mainly Germany.

Central bank cites the example of Latvia’s 5.5% growth with austerity programme as a success story of its own policies. However American economy grew at almost 10.9% in 1934, as it rebounded from the worst of the Great Depression and yet the depression was far from over. Spain is undergoing austerity measures and harsh spending cuts. Spain’s economic problem is not the result of government spending but the bursting of huge housing bubble. Large deficits emerged when the economy slowed down due to it and revenues too reduced. Indeed Spain has trouble in borrowing to finance its deficits due to possible political turmoil that is reducing investor’s confidence in Spain.

Research done by International Monetary Fund (IMF) clearly state that spending cuts (austerity) in troubled economy does not solve the problems; but it make the economic recovery painful and awfully slow. It will also reduce the faith of stock market and investors in economic recovery and hence causing further trouble.

3) Reduction in government spending

Neo-liberal framework necessarily reduces government spending in essential social sector. German and French scholars have been blaming GIPSI (Greece, Ireland, Spain & Italy) nations for spending too much on social sector and state that this is death throes of welfare state. But this is not true by any account. None of the (GIPSI) nation is among top five in terms of how much they spend social programmes before crisis. Only Italy was spending more on social programme but its welfare state was smaller than Germany. Only Greece fits the large spending trouble economy story partially. Italy ran defects in the year before crisis, but they were only slightly larger than Germany. Portugal’s deficits were significantly smaller, while Spain and Ireland actually ran surplus. Sweden which is far more welfare oriented than GIPSI nations and even Germany and France is a star performer with economic growth faster than any other wealthy nation. Hence arguing that government spending on social sector is responsible for current crisis is flawed.

Besides, cuts in government expenditure in an already depressed economy caused more serious economic troubles like unemployment, inflation and public suffering. This could transform into political crisis; large scale public demonstration and protests against government; increasing levels of political extremism in Europe is strong indications of political trouble. This can complicate situation and slow down recovery. As Marx contended economy and politics are inter dependent and has strong influence on each other. Economic turmoil often transform into political one and vice versa.

American economy was able to recover due to F D Roosevelt’s New Deal programme which was based on spending by government in economy. John Maynard Keynes’ argument that government spending in depressed economy would successfully end the Great depression and give strong impetus to economic growth was shown to be correct. It was contented that this would create demand by increasing purchasing power of people and brings economic growth back on track. Investors only invest in economy when there is a guarantee of return and that is possible only when people have purchasing power. Reduction in government spending only reduces purchasing power of people and hence slows down the economy. Private sector is unwilling to invest as there is no guarantee of return. EU’s emphasis on cut in government’s spending is thus historically flawed and existing situation also made its total failure crystal clear.

4) Huge economic inequalities

Political power is easily influenced by monetary wealth. Huge economic inequalities in EU ensure that the elites influence their respective state and institutions like Central Bank more successfully than people at large. This influence makes political actors’ blind to reality and sufferings of people at large and continue the cruel and destructive policies of austerity and deficit control.

Germany and France, especially the former, are very reluctant about ending austerity measures and providing monetary support and bail them out. Germany should do it as it will definitely bring EU’s economy back on track. German economy was in doldrums in 1980s but Germany managed to recover based on huge surplus trade relation vis-à-vis other EU countries especially those who are in crisis now but were booming then. European countries facing crisis could have emulated Germany’s path of recovery if rest of Europe, especially Germany,  was experiencing a bit of inflationary boom. It is the most possible road to bring EU on track but strong hold of economic elite on German politics and the Central Bank make it much difficult. Additionally, prejudiced German public opinion considers Greeks as lazy, corrupt and as having spent lavishly and unreasonably and hence must pay for it. Though the Greeks committed some mistakes much of the responsibility for crisis in EU has to be shared by structural and monetary policies.

To conclude, the hype about EU as a model to replicate world over is waning away fast. EU’s integration is based on economic benefits from it. As long as economic benefits are delivered by EU or there is optimism about it in near future, it will stand intact. For this to happened EU must give up its obsession with fiscal austerity, budget deficit control and accept more expansionary policies and share responsibility for crisis in the GIPSI countries. Crisis in EU vividly shows the inherent structural problems in the kind of economic integration promoted by neo-liberalism.  Strong grip of elites on political actors and institutions reveal elitist nature of democracy and democratic deficit in Europe. The way German and French governments are influenced by their economic elites underlines the Marxist notion of state as executive committee of capitalist and the hidden class character and conflict of interest among classes though not in orthodox Marxist sense. Failures of supranational governmental institution in bringing uniform economic prosperity and also address the grievances of crisis ridden people underline hollowness of current models of supranational government. Economic crisis in EU is now transforming into political crisis and this indicates the inseparable nature and interdependence of economics and politics and rejects autonomy promoted by neo-liberalism. In economic crisis people are driven by national boundaries “We” vs. “They” ideology and receive political extremism much more easily. Though European Union is far from collapsing recent developments do compels scholars across the world to contemplate over it. Any further escalation in EU crisis will have serious repercussions for Europe and rest of the world with unseen repercussion. But ray of hope is emerging as many scholars now admit the insufficiency of Neo-liberalism and its principles for peaceful and prosperous world. This is a very welcome change indeed.

By- Vikrant Halkandar


1)   Krugman, Paul, “Europe’s economic suicide”, The Hindu, April 17, 2012, p.11.

2)   Krugman, Paul; “What ails Europe”, The Hindu, February 28, 2012; p. 13.

3)   Krugman, Paul; “Death of fairy tale”, The Hindu, April 28, 2012, p. 15.

4)    Krugman, Paul; “Those revolting Europeans”, The Hindu, May 8, 2012, p.13.

5)   Krugman, Paul; “Another bank bailout”, The Hindu,  June 12, 2012, p. 13.

6)   Krugman, Paul; “Greece as victim”, The Hindu, June 19, 2012, p.11.

7)    Krugman, Paul; “Europe’s austerity madness”, The Hindu, September29, 2012, p.15.