John Hilary says Gordon Brown must not promote neo-liberalism in India where economic success for the minority runs in tandem with terrible poverty for many millions

GORDON BROWN’S trip to India is scheduled to bang the drum for British business. The fourth Britain-India summit will be Brown’s first visit as Prime Minister and comes as trade relations between the two countries are set to enter a new phase. Yet amid all the talk of India as a rising economic superpower and global business partner, it is easy to overlook the fact that it is home to more desperate poverty than all the countries of sub-Saharan Africa put together. And Brown’s efforts to open up more of India’s markets to British business will only increase that poverty still further.

Few countries display a starker contrast between rich and poor than modern India. There are currently 48 billionaires in the country – double the number in 2006 – and 93,000 millionaires. Rolls Royce has a showroom in Mumbai (the country’s largest metropolis), selling its luxury cars for £250,000.

Last year, India recorded the world’s second fastest increase in the number of wealthiest individuals – 19.3 per cent. Such is their prosperity that these people now think nothing of splashing out almost £20,000 on a unique mobile phone number. Rich north Indian landlords spend £1,000 an hour flying bridegrooms to their brides’ villages. Mukesh Ambani, chairman of India’s largest private firm, Reliance Industries, which boasts products ranging from petrol to garments, makes in excess of £50,000 a minute.

India’s economic growth is nearly three times that of Britain, with the global banker Lehman Brothers suggesting that the “right” reforms could ensure 10 per cent growth for a decade. Moreover, analysts draw a telling distinction between China, seen as the emerging world superpower, and India. As the Chinese workforce ages, in part because of the one-child policy, India’s birth rate means its population could overtake China’s within three decades. Before then, by 2028 according to Goldman Sachs, the global investment bank, India’s growth rate will surpass China’s.

Yet the Indian success story is confined to 10 per cent of the population at best. Yes, the country’s thriving economy has helped lift 100 million people out of poverty. But three times that many – one in four Indians – live in abject poverty on less than $1 a day. In all, a staggering 900 million struggle to make ends meet on under $2 a day.

Mumbai provides a graphic example of how rich and poor live side by side. As well as offering Rolls Royces to the mega-wealthy, the city is home to armies of women and children wastepickers – the poorest of India’s poor. These forgotten people sift through the city’s rubbish searching for metal, paper or old clothes they can sell for recycling. Half of them are single parents, many with large families. War on Want is a partner with the group Stree Mukti Sanghatana, which supports the women and helps them earn better and more stable incomes. But many die young due to their hazardous work.

Although India’s economic growth has fuelled a fast-growing middle class, the nation has dropped from 126 to 128 in the United Nations’ human development table – still languishing in the bottom 50 among 177 member states. Last March, the UN warned that this progress over the previous seven years has made almost no impact on the number of children younger than three years old who are underweight. India has more than a third of the world’s low-weight births. In the same period, the number of married women aged 15-49 who are anaemic has worsened. The Indian government itself admitted the record on both these key indicators has declined in 13 states.

Two Indians die from tuberculosis every three minutes, with 20,000 deaths each year from malaria. These grim figures reflect the fact that one in 10 people lack access to safe water. Even if children survive infancy, 59 million of them, mostly girls, do not go to school. At the beginning of the 21st century, four in 10 Indian women cannot read or write.

In rural areas, where two-thirds of India’s people depend on farming for their livelihoods, neo-liberal policies have raised the prices of agricultural inputs at the same time as cheap, subsidised imports have wrecked domestic markets. The resulting debts have driven around 32,000 Indian farmers to commit suicide over the past 12 years, while farm labourers earn the equivalent of a halfpenny a day.

Gordon Brown’s primary purpose in India is to promote the interests of British business. The visit comes as Britain and fellow European Union member states are engaged in negotiations towards a bilateral free trade agreement which will open up India’s economy to European exports. Of particular interest are the vast Indian markets for services and manufacturing goods, which have traditionally been closed to European companies, and the public procurement contracts of government authorities. Yet the UN has warned that opening up such markets to liberalisation could be self-defeating, requiring substantial domestic reforms while delivering little in the way of welfare gains.

The Indian initiative forms part of the new “Global Europe” strategy launched by Peter Mandelson in his role as EU Trade Commissioner. Despite their past differences, Brown has backed Mandelson’s vision with gusto. The Prime Minister’s recent speech to the Business for a New Europe conference could even have been written by Mandelson, so enthusiastic was it for a business-friendly Europe in the global economy. Whatever happened to Brown’s former talk of trade justice or making poverty history?

Indian negotiators have called for “asymmetric” liberalisation to be a central principle in any future trade agreement with the EU, in view of the vastly different challenges facing the two economies. By any measure, India remains a developing country and therefore has a right to what is delicately termed, in trade negotiations, “special and differential treatment”: the right to open up its markets more slowly in order to protect local industries and jobs. Yet European negotiators have strongly rejected any idea that India should be granted such treatment in the new trade negotiations. Instead, the country is assumed to be at the same level of development as the rich states of Europe, and is being called upon to liberalise its economy with little care for the resulting chaos.

It is clear that the free trade agreement under deliberation is designed to favour corporate interests in both India and the EU. Yet any considerations of the negative impacts have been conveniently forgotten amidst all the talk of the new Asian economic miracle. This threatens India’s poor with increased vulnerability at the same time as the country’s overall prospects look ever brighter. A recent study for the Women in Development Europe network has revealed that poor women, in particular, will be losers in any EU-India trade agreement which proceeds on the lines currently envisaged.

When he returns from India, the Prime Minister will host talks with EU leaders on the global economy. His main priority for those talks is to restore a sense of stability in the wake of recent tremors in the international financial system. Yet we cannot allow stability in the rich North to be predicated on increased poverty in the developing world. Hundreds of millions of the world’s most vulnerable people deserve better – and Gordon Brown knows it.

John Hilary is campaigns and policy director of War on Want