Saved by the electorate?

Drawing upon fieldwork spanning the past 20 years, Jan Breman undermines the distinction between formal and informal sectors of the Indian economy. Breman argues powerfully from his evidence: for example, jobs in almost all fields are got and kept via extra duties, bribes and brokerage by intermediaries. The resulting patronage relations make a nonsense of even the formal conditions of apparently organised work, and increase employees' dependence upon employers and brokers; employment remains temporary for the bulk of the workforce, and the colossal reserve pool of labour enables employers to keep staff poorly qualified and replaceable. The state barely touches all this. Official bodies including unions are part of the problem. Indeed, enforcing legal protections would initially worsen things by removing whatever better aspects the feudal pattern has. The so-called higher-technology industries of India also farm out whatever they can to minuscule workshops exempt from labour laws.

Breman's empirical work will interest researchers across development studies. His fluent Hindi and Gujarati are priceless assets, and his writing is the more powerful for being unpolemical. His fieldwork reports are detailed and depressing; the casual labour markets are all but slave auctions. Significantly, Breman notes the prosperity spreading across India, but deduces from his recent fieldwork that the relational issues have changed very little. This book is an authoritative reminder of the power of capital.

Narendar Pani, a political economist, contends that India's economic reforms will not free the economy from government. First, Pani breaks open the methodological vice cramping Indian economists' study of the alleged reforms: they ignore the "important aspects" of corruption, undeclared money, and black markets. Second, they restrict themselves to microeconomic data for number crunching, and simply keep quiet if the information available does not fit their narrow epistemic criteria. A conservative "silent consensus on methodology" results.

Intensely political implications follow. For example, India's power and water infrastructure are now hopelessly inadequate; the public sector cannot meet rising demand resulting from its success of the 1950s. Second, the state was involved in spreading technology for the green revolution - but costs were high, so otherwise productive land was left fallow; heavy fertiliser use also caused environmental damage.

Further, resource allocation turns on the bias of local officials and the protection of the legal process, despite its favouring the rich. By the mid-1980s, Pani says, the Indian state had become a liability. Declining confidence in public processes and the absence of serious debate on future directions mean that claims to material and political goods are entered under all manner of heads. Some demands are barely tenable: Pani remarks that many who oppose the infamous constitutional amendment abdicating a common civil code say nothing about tax advantages the Hindu undivided family gets under that very code.

The claims grow more desperate. Reductions in fertilizer subsidies preceded spending cuts in rural development, so increased rural-urban migration occurred and further burdened the urban infrastructure. And the peasantry are not employable in the high-tech industries the reforms allegedly encourage. Pani might have added that to high-tech manufacturers the peasantry are not consumers either.

Pani also exposes the assumptions behind the reforms. An economy with 600 million people in agriculture was treated like an industrial one; the costs in an already high-cost agriculture did not get "even a passing mention". Second, control of the money supply in the banks was offset by increased activity in the rural - unofficial - credit system. Third, land reform legislation assumed a manor-serf pattern that rarely obtains in India.

The results are alarming. Returns from financial dealings, in the expectation that government will bail the financial sector out, are higher than returns from manufacturing. The cost of money is kept high as an anti-inflation measure, regulation appears ex post facto, and money goes everywhere but into manufacturing.

In face of all this, the quality and authority of the electorate's judgement may be India's salvation. Breman's interviewees rarely knew the remedies available to them but they knew exactly what their employers were up to. And in June 1994 peasant women lined up to be photographed for their bar-coded voter-ID cards, now the local Mr Big could no longer truck in thugs to vote in their name. India's Mr Bigs beware.

Arvind Sivaramakrishnanwas a visiting fellow in politics,University of Southampton.