Those That Be In Bondage: Child Labor and IMF Strategy in India.

FOIL pamphlet #1 (Fall 1996)
A Wordperfect version of this file may be downloaded and printed.

Jab kabhi bikta hai bazaar mein mazdur ka gosht
Shaharon pe garibon ka lahu bahta hai
Ag-si sine mein rah-rahke ubalti hai, na puchh!
Apne dil par mujhe qabu hi nahi rahta hai.

Whenever the workman's flesh is sold in the market,
The blood of the poor flows in the streets,
An unspeakable fire rises in my breast
I have no control over my heart

Faiz Ahmed Faiz, "Raqib Se" Naqsh-e-Faryadi (1943)

The Contemporary Emergence of the Problem of Child Labor and its Gravity

The International Labour Organization (ILO) claims that there are between 100-200 million child laborers in the world.[1]1 Of these millions, the ILO estimates that about half may be found in South Asia and South-East Asia. Bangladesh accounts for between 5. 7 and 15 million children, India accounts for between 17. 5 and 100 million, Nepal accounts for 3 million and Pakistan accounts for between 2 and 19 million children. The South Asian Coalition on Child Servitude estimates that there are 80 million children under 14 being forced to work (55 million in India, 10 million in Pakistan, 8 million in Nepal and 7 million in Sri Lanka and Bangladesh).[2]2 The variance in the numbers may reflect the specific goals of those who do the counting just as much as it demonstrates that these children work in `unorganized’ sectors of the global economy, sectors which provide much of the world’s wealth, but which are themselves not regulated by the organized might of international and national governments.

Our purpose here is not to challenge any figure or to tout any one of these numbers as the correct one. The main issue is not whether there are 100 or 200 million child laborers, but that there are children who must work in unhealthy factory conditions in order to bolster the flagging economies of states whose passports the children barely hold. We are not of the belief that the factory conditions are acceptable for adults either: our position is that factory conditions must be radically altered in favor of the workers who produce the social wealth from which they are alienated.

Since the issue of child labor is on the international agenda, we, as members of FOIL, want to offer a perspective to a debate which has thus far remained at the level of simple morality, i.e. without a consideration of the way in which the new international political and economic developments engender an expansion of such forms of labor (sweatshops, outwork, piecework). If one is to be outraged by child labor, one must also be outraged by the way in which industrially backward nations are being forced to turn to such forms of extraction in order to cover their debt-servicing arrangements. We do not claim to offer an exhaustive account of child labor (for that, turn to the study conducted by Human Rights Watch[3]). Our purpose is to ground the problem of child labor in recent developments in international political economy.

Why did Senator Tom Harkin (Dem-Iowa) propose a bill (`Child Labor Deterrence Act') to fight child labor in industrially backward nations in September 1994? The bill attacks the importation of goods into the US which are produced by the exploitation of child labor. India is a principle example for Harkin and his main ally, Kailash Satyarthi (convener of the South Asian Coalition on Child Servitude), won two major human rights awards as part of a media blitz: the Trumpeter Award and the Robert F. Kennedy Human Rights Award (1996). At the hearing of the `Harkin Bill' in the Labor and Human Resources Committee in September 1994, Harkin declared that "today the United States is subsidizing the exploitation of young children in developing nations." Sen. Howard Metzenbaum (Dem-Ohio), Chairman of the Committee, offered the memorable phrase: "Buy an oriental rug and you have a good chance of walking on the labor of an Indian child." While we are not in disagreement with Sen. Metzenbaum's moral position, we must also ask the question: Why has the US mounted the white steed in the 1990s?

In September 1986, the General Agreement on Tariffs and Trade inaugurated the Uruguay (8th) Round of GATT which was presented in 1991 as the Multilateral Trade Negotiations (the famous `Dunkel Draft'). The Agreement on Textiles and Clothing (which will be integrated into GATT in 2003) proposes to allow for greater market access for goods. The US, for example, sets quota for imports of Indian textiles: in 2003 the treaty proposed to increase export quota growth rates.[4] One might argue that to offset the future quotas, the US textile industry felt the need to raise the issue of equalization of input costs so that it does not lose its existing market share in the US. This is surely conjecture, but one motivated by history: the first proposal to end child labor in India, after all, came in 1878 and it was driven by just this motive. In 1878, the Lancashire textile industry lobbied Whitehall to take stern measures against the use of child labor in the Indian textile industry. Child labor had recently been banned in England and Lancashire felt that Indian industry would be able to produce textiles at a low cost by its use of children. Hence, Lancashire joined Mr. Sorabjee Shapurjee Bengalee, CBE, and Lord Shaftesbury in a campaign to end child labor in India. Lord Shaftesbury's letter to the London Times offers us an adequate illustration of the motive forces:

"The remedy of the evil is a matter of both humanity and justice -- humanity to the oppressed women and children and of justice to the millowners of Lancashire, who are laid under restrictions from which the Indian millowners are entirely free."[5]

The motives were simple: if the colonies used children, they may be able to manufacture goods at a lower cost. We do not question Senator Harkin's motives, for he is an honorable defender of labor rights. Our point is this: the global initiative against child labor is not simply geared towards the children, but it is equally geared towards the interests of manufacture in the advanced industrial nations. For this reason, most moves in the advanced capitalist nations do not offer a way to `rehabilitate' the children; their initiatives are designed to punish the manufacturers in the industrially backward nations (the `Harkin Bill,' for instance, asked the US to ban the import of goods manufactured by child labor). We, in FOIL, call for the organization of the children so that they may fight for their liberation alongside the trade unions and other organs of the worker's economic struggle.

That the growth of child labor is fully implicated in the structures of the emergent globalized economy is clear from the ILO's analysis of child labor in the US:

"the growth of the service sector, the rapid increase in the supply of part-time jobs and the search for a more flexible workforce have contributed to the expansion of the child labor market."[6]

We also make this point to prevent the easy assumption that child labor is a problem only in industrially backward nations. The demise of the welfare state and of the emergence of sub-contracting as a way to cut costs resulted in the increase in production outside the confines of a factory (where regulation and union activity made certain that the corporations could not be routine in its abuses). Such unregulated production spawns the growth of child labor and of a disregard for working conditions in general. The recent incident surrounding Kathie Lee Gifford is yet another indicator of these developments.[7]

Extent of Child Labor in India

Much of the use of children occurs in agriculture: both on family farms and in large-scale agri-business outfits (including fishing plantations, orchards and tea plantations). Dalit and adivasi boys and girls are disproportionately represented among working children;[8] over the years, the percentage of boys working in agriculture has decreased, while the percentage of girls has increased. Much of the produce grown with the assistance of child labor finds its way into international markets (tea, coffee, fish, food-grains). Children work to assist the family unit by doing chores, but they also work as domestic servants, hawkers and scavengers for modest wages. While these forms of labor need to be publicly reassessed, our pamphlet will concentrate on the extent of child labor in the industrial sector. The obvious international implications of this sector alert those of us who live in Euro-America to act in concert with the children who seek a free and protective world.

between 300,000 and 400,000 Indian children work in the manufacture of hand-knotted carpets, the most coveted carpet on the market today. These children work in a region concentrated around Bhadohi, Mirzapur and Zaipur in Uttar Pradesh (UP). They suffer from endemic tuberculosis, other respiratory diseases, skin trouble, eye strain and worn out limbs (a National Council of Applied Economic Research study found that "the children surveyed appeared to be famished and had a stunted growth").[9] In 1993, India exported more than $170 million worth of carpets to the US. In Pakistan, about a million children work in the carpet industry.[10]
Diamond Industry:
between 6,000 and 100,000 Indian children work in the diamond industry, where they cut and polish diamond chips for export to the US and Europe. In 1993, India exported more than $1 billion worth of gem-stones; in that year, the largest export by value from India to the US was in gem-stones. The Operations Research Group singled out the conditions in the diamond plants in Surat, Gujarat (site of a recent plague and of the riots of 1993): "It found children, mostly boys between 12 and 13 years old, polishing diamonds for an average of seven to nine hours a day in unhygienic conditions." The children suffered from eye strain, headaches, leg and shoulder pain, malaria, discoloration of hair, rotten teeth and dysentery.[11]
Glass and Glassware:
between 8, 000 and 50, 000 Indian children work in the glass and glassware industry. In 1992, India exported more than $2 million worth of these products to the US. In a report in May 1994, the International Labor Rights Education and Research Fund described the glass factories in India as "`Dante's Inferno' due to the intense heat of the furnace, lack of ventilation, broken glass everywhere, dangling electric wires, and workers with no protective equipment."[12] The children in Firozabad, Agra District, UP, who work in its glassware factories suffer from tuberculosis, mental retardation, asthma, bronchitis, liver ailments, chronic anemia, severe burns (which are not treated) as well as fundamental damage to their genetic matter (shown in a study done by Dr. Asha Singh of the Maulana Azad Medical College, Delhi).[13]
about 25, 000 Indian children work in this industry. In 1993, the US imported more than $107 million worth of footwear from India. The children who work in footwear factories, the US Department of Labor says, are "cramped in poorly lit rooms, suffer from continuous skin contact with industrial adhesives and breathe vapors from glues."[14]

These brief descriptions offer some light on the tragedy of our contemporary labor regimes. In the next section, we will assess the principal reasons offered for the extent of child labor. However, before that, it is imperative that we understand that the increase in child labor during the course of the 1980's has been anything but steady. The Government of India recognized the sharp rise in the recorded rates for child labor during the course of the decade:

1961 (Census) 14.5
1971 (Census) 10.8
1981 (Census) 13.6
1987-88 (National Sample Survey) 17.5

Government of India Figures for Child Labor (in millions)

Indian business denies not only the ILO numbers, but also the deflated numbers of the Indian government. In 1994, Mr. G. K. Morolia of the Indian Carpet Export Production Council argued that the carpet industry only hires those children whose parents send them to acquire traditional weaving skills. Labor, he said, is free to come and to go.[15] For a child of 12, even the formal freedoms of wage slavery must surely be unclear in the face of the supervisor's wrath. The apologies of the Carpet Council are a pathetic attempt to justify its culpability. Numerous studies have established the centrality of violence and coercion in the labor process. A UNICEF study of Mirzapur (UP) found that most of the child laborers "did not come to the place of their employment voluntarily rather they were either kidnaped or dragged away by Mafia gangs from their parents to work as child labour in most appalling conditions." The Indian government admits widespread prevalence of bondage relations and violence in the carpet industry. Other sectors, such as glassware and gemstones, are not much different. The former Chief Justice of India, P. N. Bhagwati, found examples of children at work for 14-20 hours/day: "they are beaten up, branded (with red hot iron rods) and even hung from trees upside down."[16]

Traditional Explanations

Three `traditional' explanations which date from the early nineteenth century continue to hold the floor as dogma:

The first explanation does not illuminate the problem of child labor. It operates more as a justification for its existence rather than an analysis of its origins (which implies a mode for its eradication). The explanation does not address the issue of contradictory values within a nation. Indians hold a variety of notions with regard to the employment of children and few parents are callous about the conditions within which their children must labor. Such generalizations are products of orientalist assumptions and are the equivalent of posing `divorce' as an American value. Further, the only policy decision which stems from such "societal attitude" kinds of analysis is one that calls for changed values, a suggestion that is both banal and insubstantive.

The major proponent of the second explanation is Dr. Myron Weiner (MIT) who attributes the prevalence of child labor "largely to the failure of the educational system."[17] Weiner is joined by the Indian government which, in 1954, argued that elementary education will play a major role in "checking the evils of child labour."[18] Lack of education does not necessarily lead to child labor. There are a number of children in India today who while outside any system of education do not end up in the carpet or gem stone sweat shops, simply because their parents, who once slightly better positioned in terms of their earning capacities, do not want such a life for their children. Parents, whether in India or the US, do not willingly send their children into such inhuman work environments. Poverty then, the last of the traditional explanations, may seem to emerge as the best explanation for child labor in India.

While it is true that extreme poverty is what forces parents to accede to the inhumanity of allowing their children to work in such terrible conditions, such an explanation is both far too universal and partial to be meaningful. Universal and partial because, any number of social ills in India or for that matter, in any part of the world can be partially explained through poverty - child labor in India, crime in metropolitan US, high infant mortality in the third world, the drug economy in the first world, child prostitution in South Asia and anti-immigrant sentiments in North America - the list can surely be endless. What the universality of such explanations hide is the more particular structural reasons that constitute the phenomena. By pointing to poverty, all we manage to do is to avoid the more pertinent structural causes that outline the phenomena in question and thus also avoid structural policy work. What then are the specific structural causes for the explosion of child labor in India?

A clue to answering the question comes our way if we are to re-examine carefully the statistics on child labor presented in the last section. After a drastic fall in the numbers in the immediate post-independence period, child labor emerges as a growing phenomena yet again in the late 1970's and 1980's. It is only by examining the nature of the changes that the Indian political economy underwent in the late 1970's and the 1980's that one can begin to pin point the structural causes of child labor in India. It was with Indira Gandhi's emergency regime of 1975-77 that a shift in the Indian economy towards a model of export oriented growth began - a growth model that has becoming increasingly popular in the third world under the tutelage of the IMF and the World Bank (We must note here that 1981 was the year that India negotiated its first IMF loan. For a brief analysis of the Indian economy in the post-emergency phase see Appendix A). The export-oriented growth model produced an economic crisis by the late 1980's, marked by a severe balance of payments and internal capital generation problem. This was followed by new IMF strictures in the form of India accepting more or less in toto the Structural Adjustments Program (SAP) of internal austerity and economic liberalization authored by these Bretton Woods institutions. This meant a rapid fall in available funds for any internal social priorities - a domain already considerably weakened by more than 10 years of export oriented growth - coupled with a heightened export oriented economy that had at its center the global market demands rather than any internal priority. Given the crisis of the 1990's and the modes of structuring the global economy, India, like many other African and Latin American nations had little choice or any leeway for alternate models of organizing its economy, lest it incur the wrath of the IMF/WB. What such an analysis does is place the explanatory variable "poverty" in the context of the changes in a political economy and thus attempts at identifying the specificities of the structures that constitute poverty and attendant labor practices. The `poverty' of the nation, in relation to global relations of production, leads to an intensified use of child labor, notably in a phase when it undergoes a policy of stabilization under the overall guidance of the International Monetary Fund. This has recently been recognized by the ILO.[19]

One has only to look at the expenditures that the Indian state undertook on education to understand the impact of the export oriented growth model. The steep drop in the education sector begins in India in the 1970's. The effort to connect the prevalence of child labor with the lack of universal education must therefore be understood in the context of a political economy of austerity. With the cuts in education implemented by the state at the behest of the IMF, the demand of the child laborers for universal education will not be recognized. One must not just criticize the lack of compulsory universal education, but one must link those cuts and the state's lack of determination to follow through its own Constitutional charter with the `globalized' processes set in motion by international capital (through the IMF). The above analysis of the Indian political economy and the place of child labor in it serves to emphasize the structural basis of child labor. The question then is what actions can be suggested that may mitigate the problem of child labor in India. For this we need to look at the specific relation between the industries that employ child labor and their place in the export oriented growth model. Economic analysis, if it does not pay heed to the capacity of a nation, fails to be relevant. To ask the Indian economy to export goods when its basis appears unable to generate much that is exportable appears to be to joist at windmills. From 1800 to the 1940's, the exports of the Indian economy earned a pretty penny for the British Empire. During the Second World War, these export commodities were superseded: jute (by plastics), cane-sugar (by beet-sugar), indigo (by artificial dyes), cotton (by artificial cloth and by long-staple cotton from Uganda), etc. In the post-colonial world, industrially backward nations have been relegated to the status of raw material producers, simple assembly plants or simple manufactories; most high-value goods continue to be produced or conceptualized in the overdeveloped world. With the 8th Round of GATT ratifying the Trade-Related Intellectual Property Right agreement, it is unlikely that India can make a push into the high-value and high-technology sector.[20] Industries which utilize child labor in very large numbers have borne the burden of exports (gems, jewelry and garments alone cover 30% of total exports). Two examples should suffice:

(1) India's diamond exports produced the bulk of the export bill: in 1964-65, India earned Rs. 30 million from diamond exports and by 1984-85, the figure increased to Rs. 11, 720 million. India exports 6 million karats of cut-diamonds, which is the largest share of the 11 million karat world market. Between April 1986 and January 1987, the diamond exports fetched about Rs. 16, 000 million for the export bill.

(2) India, with Iran and Pakistan, controls the world carpet trade. In 1947-48, the exports earned India a mere Rs. 38 million. By 1972, the exports earned Rs. 136. 9 million and then, the numbers increased geometrically: Rs. 187 million (in 1977-78), Rs. 1450 million (in 1980-81) and Rs. 1658 million (in 1982-83). India's share of the world market in 1984 is about 16%. In the mid-1980's, the export earnings began to decline: Rs. 1490 million (in 1983-84), Rs. 1380 million (in 1984-85) and Rs. 1082. 8 million (in 1985-86). The pressure of the US dollar and newly-intensified efforts by the Pakistani state to leverage the market led to this decline. Rather than reassess the social implications of a carpet sector (which uses bonded child laborers as the government itself admitted in 1986), the government offered cash incentives of Rs. 250 million/year and other subsidies to increase carpet exports. In 1991-92, the carpet industry exported Rs. 8. 47 billion and in 1993-94, the industry exported Rs. 18. 82 billion. The government's overtures helped legitimize the industry, to cast out those who challenge the alliance between the IMF/Indian government/industry and it helped to increase an industry which is build on the backs of little children.

The industrialists and the bureaucracy justify the use of child labor on `nationalist' grounds: i.e. the desire to increase exports in order to make India competitive. To make India `competitive,' the state tacitly accepts the use of children in industry. Children, after all, work for lower wages, without unionization and for longer hours. Kiran Bhatty points out that "children can be easily laid-off in case of a slack in demand, without compensation, and therefore make ideal employees in export industries where demand is variable. The lower costs thus effected allow exporters to sell at lower prices, thereby apparently giving them a competitive advantage." [21] The link between child labor and India's political economy enables us to do more than take an empty moral stand against child labor. International bureaucracies, social democratic governments in industrially backward nations and their tutors from the neo-conservative governments in the advanced industrial nations have put forward the nostrums of SAP as the popular prejudice of governance and policy. No-one can make a claim to be `reasonable' on the world-stage without paying some obeisance to the mantras of the `Chicago Boys' (led by Milton Friedman) and the regurgitated anti-communism of F. A. Hayek. Such theories point towards an end to the systems of social-democratic construction enabled by the nationalist regimes in the post-colonial world (but not to the subsidy regimes which are so-far left intact in Germany, France and the US). Euro-America, we argue, sets the structural conditions for survival (or not) in the industrially backward nations, but it is uncomfortable with the implications of its own demands. That is the charitable position. The uncharitable line suggests that industry in the advanced industrial nations is simply trying to end the use of child labor in the industrially backward nations in order to prevent them from translating their low costs into an increase in their market share. Either way, we, in FOIL, are of the opinion that without an analysis of the contemporary global relations of production, the issue of child labor cannot be grasped.

Child Labor in India and the US Response

FOIL's motivation in producing this pamphlet is to intervene in the public debate on child labor in the US, and most specifically to speak to the analysis that underlies the `Harkin Bill' (which now has its Republican sponsors, such as Rep. C. Smith of New Jersey).

We, as FOIL, see the Harkin Bill as wanting to do away with the results of poverty rather than poverty itself. We do not support a bill which analyzes the problem of child labor without an acknowledgment of the role of corporations in a structural rearrangement of the global economy. The manufacturers in India and the Indian State are not the only ones who must bear the pressure of our morality; the IMF, the World Bank, the transnational corporations, the international banks and the US commerce department are all joined in a system which creates the conditions for an intensification of such labor practices which involve children. We acknowledge the culpability of the manufacturers and of the Indian Government, who cynically utilize children in industrial firms in order to garner profit and foreign exchange (For a brief history of the relation between the Indian State and child labor, leading to its current efforts to "image manage" the problem see Appendix B). Nevertheless, we are also aware that the actions of the firms and of the Indian Government are only one component of an international ensemble which works against the interests of working people (of whom working children are one part). FOIL, in placing the above analysis on record, wishes to demand of the American public and Sen. Harkins, the following:

The NRI's and their Grief

While the primary objective of this pamphlet is to intervene in the larger American public debate around the Harkins Bill we are also concerned about one other specific audience - the Indian immigrant class, the new generation of Indian-Americans and the Indian American media. In this last section FOIL wishes to specifically address "our" community.

The Indian-American press widely reported the moves of the `Harkin Bill,' the death of Iqbal Masih and the accolades showered on Kailash Satyarthi. Both India Abroad (New York) and India West (San Francisco) offered strongly-worded support to the anti-child labor lobby. This partisan journalism must be commended even though the newspapers failed to offer a critical and comprehensive analysis of the reasons for the attack on child labor and for the place of child labor within the global economic rearrangements underway.[22] There appear to be few who openly support the expansion of child labor and very few indeed who justify the use of child labor in South Asia. This universal sentiment against child labor needs to be applauded (if indeed it is as universal as it appears in the media).

The NRI'S, in general, shudder before any adverse criticism of things Indian. Certainly, the Euro-American media (and Euro-American social consciousness in sum) does a horrid job when it represents India. Orientalist and racist metaphors abound as writers fail to acknowledge the struggles of Indians and the various values in India which compete on important issues. India is often condemned without an active appreciation of the contradictions of Indian society. The NRI, in reaction to this, wants to appear as the embodiment of modernity by rejecting all things unpleasant in India. There is, therefore, a tendency to hide issues such as dowry deaths, anti-dalit and anti-Muslim violence, violence against women, chronic poverty and class discontent. FOIL rejects the self-serving nationalism of this attitude. FOIL believes that we must make alliances with those in India (and other South Asian nations) who are fighting against oppression and exploitation; we must find linkages between the policies of `globalization' foisted upon the world by international capital and its international agencies (IMF, etc.) and reveal their structural role in world affairs.

NRI's widely support the liberalization of the Indian economy and the components of the SAP. The purpose of this pamphlet is to emphasize that those who champion `liberalisation' policies and the new economic policy of the government of India (set in place in 1991) simultaneously support child labor. There is no sense in being hypocritically opposed to child labor and in favor of the `liberalisation.' If we are truly opposed to the inhuman use of children in unhealthy industries, then we must oppose the current form of `liberalization.'

Kaushik Basu, Professor of Economics at Cornell University, quite correctly points out that the ban on import of goods produced by children will not end the conditions which foster child labor.[23] Such a ban will ease the conscience of those who live in advanced capitalist nations, but it will do little for the difficult lives of the working children and their families. FOIL calls for a comprehensive approach towards child labor:

FOIL, along with our friends and allies on the Indian and international Left, call for a reassessment of the role of the IMF combine and of international capital which work hand-in-glove to bury the interests and futures of the vast mass of the world's people. We exhort all those who care for the well-being of the children of the world and their parents to make clear their displeasure of the policies of the IMF and its international allies. To end child labor, we must end the regime put in place by those who favor capital over our children and our laboring classes.

Appendix A

Crisis in India's Economic Destiny: A Brief History.

During the Emergency regime (1975-77), Indira Gandhi's government initiated a policy to re-configure the state's relationship to foreign trade, business and finance. The government introduced a `liberalisation' policy which dropped the barriers which prevented Indian business from purchasing goods from overseas without a license. The Indian state, between 1947 and 1975, pursued a policy known as `import-substitution' whereby indigenous business (whether publicly or privately owned) was urged to produce those products which the country hitherto imported. The process neither democratized the economy nor did it go after the myriad social inequalities. In 1961, Nehru warned that the masses did not share in the country's wealth and they lived "without the primary necessities of life." A small urban and rural elite, however, "have established an affluent society for themselves, anyhow, although India as a whole may be far from it."[24] The system, by the 1970's, required a major overhaul, notably in the sphere of land reforms and in the democratization of economic power and means. Rather than move in that direction, Indira Gandhi initiated a process to increase social wealth by relying upon a simple formula: allow industry to import machinery which they will use with cheap labor to produce cheap goods for the global market. In this manner, the regime hoped to cover the down-turn in the Indian economy.

The oil-shocks of the 1970's came after two awful droughts (1965-66, 1966-67): the Indian government went to the IMF to cover a momentary shortfall in its balance of payments (which was sorted out soon after-wards). An IMF official, looking back at India's pre-Structural Adjustment Program (SAP) phase [i.e. pre-1991], commented that despite India's "reputation for heavy-handed interventionism, which also extended to blocking foreign investment, India has nevertheless also established a long track record of macroeconomic stability based on generally cautious fiscal deficit policies."[25] As this analyst acknowledges, things seemed to be fairly stable until the 1980's (`stable,' i.e. in terms of India's balance of payments; not `stable' for the millions of people for whom survival is not a steady-state).

The international debt crisis in the early 1980's (in Mexico and Brazil particularly) forced a reassessment of the policies of the IMF as the various stabilization schemes appeared to flounder. The Treasury Secretary of the United States, James Baker, offered the `Baker Plan' in 1985 which asked the World Bank/IMF combine to impose comprehensive conditions on the debtor nations. In 1986, the IMF set-up the Structural Adjustment Facility to manage the SAP which consisted of the following well-known and fixed policies: devaluation of the currency, shrinkage of state expenditure and withdrawal from social welfare programs (to reduce budget deficit), liberalization of the national market (end import restrictions and eliminate subsidies and price controls), liberalization of the financial markets, privatization of state-held concerns, compression of real earnings (by the elimination of the practice of linking or indexing wages to domestic commodity prices: now wages remain at `national' levels while commodities are inflated to `international' levels) and finally, promotion of exports by any means necessary.[26]

In the mid-1980's, Rajiv Gandhi's `New Economic Policy' shifted the direction of the Indian economy prior to its concessions to the IMF. Mr. Gandhi's import liberalization policy resulted in large-scale importation of expensive technology intended for the production of luxury consumption goods (until 1985-86, petroleum exceeded capital goods in India's import bill; from 1986-87 until the Gulf War, India imported more capital goods than petroleum). A fascination with advanced technology, with Americanized cultural commodities (retail food goods and consumer durables are a major interest among transnational corporations in India) and with military hardware put paid to India's stable import bill.[27] The government hoped that these imports would lead to intensified production for exports. Yet, the top twenty industrial houses continued to be net consumers of foreign exchange. Further, the annual illegal (i.e. untaxed) outflow in the 1980's has been estimated at $12 billion, a sure sign of elite nonchalance; the elite, after all, enjoyed the profligate dollar expenditure permitted by the government without a social conscience. All economic indicators soon went into the red. The deficit increased from $5. 6 billion in 1984-5 to $9. 4 billion in 1988-89. From 1986-87 to 1989-90, the import bill increased by 300% (from Rs. 125 billion to Rs. 354 billion). To make up for this shortfall, the Indian government turned to four lenders:

The real motor for growth was to be exports, but industry seemed unable to produce exportable commodities, much to the chagrin of the government and of the IMF. By 1991, India was in the midst of a serious debt crisis that was only exacerbated by the Gulf war.[28] Shortly thereafter India devalued its currency as per the instructions of the IMF and entered into its current phase of liberalisation based on the SAP dogma.

Appendix B

National Unrest and Governmental Bargains:
A Brief History of the Indian States Response to Child Labour

The Constitution of India (1950) prohibits the employment of children in `hazardous' occupations (Article 24) and directs the state to secure "that the tender age of children is not abused and that citizens are not forced by economic necessity to enter avocations not suited to their age and strength" (Article 39 [e] and [f]). In 1954, the Ministry of Labour defined child labor as a Asocial evil." Modern child labor, the study argued, had little to do with `Indian tradition' or with `socio-cultural reasons,' but more to do with the complex process known as the Industrial Revolution.[29] To combat child labor, the government passed a slate of legal measures including the Minimum Wages Act of 1948, Factories Act of 1948, the Plantation Labour Act of 1951 and the Mines Act of 1952. These developed many of the colonial measures, notably the Children (Pledging of Labour) Act of 1933 and the Employment of Children Act of 1938.

In 1986, the Indian government passed the Child Labour (Prohibition and Regulation) Act which banned the employment of children under 14 from hazardous occupations (including glass and glassware, fireworks and matchmaking, and carpet weaving). The government set-up a National Policy on Child Labour which framed action policies for education, health, nutrition, integrated child development and vocational employment.

Why did the government pass an Act which did little more than replicate the ineffective legislation on the books? Two tragedies in the early 1980's turned the nation's attention to the plight of child labor: on 19 September 1981, in Sivakasi, Tamil Nadu, which is the home of fireworks production, six children and twenty-six adults burned to death in the Arunachalam Fireworks plant; in February 1982, in Chellapathy, Tamil Nadu, six children charred to death in a factory. These incidents provoked an outcry over the intensified use of children in the process of production. The Left tackled the issue inside the parliament as well as on the streets and in the factories. Further, the increased use of children internationally `shamed' the Indian government which took the measure to demonstrate its progressive credentials. The Labour Minister, P. A. Sangma offers the best example of the government's enduring motivations for such legal actions: "It is a matter the world is concerned about....and we are trying to show that we are also doing our best to eliminate this problem" (emphasis added).[30] The roll-call of deaths of child-workers continues: Jhansi on 6 October 1994 (70 lives of which many children), Sivakasi on 25 November 1994 (12 children dead) and Rhotak on 24 August 1995 (10 children dead).

Groups to Contact

The Concerned for Working Children 303/2, Lalbahadur Shastri Nagar Vimanpura Post Annasandrapalya Bangalore, 56017 India.

South Asian Coalition on Child Servitude 74 Aravali Apartments Kalkaji New Delhi, 110019 India.

Vikas Adhyayan Kendra D-1 `Shivdham,' 62 Link Road Malad (W) Bombay, 400064 India.

Janwadi Mahila Samiti Vithalbhai Patel House Rafi Marg New Delhi, 110001 India.


  1. U. S. Department of Labor, By the Sweat & Toil of Children: The Use of Child Labor in American Imports (Washington D. C.: DOL, 1994), 9 [hereafter BSTC].
  2. India West (21 October 1994).
  3. Human Rights Watch, The Small Hands of Slavery: Bonded Child Labor in India, (New York: September 1996). We are especially grateful to Arvind Ganesa who put together this report for sharing some of his insights with us.
  4. Rajeev Anand, AUruguay Round Text in Perspective, Economic and Political Weekly(2 May 1992) and Deepak Nayyar, AThe Dunkel Text: An Assessment, Social Scientist, Vol. 20, Nos. 1-2, January-February 1992.
  5. London Times (3 October 1878). Bengalee's letter in the Times of 13 September 1878 enjoins Lancashire to recognize its economic interests. The first Factories Act in India passed in 1881 as a result of these pressures: it prohibited employment of children under 7 and limited the work hours of children between 7 and 12 to 9 hours/day.
  6. An ILO 1996 Report quoted in India West (14 June 1996).
  7. For more on the Kathie Lee Gifford tale, see Vijay Prashad, "No Sweat," Nature, Society & Thought (forthcoming).
  8. Dalit: Collective name used by the numerous "untouchable" caste groups that fall outside of the Hindu caste system. Adivasi: Collective name used by the indigenous tribes in India; literally: original inhabitants.
  9. S. Vijayagopalan, Child Labour in the Carpet Industry (New Delhi: National Council of Applied Economic Research, 1993), 56.
  10. UNICEF, Child Labor in the Carpet Weaving Industry in Punjab (Lahore: UNICEF, 1992), 7 and B. N. Juyal, Child Labour and Exploitation in the Carpet Industry (New Delhi: Indian Social Institute, 1987).
  11. Operation Research Group (Madras) study cited in BSTC, 78.
  12. ILRERF can be reached at 100 Maryland Avenue, NE, Box 74, Washington D. C. 20002. They publish Worker Rights News and a powerful monograph by Pharis J. Harvey and Lauren Riggin called Trading Away the Future: Child Labor in India's Export Industry which is a full-length analysis of India's child labor laws and the prevalence of child labor in export manufacture.
  13. Cited in Sukumar Singh, Exploited Children in India (Calcutta: Shila Singh, 1989), 115.
  14. BSTC, 83.
  15. India Abroad (30 September 1994).
  16. G. Varandani, Child Labour and Women Workers (New Delhi: Ashish, 1994), 69; ILO, Children in Bondage (Geneva: ILO, 1992), 12 and Neera Burra, Child Labour in the Gem Polishing Industry in Jaipur (Noida: National Labour Institute, 1991), 13. Chief Justice Bhagwati is quoted in R. A. Sensor, "The Crime of Slavery: Child Labour in South Asia," Human Rights, Vol. 4, April 1994.
  17. Myron Weiner, The Child and State in India. Child Labor and Education Policy in Comparative Perspective (Princeton: Princeton University Press, 1991).
  18. Government of India, Ministry of Labour, Child Labour in India (Delhi: Labour Bureau, 1954), 45.
  19. ILO, Towards the abolition of child labour: ILO policy and its implications for ILO technical cooperation activities, 6 (Geneva: ILO, 1993).
  20. Mir Ali Husain and Maya Yajnik, "Virtual Work, Real Labor," SAMAR, No. 6, Summer 1996 and Salim Lakha, "The New International Division of Labour and the Indian Computer Software Industry," Modern Asian Studies, Vol. 28, No. 2, 1994. Lakha's material obviates his conclusions.
  21. Kiran Bhatty, "Child Labour: Breaking the Vicious Cycle," Economic & Political Weekly (17 February 1996).
  22. Except India West which carried such an analysis on 12 January 1996 by Vijay Prashad, "What Keeps Child Labor in Bondage in India."
  23. Kaushik Basu, "The Poor Need Child Labor," New York Times (29 November 1994).
  24. Government of India, Problems of the Third Plan: A Critical Miscellany (New Delhi: Ministry of Information and Broadcasting, 1961), 49.
  25. Ranjit S. Teja, "IMF-supported program helps India emerge from crisis," IMF Survey (21 September 1992), 285.
  26. Mohsin S. Khan and M. D. Knight, "Stabilization Programs in Developing Countries: A Formal Framework," IMF Staff Papers, March 1981. The UNDP criticized these policies without making any structural moves towards changing them: "the IMF has exerted a strong influence over developing countries by setting stiff conditions on the loans it offers. This conditionality has generally been monetarist and deflationary, obliging governments to reduce their demand for imports by curtailing overall demand -- cutting back on both private and public spending. These cutbacks have often reduced consumption, investment and employment -- and stifled economic growth." United Nations Development Program, Human Development Report (New York: UNDP, 1992), 75.
  27. On consumer goods, see Delhi Science Forum, Anything for a Dollar (Delhi: DSF, 1989). On military hardware, between 1986 and 1988 the Indian government imported arms close to the total amounted purchased by both Iran and Iraq, and they were in the midst of a gruesome war. These figures are available from the International Peace Research Institute (Stockholm).
  28. On 4 July 1991, the Prime Minister P. V. Narasimha Rao went on national television to declare that "complex maladies call for drastic remedies" as he informed the nation that India had entered a new agreement with the IMF. The foreign exchange reserves fell to the equivalent of two weeks' imports: to tide the country over, the government air-lifted 47 tons of gold to Britain as security against a short-term hard currency loan of $400 million from the Bank of London.
  29. GOI, Ministry of Labour, Child Labour, 2.
  30. Quoted in Somini Sengupta, "India's Young Workers," New York Newsday (9 February 1995).

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