Reaction Begets Reaction

Chronicle of Economic Fascism in India

T G Jacob

Any possible confusion about the character of governance in India, the class character of governance, can be laid to rest in the present context. This is being so explicitly declared by continuing spate of macro-economic measures affecting every section of people in every field of economic activity and relations between the citizens and state organs. The macro-economic 'reforms' coming one after another actually follow from a composite plan. And they all have the character of shocks being clinically administered to the social, economic system. The theory of destructive interventions to boost up finance capital accumulation is not very new. While being the naked face of the crisis of capitalist imperialism it is also marked by the gross inhumanity of the system when even natural calamities (whether they can be fully labelled natural is debatable) like cyclones, earthquakes, droughts, floods, mass deprivation, epidemics etc are looked forward to as sources of quick accumulation by the bosses of finance capital. The spate of economic reforms becoming legal in a top hasty manner are destructive interventions and follow a clear plan.

The banning of most of the liquid money was such a conspiratorial move. There was the precedence of devaluing the rupee by more than sixty percent more than four decades ago by a Congress government to restore 'global realism' in monetary instruments. It was foreign exchange crisis of payments that forced this devaluation in favour of the powerful currencies like dollar, yen and pound. What happened was that the rupee was what is called "put in place" and neo-colonial status thus became declared and open. That was, curiously enough, a period when the ruling party had not abandoned socialist/state capitalist rhetoric. Since that acknowledgement of subservience to global finance capital India has come a long way building up a strong infrastructure mainly due to state capitalist large-scale economic interventions financed by loans, 'aids', 'grants' etc under the aegis of the super banks of international capital. The corporate sector was enabled to be in a position to bid for effective power which had a political expression in the declaration of internal emergency in 1975. The principal slogan was "work more; talk less" which is self-explanatory. The Indian corporate sector also became global compradors by becoming raw materials and semi-processed goods producers for global capitalists in the continent of Africa as well as in other regions.

The linkages became ever stronger with imperialist capitalist agencies officially becoming the de facto policy makers. Series of 'revolutions' transformed main Indian agriculture into a lucrative market for global chemical industry, a heavily militarised industry (the chemical war industry and pesticide-fertiliser industry are one and the same), and their financiers, while simultaneously jacking up production for the market and cost of agriculture. The process of transferring social capital accumulated from the people by banks and other financial institutions by liberal loans became the norm of the financial system. This is a process that has a history and successive political executives promoted this suction of capital into the pouches of a few without any serious breaks. The corporates in the country were in a position to believe that the banks and their cash chests are their own to be handled as they please. This is the present state of Indian economy where the note ban was imposed.

At the time of the note ban the banks, especially government controlled ones, were in a sickly state mainly due to the trillions (one lakh crore is a trillion) of unpaid debts. The populist lie that was advanced was that the measure is a bold and highly necessary step to fight black money and fake currency. In fact the prime minister himself addressing a crowd of fascist youth proclaimed all the black money being unearthed rightly belongs to them! It did not take much time for these balloons to be deflated. Almost all the banned currency hoarded or in circulation found their way to the banks and thus the battle against black money proved non-existent. Of course, it is common knowledge that black money is not bundles of paper money stashed in pillows. Black money is real estate, gold, diamonds, shares, money parked in tax havens.

Moreover, the government of India may not have any jurisdictional control over black money as is becoming more and more obvious. It does not have any control over openly reigning cheats who have absconded with tens of thousands of bank money. These were all well and safe. Before demonetisation there were wild 'patriotic' allegations that hostile neighbours are printing and circulating Indian currency to finance terrorism and destabilise the economy. Not only demonetisation did not have any effect on what is called terrorism but the total amount of fake money proved to be utterly negligible. At least this is what is proved by government data. All the reasons advanced were proved false but those in power continued repeating the same lies. The logic seemed to be that the people ought to believe them whether they are telling lies or not. The finance minister became famous for inconsistency and irrelevance in statements as if he himself is not really aware of what actually is going on.

Demonetisation created all round chaos and human suffering. Small-scale traders, self-employed people, the entire peasantry and casual labour were administered a severe shock. They are yet to recover and it is doubtful whether they will recover in the near future. Or, if at all any recovery is possible, at what base level it will happen. Human suffering was massive with hundreds dying in queues trying to return demonetised money or seeking a little of their own from the banks. More than all this suffering arbitrarily imposed on the people what was politically important tells a more ominous side of the picture. It was a threat at large to the underprivileged. The deliberately leaked out news about the conclave of the chief political executive with the top executives of the armed forces underlined this boastful threat. In fact, the army was paraded in certain areas like West Bengal without any conceivable reason but intimidation. This was in the context of a manufactured all-round atmosphere of extreme economic insecurity/fear enveloping the vast majority of the people. The endurance of the people was being tested. The slogan advanced was that inconveniences are to be endured in the larger interests of the country and society. Executive coercive power was being arbitrarily used to siphon off funds from the people to the coffers of the starved banks to be further siphoned to the corporate debtors to correct the banks' account books. The liquidity of the people was severely restricted and it continues to be restricted even now.

The most significant aspect of immediate political significance of currency ban is its outright fascist nature. In fact, there were vigilante groups supervising the long queues looking for anyone criticising the ban and Modi. Some elderly people expressing natural displeasure were ruthlessly beaten up too. These attacks were symbolic, not widespread. But as symbols they were done to instil physical fear in a situation where the lack of money had become a torture and deaths had become routine due to this reason. The fascist logic that people better become acclimatised to a regimented, non- accountable systemic violence deliberately engineered by the ruling dispensation was sought to be rationalised in terms of populist demagogy. There was no transparency at all in the progress of currency ban but for the joy of the big corporates. The Reserve Bank by its own admission is still counting the returned currency. When the counting will be completed is anyone's guess. It was very curious that the liquidity starving of the large mass of people was complemented by the writing off of huge unpaid debts dragging the banks into quicksand. Of course, this could only be a temporary alleviation simply because the dead debts are too huge and nobody knows how much of that money is retained domestically, geographically and currency-wise. In any case, the banks are resigned to their bankruptcy which makes banking an unsafe proposition. Currency ban made the people lose confidence in legal tender, now it is a question of banks becoming unsafe for the account holder, at least the vast majority of them who are poor or middle classes.

This severe shock was followed by Goods and Services Tax (GST) which was propagated earlier as rationalising the tax structure and thus making it more easily accessible. This tax reform was conceived by the erstwhile ruling party as not only leading to rationalisation and optimisation of the tax structure but also as a strong means of economic integration of the country which also meant political integration. The enactment of this tax structure was marked by debilitating confusion which could very well be deliberate. Dr Manmohan Singh, the ex-prime minister and finance minister who is the main homemade architect of imperialist globalisation was harping on the insufficient study and preparations for such momentous tax reform. But on principle he had nothing against it, probably because he and his party very much believe in the need for such reform. But probably he did not go to the extent of administering shock therapies mainly because the Congress's brand of populism did not warrant it due to its image of corruption and more because their role was to prepare the path from which there is no going back for the ruling class. Other parliamentary opposition parties like the Leftists also had no alternative but to echo Manmohan Singh. Only a few regional parties like Trinamool Congress raised verbal opposition. On the whole, the goods and services tax regime came into being without any serious challenge inside or outside legislatures. Instead of simplifying the tax structure it became one of the most complicated in the whole world.

The much quoted rationalisation did not happen under GST regime. The tax system was still graded with wide margins. Moreover, a good or service can move from one grade to another through interventions. India is characterised by geographical division of labour between different regions which also means some regions will be affected by the new regime more than others and the basic nature of impacts also may vary. Thus one sees that some regions will be more negatively affected by loss of tax revenue than others and some regions will gain more than others. Rationalisation of the tax structure remains as far a cry as ever. It is also doubtful if such an objective was there at all. But the other aspect is more prominent.

This is the question of economic federalism which is always a contentious point between the States and the Centre. Political and economic federalism in India is heavily skewed in favour of centralism and GST strengthens centralism to hitherto unknown levels. Though regional politics has been on the ascendency since many decades this regional political trend did not take up this important implication of the tax reforms. It can be because the corporate capital is very much promoting regional political groupings too, at least when needed for basic natural resources. It can also be because the regional political groupings' economic backing and interests are by and large identical to the all-India corporate bourgeoisie. The quality of nationalism that is current is such that anyone who opposes the interests of the corporate capital can be dubbed unpatriotic, Pak agents or betrayers. Regional political groupings are actually becoming competitively nationalist in this sense. Corporatism in this phase of imperialist globalisation means economic and political centralisation which is seen in the rightist tilt across the globe. Corporatism is a dog eating dog phenomenon as is being currently played out in the telecommunication industry of India. Tax reforms were since long a persistent demand of the corporate sector and now they have got a regime that can be manipulated more and more in their interests. The case of Special Economic Zones is interesting on this count. There seems to be a growing manufactured justification for awarding special status to SEZs in the tax regime. The ostensible logic is that otherwise the priority of cheapening exports and raising the value through quantity may suffer.

In the background of all these shocks there is the persistent identity question reduced to the crass level of every child and adult furnishing bio-metric identity to a centralised data bank and identity cards issued on the basis of this data. This is exactly what was done in Nazi Germany as a preparation before its world conquest madness. Such identity data was required to weed out 'unhealthy' elements, to be first practised at home and then in subjugated territories. Accordingly, the Nazis did it in France and Poland too. And they had all plans to do it in Russia and every other place in their list of territories to be subjugated. The plan was for the whole world. In many other countries like Great Britain and United States the idea was withdrawn after protests. In India the scheme of Aadhaar is fast proceeding and it is an explicitly coercive process. Interestingly, even while the validity of this sort of identity was under the consideration of the Supreme Court the government coolly went ahead implementing the compulsion of this identity card. In fact, the independent identity of the judiciary itself is very much on shaky grounds. The judiciary seems to be confused about the ambit of constitutional rights of citizens and allegations of manipulations which makes justice a mirage. Anything can be expected in the coming days.

Aadhaar card was also made into shallow populism by linking public utilities to this number. The whole affair is tedious and dehumanising and a senseless waste of time. The poor people were made to believe that this number is the gateway to all sorts of concessions from the state and without this number you will get nothing. There was also the Jandhan scheme with the objective of universal banking and zero balance accounts. Crores of accounts were opened in all levels in banks, in rural and urban areas. This was a shameless ploy to suck more money from the people via the banks. Very soon instead of zero balance the minimum balance was steeply hiked. What happened to 'people's money' is so obvious that there is complacent silence all around. Now the banks are cancelling accounts which do not have the minimum balance and this itself can come to tens of thousands of crores. However, all this channelisation of squeezed out surplus of the poor people under false slogans did not significantly improve the health of the financial and banking system because the scale of looting which made this system bankrupt in the first place was beyond the pale of cosmetic surgery.

The course has now turned to overturning banking principles so that those with deposits will lose control over their deposits so that the banks can make their account books presentable and business can proceed as usual. Demonetisation was daylight robbery and it was called so by political economists and social analysts. Currency as economic facilitator became unpredictable and unreliable with long-term consequences for mass psychology. People at large were given a shock therapy for acclimatisation with fascist economic terror aimed at redistribution of financial resources. But the trillions that are missing from banks' accounts have attained their own momentum in the economic system which demonetisation could not handle. For many years the public sector banks were functioning as private coffers of the corporate sector speculative capitalists who are free to flee with tens of thousands of crores of people's money. National boundaries are increasingly irrelevant for suction of finance capital. This madness with a method proves beyond doubts the pro-corporate anti-people character of state in India. Now the entire banking sector is going to be convulsed which can even result in liquidations which is sure promise of great misery.

The minor efforts to recapitalise the banks is of course too insignificant for them to recover. But such measures can be a precursor to more drastic measures which will completely do away with any security for cash in banks. At that time the policy makers can say that it is the basic principle of banking to generate sufficient funds, meaning sufficient profits, and India cannot be an exception. But this option of outright confiscation of people's money has very seldom been exercised in the world and such a measure can be trumpeted as first in the world. India always seems to be gung-ho about discovering firsts in the world! However, the short and long term effect will be loss of confidence in banks, something logical because it is following the loss of confidence in money. Simultaneously, there is a growing manufactured clamour for denationalising banks. At one time the Congress brand of populism thrived on nationalisation of banks but the nationalised banks became handmaidens of the big businesses who made them uneconomic and now the banks are taxing the people so as not to completely drown in unpaid and unpayable debts. Nationalisation did not make banks people's banks but they could suck the money from the people and transfer the same and more to big businesses and thus become an effective medium for redistribution of wealth and tremendously increase inequality along with opulence and conspicuous consumption. Now the people have to maintain the banks for the corporates. The enormity of the backwash and direct effects remains to be seen.

The developing clamour for denationalising banks is actually pointless as far as the basics are concerned. The basic is that these banks are on sinking grounds not because they are public sector institutions but because they were overshooting much beyond financial management norms and rules in the interests of the corporate finance/speculative capital. They were doing with zealousness the job of siphoning off of people's money and the prime task of banks came to be similar to a crude extractive industry. Now the threatening collapse, the way out of which is conceived in terms of expropriating the people to the bare bones, is squarely the responsibility of the debtors who are the richest in the country. Denationalising them into private entities cannot change the nature of banking they were doing all these days but it can release enormous costly real estate all over the country. Rather, this real estate will be happily grabbed cheap by real estate tycoons making this into another significant redistribution of "public" wealth. All these and more can be expected in the coming days. Political pundits know all this and that is why a sort of musical chair game is sought to be staged. But India's elections are like the ones in America where money is the determining power.

Quite a lot of constitutional rights are already saying goodbye - a planned trend to streamline the body politic - but it will have implications for further manipulations of the process. And money power is there as spearhead. One who has more money stands to advantage. At the same time, the forces of diversity are still to be reckoned with, a force that can offer challenge in pockets at least. Whether it is the farmers' issue or issues of communal fascism or Dalit baiting challenges to centralisation can at times even overturn established electoral musical chairs. As such they are exceptions but exceptions can be examples with trigger effect.

The economic crisis is beyond the pale of per capita niceties or averages. It is very much global in nature too. The crisis that erupted in New York and other imperialist money markets has to spread to the entire neo-colonial world which is a means of diluting the crisis at home. Agents of imperialist globalisation who are controlling the economy now have their own full-fledged political caucus in power and it has to justify the trust and entrusted job by implementing ruling economic ideologies that go to the extent of creating chaos to facilitate accumulation. India is currently in that groove which is potentially one of creation of acutely polarised schisms undermining the bone structure. Divisive politics with fantastic ideological whimsicality is steadily gaining in the country and whatever democratic facade is in place is very fast becoming redundant for the ruling classes. Propelling all this is the deepening and spreading economic crisis which is warranting fascist methods of resolution, which predictably enough, is bringing forth more chaos than resolution. People are in for testing times, times when international capital is directly deciding the foreign policies of the powerful and the so-called international bodies for peace becoming even less than nominal. A globalised Indian economy simply cannot escape the burdens imposed by global capital. When there are gains one may be happy and sing praises of globalisation. But costs are inextricably tied to the lure? Globalisation means spreading the risk and the weaker will have to bear greater burdens when chaos rules.

As reaction feeds on reaction, crisis feeds on crisis. Demonetisation redistribution only whetted the appetite for a much bigger hogging and that is what is in store through banking 'reforms'. The world seems to be aware of what is being unfolded in India better than Indians themselves, as Indians know more about neighbouring countries than about their own. Oppositional politicking is a deflated balloon simply because the current rulers are only vigorously implementing what the others wanted to. They have no moral or intellectual standing to oppose the ongoing wholesale cannibalism.


Vol. 50, No.41, Apr 15 - 21, 2018