The Economy

Jingoism is always intoxicating, especially if it is backed by the ruling party. In the upshot, it is, however, counterproductive. But realisation of this counterproductive nature is often late in coming. The people, particularly the petty-bourgeoisie, of Italy and Germany came to realise the disastrous nature of Fascism and Nazism only after they had taken incalculable tolls of human lives and material resources. In India, jingoism against Kashmir, and against Pakistan (and China) is not doing badly at present because innumerable people are intoxicated by it. The condition of the economy is often lost sight of, except by those who have to swallow the bitter pills of economic distress.

The condition of the economy, however, sometimes forces the powers that be to supplement their jingoism with high-flown promises. For example, the claim of the government that under its supervision, the GDP will rise to 5 trillion dollars by 2025 may be taken. Now, if Arvind Subramanian's estimate of last year's GDP growth (4.7%) is considered a fairly correct approximation to reality, the official claim is nothing but a pipe dream. If harsher words are permitted to use, it is a gigantic imposture foisted on the people, somewhat similar to Narendra Modi's promise before the 2014 polls of depositing Rs 15 lakhs in every citizen's bank account.

Till now, at least 250000 farmers have committed suicide and the Modi government has done practically nothing to stop the continuation of this tragedy. One need not strain one's intellect to realise that big leaps in terms of rate of growth is of no use if such suicides continue. The government remains unconcerned, because its first priority is to look after the interests of the corporate bourgeoisie. The latest promise to bring down the tax rate paid by enterprises with turnovers of more than Rs 400 crores illustrates this point well enough. But wooing the big bourgeoisie has not yielded any macro-dividend to the economy as a whole. Unemployment is highest in 45 years. Absolute employment has shrunk between the period 2015-18, and this situation continues. The current situation in the automobile industry and the real estate-cum-construction industry is deplorable with numerous job losses. The rate of growth in the manufacturing sector has slowed down to 1.2 % as against 6.9% a year ago. The government and the RBI have cheapened the cost of credit, but the demand for credit still falls as far as entrepreneurs in a wide range of industries are concerned. The government and its whizz-kid economists are prone to think that some monetary measures are enough for recovery. They are perhaps ignorant of the lessons taught by the Great Depression of the 1930s and the recent global meltdown that sent tremors through the capitalist world.

It is clear that all-round privatisation is no solution, because the sole aim of the private sector is to maximise profits. Whenever it faces a recession-type situation, it curtails production and reduces employment. An eminent economist of our time has suggested three steps to be implemented immediately: "(i)Tax the rich and the super rich effectively and convincingly; (ii) Send the big bank defaulters to jail; (iii) spend lavishly on infrastructure, health care and public education. In other words, create strong and tangible assets." (The Telegraph, 19 August) These suggestions bear a strong resemblance to what another eminent economist suggested in his book 'Development with Dignity' and various other writings. Those with a little familiarity with the state of the economy and have no vested interests in defending the ruling dispensation and its cult of Hindutva have scarcely any reason to disagree with these suggestions.

But the point is whether, given the present power structure, such suggestions will be implemented by the state. Taxing the super rich may be very laudable, but those who have an understanding of the nexus between the superrich, bureaucracy and ruling politicians know how difficult it is, and the present government is likely to be indifferent, if not averse, to such a proposition. The second suggestion, a bolder bone, is more difficult to implement. Big bank defaulters generally belong to the corporate bourgeoisie, and it is they who form the major prop of the ruling party at the centre.

As per the recent revelation by the Association of Democratic Reforms, the BJP has received corporate donations amounting to Rs 915.95 crores during 2016-18, about 93 % of total corporate donations to political parties. How can then Modi and his party afford to imprison big bank defaulters? On the third suggestion, one may point out that Mr Modi has promised to spend Rs 100 trillion on infrastructure in his Independence Day speech. At first sight, it sounds very appropriate. But where will the government get the money from? The finance minister has already promised a gradual tax reduction for large enterprises. Then will the funds be raised through indirect taxes, implying a greater burden on the common people? Of course, the government may recourse to massive deficit financing. But doing so will incur the wrath of the IMF and the World Bank, chowkidars of world capital. It is unlikely that Mr Modi, who has already shown his subservience to Donald Trump on the issue Iran's oil will afford to antagonise the IMF and the World Bank.

When a government fails to resolve the crisis of the economy, raising jingoistic passions is a convenient tool for it. Fortunately for it, jingoism retains strong influence in the country and continue to do so until its costs become too heavy.

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Vol. 52, No. 10, Sep 8 - 14, 2019