India's Political Economy

Anirban Biswas

The world was always an unequal place, yet many people dreamt of achieving equality between man and man. This dream is ancient. When the modern proletariat was born as a result of the development of industrial capitalism, and class divisions began to distress rational minds, they undertook experiments to combat it. They began the effort to understand the laws of motion of the economy and in this process, the ideas of socialism and communism came into being. With the evolution of capitalism into imperialism, there were scrambles among big powers for greater share of the wealth of the universe, and these scrambles led to two world wars. These wars took heavy tolls in terms of human lives and resources. Yet ever since the ideas of socialism and communism appeared, there were revolutions, attempted revolutions and efforts by the working class and their real or declared representatives to seize power. There were the Paris Commune, the Russian, Chinese Revolutions, and Cuban and Vietnamese Revolution and many liberation struggles in many countries. But here too there were setbacks and Cuban defeats. Representatives of the bourgeoisie seized power in the name of the communist party. Alongside, there were vigorous attempts at re-colonisation of the formally independent countries by shaping their economic policies. The notion that a somewhat reformed capitalism can remove the problems of hunger, poverty and inequality gained ground until the East Asian Crisis of 1990s and finally the global meltdown of 2008-9 burst the illusion. Now the world is going through the pandemic, Covid-19, and the protracted nature of it is already apparent. Nobody knows when this nightmare will end.

In the strongest centre of post-war capitslism, the USA, there was a phenomenal growth of the financial sector since the mid-1970s, and private traders in foreign exchange began to rule the roost, because there was no central control over them. This trend continued, although the USA, owing to the hegemony of the dollar, went on having huge trade deficits. This situation continued smoothly until the global meltdown of 2008-9 badly shook the financial institutions, and the state jumped to rescue them by using public money. Here the principle that the market should decide everything was thrown to the winds.

But the government virtually withdrew after performing the necessary rescue operations. Here it should be noted that the U.S government wanted to restore confidence in the financial system, ignoring the production economy. So, the production economy did not recover much, but inequality grew. A complete recovery was nowhere in sight even before the outbreak of the pandemic of Covid-19. But the workers' share in national income declined perceptibly, while the national wealth held by the top 10 percent was about 50 times higher than the bottom 50 percent.

Principal concern is, however, not the US economy, but India's own one. In the country, 73 percent of the new wealth generated in 2017 went to the top one percent. In 2000, there were only 9 billionaires ( in terms of dollars) in India; in 2018, there were 119 billionaires. This phenomenon was the outcome of a multiplicity of factors, including the practice of allowing large corporates to appropriate billions of bank money and giving them systematic and huge tax concessions. Common sense about justice and injustice suggests that such big bank defaulters should be sent to jail, but it is clear that the strong man with strong chest lacks the courage to do so. This trend has definitely been strengthened by the recent reduction in the corporate tax rate in 2020 before the spread of the pandemic in India. It should be kept in mind that even when India registered high rates of growth of her GDP-- there was, however, very little growth of employment-- inequality in income and other entitlements increased, obviously as a result of the 'trickle down' policies of successive governments. This inequality, besides generating political unrest, has hindered the expansion of the domestic market, and has thus crippled even the rate of growth after some time, when the saturation point was reached. The latest reductions in corporate tax rate have, however, been unable to enthuse the big bourgeoisie, because they find the demand constraint too pressing. The government, true to its nature, is not willing to admit it. And employment creation by means of corporate-led growth is a mere delusion. This has been proved many times, and hence the Prime Minister has turned to pakoda-selling a kind of employment. It is useless to explain the distinction between disguised employment and real employment.

Some people are inclined to think that the pandemic has hit all classes equally. This is grossly untrue. As one expert with impeccable credentials regarding the presentation of facts has pointed out, giant firms like Apple, Microsoft, YouTube, Nteflix et.al have made billions during the pandemic. The Indian situation is no better. Indian corporate giants have made substantial gains during the pandemic. The present central government and ruling party, which have acquired an unsurpassable skill in turning inconvenient facts into convenient lies, will never, however, admit it. The recent farm laws show that the government is hell bent on appeasing hoarders who create artificial scarcities and boost up prices, and on exposing farmers, particularly small amd marginal ones, to the dictates of domestic corporates and foreign multinationals. The farm laws have been passed amidst the pandemic, and they contain no provision that buyers can't pay less than the minimum support price to the farmers. Faced with massive farmers' protests, Narendra Modi has been compelled to give the assurance that farmers will get the minimum support prices. But given his past record of making hollow promises, such assurances do not at all carry conviction with farmers. Restrictions on hoarding essential commodities have been relaxed ostensibly in order to benefit hoarders who will hold the consumers to ransom. How much of the hoarders' gain will go to the coffers of the ruling party, and occasionally to other major political parties, is anybody's guess.

In a country where religious minorities are massacred en masse, human beings are slaughtered in the name of cow protection and the culprits get away with impunity by virtue of their political clouts, dalit and tribal girls are raped and murdered, and the culprits get the support of the ruling party, the apex court judges give more weight to 'faith' than to evidence (as in the Babri Masjid case), any dissent is suppressed by all sorts of repressive measures, including incarceration with the help of trumped up charges and cold-blooded killing by means of fake encounters, rationalists are killed and obeying the orders of big imperialist powers is considered a symbol of patriotism, all kinds of superstitious beliefs are sought to be rationalised by stupid, unscientific allusions, this is only natural and should not surprise anybody. The reason is simple: if the rule of corporates and foreign multinationals is to be sustained with a strong hand, some kind of majoritarian jingoism is needed. The very nature of this rule must sustain itself on thriving inequality, because otherwise this rule is bound to lose the support of the corporate bigwigs, who want to acquire super profits at the expense of the people. But inequality beyond a certain point must engender further tensions. If the domestic market shrinks, the big capital's capacity for investment must also go down. Besides, economic gains often go hand in hand with political costs. There is a standing suggestion that India should look forward, i.e. boost her exports in order to wipe out the recession in her industrial sector. But that is pathetically infeasible. This is proved by the rude fact that after the USA imposed severe restrictions on the import of Chinese goods, Indian billionaires could not take advantage of the opportunity. Rather the opportunity was taken by South Korea and, surprisingly, Vietnam.

Along with the creation of billionaires, Narendra Modi et al can claim credit on another count. In respect of the proportion of hungry and undernourished people in total population, India is ahead of even Pakistan. One may argue that the paradox of the Indian economy lies in the coexistence of many billionaires and a large number of poor and undernourished people. To cover this stark truth, the ruling dispensation needs a near-war situation with the neighbouring countries; it needs to maintain an atmosphere of tension as far as the relationships with China and Pakistan are concerned. Pakistan, with all her huge internal problems, is a weak neighbour, but China is not. That is perhaps why Narendra Modi is afraid of getting engaged with a confrontation with China, occasional boastful remarks notwithstanding. He is now seeking the favour of the USA, Japan and Australia.

One convenient tool is to employ the term Maoist to all sorts of dissent, particularly to those who show the courage to fight for dalits and adivasis, and to oppose the process of 'development by dispossession'( to employ Amit Bhaduri's phrase). That is why so many social activists are now behind bars, the latest example being Stan Swamy.

Putting all the blame squarely on Maoists and Muslims cannot conceal the grimness of the economic situation in which even the well-worn cliche of growth cannot be paraded, let alone employment generation and reduction of inequality. However much the tentacles of Hindutva are spread in different parts of the country, the economic situation is bound to give rise to much more unrest than was previously seen. The already tottering regime of fanaticism and subservience to corporate capital and Western masters is going to meet its doom. That will sound the death knell of neo-fascism in India.

Frontier
Vol. 53, No. 22-25, Nov 29 - Dec 26, 2020