Direction Is Changing

India: Quo Vadis?

Anup Sinha

During the past 30 years the Indian economy, polity and society have been undergoing fundamental changes, the likes of which the nation has not witnessed since independence. The economy has been sluggish with unemployment, relative poverty and inequalities in wealth and income reaching unprecedented levels. Indian society is becoming more and more intolerant and backward looking. National institutions are becoming tools of political influence and control. The government of the land has become cruel and callous as far as minorities are concerned. There is a shift towards a majoritaria-nism marked by hyper-nationalism and xenophobia. What appears to be a randomness in rules and actions of the legislature and the judiciary, is actually a slow and sure move towards totalitarianism. Citizens are either indifferent to these changes hoping that their silence will buy them safety from dictates of the state, or they firmly believe that this totalitarianism is good for India. A small minority tries to raise their voice in opposition, but they fear wrath of the state. What is emerging is a new idea of a Hindu India where religious practices set the norms of state culture and a glorification of a mythical past. Economic problems have been germane to India’s development. The new political and cultural changes are compounding the economic ones. The nation is changing direction.

One way of capturing the changes taking place in contemporary India is to take a look at international rankings of various aspects of the nation’s economy and society. This is not to suggest that these rankings use a perfect methodology for computation. However, the same method used repeatedly gives one an idea of how the rank has changed over time and the relative position of India. India has declined in recent times in the Human Development Index of the UNDP standing at 131 out of 189 nations ranked. This considers income, education and health parameters. On a ranking of Global Food Security Index India stands at 71 out of 116 nations. On the Global Hunger Index India stands at 101 out of 116 countries ranked. On the Human Freedom Index India slipped from 94 in 2019 to 111 in 2020. On the Press Freedom Index India fell from a low 142 to a lower 150 rank between 2021 and 2022. The total number of nations ranked by this index is 180. The nation is in the bottom half of the ranks by Economic Freedom Index. India ranks 85 in Corruption Perception Index out of 180 countries. As far as environmental performance was concerned, India ranks in the bottom 5 out of 180 nations that were ranked. It was only in the Ease of Doing Business rankings that India improved its position in recent years.It rose by 25 positions. The ranking was constructed by the World Bank. Soon after its publication, the ranking list was withdrawn to investigate an allegation that data were fudged in some cases.

It may be worth noting that these indices are constructed by different agencies, using different methodologies and data. India’s position is persistently low and more often than not, declining over time. These ranks reveal three important aspects of the state of affairs in contemporary India. The first pertains to the low quality of life in the nation as a whole. In the international community of nation states, India’s standing is poor, despite political muscle-flexing as to its aspirations to be a global or at least a super-power. The second aspect is that these national level rankings hide the skewed nature of development and growth—astonishingly widening chasm between the haves and the have nots. The third aspect is that the ranks indicate a trend worth noting. A country whose rank is not improving, or even deteriorating, implies that the overall political and economic climate of the nation is becoming worse.

Ever since the economic reforms of 1991, the political system, across the spectrum of different political parties, have attached their hopes and their strategies on a belief that market-friendly reforms would take the economy forward. From the Congress to the Bharatiya Janata Party (BJP), along with the myriad regional parties have asserted their belief in the resurgence of faith in markets. The Left have often made noises about the economic dangers of market economies, without having been able to come up with any clear-cut alternative. The underlying philosophy of market friendly reforms is the core of neo-liberalism. This core was summarised in what came to be known as the Washington Consensus. The Consensus consisted of four elements that were supposed to be the foundations of a market based global economy. The elements were: open, unrestricted markets, free international trade, a conservative monetary policy with inflation targeting as its main concern, and finally a prudent fiscal policy reflecting a small government and a declining fiscal deficit. This was attempted to be followed in India with varying degrees of success since 1991. However, what the World Bank- IMF philosophy of neo-liberalism did not consider, was the historical fact that,in history, markets economies had done reasonably well only with a lot of state support in terms of fiscal handouts, and a social spending on human development and physical infrastructure. Materially affluent market economies are also invariably characterised by strong social safety nets that cushion the effects of the inevitably fluctuating fortunes of a market economy.

Markets, left to their own devices, seldom provide stability or economic assurances to the participants. Incomes and employment opportunities appear seemingly random, being shoved and pushed by unanticipated shocks. Also, any individual (worker or a potential entrepreneur) willing to avail of opportunities that markets might throw up, has to have certain skills and human resources that are acquired through education, social capital, and of course good health. None of these opportunities are adequately thrown up by markets. India’s public expenditure on health, education and physical infrastructure has been wanting since independence, both in terms of the quantum of spending as well as its quality. On the other hand, private capital has been given a lot of opportunities in more liberalised markets, fiscal support, and easy credit. As a result, the sphere of capital has expanded considerably compared to the opportunities available for the labour force. Capitalists have found labour-saving processes and technologies. The organised working class and its political voice has weakened beyond recognition. The formal employment sector has not increased, the informal sector has expanded a lot, and within this informal sector, casual employment has expanded the most. As a result of which, the bonanza of growth that the Indian economy enjoyed from the early 1990s to around 2015, has accrued to the top 20 percent of the Indian population at the most. During the last 25 to 30 years economic inequality in terms of wages, wealth and incomes have grown to alarming and unacceptable levels.

In terms of economic inequality, India ranked 147 out of 157 countries in 2018, according to Oxfam. Over the last three decades India has witnessed a 108 percent increase in the number of billionaires while 30 million more Indians have slipped below the poverty line. Several sectors are still plagued by low productivity and disguised unemployment like agriculture which houses 50 percent of jobs while contributing 17 percent to national GDP. The sector also houses 93 percent of the informal jobs. Over the last decade the technical measures of inequality have deteriorated for income, wealth and consumption. These estimates were made prior to the pandemic. Any current revision would very likely worsen the estimates. Between 1980 and 2014 the income of the bottom 50 percent rose by 89 percent. The average income grew by 187 percent. The top 10 percent experienced an increase of 750 percent. The top 0.1 percent saw their incomes rise by 1138 percent. The incomes of the super-rich 0.001 percent increased by 2726 percent. Assuming the current population to be around 1350 million the top one percent would be 13.5 million people.

Coming to an Oxfam estimate, in 2018-19 the richest 1 percent held more than 4 times the wealth held by the bottom 70 percent of the population. The total wealth of all billionaires was bigger than the size of the Union Budget for 2018-19. Obviously, these estimates depend on official figures and do not consider any wealth stashed away illegally in Swiss banks. In another measure it was estimated that the top 10 percent rich in India held about 63 percent of wealth while the remaining 90 percent held 37 percent.

The labour market inequalities have grown considerably too, with the gradual informalisation of the labour force and a serious erosion of the working class’s organisational power and bargaining strengths. For regular workers (less than 10 percent of the total labour force) with benefits and some degree of job security, the public sector is the largest reservoir accounting for 35 percent of the regular jobs, the private formal sector accounting for 17 percent and the private informal sector accounting for the residual 48 percent. For casual workers, the private informal sector accounts for a whopping 91 percent of employment. These workers have neither work-related benefits, hardly any rights, no organisational strength, and no retirement benefits.

According to an Oxfam report, during the period 1985 to 2015 managerial compensations grew by more than double the rate at which workers’ compensations increased. In 2011-12 GDP per worker (including the self-employed) was Rs 175539 per year while the average for a wage earner was less than half, at Rs 81819. It implies that incomes from profits, rents and other incomes from capital are rising at a rate much faster than that of the incomes of the working class.

The top 20 percent of India’s population has done well due to economic reforms. However, even within this band, the gains have been terribly unevenly distributed. The gains of the top 10 percent was more than the next 10 percent. The top 1 percent did even better, while the largest gains have been concentrated in the hands of the 0.1 and 0.01 percent of the population. Yet the absolute size of the market is very large for a circuit of capital to prosper and flourish. The market is almost as big as that of the US market. Capital looks for a critical mass. Once that mass is reached further expansion could be weak or sketchy without affecting the economy of the top 20 percent. Hence, seemingly, the market for luxury goods such as cars, televisions, washing machines, top end smart phones, refrigerators, air-conditioners are all flourishing. There has developed a good second-hand market for these goods too which help satisfy demand at a lower price articulated by the next 10 percent or so. Most well-to-do families have multiple cars, television sets, air-conditioners and individuals have multiple phones and laptops. Hence, the shopping malls in big urban centres look shiny and are stocked with goods that could well have been seen in a developed nation’s shopping mall. Expensive cars on Indian streets are no longer rare: Mercedes, BMW or even the fancier cars like Lamborghinis are frequently visible. All popular foreign brands are available for high-end consumer goods: Apple, Microsoft, Sony, LG, Samsung, Honda, Hyundai, and Panasonic to name only a random few.

This economic enclave of the rich and famous is self-perpetuating. Its links with the rest of the larger economy is weak and of low value. For instance, the service people catering to the top 20 percent certainly come from the bottom half of the economy, or the disposal of used consumer goods imply that these reach the population below the top 20 percent. Similarly, when availing of public services like railroads, or post offices, the rich and famous do touch the lives of the invisible. This enclave is also well connected and networked with the rest of the world. Economic transactions in terms of buying goods and services, tourism, business travel, and higher education abroad for their children are usually of an international nature. Finally, this enclave economy’s savings and investments are often parked abroad.

It is enough for capital to thrive on this 20 percent. The working class gets attached loosely and peripherally to this circuit. The absolute market is very large even for giant multinationals. For them, there are good private schools and universities, hospitals, hotels and resorts which are hugely expensive and out of the reach of ordinary mortals. The top 20 percent live in their own world which, in terms of quality, is close to that enjoyed by those living in the affluent developed economies.

Economic inequality hardens other forms of inequalities in political voice and influence, social mobility and opportunities, and cultural practices and recognition. Rising inequalities also increase inter-generational gaps. The first effect is often economic. The size of the market grows but at a diminishing pace. The ability of the market to grow and expand domestically is limited by lack of purchasing power of the bottom 80 or 70 percent of the population. There is also higher competition within the rich enclave that continuously concentrates market shares in the hands of a few large corporations. With the bulk of the monopolising corporations foreign in origin, their investment opportunities are not restricted by Indian opportunities alone. Indian capital finds increasingly limited opportunities unless directly supported by the state like the Ambani companies or the Adani group. Hence, market size limits the amount of investment. Growth continues but at a decelerating pace. This is exactly what people are witnessing now in India.

The second problem that too much inequality triggers is,in the use of environmental resources that are scarce and non-renewable. The very poor often have to depend upon ecological services of Nature just to survive. They overwork the land, they are forced to use more ground water, and over-harvest fish beyond sustainable limits. It is not that the poor are unaware of the importance of environmental resources and the knowledge of how to preserve them, but short-term compulsions make them violate those norms. Tonight’s dinner is much more important than having adequate fish in the rivers and oceans 5 years from now. On the other hand, the very rich have access to much more natural resources than they require. Hence, they can easily waste much of it, without the next two or three generations ever feeling the pinch. Environmental sustainability takes a backseat in their lifestyles.

The third problem is that of the build-up of dissent, frustrated aspirations, political impotency and anger. Too much inequality leads to crimes of desperation or the rise of organized crime that can prove to be a threat to private property. All these together have larger and long-term social and political ramifications that each historical context throws up with different outcomes. The possibilities lie in the options that the ruling elite has in controlling the frustration and anger into something less harmful for private property and capital. It could lie in the elite adopting a left-wing populist policy within an authoritarian framework of power to retain control over the bottom 70 percent. Alternatively, the ruling elite could use propaganda and lies to build up a belief system based on religion and mythology. The full control depends on beliefs as well as on channelising the anger towards an explicit enemy. That is why, the second option is more attractive. In the first option the obvious culprit would be the super-rich. The second alternative can create an enemy in either a neighbouring country, a foreign power or a domestic minority. India is on the second path and the rise of the BJP and its political agenda is a clear indication of the use of ultra-nationalism and targeted hatred for minorities.

Nation states are imagined communities. They are neither given in Nature nor are they purely based on ethnicity, religion or language. There is variety. India, with its rich diversity, has been referred to as a sub-continent. Out of this diversity a nation was carved through a prolonged struggle against imperial forces. The imagination that fired the founding fathers of India was one of secularism, diversity, democracy, and a sense of equal opportunities for all citizens. India made a hesitant start into the world of other nation states. There was economic development but the first four decades saw a gradual strengthening of the capitalist class. The state supported this class through various plans, public funding of infrastructure and gradual easing of control. Then came the spate of liberalisation and market-friendly reforms.

Reforms came as a bonanza for national capitalists and the aspiring middle class. Profit opportunities and consumption opportunities both grew for these segments of the population. Inequalities increased and to prevent social upheavals the ruling class had to divert the attention of the deprived and unemployed to things not related to material living. Religion provided the perfect foil. Hindu nationalism found a taker in mass populism. The BJP found the fertile ground to organise and take control of the dominant narrative of what the nation of India stands for. People are in the midst of a rising trend of popular hatred and anger focussed on religious minorities, a glorification of a mythical past as real history, and the propagation of Hindu cultural practices as the national way of life. Dissent is heavily discouraged. Human rights are put on the back burner. Corruption is allowed with state protection. Institutions of national importance are controlled with a mix of carrots and sticks. The attempt to build a secular, socialistic, democratic, plural India since independence had succeeded but only partially. Now it is being replaced by a less tolerant, less free, less secular, more authoritative India.

Since 1991, India’s society has changed more fundamentally than its economy. The complex forces of neo-liberal policies, coupled with the shrill narrative of intolerance has led to a consolidation of the forces that look increasingly fascist. Most citizens do not understand the trend. Those who do are afraid to articulate their concerns. A handfuls who express dissent are sent strong signals of disapproval by the state. As things look now the country is headed for a prolonged period of economic decline and social disruptions. Everyday life will also change in terms of what is officially valued and what is officially disallowed—the content of education, diet, culture practices, whom people socialise with, whom we marry, who we consider the new national heroes, and above all, who we are taught to hate. Two things might occur in the next two or three decades. First, history teaches that right-wing authoritarian regimes do not last forever. They can be brought down, but usually with a major social cost in terms of lives and liberties. The second possibility comes from the future. The hubris and callousness of the ruling powers force them to neglect the natural environment. Some catastrophe from climate change or bio-diversity loss might come as a wake-up call that will force the rulers to do things differently. Neither of the two possibilities is guaranteed. In the meantime, the death-knell of the Indian National Congress is being heard loud and clear. With it the India dreamt of in 1947 is dying without even an audible whimper.

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Vol 55, No. 14-17, Oct 2 - 29, 2022