PRO-PEOPLE APPROACH IMPLIES RESTRAINING THE SUPER-RICH SPECULATIVE CLASS - PJ James
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03 May 2019

India’s overall socio-economic collapse under the corporate-saffron fascist regime which among other things include the extreme deprivation of the vast majority of the oppressed and toiling masses is so deep rooted that cannot be resolved through a mere regime change. Mainstream discussion in the midst of the campaign on 17thLokSabhaelection that flourish in corporate media is least interested to go into the deep in addressing this grave question.  At this critical juncture, while the BJP manifesto is nothing more than a corporate-saffron statement, unlike in the past, the manifesto of Congress, the other major Indian ruling class party, has given much importance for uplifting the people mainly from their pitiable economic condition. In drafting such a manifesto with a human face, the Congress is reported to have also drawn inspiration from the ideas of a wide array of liberal critics of crony capitalism ranging from Nobel price-winning economist Thomas Picketty to former RBI governor Raghuram Rajan. In this context, this note is an examination of the feasibility of implementing such a populist policy as elucidated by Congress in its manifesto under the existing neoliberal scheme regarding which the Congress has not made any re-examination till now.

Among other things, the Congress and its supremo Rahul Gandhi have come out with a series of employment generation programs, minimum guaranteed income to those below poverty line, increased social welfare spending, etc. For instance, it promises the filling up of 4 lakh vacancies in central govt. departments without any delay. Given the average government expenditure per new employee at about Rs. 600000, this alone requires a minimum allocation of Rs. 24000 crore every year by the central govt. And if the Congress manages to constitute a govt. at the centre, it would also insist the state govts.for filling the 20 lakh posts that remain vacant at the level of states which requires another outlay of more than one lakh crore every year by state govts.

No doubt, the ‘star’ promise made by Rahul Gandhi and the hallmark of Congress manifesto this time is that of a Minimum Guaranteed Income (NYAY)of Rs. 72000 per annum to 5 crore poor families encompassing around 25 crore people. For implementing this, an allocation of Rs. 3.6 lakh crore is needed in the central budget every year. Of course, the idea of a minimum guaranteed income is not at all a novel one. It belongs to the reformist and philanthropic tradition in bourgeois policy making aimed at camouflaging or diverting attention away from the plunder by rapacious capital. When the consuming power of the vast majority on account of the private nature of accumulation is going down and economy is collapsing due to insufficient demand, prudent bourgeois leaders in the past had put forward such initiatives. In fact, the post-war Keynesian welfare state that necessitated a leading role of the state in the capitalist economy had been an enlarged version of this guaranteed minimum income. Even after the abandoning of welfare state since the seventies, several bourgeois pundits have been suggesting a “guaranteed annual income” for maintaining people’s purchasing power at the desired level. But such views became redundant with the rapid spread of neo-conservative neoliberal policies at a global level. 

For instance, following Rahul Gandhi’s announcement of the NYAY scheme along with his proposal for removing GST ,  neoliberal intellectuals and corporate centres started vehemently opposing it (For instance, see, T S Ramakrishnan, “Congress Manifesto: Absolute Profligacy”, The New Sunday Express, 07/04/2019) and characterised the Congress manifesto as “profligate populism” resulting in what they call a “deadweight for the economy”. According to them, the NYAY project alone that requires at least 13 percent of the budget outlay will lead to a violation of the mandatory deficit limits as stipulated by the FRBM Act of 2003 enacted by the Vajpayee govt. at the behest of IMF. According to neoliberal experts, it will also result in no-confidence among international investors for investing money and starting new projects. And the Confederation of All India Traders (CAIT) has strongly criticised Rahul Gandhi for his populist statement on GST. Stock-market speculators and their ideologues have even characterised Congress manifesto a “mirage” as, according to them, every social spending by govts. today has to be in conformity with the fiscal and revenue deficit limits set by the Bretton Woods institutions.

Given this situation, if Congress is serious about its manifesto unlike Modi’s most deceptive and malicious election hoaxes in 2014 such as putting Rs. 15 lakh in the account of every Indians within 100 days of his ascendancy to power, then it has to clearly sort out an appropriate resource mobilisation strategy which is sufficient enough to ensure the required funds for the promised welfare schemes.  Otherwise, Congress’s populist promises will also settle down as another election stunt. This requires at least a restriction on the fabulous wealth flows to the speculative, superrich and billionaire sections together with a reversal of the innumerable tax exemptions enjoyed by them over the past several years.

For instance, the budgetary policies of UPA and NDA governments have on an average been granting annual corporate tax exemptions of Rs. 4 lakh crore and Rs. 6 lakh crore respectively, even as top one percent of the same class is currently grabbing 73 percent of the wealth generated in India. And the top 10 corporate giants led by Ambani, Essar, Adani, etc., have in the guise of “non-performing assets” (NPAs) have gobbled up more than 90 percent ofthe 15 lakh crore money from public sector banks. Today, Modi’s ultra-rightist, pro-corporate policies are channelling Rs. 2200 crores per day in to the coffers of 9 biggest speculative billionaires in India. The role of the Indian state under Modi is just to act as a ‘facilitator’ of this corporate loot by the most parasitic money-spinning class in India. Since these billionaires are mainly operating at the sphere of financial speculation in financial and stock markets sucking out wealth from the productive economy through various channels, their wealth accumulation is constantly leading to horrific levels of joblessness in the country.

The upshot of the argument is that abolition of erstwhile Nehruvian restraints to corporate speculators and the consequent fabulous wealth accumulation by them are directly leading to unemployment, price rise and economic deprivation of the broad masses of working people. In an atmosphere of diluted labour laws and deregulated tax and environmental laws, corporate plunderers are appropriating the material conditions of people’s existence and squeezing the productive spheres such as agriculture and industry. In this context, the very sustenance of people becomes all the more difficult as the govt. drastically reduces subsidies and social spending according to neoliberal diktats. Therefore, any proposal to improve the living conditions of the people shall invariably be directed against the unprecedented wealth concentration in the hands of a few financial-corporate elite and against the methods of accumulation pursued by them including the speculation indulged by them in stock, real estate and commodity markets. Only such an intervention can reverse the undercurrents of economic slow-down, agricultural retrogression, de-industrialisation, joblessness, price rise and gruesome corruption.

Viewed from this perspective, the essential resource mobilisation needed for the provision of a minimum guaranteed income to the citizens which may be characterised as reformist is not at all a herculean task. What requires is a restructuring of the existing pro-corporate and pro-rich tax rates. For instance, as noted earlier, one of the sources of huge wealth accumulation by the Indian financial elite during the preceding quarter century of neoliberal globalisation has been unhindered speculation in stock markets. Even a large part of the money with banks and financial institutions, a share of which were formerly available to the so called ‘priority sectors’, started flowing to balloon speculation in stock markets with the initiation of financial sector liberalisation by Manmohan Singh in the early 1990s. As a consequence, the average daily trading on Mumbai Stock Exchange and National Stock Exchange today has crossed Rs. 40000 crore or Rs. 14600000 crore per year. But today under pressure from foreign and Indian corporate speculators, no tax is imposed on this turnover in stock exchanges. A minimum 5 percent tax on stock trading alone can yield an annual resource mobilisation worth Rs. 7.3 lakh crore, more than double the amount required for implementing Rahul’s NYAY.

Along with this, a concerted effort is needed to overhaul the inherently regressive nature of Indian tax structure. While capitalist countries collect up to 40 percent of their GDP as the tax revenue, India has one of the lowest direct tax rates and highest indirect tax (GST) rates in the world and the tax-GDP ratio hovers around 15 percent. While the highest nominal corporate tax rate in India is 30 percent, the effective corporate tax rate on account of a host of tax exemptions is as low as 16 percent.  Moreover, while direct-indirect tax ratio in capitalist countries is around 65:35, it is the reverse in India indicating the extent of tax burden borne by the common people on the one hand, and loss of revenue to the government on the other.

India which is among the most unequal countries in the world, there is immense scope for increasing direct tax (taxes on income, profits, capital gains, wealth and other assets)collection mainly through raising corporate-income taxes without affecting the common people. While vast majority of the common people whose entire income is spent on necessaries and essential services bear the burden of indirect taxes, the rich sections notorious for their conspicuous and luxurious consumption bear relatively negligible burden of the indirect taxes. It is high time that the taxes on necessaries, mass consumption goods and essential services are abolished and that on luxuries are increased. More than two decades of neoliberal globalisation in India have led to multi-fold galloping in the luxurious consumption of the rich. Deluxe items like private jets, imported luxury cars, yachts, entertainment gadgets, home furnishings and similar other extravagances are inexhaustible source of tax revenue to the govt. These are avenues for a prudent pro-people regime to appropriately intervene in the emerging consumption trend in the economy in a progressive manner. But the corporate-saffron regime or previous regimes for obvious reasons have been incapable to shoulder this pro-people task.

Obviously, under neo-liberalism, a people-oriented, active state-intervention is legally banned as per super-imposed IMF-World Bank diktats. For instance, the entire tax-expenditure policies of the central and state governments in India are now formulated in accordance with the Fiscal Responsibility and Budget Management (FRBM) Act enacted by the Vajpayee govt. in 2003 at the behest of IMF as a stepping stone towards the ‘second generation of globalisation’ in India.  According to this Act the state is bound to drastically downsize itself by reducing public expenditures and pursuing a ‘pro-investor’ tax regime and transform into a corporate facilitator through market-fundamentalist policies by achieving a higher rank in what World Bank calls ‘ease of doing business index’.

In such a scenario, even a ‘philanthropic program’ as minimum guaranteed income is a wishful thinking since the elected govt. is forbidden to seek a pro-people tax-expenditure policy. In a country like India which has the highest levels of malnutrition, hunger, illiteracy, morbidity, infant mortality, etc. in the world, the neoliberal prescription is to leave everything to the whims of private corporate sector and market fundamentalist forces. Let us once more take a simple illustration. According to a recent report by the US based Centre for Disease Dynamics, Economics & Policy (CDDEP), today India has only one govt. doctor for every 10189 people while the WHO recommended ratio is 1:1000. This implies a deficit of 600000 doctors, while the deficit of nurses is 2000000. To rectify this alone requires an annual investment of around Rs. 2 lakh crore. These and other pro-people tasks cannot be left to the private sector and need to be resolved through a pro-active role of the state in the economy. This invariably calls for a repudiation of the philosophy and framework of neo-liberalism itself.

Therefore, those parties which promise an improvement in the material conditions and standard of living of the working class, peasants and the oppressed even while remaining as adherents of neo-liberalism are engaged in hoodwinking the people. Their rhetoric is only another election stunt. Under neoliberal corporatisation where the top-most companies after dissociating from employment-oriented productive activities are engaged in parasitism, speculation and ballooning the bubble economy, without imposing firm restrictions on them, there is little scope for a genuine pro-people program.

On an average, only 10 percent of the billionaire class today is associated with job-generating manufacturing.  The remaining 90 percent of the super-rich is remaining as a stumbling block against any advancement of humankind in the progressive-democratic direction. As long this crony capitalists using the neoliberal state apparatus is dictating policies, all those much trumpeted development programs oriented to boosting so called ‘investor confidence’ are leading to accelerated transfer of wealth in to coffers of the financial elite. Unlike the erstwhile Nehruvian model which was the Indian edition of welfare capitalism, it has been the shift in economic policy to neo-liberalism that led to the most naked plunder of people and nature. To facilitate this loot, the leading corporate class is relieved of all governmental controls and regulations, and that is the immediate cause for the unprecedented deprivation of the broad masses of people today.

Hence, any promise of a guaranteed minimum income or minimum standard of living for the people without a program for reversing the neoliberal trend will be added insult to the people and more damaging. n

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The Communist movement in India has a history of almost a century after the salvos of October Revolution in Russia brought Marxism-Leninism to the people of India who were engaged in the national liberation struggle against the British colonialists. It is a complex and chequered history.