In 2020 September Issue of Red Star, under the title “India’s Economy is projected for the Biggest-ever Contraction”, quoting both international sources and official Indian agencies, we have briefly outlined the unravelling economic scenario for India in 2020. Accordingly, IMF, World Bank and ADB, together with India’s own Ministry of Statistics and Program Implementation (MoSPI), RBI, and the Centre for Monitoring Indian Economy (CMIE), have come to a consensus on the projection that the Indian economy was moving to a 4.5 percent contraction in 2020. Some independent researchers even predicted a shrinkage of India’s GDP from $2.11 trillion as estimated in 2019 to $ 1.9 trillion in 2021. Of course, independent institutions such as the Centre for Economic Studies and Planning (CESP), had even went a step ahead warning an impending 15-22 percent contraction for the economy. Among the factors identified by these studies that led to this historic downturn, the most important was the prolonged, ill-conceived and coercive and authoritarian lockdown superimposed by Modi.
However, most of these agencies were unwilling to have a close scrutiny of the economic performance of the 6 years (2014-20) of Modi’ rule and more or less were concentrating on the pandemic-link of the economic crisis including the regime’s ill-conceived policies that accentuated it. Though India’s per capita GDP has been one of the lowest in the world (140th rank according to 2019 estimate), corporate centres along with Modi government were still spreading the illusion that by 2024 India’s economy would move to a $5 trillion size. Contrary to the perspectives put forward by well-meaning scholars that Indian economy under Modi has been plunging throughout, the neoliberal pundits and a many academics were reluctant to have a concrete evaluation of the crisis confronted by the broad masses of Indian people. Though a general agreement is there among them that lockdown is the immediate cause for economic reverse, still they are in tandem with the official view that strict lockdown has helped India keep case fatality rate lower than counties like the US, the UK, France, Japan and Italy.
However, following the Economic Review report for August prepared by Indian Finance Ministry that was released following the spread of the information that GDP numbers for the first quarter ending June showed the worst ever quarterly performance by the Indian economy, the government was forced to willy-nilly admit thus: "Data now available for the April-June quarter confirms a significant world-wide year-on-year contraction of output resulting from the COVID-19 pandemic. US economy has contracted by 9.1 per cent, UK, France, Spain, Italy and Germany by 21.7 per cent, 18.9 per cent, 22.1 per cent, 17.7 per cent and 11.3 per cent respectively with the overall Euro area contracting by 15.0 per cent and Japan has contracted by 9.9 per cent. Relative to these advanced nations, India's GDP contraction at 23.9 per cent is slightly higher." And it is to justify this unparalleled collapse which Modi regime whitewashes as “slightly higher” without any scientific basis, that the Finance Ministry claims the “stringent lockdown” as helping the nation to contain its COVID-19 case fatality rate to 1.78 percent, as compared to 3.04 per cent in the US, 12.35 per cent in the UK, 10.09 per cent in France, 1.89 per cent in Japan and 13.18 per cent in Italy. On the contrary, as is evident from IMF’s Gita Gopinath’s unkind comment on India’s GDP contraction as “worst among G-20 countries”, neoliberal centres are unwilling to take Modi regime’s explanation as taken for granted. And of late, Lancet, the renowned medical Journal has vehemently criticised both Modi government and the ICMR under its control for covering up the gruesome pandemic situation in India.
Coming to the economic scene, the 24 percent collapse in GDP in the first quarter (April, May, June) of the financial year 2020-21 has gone against the calculations of the ruling classes. In common parlance, it implies that the total value of goods and services produced in India in April, May and June this year is 24 percent less than the total value of goods and services produced in India in the same period last year. In fact, sector-wise analysis of data shows a more frightening situation. In terms of the gross value added (GVA), barring agriculture where GVA grew by 3.4 percent (on account of favourable weather good monsoon) as claimed by government, all other sectors of the economy saw an absolute collapse. Thus, GVA in construction sector has shrunk by 50 percent, in trade, hotels and similar services by 47 percent, manufacturing by 39 percent and mining by 23 percent. According to some estimate, the entire economic activity during the quarter has been only 25 percent of what it was during the same period in 2019. The job-loss due to the collapse of the relatively labour-intensive sectors mainly comprising informal/unorganised activities alone is estimated at around 140 million. Meanwhile, the Express Research Group of MoSPI has made the startling revelation that compared with the first quarter of the previous financial year, individual consumption expenditure that comprises around 56 percent of GDP experienced a decline worth Rs. 531803 crore (the decline is estimated at 27 percent) and private business investment that is composed of 32 percent of GDP collapsed by Rs. 533003 crore (the decline is estimated at around 50 percent) in the first quarter of the current financial year.
The outcome of this unprecedented decline in respect of the two biggest “growth engines” (i.e., individual consumption and private investment which form economy’s driving force on account of the continuous downsizing of the government expenditure resulting in a decline in its share in GDP to around 10 percent) of the neoliberal economy that accounted for 88 percent of India’s total GDP, The government has no data regarding the millions of informal/unorganised workers, migrant and daily workers who lost means of livelihood and employment, though unofficial estimates count them in the range of 12-14 crore. As estimated by CMIE, around 21 million white collar professional employees and 5 million industrial workers have been sacked in India during the past one year alone that does not all include self-employed professionals like doctors, lawyers, chartered accountants, etc. As a matter of fact, the 23.9 percent GDP contraction in the first quarter of 2020-21 as estimated by Indian Finance Ministry, on account of paucity of data, is not based on the real state of the economy pertaining to the informal sector. Therefore, as pointed out by US-based neoliberal experts like Raghuram Rajan, if the damage to the informal sector is also taken into consideration, then the economic collapse will be worst in sharp contrast to the GDP drop of 12.4 per cent in Italy and 9.5 per cent in the US, two of the most COVID-19 affected economies. Hence, as the global economy is going to contract by 4.3 percent this year (as calculated by UNCTAD, this year the world will experience a complete wipe-out of $ 6 trillion in terms of GDP –equivalent to the combined GDP of Brazil, India and Mexico), as estimated by MOSPI, Indian economy is going to collapse at the rate of 7 percent in the current year!
However, the very same neoliberal centres who now expose India as the worst performing economy were unanimous in characterising it as the “best performing country” in the world in 2014 with a GDP growth rate of around 7 percent when Modi government assumed power 6 years ago. Since then, what happened has been an irreversible downward trend in GDP growth rate along with the intensifying poverty, deprivation and pauperisation of the broad masses of toiling people as manifested in the historic decline in production, biggest unemployment in five decades, horrific levels of inequality and corruption. Though already discussed much, let us go through a few indices to unravel this historic plunge of India during 2014-20. For instance, in 2014 India’s ranking in Global Hunger Index (prepared by the International Food Policy Research Institute) was 55. Under Modi, within two years it steadily declined to 100 in 2017 and further to 102 in 2019 among 117 countries in the world and much below that of all South Asian countries such as Sri Lanka (66), Nepal (73), Bangladesh (88) and Pakistan (94) in 2019. Regarding hunger and deprivation of children, an indication of the seriousness of poverty and deprivation, Indian position is despicable. In India, only 9.6% of all children between 6 to 23 months of age are given a minimum acceptable diet and medical care. India is also notorious for under-5 mortality rates and prevalence of undernourishment owing to inadequate food. And, as an indicator of inequality and deprivation, India’s rank out of 189 countries on the 2019 Human Development Index released by UNDP is 129. Of course, there is no dearth of statistics highlighting the extent of poverty, hunger, inequality, unemployment, corruption, etc. in India.
Let us see the other side of the picture too. Under Modi regime during the same period, the concentration of income and wealth with the superrich Indians witnessed a sky-rocketing. For instance, in 2013, i.e., before Modi’s ascendance to power, the number of dollar billionaires (those having assets worth $100 crore and above) in India was 63. After Modi’s coming in mid-2014, their number steadily grew to 90 and further to 138 in 2019. Ambani who leads this list with $ 8060 crore (equal to around Rs. 6 lakh crore) is the fourth richest in the world today. In the absence of reliable domestic data, we have to depend on international sources such as Forbes, Oxfam, Credit Suisse, etc. to get a real picture on this. While 53 percent of the entire national wealth is gobbled up by just one percent of the superrich, the poorest bottom half of the population owns only around 4 percent of the national wealth as of now. When Modi came to power if one percent of the superrich appropriated around 50 percent of the additional wealth generated in a year, on account of his superimposition of corporate saffron-fascism, today this proportion has grown to almost 80 percent, quite unheard of anywhere in the world!
Over the last six years of Modi regime, this horrific wealth concentration on the one hand, and hitherto unknown levels of deprivation and destitution of the masses on the other, have revealingly taken place along with a process of India’s economic transformation from “best performing” as estimated in the 7 percent GDP growth rate in 2014 (as recognised by both Indian international agencies) to “worst performing” as is manifested in the 7 percent contraction of GDP as now admitted by the Indian Ministry of Statistics and Program Implementation (MoSPI). Obviously, the roots of this destructive process are not caused by any extraneous or external disturbances but a logical corollary of the fascistic “surgical strikes” directed against the people ranging from the superimposed demonetisation to the coercive lockdown pursued by Modi without any economic or medical basis. Demonetisation in 2016 that terrorised and subjugated the people in the guise of dealing with black money was an ingenious move for an unprecedented concentration and centralisation of wealth in most corrupt corporate, crony capitalists. The GST that followed (since mid-2017) was also aimed at bringing India’s goods and services market under the firm control of corporates after demolishing the federal structure of the Constitution. Both these neoliberal-fascist offensives that may be characterised as economic holocausts led the entire economy to a frozen state, brought all economic activities to a standstill and paralysed the agricultural sector that provide sustenance to 50 percent of the people and destroyed the informal and traditional sectors which are the sole source of livelihood for 95 percent of the 52 crore workforce in India.
The whole package of far-right neoliberal polices and direct measures such as pro-corporate tax exemptions, neoliberal labour and environmental deregulations, series of stimulus and economic packages that directly channelled trillions worth of public money into the coffers of corporate thugs and outright loot of public sector banks coupled with the fascistic demonetisation that at a stroke wiped out 86 percent of currency in circulation quite unheard of in modern history, followed by GST and so on have already led India to a historic economic stagnation on the eve of COVID-19 itself. The fabulous wealth thus appropriated by corporates, both foreign and Indian, according to the logic of neoliberal accumulation, instead of contributing anything towards employment-oriented productive sphere, actually went into money-spinning speculative spheres or for further appropriation of public assets by a handful of the superrich billionaires. Consequently, on the eve of COVID-19 itself, Indian economy had entered into the biggest-ever contraction in its history along with its concomitant manifestations in all spheres.
Historically, crisis has been an opportunity for fascists and Modi knows the art of effectively utilising it from his experience of heading both state and central administration. Thus without even consulting the parliament or opposition, and with a four-hour notice, and quite reminiscent of the manner in which demonetisation was implemented, he superimposed the most stringent and most coercive lockdown that continued at a stretch for two months on an economy which, as we noted in earlier articles, was already in ICU. This highly authoritarian and destructive move which is unjustified and uncalled for while collapsed the entire industry and service sectors, also impacted the agricultural sector due to abrupt collapse in demand and freezing of trade and transportation. Only the fascistic administration and its oppressive instrument such as police required to implement the lockdown remained functional. The outcome: India has become the worst performing economy in the world during 2020 April-June quarter.
Now if we take the entire Asian countries, the estimated COVID-triggered economic contraction for this part of the world during this period now hovers around an average of around 6 percent, even as the real economic collapse of India may be larger than the 24 percent now estimated by government’s own agencies. For instance, former chief statistician Pranab Sen had projected a GDP contraction to the extent of 35 per cent if the real situation in the informal sector is also taken in to consideration. Therefore, COVID-19 is only partial explanation for India’s current economic collapse. Rather, it is directly connected with Modi regime’s far-right fascistic policies that serves corporate capital since 2014. The present unparalleled economic collapse of India is corporatisation-induced. To reiterate again without much elaboration, as we have already said, unless this trend is reversed through an appropriate political intervention, the corporate-saffron fascist regime will again try to deploy all avenues at its disposal to carry forward its disastrous pro-corporate agenda and put heavier burdens on the backs of common people.