In continuation to Modi’s speech on 12th May announcing Rs 20 lakh crores stimulus package, the FM Nirmala Seetharaman has started explaining how this stimulus shall be implemented in a series of press conferences from 13th May. Today she has started this process, under the guise of self-reliance, a series of measures are announced for MSMEs after changing the definition by raising their investment and turnover limit. But, there was not even a mention of the informal and unorganised sectors. No Immediate relief for the dying many millions of migrant workers. No direct money transfer to the starving millions. At the same time, she announced many tax giveaways to middle classes. The state governments are completely ignored, when they are in extreme crisis on account of heavy responsibility to deal with COVID-19, and nothing to rejuvenate their financial position.. There was not even mention of the question of distributing the GST arrears due to states. Her high sounding and rhetorical presentation, had nothing concrete for the most deprived. There is a reference to more liberalisation in FDI, labour, land and necessary legal changes for that. But details are not announced..
When the whole world is in lockdown, Modi has no other option other than appealing for becoming "Atmanirbhar" (self-reliance). On the other hand, the "Make in India" program, announced by him after ascending to power in 2014, has become a farce and that slogan was a cover for transforming India in to a dustbin/dumping ground for MNCs In view of the announcements yet to come, especially related to liberalisation in FDI, labour laws, land acquisition, etc., the fate of Atmanirbhar is not going to be different. Meanwhile, the 15 items taken up today are oriented towards rejuvenating middle classes with tax exemptions and money availability while nothing is there for the most deprived inter-state migrant workers. No mention on the transfer of GST dues to State Govts. COVID is an opportunity for shoring up the vote banks for the ruling regime. In the name of atma-nirbharatha, Modi is continuing his organized plan to hoodwink the masses to implement the RSS agenda. When Covid19 broke out, not perturbed by another wave of its outbreak, as WHO and many scentists are warning, Modi is trying to strengthen his corporate fascist rule, helping the mad race of the foreign and native corporate forces for further accumulation of natural wealth. So, showing any feeling about the plight of the millions of migrant workers and their families is alien to Modi.
K N Ramachandran
CPI (ML) Redstar
13th May 2020
We are just on the second day of a 21 day enforced lockdown declared by the Government. The Finance Minister has just announced a relief package of Rs. 1.7 lakh crores. At the current rate of exchange this package amounts to $22.7 billion. Compare this with the package of over $2 trillion announced by the USA, or about $ 200 billion announced by UK or even the $ 45 billion announced by Italy (which has an economy much smaller than India). Even the Canadian Government (where the population is 1% of India and less than most major Indian cities) is rolling out $ 27 billion in subsidies and $55 billion in credit to help those affected by COVID 19. Keep in mind that India will have many more people affected by the lockdown, firstly because of its vastly larger population and also because there are a far greater proportion of poor who are in need of relief measures. This clearly shows that the relief measures being announced are woefully inadequate.
Actually even the figure of 1.7 lakh crores is misleading. This includes the amount of Rs.31,000 crores which is already in the fund for benefit of construction workers which the State Governments have been asked to spend for construction workers. This is not a new benefit for construction workers but money which was already provisioned for their benefit.
It also includes Rs. 20 increase in the daily wage of MGNREGA workers. This will only be available to them when they can do the work of MGNREGA, which seems unlikely till the lockdown lasts. There are about 27 crores of MGNREGA workers[i]. Each worker is to benefit by Rs. 2000 in one year (given that he gets the full 100 days of work, which never happens). So 54,000 crores is for the MGNREGA workers. So half of the package – 85,000 crores (31000 crores for construction workers and 54000 crores for MGNREGA workers) is no contribution by the Government at all. In any case, MGNREGA workers were due for a rise in wages, even otherwise. Their rate of wages is among the lowest in the country today.
About 20 crore women who have Jan Dhan accounts will get Rs. 500 per month for 3 months. This amount is too little to provide any real relief. The free LPG connections to the around 4 crores beneficiaries of the Ujjwala Scheme gives each a benefit of about Rs. 2400 (deferred over about 3 months taking one cylinder per month). About 3 crores senior citizens and widows are to be given Rs. 1000 each. Again not a great amount. Besides this BPL households will get each month 5 Kgs of rice or wheat and iKg of dal free. Rural farmers are to get Rs. 2000 each as direct transfers to their accounts in the first week of April. Besides this the PF contribution for workers (both employers and employees shares) for MSMEs will be paid by the Government for the next three months. Take the best case scenario of a farmer who is a woman having a Jan Dhan account and also a widow. She would then get Rs. 3500 and three free gas cylinders for three months and 5 Kgs of rice or wheat and Ikg of pulse. She would get a further Rs 500 per month and another 5 Kg of rice/wheat and 1Kg of pulses for the next two months. This is too meagre an amount to provide any real relief in todays times. The monthly estimate by the 7th Pay commission for a worker’s family of two parents and two children is 42.75 Kgs of Rice/Wheat and 7.2 Kgs of pulses (dals)[ii]. The cost of just food and cloth for such a family was calculated as Rs. 9300 per month as on 1st January 2016. Today, this would translate to well over Rs. 10000. When you declare a total lockdown, it must be assumed that all opportunities for earning are stopped. People will have to depend solely on savings and aid.
The Indian economy before the lockdown was none too healthy. Recent figures had shown that unemployment was at the highest in 45 years[iii]. The GDP growth rate has already fallen to about 4.5% in the third quarter of the current financial year. The stock markets were in a crash mode for almost a year, banks have been turning belly up, the growth in the manufacturing sector was down to around 0.5% in the third quarter. All this shows the ailing health of the Indian economy. The signs were clearly there for the Government or anybody else who wanted to, to read.
In times of recession, it is not the large enterprises which suffer the most. It is the small and medium enterprises which have to bear the brunt, eventually being eaten by the bigger fish. Even more it is the workers in these enterprises who suffer the most. The capitalist can make up his losses just by selling the assets like land, which have appreciated so greatly that he is often left with more than when he started. For the workers – especially the workers in the smaller enterprises and informal sectors, the contract workers, casual workers, self-employed workers, small sellers, small farmers, there is nothing to fall back upon. If the economy is to shut down for a prolonged period of time, it is these workers and farmers who have to be provided for.
What could be done for such workers and farmers? Let us take the workers first. The Government has to ensure that they will be paid their wages for the full period of the lockdown with assurances that their jobs will be retained. How can this be ensured? In the UK, their Chancellor, Rishi Sunak has announced that the Government would pay 80% of wages to employees (till £ 2500 per month) who were not able to work due to COVID 19 in an attempt to see that their jobs are retained. This cover will be backdated to start fr[iv]om the beginning of March and will last for three months and may be extended if necessary, it was announced. Other measures include help to those unable to pay their rents. After this announcement by the Chancellor two further schemes to help business were announced on Tuesday: a new interest-free Business Interruption Loan Scheme for small and medium-sized firms and a Bank of England finance option for bigger businesses. A support package for self-employed people is also expected soon as already announced by the Government.
The USA already has a robust system of unemployment benefits based on what you have earned in the past 12 months and subject to a minimum of 50% of the average. This is to be extended to those who are unemployed due to COVID 19. At the time of writing this the US Senate has just passed a new bill for $1.7 trillion. This includes $1200 direct aid to all individuals who earn below $75000 per year, $250 billion for further unemployment aid including for self-employed and $300 billion for the airlines industry.
Even in Pakistan, Imran Khan yesterday announced a package of Rs. 1.2 lakh crores to help people affected by COVID-19. This is for a population of 20 crores – less than a sixth of India’s population.
About other countries, the Business Standard Article of 20th March had this to say :
- Paid reductions in working time/partial unemployment benefits, which compensate workers for hours not worked, are being expanded or simplified in France, Germany, Italy and the Netherlands
- The Chinese government has directed employers to not terminate contract of migrant workers in case of illness or containment measures
- Unemployment insurance benefits have been expanded in several countries, including the United States. In the Philippines, the Social Security Scheme is prepared to give unemployment benefits for up to 60,000 job losses
- Countries like Italy and Japan are giving financial support and simpler procedures for allowing teleworking
- Provisions for paid sick leave for self-employed in Ireland, Singapore and South Korea
In the face of such measures the relief being provided to workers and poor farmers in India is only illusory and a farce! We have to demand. better and more meaningful support. Such measures can also be easily taken. For instance, India may not offer 80% of the wages to workers, but it can certainly say a lesser percentage, say 50%! It not that, it could offer enterprises which keep their workers and give them full pay a tax sop or a moratorium on taxes as an incentive to keeping the workers. It may not be able to give full relief to the farmers but it can certainly set up a Minimum Support Price and can ensure that it itself buys all farm produce at the minimum support price. This is especially important when the Rabi crop is in the process of harvest and is expected to be a bumper crop. This will, of course lead to the question of stocking such produce but that is not a real problem. The FCI godowns today have more stocks than ever before. An article in the Economic Times of 26th March 2020 based on the statement of the Food Minister, Ram Vilas Paswan, says that though the norm is to store 21 million tonnes of food grains we now have over 58.49 million tonnes (30,97 million tonnes of wheat and 27.52 million tonnes of Rice). There is nothing to stop the Government from directly sending all this food grain to affected people. It has already agreed to give them meagre amounts like 5 Kgs per month for 16 crore families it only comes to less than 1 million tonnes per month. Why is the Government hoarding food grains at a time like this?
Where is the money for all this to come from? Barclay’s has estimated that the loss to the Indian economy by just the three week lockdown is of the region of $120 billion. We need not spend as large amounts as the US or European. However, we cannot make worries about fiscal discipline stop us from providing needed aid at a time like this. India is today sitting on the largest foreign exchange reserves in history. India has foreign exchange assets of $ 447.3 billion in total reserves of $481.9[v]. Even if the Government were to increase its aid by ten times, this would not even be half of the foreign exchange reserve. Such an amount could give every worker of the 47 crore workers in our country the minimum wage of Rs. 10000 per month for Three months. Even if not this source, in such a crisis any source could be used. Fiscal discipline cannot guide spending in such a time. Germany’s Angela Merkel has said that they will spend whatever is necessary. Same with other countries. We can capitalise (print the money if necessary though such measures may not become necessary) at such a time of crisis. We can worry about inflation later.
Com Sanjay Singhvi is the General Secretary of TUCI
[i] From the MGNREGA website see http://mnregaweb4.nic.in/netnrega/all_lvl_details_dashboard_new.aspx
[ii] See page 65 of the Report of the Seventh Central Pay Commission published here by the Finance Ministry https://www.finmin.nic.in/sites/default/files/7cpc_report_eng.pdf?download=1
[iii] Though the Statistics Secretary, Pravin Srivastava said that the figures were based on a new matrix and new design when the report was released in May 2019, he would not deny that unemployment was at a 45 year high. In any case the Labour Force Participation Rate, which is closely allied confirms that unemployment was at the peak for the past fifty years.
[iv] See the BBC page here for more details https://www.bbc.com/news/business-51982005?xtor=AL-72-%5Bpartner%5D-%5Byahoo.north.america%5D-%5Blink%5D-%5Bnews%5D-%5Bbizdev%5D-%5Bisapi%5D
[vii] According to the Reserve Bank’s weekly supplement of 13th March 2020. See https://m.rbi.org.in/Scripts/BS_ViewWssExtractdetails.aspx?id=49546
When all eyes are on the upcoming 2020-21 General Budget, according available macro-economic indicators, Indian economy has been experiencing an irreversible downward trend since the second quarter of 2018, from the claimed 7.6 percent GDP growth (financial year 2018-19) to 4.5 percent in September 2019 (financial year 2019-20). By mid-2019, unemployment growth rate has risen to 7.4 percent, the highest in five decades. And by December 2019, retail price inflation had reached 7.35 percent. Usually, in terms of conventional economic analysis, the continuance of such trends in more than four quarters is sufficient enough to characterise the phenomenon as stagflation defined as a peculiar situation of economic stagnation and huge unemployment coupled with high inflation. In fact, over the past six consecutive quarters since mid-2018, India has been in the grip of a full-fledged stagflation. In conventional economics, there is no remedy to resolve stagflation for obvious reasons. That is, any move to address unemployment and lack of demand arising from economic stagnation will lead to a further rise in inflation, while efforts to tackle inflation will aggravate stagnation.
Meanwhile, Modi regime and its ideologues are engaged in interpreting the grave situation as “cyclical” and not “structural” in character. According to this logic, India’s economic downturn is just an extension of world economic crisis. Thus, economies are cyclic in nature with periodic peaks and troughs. The protagonists of this view this view argue that no economy can keep going in one direction and is subject to the principle of ups and downs or boom and recession. Hence the current cyclical downtrend or the poor state of the economy can be treated with the standard neoliberal medicine currently in vogue. The policy thus is centred round a further boost toward unleashing the power of corporate capital with the state acting as its facilitator. The prescriptions therefore include a whole set of “supply-side oriented” investor-friendly measures directed at achieving “ease of doing business” such as reduction in corporate taxes, liberal and easy corporate financing, facilitating unfettered entry and exit of foreign corporate financiers, and so on.
This neoliberal-corporate orientation has been the hallmark of Modi government’s policies since 2014 which gathered further momentum under Modi.2. For instance, the first budget of Modi.2 in July 2019 followed by successive ‘booster packages’ that overshadowed the budget itself have channelled millions of crore worth of national assets and public money in to the coffers of the most corrupt corporate class. Stagflation is the direct outcome of the unbridled speculation and money-spinning businesses indulged by this tiny financial elite who owns lion’s share of the national income. More than three-quarters of the national income generated in India today is appropriated by one percent of the upper strata who is not at all interested in investing in employment-oriented productive activities. Modi’s policies since 2014 have evolved along with a close integration of the regime with these richest crony capitalists. Its outcome is an unprecedented wealth concentration in the hands of a billionaire class, horrific levels of inequality and destitution of the broad masses of population, speculation-induced sky-rocketing prices of items of mass consumption, massive unemployment and hitherto unknown levels of corruption.
Of course, like all fascists, Modi also came to power effectively using populist slogans pertaining to employment generation and elimination of corruption thereby hoodwinking the people along with the unleashing of Hindutva polarisation. For instance, he promised the creation of 20 million additional jobs every year. He assured people of depositing Rs.15 lakh each in their accounts after bringing back black money hoarded in foreign tax havens. After coming to power for a second time, he proclaimed the goal of transforming India in to a $ 5 trillion economy within 5 years, i.e., almost doubling the present $ 2trillion economy. To achieve this, his policy managers envisaged an annual average GDP growth rate of 8 percent.
But all his claims are now exposed as mere post-truth statements. No new employment opportunities have been created. On the other hand, unemployment today is the highest in five decades. GDP growth rate is plummeted to 4.5 percent (according to some US-based experts, it may even fall towards 3.5 percent) and is even below that of neighbouring Bangladesh, Nepal and even Pakistan, such that the goal of achieving the target of $5trillion by 2024 has become a mere illusion. Under Modi regime, over $1trillion (more than Rs. 72 lakh crore) in black money being hoarded abroad by wealthy Indians (BJP leader Subramanian Swamy’s estimate), India has become the most corrupt country in Asia. Unemployment growth rate at 7.4 percent, as mentioned in the beginning, has become alarming. The wealth appropriated by 63 billionaires at Rs. 28.97 lakh crore is more than Modi’s 2019 budget estimates worth Rs. 24.42 lakh crore. Under Modi, based on Gini coefficient (a statistical tool to measure inequality) India has become the second most unequal economy in the world after Russia. According to Oxfam, inequality is fracturing India such that today 57 billionaires control 70 percent of the country’s wealth.
Exports have gone down and the external value of rupee under Modi has undergone an unprecedented steep fall. When the external value of rupee under UPA regime was approaching Rs. 60 = $1, Modi accused the central government as anti-national. Now following his 6-year rule since 2014, it has now plunged to Rs.72 = $1, indicating the extent of neo-colonial drain from India—much larger than the “colonial drain” estimated at $71 trillion during two centuries of British rule over India. The much trumpeted FDI-depended “Make in India” initiative that envisaged to boost the ratio of manufacturing to GDP from 17 percent to 25 percent has become not only a non-starter, but that ratio itself has gone down below 13 percent. In fact, the country is going through an unparalleled deindustrialisation and agricultural retrogression. In the same vein, the Digital India Initiative that Modi proposed with much fanfare is in doldrums.
To be precise, this economic collapse of India as manifested in what is called stagflation cannot be explained as a mere extension of world economic recession or as a “cyclical” one. For, as neoliberal centres have put on record, when Modi came to power in 2014, India was the “best performing” economy of the world. It was from that relatively better off position that India was transformed as the worst performing economy today. It is directly connected with a series of onslaughts facilitating the reckless loot and plunder of the country and its people by the most corrupt corporate thugs and crony capitalists under the umbrella of the Hindutva fascist regime. The first of these anti-national offensives was demonetisation which has no economic logic either in neoclassical or in neoliberal theory or practice, an aspect clearly pinpointed by several world-famous mainstream economists and experts. It was a traitorous and brutal experiment designed and superimposed by Modi in unholy nexus with criminal-corporate global centres enabling the financial elite to centralise nation’s wealth in their hands by sucking out the life blood of the Indian people. Demonetisation will be recorded in history as a classic post-truth program since it was imposed in the name of eliminating black money and counterfeit notes, but led to the biggest accumulation of both in India. Its economic outcome by blocking the entire circulation system was a total paralysis and freezing of all productive activities on the one hand, and a further ballooning of the cyber-based speculative sphere led by corporate financiers.
The second death-blow has been the super-imposition of GST that transferred economic power to the corporate class through an alteration in country’s federal character. Together with Demonetisation, GST has led to a collapse of all productive spheres including agriculture, medium and small industries, informal and organised sectors where more than 95 percent of the Indian people find their sustenance, leading to utter collapse of the purchasing power of the broad masses. At a time when the superrich billionaires with whom the country’s wealth is concentrated are reluctant to invest in job-oriented productive investment, GST by putting the tax burden on the small scale sector and retailers led to further shrinkage of not only production but consumption too. Paving the way for a breakdown in tax mobilisation and reduction in state finances, GST also resulted in further reduction in public expenditures social service spending again leading to economic downsizing and stagnation. Very revealingly, at the behest of neoliberal centres, when Modi regime was initiating steps towards GST in mid-2017, confronted with an economic breakdown, Malaysia was withdrawing from it.
In addition to Demonetisation and GST, looting of public sector banks under the euphemism of NPAs, appropriation of precious national assets of PSUs through disinvestment, budgetary and extra-budgetary fund transfers, booster packages, central and state grants for PPP projects, plunder of natural resources, speculation in money and stock markets, hoarding and black marketing, and other direct and indirect cash receipts, concentration of wealth in the hands of a few financial elite reached epic proportions. On the other hand, collapse of employment together with a whole set of austerity measures and enforced reduction in real wages, vast majority of the common people are subjected to unprecedented poverty, deprivation and destitution. Thus, closely integrated with the Hindu Rashtra project through CAA, NPR and NRC has been the superimposition on the people of the tyranny of the most reactionary corporate financiers allied with the Hindutva forces.
Modi.2’s second budget to be presented to parliament on February 1 is being drafted at this critical juncture. Meanwhile, the IMF after taking serious not of the grave economic situation of India had hinted at the orientation of the forthcoming budget including an advice for further opening up of the economy with a more liberal FDI regime. On January 9, Modi himself at NITI Aayog has taken the initiative for the forthcoming budget through a brainstorming discussion with around 30 top economists and policy experts. Very revealingly, the finance minister Nirmala Sitharaman was conspicuously absent in that discussion (according to observers, pre-budget discussion without finance minister having no precedent was shocking!)in which other leading ministers such as Amit Shah, Nitin Gadkari, Piyush Goyal, Narendra Singh Tomar were present. According to reports, the discussion was mainly centred on real estate development, PPP projects in social overheads and infrastructure projects along with a series of measures to boost foreign and domestic corporate investments through investor-friendly measures including a further reduction in corporate taxes. Of course, Modi’s interaction with top business tycoons is an ongoing process. Even at this time of stagflation, Modi is reluctant to interact with the representatives of peasants, workers, small traders and other sections who bear the burden of the worst-ever crisis. Meanwhile, a decision was also taken to have another round of fund appropriation worth Rs. 45000 crore from RBI.
The stagflation in India which is rooted mainly in country-specific domestic factors and directly connected with the pro-corporate, fascist policies of the Modi regime is currently a topic of discussion even among neoliberal experts. For instance, according to Arvind Subramanian, India’s former Chie Economic Adviser, Indian economy is currently moving towards the ICU. To quote him: “Clearly, this is not an ordinary slowdown. It is India’s Great Slowdown, where the economy seems headed for the intensive care unit, and”, and all indicators are “close to negative territory.”However, even such experts like Subramanian and Reguram Rajan who are opposed to the majoritarian Hindutva fascism now led by Modi, on account of their adherence to neo-liberalism, have no solution to the crisis confronting India. While vehemently criticising Modi, they fail to recognise that the material foundation of fascism including Hindutva fascism is neoliberal-corporatisation itself. Being proponents of neo-liberalism, their criticism is centred round the question of implementation only. It implies that the present crisis can be resolved through a replacement of the existing regime. Though some among them speak on increasing productive capacity, employment generation and even real income of the people, they are reluctant to recognise that the logic of neoliberal corporatisation totally lacks such an orientation.
Since Modi’s advisers, though in varying degrees, also belong to this category, his interactions and brainstorming sessions with corporate chieftains and experts intended to formulate the blueprint for the forthcoming budget are bound to put still more heavy burdens on the backs of the common people. In the guise of boosting investment for overcoming stagnation, the General Budget will resort to several fiscal measures for pumping more funds in to the coffers of the parasitic billionaire class. Under the cover of fighting economic contraction, still more pro-corporate, neoliberal measures along with further direct tax deductions can be expected for boosting the stock, financial and real estate and other money-spinning sectors. On the other hand, in the name of curtailing prices and keeping inflation under check, public spending on education, health and other social expenditures will be cut. Ingenious methods for salary-wage freeze including many austerity measures also cannot be ruled out. Other things remaining the same, the coming budget with still more far-right policies including a more stringent GST regime is going to deepen and widen the stagflation that is already set in. There little sense in expecting anything from the forthcoming budget of the far-right Hindutva fascist regime in the direction of alleviating the multi-dimensional deprivation of the broad masses of working and oppressed people in India. The working class, peasants, retail traders and all toiling and oppressed masses will be thrown in to a ‘do or die’ situation with no other option except resisting and defeating the corporate-saffron menace.
When Modi.2 was ascending to power, we wrote in the beginning of June, 2019: “Then the outcome is an extra-ordinary galloping of financial speculation led by the most corrupt corporate class under whom the so called development itself is transformed in to a by-product of money-spinning businesses throughout. Modi’s second coming implies a further opening up of the floodgates of ultra-rightist, neoliberal corporatisation subjecting the working classes and all oppressed to the domination of the most degenerated financial class in every sphere. Its outcome shall be unprecedented wealth concentration in the hands of the most corrupt tiny financial elite and intensified pauperisation and loss of purchasing power for the vast majority.” (“India’s Impending Crisis”, Red Star, June 2019). Now within three months of Modi.2, India is in that horrific situation. Today, even the saffron-corporate media which till now have been indulging in propaganda blitzkrieg on Indian economy’s concocted fastest growth under Modi are now forced to recognise it as in deep recession. As such, contrary to the hollow claims of 8 percent GDP growth claimed by official agencies at the time of Modi.2’s maiden budget in the beginning of July, the growth rate has now plummeted to just half of what they claimed a few months back.
As is widely conceived now, India is confronting the biggest economic plunge since 1947, even as the saffron leaders continue to boast of making the country a $ 5 trillion economy in 2024. Agriculture and industry are shrinking and unemployment is the biggest in five decades. Exports show the biggest decline in seven decades while external value of the rupee at Rs.72=$1 is the lowest-ever. Consumer market including the much trumpeted fast moving consumer goods (FMCG) sector is in doldrums. Transactions pertaining to real estate, housing, automobiles, and textiles are at their lowest level. But the most critical aspect of the economic downturn as reflected in the inability of the common people even to purchase a five-rupee biscuit packet is just casually mentioned in the mainstream discussion. Under the UPA regime, Arjun Sengupta, the Planning Commission expert had estimated that 83 percent of the Indian people earn only Rs. 20 or less a day. However in view of the prevailing historic slump of Indian economy, the percentage of pauperised population devoid of even Rs.20 per day will definitely have gone up. In fact, the plight of the most deprived including the peasants, the tillers of the soil, and the unorganised or informal working class who constitute the largest chunk of the toiling masses in India are the least discussed in corporate media.
However, the entire mainstream analysis of the economic collapse is from a neoliberal”supply-side” orientation implying that it views the disease affecting the economy from the perspective of corporate investors and the plausible threat to their wealth accumulation. On the other hand, Modi’s far-right analysts are reluctant to approach the downturn starting from an evaluation of the abysmal fall in consumption or consumer demand, which depicts more than 50 percent decline in the first quarter of the financial year 20019-20 compared to that in 2018-19 according to World Bank statistics. Obviously this is due to the unprecedented downfall of people’s real earnings and purchasing powerarising from unparalleled job loss everywhere. Therefore, common sense demands an urgent intervention on the part of govt. to overcome the deep recession in India through picking up mass consumption demand byboosting employment-oriented productive spheres such as agriculture, industry, manufacturing, etc.
On the other hand, the sole purpose of Modi regime’s maiden budget presented on July 5, and the four successive ‘booster’ or ‘stimulus’ packages (or so called mini-budgets, quite unprecedented in the economic history of nations) announced since August 23, has been to channel more and more national wealth and people’s money directly in to the coffers of the most corrupt corporate plunderers who themselves are responsible for the present crisis. Meanwhile, along with the Modi govt. that identifies itself as a ‘facilitator’ of corporatisation, both corporate media and neoliberal ideologues also are cunningly engaged in camouflaging the fact that the present stagnation is corporatisation-induced. It is well-recognised under neoliberalism that the so called investors who have got unfettered freedom and access to all corrupt means in the economy are interested only in speculative and money-spinning activities along with direct appropriation national wealth including natural resources that yield fabulous profits within the shortest time, and that both employment and share of wages in national income are slowing down at an alarming rate.
The soaring corporate profits and wealth accumulation are systematically backed by what are euphemistically characterised ‘ease of doing business’, ‘investor-friendly measures’ etc. encompassing biggest-ever corporate tax exemptions and direct wealth transfers to the super-rich. In India, for instance, this reactionary process under Modi.1 and Modi.2, have led to a situation where more than three-fourths of the national wealth generated is now appropriated by one percent of the top billionaires. This corporatisation process is also facilitated by continued by a series of fiscal measures pertaining to expenditure-reduction and austerity steps, casualization or informalisation of the workforce and deliberate reduction in real wages and an outright plunder of nature. While these steps result in biggest concentration of wealth in a few billionaires and multi-dimensional poverty for the broad masses they have transformed India as one of the most corrupt countries in the world today. While these trends constitute the essence of the crisis today, the corporate-saffron fascist regime, the co-opted media, and neoliberal intellectuals revealingly keep silence on the concrete Indian situation as experienced by common people.
As is obvious, the successive mini-budgets or booster packages that follow the July 5 General Budget aimed at directchannelling of public money appropriated from the peoplein to the coffers of the corrupt-parasitic billionaires and super-rich classes, cannot in any way resolve the unprecedented economic slowdown. In accordance with the prevailing neoliberal logic, itunleashes the ‘animal spirits’ (a phrase frequently in use among neoliberal spokespersons today) of the anti-people and reactionary financial class further enabling them to appropriate ever-greater share of country’s shrinking output as manifested in the skyrocketing stock and financial indices thereby leading to hitherto unknown levels of poverty and destitution of the vast majority of working and oppressed people. In other words, the outcomeof all the fiscal and monetary measures implemented in under the guise of alleviating the crisis is an aggressive transfer of national resources to corporate looters imposing heavier burden on the backs of toiling people.
Therefore, every intervention on the part of Modi regime to resolve the crisis is nothing but an intensification of the corporatisation-induced recession with wider and deeper manifestations. In other words, the economic collapse is used as guise for strengthening the neoliberal regime in more vicious forms. No doubt, neoliberal credit rating agencies like Moody’s and neo-colonial institutions led by Fund-Bank combine are also instigating the Modi regime to resort to a further deepening of the far-right economic policies in this regard.
For instance, the latest ‘booster dosage’, the fourth in the series,comprising fabulous corporate tax-exemptions announced on the eve of Modi’s Houston program where he accomplished one of the biggest sell-outs of India to US imperialism, led to a sudden ballooning of the stock market that skyrocketed stock indices by more than 2000 points adding the largest single-day speculative gain worth more than Rs. 6 lakh crore on September 21, 2019. Revealingly, this has nothing to do with increasing productive capacity, employment generation and purchasing power of the common people. Rather, these measures trumpeted as pro-investor measures act as a drag on the job-oriented productive economy.
As such, the crux of the problem today is to politically understand that with every step towards boosting corporate accumulation, not only the economy is collapsing, but the scope of manoeuvrability within neoliberalism is increasingly exhausting. Thus it is clear that any attempt at resolving the crisis is to be sought outside the logic of corporatisation, or rather a reversal of Modigovt’s blind adherence to neoliberalism solely oriented to the ultra-wealthy sections. That implies no short-cut but calls for a political resolution with a program of reversing the far-right policies leading to the oppression of corporate-financial class over the people. So long as that political alternative is delayed, every worsening of the crisis that is inevitable will result in the ruling regime continuing to put far more heavy burdens on the backs of the people in manifold ways on the one hand, and utilising the economic collapse itself as the foundation for corporate-saffron fascism on the other. Along with its divisive, majoritarian Hindutva offensive, fascism in India too, as elsewhere, is the super-imposition of the tyranny of the most reactionary, utterly parasitic super-rich corporate classon the broad masses of toiling people. It is definitely a ‘do or die’ situation before Indian working class and oppressed people and there is no other option except to resist and defeatthis terrorist dictatorship of saffron-corporate capital.
“Fourth Booster” is also Incapable to Revive the Economy : Scope of Manoeuvrability is Fast Depleting
Since the 3 booster packages announced by Modi regime since August 23 aimed at unleashing the “animal spirits” of the corporate looters have done nothing to revive the sinking economy, today, Nirmala Sitharaman, the finance minister has come out with a fourth booster shot to shore up investor sentiments leading to a sky-rocketing of the Sensex by 1650 points increasing the wealth of corporate speculators by around Rs.2. 5Lakh crore, the highest single-day gain in Indian stock market, while these lines are written. Included in this booster shot are a further reduction of the corporate tax rate from 25 percent to 22 percent for existing companies and to 15 percent for new companies, reduction of minimum alternate tax from 18.5 percent to 15 percent, exemption of listed companies from buyback tax, surcharge exemption for speculative (capital) gains made by foreign speculators (FII), etc., that will result in annual revenue loss of Rs.1.45 lakh crore to govt. in addition to the Rs.8.99 lakh crore corporate-tax exemptions announced in the July 5 Budget and a series of direct wealth transfer measures announced in the stimulus packages announced since August 23.
However, according to the logic of corporate wealth accumulation prevailing today, this 4th booster package that is announced as part of mounting crony capitalism—the unholy nexus between the most corrupt corporate capital and the neoliberal state— is not in any way going to reverse the economic downturn. Today India is in a vicious corporatisation-stagnation trap resulting in a total breakdown of the economy. The exponential growth of the parasitic-corrupt corporate class at the expense of employment-oriented genuinely productive activities threatening the very sustenance of the vast majority of toiling people has been the essence of the crisis today. Therefore, boosting up the very same anti-people corporate-financial class through repeated fiscal and liquidity manipulations will not contribute anything in the direction of alleviating the systemic crisis; rather it is oriented towards an aggravation of the economic collapse further. It is also a clear symptom that the space for manoeuvre is fast depleting under neoliberalism.
Further, the injection of lakhs of crores of people’s money in to the coffers of the corporate plunderers who themselves are responsible for the present historic crisis, without doing anything in the direction of reviving the real incomes and purchasing power of the vast majority of people who are subjected to hitherto unknown levels of deprivation and destitution is an outright fascist act too. It is the super-imposition of the tyranny of the most reactionary, utterly parasitic super-rich corporate class integrated with saffron forces on the working class and the oppressed. It is high time.
Where Modi-2 Government is Leading the Economy to ?
After officially acknowledging India’s historic economic downturn in 70 years, on August 23, 2019, finance minister Nirmala Sitharaman has announced a series of initiatives including further abolition of corporate taxes and many wealth transfer schemes to the superrich completely ignoring the unprecedented deprivation and destitution borne by the vast majority of common people. Till now, the govt. spokespersons have been working overtime to depict a rosy picture of the economy even manipulating data with official agencies. However, this ‘window dressing’ got exposed itself when global credit rating agencies like Moody’s Investors Service and even the Bretton Woods twin (IMF-World Bank) themselves have come forward strongly confirming a well-defined recession in India. It is in this context that, following Niti Aayog vice-chairman Rajiv Kumar’s comment on the threatening financial system and particularly in the midst of Modi’s world tour, finance minister Nirmala Sitharaman has reiterated her govt’s unwavering commitments to corporate capital as announced in the maiden budget along with several fresh corporate-investor friendly measures.
The package of announcements include a series of tax exemptions and tax rolling backs including withdrawal of capital gains tax and surcharges on corporate speculators— both foreign (FPIs) and domestic— in stock markets, infusion of an additional Rs. 70000 crore into banks enabling them to lend another Rs. 5 lakh crore to corporate sector, dilution of violations of Corporate Social responsibility as a mere civil offence, pursuance of a soft approach to tax evaders, empowering bank officials to pursue a soft approach to corporate defaulters and so on, all in essence aim at further encouragement to ‘ease of doing business’ and boosting corporate animal spirits.
While such a mega booster is imparted to the corporate billionaires and foreign speculative investors for sky-rocketing the stock indices, there is not even a mention on the ground reality of the economy or on the extent of deprivation to which vast majority of the toiling people are subjected. In fact, the whole economy has been shrinking on account of withdrawal of productive investment by both public and private sectors, and as a manifestation, post-GST tax collection itself has gone down by 10 percent. Indian rupee’s biggest ever depreciation is also integral part of the all round economic collapse. And even in the productive sphere that is sustaining, on account of the informalisation and casualization of workforce unleashed by corporate capital in its mad pursuit of super exploitation, the real earnings and purchasing power of the workers are shrinking at an alarming rate, even as unemployment rate is the highest in five decades. At the same time, under the Modi regime, with more than 80 percent of the national wealth generated being gobbled up by just one percent of the most corrupt corporate class, India has become one of the most unequal countries in the world.
Meanwhile, under such pro-corporate measures as Demonetisation and GST that while sucking out the life blood of the vast majority depending on cash-based informal and unorganised sectors on the one hand, and fattened the superrich on the other, corruption has grown to such an extent making India the most corrupt country in Asia surpassing Thailand and Pakistan. While there is no dearth of anti-corruption rhetoric from rooftops, the ultra-right neoliberal policies of the corporate saffron regime has done nothing to unearth the accumulation of vast sums of black money by the ultra-wealthy sections in offshore and domestic tax havens. And a major factor behind the unprecedented liquidity crunch that the economy confronts today is the diversion of funds mobilised from various sources to intricate, tax-evading underhand deals.
Along with this, intensified downsizing and rollback of the state sectors coupled with collapse of industry and agriculture and drastic reduction in social spending have led to absolute reduction in the consuming/purchasing power of the people leading to lack of ‘effective demand’. Ironically, even while the economy in general is experiencing a downturn and common people are subject to more deprivation, corporate billionaires are successful in shoring up their super-profits. For obvious reasons, it is well-nigh impossible for Sitharaman even to mention these underlying factors that led to the present economic tsunami in India with its unfolding repercussions in the days ahead.
The slew of neoliberal-instigated tax-liberalisation and wealth transfer measures intended to further replenish the corporate looters now pursued by the Modi regime that resemble a ‘mini-budget’ are quite reminiscent of the “quantitative easing” and “rescue packages” pursued by the imperialist powers ranging from the US and EU to China following the 2008 global economic meltdown. According to estimates, for instance, immediately after the financial crash, around 25 percent of the GDP of US was channelled in to the coffers of corporate-financiers who themselves were responsible for the crisis. But the crisis is still continuing. The outcome of the booster dose now imparted by Modi.2 is also going to be the same.
As the global economic downturn following the 2008 financial breakdown is a continuing process, India’s sudden economic collapse under Modi regime, though connected with many external factors, is different in many respects. For, as highlighted by several international and Indian experts, the Indian economy had been ‘relatively immune’ from the global meltdown of 2008 and as can be guessed from several studies such as the recent one by the Economic Research Department of SBI, the Indian economic scenario was relatively better on the eve of Modi’s ascendance to power in 2014.
However, as reported in the media, now apart from manipulation of data, a despicable move also is there to erase such statistics which are unpleasant to the regime from govt websites altogether, even as under Modi.2 alone Indian stock markets have experienced a whopping loss worth of more than Rs. 15 lakh crore within a span of just three months. This bursting of the bubble itself is a symptom of an extreme crisis where even the corporate cronies integrated with the saffron-fascist regime are losing faith in the economy. That is, the extent of the historic collapse of the Indian economy is incomparable with the contemporary situation elsewhere including that in the leading imperialist powers US and China which are engaged in an unprecedented protectionist tariff/trade war.
Therefore, the ongoing economic collapse is inseparably linked up with the far right shift in economic policies under Modi regime. The root cause of the crisis today is the pan-Indian extension of the Gujarat model of aggressive corporatisation that took away even namesake barriers to corporate plunder. Indian economy today is engulfed in a vicious cycle of corporatisation-stagnation trap. No amount of ‘window dressing’ as that now resorted by the regime can drag the economy out of this crisis which is bound to assume further dimensions. What requires is a fundamental and immediate reversal of the explosive growth of the most corrupt and parasitic corporate class sucking out wealth from the real economy through manifold ways while remaining at the sphere of speculation.
And as the crisis intensifies, along with putting heavier and heavier burdens on the shoulders of the people, all avenues at the disposal of corporate-saffron fascism are deployed not only against workers and all oppressed including dalits, adivasis, women and minorities, but also on political opponents and dissenters. Obviously, there is no shortcut, and the only option is a political alternative capable of resisting and defeating this horrific situation. n