Dear Comrades! Today we are commemorating Comrade Engels at a critical juncture. The world, the entire humanity, is now entered in what is called the anthropocene epoch. That means the planet’s ecosystem is in an unsustainable situation and commemoration of Engels and his great works assumes paramount significance in this context. We know that as co-author of Marx, Engels had published many works jointly with Marx. However, in pursuance of the relevance of our present discussion, let me confine to the importance of Engels as the leading Marxist theoretician and pioneer in applying dialectical materialism not only to political economy and history but even to nature, science and society.
There is an oft-repeated allegation that Marxism’s concern was only with economy and not environment and ecology and that it was oblivious of the destructive impact of capital accumulation on nature. As such, postmodernists, post-Marxists and even neo-Marxists together with liberals and NGO theorists are working overtime to put the stamp of technological optimism, materialistic determinism, etc. on Marxism. But this is a baseless allegation. From the very beginning, the concern of both Marx and Engels was not only on the exploitation of workers but also on the plunder of nature by capital. For instance, in Capital Volume I, Marx has clearly pointed out how the two sources of human existence, i.e., labour and nature (soil) are made unsustainable or destroyed by the onslaught of capital.
In fact, Engels in his book The Condition of the Working Class in England published in 1845 had taken up this issue in a detailed manner. In this classic work, Engels while explaining capital‘s brutal exploitation of workers under the factory system, had brilliantly explained the horrendous environmental and epidemiological conditions imposed by Industrial Revolution. Engels in his book has beautifully explained how capital accumulation is associated with periodic epidemics, toxic contamination, pollution, and all around devastation of the working class including poor nutrition and high mortality rate arising from high levels of environmental and ecological destruction as capitalism advanced. That is, the idea of Engels that capitalism has always been connected with ecological destruction and plunder of nature was not casual but inalienable to Marxism from the very beginning. And Engels could be seen carrying forward this perception in his 1878 book Anti-Duhring too.
Of course, after the death of Marx in 1883, Engels had to edit and complete Capital Vol. II and Capital Vol. III (respectively published in 1885 and 1894) along with organising and publishing the uncompleted notes of Marx as Theories of Surplus Value also known as the Fourth Volume of Capital. Engels had to take up this huge task while performing his critical role as the foremost authority, theoretician and propagandist of Marxism including his task of organising the working class till his death in 1895.
Therefore, Engels did not get enough time to concentrate on the book Dialectics of Nature which he started to write in 1872. Even though he worked on it for 10 years, that is up to 1882, it remained an unfinished work, and after the death of Marx, Engels had little time to concentrate on it. Hence before his death, Engels entrusted the manuscripts of Dialectics of Nature to Bernstein who was not interested in publishing it. However, in 1924, Bernstein handed it over to Einstein who could grasp the importance of the book. As suggested by Einstein, it was Riazanov who first brought out a rudimentary form in 1927 and a final form appeared in 1935, and ultimately, the full fledged edition of Dialectics of Nature with JBS Haldane’s Preface was published in 1939. According to Haldane, who admired Engels‘ application of dialectics to physical and natural sciences, had Engles’ method of thinking which no environmentalist at that time could even think been known earlier, the transformation of ideas in science would have been smoother and beneficial both for scientists and activists.
Of course, mechanical materialists and positivists have alleged that Engels in Dialectics of Nature had emphasised on materialist conception of nature instead of history and have criticised Engels for, what they said, not taking dialectical materialism in the proper perspective. Such a criticism is far-fetched since, as Haldane pointed out, while exposing the destructive dimensions of unhindered encroachment on nature, in Dialectics of Nature Engels himself had highlighted the interrelationship among science, nature, society and development from a dialectical-historical perspective. For, drawing lessons of the so called development ranging from ancient civilizations of Mesopotamia, Greece and Asia Minor and Middle Ages to Colonialism, Engels vividly explained how human intrusion in to nature and destruction of forests that reached its zenith in the irreparable damages to tropical forests in Africa and Asia had destroyed the very basis of human existence. Underlying in this analysis is a dialectical link between oppression and exploitation on the one hand and destruction of nature on the other. Of particular relevance in this context is Engels’ reference to the so called primitive accumulation that Marx explained in Capital and the environmental degradation associated with it.
Though Dialectics of Nature was published after Lenin, the Marxist perspective on development that called for a harmony with nature had been there in Lenin’s agenda from the very beginning. As a reflection of this approach, vast tracts of protected land called Zapovedniks were kept forever wild as acknowledge-ment of environmental protection, and Lenin himself signed this into a law in 1921 to put the same on legal footing. This trend continued such that even when Soviet Union collapsed in the late 1980s, it had 330000 square kilometres of Zapovedniks. And in the industrialisation debate of the 1920s, though this perspective on ecology was there, a one-side emphasis on development and theme of Catching up with the West slowly got prominence followed by the entry of American experts and Fordist methods of factory organisation in to Soviet Union in the 1930s. After the 1970s, the so called modernistic conceptualisation that development is an absolute principle got official acceptance in China too.
As such, by the 1970s when the collapse of welfare capitalism coupled with mounting environmental problems pushed imperialism into a an irreversible global crisis, even official agencies like the UN and a whole set of NGOs were forced to come forward putting forward certain reformist propositions for the environmental question along with neoliberal prescriptions. However, on account of the ideological political setbacks suffered by the International Communist Movement, in spite of the Marxist contributions of Engels in this regard, the Left could not take up the required task in the proper perspective. On the other hand, together with unhindered financial speculation which is the major form of neoliberal accumulation, unhindered plunder of nature also became a major avenue of super-profit by corporate capital. And with the turn of the 21st century, as I have mentioned in the beginning, this has now driven humankind to an ecological catastrophe quite characteristic of an anthropocene epoch which is manifested in the frequent emergence of zoonotic viruses, the latest being COVID-19.
In this critical situation, it is indeed heart-warming that Engels works pertaining to science, nature and society are getting more attention from both Marxists and different sections of well-meaning people the world over. The ecological consequences of capital accumulation under colonialism that Engels unravelled especially in Dialectics of Nature under colonialism in the 19th century have grown further and become horrific now. Thus together with the commodification of labour, neoliberal corporatisation has now accomplished a commodification of nature too. Therefore, in conformity with the positions already laid down by Marx and Engels, the working class and oppressed people today have to strive for a de-commodification of both labour and nature.
Under today‘s profit-led development paradigm, the sustenance of humankind is at stake on account of the onslaught of capital both on labour and on nature. It is from this perspective that CPI (ML) Red Star in its Party Program has incorporated the contradiction between capital and nature and ranged it along with the other major contradictions including that between capital and labour. Therefore, along with the resolution of the other major contradictions, resolving the contradiction between capital and nature has also become the task of communist revolutionaries and the International Communist Movement as a whole. With these words, let me conclude, comrades.
Thank you. Revolutionary Greetings to All.
(Presentation by Comrade PJ James)
Today Indian economy is confronting the worst contraction on record. Officially also, it is acknowledged as historic down-turn in 70 years. It is a fact that COVID-19 came when imperialism has been still reeling under the impact and repercussions of the 2008 global crisis. Now the pandemic has driven the world economy to a state of crumbling, the dimensions of which are surpassing that of the Great Depression of 1929-33.For instance, based on October 2020 database, IMF estimates a 4.4% contraction in world output in 2020. Except China which is expected to mark a growth rate of 1.9%, all leading countries will contract or represent minus growth- US(-4.3%), Japan(-5.3%), Euro Area(-8.3%) and UK(-9.8%). On the other hand, while the average growth rate of the so called “developing countries” is predicted to contract by -3%, that of India will be a staggering -10.3%.
According to Swiss bank UBS, by the dawn of 2020 itself, half of world’s net wealth belonged to the top 1% of the superrich; and top 10% of the population held 85% of total global wealth. Conversely, 90% of the people have only 15% of world’s wealth (and top 30% holding 97% of the total wealth). During the pandemic, world’s billionaires whose number rose from 2158 in 2017 to 2189 by mid-2020 increased their wealth by 27.5% during April-July 2020, to a record high of $10.2 trillion.
Its global consequences as manifested in surging poverty and unemployment are horrific. While IMF predicts a fall of an additional 90 million people in to extreme deprivation in 2020, ILO calculates an unemployment/underemployment of up to 2 billion people (58% of the world’s total labour force of 3.46 billion in 2019) in 2020 itself. According to the World Food Program, on an average, around 9 million people are dying annually from famine and hunger-related causes. Now, on account of the pandemic, this figure may skyrocket as there will now be 1.5 to 2.0 billion famine-vulnerable people, many of whom may die.
Indian Economy Facing The Worst-Ever Contraction
However, the present collapse of the Indian economy, as noted in the beginning, is quite unparalleled and the worst on record. Both International agencies and official Indian sources have acknowledged this. In continuation of a 24% contraction or negative growth for the first quarter of 2020, the IMF, in its latest World Economic Outlook, predicts a 10.3% contraction for the entire financial year ending March 2021, revising its earlier prediction of a 4.5% decline. This additional 5.8 percentage-point downgrade of Indian GDP is the worst in the world. Strikingly, IMF’s outlook for India is worse than RBI’s prediction of a 9.5% decline in GDP in the current fiscal year. A comparison of the sector-wise official statistics pertaining to the first quarter of the previous year (2019-20) with that of the current year, gives a more concrete picture. For instance, except agriculture, forestry and fishing (that shows a growth of 3.4% in the first quarter of 2020-21 compared to 3.0% growth in 2019-20), all other sectors are steadily contracting. Thus, 2020-21 quarter one contraction for mining and quarrying was -23.3% (4.7% in 2019-20), for manufacturing, it was -39.3% (3% in 2019-20), electricity, gas, water supply and other utility services -7% (8.8% in 2019-20), -50.3% (5.2% in 2019-20), trade, hotels, transport, communication, broadcasting services -47% (3.5% in 2019-20), financial, real estate and professional services -5.3% (6.0% in 2019-20), and public administration, defence and other services -10.3% (7.7% in 2019-20).
As such, according to independent analysts, the crisis is more deep-rooted and worse outcomes are in store. For instance, India’s former Chief Economic Advisor and World Bank Chief Economist Kaushik Basu have predicted the economy to shrink by around 12% in the current year. According to Arun Kumar, another well-known economist, India’s GDP decline in the current year will be around 50% and not 24% as officially claimed. This is because of the devastation of India’s unorganised/informal sector that provides 94% of total employment and yields 45% of total output produced in the country. Contradicting CMIE data, Arun Kumar also puts the actual unemployment figure at 20 crore. According to him, unless appropriately managed through policy interventions, the official optimistic projections for 2021 will remain as wishful thinking.
The massive decline of around 24% in India’s GDP, as officially estimated, in 2020 April-June quarter makes the size of GDP almost the same in size as that in the same quarter in 2015. Hence it can be said that the GDP level has leaped back by 5-6 years, more or less equal to the same level when Modi came to power. As a result, the past half-a-decade under Modinomics may be characterised as lost years for India. A comparison between Bangladesh, India’s neighbour would be more illuminating in this regard. According to IMF data, on an average, India’s per capita GDP has been 24 percent higher than that of Bangladesh during the last 5 years. But by mid-2020, India’s per capita GDP in nominal US dollar terms was $1876.53 (Rs. 1.25 lakh approximately) compared to $1887.97 for Bangladesh.
Consequently, in the 2020 Global Hunger Index prepared jointly by World Hunger Aid and Concern Worldwide, India’s rank slipped to 94 (among 107 countries) from 55 (among 76) in 2014. Most of the South Asian countries — Sri Lanka (64), Nepal (73), Bangladesh (75), Myanmar (78) and Pakistan (88) — are better off than India in this regard. As its manifestation, with 17.5% of world population, India is home to 22% of world’s most poor and hungry people. As a direct outcome of this destitution, with 37.4% of the underweight children, India has the distinction of having number one position in the world in this regard too. In the same vein, in the case of other indices such as Inequality Index (where India’s position is 129 among 157 countries), Happiness Index (144 among 156), Environment Performance Index (167 among 180), and so on, India’s deterioration continues unabated. With 18 million slaves (out of 46 million worldwide) almost entirely from the lowest rung of the caste system, India under Modi regime occupies number one position in Global Slavery Index too.
At the same time, amidst a 24% GDP contraction during the first quarter of 2020-21, as estimated by Forbes, within one year Ambani has his wealth increased by 73% from$3730 crore to $8870 crore, that of Adani by 61% reaching $2520 crore, and in that order for many billionaires such that the total wealth of the first 10 Indian billionaires rose to $51750 crore (approximately Rs. 38 lakh crore) during the same period. In general, as Oxfam has estimated, today around three-fourth of the additional income or wealth generated in India is gobbled up by the upper 1% of the super-rich (close to 60 percent of the country’s total wealth is in the hands of upper 10 percent of the population). If we exclude the 75% of the income appropriated by the upper 1%, then the per capita income of the 99% will be a paltry portion of the officially estimated Rs. 1.25 lakh. And if we exclude the organised sector and take the unorganised and informal sectors where 95% of the Indian workforce are depending for their sustenance (for which no detailed official data is there), then the situation will be too gruesome. It may be more horrific than what Arjun Sengupta, the then Planning Commission member had estimated a decade back—that 83% of Indians subsist on just Rs. 20 a day!
Analysis Of The Situation
The cause for this situation is now generally attributed to India’s lockdown which is acknowledged as the most coercive, the most stringent and most prolonged in the world, on account of its deadly restrictions on social and economic life. For instance, a study on the government responses to COVID-19 by the Oxford University, after comparing the pandemic-induced lockdowns that put the economy in a frozen state on account of disruptions in both movement of the people and supply chains in various countries, has attributed the highest “Stringency Index” of 100 to Modi government followed by Italy (with a Stringency Index of 95.2), Spain (90.5), Germany (81), US (66.76) and Japan (45). Revealingly, while all other countries resorted to lockdowns when the number of infections reached around 100000, the strictest lockdown in India was superimposed when the total infections were just around 5000 in the third week of March 2020. While putting the entire economy in a frozen state leading to a devastation especially of the informal sectors that provide sustenance for vast majority of the toiling masses, in the absence of any worthwhile intervention for containing the pandemic, the lockdown that lasted for almost 2 months utterly failed to get the pandemic under control, with the number of corona-virus cases crossing 7.6 million (by the beginning of the 3rd week of October, while these lines are written), second only to the US.
COVID-19, The Immediate Cause Only
The government and corporate media in India now firmly claim that the economic collapse with all its manifestations is caused by the corona virus pandemic. This is also endorsed by IMF when its chief economist Gita Gopinath referred to the “great lockdown” of India. But this forms only a partial explanation and not in accord with concrete facts. On the other hand, a closer analysis reveals that the elements of the present crisis and the consequent irreversible economic downturn got a new turn since the advent of Modi in 2014. In fact, COVID-19 is only the spark and not the root cause triggering the present crisis.
That is, while the post-meltdown crisis has been a continuing process at the global level, India’s economic collapse under Modi regime, though connected with many external factors, is to be understood as different in many respects. For, as highlighted by several international and Indian studies including that done by the Economic Research Department of SBI , the Indian economy was ‘relatively immune’ from the global meltdown of 2008 and the country’s GDP had been growing at 7-8 % on an average up to 2014-15. This also prompted neoliberal centres to characterise India as “the best-performing economy” in the world during the years immediately following 2008 meltdown.
Thus, in retrospect, it can be seen that the ongoing economic collapse of India has been inseparably linked up with the complete transformation of the Indian state as a “facilitator” of corporatisation and the consequent far-right shift in economic policies under Modi regime. For instance, without any qualm, immediately after coming to power, the first step that Modi did was the abolition of the more than six-and-a-half decade-old Planning Commission, the last remnant of state-led development, and its replacement by a corporate-bureaucratic think-tank called NITI Aayog and entrusting the task of policymaking with it without even consulting the parliament. To transform the State as corporate-investor-friendly, and to rapidly improve India’s indices pertaining to “ease of doing business” and “global competitiveness” as laid down by Bretton Woods twin (and, of course, fully in tandem with the far-right economic philosophy of RSS that guides the Modi regime), what followed was a pan-Indian extension of the ultra-rightist Gujarat model that uninterruptedly flourished under Modi’s chief ministership. Mimicking China’s export-led growth, the flagship “Make in India” initiative was announced in September 2014 with the declared aim of transforming India into world’s manufacturing hub, creation of an additional 100 million jobs in the manufacturing sector and raising the proportion of manufacturing from 16 percent to 25 percent of GDP by 2022. However, what happened is the opposite and today this proportion has further fallen down to around 13 percent. The foreign capital that rushed in taking advantage of liberal tax, labour and environmental regulations under the cover of “Make in India” mainly went into money-spinning speculative activities, as capital that flowed in was least interested in employment-oriented production. Consequently, “Make in India” transformed India into a dustbin corporate-speculative capital on the one hand, and a dumping ground for capital and consumer goods from imperialist sources ranging from US to China.
Modi’s 2016 Demonetisation superimposed on the people in the guise of a surgical strike against black money was an ingenious move to whiten the black money with the most corrupt corporate black money holders on the one hand, and suck out whatever left in the arteries of common people by denying them cash which is the life-blood of the informal sectors and essential for people’s daily transactions, leading to a further concentration of wealth with the corporate-financial elite closely connected with the ruling regime. In the process, the whole economy remained in a paralysed state. This was followed by GST that deprived the states of their Federal right of resource mobilisation and shifted the tax burden on the shoulders of common people and on the unorganised sectors.
Though Modi came to power in 2014 claiming to generate an additional 2 crore jobs every year, according to independent estimates, by the beginning of 2020, i.e., on the eve of the pandemic, the country had lost around 14 crore jobs since 2014. And India today experiences the worst unemployment in recorded history. Almost 50 percent of the people is still clinging to agriculture for their sustenance though the contribution of agriculture to GDP is only around 15 percent as of now. Modi’s input-output pricing policies pertaining to agriculture and its forcible integration with world market coupled corporatisation policies have pauperised the peasantry. Over the years, corporatisation of agriculture had displaced large sections from agriculture altogether.
Though concentration of income and wealth under Modi is of unprecedented proportions, only 1.5 crore Indians are effective direct tax payers (including corporate and personal income taxes) and in spite of extreme concentration of wealth and inequality, Indian corporate tax rate at 15 percent is the lowest in the world. The direct tax-GDP ratio in India is stagnating at around 5.5 percent which also is the lowest in the world. If the upper 10 percent of the wealthy sections are brought under the tax net, together with 30 percent corporate tax prevailing when Modi came to power (during the 1970s, the highest rate was up to 90 percent), the direct tax-GDP ratio could have easily been raised to 20 percent.
To compensate for this biggest loss in direct tax revenue arising from tax rate reduction, along with the increase in indirect tax burden on the people through GST, Modi has been resorting to the biggest-ever loot of the broad masses by sky-rocketing prices of petroleum products (mainly through raising taxes and cesses on petrol, diesel, cooking gas, etc.), and by this alone during 2014-20 the regime has amassed an additional amount worth Rs. 17.5 lakh crore compared to the UPA regime. Ironically, the average world crude oil price (India imports around 80 percent of its crude oil requirements) during the entire Modi regime has been around one-third of what it was during the previous UPA rule, and following declining global demand in the context of COVID-19, global price is now hovering around one-fourth of what it had been a decade ago. Meanwhile, declining government revenue from direct and indirect taxes(the latter mainly on account of loss in people’s purchasing power) coupled with corruption (though Modi came to power on an anti-corruption plank and with the promise of bringing back Indian black money from foreign tax havens and putting Rs. 15 lakh in to the account of each Indian citizen, under him India became a “flourishing example of crony capitalism” and the most corrupt country in Asia) and loss to exchequer in manifold ways, etc., are resulting in an unprecedented growth in India’s debt-GDP ratio to around 85 percent during the Modi period. To cap it all, an unprecedented loot of public wealth through disinvestment of PSUs and plunder of public sector banks through the creation of NPAs by corporates are flourishing without any let up.
The anti-people nature of this government is self-evident in its reluctance to distribute at least a portion of the huge stock of food grains among the starving millions including the migrant workers who were condemned to bear the brunt of the coercive lockdown. In spite of Modi regime’s anti-farmer policies including the latest pro-corporate central agricultural legislations, India is ranked second in food and agricultural production. As such, the total food grains stock (rice plus wheat) with FCI has topped 100 million tons by mid-2020. On account of grave storage challenges, millions of tons of this grain stock are prone to decay, and the government could have effectively and quickly liquidate the heavy burden of storage by immediately distributing this among the needy, vulnerable and destitute sections through a free-grain scheme. But true to its fascist character, except certain window-dressing (eg, the announcement to distribute 5 kg wheat/rice for 3 months among the poor as part of Aatmanirbhar), the government least interested to distribute the food grains among the tens of millions of poor including the migrant workers.
To be precise, prior to COVID-19, the neoliberal-corporatisation policies pursued by Modi government have been driving the country to an economic contraction of unprecedented proportions. Now the pandemic is again used as an opportunity by the corporate-saffron fascist regime for stimulating the corporates by its far-right agenda more aggressively. For instance, the recently announced so called “Aatmanirbhar Bharat Abhiyan” is another cover for an unprecedented “stimulus package” for those whom Modi regime characterises as “wealth creators” (a synonym for most corrupt corporate looters). Aatmanirbhar Bharat is a vulgar imitation of the earlier prognosis of “Make in India” (of late, “Make in India” is replaced by the new catchword “Assemble in India for the World” in accordance with the “Global Value Chains” hypothesis recently put forward by World Bank)and what envisaged now is the outright sell-out of remaining key and strategic sectors including mining, transport, defence, banks and insurance, space exploration, power distribution, health research, and entire frontier technologies to foreign and Indian corporates. No doubt, such “supply-side” interventions belong to the same genre of pro-corporate stimulus packages pursued elsewhere by neoliberal centres. Revealingly, out of the Rs. 21 lakh crore Aatmanirbhar package, what addressed to the vast majority of toiling and oppressed masses is only around Rs.2 lakh core or just one percent of the country’s GDP, the remaining straightway going to corporate coffers.
On Understanding the Present Economic Collapse
Obviously, for fascists, crises are new opportunities, and the corporate-saffron fascist Modi regime is no exception to this rule. Using COVID-19 as a cover, Modi.2 is now engaged in an aggressive wealth transfer to corporate looters on the one hand, and imposition of heavy burdens on the backs of common people on the other. Of course, as can be seen, there has been a constant economic downturn under Modi-1 and Modi-2, and the GDP contraction cannot be only due to the pandemic or the severest lockdown. Ironically, as we pointed out earlier, corporate wealth accumulation is flourishing without any let up even as the economy and all its components are going down—private consumption expenditure contracted-26.7%, exports-20%, construction-50%, investment and services (including trade, hotels, communication, transport and broadcast)-47% respectively and so on in the context of the pandemic. In the ultimate analysis, all these variables could be seen directly and indirectly linked up with gross value addition, production, employment and earnings ofthe people. Therefore, it is important to understand this irreversible declining trend under Modi regime with respect to the logic of corporatisation (“wealth creation” as the govt. officially puts it) vigorously pursued by it.
From its very inception, Modi government’s concentrated effort has been to create an ‘investor-friendly” atmosphere for the corporate speculators. In the guise of unleashing the “animal spirit” of the most corrupt corporate giants, unprecedented tax give-aways and exemptions along with steep reduction in corporate tax rates have become regular feature of all budgets and extra-budgetary measures since 2014. Now at 15 percent, Indian corporate tax rate is the lowest in the world. Corporate companies are exempted from paying Dividend Distribution Tax (DDT), audit exemption for adapting to cashless transactions up to Rs. 5 crore, amendment in Indian Company’s Act for abolishing penal steps against those violating it including non-adherence to Corporate Social Responsibility (CSR), and so on. Even profit-making PSUs are disinvested at throwaway prices to be gobbled up big corporate companies. Leading corporates were allowed to build-up huge non-performing assets (NPAs) with public sector banks that pushed the banking system to crisis. Elimination of all restrictions to the free entry and exit of foreign corporate capital and similar other steps were also initiated in a systematic manner.
But this unparalleled wealth transfer to corporates in the guise of boosting production and employment has, instead of positively contributing anything to employment-oriented production, rather led to horrific proportion of wealth accumulation by both foreign and domestic corporate giants who diverted a major component of this wealth to terribly destructive speculation and money-spinning activities. Even banks, financial institutions and mutual funds have become reluctant to deploy the immense funds at their disposal for productive investment. Still under the so called ‘expert’ advice from neoliberal centres, red carpet has been continuously laid down for attracting foreign capital. And the economic situation which was bad in the pre-Covid situation has become worse, or as is conceived by many, the economy which was already in the ICU is now put on the ventilator. Thus, Modi government’s wholehearted embrace of the logic of corporate capital-i.e., if left free capital today invariably goes to the most profitable avenues- has pushed Indian economy in to a vicious corporatisation-stagnation trap. Its ultimate outcome is 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.
Lenin in his theory of imperialism had already explained much on the character of fictitious or speculative capital –an aspect briefly noted by Marx too in Capital. Today under neoliberal imperialism, speculative capital that develops exclusively in the financial sphere by sucking out value from the real economy without any real link with material production has become the dominant form of capital. And this is the essence of economic contraction and crisis today. India today is in the firm grip of a vicious circle—i.e., lack of investment in employment-oriented productive investment leads to lack of jobs resulting in lack of income and purchasing power for the masses, which in turn leads to lack of demand for goods and services and market contraction that lead to lower or lack of profit from the productive sphere which again pulls back investment in spite of repeated corporate “stimulus packages” by the government. As this vicious circle of contraction/stagnation strengthens, Modi government which rolls itself back from all investments, in tune with neoliberal diktats, is coercively superimposing 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, minorities, women and even children, 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.
On Immediate Options and Political Alternative
Obviously, from the perspective of Marxist political economy, the alternative to this corporate-fascist offensive is to break the logic of neo-liberalism itself, which calls for an appropriate broad-based, nationwide people’s movement led by revolutionary forces capable of imparting death blows to corporate capital. The immediate requirements or slogans for initiating such a process are there in the Draft of the Common Minimum program for building the Anti-Fascist Front already proposed by CPI (ML) Red Star (see, “ Appeal to All Revolutionary Left Organisations”, Red Star, August 2020). The specific economic demands (items 3-8) mentioned in it, for instance, if urgently implemented, will ensure more purchasing power in people’s hands and will provide a boost to productive economic activities. Though reactionary sections of corporate capital may still keep aloof from investment, it will definitely prompt sustainable agriculture, encourage medium and small industries to actively come forward to boost production and employment, which can break the vicious circle of economic stagnation.
Together with this “demand push” (as against “supply side”) initiatives, demands for reintroducing progressive corporate taxation, wealth and inheritance tax, abolition of regressive indirect taxation including the neoliberal GST that puts disproportionate burden on the people, introduction of redistributive wage and universal social and security and gender-specific policies, ensuring quality public services including water, health and education, total elimination of burden of unpaid work especially by women, guaranteeing elder care as well as child care, ensuring minimum wage sufficient enough for adequate standard of living, regulating ratios between lowest and highest wages and earnings, price support programs for peasants, reasonable restrictions on financial dealings and ban on speculation, capital flight, illicit financial flows, etc., anti-monopoly and anti-corruption policies, strengthening public sector and reversal of disinvestment and denationalisation policies and so on can appropriately be incorporated in to the minimum program. This shall form the stepping stone towards a sustainable political-economic alternative capable of resisting and overcoming the hegemony of corporate capital.
(Party School Paper for 2020)
Regional Comprehensive Economic Participation (RCEP), world’s largest Free Trade Agreement (FTA) ever,comprising 10 ASEAN countries and other 5 big players, namely, China, Japan, Australia, South Korea and New Zealand formally came into existence Bangkok on November 15, 2020. It accounts for about one-third of world population, 30 percent of global GDP and 28 percent of world trade among them. The scope of further strengthening of regional value chains among RCEP members is comparatively large since 44 percent of their total trade is already intra-RCEP.
Till its disengagement from RCEP negotiations by the dawn of 2020 mainly on account of China factor,amidst widespread protests across India from farmers, lakhs of medium, small and petty producers and millions of informal workers, the Indian government was having an active role in RCEP negotiations and since his ascendance in 2014, Modi has his personal attention in the past 6 years of long drawn out intense bi-partisan talks with ASEAN, the precursor of RCEP. In fact, India’s signing of the final agreement was almost certain even during the 2019India visit of Chinese president Xi leading a 90-member delegation including Chinese foreign minister. Though the content of Modi-Xi talk was almost covered up and doled out to media as “informal talks”, external affairs ministry had characterised the interaction between two heads of states as “productive”, “pleasant conversation over a long dinner”, etc. Obviously, being the biggest economic power (on PPP basis)but still second to US in military prowess, and as the leading partner in RCEP, the fact that China would be the biggest gainer from this FTA was already recognised. Therefore, Xi’s arrival at Mamalapuram, near Chennai at that time was also interpreted as a tactical move to pressurise his Indian counterpart to bow to Chinese diktats, in continuation of the success on the part of US led Western imperialist bloc in using the Kashmir issue as a tool for blackmailing the Indian regime to pry open more avenues of plunder in India.
Modi was actively participating in the 6 years of long drawn out intense bi-partisan talks with in the grouping composed of 10 ASEAN, the precursor of RCEP. However, in the context of the advent of the COVID-19 pandemic and consequent Sinophobic propaganda by US and the eruption of Sino-Indian border dispute in March, the Modi regime took a somersault and retracted from all further discussions pertaining to RCEP.
Of course, regional FTAs (such as ASEAN, NAFTA, MERCOSUR, EFTA, half-baked and aborted SAFTA, etc.) are to be evaluated as complimentary to neoliberal globalisation. Both WTO and the Bretton Woods institutions, the pillars of imperialist plunder today are propagating regional trade agreements among countries as effective tools towards global integration of distinct economies into bigger markets for capital flows as well as trade in consumer items with tariff and non-tariff barriers. According to WTO provisions regional trade agreements are “gateway” to internationalisation or globalisation of market and investment. RCEP encompassing South and East Asian countries is also in accordance with this neoliberal dictum. Generally, on account of closeness and proximity, RCEP-like FTAs will lead to full market access within the free trade area as far as members are concerned, and consequently will be more threatening, than even WTO, to those members who are lack comparative cost advantage.
Now Modi’s retraction from RCEP has given rise to many arguments for and against it. The main argument by those who criticise Modi regime for not joining RCEP is in terms of the usual logic always upheld by “free traders”. According to the standard liberal economic theory, free trade among countries increases the economic size of the free trade area as a whole, as it allows goods and services to be produced more efficiently and at the least cost. Free trade encourages productivity as production will move to those locations where natural resources, infrastructure, or skills and expertise are best suited to production. Greater competition and less red tape within the FTA will make goods and services available consumers at lower prices and ultimately, will result in increased GDP growth for the members of the FTA. So neoliberal experts and free trade theorists always argue in favour of a free trade area.
However, experience has been on the contrary. Traditional agriculture and informal/unorganised industries which cannot withstand competition from cheap products within the FTA will collapse altogether leading to unemployment and pauperisation of the broad masses of population. Cut throat competition will lead to a massive deindustrialisation wiping out the domestic industrial base in economically backward members of the FTA. It will prohibit governments in backward economies to protect domestic agriculture or industries with adequate price support programs. For instance, take the case of the 25 provisions finally adopted by the RCEP. These terms were in fact dictated by the two leading members, viz., China and Japan, of the union. The immediate effect of RCEP on India, which today faces the biggest-ever economic collapse on record, would be an immediate transformation of India as dumping ground for the almost all agricultural and industrial products from China and Japan which enjoy a clear-cut technological superiority over India.
In fact, as part of India’s erstwhile agreement with the ASEAN, cheap agricultural products have already been entering India with devastating impact on its farm sector. Now the RCEP which is an expanded version of ASEAN, on account of their higher productivity and comparative cost advantage will enable China and Japan also to dump their cheap industrial and agricultural goods in India.
Meanwhile, a section of the Indian ruling classes and their economic experts have interpreted Modi’s disengagement from RCEP as a historic blunder, as it has lost a golden opportunity of economic integration especially with the less developed ASEAN countries. According to them, the economic disadvantage arising from Chinese and Japanese goods flooding Indian market would have more than compensated by India’s growing market access to developing economies of the 10 ASEAN members of RCEP. They also argue that RCEP will result in enhanced technology transfer and inflows of FDI into India. According to them, turning away from RCEP, a grouping which is also in conformity with Article 24 of WTO, is autarchic, protectionist and isolationist and will make India uncompetitive and inefficient, thereby making India unable to reap the fruits of economic integration among countries.
Now let us examine these arguments in relation to concrete facts. Free trade arrangements are not new for India. Except China, India already has some form of bilateral free trade agreements with all constituents of RCEP such as ASEAN, Japan and South Korea, while discussions for free trade deals with New Zealand and Australia are in the final stage. While all such trade agreements have led to surge in India’s imports from these countries, there has been no perceptible growth in Indian exports to them, leading to a steady growth intrade deficit with them. Over the past years organisations of both farmers and medium and small scale industries as well as petty producers have been strongly opposing India aligning with ASEAN; but the Modi regime was not even willing to hear their genuine concerns. And, if India becomes a constituent of RCEP, then in view of the existing trend, its outcome will be a further intensification of this negative trend and further worsening of the country’s historic economic collapse. Obviously, it will be due to the superior position of China in RCEP. For instance, in spite of India having no free trade agreement with China, the latter has been India’s biggest trading partner. From a meagre $1.8 billion worth of trade in 2000, the trade volume between the two rose to almost $90 billion in 2018. In this, since India’s exports to China are worth only $14 billion, the deficit in India’s trade balance with China was $76 billion. According to preliminary estimates, in the event of India becoming a member of RCEP which shall inevitably be led by China, the former will be duty-bound to eliminate tariffs on around 80 percent of the imported Chinese goods either fully or partially, resulting in unforeseen consequences for the economy. That is, India’s adverse trade balance and harmful impact on its agricultural and industrial production arising from its erstwhile pact with ASEAN (for instance, India’s trade deficit with ASEAN was $24 billion in 2018, in spite of Modi regime’s aggressive export-push approach under the cover of self-reliant postures such as ‘Make in India’ and the latest ‘Atmanirbhar’) are bound to accentuate further in the event of India joining RCEP.
Obviously, the real reason behind Modi regime’s abrupt turning away from RCEP at the last moment, is geopolitical and not economic. On account of its extreme servility to imperialist capital and in the course of fulfilling the commitments to neoliberal market obligations, the Modi government has shown little consideration to the sustenance of millions of domestic produce or their genuine sentiments. In accordance with that, till last year, Modi was systematically propping up India’s close trade integration with China in continuation of what he did during his long tenure as chief minister of Gujarat. And in spite of the much trumpeted ‘Make in India’, it was under Modi that Indian market became flooded with cheap Chinese goods. For, during the first four years of Modi rule, bilateral trade between China and India rose by around 25 percent from almost $65 billion in mid-2014 to $ 90 billion in mid-2018, with trade balance highly unfavourable to India, as already noted. As a matter of fact, Modi’s participation in RCEP talks in which China has the key role till the end of 2019 was inseparable from India’s growing bilateral trade with China. Therefore, any reversal in this adverse trend in India’s trade with China would at least have a cushioning effect on India’s trade deficit and on the domestic economy. To that extent, India’s move away from RCEP is to be welcomed.
On the other hand, Modi’s sudden disengagement from the mega trade deal RCEP was not motivated by any economic consideration, and not at all based on the obvious economic logic behind it, but is purely dictated by geopolitical factors. For, unable to economically compete with China which already had acquired the technological capability to challenge the US, the latter, with its protectionist approach under Trump and with whom India has a strategic military cooperation, was compelling Modi regime to withdraw from the RCEP from the very beginning. Together with this sharpening inter-imperialist contradiction between US and China, it was the eruption of the border dispute with China that compelled Modi to have a U-turn on RCEP along with the imposition of many rounds of tariff and non-tariff barriers and other import controls on many Chinese products. Now this is done under the cover of ‘Atmanirbhar” in the place of the worn out ‘Make in India’ which had already ended up as ‘made in China’.
However, turning away from the China-led RCEP,in tune with RSS’ time-tested, historical allegiance to US imperialism, along with strengthening India’s position as a strategic junior partner of US in latter’s geo-political contradictions with China and by signing many military-to-military partnerships with Washington, Modi is laying red carpet for US finance capital’s biggest-ever plunder of India by resorting to a series of ‘investor-friendly’ measures such as aggressive liberalisation of labour, tax and environmental laws along with many digital deregulations as required by US MNCs. Now the outcome is like that of ‘jumping from the frying pan to the burning fire’, as involvement in a US-led military and economic arrangement is more vicious in degree compared with the RCEP grouping, which too led by another imperialist power.
Today, when world market is dwindling and negative growth trends are a ubiquitous phenomenon, India with its continental size and with a population of 137 crore richly endowed with immense natural and human resources, there is vast scope for pursuing an independent, self-reliant and self-expanding path of development pursuing friendly relations with other countries and peoples. What requires is an immediate overhauling of the existing foreign market-oriented neoliberal, pro-corporate model and the adoption of a pro-people, pro-nature, domestic-market oriented development strategy ensuring livelihood and sustenance of the vast majority of working and oppressed masses.
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.
“Following the longer period of lockdown”, according to the latest Report of IMF, “India’s economy is projected to contract by 4.5 percent” in 2020, the lowest ever for India in seven decades. And according to ADB’s latest forecast, this contraction is slated to continue in 2020-21 too, though IMF does not share such a view as of now. Moreover, if this contraction persists, then by 2021, India’s GDP may shrink to $ 1.9 trillion from $2.11 trillion (as estimated in 2019). Though Modi regime is now reopening the economy amidst further intensification of COVID-19 pandemic, many experts including Gita Gopinath, chief economist of IMF identifies the “Great Lockdown” as the immediate cause for the worst downturn in India’s history. Many US-based economic experts who earlier worked as Modi regime’s economic policy advisers have also come out identifying, among other things, the ill-conceived COVID-19-related policies including the prolonged lockdown as one of the reasons for the contraction of the economy.
Following this, even Indian official sources such as Ministry of Statistics and Program Implementation (MOSPI), Centre for Monitoring Indian Economy (CMIE) and RBI (many official Indian agencies linked with the government were engaging in preparing doctored statistics as suited to the regime and those experts who questioned it had to resign too) have now started parroting on the negative economic trends already identified by neoliberal centres. For instance, the second quarter (of 2020) estimates released by the RBI just two days ago portray a dismal economic picture in every sphere in this regard including a 4-6 percent GDP contraction in the fiscal year 2020-21. However, independent research bodies such as the Centre for Economic Studies and Planning (CESP), from the perspective of output and employment, predicts an impending 15-22 percent of the economy. According to noted economist Arun Kumar of CESP, India’s GDP in the fiscal year 2020-21 is set to contract by at least 30 percent from Rs. 204 lakh crore to Rs. 130 lakh crore. Many such evaluations are forthcoming from diverse centres.
Of course, COVID-19 and the coercive lockdown with just four hours prior information that brought the economy to a standstill are only the immediate cause that accentuated the crisis. That is, it is not COVID that created the crisis, rather the former only strengthened the latter that was already set in. On the other hand, until the onset of the pandemic, as opposed to their recent revelations and sudden somersaults, all the neoliberal institutions and far-right ideologues associated with them were working overtime to bring about a rosy picture of India even when its economy had been steadily and irreversibly plunging throughout the Modi regime. And throughout, these neoliberal pundits were camouflaging the real state of the economy under this government as well as the horrific living conditions of the broad masses of this country when Modi has been resorting to all means to accomplish the required investor-friendly measures and for laying red carpet for the unfettered inflows of money-spinning and speculative imperialist capital to India. Most corrupt corporate Consultancies like PwC and their Indian pen-pushers while spreading the illusion of a $5 trillion economy by 2024 and $10 trillion size by 2030, were abstaining from unravelling the underlying trends behind India’s 140th rank (2019 estimate) in the world in terms of per capita GDP.
As already underlined by various domestic and global studies, when Modi came to power in 2014, India’s GDP growth rate was hovering around 7 percent that prompted them to characterise India as “the best performing country” in the world. To an extent, as pointed out by many analysts, it was also “relatively immune” from the world economic crisis of 2008-09. Thus the irreversible declining trend in GDP growth rate actually began in 2014. To transform the State as a corporate-facilitator and to rapidly improve India’s indices pertaining to “ease of doing business” and “global competitiveness” (even after so much sell-outs, India’s rank is still at the pitiable 63rd and 68th position in global ranking regarding these indices) as laid down by Bretton Woods twin and in accordance with the far-right economic philosophy of RSS, the first step that Modi regime did was the abolition of the more than six-and-a-half decade-old Planning Commission, the last remnant of state-led development, and its replacement by a corporate-saffron think-tank called NITI Aayog and entrusting the task of policymaking with it without even consulting the parliament. This was followed by the Demonetisation in 2016 and GST in 2017 which in essence aimed at further concentration of income and wealth with the corporate-financial elite leading to a superimposed destruction of all the informal and traditional sectors of the economy upon which, as of 2019, more than 95 percent of the 52 crore Indian labour force (as of 2019) subsists. Along with this, mimicking China, the flagship “Make in India” initiative was announced in September 2014 with the declared aim of transforming India into world’s manufacturing hub, thereby claiming to raise the proportion of manufacturing from 17 percent to 25 percent of GDP by 2022. However, what happened is the opposite and today this proportion has fallen further to around 13 percent and in the meanwhile in spite of becoming one of the largest destinations of foreign capital investment, India’s position has again deteriorated into a dustbin of money-spinning speculative capital (since capital that flowed in taking advantage of liberal tax, labour and environmental regulations is least interested in employment-oriented productive activities) as well as a dumping ground for goods and services from imperialist sources ranging from US to China.
It is not intended here to go into the details of this economic collapse. Though Modi came to power in 2014 claiming to generate an additional 2 crore jobs every year, as of now, according to independent estimates, the country has lost around 14 crore jobs during the six year period 2014-20. And India today experiences the worst unemployment in recorded history. Almost 50 percent of the people are still clinging on to agriculture for their sustenance though the contribution of agriculture to GDP is only around 15 percent as of now. But Modi’s input-output pricing policies pertaining to agriculture and its forcible integration with world market and corporatisation policies are displacing large sections from agriculture altogether. Despite the economic slump, India being one of the highest number of superrich billionaires, income and wealth inequality (close to 60 percent of the country’s total wealth is in the hands of upper 10 percent of the population, and three-fourth of the additional wealth generated is gobbled up by the top one percent) are of unprecedented proportions. Still only 1.5 crore Indians are effective direct tax payers (including corporate and personal income taxes) and in spite of extreme concentration of wealth and inequality, Indian corporate tax rate at 15 percent is the lowest in the world. The direct tax-GDP ratio in India is stagnating at around 5.5 percent which also is world’s lowest. If the upper 10 percent of the wealthy sections are brought under the tax net, together with 30 percent corporate tax (during the 1970s, the highest rate was up to 90 percent), the direct tax-GDP ratio could have easily been raised to 20 percent.
To compensate for this biggest loss in tax revenue (GST collection is already on the downturn due to lack of purchasing power of the masses and declining consumption expenditure), Modi has been resorting to the biggest-ever loot of the broad masses by sky-rocketing prices of petroleum products (mainly through raising taxes and cesses on petrol, diesel, cooking gas, etc.), and by this alone during 2014-20 the regime has amassed an additional amount worth Rs. 17.5 lakh crore relative to the UPA regime. Ironically, the average world crude oil price (India imports around 80 percent of its crude oil requirements) during the entire Modi regime has been around one-third of what it was during the previous UPA rule, and following declining global demand in the context of COVID-19, global price is now hovering around one-fourth of what it had been a decade ago. Meanwhile, declining government revenue from direct and indirect taxes coupled with corruption and plunder of the exchequer in manifold ways are resulting in an unprecedented growth in India’s debt-GDP ratio to around 85 percent during the Modi period. To cap it all, an unprecedented loot of public wealth through disinvestment of PSUs and plunder of public sector banks through the creation of NPAs by corporates are flourishing without any let up.
In 2015, the World Bank based on its renewed yardsticks of poverty measurement including the new methodology of purchasing power parity redrew its world poverty line. Still India with 17.5 percent of world population had more than 20 percent of world’s poorest people. Out of this, more than 6 crore belongs to chronically malnourished children under the age of 5. According to UNICEF estimate, 8.8 lakh Indian children have been dying every year due to lack of food. As per the latest Edition of the State of Food Security and Nutrition in the World (SOFI) India has the distinction of the largest share of food insecure people. As estimated by UN Organisations, under Modi.1, the prevalence of food insecurity in India increased by 3.8 percentage points. As a result, by the year 2019, the number of food insecure people increased in India by an additional 6.2 crore than 2014. Though FAO in its Prevalence of Moderate and Severe Food Insecurity (PMSFI) estimate places India in a very critical situation, Modi government is not allowing publication of such reports in India for obvious reasons.
Usually, while the World Bank reports often whitewashes the Indian situation, the FAO Report seems to be more objective in approaching India’s stark realities. Thus, according to FAO’s PMSFI, while 27.8 percent of India’s population suffered from moderate or severe food insecurity in 2014, the proportion rose to 31.6 percent in 2019. Thus, number of food insecure people in India rose from 42.65 crore in 2014 to 48.86 crore in 2019. Accordingly, India accounted for 22 percent of the global burden of food insecurity, the highest for any country in 2019. Since Modi government has not released the usual NSSO Consumption Expenditure Survey data even for 2017-18 which was due, FAO had to use supply-wise data on per capita food availability to measure changes in average per capita calorie intake, which is an underestimate. Prolonged lock down and lack of buying capacity of people has increased the core issue of hunger and food security, and many starvation deaths are frequently covered up under COVID-19. While there is no let-up in India’s multidimensional poverty, the 2019 Global Hunger Index (that measures the severity of hunger) has ranked India at 102nd out of 117 countries.
On the other hand, amidst the fudging of economic data, deployment of the entire administrative machinery for achieving its Hindutva majoritarian objectives and using the pandemic itself as an opportunity for corporate bootlicking and selling out the country’s wealth to the most corrupt foreign and Indian corporates, concerted efforts are also going on to cover up the stark realities people’s life. For instance, India being ranked second in food and agricultural production, the total food grains stock (rice plus wheat) with FCI has now topped 100 million tons as of June 1, 2020. On account of grave storage challenges, millions of tons of this grain stock are prone to decay, and the government could have effectively and quickly liquidate the heavy burden of storage by immediately distributing this among the needy, vulnerable and destitute sections through a free-grain scheme. But true to its fascist character, except certain window-dressing (as part of the much trumpeted Aatmanirbhar, 5 kg wheat/rice for 3 months among the poor 80 crore was announced), no concrete intervention is there to distribute the food grains among the tens of millions of poor including the migrant workers who were forced to bear the brunt of Modi’s coercive lockdown since March 25th 2020. Concerned people have already demanded an extended food distribution system along with an universalisation of the MGNREGA program expanding to urban and semi-urban areas where the informal/unorganised workforce is concentrated including a revision of pay from the existing Rs.202 to Rs.450 a day. They have also demanded a wage-led approach that will boost output, employment and demand instead of the current “supply-side” interventions (i.e., the pro-corporate stimulus packages) now pursued by the Modi regime.
However, the fascistic Modi regime is consistent in blatantly opposing such genuine pro-people demands. On the other, as again proved by the announcement of Rs. 21 lakh crore package (in real terms what is addressed to the vast majority of toiling and oppressed people in it is only around Rs.2 lakh core or just one percent of the country’s GDP) under what is called “Aatmanirbhar Bharat Abhiyan” the regime is still pursuing the beaten track of stimulating the corporates as the only alternative before it. While setting apart a paltry sum for the people whose entire livelihood has been destroyed, Aatmanirbhar turned out to be a cover for an unprecedented sell-out to those whom Modi regime characterises as “wealth creators”, a post-truth synonym for corporate looters who plunder and appropriate the country’s wealth. Thus Aatmanirbhar Bharat has turned out to be a more vulgar imitation of the earlier “Make in India”, under the cover of which the remaining key and strategic sectors including mining, transport, defence, banks and insurance space exploration, power distribution, health research, and entire frontier technologies are thrown open to foreign and Indian corporates.
As already discussed, this intensified shift to the far-right by the corporate-saffron regime laying red carpet for aggressive corporate plunder using COVID-19 as an opportunity is driving the country deep into the vicious circle of corporatisation-induced economic breakdown. Unless this trend is reversed through an appropriate political intervention, fascist forces will deploy all avenues at its disposal to put still heavier burdens on the backs of common people. A broad-based, nationwide people’s movement capable of mobilising the workers and all oppressed including dalits, adivasis, minorities and women based on a common minimum program against corporate saffron fascism is the need of the hour.
Following India’s bloodiest clash with imperialist China in 45 years, there seems to be no dearth of jingoistic postures from saffron centres, as even Chinese intrusion in to India’s territory is becoming self-evident now. As part of this, a hectic campaign is in full swing for an economic retaliation against China mainly by boycotting Chinese products. For instance, the pro-RSS Confederation of All India Traders (CAIT), has called for an outright boycott of 450 broad categories of imported Chinese items which include 3500 products comprising a whole range of cosmetics, bags, toys, furniture, footwear, watches, etc. so as to reduce their imports by $13 billion or Rs. I lakh crore by December 2021, whereas the value of India’s import from China approximately equals to the staggering figure of around $70 billion or Rs. 525000 crore in 2019-20. However, at the outset, it may be stated that such moves are mainly rhetorical since India’s dependence on and integration with imperialist China in the economic field (of course with its political ramifications) is so complex and deep-rooted that in the immediate future, despite the much trumpeted “Make in India”, and the latest “Atmanirbhar Bharat”, it will be well-nigh impossible for India to resort to a ban on Chinese investments and products.
China’s Transformation as the Largest Imperialist Economy
To unravel this, a brief note on China’s emergence as an imperialist power with its position today as world’s leading capital and commodity exporter would be in order. No doubt, China’s experience of breaking the imperialist hierarchy inherited from the colonial world order is an exceptional and unique phenomenon. China’s political trajectory as a socialist country for more than a quarter century after WW II, its capitalist restoration following seizure of power by bureaucratic bourgeoisie in the late 1970s and its eventual transformation as an imperialist power are all complex processes that require in-depth analysis and, therefore, is outside the scope of this note. Since the beginning of the 1980s, with its catchword of “socialism with Chinese characteristics”, the bureaucratic state capitalism in China began its close integration with private sector orienting state-owned banks toward liberally supporting private businesses. Since the 1990s, there took place a relative shift in this privatisation strategy with more emphasis on FDI inflows that rushed in to take advantage of China’s inexhaustible supply of cheap labour. As the cheapest source of production and as an active participant in the neoliberal international division of labour, this enabled China to increasingly integrate itself with global finance capital. In conformity with the logic of capital accumulation, lucrative real estate, financial markets and other money spinning businesses also flourished as a concomitant. Party-led bureaucratic state was transformed into an apparatus committed to protect the interests of corporate capital at the expense of workers, peasants and toiling people. As estimated by All-China Federation of Industry and Commerce, the share of private sector in Chinese GDP today is more than 60 percent. As of 2018, the entire private sector including both domestic and foreign accounted for70 percent of technological innovation, 80 percent (340 million) of the total employment (783 million) and 90 percent of all Chinese exports.
The bureaucratic state monopoly capitalism of China through various joint ventures between state-owned enterprises and foreign corporate capital went on adapting itself to the most modern and state-of-the-art technologies and in the process succeeded in building up a number of Chinese monopolies exporting capital to almost a hundred countries by the turn of the 21st century and to more than 125 countries as of now. Sino-US bilateral trade during the four decades following capitalist restoration in China had grown by 150 times —quite unprecedented in recorded history — from $4 billion in 1979 to around $600 billion in 2019. With an average annual GDP growth rate of 10 percent since mid-1980s, China rose to the position of the second largest imperialist power when the 2008 world imperialist crisis erupted. Since then, though the growth rate has gone down, according to World Bank’s purchasing power parity estimates, by 2019 China became world’s largest economy with a GDP of around $27 trillion relegating the US to the second position with around $21 trillion. As its manifestation, in all other economic indicators including global trade volume, China had already surpassed the US. And by leading several organisations, groupings and initiatives such as Shanghai Cooperation Organisation (SCO), Regional Comprehensive Economic Partnership (RCEP), Asian Infrastructure Investment Bank (AIIB), Belt and Road Initiative (BRI), BRICS including New Development Bank (NDB), etc., China is already in an enviable position, as the US hold over many post war neo-colonial institutions such as UN and its Specialised Agencies are rapidly loosening. And in tandem with its growing imperialist political-economic clout, China’s military budget had steadily grown from around $14 billion in 2000 to more than $260 billion in 2019, almost four times that of India!
This transformation has its domestic repercussions. The so called “iron rice bowl” of socialism that ensured food, housing health, education and employment for all has been demolished. All the evils of ‘uneven development’ associated with capitalism and market economy are on the ascendance. Destruction of ‘self-reliant’ and ‘self-sufficient’ communes has led to one of the biggest internal migrations in history that resulted in tens of millions of displaced landless peasants becoming unemployed while a section of them who could migrate to urban centres and special economic zones in coastal areas were subjected to extreme forms of super-exploitation jointly by both foreign capital and emerging Chinese monopolies. In 1980, urban dwelling population was just 20 percent; it reached almost 50 percent in the first decade of the 21st century, a trend that gathered further momentum since then. China’s urbanisation, like its whole course of development, is unprecedented. According to latest Demographia’s World Urban Areas Report, there are now 113 urban centres in China that surpass the one million population threshold. In comparison, only North America and the European Union combined have 114 urban areas that surpass one million people. At the same time, large sections of the population still remain in the country-side at subsistence level. Since a social safety net composed of cost-indexed wages, health care and pensions is totally lacking outside the public sector employment, tens of millions of workers are left without access to welfare benefits or minimum standard of living. Migrant workers in construction sites and unorganised sectors live and work in desperate conditions and are paid below normal rates. As a reflection of the extreme misery and destitution suffered by people, all evils of capitalism such as poverty, price rise, corruption, sex trade, child-begging, homelessness and cultural degradation have also become rampant. And the emergence of a ‘deep state’ and political oppression have now become a corollary of the inevitable social tensions arising from the rigorous dismantling of even the remnants of erstwhile socialist achievements.
The concomitant political-ideological dimensions of this economic transformation found its first formal expression in the 16th Party Congress of Communist party of China (CPC) held in 2002 that formally announced extension of party membership to CEOs of corporate companies. Its outcome was well-reflected in the National People’s Congress (NPC) held in 2018 when large number of the delegates elected were from corporate CEOs and super-rich financial elite and wealthy individuals along with the party bureaucrats who have been the sole beneficiaries of the four decades of capitalist restoration. For instance, almost half of the more than 300 Chinese global billionaires (3 times that in India and second only to the US in 2018) whose wealth has appreciated by around 20 percent a year had their berth in higher echelons of CPC. Overall proportion of millionaires and billionaires in party bureaucracy is relatively high compared with their membership in CPC composed of 89 million out of a total population of almost 1400 million. According to China Rich List released by Hurun, the total wealth held by the top 70 delegates to the 2018 NPC was larger than that with the members of the entire US Congress! China’s Gini coefficient estimated at 0.465, - a statistical measure of inequality in which 0 indicates perfect equality and 1 depicts a situation where all incomes go to one person - is one of the highest in the world. In view of corroborative evidences coming from various other sources, today it is difficult to ignore such data as mere guesstimates associated with usual West-sponsored Sinophobia.
As a matter of fact, the reunification of Hong Kong in 1997 and Macao in 1999, both being nerve centres of global finance, trade and speculation, followed by China’s formal entry in 2001 into WTO, often characterised as the third neo-colonial pillar (the other two being IMF and World Bank) were milestones that speeded up its integration with imperialist market and finance capital. As world’s low-cost production base, this integration enabled China to capture substantial share of commodity markets not only in Afro-Asian-Latin American dependent countries, but even in US, its main imperialist rival for world hegemony. At the same time, this Chinese integration with global market has coincided with the emergence of fast moving ‘frontier’ or new generation technologies such as, digitisation, blockchain, artificial intelligence, biotechnology, robotisation, etc. which were practically insignificant in the 20th century. Closely integrated with the bureaucratic state, many Chinese companies became pioneers in economic innovation and application of these technologies to production at a maddening speed. Among them Baidu, Alibaba, Tencent (popularly known as BAT) and Huawei (pioneer in ‘5G revolution’) have now become world leaders in digitisation, the fast-moving frontier technology of the 21st century, and even capable of successfully challenging US-based “Silicon Six” (Google, Facebook, Amazon, Netflix, Apple, Microsoft). For instance, though five years younger than Amazon, the biggest American e-commerce giant, in terms of volume of trade, Alibaba has already eclipsed the former and is now the leading cloud-provider besides being world’s biggest e-commerce company. And backed by the breakthroughs in digital technology, China is also pioneering a digital currency alternative to the hegemony of US dollar in international transactions.
A crucial aspect to be underlined in this context is that mechanical approach to class/property relations and western notions of corporate governance do not fit in with the private sector in China. Chinese bureaucrats have learned lessons from Soviet Union’s eventual disintegration on account of private corporate sector finally usurping power and taking over the regime. As such, Chinese bureaucratic bourgeoisie’s unleashing of privatisation and corporatisation and encouragement to private businesses for generating economic growth, propelling investment and exports, etc., always go hand in hand with party bureaucracy’s strict supervision over the entire process. Party bodies and ‘party cells’ function in every private business, including even foreign enterprises. This intervention is intended to ensure economic growth strictly avoiding the plausible danger arising from any organised alternative to centres of political power.
It also ensures the regime’s close nexus with corporate capital together with constant surveillance over their dealings. According to a 2018 report, around 95 percent of the private enterprises in China had or in the process of having party cells/units in them. And the presence of the appropriate party representative in board meetings of companies is the accepted norm and corporate CEOs holding ‘Communist party’ membership is the general rule.
For instance, Jack Ma of Alibaba, global face of Chinese monopoly capital and corporate philanthropy has been a party member since 1980s, though his membership was openly declared only in 2018. Even Walmart, world’s biggest US-based retail MNC (that at one time depended on China for around 70-80 percent of its merchandise) which is notorious for not allowing unions in its US stores, had party cells in its companies in China. To be precise, driving corporate wealth accumulation and buttressing the bureaucratic state regime are two sides of China’s private sector that is accomplishing the miraculous “success story” of Chinese imperialism.
Alarming Chinese Penetration to Indian Market
In the background briefly stated above, it may be stated that India’s transformation as a market for Chinese products as well as a destination for investments from China is primarily a 21st century phenomenon intertwined with latter’s emergence as the workshop of the world under neo-liberal globalisation. On account of the 1962 Sino-Indian war and disputes such as the 1967 Chola incident, 1975 showdown when Sikkim became a state of India, and the 1987 Sino-Indian skirmish, both diplomatic and economic ties between India and China had not at all been enthusiastic during the 20th century. Obviously, it was China’s formal entry into WTO in 2001 that enabled it to integrate herself with other countries based on her ‘comparative advantage’ that prompted China to explore neighbouring India’s vast market. Consequently, Chinese premier Zhu Rongji’s2001 India visit was duly reciprocated by Indian Prime Minister Vajpayee’s visit to China in 2003. The period that followed witnessed regular visits by both Indian and Chinese delegations for pursuing and signing innumerable bilateral investment and trade deals.
As a result, since 2000, trade between China and India has grown nearly twice as fast as each country’s trade with the rest of the world. In 2008 itself, surpassing US, China became India’s largest trade partner. Meanwhile, bilateral trade between China and India shot up from $2 billion in 2000-01 to $65 billion in 2013-14. Trade (including exports and imports) between China and India during this period was growing at nearly three times the pace of US-China trade. Modi’s tenure since 2014 saw a further boost to trade such that by 2017-18 India’s trade volume with China again rose to $89.76 billion excluding that with Hong Kong ($34 billion). In 2018-19, though bilateral trade marginally declined to $87.07, in that year, India’s trade deficit with China was $53.57 billion (around Rs. 401700 crore) as India’s imports from China were worth US$ 70.32 billion and exports to China were only US$ 16.75 billion. Even today there is little change in India’s huge trade deficit with China. As such, India’s position in India-China bilateral trade is highly unfavourable for India.
According to IMF estimates (based on 2019 data), while China’s exports to and imports from India respectively came to 3 percent and 0.9 percent of its total exports and imports, the corresponding proportion for India was 5.1 percent and 13.7 percent (respective figures for 2020 February were5.33 percent and 14.09 percent). Revealingly, according to 2020 February data, in percentage terms, India’s imports from US at 7.58 percent of its total imports amount to only half of that from China. This depicts India’s relatively high dependence on China than US with whom India has even a strategic military relationship as a junior partner. An item-wise analysis of Indian imports from China also reveals the essence and gravity of this economic dependence. For instance, 76.3 percent of all antibiotics and pharmaceutical products imported today by India is from China. This dependence of India on China is 84 percent for vehicle accessories, 68 percent for nitrogen compounds, 64 percent for diodes and transistors, 63 percent for iron & steel pipes and tubes, 58 percent for electric accumulators, 55 percent for LCD/LED/OLED panels for TVs, 52 percent of insecticides and pesticides, 46 percent of data processing machines, ACs and Fans and so on for several other items. A significant aspect connected with these imports by India is that they also comprise critical raw materials and intermediate items for production and export to other markets. To put it differently, while India depends heavily on imports from China, the latter has no such dependence on India. Hence an economic boycott of China, as stated at the outset, is only of rhetorical value and not at all feasible in the immediate future, especially at a time when India’s growth rate is projected to shrink by 5 percent during the fiscal year 2020-21. And many Indian auto, pharma and electronic companies that heavily depend on Chinese supplies have already raised alarm bells against such a move in the absence of developing reliable alternatives. More revealingly, even US companies in India that relies on raw-materials from China have conveyed their anxiety on carrying on production in view of the reported move to ban Chinese imports.
How “Make in India” Became “Made in China”
From the very beginning, due to its inherent far-right economic orientation, RSS’ servility to imperialist masters, to Britain during the colonial period and then to US in the post-war neo-colonial phase is not at all a debatable issue. Hence, the RSS-led Modi regime’s allegiance to US imperialism is expected to be its normal behaviour. However, though credited with the ultra-rightist ‘Gujarat model’ of privatisation/ corporatisation during his long tenure as chief minister of Gujarat, on account of US visa denial to him following the Gujarat pogrom, Modi could not enter US for many years. Probably, this might have prompted him to cultivate his personal relationship with Chinese rulers by visiting China four times as chief minister of Gujarat, the only chief minister from India doing so, and again visiting China five times during 2015-18 as prime minister of India.
Modi’s five-day China visit in November 2011 was historic as it was against Manmohan government’s stand of not permitting him to travel to China. Modi went to China via Hong Kong and, according to reports, to the great embarrassment of the Indian ambassador, landed up at the Indian embassy in Beijing and during his visit met many Chinese companies willing to invest in Gujarat. This was followed by Vibrant Gujarat Global Investor Summit in 2013, and by 2014, could arrive at a deal on Chinese investments worth Rs. 9000 crore in the state. Apart from many Chinese firms such as Great Wall Motors Company Ltd and Shanghai Automotive Industries Corporation agreeing to set up mega vehicle manufacturing plants in the State, of particular importance was regarding the strategic Chinese investment in Mudra port owned by Adani. While ports like Mumbai and Tuticorin were not allowed to seek Chinese investment on account of security concerns, China’s investment in Mudra port remained an exception. In fact, the large-scale rolling-out of red carpet for Chinese investments in Gujarat was despite objections raised by the then UPA government at the centre. And as part of making Gujarat a Chinese investment hot-spot, Modi, in fact, went to the extent of initiating even Mandarin (China’s official language) coaching institutes and courses in universities in Gujarat.
No doubt, this “Gujarat-Cheeni Bhai Bhai” process accelerated once Modi became prime minister in 2014, and on his election Chinese media continued to eulogise the ‘Gujarat model’ followed by the 2014 visit of Chinese president Xi to Ahmadabad leading to a surge in Chinese investments in Gujarat and conversion of India as a dumping ground for Chinese exports. By the time of 2019 Vibrant Gujarat Summit, the committed investment by firms from China including Huawei were to the tune of Rs. 17000 crore in addition to proposals for a Rs. 21400 crore investment led by the Chinese solar giant East Hope Group in Dholera Special Investment Region along with an Adani-owned power plant at Godda in Jharkhand. This was over and above the June 2017 Rs. 2250 crore deal that Adani had with Chinese firms. Of course, this Chinese connection had other dimensions too. As per a document, revealed through Freedom Information (www.theguardian.com/ environment/February 2018; www.ft.com), Adani, Modi’s closest friend even sought Australian ministers’ help to write to a Chinese government agency vouching the controversial Carmichael coalmine project in Australia.
Meanwhile, after his ascendance as prime minister, the immediate initiative that Modi undertook was a pan-India extrapolation, this far-right ‘Gujarat model’ as prelude to the rapid transition from ‘Manmohanomics’ to ‘Modinomics’. At the same time, in conformity with RSS’ historical allegiance to US imperialism, even while maintaining his opportunistic Chinese link and camaraderie with Xi in relation to the economy, during the past six years Modi has strengthened India’s position as a strategic junior partner of US in latter’s geo-political contradictions with China by signing many military-to-military partnerships with Washington. Meanwhile, after a thorough overhauling of the last vestiges of Nehruvian state-led development paradigm including the abolition of the 64-year old Planning Commission, thereby transforming the state as a corporate-facilitator, Modi put forward the attractive formulation “Make in India” on September 25, 2014, with much fanfare. Its objective was to transform India as world’s “sweatshop” emulating the Chinese experience as a low-cost workshop of the world. The aim was to project India before the West as an alternative cheap-labour manufacturing hub by improving “ease of doing business”, removal of all barriers to the free entry and exit of foreign capital and a series of investor-friendly measures such as aggressive liberalisation of labour, tax and environmental laws for unfettered plunder of labour and nature by MNCs and their junior Indian partners. Coupled with Modi’s high-profile tours to neoliberal centres, the “Make in India” prognosis, amidst the pseudo-nationalism of the ruling regime, laid down the roadmap for India’s dependence on international capital at an alarming pace.
Obviously, even from a neoliberal perspective, the “Make in India” program, unlike the Chinese experience of making use of western capital in the initial phase of its capitalist transformation until the turn of the 21st century, was totally devoid of any domestic efforts to boost productivity and competitiveness. By utilising the ‘red-carpet for investors’, foreign companies wasted no time to enter the country and gobble-up precious natural and mineral resources and strategic public assets and critical infrastructure overheads through the “public-private-partnership” (PPP) route. And in accordance with the logic of corporatisation today, instead of developing employment-oriented productive spheres, capital that rushed in from the West, mainly from US with relatively obsolete manufacturing technologies, was only interested in ballooning the money-spinning speculative sectors thereby keeping up the bullish trend in the stock market and sky-rocketing of the Sensex. Accordingly, many concessions extended to US MNCs under pressure from Trump administration have led to a ‘financialisation-stagnation trap’ instead of adding up to real production, and this has been a contributory factor for unprecedented unemployment and economic downturn in India since 2014.
It was in this context that China, as the leading imperialist economy with up-to-date production technologies and whose manufacturing contributes around 30 percent to GDP (for US the corresponding share is only 11 percent) has been in a better position to take advantage of Modi’s “Make India”. The background for this was already there through Modi’s friendship with Chinese president Xi including his meeting with the latter as many as on 18 occasions! Cheaper and more efficient technology relative to that of the West has been a comparative advantage for China for grabbing projects in India. Probably, an interesting example in this regard is that of Indian Army’s 2017 contract with Beijing Protech New Material Science Company Ltd for the import of material fabric and boron carbon white powder essential for manufacturing bullet proof jackets (thepolicytimes.com). Earlier these raw material/ intermediate goods were imported from the US and Netherlands; but the shift was necessitated as the Chinese imports were 60-70 percent cheaper and the decision was taken following a series of firing tests to check quality in tune with the standardisation laid by Bureau of Indian Standards. When the usual security question regarding this Chinese deal came up, V K Saraswat, NITI Aayog member and former DRDO chief explained the government’s ‘helplessness’ thus: “It is a market force; we cannot do much about this. The only thing is if we find that the bulletproof jackets produced by the Chinese material are not up to the mark, then we will have to say, as of now there is no such reports.”Though a report on China printing Indian currency along with that of Brazil, Poland, Thailand, Malaysia and Sri Lanka (China is the only country that can perform the intaglio style of printing simultaneously on both sides of a banknote using a Colour Dance to improve note’s security) was there in the media (Deccan Chronicle, April 14, 2018), an official on condition of anonymity later denied it.
It is this “law of market” dictating neoliberal globalisation today that ultimately became decisive in unravelling ‘Make in India’ as ‘Made in China’. Despite Modi regime’s intensified military integration with US transforming India as former’s strategic base for its Indo-Pacific machinations directed against China, the US obsolescence in many badly needed technologies coupled with their high cost enabled China to effectively displace the US from many investment spheres. Accordingly, total Chinese investments in India rose from $1.6 billion (Rs.12000 crore) in 2014 to $8 billion (Rs. 60000 crore) in the beginning of 2020. If the planned or proposed investment is also added to this, the figure will be more than $26 billion (nearly Rs. 2 lakh crore; on the other hand, cumulative Indian investment as of now is estimated only at Rs.7000 crore). However, according to many observers, a major part of Chinese capital investment is often “rerouted”, that is from third country sources such as Singapore, which is technically the largest source of foreign investment for India today. During the UPA rule, Mauritius had been India’s biggest FDI source, which was mainly camouflaged US capital export to India (for taking advantage of the tax-avoidance treaty between India and Mauritius). Now under Modi regime, Singapore is replacing Mauritius as the biggest capital exporter to India may also be read along with India’s growing economic dependence on China. However, reliable data on this aspect are few and far between.
Now, coming to the concrete instance of Chinese investment with its thrust in the technology sector, the picture is too complex. In 2008 itself, India (Bangalore) with 1000 employees was the biggest foreign destination for the Shenzhen-based Huawei Technologies Company Ltd, world leader of 5G which (together with AI) is envisaged as the most strategic frontier technology. It is already reported to have carried out 5G trials in India much against the advice of Trump administration, though its future course of action in the wake of border dispute is uncertain. After Modi coming to power, as estimated by the Gateway House, leading Chinese tech MNCs have put an estimated $4 billion (Rs. 30000 crore) in Indian start-ups. Within five years of Modi rule, by March 2020, 18 of India’s 30 unicorns (unicorn is a start-up company valued at over $1 billion) are Chinese funded. Other 92 start-ups with less investments are also funded by Chinese companies.
Chinese software companies like Alibaba, Bytedance, Tencent, Huawei, ZTE, mobile companies like, Xiaomi, Oppo, Vivo, Oneplus, Coolpad, Motorola, LeEco, Lenovo, Meizu, Honor, Gionee, Gfive, Hair, TCL, and automobile giants such as Volvo, SAIC, Nippon, Shanghai Electric, Beijing Automotive, WISCO, China Dongfang, have already established there deep roots in India. Didi, Chunxing, Shunwei Capital, Fosun Capital, China-Eurasia Economic Cooperation Fund are well-known Chinese MNCs who have substantial investments in some of the important Indian start-ups such as Paytm, Ola, Snapdeal, Swiggy, Flipkart, MyDermacy, Hike Messenger, IBIBO and Make My Trip, Dream 11, Byju’s App, BigBasket,Delhivery, Oyo, PolicyBazzar, Quikr, Rivigo, Uddan, Zomato, etc. TikTok, the Chinese video app, has 200 million Indian subscribers and has overtaken the US-based YouTube in India. Alibaba, Tencent and ByteDance are in the process of overtaking the US giants Facebook, Amazon and Google in India. Chinese smartphones like Oppo and Xiaomi controls around 72 percent of Indian smartphone market leaving South Korean Samsung and American Apple far behind; and four out of the five top mobile phones in India today are Chinese brands. And unlike comparable investments from other imperialist powers, since Chinese investments are in fast moving frontier technology areas having complex linkages, their impact is considered to be disproportionate to the apparent size of such investments. In this situation, it is left to readers to ponder over whether Indians today can afford to boycott Chinese products.
Of course, the aforesaid ‘Chinese connection’ with “Make in India” is more explicit with respect to former’s domination in frontier technologies including digitisation. For instance, an important component of “Make in India” has been “Digital India” that too launched by Modi on 1 July 2015. But the last five years’ history of digitising India including Modi’s experiments with digital transactions amply reveals India’s abject dependence on China for the essential digital tools and digital infrastructures required for them. Even the ArogyaSetu App, India’s contact-tracing app to combat COVID-19, is modelled after the ‘authoritarian’ Health Code App of China. According to an MIT Technology Review, among 19 countries that designed similar apps, India belong to the category of the three countries, other two being China and Turkey, where the app poses greatest risks for user privacy. Even though India still depends on the US technology giants for a major portion of the digital software needed, Chinese monopolistic hold over the required digital hardware is explicit. A typical example is that relating to the swiping machines or PoS terminals which are indispensable for the ongoing digital payments/cashless transactions taken up by the regime as its flagship program.
In this regard, almost the entire PoS machines (around 3500000) in India today were made in China by two companies, Veriphone and Ingenica and directly exported to India. According to data published by an import tracking website Zauba.com, Ambani, India’s largest corporate player and very close to Modi together with Adani, have imported 435000 new 4G SIM cards from China. It is often said that through Jio, Ambani is trying to replicate the “Alibaba model” in India. Still there is no dearth of calls for boycott of Chinese products from far-right saffron quarters!
Along with this, Chinese capital’s penetration in many sectors of industry and engineering including solar power generation equipment, chemicals, aluminium, animal feed, automobile, metallurgy, construction, rail and port construction, etc. is regularly taking place. In the banking sector too, the People’s Bank of China (PBOC) already has a series of moves in India.
Recently, PBOC has increased its stake in Housing Development Finance Corp. Ltd (HDFC) in India. Even the 600ft high Patel statue, Modi’s towering tribute to Patel called “Statue of Unity” constructed at a cost of Rs. 2990 crore, is not free from the stamp of China. Announced in 2010 when Modi was Gujarat chief minister, but completed after his ascendance to prime ministership, the entire 6500 bronze panels weighing 1700 metric tons were cast in Jiangxi Tongquing Metal Handicrafts Co. Ltd, as India lacks such facilities.
By Way of a Conclusion
The above is only a bird’s eye view on India’s dependence on China and other imperialist powers for the emerging technologies. No doubt, the pitiable Indian situation is not an overnight development. When the country was opened up for globalisation a quarter century ago, its industrial and manufacturing system was characterised by extremely low productivity mainly on account of technological obsolescence. The crony capitalism-corporate-politician-bureaucrat nexus- oriented towards quick-yielding money spinning businesses and speculation that flourished since then had little interest in applying science and technology to production appropriate to the country. While India is world’s second largest smartphone market, it is too pitiable that the country is still incapable of manufacturing any of the phones itself. While R&D expenditure in imperialist countries is between 2.5 and 2.75 percent of GDP, the same in India is still less than one percent on an average. Here too, China is the global leader with almost 20 percent of total world R&D expenditure as of now. In accordance with its geopolitical global ambitions, the 2020 National People’s Congress of China has launched the “Made in China 2025” and “China Standards 2035” initiatives with an astounding $1.4 trillion (approximately 70 percent of India’s current GDP) public spending program to further shore up its domination in industry and frontier technologies.
On the other hand, India’s PSUs which were capable to undertake R&D even in advanced semiconductors were systematically dismantled or undermined, while the crony capitalists who made fabulous wealth appropriation through speculative corporatisation have little interest either in heavy industries or in technology development. Meanwhile, under the post-truth prognoses of “Make in India” and “Atmanirbhar Bharat”, the Indian private corporate sector is encouraged for technology imports through foreign collaborations and joint ventures. And the MNCs from China, US, Japan and other countries that are rushing in under the liberalised atmosphere in IT, biotechnology, pharmaceuticals (and revealingly not in heavy industries) and in similar other areas are not all willing for technology transfer or up-gradation here. COVID-19 has once again underlined that no country can move towards self-reliance without substantial investments in public health, public education and research and development. For a country of India’s size and diversities, there is no model that can be copied from abroad. Dependence on private corporate sector, financing from external sources, and offshore manufacturing bases at the cost of planned government intervention with appropriate people’s participation is becoming suicidal for India. The ongoing border dispute with imperialist China has exposed this vulnerability of India more than ever, and it is high time on the part of all progressive democratic forces to seriously think over a viable political alternative to this deplorable situation.