Dim Prospects of Recovery for COVID-19 battered Indian Economy - P J James

01 May 2021

Sudden escalation in the second wave of COVID-19 in India with over 3 lakh cases (315660 cases recorded in India at 11.15 pm on April 21, 2021 is the highest-ever single-day spike in coronavirus infections in the world. Till now, 300310 were the highest single-day infections reported in US on January 2, 2021) and more than 3000 deaths per day has again belied the neoliberal pundits’ prediction of an uptrend in its economic indicators. Ongoing nation-wide vaccination drive that is leaving people to the mercy of Indian and multinational pharma companies coupled with re-imposition of virus management measures such as containment zones, night curfews, reduction in working-time and reverse migration of workers and so on will further dampen economic activity in general. Though IMF and other international agencies had predicted an economic recovery with double-digit GDP growth rate in 2021, such a prospect seems to be very dim as of now. Even UNCTAD’s modest forecast that India is to recover at the rate of 3.9 percent in 2021 is also going to be wishful thinking in view of the critical situation in the country. According UNCTAD, rather than the stimulus packages aimed at easing supply-side constraints (meaning pro-corporate stimulus packages, a large increase in public spending for pandemic relief that is expected to boost the purchasing power of the people is the only route towards recovery.


Revealingly, as already discussed much, India’s economic collapse in 2020 has been historic since the accumulated income loss as measured in terms of GDP for the fiscal year 2020-21 relative to 2019-20 (pre- COVID period approximately) was 27.7 percent compared to around 4 percent for the global economy. On the other hand, UNCTAD forecasts a 4.7 percent GDP growth for world with a 4.5 percent growth for US and 8.1 percent for China (according to latest report, China has recorded 18.3 percent GDP growth during the first quarter of 2021), and an average 4.7 percent growth for the world economy in 2021. This growth “will still leave the global economy over $10 trillion short of where it could have been by the end of 2021 if it had stayed on the pre-pandemic trend.” However, in view of the second wave of the pandemic at a global level, on account of pro-corporate/neoliberal austerity steps and supply-side policies, even the moderate predictions of UNCTAD regarding an economic recovery are going to be too optimistic.  


Of course, both international and Indian sources have already acknowledged Indian economy’s historic collapse, along with IMF’s own characterisation of the same as the “worst among G-20 countries” in 2020. Obviously, this has been due to the far-right, crony capitalist policies of Modi regime such as Demonetisation and GST coupled with the most stringent, most prolonged, ill-conceived, coercive and authoritarian lockdown superimposed by it on a population of 138 crore. That’s, the neoliberal fascist offensive by Modi regime that acted as economic holocausts has led the entire economy to a frozen state bringing all productive activities to a standstill as exemplified in a paralysis of the agricultural sector that provides sustenance to 50 percent of the people and destruction of the informal and traditional sectors which are the sole source of livelihood for 95 percent of the 52 crore workforce in India.

 A corollary of this neo-fascist offensive has been the unprecedented concentration of the country’s wealth with Ambanis and Adanis through such measures as pro-corporate tax exemptions, neoliberal labour and environmental deregulations and the series of stimulus packages that directly channelled trillions worth of public money into corporate coffers.  And, in consonance with the logic of neoliberal accumulation, this fabulous wealth appropriation by the billionaires, instead of contributing anything to the employment-oriented economy, went on ballooning the money-spinning speculative spheres, again leading to further appropriation of public assets by a handful of the corporate superrich. Modi’s megalomaniac’s approach to COVID, starting from such obscurantist practices as “switching off lights” and “banging vessels” and finally superimposing the most coercive and stringent lockdown at a stretch for two months in an unjustified and uncalled for manner had led India to the disastrous situation of the worst performing economy in the world during 2020.

 In this context, when the COVID tsunami in the form a ‘second wave’ is ravaging India, its devastating impacts are on the top of the severe damage to the economy that has already been inflicted by Modi’s corporate-saffron fascist policies.  For instance, joblessness which is highest in India’s recorded history, have already pushed tens of millions into absolute poverty. However, instead of a badly needed public spending program, Modi, at the behest of his corporate friends, has accelerated the privatisation-corporatisation agenda and all-round neoliberal policies with intensified vigour. Consequently, for instance, under the nationwide covid-vaccination drive, without even resorting to namesake public control, Modi has entrusted the vaccine production, its price determination and distribution solely to big pharma, both Indian and foreign, leading to a further amplification of all the pandemic-induced socio-economic vulnerabilities in the country. Following the announcement of his pro-corporate vaccine policy that is to take effect from May1, 2021, the Serum Institute, the producers of Covishield, that constitutes 90 percent of India’s vaccine supply as of now, has suddenlyrevised its price that was available at private hospitals at a price of Rs.250 to a whopping Rs.600 per dose. While it ensures super-profit for vaccine monopolies, as in the case of all far-right policies of Modi, it is intended to push large sections of poor out of the social safety net.

Coming to the economic scenario, while Modi regime is denying vast majority of Indians their basis sustenance, as reported by the Forbes 2021 list, the ranks of Indian dollar billionaires have swelled further from 102 to 140 in 12 months, their combined wealth doubling to $596 billion in just the past year, when the working and oppressed people of India were bearing the entire burden of the first wave of Covid. According to Forbes, these 140 billionaires now gobble up 22.7 percent of India’s GDP of $2.62 trillion. While the economy was contracted and vast majority of Indians were pushed down on the economic ladder, the combined wealth of the 140 billionaires has almost doubled to $ 596 billion (the combined wealth of the top two -- Ambani ($84.5 billion) and Adani ($50.5 billion) -- comes to $135billion) in the year 2020. Forbes also noted how, in spite of occasional ups-and-downs, the stock market scaled new heights during the same period leading to a gallop in wealth appropriation by the speculative superrich class. Thus, when the GDP contracted by more than one-fourth, the combined wealth of India’s crony capitalists went up by more than 90 percent! This situation, that’s characterised as “prosperity rules at the very top” while majority collapses continues unabated in 2021. 

While India thus has the third highest number of billionaires in the world after the United States and China, India under Modi has totally abolished the wealth tax along with reduction of corporate tax from 30 percent 15 percent. A 10 percent wealth tax (as a pandemic tax) alone on the superrich would have yielded many lakh crore rupees to the public exchequer which we could have been used for running the National Rural Employment Guarantee Programme to provide sustenance to tens of millions of poorest Indians for many years. This tax money should have also been used for distributing food grains to the hundreds of millions of starving Indians including migrant workers from the buffer stocks which during the pandemic time in mid-2020 reached 104 million tons. In the same vein, this money would have been used for extending healthcare and education to the poor. On the contrary, the anti-people fascist character of the regime has become self-evident to the whole world, as India (having third position in the number of billionaires and second in food and agricultural production) ranked 131 in UN Human Development Index-much below ‘least developed’ sub-Saharan, Latin American and Asian countries. 

Meanwhile, under the cover of “Aatmanirbhar Bharat Abhiyan” which is another reincarnation of “Make in India”, many lakh crore worth of “stimulus packages” were being granted to the corporate thugs called “wealth creators”, along with outright sell-out of the entire 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. While even the US under Biden in the beginning of 2021 again announced a ‘rescue package’ worth $1.9 trillion (equivalent to almost 90 percent of Indian GDP) mainly as direct cash transfers to people, the paltry Rs. 2 lakh direct benefit transfer to the people (along with Rs. 27 lakh crore worth corporate ‘stimulus package’) carried out by Modi during 2020 amounts to just one percent of the country’s GDP. Its outcome has become clear. For, on account of demand-push initiatives, according to latest forecasts, unemployment in US is expected to fall from 8.1 percent in 2020 to 4.1percent in 2022 along with an economic recovery in 2021. 

But under the corporate-fascist Modi regime that uses COVID as an opportunity to suck out whatever left in the arteries of common people for fattening corporate cronies, the economic contraction has become irreversible and is going to accelerate further. Obviously, in consonance with the character of neoliberal accumulation, the biggest-ever wealth transfer to the billionaire class is not used for employment-oriented production, but to horrific levels of speculation, plunder of nature and other money-spinning businesses. As we have previously analysed, Modi’s nexus with the speculative corporate oligarchs like Ambani and Adani has pushed India into a vicious corporatisation-speculation trap again leading to 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.

 At a time when even neoliberal centres have suggested a return to public-expenditures and demand-push policies for sustaining the economy, saffron-fascist regime is unwilling to deviate from its arch-reactionary character. Modi’s repeated corporate-stimulus packages is continuously pulling back the badly-needed investment in the productive spheres. The latest example of this is his COVID vaccine policy of unleashing big-pharma over the production, distribution and marketing of vaccines in the country. Even in this hour of crisis when India has become the epicentre of the second wave of COVID, Modi is reluctant to resort to a public financing of the vaccination project; instead he is keenly using the vaccination drive for unbridled profiteering by private pharmaceutical companies. Being a typical neo-fascist regime, Modi govt. is deploying all avenues at its disposal for the maximum wealth appropriation by corporate speculators at the shortest possible time. And this saffron fascist move against workers and all oppressed including dalits, adivasis, minorities, women and even children, and on political opponents and dissenters is quite unparalleled today. A broad antifascist front capable of defeating the saffron-fascist regime is the only political option  to overcome this horrific situation.

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