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.
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.
Contrary to the tall claims made by the finance minister, first there was all round slow down; Modi-2 gave many sops to the corporate giants and to the foreign speculators investing in the stock exchange to get out of it, while abandoning the masses who are left to the mercy of these looters. The RBI also came out with a 1.76 trillion largesse, which also will finally go to the pockets of these looters. At the same time, in spite of the finance minister’s assurances and the untiring justifications by the cyber warriors of RSS, as the purchasing power of not only the 65% below poverty line sections, but also of the middle classes continued to go down, as our economy depends overwhelmingly on internal market, the slow down and recession are continuing. Thousand of middle and small industries are closing down, major industries started cutting down production and throwing out lakhs of workers and white collar employees. As recession is accelerating even in the second quarter of this financial year (2018-19), Modi-2 has come out with the economic report which says even in the first quarter (April-June) itself the GDP growth had come down to 5% from the previous quarter’s 5.8%! So, one can imagine what will be the GDP growth in this second Quarter!
Modi-2’s efforts are to cover up these steep falls in the fields of production and consumption by intensifying further the saffronisation and fascisation projects more feverishly as we are seeing in J&K and Northeast glaringly, and all over India. But it forgets that, as the unemployment and price rise continues to make life miserable for increasing number of people, even the poor among the majoritarian Hindutva bloc, it is creating, are also going to recognize that they cannot forget for long the hunger and miseries just by chanting Jai Shriram!
The Modi-2 is intensifying corporatization and devastating the masses and environment, destroying the purchasing power of the people very fast. It cannot come out of the cycle of crises in the economic field however hard it tries. In the current quarter the GDP growth is going to fall further.
CPI(ML) Red Star.