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.
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.