Road map to a failed state
As the Modi governments hard-nosed neoliberal policies lead the country to a dead end of economic stagnation and more hardships for the people, there is a real danger of an exponential rise in state-promoted intolerance and fascist tendencies.
By PRABHAT PATNAIK
There is a common view that the Modi governments economic policy is no different from that of the United Progressive Alliance (UPA) government. Indeed, even a senior Bharatiya Janata Party (BJP) leader has reportedly said that Modis policies were Congress plus a cow. This perception, however, is inaccurate. No doubt both the UPA and the National Democratic Alliance (NDA) governments pursue broadly the same neoliberal policies, but there is a difference. Since there were divergent views inside the Congress, with a segment around Sonia Gandhi insisting on certain measures of relief for the people even within the overall trajectory of neoliberalism championed by Manmohan Singh and P. Chidambaram, what the UPA actually ended up pursuing was an eclectic neoliberalism, or neoliberalism with a human face. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Right to Food (which was legislated but never got implemented because the UPA got defeated), the Forest Rights Act, the Right to Information Act, each of which was disliked by the neoliberal segment of the UPA, were all, nonetheless, pursued at the instance of the Sonia Gandhi group, with strong pressure from the Left during the tenure of the UPA I government.
Hard-nosed neoliberalism
Within the BJP or the NDA, however, there are no divergent views, there is only one view held by their supreme leader. Instead of an eclectic neoliberalism we have a hard-nosed neoliberalism, a neoliberalism that shuns the human face. The running down of the MGNREGS, the non-implementation of the Right to Food legislation, the repeated promulgation of the land acquisition ordinance (demanded by the corporate-financial oligarchy but not translatable into law because of the NDAs lack of numbers in the Rajya Sabha), the insistence upon the Goods and Services Tax (GST) which, again, is demanded by the corporate lobby but which would completely take away the State governments freedom to decide on tax rates and hence subvert the federal nature of our polity, are all instances of this hard-nosed neoliberalism.
On each one of these, no doubt, there would be very little difference between what Modi-Jaitley want and what Manmohan-Chidambaram had wanted, but Manmohan-Chidambaram did not always have their way. They had to compromise; Modi does not. What he and Jaitley are pursuing, therefore, is what I have called a hard-nosed neoliberalism.
The question of whether Modi subscribes to such unadulterated neoliberalism, or indeed what his theoretical beliefs are, if he has any, is beside the point. Towards the end of the tenure of the UPA II government, as the Indian economy started slowing down under the impact of the world capitalist crisis, the corporate-financial oligarchy succeeded in propagating the view that it was not neoliberalism itself (which had hitched the Indian economy to the vicissitudes of world capitalism) but rather the human face put upon it that was to blame. The Manmohan Singh government was portrayed to be weak, inter alia because it had succumbed to this populism (associated with putting a human face on neoliberalism) instead of being decisive on development, that is, pursuing hard-nosed neoliberalism. Hard-nosed neoliberalism was presented as the panacea for the crisis which the UPA governments populism had allegedly brought about.
Modi in his quest for power bought into this idea and projected it, for which he obtained massive corporate backing, and finance, during his election campaign. This backing, together with the Rashtriya Swayamsewak Sangh spadework and the Muzaffarnagar riots, won the election for the NDA; and the corporate-communal alliance that had thus come into being interpreted the election victory as a mandate as much for hard-nosed neoliberalism as for Hindutva nationalism, which is but a euphemism for communal-fascism.
Corporate-communal alliance
In fact, hard-nosed neoliberalism and Hindutva nationalism complement one another and constitute the ideological brew of the corporate-communal alliance. If hard-nosed neoliberalism is presumed to be essential for development, and if any provision of relief for the poor constitutes populism that is inimical to development, then it follows that anyone who opposes wooing international capital, which is an essential component of neoliberalism, and demands decent wages and work conditions or transfers to the poor, is, ipso facto, anti-national: such a person is holding up the nations development. A metaphysical nationalism that sees the nation as being entirely distinct from and placed above the people is, thus, as much pro-corporate as it is pro-Hindutva: not only, ironically, does such nationalism kow-tow to the metropolitan corporations and banks, but its very emptiness implies that it can be filled in by Hindutva shibboleths. Anything, from observing karva chouth to lynching beef-eaters and those celebrating Mahishasur, can be construed as an act of nationalism, and its opponents denounced as anti-national.
Not surprisingly, the last two years have seen substantial social retrogression, marked by an upsurge of casteism and communalism, together with a pursuit of hard-nosed neoliberalism. The Make in India campaign, whose basic thrust is to entice international capital to locate plants on Indian soil for meeting global demand, is the logical denouement of such a hard-nosed neoliberalism. But the irony is that the Modi government is pursuing a hard-nosed neoliberalism at a time when neoliberalism itself has reached the end of its tether.
The world capitalist crisis that began in 2007-08 is not just persisting but getting accentuated: it has now spread to countries like China and India that earlier appeared immune to it. Not only is there no initiative to end it, by way, for instance, of a coordinated fiscal stimulus among several advanced countries, but countries are currently vying with one another to effect exchange rate depreciations vis-a-vis the United States dollar, while the U.S. itself is resorting increasingly to protectionism. We have, in other words, a spate of beggar-my-neighbour policies, with each country making a futile bid to capture a larger share of a stagnant world market. In the absence of a new bubble getting formed (of which there is no sign), the crisis will persist, unless fiscal activism on the part of the state gets restored. But this will require the imposition of capital controls and a degree of protectionism, which mean a retreat from the neoliberal regime.
Capitalist crisis
Within the neoliberal framework itself there is, thus, little prospect of a recovery from crisis, a fact by now so well recognised that even conservative economists like Lawrence Summers are propagating a stagnationist thesis (and ironically claiming originality for it notwithstanding the fact that the Left has been advancing it for quite some time). With the world economy mired in stagnation and crisis, and with neoliberal capitalism at a dead end, Modis hard-nosed neoliberalism is bound to come a cropper. In the current situation, where the inducement to invest is low everywhere, the Make in India campaign, quite apart from being objectionable per se for kow-towing to foreign corporates, will not even generate much investment. With the consequent persistence of stagnation, the people who, even during the boom years of 2004-12 had witnessed an increase in deprivation (on this more later), will be hit still harder. This is because if a boom brings suffering, then its reversal, far from reversing the suffering, only accentuates it further.
Assiduous efforts will be made, no doubt, to project an image of the Indian economy as one that is in good health. Indeed the claim about India being the fastest growing economy of the world in 2015-16 is one such effort. This claim means little: the conceptual and statistical problems associated with the GDP (gross domestic product) estimates are well known; and the recently revised GDP estimates on the basis of which such claims are made have drawn flak even from government economists. To get a better picture of what is happening, let us just consider a few undeniable facts.
Foodgrain production in million tonnes over the last four years, starting with 2012-13, has been as follows: 257.1, 265.0, 252.0 and 253.2. Since the per capita foodgrain output for the peak year 2013-14 was more or less the same as that for 1990-91 (215 kilogrammes compared with 212), given the low level of foodgrain output in the two Modi years, there has clearly been a sharp fall in per capita foodgrain output in these two years compared with even 1990-91.
Dubious growth
The rate of growth in the Index of Industrial Production over the last four years has been: 1.1 per cent, -0.1 per cent, 2.8 per cent and 2.4 per cent respectively. Clearly, the industrial stagnation that set in towards the end of the UPA II governments tenure persists even today. It follows, therefore, that the main material production sectors, agriculture and industry, witnessed no noticeable absolute increase in output in the Modi years compared with before (agriculture, especially foodgrains, even witnessed an actual decline during the Modi years). Thus, the hype over the highest growth rate in the world is hardly justified. Such growth as has occurred has been mainly in the service sector, and that is growth of a very dubious kind. The decline in foodgrain absorption has been even sharper than in output. Even though we have seen that per capita foodgrain output in recent peak years was more or less similar to the early 1990s, per capita absorption even in such peak years has been distinctly lower. Consider the proportion of the population below the calorie norms of 2,200 per person per day in rural areas and 2,100 per person per day in urban areas (which are the official benchmarks for defining poverty). Compared with 1993-94, when the percentage of the rural population whose total spending on all goods and services was not enough to ensure that the food spending part gave 2,200 calories per person per day, was 58.5, the percentage in 2011-12, which was a peak output year, was 68 (both these were years when the National Sample Survey Office conducted large sample surveys). The percentages of the urban population not able to spend enough to obtain 2,100 calories per person per day were 57 and 65 respectively in those two years. Since these figures relate to a peak year, 2011-12, and since the two Modi years have witnessed lower output than 2011-12, the nutritional deprivation in these two years must have been even greater. In short, the growing nutritional poverty of the neoliberal period as a whole (which has made India worse off nutritionally than sub-Saharan Africa or the Least Developed Countries), far from abating, has got accentuated during the two Modi years.
Abysmal export performance
The world capitalist crisis has left its impact, though it is not the only factor, on the abysmal performance of Indias exports. For 17 consecutive months until April 2016, the latest month for which we have data, the growth of merchandise exports in dollar terms in each month over its level a year ago has been negative. For the fiscal year 2015-16, the decline in dollar value of exports compared with the previous fiscal year has been as large as 15.85 per cent. Such a sharp decline in exports would normally have caused a serious balance of payments crisis; what has come to the countrys rescue is the fall in oil prices which has also restricted imports in dollar terms.
In fact, but for the decline in oil prices the economy would have been in more dire straits by now: the depreciation of the currency would have been sharper, which, together with the higher dollar price of oil (in the absence of such a decline), would have greatly accelerated the rate of inflation through cost-push effects. And to balance the payments, in addition to the exchange rate depreciation, interest rate would have had to be raised to attract adequate foreign finance, which would have restricted the domestic level of activity even further. The fact that these have not happened is because of the low oil prices which have prevented Modis two years from becoming even more abysmal in economic terms than they have been.
Front Line
