Two Years Of PM Modi: BJP's 'Communal Fascism' Will Worsen Economic Conditions

When we think in terms of this government’s economic policies, they are obviously in a certain sense a continuation of what was happening under the Manmohan Singh’s government, basically the neoliberal policies which were being pursued by the earlier government are being pursued by the current one.

As a matter of fact the economic bureaucracy more or less remains unchanged, much of it is recruited from the IMF and the World Bank when you look at the chief economic adviser, the governor of the reserve bank, they are all the same and they are all from the stable of bank under fund, and consequently economic policy in a sense does become insulated from changes in government.

Having said that, I also feel that with this government there is a certain change as compared to the earlier one that arises because of the fact that the congress or the UPA spoke in a number of different voices, in other words, it was not something in which there was just one view -- the neoliberal view -- that was dominant. You had alternative positions and some of those used to get accommodated and consequently the neoliberalism of the congress was a kind of soft neoliberalism which now is getting much more hardened.

Even though this government is pursuing the same neoliberal economic policies, this neoliberalism has now got much more hardened tinge and I see this hardening in number of different spheres. The first which is the most obvious is the diminution which is taking place in a number of welfare programmes like the Mahatma Gandhi National Rural Employment Guarantee Scheme and so on, that was as you know a major flagship programme of UPA-1. Over time, in the last couple of years in particular, what has happened is that the effective allocation for that which is supposed to be a rights based programme, is supposed to be demand driven, has shrunk which basically means it is no longer a demand driven programme and it is now a much more reduced programme in scale than it used to be.

Now that’s a very obvious change which has taken place but along with it there are a lot of other changes which impinge on the welfare expenditure side of the government’s budget. One very important change which is taking place, not often commented upon, is that there is a centralisation of resources. Now the moment I state this many would say ‘what nonsense’ because we just had a finance commission and it has raised the share of the states in the divisive pool and the finance commission’s recommendations have been accepted by this government, so how can you say about an increased concentration of financial resources? But as you know, the devolution from the centre to the states used to occur under at least three different heads earlier. One was through the finance commission, the other one through the planning commission ( planning commission no longer exist so presumably it would be through the finance ministry) and the third basically used to be departmental devolutions. If you look at the total devolution under all heads then you find that the devolution under the non-finance commission heads has shrunk to such a great extent that even though the finance commission devolution has increased, as a total, as a proportion of GDP we have a reduction in the amount of funds being transferred to the states.

Now you know that one of the features of the Indian economy and polity of late has been the fact that many of the state governments, particularly the regional parties running state governments have really started a plethora of programmes which are criticised by the media in Delhi as being populist but none the less which actually have provided some succour to the people.

Now if you have reduced devolution as well as a tightening of the fiscal deficit, centre and state taken together, then many of these welfare programmes are going to be wound up. Therefore, not only do you have the centre reducing the financing under MGNREGA but I expect the centre is now through the reduced devolution of funds also going tighten up many of these ways in which some succour used to be provided as far as the poor people are concerned.

The third area in which you actually find a hardening of the neoliberal stance is of course the fact that there are a number of legislations which the corporate sector in India has been demanding, which is corporate financial oligarchy. For instance, there is an ordinance as far as the land acquisition is concerned even though the government needed a majority in the Rajya Sabha to push it through but there is a systematic effort now to push the GST Act for instance.

Now GST is something which again Mr Chidambaram had supported but Congress at the moment mercifully is going to slow on it, but the GST in my view is a major assault on the rights of the state. It is even possible to argue that even if all states agree to the GST, even if the centre agrees to the GST in so far as the Goods and Services Tax implies a change in the constitution, it must not be allowed to go through without an amendment to the constitution.

In other words this way of bypassing the constitution to introduce the GST which basically is going to tie the hands of the state from now onwards is something that is completely illegitimate. This is something which is being pushed through and likewise there is for instance, amending labour legislations so that the so called labour market flexibility could be introduced.

The fourth feature is of course this Make in India campaign, which essentially means providing freebies and goodies to the corporate sector, to not just domestic corporates but to international capital in order to induce them to undertake investment in the Indian economy and this implies providing, as I said, very substantial amount of subsidies because the capital is induced to invest or their state of confidence gets boosted when they get money from the budget.

Now all these representing my view as hardening the neo-liberalism strategy but that is remarkable because we are now in a period in which, to my mind, it is obvious that neoliberalism is at the end of its tether. We had a world capitalist crises which began in 2008, which is still continuing, if anything it is worsening. As a matter of fact, poverty in Europe, in the advanced capitalist countries is on the rise; the world economy is virtually stagnant; the United Sates which is supposed to have come out of the world crisis, is once more getting mired in recession.

In this period of crisis there is absolutely no way that the world economy has any chance of moving forward. What is happening now is in fact is a situation where different countries are engaged in competitive exchange rates devaluations, which is referred to by economist as ‘Beggar my neighbour policy’ that each wants to export unemployment to the other.

Now all of them devaluing at the expense of United States dollar and consequently you may feel that “beggar my neighbour policy” would ultimately mean “beggar the United States” because the United States dollar is the one which is appreciating, with which countries are devaluing their currencies. But the United states is increasingly going protectionist, the fact that now for instance even outsourcing is something which is being targeted by US administration and is symptomatic of a number of measures.

Consequently as I said we are now in a world in which the period of neoliberal globalisation appears to have run its course with no immediate ways of getting this world economy out of the world crisis. The fact that at the same time this government is pursuing a hardening of neoliberalism only implies the crisis is hitting us to an extremely serious extent, much more than it would otherwise have done. This is visible in a number of ways.

The index of industrial production is virtually stagnant. It had been stagnant even before, I think in 2012-13 it was 1.1%, then -0.1%, and then it was 2.8% and now its 2.4%, ending March 2016. So industry is absolutely stagnant.

In agriculture the last good harvest, the peak food production year probably was 2013-14 and after that food production has declined. So obviously you look at the material production sectors you find that there is virtual stagnation even if not decline compared to the period before this government took over. If you look at exports for instance for virtually a year now, year by year, the export earnings are actually declining in absolute terms. This is because the world economy is stagnant; this is because of the fact that the US is introducing a certain amount of protectionism and this is also partially because of the fact that all currencies, against the dollar, are depreciating, but the rupee is depreciating less than the other currencies so that we become uncompetitive, we save the other countries exports.

Consequently, we are having decline in exports in absolute terms month after month. The only thing that has allowed the economy to keep its head above the water is obviously the fall in oil prices. It meant that inflation has been moderated somewhat, even though we still have 5% inflation, and of course the fall in oil prices also means that the balance of payments has not become as serious as they would have if it was the case that the decline in exports would have actually shrunk our export exchange earnings.

Now it turns that even the remittances are declining, which is not surprising as another symptom of recession, so the fact that the balance of payments are not yet in a serious crisis is to a very significant extent because of the fall in the oil prices. If you have a rise in oil prices, the payment crises would become even serious , rupee would fall further and when the rupee falls further, inflation would accelerate so the economy is really keeping its head above water only because of the fact that oil price continue to remain low. But obviously this is something which is going to change any moment and the moment that happens, the crisis would hit us.

As a result what we found in last two years is that, here is the crisis, the crisis that require a degree of imagination to think in terms of ways of insulating the economy from its impact but that imagination is not being shown. This government is not capable of that kind of an imagination and in any case it is under pressure from the corporate backers of the government to pursue a policy which as I said amount to a hardening of neoliberalism.

Now that brings me to the last point which I want to leave you and that is the following that we think of this government, I certainly think of this government as basically to use Amartya Sen’s term ‘Communal Fascist’ government that it is actually fascism of a communal kind, it’s not the classical fascism but an Indian variety of communal fascism, but there is a major difference between fascism of the classical kind and what we see here. You see fascism of the classical kind if you look at 1930’s, Germany and so on, of course they were horribly fascist, but they actually brought about a recovery in the economy from the great depression. The first countries that recovered from the great depression through a boosting of military expenditures were Japan, 1931, Germany, after 1933 and as a result you found that actually fascism because of its militarism, actually resulted in improvement as far as the level of economic performance is concerned, unemployment and so on are concerned.

Here we have a situation where this fascism through its hardening of neoliberalism is not only incapable of bringing about any improvement in the economic condition but as a matter of fact is likely to worsen the economic conditions. Economic conditions have been pretty bad even if you look at a simple index of per capita food grain absorption in urban or rural areas, it has declined. If you look at the proportion of population which is below 2200 calories which is taken as poverty norm in rural area, that proportion which you compare 1973-74 with 1993-94, there is a remarkable increase in proportion below that minimum norm, it’s about 68% according to 2011-12, National Sample Survey large sample data, 2011-12 was a very good crop year since then there has actually been a further decline in food availability and consequently an increase in nutritional standards of the population. Exactly the same as far as the urban areas are concerned, 2100 calories. You take the proportion of the population whose daily intake falls less than 2100 calories, about 65% in 2011-12, it is now much greater because as I said the food situation compared to then, is even worse.

If that is the case, then you find that misery is increasing , the capacity of this fascist government unlike classical fascism to bring about a change in condition of economy, is negligible and if that is the case then it seems to me that there would be much greater attempt on the part of this government, because it would be so incapable of bringing about an economic improvement there would be much greater attempt to talk about anti national, about victimising people, about attacking opponents, about closing down institutions, closing down universities and so on. So the ideological offensive on the criterion of the so called nationalism is likely in the coming months and years to be far more than even what we have seen because of the failures on the economic front which I anticipate.

(This is a transcript of a presentation made at the “Idea Of India Conclave”)
(Photo: Jobless youth queue up at an employment exchange)