June 22, 2014

The Intelligence Bureau Report

Prabhat Patnaik

THE Intelligence Bureau report suggesting that foreign-funded NGOs are holding up the nation’s “development” could be dismissed as a silly piece of officialese, were it not for the fact that the government of India seems keen to use it not just for acting against some particular NGOs but for breaking down any opposition to the process of primitive accumulation of capital unleashed by neo-liberalism. The initial results of the “merger of corporate and State power”, which constitutes the essence of fascism and which the Modi government epitomizes, are manifesting themselves through the attack on NGOs on the grounds of their holding up “development”. The Left, let it be said, has always been circumspect about foreign funded organisations, but the reason for its circumspection has been the possibility of imperialism using such organisations to promote its interests. Its objection to foreign funding in other words has sprung from its anti-imperialism, which means above all its opposition to the ascendancy of metropolitan capital in the realm of the economy. But the government’s objection, articulated through the IB, is precisely for the opposite reason, namely that such NGOs hold up the incursion of metropolitan capital into the economy. The government believes that multinational corporations are good for the economy; that the ascendancy of metropolitan capital is good for the economy; that imperialist domination over the nation, through MNCs displacing petty producers, through multinational banks outstripping or taking over nationalised banks, through multinational mineral companies controlling the natural resources of the country, as had been the case with foreign capital during the colonial period, is good for the economy. But these “good” prospects do not get realised according to it, and hence “development” suffers, because NGOs, typically foreign-funded, stand in the way. In short, while the Left argument against foreign funding of organisations is that it would serve to promote the interests of imperialism, the government’s argument is that it would serve to oppose the interests of imperialism (whose realisation, it believes, leads to “development”). BEMUSING POSITION The political economy of the government’s position is bemusing. Imperialism in its totality (i.e., covering several metropolitan countries), through its numerous front organisations, through the World Bank and other multilateral agencies which act at its behest, and through the plethora of foundations via which it operates, no doubt constitutes the biggest source of foreign funds, apart from the non-resident Indians. If foreign funds are holding up “development” (which the government takes to be synonymous with promoting the incursion of metropolitan capital), then the question to ask is: why does imperialism sustain this entire bunch of organisations that act against its own interests (which are synonymous with the interests of metropolitan capital)? Is it in imperialism’s interest to have such “development” in India, or is it not in imperialism’s interest? If the former, then why should it finance all these organisations to block its own interest? If the latter, then why is the government so keen to tie up with metropolitan capital, which supposedly does not want such “development”, for ushering in “development”? Or is there some altogether different funding agency, some hitherto unknown third party that is funding all these organisations to prevent metropolitan capital’s ascendancy over the Indian economy? If so, then what is its identity? There can be two possible answers to the question of why certain NGOs continue to get foreign funds, even from imperialist agencies, despite their opposition to incursion by metropolitan capital: one, that imperialism is a structure not a conspiracy. Organisations can operate in the interstices of this structure, and draw funds from imperialist agencies, with agendas which, while not threatening imperialism in any basic sense, are not necessarily congruent with its agenda, and can even serve to counter the process of primitive accumulation of capital in specific cases. The other answer is that imperialism itself, while wanting metropolitan capital’s ascendancy over the Indian economy, is circumspect that this should not be achieved through such a wholesale alienation of the people that it becomes costly to maintain it. It is for that reason that it is even willing to finance certain organisations that articulate the people’s grievances. In either case, however, the question arises: what is wrong with such organisations articulating the people’s grievances? Why should riding roughshod over such grievances, if it even makes imperialism circumspect, be considered a desirable goal by a democratically-elected government of the Indian Union itself? FASCISTIC MINDSET The fuzziness of the government’s political economy however is part of the fascistic mindset of the Hindutva brigade. This brigade is “anti-foreign” but not “anti-imperialist”. Its political economy consists precisely in the fact that it does not have one. Just as the German Nazis denounced the Jews (all of them!) for exploiting the ordinary people in their capacity as capitalists, but were not against the capitalist system (on the contrary they were closely linked to German monopoly houses), likewise the Hindutva government accuses “foreigners” of holding back the nation’s progress but not imperialism whose hegemony it welcomes. The ire it seeks to arouse and cash in on therefore is against the skin colour of the “foreigners”, not against any structure (of the sort that imperialism represents). This position is precisely the opposite of the Left position, which does not invoke ethnic, religious or racial differences for arousing people’s ire, but seeks to mobilise them against certain structures that involve exploitation. This implicit focus on skin colour also allows the government to draw distinctions to its own advantage: its opposition to foreign funding does not extend to funding by non-resident Indians even though the latter are not without agendas of their own. The BJP and the RSS are among the largest recipients of NRI funds, which too constitute foreign funds, but while foreign funding from the NRIs is considered totally acceptable, that from other sources is not. If the government is serious that foreign funds should not be used for influencing the economic and political direction of the country, then it should enact appropriate legislation, covering all sources of foreign funds including the NRIs, for this purpose, instead of saying (in effect) that foreign funds deployed for agendas it does not like are objectionable, but foreign funds deployed for agendas it likes are welcome, a distinction that amounts to an interference in the rights of NGOs. It amounts also to endorsing officially an insidious distinction: foreign-funded NGOs promoting the Hindutva agenda are acceptable but not foreign-funded NGOs that agitate against the displacement of peasants and tribal people for “development” projects. This distinction in turn has other serious implications. If promoting an agenda approved by the government becomes the criterion for distinguishing between NGOs, i.e., if opposition to government policy is decried as being anti-“development”, and hence “anti-national” (the link to “foreign funds” buttressing this impression), then tomorrow this “anti-national” stigma can be made to stick against anyone opposed to the government’s “development” agenda, including someone who does not receive any foreign funds at all. In other words once the crutch of “foreign funds” has been used to link opposition to the government’s “development” agenda with being “anti-national”, then this link can continue even after the crutch is removed. This link itself then becomes a part of the discourse, so that trade unions, Left activists, non-foreign-funded NGOs, indeed anyone opposed to the government’s “development” agenda, and raising his or her voice against the corporate loot which this agenda necessarily entails, can be branded as being “anti-national”. This is precisely how the merger of corporate and State power manifests itself, namely, using a State agency, namely the Intelligence Bureau, to build up an atmosphere conducive to unbridled corporate aggrandizement. What is particularly breath-taking is the liberty taken with economics in the IB’s argument. It is claimed that on account of opposition to big ticket investment projects such as POSCO and Vedanta, the country is at present losing 2-3 percent of its GDP annually. Since India’s GDP at market prices in 2013-14 is likely to have been around 112 lakh crores of rupees, the argument is that if the big ticket investments had gone through then this should have been 2-3 percent higher, which means (taking the mean figure of 2.5 percent) Rs 2.8 lakh crores larger. The IB’s calculations, like all such calculations, must assume away any demand constrain on output (for otherwise it cannot make all these claims); let us therefore do the same. In that case, taking an average capital-output ratio to be 4, the capital stock should have been 11.2 lakh crores higher at the beginning of 2013-14 than it actually was, and this higher figure would have been achieved presumably through the contributions of Vedanta, POSCO et al. Now, these companies have not been knocking on India’s door since time immemorial; their interest in India and the agitations against them are recent phenomena, say since the last ten years, i.e., since 2003-04. The IB claim therefore amounts to saying that Rs 11.2 lakh crores of cumulative investment has been “lost” because of agitations over the last decade, which means Rs 1.12 lakh crores per annum on average at 2013-14 prices. The average GDP at market prices for the decade as a whole, which would correspond roughly to the mid-point of the period, at 2013-14 prices, would be just short of Rs 80,000 crores; this means that, according to the IB’s figures, gross investment to the tune of roughly 1.5 percent of GDP on average was annually “lost” during this period. When companies make “investment” they only raise the finances needed for it; the real resources for such investment comes (except in a demand-constrained system which we are deliberately assuming away) either through cuts in consumption (public and private), and hence higher “savings”; or through borrowing from abroad to sustain a larger current account deficit. Since over the period of the last decade, inflation was rampant, raising an additional 1.5 percent of GDP through higher savings would have exacerbated inflation. And if the 1.5 percent was to come through a larger current account deficit, then the current deficit to GDP ratio would have exceeded 2.8 percent which the Planning Commission considers sustainable: the rupee would have plummeted even earlier than it actually did, and would not even have staged the partial recovery it has done. And if the companies like POSCO, and Vedanta, had literally brought their own foreign exchange for paying for the import of capital goods required to raise investment by a further 1.5 percent of GDP, then the country’s external debt to GDP ratio at the end of 2013-14 would have been 10 percent higher! Every single one of these courses in short would have been unsustainable. Whichever way we look at it, bland assertions about “loss” of GDP constitute very poor economics; but that alas is the fashion these days. Now, Vedanta itself has got into the act and is claiming that agitations against it alone have cost the country 2 to 3 percent of GDP annually! The corporates are clearly on the war path, as one would have expected after the Modi victory.