October 19, 2014

Modi Govt’s Deadly Cocktail

THE deadly cocktail of imposing greater economic burdens on the people, on the one hand, and sharpening communal polarisation, on the other, continues to be intensified under this Modi-led NDA government. Much is being made about a fleeting decline in the Wholesale Price Index (WPI), according to the data released by the union commerce ministry, which shows that the annual rate of inflation, based on the monthly WPI stood at 2.38 percent in September 2014 compared to 3.74 percent in the previous month and 7.05 percent during the corresponding month of the previous year. The elementary fact is that as far as the common man is concerned, what matters to his daily existence is the Consumer Price Index (CPI), which always is exponentially higher than the WPI. Anybody who has the experience of visiting the markets regularly will confirm the fact that the prices of all essential commodities continue to rise imposing further burdens on their quality of life. Further, the concept of the inflation rate must be understood. A fall in the inflation rate does not mean a fall in the prices. What it means is that the rate of rise in the prices is lower than what it was. Prices are nevertheless rising. This elementary economics seems to have escaped the ministers and spokesmen of the government who are being ably cheered by the India Inc. These statistics come at a time when there is an unprecedented decline in the international prices of oil that has greatly eased the pressures on India by lowering our import costs. Many have pointed out that this sharp decline in international oil prices is an engineered one aimed at squeezing Russia, which is a major oil exporter, in order to mount pressures on it to withdraw from its intervention in Ukraine in the defence of the besieged common people there. USA and Europe seek to break Ukraine from Russia’s dependence and utilise its vast natural resources to bolster their staggering economies by incorporating it into the European Union. Notwithstanding the validity of such an explanation, this sharp fall in international oil prices should have led to a decline in our current account deficit. This would have eased a large number of pressures on the Indian economy and its global standing. However, in September this year, the trade deficit rose sharply to an 18 month height of $ 14.2 billion. This is because of a massive surge in gold imports. In the month of September alone, the imports increased manifold to $ 3.8 billion compared to $ 682.5 million last month! It must be recalled that during the last year of the besieged UPA-II government in order to contain the trade deficit, severe restrictions were imposed on gold imports by the then government. This had hurt the India Inc. badly who were investing their huge surpluses in speculative activities – real estate, gold accumulation and transferring their savings into foreign exchange, thus lowering the value of the Indian rupee. Clearly, in order to favour India Inc. who rendered a magnificent service of financially supporting the Modi election campaign and who continue to `cheer lead’ today, this government seems to have eased such restrictions on gold imports. All this is, of course, detrimental to our economic fundamentals. Since Modi took over as the PM, the four sectors of the economy which were showing signs of revival have actually registered a decline. According to the official government statistics on index of industrial production, the figures for these four sectors are: In May 2014, mining and quarrying – 125.6, manufacturing – 181.6, electricity – 183.2 and the general index – 173.8 declined in June 2014 to 121.5, 178.2, 181.6 and 170.5 respectively. Such is the truth! On top of this has now come the latest data on the Consumer Goods Index. This declined by a whopping 159.9 percent in August 2014. This is 6.9 percent lower than the corresponding period last year. It is, in fact, lower than what it was five years ago, i.e, November 2009. What this clearly means is that the people are having lesser and lesser disposable incomes in their hands to purchase consumer goods. This is only natural given the fact that a larger and larger share of their incomes is being consumed by the costs of sheer survival. Coming as this does during the `festival season’, it shows the real desperate living conditions of the vast mass of our people. Such a decline in consumer expenditures and fall in the sale of consumer goods is a natural dampener for any growth in investments. This is because unless the purchasing power in the hands of the people increases, their capacity to buy cannot increase. On the contrary, this is decreasing because of the continuous relentless rise in the prices of all essential commodities. Further, this easing of international oil prices should have led to a corresponding decline in the prices of petroleum products being sold domestically. Despite the completely irrational policy of the government to equate the domestic prices of petroleum products to international prices, while the costs of refining crude oil (more than 90 percent of our imports) into different products is much lower in India than internationally, the prices of diesel have not been reduced. This continues to impose burdens on the vast mass of the Indian people, particularly the farmers already suffering due to inadequate rainfall this monsoon, who bear the burden of high diesel prices. The country is being promised that this would be done soon! The decline in the petrol prices is also much less than the international price decline, thus, permitting the petroleum retailers to continue to reap super profits. This is the meaning of the `payback time’ to those who have handsomely financed the Modi election campaign. The only way to provide some relief to the suffering people is by greatly bolstering public investments that will create additional employment while building our much-needed infrastructure. On the contrary, the Modi government has embarked on a massive privatisation and disinvestment programme which is likely to reduce further even existing job opportunities. Further, in his first Independence Day Red Fort speech, PM spoke of making India an industrial hub by declaring “Made in India” as our `motto’. In the US, he spoke repeatedly of “Make in India”. The former is propagated declaring the strengthening of India’s domestic industrial base while the latter is an open invitation for foreign investments, particularly US investments. Their main objective always remains profit maximisation and not augmenting India’s productive capacities. India, thus, appears ready to further liberalise its economy by further opening up of our markets, resources and cheap labour for profit maximisation. This is the surest recipe for imposing further hardships on the Indian people. Simultaneously, the RSS and its various tentacles have sharpened their campaigns for communal polarisation. This is the old stratagem employed by the RSS/BJP - while pursuing neo-liberal economic policies imposing greater burdens on the people, sharpen communal polarisation and, thus, seek to reap the consequential electoral benefit. It, thus, practices the worst form of vote bank politics of consolidation of the majority Hindu vote bank on the basis of communal polarisation. This is confirmed by the RSS chief’s nationally televised Vijaya Dashami speech which warns of “a serious upsurge in Jehadi activities”, especially in Kerala and Tamilnadu and “illegal migration of a particular community” in West Bengal and Assam etc. Such efforts to sharpen communal polarisation, through a completely unscientific and motivated rewriting of Indian history, come while urging people to restore “the pride of their national Hindu identity”. He said that for millennia, “The unbroken current of national thinking that has prevailed in the vast region between Himalayas and its extensions on one side and the sea on the other, has been known as Hindutva”. He, thus, completely negates the syncretic civilisational advances of our great country. The campaigns on the issue of `love jihad’ are now being confirmed as being `engineered’ by the RSS/BJP to rouse such communal passions and consequent polarisation. The so-called `victim’ of an alleged gang-rape and forced conversion in Meerut, two days later retracted all earlier charges. It has now been shown as a case of inducement by a local BJP leader in Meerut who paid money to the family to force the girl to make such a charge. The police has now filed a case of assault and threat to murder against this girl’s parents (Times of India, October 15, 2014). Likewise The Indian Express (October 11, 2014) reports that VHP’s leader Sudarshan cites figures to show “the trend” of `love jihad’, claiming at least 100-150 such cases in the past five years in Meerut region alone. “Asked for details of even one, Sudarshan mentions a case in Mawana in rural Meerut. Immediately, though, he backtracks. The girl who had turned complainant after eloping with a Muslim boy, Sudarshan confesses, had run away with him again”! Thus, the diabolic agenda is clear: Transform the secular democratic Indian Republic into the RSS vision of a rabidly intolerant fascistic `Hindu Rashtra’ and reap political and electoral benefits through consequent sharpening of communal polarisation while simultaneously imposing further back-breaking economic burdens on the people. (October 15, 2014)