June 12, 2016

Modi’s Two Years

Prabhat Patnaik

NEO-LIBERALISM is usually portrayed in terms of a “State versus Market” dichotomy, as entailing greater recourse to the market in lieu of State regulation, and hence constituting a “retreat of the State”. This is erroneous: neo-liberalism is a class phenomenon, which entails an intensive assault by globalised finance capital, the new leading actor on the world stage with which the domestic corporate-financial oligarchy is integrated, upon the working people of the country, consisting of the workers, the petty producers, the peasantry and the agricultural labourers, through the use of both the market and the State. What appears as a “retreat of the State” is in fact a reshaping of the role of the State, from an entity apparently “standing above classes and protecting the interests of all”, including the working people, to one that aids and abets the attack upon them by globalised finance capital and its local aliquot part, the domestic corporate-financial oligarchy. The “retreat of the State” is only from its role of providing some protection and relief to the working people, and promoting national self-reliance which globalised finance capital is naturally opposed to; this role which bourgeois States might have played earlier, is now ruled out. SINGLE-MINDED PURSUIT OF NEO-LIBERALISM The Modi government which got elected with the support of big capital, a support that was an expression of a new corporate-communal alliance, a Mephistophelean deal between Hindutva and the corporates, is more single-minded than any previous government in its pursuit of unalloyed neo-liberalism, and hence also in its project of promoting corporate interests at the expense of the working people. As this government completes two years, this single-mindedness stands out as its single most notable “achievement”. Consider a few manifestations of it. The “Right to Food” legislation was passed before this government came to power, despite objections of the leading neo-liberal echelons of that period. It was rightly criticised by the Left at that time as being inadequate, since, instead of providing subsidised food to the entire population (which the term “right to food” suggests), it aimed to provide subsidised food to only about two-thirds of it; nonetheless it offered some protection to the poor against hunger. One does not hear of that legislation any more after the NDA has come to power; it has been given a quiet burial. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) which was launched by UPA-I through active Left intervention has been systematically whittled down under the NDA government. When Arun Jaitley presented his budget at the end of February this year, there were almost Rs 12,000 crores of wage arrears under the scheme which the centre had to clear. The allocation for MGNREGS had been roughly Rs 34,000 crores each for the two preceding years over which these arrears had got built up. If Jaitley had been interested in maintaining the scale of the programme at the same level as earlier, then, even ignoring inflation, he should have provided Rs 52,000 crores (ie, Rs 40,000 crores for actual expenditure and Rs12,000 crores of arrears). Instead he provided only Rs 38,500 crores, in the current year’s budget, which represents a nearly 30 percent cut in the size of the programme. To claim that this being a Rights-based programme, any expenditure on it will be recompensed by the central government, and that therefore the allocation for it does not matter per se, is absurd: where the arrears are to the state governments, the latter would be reluctant to continue piling up debt and would therefore whittle down the programme; and where the arrears are to the workers, they would be reluctant to offer themselves further for work which does not get paid. The NDA government’s niggardliness therefore is nothing short of an attempt to scuttle the programme, and that too in a year when under the shadow of the drought, the demand for work by labourers would be particularly large. As regards the peasantry, the NDA brought, for the first time in the country’s history, a legislation stipulating that capitalists could take over peasants’ land for certain kinds of projects without their consent. Earlier, from the days of colonialism, the taking over of land could only be by the government, and for projects in the public interest; this was changed. To be sure, it was only for certain kinds of projects; but since within any project there would always be a certain amount of “flab”, representing excess acquisition of land for real estate and other such purposes, an amount that nobody can be quite sure about, this meant dispossessing peasants without their consent for pure private gain, an instance clearly of legitimising “primitive accumulation of capital”. The NDA did not fortunately have the requisite numbers to pass the bill in the Rajya Sabha, because of which it passed an ordinance and kept re-promulgating it; but as the numbers change in its favour we shall see this insidious piece of legislation being enacted. As regards the working class, “labour market flexibility” which basically means the absolute unrestricted right of employers to fire workers, is all set to be enacted into law. The absence of such a right on the part of the employers, is enjoyed by no more than around 4 percent of the country’s entire work-force; but a concerted campaign has been launched for quite some time, including by economists who have sold their souls to international finance capital, that this is holding up the “nation’s development”! The real purpose of the proposed legislation is to break the trade unions, since, with the absolute right to fire workers, the employers will sack without delay anyone attempting to form a union. Not surprisingly, trade unions are particularly powerful precisely among the organised sector workers to which the above-mentioned 4 percent of workers belong. RELENTLESS ATTACK Thus whether it is the agricultural labourers, or the peasants, or the working class, the NDA government, even during the brief period of two years when it has been in power, has been engaged in a relentless attack against them on behalf of international finance capital. Of course, each one of these measures that the NDA is pursuing was mooted and promoted by the Manmohan-Chidambaram team and the neo-liberal crowd around them; and they are all central to neo-liberalism. But the point precisely is that under the NDA, unlike any previous government, there are no restraints on the pursuit of neo-liberalism. It is pursuing neo-liberalism with a vengeance. Two questions may be raised here: first, has the NDA not been successful on the growth front, to a point where India is now considered to have had the highest growth rate among all countries in 2015-16? This claim however is baseless. The new GDP data on the basis of which this claim is made have been criticised even by government economists and even in the pages of the government’s own Economic Survey. To see what has been really happening, let us for a moment forget about GDP and look simply at some facts on the basic material production sectors, industry and agriculture. The index of industrial production, which is compiled from information on how fast the various industrial sectors’ outputs have increased, shows the following growth rates for the four years, starting from 2012-13: 1.1 percent, -0.1 percent, 2.8 percent, and 2.4 percent. Calling two-plus percent growth rates in industry, which is what the Modi period has witnessed, an “achievement”, is obviously ludicrous. The fact remains that the industrial stagnation that set in towards the end of UPA-II still persists. Let us now turn to agriculture. Again, the physical outputs in million tonnes in the most significant sector within agriculture, namely foodgrains, for the last four years starting with 2012-13, were as follows: 257.1, 265, 252.0 and 253.2. Clearly, relative to the earlier period, the two Modi years have witnessed a sharp fall in foodgrain output. With industry barely growing compared to the earlier two years, and with foodgrains, and hence, by implication, agriculture, registering an absolute decline, the Modi period’s growth rate in the material production sectors must have been near-zero. Even if we take just the year 2015-16, when India’s GDP growth rate was allegedly the highest in the world, with a 2.4 percent growth rate in industry, and a 0.4 percent growth rate in foodgrain production over 2014-15, it is clear that the material production sectors scarcely showed any noticeable growth. The “highest-rate-of-growth-in-the-world” claim therefore must be based on an extraordinarily high growth-rate in the service sector. But, service sector output (and hence growth rate) is beset with serious conceptual and statistical problems. One such conceptual problem is that an increase in the share of economic surplus can appear spuriously as an increase in service sector GDP. For instance if there is an increase in taxes on the poor and the proceeds are used to raise the salaries of government employees, then this would appear as an increase in service sector GDP, even though all that has happened is a rise in the share of surplus in GDP (the part going to the State). Growth claims based on service sector GDP increase therefore are worth very little. The second question that may be raised is: has the government not taken a set of “pro-peasant” measures in the last budget? The answer again is no. The supposedly “pro-peasant” tilt of the budget is another instance of the hype that the NDA habitually dishes out. In fact, even in the sphere of agriculture this budget is the most pro-MNC and pro-corporate in our history. The two most prominent announcements of the budget are: first, the so-called “decentralisation” of foodgrain procurement which means the withdrawal of the Food Corporation of India from the task of procuring foodgrains; and, second, allowing 100 percent foreign-owned firms into the market for agricultural products. The two have one common objective: until now, agro-marketing MNCs had largely kept away from the Indian market because of the existence and the operations of the FCI; that impediment is now removed. The peasantry, whether producing foodgrains or other agricultural goods, will henceforth be forced to depend upon the agro-marketing MNCs. A government procurement arrangement, which had been a legacy of the anti-colonial struggle and which was supposed to ensure that, come what may, the peasants would never again suffer the fate they had suffered during the 1930s Depression, is now being dismantled. A more anti-peasant move is difficult to imagine. Likewise the Modi government’s crop-insurance scheme, much advertised these days, is a fraud. If the government was paying the entire premium on behalf of the peasantry under such a scheme, then at least it could constitute a bonus of sorts, portending no harm to the peasantry. But such is not the case. Following the insurance route simply means enlarging the business of insurance firms, who would collect premia from the peasants but, as is their wont, demur when it comes to paying in the event of a crop-failure. The crop-insurance scheme is pro-corporate not pro-peasant. The Modi government’s effort is to enlarge the scope for profit-making by the corporates at the expense of the peasantry. And that is part of its hard-nosed neo-liberalism.