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| India:
A Setback for Neo-Liberalism |
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In
1991, India, one of the bastions of third world
dirigisme since the days of Jawaharlal Nehru,
embarked on a neo-liberal economic policy-course,
a shift which was ranked by a leading World Bank
economist of the time among the "three most
important events of the twentieth century",
alongside the collapse of the Soviet Union and
China's turn to "market reforms". The
immediate provocation for India's switch was a
balance of payments crisis caused by a combination
of the Kuwait war, and a flight of Non-resident
Indians' deposits with Indian banks. But this
was a minor problem which could have been handled
without any change of course : the real reason
for the change was that the contradictions of
the dirigiste strategy, manifested above all in
a fiscal crisis of the State, had brought it to
a cul-de-sac, where the bourgeoisie, especially
newer sections of it, wanted to adopt a neo-liberal
regime, which imperialism had been pressing for
anyway. While the government of the Congress party
initiated the neo-liberal reforms, it is the government
led by the Hindu right- wing party, the BJP, which
came to power in 1998, which carried forward these
reforms with a vengeance.
This might appear intriguing at first sight. The
BJP is the political wing of a fascist organization
called the RSS, which had been formed in the 1920s
preaching virulent communal hatred of the Muslim
minority. It had played no positive role in the
freedom struggle since it was fundamentally anti-Muslim
rather than anti-colonial. It had actively participated
in the communal riots that followed independence
and partition of the country, and one of its followers
had assassinated Mahatma Gandhi. Though there
was no evidence linking the organization to this
act, it had been banned for a while until it pledged
to abjure politics. It had formally kept the pledge
by setting up the BJP as a front political organization,
which adopted all kinds of opportunistic slogans,
even though the consistent objective of the RSS
has always been the establishment of a Hindu State.
Like other fascist outfits however the RSS too
has a Radical Right opposed to the hegemony of
the MNCs and global finance, and advocating "swadeshi"
or "indigenous capitalism", which makes
the BJP's avid espousal of neo-liberalism rather
curious.
But RSS/BJP is not a religious fundamentalist
outfit of the sort one finds in several middle
eastern countries. It is much more in the fascist
mould. While appealing to religious sentiments
(its recent rise to power was propelled by the
destruction of a sixteenth century mosque in Ayodhya
on the grounds that a temple had to be built on
that very spot since Lord Rama, the Hindu deity,
was born there), it is technology-savvy, and has
a large following among well-to-do professionals
of Indian origin in the U.S. and elsewhere who
combine the conservative politics of their adopted
land with an RSS-mediated vicarious link to their
"cultural roots". The BJP with its long-standing
affinity for Israel, and hence for the U.S. (especially
after September 11), was quick to jump on to the
neo-liberal bandwagon and establish for itself
a sizeable chunk of support among the domestic
nouveau riche, young upwardly mobile professionals
(the “yuppies”) and sections of the bourgeoisie
(in addition to its traditional petty-bourgeois
base). The Radical Right within its ranks, under
the circumstances, was silenced with ease.
With all its communal appeal and propaganda, the
BJP never succeeded in getting more than a quarter
of the total votes in the country, fractionally
less than the Congress, and that too on account
of a degree of disillusionment of the people with
the first five years of neo-liberal reforms. It
ruled however with the support of a number of
regional and smaller parties, some driven by local
anti-Congressism, some tempted by the offer of
financial assistance to state governments run
by them in a situation where the states have been
fiscally squeezed by the Centre, some tempted
by power, and some merely jumping on to the bandwagon.
The BJP was however the undisputed leader of the
coalition government (of 22 Parties) termed the
National Democratic Alliance from 1998. Its writ
ran, and ran to devastating effect.
In foreign policy, India moved much closer to
the U.S., and the government even toyed with the
idea of sending troops to Iraq at American request,
until massive popular opposition made it desist.
Though not formally abandoning India's traditional
support for the Palestinian cause, it warmed up
to Israel, and there was even occasional talk
of an India-U.S.-Israel axis. In the name of fighting
terrorism, it enacted a draconian law, the Prevention
of Terrorism Act (POTA) providing for arrest without
bail and trial by special courts. The RSS cadres
targeted the minorities, the Muslims of course,
but additionally the Christians as well. Christian
missionaries were attacked in many places and
a law banning conversions was demanded. Government-run
cultural and educational institutions were sought
to be handed over to persons of little expertise
but with known RSS loyalties. A whole set of text
books, reinterpreting Indian history to the liking
of RSS, was sought to be introduced at the school
level. And obscurantist courses on astrology and
Brahmin priestly practices were sought to be introduced
at universities. Since "Communists"
were vilified, and any liberal opinion opposed
to the RSS was called "Communist", all
scholarly activity in effect was treated with
suspicion. The best-known painter, and the best-known
theatre activist of the country who happen to
be Muslims were attacked. Above all, there was
a massive pogrom against the Muslims in Gujarat
from February 2002, organized with the connivance
of the state government which was and continues
to be headed by a hardcore RSS loyalist. The state-aided
pogrom was apparently in retaliation for the killing
of some Hindu activists, though the exact nature
of this killing still remains shrouded in mystery.
In short there was a veritable assault on the
country's composite culture, the secular foundations
of its polity, and the entire legacy of its anti-colonial
struggle.
This legacy was undermined in the economic realm
too through a determined pursuit of neo-liberalism.
The neo-liberal decade of the nineties has witnessed
a massive deflation. Since the tax-GDP ratio has
come down, as a fall-out of tariff cuts and "incentives"
for investment, since the interest on public debt
has been raised, and since enlarging the fiscal
deficit has been taboo (notwithstanding the coexistence
over much of the period of unwanted food stocks,
unutilized industrial capacity and burgeoining
foreign exchange reserves), the governments, both
at the Centre, and, through the latter's arm-twisting,
at the state-level, have cut expenditures drastically,
especially social sector expenditures, investment
expenditures, rural development expenditures,
and transfer payments to the non-rich. This has
brought about an infrastructure crisis (which
no amount of red carpets for the MNCs has succeeded
in overcoming), a running down of public education
and health facilities (accessed mainly by the
poor), and a compression of aggregate demand through
a reduction in purchasing power, especially in
rural India.
Notwithstanding the fact that the growth rate
of foodgrain output fell behind the rate of population
growth for the first time since independence in
the nineties, so drastic has been the fall in
purchasing power, especially in rural India, that
there were 65 million tonnes of foodgrain stocks
lying with the government by June 2002, even though
per capita foodgrain absorption for the country
as a whole had fallen by that date to what it
had been on the eve of the Second World War. To
get rid of the stocks the BJP-led government sold
foodgrains in the international market at prices
below what the poorest in the country pay, even
though there was growing mass hunger at home (
reflected in the abnormal stock accumulation).
Reduced infrastructure investment, combined with
the curtailment of subsidies to the peasantry,
the virtual end of the regime of low-cost credit
directed to agriculture, and the import of the
world price-crash for many crops under the new
WTO dispensation, caused a massive agrarian crisis
with thousands of peasants in several states,
including even prosperous ones, committing suicide.
Small scale industries too faced closure in the
new context of high-cost credit and import liberalization.
Even though there was considerable expansion of
IT-related services and Business Process Outsourcing
to India (which the U.S.Presidential candidate
Kerry now wants to restrict), employment opportunities
shrank both in urban and rural areas. Organized
workers faced retrenchment, "voluntary retirement",
and vastly reduced bargaining strength, with the
Supreme Court even giving a verdict against their
right to strike. The need for "introducing
flexibility into the labour market" (a euphemism
for a wholesale attack on workers) began to be
openly aired.
All these have been experienced in other countries,
and may not sound much to an outsider, but in
India with its long history of dirigisme, its
strong democratic tradition inherited from a prolonged
anti-colonial struggle, it represented an unimaginable
shift, and especially so when the BJP-led government
started selling off profit-making public sector
enterprises at throwaway prices to the private
sector (some of which were resold within weeks
at a multiple of the price at which they were
bought). Even the oil sector, control over which
had been acquired after decolonization, through
a prolonged struggle against the oil majors and
imperialist agencies acting on their behalf, and
that too only because of the help from the Soviet
Union, was sought to be privatized, with an initial
clutch of the shares of the highly-profitable
public enterprise, Oil and Natural Gas Commission,
being bought by the nominees of Warren Buffet,
the Californian financier.
Meanwhile however the stock-markets boomed; foreign
exchange reserves multiplied, reaching a staggering
$110 billion by early-May, as the Reserve Bank
tried to keep currency appreciation in check in
a situation where India was becoming a "parking
place for dollars"; and the cities became
jammed with imported, or locally-assembled, cars,
as the upper echelons, which in India would still
run into a few millions, prospered under the new
dispensation, a prosperity that was played up
in the media, both internationally and locally.
The BJP-led government, taken in by this hype
which was sustained by several Opinion Polls,
decided to call for early elections, and campaigned
on the slogan of "India Shining", and
of a "Feel Good" factor in the air.
It was faced by a Congress-led secular alliance
in several states, and by the Left in its own
strongholds. The alliance between these two was
confined to a few states, though it was well-known
beforehand that the Left would support a secular
government at the Centre. The election outcome
was a resounding defeat for the BJP-led alliance,
the like of which had not been seen since 1977,
when Indira Gandhi had suffered a humiliating
defeat in the election, which she had called to
legitimize her authoritarian rule imposed during
the "Emergency". The Indian people had
once again risen to the occasion. These election
results show above all the strong roots that electoral
democracy has struck in India. The sheer fact
of people across what is virtually an entire continent
acting in unison, without any prior contact with
one another, despite being apparently fragmented
along language, religion, caste and other lines,
and stubbornly against what the pundits had been
telling them about "India Shining",
is indeed quite overwhelming.
Their verdict however is not only against the
BJP. It is against the neo-liberal policy course.
It is noteworthy that even in Congress-ruled states
like Karnataka and Punjab, where the writ of the
World Bank or the ADB ran, and the peasantry was
driven to suicides, the people voted against the
Congress, as they had done a few months earlier
in Madhya Pradesh, throwing out the Congress government
there. Indeed ever since the introduction of neo-liberal
"reforms" in 1991, the tendency has
been for "reform"-oriented governments
to be voted out of power, but this fact could
always be camouflaged by dragging in this or that
specific explanation of the concerned government's
unpopularity. The recent election outcome however
reveals this fact clearly and sharply. It is not
surprising that the Congress, sensing the popular
mood, came out with an election manifesto that
is at variance with the neo-liberal agenda which
it had itself been instrumental in introducing
into the Indian economy.
Indeed the two most striking features of these
elections have been the shift in the avowed position
of the Congress Party, and the strong emergence
of the Left. The Congress manifesto talked of
the revival of public investment, of emphasis
on the agricultural sector, of strengthening the
public distribution system for foodgrains and
certain other essential goods, of not privatizing
profit-making public enterprises, and above all
of an employment guarantee scheme that would ensure
a minimum of 100 days of employment per year to
at least one member of each household. These,
among others, were the demands of the Left during
the heyday of neo-liberalism; the Congress' adopting
them is symptomatic of the popular mood, as is
the strong emergence of the Left, admittedly only
in its areas of influence.
The Left, consisting of an alliance of four Parties,
obtained 62 seats in a House of 543, its highest
tally ever. It virtually swept the polls in the
three states where it is a major force, West Bengal,
Kerala, and Tripura. Since a secular government
could not be formed without its support, there
was a view that it should join the government
in order to strengthen it. Though this view was
ultimately rejected by the Central Committee of
the Communist Party of India (Marxist), the largest
of the four Parties, and the Left decided to support
the government from outside, what was significant
was the fact that a very large number of artists,
intellectuals and social activists, representing
a whole spectrum of political views, from Gandhism
to anarchic Leftism, to social democracy, to NGO-style
progressivism, entreated the Left to participate
in government. Many of them have traditionally
been hostile to the organized Left. The fact that
they nonetheless wanted the Left to be a part
of the government to defend the peoples' interests,
shows a significant re-alignment of socio-political
forces, a coming into being of a new kind of relationship,
towards which the Left's active participation
at the World Social Forum at Mumbai in January
2004, was a pointer.
The new government has been formed on the basis
of a Common Minimum Programme, which, though well
short of what the Left would have liked, has been
broadly endorsed by the Left and has been generally
well-received. The Programme does represent a
shift of direction away from neo-liberalism, by
re-asserting the centrality of State intervention
for improving the living conditions of the people.
No matter what the specific provisions it begins
with, if there is an honest adherence to this
perception, then that would inevitably set up
an alternative dialectic away from the neo-liberal
trajectory.
Not surprisingly therefore globalized finance
has not taken kindly to the CMP. Indeed India
at this moment represents the classic spectacle
of a struggle between the will of the people demanding
a shift away from neo-liberalism, and the will
of international finance capital, and its local
allies, demanding a continuation of neo-liberal
"reforms", with the bulk of the English-language
media, both print and electronic, pitching in
with the latter. Finance capital fired the first
shot in its struggle against the peoples' will
during the election process itself (which in India
lasts several days), with the intention of influencing
the peoples' verdict. When the exit polls after
the first few rounds of voting suggested difficulties
for the BJP-led government's return to power,
the stock-markets crashed, and the BJP promptly
appealed for votes in the name of financial stability.
When the results came out and the Left, without
which a government could not be formed, expressed
itself against disinvestment in the core sector
and of profit-making public enterprises, there
was again a crash on the stock-market, which the
media played up suitably as portending disaster.
This was absurd, since stock prices have very
little impact on private corporate investment
decisions in India, let alone on the overall investment
ratio; since the so-called "losses"
owing to stock price falls are mainly "paper
losses" with no impact on the real wealth
of the country; and since in any case only about
0.1 percent of the country's population participates
in the stock market. But the media blitz was unrelenting:
a thousand billion rupees of wealth, it was claimed,
had been "wiped out" because of the
Left's "ideological intransigence".
Emboldened by this brou-ha-ha some financiers
even held a demonstration against the stoppage
of disinvestment of profit-making public sector
units (as if grabbing peoples' property was their
birthright)!
There was some revival of the stock-market when
Sonia Gandhi, the Congress leader who had struck
a chord with the masses and had virtually single-handedly
brought that Party to power, and who, because
of her "inexperience" was seen to be
"pro-poor", made way for Manmohan Singh,
the original architect of "reforms",
to be Prime Minister. But the when the CMP was
released to the public there was yet another crash.
The new Finance Minister Chidambaram, also with
a pro-"reform" background, has been
trying to reassure finance capital in various
ways, but with ambiguous results so far. Capital
flight has not been a problem as yet, but not
a day passes without the media circulating scare
stories about the implications of the CMP.
The question that arises is: what will be the
outcome of this struggle? Where is India heading?
The dependence of the government on support from
the Left would ensure that it would not make a
complete volte face on its commitments embodied
in the CMP in the matter of economic policy. Even
though the Left has assured support to the government
for a full five year term, it is unlikely that
the government would exploit this commitment to
push a neo-liberal agenda. The least that can
happen in this respect in the short-run therefore
is a "freezing" of "reforms"
with some measures to alleviate the peoples' hardships,
such as have been announced by the new government
of Andhra Pradesh, where the previous regime,
much loved by imperialism, has been voted out.
And certainly in the matter of removing the baleful
influence of communal-fascism in the sphere of
education, in eliminating POTA from the statute
books, in bringing in stringent laws against the
fomenting of communal violence, in correcting
the foreign policy bias of the BJP-led government,
and, generally, in refurbishing the secular foundations
of the polity, much can be done.
Taking a somewhat longer view however it is clear
that since the adoption of the neo-liberal agenda
was in part a result of the fact that old dirigisme
had brought the bourgeoisie to a dead end, the
capacity of the latter to chart a new course away
from neo-liberalism is limited. The current bourgeoisie
is not the bourgeoisie of the period of the anti-colonial
struggle, just as the current imperialism differs
vastly from the old colonialism. The current bourgeoisie
is in no position to provide the lead in charting
an anti-imperialist development trajectory, even
though it might benefit from such a trajectory
and sections of it may even join the movement
for adopting it. The lead for such an alternative
trajectory has to come from the Left. In other
words the current developments in India mark the
beginning of a process, which no doubt would be
protracted and tortuous with several twists and
turns, of a polarization of society into two camps,
a pro-imperialist camp supported by the Fund,
the Bank, globalized finance and the MNCs, and
an anti-imperialist camp led by the Left but encompassing
diverse elements. Imperialism's impending defeat
in Iraq would provide space for the consolidation
of the latter camp, but the degree to which such
consolidation can be successfully accomplished
depends crucially on the ability of the Left to
overcome sectarianism and narrowness of outlook
and unite the widest possible segments of anti-imperialist
social forces. The people in a whole lot of third
world countries, to whom India is the latest addition,
have rejected the neo-liberal agenda, imposed
by imperialism, in recent months. A new anti-imperialist
stirring is visible in the third world. The Left
has to respond to it, and only by doing so can
it move forward to its eventual objective.
June 9, 2004. |
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