The Indian economy is heading for a recession. GDP growth has decelerated for the last five quarters and is now below 5%, a six-year low. Even government policy think-tanks say this slowdown is unprecedented in the last 70 years.
Many industries are facing closures. The car industry has been hit hard with a 41% slump in sales. Up to 10,000 factories are expected to close. In Bangalore, alone, 1.5 million jobs are expected to be lost.
The banking sector is another potential flashpoint that could trigger a further slump; some estimates are that more than 17% of bank assets will have to be wiped out. Corruption, ‘double credit’, and bad ‘credit feature’ are prevalent in the banking sector, which is still 70% state-owned. In the March 2018 quarter, the gross non-performing assets (NPAs) of Indian banks surged past Rs 10 trillion (£110 bn). Public sector banks account for over 80% of the NPAs.
When the government attempted to implement anti-worker bank reforms recently it faced militant opposition from bank workers. In other words, the great hope of “shining India” is well and truly over.
From the moment, the BJP spent £20 million promoting the slogan “India Shining” for an election. It was a cruel joke. India is home to one third of the world’s poor. None of Modi’s 2014 election campaign promises were delivered on in his first term.
In fact, the opposite took place. The prices of essential items, including fuel, sky-rocketed, while unemployment soared to a 45-year high.
In order to deliver on his pledge relating to ‘black’ money, the Modi government implemented what is dubbed a “surgical strike” – the overnight de-monetisation that suddenly made the use of Rs500 and Rs1000 notes invalid. This move rendered 86% of the cash in circulation illegally. But even the Reserve Bank of India (RBI) admits since the demonetisation there is a 35% increase in counterfeit notes and the process led to a loss of at least 1.5 million jobs and closure of many small businesses. Then came the implementation of the Goods and Services Tax (GST) which again failed to tackle its stated aim of tax evasion and black money dealing.
Despite all these failures and deteriorating economic conditions, Modi won the second term in May, of this year, with an unexpected majority. Communal polarisation, nationalism, the threat of war with Pakistan and other factors contributed to this victory. However, his victory also represents the hope against hope of millions in poor and deprived communities but these are likely to shatter in Modi’s second term.
The methods that have been tested and failed in the capitalist west are now being utilised by the Modi-led government. Measures that transfer wealth from the poor to the rich include accelerating privatisation initiatives, using tax payers’ money to provide so-called stimulus packages to protect corporates, and providing tax breaks to big business. This is combined with reduced public spending and price hikes.
The finance minister, Nirmala Sitharaman, recently reduced the corporate tax from 30% to 22%, while promising to cut spending. This, she claims, will recover Foreign Direct Investment (FDI) from the US and the West. Tax as low as 15% will attract manufacturers, such as Apple, away from China to India, she claimed. But India does not have the ability to compete with Chinese production, despite offering low tax and labour costs that are a third of Chinese labour. Indian manufacturing lags behind China in terms of ability to own and produce cutting-edge technology.
The result is the opposite of what the Modi government says. Not only is FDI in decline over the last two years, the wealth created by the cheap labour of India is now taken out of the country. India ranks third in the world for highest outflow of wealthy individuals (China and Russia are the first and second). Last year, alone, 5,000 millionaires left the country. According to another report, 23,000 dollar millionaires have left the country since 2014.
Indian economic growth was mainly debt driven and relied on the service industry rather than manufacturing. Modi’s “make India” campaign miserably failed to materialise or reverse the trend of fleeing capital. It is worth noting that Nirmala Sitharaman presented the last budget, calling it a 10 year vision document, but had to revise it three times in the span of three months.
Regional co-operation, such as making use of the cheap commodities produced in other countries in the region, cannot offer an escape from economic crisis. Heightened inter-regime tensions both in the region and across the world are a factor. The US-China trade war impacts on the Indian economy. Over the last five months India-China bilateral trade has declined by 3.59%.
As its popularity dwindles, the Modi regime relies increasingly on Hindu nationalist patriotism to maintain its hold on power. The state is increasingly repressive, particularly in the places where the BJP is in power. There is also a sort of ‘purge’ taking place inside the state apparatus, particularly in the judiciary, to replace high positions with Rashtriya Swayamsevak Sangh (RSS) supporters, a Hindu nationalist, and right-wing paramilitary volunteer organisation. The Calcutta high court was on strike for more than three months against the appointment of judges.
There is a widespread ruthless promotion of Hindu nationalism. As a result, violence against women, oppressed castes, and Muslims has risen. Although the Modi regime is still talking about populist measures (such as giving jobs to 36,000 youth in Maharashtra), the BJP support among youth and workers is diminishing.
The BJP’s push for its ‘one country – one tax – one language – one citizenship’ policy opened up divisions among the poor masses. The revocation of Kashmir’s special status, in the abolition of article 370 and 35A in the constitution, was also used by Modi to whip up Hindu nationalism.
The entire Kashmir region was shut down before the central government implemented the attacks on the democratic rights of Kashmiris. Kashmir is under siege as the massive propaganda is waged by the Modi regime. However the Kashmiri masses refuse to go silent. Despite huge repression a battle is taking place almost every day. This issue not only heightens the national question in Kashmir but impacts the entire region. From Assam to Tamil Nadu, there are increased tensions with the central government.
Many other struggles have begun to build up against Modi’s policies. Hundreds of protests are taking place across the country. Bank workers’ militancy to oppose the so-called reforms imposed on them has led to calls for strike action, even a general strike to stop Modi.
However the trade unions are slow in coming forward to organise the anger that is mounting among workers. The two leading communist parties, the Communist Party of India (CPI) and the Communist Party of India (Marxist) (CPI (M)), do not see themselves as a vehicle to lead the workers’ struggle. So far, they have concentrated on their electoral alliances. Characterising the Modi regime as ‘fascism’, they have sought alliances. But not alliances of mass action to defend democratic rights and fight for improvements, but political pacts with the most corrupt Congress and other regional parties who also have a history of corruption and betrayal against the working class and poor masses. This approach offers no way forward for the working class and the suffering peasants and youth.
Some of the more far-sighted defenders of capitalism, who are conscious that their system will not recover unless the masses have money in their possession, ask that some concessions are made to workers. There is nothing on offer though. Poverty wages must end now. The introduction of a minimum wage of Rs178/day (around £2/day) is nothing but a small gesture, nowhere near enough to improve living standards and create spending power.
Facing the mammoth general strike in 2016, Modi and his former finance minister, Arun Jaitely, previously made promise in the parliament to the trade unions to implement their demand of Rs 15 000/month (£172/month). Even the committee appointed by the government recommended Rs385 (£4.40) as a daily wage. But the government has taken a regressive step with its token gesture of an increment of just Rs2 (£0.023) from the previous Rs176 level. This made a mockery of demand of the unions and demand put forward in the last general strikes.
In fact, there is widespread fear that the new national level will be used to lower wages in many areas. New Socialist Alternative – the Indian section of the Committee for a Workers’ International (CWI) – demands a minimum wage of Rs100/hour (approximately £1), Rs25,000/month (£286).
New Socialist Alternative rejects all job cuts and casualisation of the work force. Instead of redundancies there should be increased public investment to improve all public services, such as fully free education and health, affordable house building, and to create decent jobs. New Socialist Alternative totally rejects the tax concessions given to big business. Instead nationalisation under democratic workers’ control and management is necessary, combined with capital controls to prevent the flight of capital.
New Socialist Alternative calls on all radical left forces to come forward to build a mass workers’ organisations. All attempts to attack on living conditions must be resisted. Workers and poor are not responsible for this crisis and they should not be punished for it. All the attacks on labour rights must be reversed immediately.
Tens of thousands of rank and file members of CPI and CPI (M) are disillusioned following electoral failure these parties faced in the last election. There is an urge for building a strong fight-back against the onslaught that the working class are facing. The discussion about reuniting CPI and CPI (M) should not be just about electoral coalition. Instead, all rank and file member together with trade unions, other workers and youth should come together to create a new democratically organised mass organisation that can end these attacks and the rotten capitalist system. The objective should be to fight for workers and poor peoples’ government, as an alternative to capitalist government. The building of a socialist economy is the only way to democratically plan the regional resources for the benefit of the masses.