India | A New Phase of Indian Capitalism and Challenges Ahead

Indian Prime Minister Narendra Modi (Photo: Dimitris Papamitsos / CC)

The extremely right-wing Modi-led BJP government has completed nine years in power, with elections scheduled next year. At this juncture, when we draw political perspectives, we need to assess the processes that have been unfolding over the past decade. During the nine years of its rule, the BJP government subjugated various institutions of democracy, like investigating agencies, media, and to an extent even the judiciary, to the Party agenda. With a huge concentration of power and all the institutions of the state firmly under its control, it has developed into an authoritarian state. Now as the whole country has gone into election mode, the BJP almost appears invincible.

But not quite so. Some sharp changes have taken place and understanding these and the driving forces behind them is key. In 2014, Modi came to power riding on a mass wave of support. His narrative of a New India, free of corruption and nepotism, attracted masses. The right-wing propaganda of Hindu nationalism i.e. religious nationalism, also had a big effect. The mass wave however was not just an emotive one. It emerged from a peculiar phase of capitalist crisis. The global crisis of capitalism in 2008 hit the Indian economy with a lag. From 2011 it moved into a downward spiral. The next couple of years further deepened the downturn.

It was under such circumstances that the big bourgeoisie shifted almost en masse to the BJP to carry forward its agenda of neoliberal reforms. It counted on Modi’s ability to mobilise mass sentiment around issues such as Hindutva nationalism that could provide him legitimacy to push through a corporate agenda. The upper middle class too was shocked by that time as the story of ‘India shining’ was fading away and also looked to Modi to fix it. The working class was paying the price of the downturn and was swayed away by the propaganda and narratives put forward in the run up to the election. It was such a peculiar alignment of class forces that paved the way for Modi to come to power, riding on the wave of mass support.


India’s Economic Revival

How does the Indian economy look after nine years of the BJP government? On the face of it, it seems to have experienced a big growth. After a contraction of 6.6% in 2020-21 i.e. during Covid, it rebounded recording a growth rate of 8.7% in the financial year 2021, and then 7% in 2022. This year the economy is estimated to grow at 6.1%. It has already achieved the glory of being the world’s fastest growing economy. In terms of size too, it has made phenomenal progress. In 2014, it was the tenth largest economy. Now it is the fifth largest economy. Modi this week announced that when he comes back to power in his third term, India will become third largest economy, leaving behind Japan and Germany.


Real Character of Economic Revival

So India’s success story has not just been saved but taken to the next level by Modi. Or has it? While apologists of the regime are going gaga over the economy, a closer look indicates something deeper. The Modi government, acting as an agent of capitalist class, has carried through various policies in its favour. These included brining in an Insolvency and Bankruptcy code, GST. It made public sector banks write-off bad loans of billions of dollars, primarily owned by capitalist class. This led those companies to deleverage and then announce new projects. This however was at the cost of the working class, as the money of public sector banks was public money. The government also showed its acute class bias when, while the masses were burdened with higher indirect taxes, it slashed corporate tax by 5% making the bourgeois cheer. All these measures significantly led to the capitalist class grabbing a higher share of output.

The so-called GDP growth is thus extremely lopsided in favour of the capitalist class. While under capitalism, this is not unusual, this government has taken this to a qualitatively new level. Various figures bring that forward. Per capita income growth in past nine years has been 67% which is significantly low than the 145% growth recorded in the preceding decade. Mass unemployment is becoming almost like a permanent feature, with it reaching a record 45 year high in 2017-18. The workforce employed in manufacturing has come down significantly, by 31% from 2016-17 to now. Many other indicators also point to similar phenomenon. Sale of high-end luxury cars, like Porche and Lamborghini, surged from 22,166 in 2021-22 to 27,910 the next year. Similarly, sale of premium cars also shot up from 0.78 million to 1.3 million in this period. But what about economy cars afforded by middle class? It registered a negative growth with sales figures tumbling down.

This whatever economic revival that is achieved in past couple of years is not based on any real increase in working class income or more job opportunities but by making rich yet richer. A section of bourgeoise commentators too realise it. One such commentator Rathin Roy, Managing Director of Oversees Development Institute when asked about economic revival in 2021 “how do you see recovery- V, U or W?”, he said “I will not use letter to describe it. But will use only a word – profit-led. A profit-led recovery means the recovery you are seeing in the economy is being driven by an increase in profits. It is not being driven by increase in wages or increase in returns to capital.”


Monopoly Capitalism and Fascistic Tendencies

This however is not just about the economy. The last nine years mark a new situation in Indian capitalism. In this phase, a few big corporations, notably Ambani, Adani, and the state, colluded to bring more and more spheres of the economy under its monopolistic control. So while the bourgeoise as a whole benefited from the Modi government’s policies, the few big bourgeois gained far more, and at times, even at the cost of others. C. P. Chandrasekar, a left economist pointed out that “the share of assets in non-financial sector owned by the Big-5 business groups has risen from 10% in 1991 to nearly 18% in 2021, whereas the share of next five has fallen from 18% to less than 9%.” This process is carried out not by the forces of market or by rules of the game but by blatantly subverting them to favour Big few. The authoritarian character of this government, and the fascistic tendencies in it, should be understood in this context.

After a massive victory in 2014, the Modi-led BJP government subjugated one after another institution to its agenda, annihilating opposition parties and left, progressive forces. As time progressed, the BJP’s grip over power only strengthened. Modi with his grand persona led this game, unleashing a flurry of propaganda against opposition leaders. On ground, gangs of cow vigilantes and other goons terrorised any opposition, carrying out mass protests and violence. On social media, a paid army of trolls would attack any voices of dissent. Government also used investigating agencies like the Enforcement Directorate (ED) to bring the opposition to its knees. With such instruments of power at its disposal, it toppled many opposition governments in state provinces by engineering splits in them. Even mass protests, like those against citizenship laws or agricultural laws, were targeted by BJP goons off and on road. When the historic struggle of farmers reached its zenith to oppose farm laws, its organisers were accused of being “anti-national”.

All this of course, would not have been possible without active support and money from big corporations. Ambani used his capital to gain control over the media by buying stakes in large media houses. NDTV, one of the leading TV channels that carried out independent journalism questioning Modi’s policies and posing challenges to it was subjected to a hostile takeover by Adani, who thus succeeded in quashing its independent journalism. The government has constantly undermined and subjugated the judiciary to its agenda.


Hollowed-Out and Naked

Both the big bourgeoisie and the Modi-led BJP appears all powerful and almost invincible today. But is it so? While being all powerful, they both stand hollowed-out and naked.

As Marx pointed out, it is the inner contradictions of the capitalist system that makes it crisis ridden. The antagonism between capital and labour leads to the capitalist class amassing a higher and higher proportion of wealth created by the workers, it only pushes the system into further crisis. This is precisely what is happening with Indian capitalism. In the 2000s, the Indian economy grew at a spectacular rate. The run of the economy, associated with the boom in the global economy, at least led to the creation of some jobs, though at a modest rate. Sectors like IT offered opportunities to those educated youths from a middle class background. With low interest rates prevailing, the construction industry and consumer goods sector, driven by the availability of cheap credit witnessed the boom run. Nonetheless, the inner contradictions of capitalism were at play all through. Even then, it was widely termed as jobless growth even by a few among the bourgeois commentators. The dream run of capitalism failed to spur any mass consumption proportionate to the population, or stimulate industrial growth that could rescue the massive workforce trapped in agriculture.

This economic run came into question following the global meltdown in 2008. The new model of capitalism brought forth by the big bourgeoisie and Modi-led government only made the structural weaknesses and contradictions of Indian capitalism much sharper. Rathin Roy, cited above, commented “As long as we continue to look at automobile sales, Scotch whiskey sales and FMCG [Fast Moving Consumer Goods] sales as what moves the Indian economic needle, we are going to be badly stuck in a growth story that is long finished and past its prime. The 1991 India growth story is over.” Thus Indian capitalism today stands as the epitome of the big bourgeoise’s lust for profits but without any considerable upsurge in output or incomes and jobs for the masses.

The Modi government also suffers from something similar. Its grand vision of unseating all opposition parties and gaining complete control over all layers of political centres has hit its limits. In the process of dominating the political spectrum, its narrative of New India is bruised and mutilated. Modi talked big about getting rid of corruption, nepotism and casteism. Of course, he was never serious about any of these evils and it was just an election gimmick. But nonetheless, posturing himself as one determined to get rid of these evils gave the BJP a clear advantage and helped mobilize mass support. The contradictions of the Indian bourgeois democracy that came into being, not by annihilating the caste-feudal system, but by co-adopting it, exhibit themselves in various forms including peculiarities of caste-class interests, the national question, regional disparities and the associated and varied interests of the regional bourgeoisie. Be it corruption or nepotism they are very much a product of bourgeois democracy.

Modi’s grand vision and narrative has hit upon precisely these realities of bourgeois democracy. In a bid to gain power in many state provinces outside its control, it used investigating agencies to threaten corrupt opposition leaders to break away and join BJP. With these tactics, though it made temporary political gains, its narrative of making democracy corruption free stands exposed. Same with nepotism and other such loftily claims which are not more tenable. In fact it has given a new lease of life to all evils of bourgeois democracy.

The regime now stands naked, stripped of all pretensions of the New India narrative and has reduced itself to a bully in a naked power game. Powerful, formidable and yet a bully.


Developing New Situation  

Both the big bourgeois and the BJP government thus stand all powerful and yet hollowed-out. This is not to say that they will fall. The Indian economy in the gloomy global scenario is being projected as a bright spot. The US and the West intends to co-adopt India to counter China. Its upper middle class, though a small section of the population, but substantial in absolute numbers, makes it an attractive market for global multinationals. The structural weaknesses of Indian capitalism may take a few more years to unfold, and among the cheers and celebrations over economic recovery the dissent of the working class might not immediately turn into a mass movement, though sectoral struggles may pick up. Government would also dole out targeted welfare payments in the run up to elections with the sole purpose of winning their loyalties. Also, the completion next year of the Hindu temple, Ram Mandir, could be used to stoke-up Hindutva propaganda.

Nonetheless, for sure, vulnerabilities are creeping in too. Recent elections in Karnataka, the only south Indian province where the BJP held power, saw a massive defeat of the BJP with the Congress party returning to power with a thumping victory. It removed the aura of invincibility around the BJP. Other developments this year, like the Hindenburg report on Adani, the Women wrestlers’ protest, and, most notably, the ethnic violence in Manipur, undermine the legitimacy of the government and its claims. A generation of youth was propelled into the political arena in 2014 with Modi’s promise of New India. Now that such narrative stands shattered, many of these youths, and workers, find themselves in shock. If all of this translated into a vote against the BJP is something to be watched. Some of them may retreat into personal lives. But a section of youths and workers feel betrayed.

It is under such circumstances that we need to draw out our plans of intervention. Pressures of lesser evilism will only get more powerful calling for us to support Congress against BJP. The Communist Party of India and the Communist Party of India (Marxist) will continue with its usual stand of aligning with Congress against the BJP. For us, the change in the situation brings significant opportunities of politicisation of youths and workers who feel betrayed and are keen to listen to new ideas. It is this layer of the working class that we would reach out to with our material explaining the need to annihilate capitalism and bring socialism that would emancipate humanity from the barbaric life conditions imposed by capitalism.

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September 2023