Crises of Crony Capitalism: the Unraveling Incompetence of Modi Regime

(Report on the Public meeting by New Socialist Initiative on 24^th Nov, 2018 by Sanjay Kumar)

Speakers: Prashant Bhushan, DrAtulSood (JNU) and DrRohit Azad (JNU)

Economy is unarguably among the most important component of any society. However, it is also true that informed discussions and debates on issues related to economy rarely enter public discourse. Instead, a moralistic populism which is quick to eulogise heroes and vilify villains dominates. In their opening remarks, the organisers of the public meeting on the above topic cited this lacuna in the political discourse in India as the context of the programme. For example, during the most recent national elections in the US, France and UK, an increase in the minimum wage was an important part of the opposition candidates’ campaign. In India that is highly unlikely. This absence is especially dangerous for left politics because it does not allow a critical class consciousness to emerge. Ever since independence movement we are witness to a longstanding populism in India, which talks of the poor, and how they need to be ‘helped’. Through this thepolitically powerful develop patronage over the weak. However, the poor in whose name economic policies are declared cannot be agents who make history, which any left politics needs.

Indian economic scenario has been dominated by neo-liberalism for nearly three decades now. Does Modi regime represent a new stage of this phase?  Hence, a specific task at present is to find out if the typically fascist aspects of Modi government make its economic policies different from those of earlier governments. Fascism is a reactionary attempt at mass politics.  The three core pillars of Modi politics are a revanchist nationalism, a majoritarian communalism, and a technocratic. growth centered discoursedesigned specifically for the socalled ‘aspirational India’. We saw how the first and the third were used in propaganda around demonetization. Since fascist politics builds legitimacy on the basis of nation, religion or communalism, it has no hesitation in coming out openly in favour of the super-rich and attacking working people’s rights, something a party claiming social welfare would be wary of. This too has been fairly obvious in the four and a half years Modi rule, during which the perennial cronyism Indian capitalism has plummeted new depths. Fascist political culture is based upon maniacal hatred, and unfounded visions of a grand past and future.  It has no place for rationality and intellect.  It has no shame in suppressing facts, and pushing falsehoods. Modi govt appears adept at all these. When the labour bureau surveys showed that there has been no increase in employment during its initial years, it discontinued the survey itself. If there is no increase in the formal sector employment, its NitiAayog changed the very definition of formal employment. Fascist politics presents ‘the genius leader’ as the ultimate savior. In fact, as the example of Hitler or Mussolini shows, the megalomania of such leaders is catastrophic for their countries.Demonetisation, half-baked implementation of the GST, and fracas with the RBI are monuments to the idiocy and incompetence of Modi regime.

Invited presentations were initiated by Rohit Azad who teaches economics at JNU. He started by noting that the Modigovt does not believe in, nor cares for data. Its claims of high economic growth are hard to square by the actual macroeconomic environment. Typically there are three sources of economic growth. Ever since the global crisis of 2008 Indian exports have been practically stagnant. Labour laws have been considerably weakened for the sake of Make in India, but the latter has failed to take off. The second is govt spending. This too has been tight due to the socalled fiscal consolidation demanded by global finance. The third factor, lending to private corporates has also been in doldrums due NPAs of public sector banks. In fact, in the past banks have gone to extremes to lend to corporates. The Adani, Videocon and the GMR groups did not have income to pay back their existing debt, yet banks lavished them with more loans.RaghuramRajan called it the ‘riskless capitalism’. The risk of course does not go away, it is borne by the people at large. And now, we see further action on the same front, when govt is arm twisting the RBI to lower the interest rates, and restart the debt cycle.   On the other side we see that the bankruptcy code has become a tool for successful capitalists to acquire assets of indebted capitalists at heavy discounts. In this inter capitalist transaction the loss is suffered by public sector banks, which are then recapitalized by public taxation.

One consequence of the above, which should not surprise anyone here, is that rich become richer, and poor, if not poorer, remain where they are. What is surprising is the obscene degree and speed the inequality is increasing. Estimates of wealth distribution show that two years ago the richest one percent of Indians owned 58% of country’s wealth. In one year their share increased to 73%. We can understand this increasing inequality from employment data. An 8% GDP growth now leads to only 1% employment increase.  Clearly the new wealth being generated is getting concentrated with those who do not have to work but make money from profit, speculation and rent. All this leads to the critical question of left politics. Right wing politics has two aspects. One, which stands with the capital against the working class, and second which divides the working class. BJP is doing both. Rather than responding defensively to its politics, or following the lead of other parties, the Left needs to evolve an alternative agenda.

AtulSood, who also teaches economics at the JNU, spoke about three interlinked issues; the nature of current capitalism, its specifities in India, and the politics of Modi regime. At the global level capitalism has to be understood both as a collusion and competition between global and domestic capital. Another development is the changing balance of force between labour and capital as a consequence of outsourcing, off shore manufacturing, global value chains, etc. Third, the predatory accumulation based upon violence and dispossession is not outside the normal accumulation cycle. This is the only capitalism. In this context, it is not possible to think of a non-crony capitalism.

There is always a continually evolving dynamic between any nation state, and its instrumental use for capitalism. In India, a new phase of this relationship has started, after Nehruvian form has been decisively discarded. Hence, the political economy of current phase should not be seen as develomentalist. Economic reform, social justice and social development are in contradiction. Hindu nationalism should be seen as emerging from the wreckage of Nehruvian project. Indian state has always claimed to be working for the interests of the poor, hence all policy formulation and implementation is by stealth. The institutional environment doesnot lead to any accountability or transparency. Accumulation can best be described as ‘backdoor accumulation’.

The end of UPA II was also the period of crisis of accumulation. Modi govt tried to do a front door politics in favour of the rich, by attacking laws related to labour and land. It had to beat a retreat in the case of law for land acquisition. However, we should note that Modi has been successful in reconstituting what is considered ‘socially just’. He is trying to normalize blatant use of state power for anti-people policies. This means that his economic and political discourse are all the time in tune. It is a conscious tactic to keep the society in permanent turmoil to keep opposition and people disoriented. Demonetisation is a perfect example of a destabilizing economic decision with a clear political intent.

Another issue which is going to become important is the way current capitalism is framing the employment question. Agriculture and employment are taken to be residuals, requiring no specific policies.  The 2019 World Development Report of the World Bank openly admits that employment for the majority of humanity under current capitalism cannot provide sustained and decent livelihood. It is in this contextthat  we hear about ‘basic income’ as a possible state response. 

Well known public interest litigation lawyer Prashant Bhushanwas the last address the audience. He explained many blatant instances of government favouring its preferred clutch of capitalists, and emphasized the necessity of robust institutions and electoral reform if the democracy is to be saved. Modi govt’s focus appears to be neither development, nor growth, but only to help its cronies. Referring to Rafael deal he mentioned how the bench mark price of the plane was increased from 5.2 billion dollars to 8 billion dollars, so that Ambani  gets to be a part of the deal. The latest scam is the 59 minute loan mela, in which a bogus company in Gujrat has been made the nodal agency. It needs to be kept in mind that crony capitalism has been around for many decades. The 2G scam under UPA is well known. In fact devious ways of unscrupulouscapitalists are known to the government and itsinvestigating agencies. However, even when an investigation unearths fraud, like over-invoicing of imported equipment by Adani power, agencies are stopped from following the law. He also referred to Birla Papers, which have clear references to payment to policiticians, including from the ruling party. Yet, no investigation has been initiated. In fact cronies have become so powerful that they effectively control our public institutions.

In the current context, we should raise two specific demands. All information related to loans given by public sector banks should be in the public domain. After all, these banks are playing with public money. Second, the electoral bond scheme must be rolled back. It allows anonymous donations to political parties, and hence by law hides information about who is paying which party. It legally allows dubious deals between corporates and political parties. Indian subsidiaries of even foreign corporates can pay political parties. It is not difficult to see how this is going to encourage crony capitalism.