India: Lower Economic growth & the Gathering Storm

Photo: The general strike of 2010 in India (photo by Jente Somers CWI-Belgium)

The following article is a translated version from the Dutch original and is based on an introduction by a visiting comrade from India at a meeting of the Linkse Socialistische Partij/Parti Socialiste de Lutte – LSP/PSI (Left Socialist Party – CWI Belgium) branch in Antwerp (Belgium) on 24th Jan, 2012.

Together with China, India is often presented as a rapidly growing economy that could potentially coming to the rescue of the ailing global economy. While India experienced high growth rates in the last decade, but only a small proportion of its population benefited from it. The gap between the rich and poor is only increasing, leading to social unrest. Given the fragility of the world markets and widespread poverty in India, further growth remains uncertain.

The growth in the past 20 years was part of a worldwide process. After the collapse of the Soviet Union, the idea that the so-called “socialism” of the Soviet bloc could not provide an alternative only strengthened the case for neo-liberal reforms. The economic crisis of the early 90’s (as a result of failure of state directed capitalism in India) was used as an excuse to introduce harsh neo-liberal reforms in India. This happened under the leadership of a Congress government, with the current Prime Minister Manmohan Singh, as its finance minister.

The policy of opening up the economy to foreign companies was used by the Congress as well as the opposition Hindu nationalist BJP in the name of bringing development. One of the reasons this policy was able to sustain was the unique element of a large number of educated youth who had enough skill and sufficient knowledge of English for the call centre and IT related jobs. Thus India attracted companies from Western Europe and the U.S. encouraged by the advantages offered by the Indian government and lower wages.

Wages in “new” sectors such as IT, while higher compared to other sectors of the economy, but it was obviously never at the full wages of the Western world. The economic growth was export oriented due to the failure to create a domestic market. The idea of a large Indian “middle class” is only partially true. The size of the middle class is indeed exaggerated, numbering anywhere between 60 to 100 million, which represents less than 10% of the population.

Simultaneously there is immense poverty. The government acknowledges that 37% of the population lives in poverty, other studies have shown 50% and more living in poverty. There is a study of the Oxford Poverty and Human Development Initiative which stated that 650 million Indians (53.7%) live in severe poverty. Moreover, the number of poor increased rapidly as a result of the global economic crisis that has had impact on prices, including food prices. Due to the crisis of the global economy, this is having an impact on the exports. Thus the economic forecasts for 2012 has been revised downwards to 6% as against the previously proposed growth of 9%.

In recent years, due to rapid economic growth and the absence of a strong state apparatus, has given rise to a series of corruption scandals. This led to anger against the current government and the political establishment. The Indian right together with right wing NGO’s and business responded by starting the campaign – India Against Corruption (IAC). The problem of corruption is widely recognized and is certainly not limited to the upper echelons, it is a problem at all levels. The political right used the broad-based discontent against the government and the Congress Party by seizing on the corruption issue. The campaign “India Against Corruption” got huge media coverage and did get some support from the people, even though their demands were narrow.

The campaign, however, offered no real answers to corruption, an ombudsman making no fundamental difference to a problem linked to social inequalities within the system. Moreover due to the undemocratic nature of the campaign, there have been allegations of corruption within the campaign itself that has obviously undermined its credibility. The last demonstration of “India against Corruption” in December only saw a few hundred demonstrators in Mumbai and Delhi.

The fact that the campaign had some success is also attributable to the absence of a consistent political left. The so called “Communist” parties one way or the other support neoliberal reforms and implement their own policies in support of big business and foreign investors. This has undermined their electoral position in the states that were previously under their control. But the inclusion of a neo-liberal course also means that they have no radical political alternative on the agenda.

Where they were in power, the ‘communist’ parties have omitted radical elements. In their search for a compromise, they ended up with what in reality is a neoliberal policy. The foundation for this lies in the erroneous two-stage theory of revolution and thus sowing the illusion for development on a capitalist basis before putting socialism even on the agenda. The end result was that last Left government in West Bengal took a consistent anti-union position so as not to discourage companies to invest.

With the turn to the right by the “communist” parties and their growing absence in social struggle, there is a huge vacuum on the left. With New Socialist Alternative, the Indian section of the CWI, our capabilities are limited because we are yet to become an all India force. This creates room for lots of forces, including the petty-bourgeois and right wing currents such as “India Against Corruption”. NGOs are also trying to fill the vacuum, but this is happening on an apolitical basis leading to a marked de-politicization of campaigns.

The social situation in the country coupled with the global economic crisis is a recipe for a potentially explosive situation. One thing that is becoming clearer is that workers’ struggle is back on the agenda. It will therefore be an important task for Marxists to intervene in these struggles (the general strike of 28 February could be a possibility) and also build the forces towards the formation of a new workers’ party with the program for a Socialist Alternative.

Geert Cool

Antwerp, Belgium