By Dr. P J James
Introduction
The Economy of India with a nominal GDP of $ 1.7 trillion ranked eleventh in the world in 2013. But with a per capita income of around $1400, its position is 140th, thus qualifying itself as a low-income country inhabited by one of the most deprived and poorest people in the world. According to recent World Bank statistics, about 400 million Indians, as compared to 1.29 billion people worldwide, live on less than $1.25 per day. Arjun Sen Gupta Committee of the Indian Planning Commission had recorded that more than 80 percent of the Indian population subsisted with a daily earning of less than Rs. 20 a day. India has about 61 million children under the age of 5 who are chronically malnourished, compared to 150 million children worldwide. According to latest sector-wise national income statistics pertaining, agriculture, industry and services respectively contribute 15%, 26% and 59% to the countrys GDP. The same data source puts the distribution of Indias labour force by occupation in agriculture, industry and services as 52%, 14% and 34% respectively, pinpointing the extreme dependency of the people on agriculture for their sustenance. As is obvious, industry and services which together encompass 85 percent of the national income provides employment only to 48 percent of the population, that too an inflated figure. According to latest reliable data, of the 487.6 million workforces in the country, only 7 percent works in the organized sector, 90 percent of which is still provided by the dwindling public sector. The literacy rate of 74% as claimed by government is still lower than the worldwide average and the country suffers from a high dropout rate. As revealed by the 2011 census data on the household consumption patterns, about 67 percent of households use firewood, crop residue or cow dung cakes for cooking purposes and 53 percent do not have toilet or drainage facilities on premises. However, today more than 850 million Indians have mobile telephone connection while 43 percent of the households have a television. According to World Fact Book maintained by CIA, India has a national tele-density rate of 74.15% with 926.53 million telephone subscribers, two-thirds of them in urban areas, but Internet use is rare, with around 13.3 million broadband lines in India in December 2011. Some 600 million Indians have no electricity at all. While 80% of Indian villages have at least an electricity line, only 44% of rural households have access to electricity. Retail trade is one of the pillars of Indian economy and accounts for almost 15% of its GDP. The Indian retail market is estimated to be around $ 500 billion and one of the top five retail markets in the world by economic value. But organized retail supermarkets account for around 5% of the market as of 2013. As one of the largest middle class consumer markets, India is the tenth largest importer in the world and a destination for considerable foreign investment from global financial centers. India has one of the most corrupt regimes in the world and according to a report by the Swiss Bankers Association, India topped the worldwide list for black money with almost $1,456 billion stashed in Swiss banks alone and its underground economy is conceived to be much larger than the so called official economy.
The above sketch based on macro-economic data is a clear symptom of a malaise whose roots lay deep in the very structure and management of the Indian economy and polity over the 67 years since power transfer. Under the much despised Hindu rate of growth during the so called Nehruvian period which was followed by the so called fast moving economy under neo-liberalism since the 1990s, the economic variables pertaining to the life of the broad masses of people have not depicted any qualitative transformation. On the other hand, on account of the ever intensifying integration and penetration of global finance capital into the vital sectors of the economy over the years, and with the recent emergence of a mushrooming elite middle class and a club of billionaires fully integrated with international financial centers, there took place a basic distortion in the fundamental working of the economy itself. For instance, according to the Report of the National Income Committee in 1948-49, 47.6 percent of the countrys GDP was derived from agriculture and allied sectors, while that of the services sector was only 35.2 percent. Today as already noted, the share of agriculture in GDP has shrunk to 15 percent and that of services sector has grown to 59 percent. On the other hand, in spite of this structural transformation in the economy, the dwindling agricultural sector is still the source of livelihood for majority of the people and the services sector composed of trade, real estate, finance, and other money spinning businesses, despite its rapid growth provides proportionately much less employment clearly pinpointing to the fact that the gains from the so called development have mainly gone to the upper echelons of society. In other words, despite being a low-income country, as a result of the ever-intensifying integration with imperialist finance capital, India is also going through the same phenomenon of jobless growth and becoming a waste land of unemployment as experienced by developed capitalist countries today. Hence, though national income has grown several times during the past several decades and so many trickle-down efforts have been taken up by the rulers, there has been little perceptible change in the life of the broad masses of working people, including such oppressed sections as dalits, adivasis, minorities and women.
However, from a political economy perspective, the whole trajectory of Indias economic transformation is to be situated in the broader context of postwar neo-colonization and global expansion of international finance capital primarily led by US imperialism. By transferring formal political power to the comprador Indian ruling classes who were born and nurtured under the umbrella of British colonialism, the imperialists effectively ensured the continued plunder of India through the neo-colonial institutions and arrangements designed during and after World War II. As is obvious, at a global level, during the quarter century following World War II, on account of the presence of socialism and national liberation movements, US led imperialism had to pursue the neo-colonial plunder through the policy of international Keynesianism or welfare capitalism. During this period, even while the global expansion of capital and its multi-dimensional penetration into neo-colonial countries had been strengthening, the slogans of import substitution, state-led development, public sector, welfare state, etc. were profusely used to hoodwink the masses. Meanwhile, for the penetration of finance capital into neo-colonial agriculture, led by the World Bank, USAID, and Rockefeller-Ford foundations enabled comprador regimes in neo-colonial countries to pursue Green Revolution, which encouraged agribusiness MNCs to completely monopolize the input-output markets for agriculture. In the place of the erstwhile feudal classes who served as the social base of imperialism in the colonial period, through Green Revolution imperialism took particular attention to build up a comprador/kulak agricultural bourgeois class imbibed with the ideology and technology of commercial agriculture in Asian-African Latin American countries as a firm ally in the neo-colonization process. The consequent restructuring of land relations including the abolition of feudal relations led to a further concentration of land in new landlord classes on the one hand, and unprecedented landlessness and pauperization of the peasantry, the real tillers of the soil on the other.
But the Keynesian medicine applied in the specific international context conditioned by a whole set of factors, could not overcome the inherent logic of finance capital which is stagnation and speculative parasitism. The unhindered printing and pumping of dollar and the consequent financial expansion and speculative tendencies, which are inherent in the neo-colonial phase, have led to qualitatively new problems. In the initial years of postwar boom, this financial expansion was accompanied by increase in production, but later the financial growth began to overtake that of output growth leading to what is called stagflation–stagnation in production coupled with inflation or abundance of money supply. In other words, the Keynesian policy of inflationary financing of chronic stagnation that began in the 1930s has broken out in the 1970s as another incurable crisis resulting in the abandonment of Keynesianism itself. This enabled the US led imperialism to transfer the burden of the capitalist crisis to the shoulders of world people by resorting to a change in neocolonial accumulation process through a shift in economic policy from Keynesianism to neoliberalism or monetarism. As is obvious, the result was a downsizing and rollback of the welfare state and abolition of erstwhile Keynesian restraints and controls on the free international mobility of speculative capital. In search of fabulous profits, speculative finance capital that leads imperialist globalization or the accumulation process is subjecting every sphere of the economy including agriculture, industry and service sectors on the one hand, and developing newer and newer avenues of speculation on the other, resulting in hitherto unknown levels of wealth concentration with a tiny financial elite together with unprecedented inequality, poverty and deprivation of the broad masses of the people. The outcome of this financial speculation today is stagnation, de-industrialization, joblessness, inflation and price rise, corruption, ecological catastrophe and gruesome cultural degradation of hitherto unknown levels.
A discussion on the whole course of postwar transformation of Indias political economy should also be located in this broad historical context of global neocolonisation unleashed by US led imperialism. More specifically, such an analysis is to be carried out with respect to the global shift in economic policies from Keynesianism (pre-liberalization period) to neoliberalism or monetarism (post-liberalization period).
Pre-liberalization (Nehruvian) Period
During the Nehruvian era which was coterminous with international Keynesianism as elucidated above, the Indian ruling classes and their apologists could manage to camouflage the comprador character of Indian state through postures such as public sector, import substitution, self-reliance, etc. In conformity with the Keynesian state-led development and import-substitution policies put forward at the international level and copying from the Tata-Birla or Bombay Plan prepared in 1944 by the leaders of Indian big bourgeoisie, Nehru, the first prime minister envisaged a planned and regulated economy for India while at the same time pursuing a liberal foreign investment and trade policies in general. With a strong emphasis on a large public sector and state intervention in vital sectors of the economy, private sector, both Indian and foreign, was given a cost-free infrastructure for accumulating wealth. Domestic policy tended towards protectionism, with high tariff walls and a strong emphasis on import substitution industrialization(ISI), economic interventionism, a large public sector, business regulation, and central planning, while foreign investment policies were very liberal which allowed MNCs from various imperialist countries to have control over key and strategic sectors of the economy through innumerable foreign collaborations and joint ventures in public and private sectors with majority and minority participation. In brief, the Nehruvian ISI and so called self reliant development strategy were heavily dependent on foreign capital and technology that led to mounting balance of payments crisis through the ever-expanding outflow of foreign exchange in the form of royalty, technical and management fee, dividend, interest and profit together with massive out payments required for accelerated PL-480 food shipments and imperialist enforced under-invoicing of exports and over-invoicing of imports ultimately compelling the government to resort to the infamous devaluation of Indian rupee to the extent of 57.5 percent in 1966 under American diktat. Even much before this ignominious decision, as a manifestation of the mounting foreign exchange crisis, within two years of the beginning of the Second Five Year Plan, the Nehru government dispatched a high power delegation to Washington resulting in the establishment of an Aid India Consortium (AIC) in 1958 itself with World Bank as chairman at the behest of USA. Till the collapse of Nehruvian strategy of state led development in the 1980s that followed the demise of international Keynesianism in the 1970s, the AIC remained as the apex neocolonial monitoring arrangement entrusted with the task of supervising imperialist aid flows or loan capital to India.
These arrangements enabled USA through the Bretton Woods institutions to penetrate in to the core of Indian economic policy making and directly influence plan priorities. It also gave US imperialism a definite score over Soviet Union in the Cold War in establishing its firm foothold in strategic sectors of India. From this period onward India witnessed the placement of US trained experts in strategic positions in the various ministries of the union government, Planning Commission and even in the Reserve Bank of India. As revealed by official sources, in the guise of extending expert opinion American agents, World Bank and Ford Foundation experts could easily infiltrate even in to the prime ministers office and had access to classified documents, could elicit the relevant information required to carry on the neocolonisation of India ensuring its perennial dependence on imperialist capital even amidst the slogans of socialism, public sector, self reliance, etc. While the foreign aid -loans and grants- component of the First Five Year Plan was 10 percent, in the Second Five Year Plan in which the Nehruvian model of self-reliance and socialism found its full-fledged expression, it rose to more than 30 percent of the total plan outlay. As leader of the neocolonial world order, American imperialism stood as the major donor contributing almost 55 percent of the total external aid during the Second Plan while that of Soviet Union was 5.4 percent. More than 90 percent of the total foreign aid was from the US led imperialist sources including the World Bank. From a position of zero external debt in 1951 when planning began, the accumulated foreign debt of India rose to Rs. 1073 crores in 1961 when the Second Plan ended and this external dependence got strengthened in due course.
At the same time, concentration of wealth and income with the comprador Indian bourgeoisie, the leading section among the ruling classes went on increasing. For instance, if twenty family groups in India controlled 20 percent of total private capital in 1951, this has increased to 33 percent by 1958 and in 1965, 75 leading business groups owned 47 percent of assets of all non-government companies. But with the completion of the infrastructural projects by the public sector, from the 1960s onward, there took place a spectacular growth in comprador big bourgeoisie in India. However, from the late seventies and early eighties onward, in the background of the collapse of international Keynesianism, with the gradual demise of Nehruvian state led policies, easing of state controls on economy , liberalization of industrial licenses , finance, tax regime, etc., the trend of increasing concentration of wealth in the comprador bourgeoisie got further strengthened, which rather than making it a powerful independent capitalist class, true to its class character, led to its further compradorisation and consequent subservience of the Indian state to US led imperialism as the latters strategic junior partner.
In the meanwhile, the economic crisis further aggravated and under American pressure, the Indira Gandhi government was forced to declare a plan holiday for three years during 1966-69. The second half of the sixties was a turbulent period in Indian history marked by country-wide food riots, mass upsurges against price-rise and peasant struggles for land including the Naxalbari peasant uprising of 1967 leading to the formation of CPI (ML) in 1969. This compelled Indira Gandhi to revamp the Nehruvian populist mask once again even while abjectly surrendering to imperialism. The rhetoric on the need for reformist land reforms including issues like the security of tenure but wholly excluding the fundamental question of land to the tiller, became frequent during this period. To hoodwink the masses the government of Indira Gandhi also resorted to a series of much trumpeted legislations including her slogan of garibi hatao to cover up the blemish arising from rupee devaluation, dilution of 1956 Industrial Policy and above all opening up of agriculture to the penetration of imperialist finance capital through Green Revolution. As a result, laws pertaining to the abolition of Privy Purses to the erstwhile feudal kings, nationalization of banks (1969), Monopolies and Restrictive Trade Practices (MRTP) Act, Patent Act (1970) and Foreign Exchange Regulation Act (FERA) 1973, came into the statute books. However, when the crisis further deepened as manifested through the Railway Strike, country-wide students agitation and Jayaprakash Narains call for overthrowing Indira government, the latter resorted to the fascistic and ultra-reactionary Internal Emergency. But after coming again to power in 1980, Indira Gandhi not only reversed all her earlier populist postures but also led the country to the IMF tutelage and as a prelude for the impending liberalization of the eighties, accepted all the structural adjustment conditionalities dictated by IMF in return for a huge External Fund Facility loan in 1981.
A note on Green Revolution
During the colonial period, though feudalism continued as the social base of imperialist domination in the main, as a result of the long years of colonial onslaughts, the whole structure of the economy after deviating from its natural course of development was becoming distorted by imposed conditions. Even the existing mode of production established through imposed land settlements such as Permanent Settlement of 1793 from above aimed at surplus extraction, being subjected to the process of disarticulation and subordination to the interests of imperialist finance capital, rather than becoming a rigid pattern, was itself transforming in to a colonial mode of production. That is, the increasing integration of the country with imperialist market, though prevented an independent capitalist development of the classical pattern, could put substantially alter the feudal mode of localized production and localized appropriation. The most obvious developments were in relation to the increasing commercialization of agriculture coupled with the rapid monetization and growth in exchange relations in every sphere of economic activity. Rapid strides in commodity production in consonance with the requirements of both export-oriented and domestic market oriented cash crop agriculture started altering the feudal and semi-feudal mode of production in the country-side. Its striking ramification was the entry of capitalist relations in agriculture and the massive displacement of poor peasants that swelled the ranks of landless poor peasantry including agricultural workers as the largest section in rural population, a trend that got further strengthened under neocolonisation since 1947.
In view of the low level of agricultural production in India, from the forties onward there was a debate among mainstream economists over what is called institutional path versus technological path for increasing agricultural output. While the former group primarily stood for land reforms and changes in land relations as a means to unleash productive forces in agriculture, the latter group representing bourgeois-landlord classes as well as imperialists argued for overcoming agricultural stagnation through technical improvements freezing changes in land relations in favour of the real tillers of the soil. As far as India is concerned, the Tata-Birla Plan along with its industrial policy also had an agrarian strategy in conformity with its comprador class character. It emphasized reliance on technological improvements of agriculture based on landlords and affluent sections in whom land is concentrated. This desire on the part of big Indian bourgeoisie for building up a corresponding comprador class integrated with global market in the rural areas got its full backing in the Green Revolution initiated by US Department of Agriculture, Ford-Rockefeller philanthropies, World Bank USAID and American MNCs who by this time were turning to agro-industries and agri-business operations. It envisaged the conversion of erstwhile zamindars and feudal lords into a new class of agricultural bourgeoisie, rich farmers or kulaks as a firm ally of imperialism and fully integrated with the neocolonial market. Being the chairman of Aid India Consortium as the apex imperialist monitoring body supervising neo-colonization of India, it was easy for the World Bank to incorporate green revolution into the countrys official development program. The final decision to launch green revolution in Indian was clinched during the 1965 Washington visit of C. Subramanian, the then Union minister of agriculture.
Amidst the top-down, cosmetic land reforms started since the early fifties, the phenomenon of Green Revolution while altered the feudal and semi-feudal relations in land, led to an ever-increasing land concentration in India. At the time that Indira Gandhi promulgated her celebrated election-winning slogan of garibi hato, data from Indias first Agricultural Census in 1970-71 revealed that one-half of Indian peasants belonged to the marginal and sub-marginal category having less than one hectare of land. This lowest one-half of cultivators held just 9 percent of the total area while large holdings of 25 acres and above accounted for 31 percent of the total. According to the Census, the proportion of marginal and sub-marginal cultivators had actually increased from 39 to 50 percent of the total over the preceding decade. And as much as one quarter of all cultivated land was operated by share-croppers, reaching up to 40 percent in the densely populated rice regions. More than one-quarter of the total workforce consisted of landless labourers and the total land held by this poorest category was only 3.36 percent of the total area. On the other hand, the upper one percent of the new landlord class continued to control more than 15 percent of the land. The socio-economic and political ramifications of green revolution in India are deeper than apparently felt. While Green Revolution resulted in unforeseen ecological and social repercussions in the country, it in no way contributed for improving the food intake of the broad masses of toiling millions. In fact, though food grains production in the country rose from 50.8 million tons in 1951 to around 250 million tons as of now, in direct proportion to the intensification of neocolonisation, the per capita availability food grains, except for a brief interregnum has been decreasing. For instance, data released by the Directorate of Economics and Statistics in July 2010, depicts a long run decline in this regard. Thus, the per capita per annum net availability of food grains in India declined from 171.1 kilogram in 1961 to 162.1 kilogram in 2009. With the process of curtailing subsidies through Aadhar, etc. gathering momentum in recent years, there should have been a further decline today. So far no official expert has come forward to contradict this data. While food intake of the broad masses of people went down, the marketable surplus of food grains available with kulaks, speculators, hoarders and black marketers and now by so called futures traders has increased over time, also resulting in an unprecedented rise in the open market price of food. In brief, along with its ecological repercussion, Green Revolution also resulted in acute landlessness and extreme poverty for the vast majority depending on agriculture for sustenance leading to massive displacement from land and migration to urban slums in search of sustenance.
Towards the Debt Trap
Throughout the Nehruvian strategy of development that lingered on till the 1980s, underlying the posture of self-reliance was the ever-intensifying humiliating dependency on imperialist aid donors. For instance, the draft outline of the Fourth Plan, the blueprint of which was reportedly prepared in Washington in consultation with imperialist think tanks, declared 1981 as the deadline for India achieving the goal of zero net foreign aid. Paradoxically, 1981 turned out to be the year in which the country was dragged into the irretrievable debt trap set by IMF. Being subjected to the aid, trade and investment policies of US led imperialism and Soviet social imperialism, and with the intertwining of Nehruvian model, with the laws of motion of finance capital under neocolonialism as already noted, India also was in the grip of an unprecedented political and economic crisis in the seventies along with the global crisis of imperialism called stagflation. As far as the broad masses of toiling people are concerned, poverty, unemployment, ill health, illiteracy and deprivation were abysmal. According to a Study Group of the Planning Commission, 54 percent of the people in rural areas and 41 percent in urban areas were below the poverty line in 1972-73. This was based on the criterion that Rs. 21 per month at 1960-61 prices was necessary to supply the minimum diet to keep a person alive. The Rural Labour Enquiry Commission had found that during the period between 1964-65 and 1974-75, the number of days for which employment was available in rural areas declined by 10 per cent for men, 7.5 per cent for women and 5 percent for children. In urban areas, the number of people on the live registers of the employment exchanges had increased from 1.6 million in 1960 to 12.7 million in 1978. No data was available regarding the vast number of uneducated, unskilled and semi-skilled unemployed and under employed people. According to the All India Debt and Investment Survey, between 1961 and 1971 in rural areas the percentage share of the lowest of 70 percent of the population in total assets declined from 2.5 percent to 2 percent while the top 30 percent increased their share from 79 percent to 81.9 percent. According to the 1981 census, the upper 2.4 per cent composed of the landlord rich peasant class owned 22.8 percent of the land while 75 percent of the peasants in the lowest rung owned only 26.3 per cent of the cultivable land. This was the outcome even after three decades of land reforms. This domestic situation coupled with the external balance of payments problems worsened by the ever-intensifying neocolonial plunder led to an economic and political destabilization aggravating all the contradictions in the country. The proclamation of Internal Emergency by the government of Indira Gandhi in 1975 was the political manifestation of this neocolonial crisis. Even after the withdrawal of emergency in 1977 the domestic economic crisis and balance of payments crisis continued unabated. Starting with the IMF loan of 1981, as already mentioned, the situation in India was ripe for launching the Structural Adjustment Program led by IMF and World Bank and the unbridled operation of MNCs and finance capital which were relatively subtle and camouflaged till then. The consequent intensification of neocolonial plunder pushed India in to a debt trap as was the case with the neocolonial countries in general for whom the 1980s had been a lost decade.
From Import Substitution to Export Orientation
The package of policies that came along with the IMF loan of 1981 prepared the ground work to completely tore up the Nehruvian self-reliant and import substituting perspective of development and replaced it with an export-oriented industrialization (EOI) strategy which pushed the country into the vicious circle of foreign trade, i.e., more imports to boost exports leading to more exports to pay for these imports leading again to more imports to boost exports and so on, thereby placing the country totally integrated with the fluctuations in world market. As a concomitant of this export or foreign trade orientation in economic strategy, in gross disregard of developing domestic market and purchasing power of the people, the Rajiv Gandhi regime brought about a series export promotion initiatives to transform country in to a cheap labour-based export platform along with the necessary liberalization in imports of capital and technology including relaxations in the repatriation of royalty, dividend and profits arising from foreign collaborations. Together with this, steps were initiated to further dilute erstwhile FERA and MRTP laws and incorporate anti-labour enactments like ESMA. Till the demise of Indira Gandhi, even while implementing the IMF-World Bank diktats, official circles were very particular to maintain the posture of public sector and self reliance. However, the advent of Rajiv Gandhi in mid-eighties and the proclamation of New Economic Policy in 1986 heralded the final abandonment of concepts like self-reliance and import substitution to be replaced by the catchwords of liberalisation, export promotion, modernization, etc. The triennial exim policies announced in 1985, 1988 and 1990 were in tune with trade and liberalization prescriptions dictated by IMF and World Bank. With an eye on Indias flourishing middle class market and utilizing the liberal industrial policy of Rajiv Gandhi, MNCs rushed to the production of a whole range of durable consumer goods which prompted several academic economists, and comprador intellectuals to characterize the 1980s as a decade of industrial development even when the country was plunging into an irretrievable debt trap driving the vast masses of people to destitution and pauperization. Under the extremely liberalized profit repatriation facilities available in the eighties, MNCs could take out their entire amount of capital investment through profits within a short span of one to one-and-a-half years. And American MNCs could repatriate the whole amount invested within a year as the average ratio of profits to paid-up capital towards the second half of the eighties was hovering around 100 percent. Thus India became one of the most profitable destinations of imperialist capital on account of the economic liberalization of the 1980s.
A notable feature of the 1980s has been the decline in the share of official aid and growth in commercial borrowings, the repayment of which are guaranteed by IMF and World Bank conditionalities. This shift was perfectly in tune with the demise of Keynesianism and rollback of the state on the one hand, and the ascendancy of neoliberalism with its concomitant deregulation of international finance and its free mobility across countries on the other. Consequently, the high cost of commercial borrowings and increased imports led to a surge in debt service obligations in the latter half of the 1980s resulting in a Latin-American type drain on Indias foreign exchange reserves. For instance, Indias debt service obligations increased by more than three times during 1985-91 and depletion of the foreign exchange reserves to one-third of what was in 1985. Mounting debt service obligations and depletion of the foreign exchange reserves brought about an unprecedented demand for foreign exchange, especially dollar, leading to an appreciation of it relative to rupee. Depreciation of the rupee has been a deliberate policy of export orientation engineered by IMF in the name of making Indian export competitive in the international market. As already noted, IMF- World Bank enforced depreciation and devaluation of the currencies of neocolonial countries has been a time-tested neocolonial device of plundering their labour and resources cheap. The domestic repercussions of this intensified neocolonial plunder in the eighties were a further deepening of the socio-economic crisis that the country was facing. Under the so-called export oriented industrialization what took place was a deliberate policy of deindustrialization involving low capacity utilization in the existing industries. In the guise export promotion, several areas of traditional industries and manufacturing were neglected. As the same time, highly capital intensive and labour-saving repetitive collaboration agreements with MNCs resulting in all pervasive automation and computerization that spread to railways, banks and factories led to retrenchments along with golden handshakes as regular phenomena in the eighties. While inaugurating the Seventh Plan in 1985, the government pledged that over the five year period 40 million new employment opportunities would be created. But on account of the specific pattern of industrialization pursued, the employment growth rate which was 2.10 percent during 1977-83 dropped to 1.77 percent during 1983-88. Therefore the promise made in the Seventh Plan document not only remained unfulfilled, but another 39 million new entrants were added to the reserve army of labour. In brief, the combined effects of the so called modernisation strategy of the 1980s and green revolution in agriculture have led to a further worsening of both interpersonal and interregional inequalities in the country, especially in rural areas. During the1981-91 ten-year period, though the average annual growth rate of population declined from 2.20 percent to 2.14 percent, the number of landless poor peasantry rose from 14.80 crores to 18.53 crores and further to 23.41 crores in 2001.
By the turn of the 1990s, on account of more than four decades of neocolonisation, India had become home to the largest chunk of the most deprived people in the world. Over the years, the comprador Indian state had no interest in collecting appropriate and reliable data on the extent of poverty and destitution in the country. Therefore, one has to rely on imperialist sources such as World Bank and UN for the required data. In this context, since the nineties, the UNDP, as part of compiling its Human Development Report has devoted some attention to measure the extent of economic and social deprivation based on a composite index relating to the provisioning of food, health, education, knowledge, drinking water, participation in decision making, personal security, etc. in poor countries. According to the human poverty index thus constructed, in 1990, almost one-fifth (exactly 19.4 percent) of the Indian people was not expected to survive to the age of 40. While this proportion was just 5 percent in imperialist countries, the position of other neocolonial countries like Sri Lanka, Thailand, Mexico and Chile was far better than India where, on an average, only 10 percent of the people was expected to die before reaching the age 40. While the adult illiteracy rate in India was as high as 48.8 percent in 1994, it was 30.3 percent for all neocolonial countries. Out of 78 Afro-Asian-Latin American neocolonial countries whose human poverty index was computed by UNDP, Indias rank was as low as 47, an indicator of the extreme deprivation and destitution suffered by the Indian people.
Trends under Neoliberalism (liberalization-privatization-globalization period)
As is obvious, the beginning of 1990s, taking advantage of the collapse of East Europe and Soviet Union and effectively utilizing the ideological and political setbacks suffered by the International Left, US led imperialism started its neoliberal offensive having economic, political, military and cultural ramifications against global people. In the economic realm, this found a reinvigoration of all the existing neocolonial weapons, the creation of WTO as a neoliberal pillar along with IMF and World Bank and a multi-dimensional penetration of speculative finance capital leading to financialisation and corporatisation of all spheres of economic activity. The political and economic situation in India at this time was highly favourable for US imperialism to impose this neoliberal economic strategy on the country by super-imposing Manmohan Singh (who pioneered Rajiv Gandhis New Economic Policy in 1986 as deputy chairman of the Planning Commission) as the finance minister and the architect of imperialist globalization in India in 1991. By this time, India was already confronting an acute balance of payments deficit as manifested through the ignominious shipment of Indian gold reserve with RBI to the Bank of England. Indias external payments position was further aggravated by the sudden exodus of dollar deposits from the Foreign Currency Non-Resident Accounts by the so called Non-Resident Indians who are a cover for foreign speculators. This accelerated the flight of foreign exchange from India. Starting from $ 102 million in October 1990, this flight shot up to $ 373 million in April 1991, $ 228 million in May and $ 330 million in June. During the eight months from October 1990 to June 1991, the total withdrawals from Indias foreign exchange basket amounted to $ 1330 million reducing the countrys foreign exchange reserves to an all time low of $ 1 billion in June1991. The opportune moment thus being created, the Indian compradors were forced to ask for a $1.8 billion bailout loan from the IMF in return for subjecting the country to a whole set of neoliberal reforms throwing all the remnants of Keynesianism in to the dustbin as dictated by imperialist centres and implemented by Manmohan Singh as finance minister.
The so called economic reforms implemented by successive governments both at the centre and states through budgetary and extra-budgetary means over the past two decades suggested a number of policy changes pertaining to domestic price and foreign exchange rate, extensive deregulation and liberalization of the agricultural, industrial, financial and foreign trade sectors, liberalization and restructuring of tax, labour and industrial relations and above all a down sizing and rollback of the state from economic social spending. In a nutshell, backed by the philosophy of neoliberalism or monetarism, the state itself has transformed from its erstwhile Keynesian role of an initiator of economic activities to a facilitator of corporate behaviour everywhere. The IMF-World Bank-WTO enforced conditionalities which form the core of this neoliberal attack consist of a downsizing and roll back of the erstwhile welfare state, cut in social welfare expenditures pertaining to food, health, education and shelter, abolition of special provisions oppressed and weaker sections, elimination of state subsidies including that of food, stoppage of price support and procurement programs, closing down of public sector units and disinvestment of even very profitable ones at throwaway prices, restructuring infrastructures, public utilities and social overheads under the euphemism of public-private partnership(PPP) and BOT schemes enabling private sector to accumulate vast amount of wealth through toll collection or imposition of appropriate user charges, liberalization of trade, banking and financial markets, liberalization of tax regime, liberlisation of the labour market including wage freeze along with required anti-strike laws and above all, a free entry and exit of MNCs. As a manifestation of the systematic downsizing of the state, successive governments at the centre and the states are increasingly withdrawing from their resource mobilization efforts such that as a proportion of GDP tax collection is fast going down. For instance, under the Nehruvian or pre-liberalisation period, the tax-GDP ratio of the central government had been 14 percent on an average, while under neoliberalism, the same has declined below 10 percent. This trend has further accelerated with the ascendancy of Manmohan Singh as the prime minister of the UPA government since 2004. Through growing corporate tax exemptions and tax reduction in corporate and income taxes, big businesses are grabbing huge sums from public exchequer. For instance, according to the statistics given in the 2011-12 Indian budget by the central government, tax forgone by Manmohan Singh government had risen from 50 percent of the total tax collected in 200506 to 72 percent of the total tax collected in 201011. During this five year period alone, according to official estimates, the total revenue forgone under corporate income tax, excise duty and customs duty amounted to more than two million crores of rupees! The outcome of this phenomenon even when the number of speculative billionaires in the country is mushrooming is an absolute reduction in governments social welfare expenditures and cut in subsidies to the downtrodden and toiling masses whose purchasing power steeply falls in the context of lack of earnings and rising prices of essential items, especially that of food.
Sector-wise, agriculture is now subjected to the worst form of financial penetration and corporatisation through what is called second green revolution. As we have already seen, the first green revolution acting as a conduit for the penetration of imperialist capital in to Indian agriculture has already transformed it as an appendage of agribusiness MNCs together with the strengthening of land concentration in new landlord classes and accentuation of landlessness of the peasantry. It has also led to the complete loss of Indian peasants self-reliance on domestic seeds, fertilizers and pesticides, transfer of the Indian gene pool of food crops to the seed banks controlled by MNCs, and above all the irreversible soil degradation and natural resource depletion having long lasting ecological problems. However, as we have noted, these changes were taking place under the domain of state led Keynesian strategy. However, the advent of globalization since the beginning of 1990s and the consequent unhindered financialisation have added a new dimension to Indias agrarian crisis. With the inclusion of agriculture along with intellectual property rights into the WTO regime, led by agri-business MNCs who have completely monopolized the agriculture technologies, India is now witnessing an unprecedented corporatisation of agriculture. Along with the ongoing corporate land grab in the name of various neocolonial projects such as SEZs, tourism zones, townships, industrial corridors, etc., agri-business companies in the name of corporate agriculture are also concentrating vast land areas leading to further landlessness and destitution of the peasantry. Even existing land ceiling acts are repealed to facilitate this corporatisation resulting in large scale displacement of the peasantry. Consequently, India is witnessing an unprecedented internal migration ever recorded in human history and the displaced, landless peasantry is joining the ranks of slum dwellers in urban centres of the country. As noted by the 2011 Census, if the present trend continues, within a short span of time the people living in urban areas in the country will be larger than those in rural areas.
Coming to the case of industry, during the past several years, in terms of its contribution to GDP, industrial sector is more or less stagnant. Several spheres are experiencing what is called a deindustrialization and this is more manifested with respect to employment generation. The ongoing foreign market oriented EOI being primarily cheap-labour based, whatever employment created is in the informal or unorganized sector where job security and social security are nil. As a result of economic crisis in US and EU which are Indias major export markets, several sunrise industries that emerged under globalization are facing threat of closures. The IT- related outsourcing bubble, which has been solely depending on the financial boom in imperialist countries, is also bursting. Unemployment and disguised unemployment are becoming the order of the day. As a mark of the deterioration in the standard of living of workers in general, the share of wages in GDP that on an average hovered around 35 percent in the pre-liberalization period has fallen to less than 20 percent under imperialist globalization.
On the other hand, utilizing the liberalized atmosphere and in tune with the specific character of finance capital, corporate MNCs and their Indian junior partners are fast moving from the sphere of production into the sphere of speculation composed of real estate, finance, trade and other money-spinning businesses. Finance capital is subjecting every item of human life such as land, food, medicine, education, fuel and so on to outright speculation. As such, the so called fast growing services sector that encompasses these money spinning businesses is now composed of almost 60 percent of the countrys national income. Obviously, a tiny upper echelon of society gobbles the gains from this flourishing speculative sphere up. Along with all pervasive corruption propelled by extreme greed, corporate capital with the connivance of political-bureaucratic set up has unleashed an unprecedented plunder of nature including water, forests and natural and mineral resources leading to unprecedented ecological destruction in the country.
All these are the direct outcome of the liberalization-privatization-globalization regime arising from the integration of the country with global corporate capital whose driving force of accumulation today is financial speculation rather than production. Through ever-intensifying neocolonisation under neoliberalism, the irresolvable crisis confronting finance capital is spreading to India also at a fast pace. As in imperialist countries, an utterly parasitic elite and corporate section who are junior partners of imperialism are reaping super profits from this scenario while the very sustenance of the broad masses of toiling Indians is in peril. In the context of 67 years of neocolonisation, it is the solemn task of Indian working class, peasants and all oppressed sections in alliance with progressive-democratic forces to resist and overcome this horrific situation based on a concrete understanding of neocolonialism and its latest form, neoliberalism.
The author worked as Lecturer in Economics, St. Thomas College Pala for 28 years and left that profession at the age of 50 in 2007 to work as a whole-timer of CPI (ML) and presently its polit bureau member. Took Ph.D from the School of International Relations, Mahatma Gandhi University in 2004 for the thesis entitled Political Economy of Participatory Development. Author of Imperialism in the Neocolonial Phase, Nehru to Rao: Neocolonisation Process in India (Massline Publications), Global Funding and NGO Network: The True Mission (New Spring Publication), etc. Also, editor of Sakhav organ of CPI(ML) Kerala State Committee.