Renowned Indian economist and political analyst Prabhat Patnaik spoke with Bengali newspaper Ganashakti about the present state of India’s economy and politics, on the occasion of the 75th anniversary of India’s independence from British colonial rule.
Ganashakti: After 75 years of independence, wealth inequality and unemployment are increasing rapidly, while employment and the guarantee of an income for the majority of the population are decreasing every day. Does this mean that India is no longer a welfare state?
Prabhat Patnaik: If we consider the definition of “welfare state” properly, India was never a “welfare state.” Even if a “welfare state” works for the welfare of a particular group instead of working for universal welfare, it must try to maintain everyone above a certain minimum level of guarantees. This was never the case in India. When the universal public distribution scheme [not the targeted rationing scheme of today] existed to guarantee food security in the country, there were very few government-funded ration shops in rural areas. That is, the scheme, despite its name, was not universal. In the Indian Constitution, all the norms of the “welfare state system” are under the Directive Principles of State Policy, which are not enforceable by any court and hence are not mandatory for the state to follow.
It is true that the declared aim of the constitution, from the beginning, was to develop India as a welfare state. Nevertheless, that aim has now been openly abandoned. Otherwise, the “trickle-down theory” would never have been presented, which actually means that the state will not provide assistance and will instead depend on a “spontaneous” process. This abandonment is part of the vision of neoliberalism. This gets reflected in many spheres. For example, the state has withdrawn itself from universal public distribution of food; it is converting education into a consumer commodity which is making it impossible for most people to access it; it is weakening the public healthcare system. There are many more such examples.
The high unemployment rate—the highest after independence—in a country where there is no general system of assistance for the unemployed; the rapid rise of extreme inequality—higher than that of any time during the previous century according to Picketty and Chancel; the huge decline in the nourishment of the population, which had experienced significant advances after independence from Britain—all of these trends are proof of the general decline during the neoliberal period.
Ganashakti: Three decades have passed since the introduction of neoliberalism. What has been the main impact of this policy? At this moment, can we say that this policy has been a total failure?
PP: The neoliberal period in India may be divided into two parts—one that saw high rates of economic growth; and the other in which the economic crisis of neoliberalism began. The latter period is occurring globally. The dividing line between these two phases was the second United Progressive Alliance government [2009–2014]; after the housing bubble burst in the United States. The crisis started a bit later in the context of India.
In fact, even when there was a high rate of growth during the earlier period of neoliberalism, total poverty grew as well. The daily caloric intake of 2,200 in rural India, which is the basic definition of “poverty”—the number of people who cannot achieve this grew from 58% in 1993–1994 to 68% in 2011–2012. In the urban area, this figure was 2,100 calories, and the number of people who could not reach this increased from 57% to 65%.
However, since the start of the crisis and stagnation of neoliberalism, the state of the working class has worsened. The National Sample Survey [NSS] 2017–18 showed such a grave situation that the Modi government did not release the report, and kept it hidden, and even decided to dissolve the NSS, despite the fact that it was the renowned statistician PC Mahalanobish who introduced that system. That report got leaked, however, and it revealed that the real purchasing power per capita of rural India decreased by 9% from 2011–12 to 2017–18. This figure is an average, the reduction with regards to the working class must be even worse. The situation has worsened even further after the pandemic and the current worldwide inflation.
Even if capitalism can overcome the pandemic and the war in Ukraine, the long-term structural crisis of neoliberalism, which was already visible before 2019–20, will still remain. There is no possibility of overcoming this crisis from within neoliberalism. The way that neoliberalism tries to combat the crisis is by giving more concessions to the capitalists in the hope that they will invest more, which will increase economic activity and generate employment. However, in reality this just deepens the crisis. During times of crisis, when the market does not expand, capitalists do not invest in anything. Therefore, as long as neoliberalism lasts, the socioeconomic situation of the people will continue to worsen. The sooner the country gets out of this system, the better.
Ganashakti: If you are asked to select the sector of the Indian economy that is going through the most severe crisis, which one would you select?
PP: The biggest problem of neoliberalism is that its attack on small producers and labor-intensive farming is particularly vicious. Since the neoliberal system is directed by the elite bourgeoisie associated with international finance capital, it withdraws support for labor-intensive farming that depends on the cultivators. In fact, the Modi government was on the verge of eliminating the minimum support price for crops, which is the last mode of support that still remains. It was forced to suspend this in the face of large-scale popular resistance.
As the government goes on reducing support for the agroeconomy sector, it stops being profitable. The government is also allowing corporations to invade this sector, incentivizing the process of primordial accumulation of capital. This is the reason behind the ongoing crisis in the agricultural sector. The hundreds of thousands of farmer suicides, unprecedented since independence, is a manifestation of this crisis. Mass migration of farmers from villages to cities in search of employment that does not exist and the consequent growth of excess workers is another manifestation of this crisis. Since the number of stand-by workers is rising, there are more employment-seekers in comparison to the amount of existing jobs. Considering the census of 1991 and 2001, the number of farmers—who are called “cultivators” in the census—decreased by 15 million.
The poverty of farmers even reduces the bargaining power of sectors of organized labor, and this increases the total poverty of the population. This is the central theme and the most significant characteristic of neoliberal capitalism. In a country like India, the key to the overall stability of the economy is the continued survival of cultivator-dependent farming, which is also closely related to the situation of farm laborers. Neoliberalism has put this very survival into question.
Ganashakti: The Indian corporate sector more or less supports the ideology of Hindu religious fundamentalism despite being aware of its dangers. Why is this happening? Is the Indian big bourgeoisie changing its cultural-ideological principles?
PP: No, the cultural and ideological principles of the Indian big bourgeoisie are not changing as such. This is a result of the crisis of neoliberalism, when international finance capital and the local big bourgeoisie are afraid of possible challenges coming from below. While economic growth during the first phase of neoliberalism was high, the “trickle-down theory” could be sold to the working masses—this was how neoliberalism tried to avoid or delay resistance from the working class, although the conditions of the working population continued to worsen. Nevertheless, this was a support system of neoliberalism. However, with the arrival of the crisis, this support system vanished. When there is no growth at all, nothing can “trickle down” anymore. In this situation neoliberalism has to find a new support system. Neo-fascism is that system. This led to the neoliberalism–neofascism alliance; in India this is the corporate–Hindutva alliance. This alliance is trying to help neoliberal capitalism survive. This alliance is changing the narrative, creating hatred against some minority groups so that working people do not focus on the material conditions of their lives. This is helping neoliberalism in two ways: it is keeping the working class divided, and it is diverting the attention of the people from the issue of survival to that of religion. The corporate–Hindutva alliance is a weapon of fascism.
Georgy Dimitrov stated at the 7th Congress of the Communist International that fascism arises during the crisis of capitalism. The Great Depression of the ‘30s is an excellent example of that. The present crisis of neoliberalism is creating a similar context that is facilitating the rise of neofascism. It should also be noted that just like in the 1930s, this rise of neofascism is a worldwide phenomenon, it is not confined solely to India.
However, there are differences between the 1930s and today. In the 1930s, fascism saved capitalism from crisis, as governments increased spending for the manufacturing of weapons as they geared up for war, and this increased spending was covered by taking loans from financial institutions, that is, through accumulating fiscal deficit. At present, governments will not take loans to raise spending. This is out of the question, because a large fiscal deficit is not acceptable to finance capital. Moreover, finance capital is international but the state has remained national. The state has to give concessions so that finance capital does not leave the country en masse. Similarly, under neoliberalism, it is impossible for the state to collect more funds for the treasury by raising taxes on large capitalists who accumulate huge quantities of surplus value. What the state tries to do instead is raise taxes on the working class in order to cover necessary government spending, but that does not really increase the size of the state’s total collection through taxes. This is because the working people are forced to spend all their earnings for the most basic necessities. Therefore, even the old-style fascist state would not be able to help capitalism overcome its current crisis. This is the difference between neofascism and 20th-century fascism, and this is the weakness of neofascism.
Ganashakti: Do you think the corporate–Hindutva alliance can lead India into fascism? If so, what might be the probable characteristics of “Indian” fascism?
PP: Since today’s context is different from that of the 1930s, today’s fascism will not be a carbon copy of 1930s’ fascism. However, all the general characteristics of fascism are already in India. For example, oppressive authoritarian rule based on fear; alliance between a fascist party and big business; targeting a minority group and generating hatred against them; persecution of political opposition by state repression as well as using fascist criminals; and above all, widespread violence and repression against intellectuals and social movements that raise their voice against the authoritarian rule—and all of this is being done because the fascist state is afraid of losing political power. Nevertheless, present-day fascism or neofascism is forced to function within a democratic system. Therefore, neofascism is destroying democracy but keeping its façade intact, and is always pretending to be democratic. This means that today’s fascism is in disguise. Hence, we cannot say that the corporate–Hindutva alliance can lead India into fascism; this alliance is fascism in disguise. It will depend on the evolving situation whether fascism will get rid of this disguise and operate more openly.
If one of the characteristics of Indian fascism is keeping the democratic façade intact, although this is not unique to Indian fascism, another of its principal characteristics is using religious identity to define “others.” These “others” are religious minorities in India. In other countries, race, nationality, and other similar identities are used for identifying “Others.” In India, religion is being used as the basis of fundamentalism.
Fascism must be defeated. Only leftists are capable of promoting the revival of real democracy and the means of economic relief for the working masses, which is the only way to defeat fascism and overcome neoliberalism. Leftists have to build a broad popular movement—a platform of the union of all anti-fascist forces. It was the left that defeated fascism in the previous century, it has to carry out this historical task this time as well.
(Ganashakti) Translation: Orinoco Tribune