One year of Rajiv Gandhi:
INDIA tion, healthcare and protein intake.
The general direction of the Indian economy, strongly reinforced by the policies of the Rajiv government, is away from equity and self-reliance. clearly is "two Indias", with industrian economic review alization, "modernization" and growth catering for the "first" India, that is the relatively well-off, the growing rich, upper-middle, middle and upwardly aspiring lower-middle class of both town and country, which by the
THIS IS THE first of two articles describing the economic and political developments in India since the assassination of Prime Minister
Indira Gandhi in October 1984. The first article analyzes the increasingly rightward movement of the economic policies initiated or continued during the first year of Rajiv Gandhi's tenure as prime minister. The second article, to appear in a future issue, will take political issues of caste and communalism, foreign policy, up the bourgeois politics and various left and social movements.
M NAVID
BOMBAY - The economic policy of the Rajiv Gandhi government represents both continuity and change. It continues in a direction that was charted earlier by both the 1977-1980 post-1980 Indira
Party and
Janata
Gandhi governments.
But it also represents such a dramatic acceleration this direction that it is without in doubt the most right-wing capital
India's accumulation programme in post-independence history.
For the first time seventh plan, private sector investment (which includes agriculture) is higher than in the public sector. The corporate sector and trade have an rupees = 1 US dollar]
(especially industry) is to be promoted through liberalization of imports and delicensing, as well as a degree of a framework which allows all sectors to thrive. In addition, industry has been provided with fiscal incentives agriculture one can expect a in production food grains, as well as certain commeras irrigation and other cial crops, aspects of capitalist farming methods
Production of food grains expand.
will more than keep pace with population growth, though in the absence of equitable distribution, mass poverty and malnutrition will continue to exist. Poverty eradication is not a for priority the
The new regime.
government is leaving it to schemes like the Integrated Rural Development
Programme (IRDP) and National Rural
Employment Programme (NREP) to
10 tackle this issue of rural poverty.
But these schemes give disproportionate benefits to the not-so-poor; they do not alter rural asset holdings or the existing patterns of access to cooperative or collective assets. And whatever equalizing effects they might have are substantially counterbalanced by the inequitable effects of the other dimensions of economic growth. For employment opportunities in agriculture, which accounts for around 70% of the total labour force, as this sector's share of the gross national product falls even further from the 37% of today to 33% by 1989-1990.
the proportion of those the poverty line might remain stable or even decrease slightly, the absolute number of people below the poverty line is likely to rise. Studies between 1966-67 and 1977-78 show that the limited decline in relative levels of poverty has little to do with the effect of the special poverty eradication programmes. It is this trend continuing. What is disparities within sector itself are almost certainly going to increase with the poorest of the poor becoming even worse off.
short term (the Indian economy may well achieve an average 5.2% average of the sixth plan period. But even if the most optimistic forecasts of growth rates between and the year 2000 are achieved, this Indian at the turn of the century will have a standard of living equal to the average Chinese of today. But he will still be worse off than today's average Chinese in areas like housing, educayear 2000 could well amount to over 200 million people out of a total population of 1,000 million. polarization, especially in the countryalready constitute over rural population), is going to grow.
It is also quite clear that unemployment in all its forms is going to become an ever more acute problem. increasingly less able to absorb the growing labour force, industry is also less able than ever to absorb them because of the definite labour-saving pattern of capitalist modernization that is taking place in Indian industry.
inequality unemployment serious short-term economic problems for Indian capita-
The two most serious problems new economic policy the possibility of a major resources within a few years and the "resources crunch" is associated with the fact that inadequately controlled liberalization of imports can seriously worsen the balance of payments position (although the comfortable debt position of the country affords space and time for manoeuvre) and that countermeasures like hiking administered prices on, example, oil and oil products, as the government has just done, will contribute to inflation.
emphasis towards reinforces the existing neglect of the strengthen the likelihood of a crisis of inadequate investment in infrastructural industries of power and rail transport, and of a similar crisis of investment in the capital goods sector.
The private sector, by the very nature of its orientation (towards elitist consumption), simply cannot generate the resources necessary to bring about the required investment in these areas. And this in spite of a
"investment boom" in private sector, where funds generated by the corporate sector capital and share market are
International Viewpoint 5 May 1986
higher than last year and five times higher than they were in 1980-81.
Closely connected to the problems in the capital goods sector is the whole question of shift in technologies. The worldwide shift in technologies for a whole range of industries - steel production, process industries, electronics etc - is leaving India stranded and with little choice but to import certain key technologies. This has negative effects on the balance of payments position as well as on indigenous efforts at technological innovation. But the alternative is to accept a considerable degree of backwardness in the name of self-reliance.
The class portrait of 1985-86 shows an urban working class which has, on the whole, been quiet. While there have been various strikes, there was no major strike on industrial, let alone political, issues by workers which could be said to have had a ' national or even an extralocal resonance. In this respect the first year of Rajiv Gandhi's tenure has not been different from the pattern immediately preceding it and following the historic textile strike. Because of this strike [which began in January 1982, involved 250,000 workers and lasted important peak in the short-term cycle of working class excluding the textile lost due to strikes in 1981 totalled 21.2 million. The corresponding figures for subsequent years (statistics for 1985 are not yet available) are 10.7 million for 1983 12.3 million for 1983, and 15.9 million in 1984. In brief, working class resistance at the industrial level is at best slowly from the demoralization and defeats of recent years.
In fact, strike statistics kind can even be a notoriously misleading indicator
For strength. of the weaker worker whole on the working bar ch worker
Rajiv Gandhi (DR) the labour market more "flexible" for themselves.
The Rajiv Gandhi government also seemed to show the need to have a strategy for dealing with labour than did the trade-union federations of the major left parties themselves. So the Centre. [central government] has actively promoted a programme of economic modernization that will result in less labour absorption in industry than before. It has less commitment than ever to for unorganized industrial labour in the small-scale sector and shows an ability to combine stick and carrot to weaken and divide working-class movement as a
On the one hand the yearly bonus (having the legal status of a deferred monthly wage) is now to be given to workers drawing up to Rs. 2,500 a month, whereas earlier the limit had been Rs. 1,600 per month.
At the same time the government is encouraging privatization of sections of industry formerly in the public will undoubtedly have on the employees, as will also the encouragement of more closures of "sick" units in the name of promoting competition and efficiency.
The draconian Essential Services Maintenance Act (ESMA), which bans services→and was originally promulgated in 1981 for four years. But in August unsurprisingly extended the lifespan of the ESMA.
the only serious example of organized mass resistance was the September 1985 state-wide, one-day all trade-union federations including the West Bengal unit of the Indian National Trade Union Congress
- INTUC]. This was organized by the Communist Party of
India (Marxist) [CPI(M)] and they turned it into a full shut-down in order to protest against the growing number of closures of firms in the state. The demands for the reopening and rejuvenating of closed and sick industries, for the nationalization of jute and textile mills and for no retrenchment or dismissals of workers had to be supported by the workers movement.
But the motivations of the CPI(M) do the workers' party, to applaud more than a local impact.
The most important class aspect of the Rajiv government has been the self-confidence that the new dispensation in New Delhi has imparted to the urban middle, upper-middle and upper classes. For the first time they see a government which is explicitly and publicly orienting itself to its aspirations and needs. bourgeoisie (all sections) have strongly government's economic strategy.
Why then the series of raids on big and medium-sized businesses and on corrupt tax officials? The explanation for this seemingly puzzling destabilization of business by a strongly probusiness government may be straight-
The government, which has reduced taxes, wants to prevent the possibility of a dangerous budget deficit emerging by frightening the business houses into being honest in the matter of their tax
Mason to doub 11
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