People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 38

September 23, 2012


Brazen & Authoritarian Policy Measures

Will Worsen Unemployment,

Deepen Stagflation


Utsa Patnaik    


THE recently announced decisions by the government to raise diesel and LPG prices combined with permitting 51 per cent FDI in multi-brand retail are measures which have been strenuously opposed for years by mass organisations and all political parties. These are measures which are extremely unpopular within the ranks of the Congress itself. The fact that nevertheless this is now declared official policy indicates the extent to which the entire Congress party has allowed itself to be hijacked by the tiny minority of dogmatic neo-liberal economists in high places in the government, whose groveling before the domestic corporate sector and international finance capital has now crossed all limits of decency. These measures mark a decisive crossing of the Rubicon, a declaration by the dogmatic neo-liberals that the welfare of the Indian people matters nothing, nor does it matter that the people have repeatedly expressed their opposition in every possible democratic forum and through all accepted modes of protest. All that matters for this minority of dogmatic neo-liberals is to placate finance and therefore they are bent on ramming through these measures using every trick of authoritarian misuse of power and every trick of intellectual obfuscation - measures which they are presumably foolish enough to imagine will  lead to an inflow of capital from an already crisis ridden global system.


The current regime of high inflation is daily eroding the purchasing power of ordinary people, to such an extent that they are forced to cut back on food consumption. The latest National Sample Survey Report on consumption expenditure for 2009-10 shows that in the country as a whole 75 per cent of all persons could not afford to consume enough food to give 2100 calories of daily energy intake, compared to 65 per cent in that position in 2005. In the capital itself, urban Delhi state, the data show that a shocking 92 per cent of all persons could not afford to obtain this minimal level of nutrition compared to 57 per cent in 2005. The position by now in 2012 is sure to be worse. It is obvious that the proposed steep hike in diesel price if implemented, will have well known cascading effects, and will be passed on to the consumer as an even higher rate of food price inflation, further reducing their purchasing power. But the dogmatic neo-liberals could not care less.  Assuming for a moment that foreign capital does come in – which is doubtful – all it will do is to lead to a brief stock market bubble before collapsing again. 


The entry of the multi-brand corporations in retail into the Indian market had been strenuously and rightly opposed on the grounds of the adverse effects on employment. The tertiary or services sector which includes retailing is the last refuge of displaced and unemployed peasants and artisans, of workers thrown out of regular employment. Again the employment data from the NSS for 2009-10 shows that the annual employment growth rate virtually collapsed for the economy as a whole, to only 0.8 per cent during 2004-5 to 2009-10 compared to 2.7 per cent over the preceding five years ending in 2004-5. In such a situation of fast rising unemployment, to deliberately undermine jobs in an important part of the tertiary sector by bringing in foreign corporates is an act of madness. But then, it is doubtful if Marlowe’s Dr. Faust could have been entirely sane when he sold his soul to the devil.


How does the country rid itself of the incubus? By broadening and intensifying peoples’ democratic struggles, by utilising every peaceful, transparent and open means to counter the cunning of the adversary.