People's Democracy

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


No. 08

February 24, 2013




Will Govt See Writing on the Wall?


AS we go to press, the general strike of the Indian working class has begun. This is historic in many ways. This is for the first time in the history of independent India that a general strike has been called for two days, i.e., 48 hours. This is also for the first time that the call has been given jointly by all the eleven central trade union organisations recognised in the country, irrespective of the political affiliations of their leaderships. This call has been supported by almost all the national federations of various professional organisations. This call has also found large-scale support from various regional level organisations of workers and employees and also from a number of independent industrial plant level trade unions. The Left parties have expressed their solidarity with and support for this call. Additionally, many mass organisations of peasants, youth, students and women have also expressed their support to this historic, unprecedented working class action. 


This general strike comes in the background of increasing attacks being mounted on the working class and other toiling sections of our people by the trajectory of neo-liberal economic reforms adopted by the Indian ruling classes for over two decades now. All the genuine issues raised by the trade unions and various organisations of the working people, their militant protest actions and strikes in the past have so far fallen on deaf ears. Even on this occasion, despite the call being given many months earlier  and the strike notices having been served in accordance with the Indian laws, the government called the leaders of the central trade unions for discussion only on the eve of the general strike, i.e., in the evening of February 19. This was clearly an exercise in mockery and to bring on record that the government had appealed to the trade unions to withdraw the call. The central ministers did not even find it proper to discuss the demands raised by the central trade unions. On the contrary, they stated that any discussions on the demands can take place only after the strike call was withdrawn! 


This general strike has been called on a ten point charter of demands. These included a call upon the government to take urgent measures to curb the relentless rise in the prices of all essential commodities; institutionalise a universal public distribution system to ensure food security for all our citizens by making available 35 kg of foodgrain to all families monthly at not more than Rs two per kg; a minimum wage of Rs 10,000 monthly for unskilled workers; equal wage for equal work; to guarantee the right to collective bargaining and of trade union activities for unorganised workers, and to address the problems of contract workers etc. In other words, all these demands are aimed at providing some relief to the vast mass of our people who are groaning under increasing economic burdens. 


On the second day of the general strike, the budget session of the parliament will convene. There are many important issues that the parliament would have to consider in this session, like the Lokpal and food security bills, converting Justice Verma Report into legislation etc. The main agenda, however, would be to consider and approve the budgetary proposals.


This year’s budgetary proposals come in the background of a severe economic slowdown. Though the finance ministry is contesting the Central Statistical Organisation’s estimation of a five per cent GDP growth last fiscal, the reality suggests this to be closer to the truth. Industrial output has contracted by 0.6 per cent in December --- on top of a similar contraction in November this year. For the nine month period between April-November 2012, industrial production grew at a meagre 0.7 per cent compared to 3.7 last year. Worse, the manufacturing sector which constitutes over 75 per cent of the index registered a decline of 0.7 per cent in December. The consequent growth in unemployment comes on top of a relentless rise in prices with food inflation of 10.8 per cent in January 2013. The prices of vegetables are growing at the rate of 26 per cent, edible oils by 15 per cent, meat/fish/eggs by 14 per cent, cereals and pulses by 15 per cent and sugar by 13 per cent. Clearly, the people are hoping that this budget will provide them some relief from this growing agony and this two day working class action is demanding precisely this. 


However, all indications point towards the government imposing further burdens on the people rather than providing them relief and alleviating their hardships. In the name of fiscal discipline, the government has already indicated that there will be a monthly hike in the prices of petroleum products and a large-scale reduction in the subsidies meant for the poor. Given its pro-rich bias, the government has not given any indication whatsoever on the issue of the massive tax concessions that it has been continuously giving to the rich and India Inc. As noted in these columns earlier, during the last fiscal, such concessions were Rs 6,000 crore more than the entire fiscal deficit. 


The neo-liberal economic reform trajectory inherently favours international finance capital at the expense of the Indian people.  Following this, the official thinking seems to suggest that this government may seek to stimulate growth through attracting large doses of international finance. Already, there is large-scale opening up of our economy to FDI – in retail trade, insurance and banking sectors, in pension funds etc. The General Anti-Avoidance Rules (GAAR) have been deferred by two years. This has come as a great relief to foreign investors. This, it is hoped, would lead to higher levels of investment resulting in higher growth. Such a  strategy simply cannot work because no amount of investment can lead to growth unless what is produced is consumed by the people. Given the current realities, such a degree of consumption capacity simply does not exist amongst our people. 


Crucially, the budget would also reflect how India is responding to the continuing global crisis. The ILO’s special report on global employment trends for 2013 notes that in the fifth year after the outbreak of the global financial crisis, global growth continues to decelerate and unemployment gallop. By 2014, ILO estimates that over 205 million job seekers will remain unemployed while an additional 100 million would simply drop out the labour market.  Over 35 per cent of youth have not been able to enter into any employment. The report concludes saying, “Income growth has come under pressure from rising unemployment (In India’s case add inflation) putting downward pressure on real wages.” This, it says, is considerably lowering the level of economic activity due to lower consumption capacity of the people. 


Instead of concentrating on bolstering demand and consumption capacity of the people, global capitalism has been seeking to overcome its crisis in a manner that is only resulting in a newer crisis. The crisis that began with a sharp decline in the purchasing power of the people was sought to be overcome by providing cheap credit through the `sub prime’ loans. When these loans could not be repaid, the second phase of the crisis came with the global financial meltdown. In order to emerge from this crisis, those very financial giants that created the crisis were bailed out through humongous state-financed packages. This led to the third phase when corporate insolvencies were converted into sovereign insolvencies leading to the bankruptcy of several advanced countries. In order to reduce governmental expenditures as a consequence, many of these countries have imposed severe `austerity measures’ leading to a further contraction in the consumption capacity of the people, which, in turn, heralded the fourth phase of the crisis slowing down both growth and employment. The Guardian recently, reporting on the death of a welfare state that existed in Britain for just over 70 years (ironically corresponding to the Biblical reference to a human life span of ‘three score and ten’), carried an obituary for the ‘welfare state’ where it said, “Instead of a book of condolences, there will be a special edition of the Guardian’s letter page!”


The fifth phase of the crisis is around the corner. The USA has temporarily avoided falling off the “fiscal cliff” extending its debt ceiling for three months. This is a mere postponement and even this implies an immediate fiscal squeeze of 1 to 1.5 per cent of GDP without any resolution of the country’s long term debt.  USA’s current debt is larger than its GDP. With its GDP growth rate hovering around two per cent, such a squeeze will mean a severe slump. Across the Atlantic, the IMF expects the Euro zone economy to shrink by 0.2 per cent this year. Global economy is, thus, reaching back to its original cycle that began these phases of crises.


In this backdrop, the Indian economy can only be reignited by focusing on a massive expansion of our domestic demand. This can happen only when public investments are significantly raised to build our much-needed infrastructure while they would generate large-scale employment and consequent boost the aggregate domestic demand. This is the only course that is available in the current global scenario. 


There is no dearth of resources, as noted in these columns repeatedly in the past, for a such a quantum hike in the levels of public investments if only large-scale corruption can be curbed and massive tax concessions to the rich are stopped. Resources so saved can then be used to hike public investments that will put our economy on a sustainable growth pattern and improve the livelihood of our people. 


In the interests of the vast mass of our people, the budget should adopt such a course.


Else, the ruling classes be warned to face the people’s wrath and mightier popular struggles in the future.


February 20, 2013