Millennium Post

Now, the house is on fire

Much has been written in the past few weeks about the doldrums the Indian economy is in. The latest lexionic discovery of the country’s popular discourse is a new word that in short, reads CAD (Current Account Deficit). Now, CAD can mean the modern shortform (as opposed to the longform) of the cadaverous Indian economy, or even point at the vain intellectualism that has encumbered the economic debate lately.

The sliding Rupee, the plunge in the economic growth rate, the tapering off the job availability, high inflation, has all contributed to a sentiment of negativity in the country, which is unsettling for the key political parties of the country like the Congress Party and the Bharatiya Janata Party.
Their house economists and political commentators have pointed to the huge CAD, and factors like US financial decision-making and domestic factors like sectoral slowdown, having pushed the economy to the precipice.    

However, for the Congress party especially that had always had a rural appeal in the country – the residual elements of which still exist in the south of Vindhyas and the fringes of the Hindi belt like Rajasthan – had got the cutting edge for its electoral success in 2009 from the urban middle class, who had won them a full fifty per cent of their seats.

And it is this constituency today that is most disaffected by the turn of events. Their failed god, Manmohan Singh, is being sought to be pushed from the perch, with a fresh search for a new middle class icon already under progress. Narendra Modi, howsoever sullied by his blatant communalism, is being airbrushed to take on the mantle.

Periodic crises is a fundamental fault-line of the capitalist system that was first identified by Marx and expostulated upon, following which the factor has extensively gained from the vast empirical evidence of 20th and 21st century experiences. Marx had shown that the crisis of Capital is endemic in its production processes by its periodic excesses leading to a cyclical downfall. Even though he had preceded the emergence and expansion of finance capital as the all consuming force, he had foreseen its advent in the requirement of capital formation.                

But the rules of the game have not changed ever since. The Western finance capital collapse of 2008 with its attendant severe pain, led by its upholders of yore, the commercial banks, and the relatively newer dispensations of insurance companies, had led to an easy money policy followed both by the USA and China. But more than China, the US monetary policies of a deluge of dollars, freshly minted had a larger impact on the developing world economies, including India, as the currency was the world’s monetary reserve. Even as those loose dollars spread, the Indian capitalist class got their share of the largesse.

What they did with that is the story that has barely begun to be told in the Indian media by their former admirers, who have since turned their coats. Well, the broad divide between manufacturing capital and trading capital really narrows in countries like India, where the capitalist class has always been supported by the government agencies, in exchange of the currency of proximity to political power. In other words, crony capitalism is so in-grown in India that it does not even raise a significant protest. What is even more important is the mental development of the country’s capitalist class has always narrowed the difference between manufacturing and trading. They have been more prone to trading as the way to quick prosperity than the arduous task of creating wealth through the difficult process of manufacturing.

Manmohan Singh, being a participant for long in this incestuous system, quickly understood this and chose a path of economic expansion that did not require too much of public investment in areas like infrastructure and education. Hence, the booming growth of the services sector like information technology enabled service packages.

On the other hand, the lack of investment in areas like infrastructure did not put finance in the hands of the majority of the people of the country, or equip them educationally for the supposed ‘brave new world’ they were supposedly entering. The UPA government sought to negate the possible social turmoil it could cause, by creating chimerical assistance programmes like MGNREGA that enshrined the clientilist relationship of the people with the Congress Party, with all its feudalist manifestations.
For the last 10 years it has been in power, the Congress Party-led government has not been able to produce a poverty rate figure that could give an idea of the political efficacy of the economic liberalisation programme, which constantly searched for a wider constituency.

Much to the chagrin of the likes of Manmohan Singh, Montek Singh Ahluwalia and Co, now the house is on fire! For the BJP, this is not an object lesson yet. The celebrants of the pre-capitalist, feudalist social order of the country, the party in the obverse side of the same political coin is promising more of the same.

The author is a senior journalist

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