What was meant to be relief package was repackaged relief- old stuff with most bags empty. Continuing the trend he established in his earlier addresses, PM Modi in his announcement on May 12 again ignored the basic concerns of the people in the wake of Corona pandemic. There was not even a mention of relief to inter-state migrant workers who have been the worst sufferers of Govt. measures. Nor any concrete action plan to kick start economy particularly to get employment for the workers and relief to the peasants and agricultural labourers. Corona hitherto has not yet shaken the neoliberal policy framework of ruling classes serving foreign and domestic corporate and reactionaries, rather has given an opportunity to the Govt. to put vigour into pursuit.
Modi has talked of five pillars in his speech namely quantum jump in economy, building of modern infrastructure, technology driven system, vibrant demography and becoming part of global supply chain. Wreck your brain to find the ‘invisible’ link that these measures have specifically to Corona outbreak except that Govt. finds Corona times as opportune to further its longstanding thrusts. The last point is particularly relevant here as Indian ruling classes have been striving to attract capital of US and its western allies from China for which they had kept the red carpet rolled out and which they feel US companies are now ready to step onto. The wait they hope will now be over. The reference to vibrant demography was more for the effect but it has been the most visible sight of Corona lockdown on and off the roads.
Now the so-called relief package itself. Modi claimed it to be of Rs. 20 lakh crores ostensibly to meet the demand from several quarters to roll out a package to the tune of 10% of GDP and to bring it in line with developed countries where it has mostly been above that level and counting with Japan’s spending amounting to 21% of GDP topping the list. Govt. ministers have now started calling India a developed country, much in line with Trump who has many months back called India a developed country and hence not entitled to relaxations in trade rules meant for developing countries.
But this reel life (on channels) gave way to real life. He included in this relief package so many parts having earlier been announced. Govt. has a bad sense of history in the sense of mixing fact with fiction and this is an exercise of more of the same. Of particular import is the inclusion of the measures announced by RBI from February 7 to April 27 for the liquidity enhancement. These measures are neither new nor of any relief to the people. And these constitute more than two fifth that Modi offered to the people. These measures by RBI totaling Rs. 8.04 lakh crores include measures amounting to Rs. 2.8 lakh crores announced on February 6, worth Rs. 3.74 lakh crores announced on March 27, other measures announced on march 27 e.g. Targeted Long Term Repo Operations (Introduced by RBI which allows banks to borrow for long period of upto three years from RBI on repo rate- the rate at which banks borrow from RBI) if the loans are invested in investment grade corporate debt), cut in Cash Reserve Ratio by 100 bps totally worth Rs. 1.37 lakh crores, Accommodation under marginal standing facility (The facility introduced by RBI in 2011 whereby banks can borrow overnight funds from RBI at slightly higher than Repo Rate against govt. approved securities) hiked from 2% to 3%. On April 27, RBI again announced 2nd installment of TLTRO, along with Refinancing of Sidbi, Nabard and NHB and Special liquidity facility for mutual funds each amounting to 50 thousand crores. All these measures included in this package bring the total to over Rs. 8 lakh crores. Note all these measures are to enhance availability of funds and not any investment.
Also included in this package were the measures announced by Finance Minister on March 27, two days after the lockdown was enforced. That package was included in Modi package that too on its declared value of Rs. 1.70 lakh crores involved only Rs. 61,380 crore in actual transfers over next three months. It included payments of nearly 10 thousand crore transfer to women holders of Jan Dhan accounts and Rs. 3000 crore for pension of widows, elders and disabled were already part of Union Budget 2020-’21. Rs. 17,380 crores announced for the farmers was frontloading of an installment from Rs. 6000 per year being given to peasants under PM Kisan scheme and Rs. 31000 crores marked for construction workers were from their Welfare Fund. This announcement was substantially jumlonomics.
The package also includes Rs. 15000 crores announced for health care needs in the wake of Covid. This will also include payments from PM Cares Fund wherefrom PM has announced Rs. 2000 crore for ventilators and Rs. 1000 crores for migrant workers. Given the scale of the latter problem, the allocated amount is peanuts.
Removing these parts, Modi package is reduced to just one half. But it may not be that much also. The exercise substantially is of providing loan guarantees, giving tax breaks and postponement of debt repayment and counting these as part of package. Though PM announced that Finance Minister will outline the actual measures over the next few days but the direction is already established of providing for loans and counting loans as relief. These loans do not address the problems Indian economy is facing, has been facing from earlier which has been aggravated by the senseless (Couldn’t Care Less) acts of the Govt. in the wake of Corona pandemic.
However, there are reasons to believe that the actual expenditure will be far less than the announced. One indication of the same is the decision by the Central Govt. to increase market borrowings for the current fiscal year i.e. 2020-21. Govt. had budgeted Rs. 7.80 lakh crores (BE) which has been increased to Rs. 12 lakh crores on May 8. The decision coming days prior to the announcement of the package may provide a clue that govt. is planning to spend just about 4 lakh crores, nearly 2% of the GDP.
On the other hand, significantly the Govt. is on a spree of mopping up fund. When prices of crude oil plunged to one third in international market (from roughly US$ 69 per barrel to roughly US$ 28 per barrel) Central Govt. increased excise duty on petrol and diesel by Rs. 10 and Rs. 13 per litre respectively. Through this measure the govt. is expected to increase its revenue collection by Rs. 2.85 lakh crores. Had it transferred this decline in crude prices to consumers it would have helped agricultural operations and industry but that is too much to expect from this anti-people govt. Further Central Govt. has frozen DA increases of 11.5 million Central Govt. employees and pensioners for eighteen months beginning with January 2020 installment of DA increase. State govts. will follow suit by withholding DR payments at least for the same duration. These will total to Rs. 1.2 lakh crores (Rs, 38 thousand crores saved by the Central Govt.) One can see that govt. has extracted over 4 lakh crores from the people over the last few days only. It becomes tight-fisted only when it is the question of giving to the people; it is not so circumspect in extracting from the people and in handouts to the rich.
PM Modi talked the four emphasis areas in his speech. Each one of them is alarming and poses grave danger to the people. First he mentioned Land. One knows that RSS-BJP Govt. is keen to change LARR (law relating to land acquisition) to make it easier to take land from peasants including tribals. RSS-BJP Govt. also wants to change land use laws to bring about corporate controlled agriculture. These pose grave danger because the only way to spur economy known to Indian ruling classes is to invite foreign capital and create conditions for their investment. In the immediate sense, RSS-BJP govt. plans to sell land with the Govt. and public sector enterprises which can fetch good sum and Govt. can shower bonanza on their corporate friends. This may explain why Modi kept it as his first priority. Missing are peasants and agricultural labourers. Focus is on land i.e. taking land from them.
His other priority is liquidity i.e. increasing availability of liquidity to entrepreneurs. The whole emphasis is on increasing loans to them and not address the causes. This is goose that lays golden eggs. In the name of addressing crisis, ‘sub-prime’ lending is being talked of, lending without any chance of recovery with company law barring recovery from other assets and govt. helping the defaulters to escape. This would be creating NPAs on the vast scale. Fund so created may appropriately be called Nirav Modi Fund. One can easily see the trajectory of such funds and where parts of it will land. Further, the Govt. owes dues to MSMEs in huge amount. MSME minister has asked for its payment. It is expected that this payment of dues (which is any overdue) may also be accommodated in Modi package.
Moreover, there is no mention that help to companies even making loans available to them is dependent on saving or creating jobs. Providing even capital and hence right to get profits from public funds but not even ensuring the wages and jobs of the workers!
Another priority announced by Modi is Labour. Labour could not escape his attention though there is a saying in rural areas of the dangers in being in front of officer i.e. getting his attention, less the better. Central Govt. announced its intention of taking Ordinance route to bring in Labour Codes, a euphemism for abolishing rights of workers in the existing laws. While this is in pipe line, two RSS-BJP ruled states namely UP and MP have announced suspension of labour laws. Many more states including Karnataka, Punjab, Odisha, Rajasthan, Goa, Haryana and Maharashtra have announced increasing the work day up to 12 hours though there are differences among their announcements as to the period of its operation, payment of overtime at double rate etc. When the govt. has announced its intention to ensure payment of salaries to workers, and the industries will open up only gradually, it is to be expected that work day will be reduced to practice physical distancing as well as provide work to all. The govts. on the other hand are increasing working hours. It is clear that govt. has no intention of paying the wages or ensuring their payment.
This whole talk of labour law changes is being projected as necessary for providing employment and hence ‘pro-labour’. The lack of implementation of labour laws with respect to overwhelming majority of unorganized workers (for which the govts. themselves are responsible) is used to negate their availability to the sections of workers who can enforce them due to organization. Attacking the workers for their own good is old, tested but worn out tactic of representatives of big capitalists.
Modi also mentioned Laws as the fourth area. This will include changes in the laws to give effect to what RSS-BJP Govt. plans, i.e. attacking the workers, peasants, in fact all toilers. Corona is too good a crisis to be missed by the reactionaries, a golden opportunity to miss to squeeze the working people while pretending to save them. As Niti Ayog Vice chairman Rajiv Kumar said “You will see a spate of reforms now, as you have seen in case of labour reforms in the states. (The PM) is hell bent on turning this crisis into opportunity”. This is also an opportunity to further privatization of PSEs particularly profitable ones and hand them over to corporate – foreign and domestic.
A matter of grave concern in Modi’s address was absence of any measures to address the plight of inter-state migrant workers. Modi’s understanding is “it is natural to be home sick”. In fact this narrative is built by several ruling class politicians as if workers are leaving on their own thus absolving themselves of the culpability in one of most horrendous crimes in the history of the country. And building on this false narrative, Modi has proceeded to punish them by laying out a most vicious plan to attack them, all in the name of relief package. One could only marvel at the audacity of impunity! Here Modis of India do not compare their package with other countries even countries of Modi’s close friends- Trump and Johnson. US$ 2.2 trillion package passed by US Congress (since increased to $2.8 trillion) provides for payment to all workers in the whole Corona period. One can deduce from the debate in the Senate that some Republicans wanted to change provisions which entitled workers to earn more in this period than they would otherwise have done. The challenge was defeated. In UK relief package includes 80% of the salary (upto 2500 UK pounds roughly equal to 2.32 lakh Rs. per month) to all workers till October 2020. It is in these times that Modi and RSS remember why we should not copy the west; otherwise they sneeze when it gets cold there. Modi package had no words for ensuring payment to industrial workers, agricultural labourers; it had no measures for peasantry.
The most glaring and probably criminal neglect is absence of any measure to revive economy. Even prior to Corona, Indian economy was in downward spiral. Corona has greatly aggravated it. Indian ruling classes are in denial mode on the causes- it is denying that it is the demand deficit i.e. lack of purchasing power of the overwhelming majority of the people. And Modi has not addressed this, not even mentioned it. There is no talk of helping workers and peasants, the overwhelming majority of the Indian people. Without increasing the purchasing power of workers and peasants how does one address the cause of downturn? There are no prospects of increasing exports. The wave of protectionism, already strong in the developed capitalist countries, will gain further strength in the post-Corona period. So Make in India has to be along with Make for India.
All talk of promoting domestic companies will amount to small measures as Indian ruling classes are pinning all hopes that companies of US and other western countries will flock to India, especially from China. But such movements take place firstly over a long period and secondly not for the cheap labour alone but this along with infrastructure and markets. Here US companies are in a dilemma. But the most important aspect is that a country of 1350 million cannot take on the path of growth and progress without building domestic market i.e. without increasing purchasing power of her people. This also means that economies do not develop in the long run in isolation with the well being of her people, and particularly in a country as big and populous as India. It is here the direction of Indian ruling classes, including ruling RSS-BJP is against the needs of Indian people, especially its overwhelming majority. Corona has brought this into sharper focus.
Modi’s speech was an admission that Govt. will do little for the people. It was an admission that govt. only cares for rich and powerful. Modi has announced that Finance Minister will announce details of the package, but when the package is itself empty, details will only be subterfuge, camouflage and downright pedantry. People must see the utter disdain and contempt of their concerns by the rulers.
May 13, 2020