The country goes to a general election to elect the 16^th Lok Sabha at a time when it is abundantly clear that the economy is in profound crisis. It is more apparent than ever before that this crisis is neither temporary nor merely the result of deterioration in the external economic environment but endemic to the very structure of the domestic economy. The period of economic growth has collapsed into a phase of stagflation resulting in enormous misery to all working people. Despite this, there is a consensus on economic policy between the two dominant parties – the Indian National Congress and the Bharatiya Janata Party and almost all regional parties irrespective of whether they are aligned with the United Progressive Alliance or the National Democratic Alliance or not.

 Global Integration leading to collapse of Macro-economic strategies

Two decades and more of pursuing neo-liberal policies has failed to grow the share of manufacturing, has created an export-dependent service sector and an unsustainable agriculture. India’s integration with the global economy has further accentuated the unsustainability of its economy External financial flows have played an important role in recent growth strategy allowing for easy liquidity and low interest rates and therefore private corporate sector driven and debt-fuelled growth and accumulation. But as structural constraints began to bite and external condition worsened, the economy went into a tail-spin. Even as the economy slowed down, the resultant widening of the current account deficit could not be financed at existing levels of external financial flows thereby putting the rupee under tremendous downward pressure. The resulting devaluation of the rupee stoked inflation which was then exacerbated by speculation in commodity markets. So even as growth slowed down markedly, both the current account deficit and inflation proved stubborn leading to a perfect storm of stagnation and inflation - stagflation. However, in last few months, the current account deficit has narrowed appreciably and that has led to a rapid appreciation in the value of the rupee. The wild fluctuations of the exchange rate as a result of an ideological obsession with letting markets determine its value has not only complicated macroeconomic management but significantly increased the risk faced by business. Whether the correction in the current account can be sustained is another matter. As discerning analysts have already noted, a part of the decline in the deficit is due to decline in capital goods imports, which in itself is a result of a decelerating economy. Given the structural nature of this relationship, capital goods imports will increase with a revival of growth. The expectation that the private sector would be able to provide adequate surpluses for the investment needs of a growing economy has simply not been achieved. As a result the growth of the private sector has come to be dependent on tuning the public sector to support private sector expansion. This has been achieved by allowing the private sector to make inroads into industries and services dominated by the public sector, including through public-private partnerships, and also to place public sector banking and financial institutions at the disposal of the private sector. As a result where the public sector is thriving, especially in manufacturing, it is in tune with the neo-liberal framework while the assets of public sector financial institutions have come to be stressed by poor private sector performance. Alongside these concessions there have been large scale concessions to capital in the form of tax reliefs, capital subsidies and the opening up of public utilities and natural monopolies to the private sector, and the transfer of vast tracts of land for the exploitation of natural resources The rising fiscal deficit has been portrayed as a symptom of the government’s populist profligacy. But the fiscal deficit hides the collapse of private corporate savings and the insistence on continuing to subsidise capital (through taxes foregone) even as revenues have collapsed. The same government then hypocritically uses the decline in revenues to cut back government expenditure that benefits working people and the poor. This fiscal deficit also hides the profitability and efficiency of public sector enterprises particularly in manufacturing. A profitability that the government has milked to help contain the fiscal deficit. The nature of capital-state relationship is such that this incentive has become more a permanent concession to capital. The growing complicit state-capital relationship has increased corruption that has come to be rooted at an unprecedented scale in every aspect of economic life.

In the absence of sustained expansion of the urban economy and inadequate support for autonomous development of the rural economy, the agrarian crisis has severely threatened the livelihoods of small and landless peasants. The government has entered into WTO and bi-lateral Free Trade Agreements with the objective of attracting foreign investment. These FTAs have not led to any marked increase in inward investment, but has led to an increased dependence on imports in the manufacturing sector of the economy, and increased vulnerability in some primary sectors. The WTO regime and the FTAs have severely undermined the existence of small and medium enterprises that remain an important source of employment and an important site for building competitiveness. Exploitation of natural resources and building of infrastructure have become the two principal areas for capital accumulation. As both these economic activities are land intensive, this land grab has come to define the most significant form of attack on rural livelihoods.

 Agrarian Crisis: Migration, Feminisation and Low wage spiral: Widening Inequality

The agrarian crisis has been exacerbated by low and non-remunerative prices for agricultural produce, causing immiserisation among small and medium peasants. This has resulted in a situation where there is insufficient employment for workers in rural areas to ensure a dignified existence pushing worker’s in rural areas to migrate. This large scale distress driven migration is continually pushing wages down by creating not just wage competition amongst workers but in fact creating a situation where the achievable bargained wage is only equal to the statutory minimum wage. This has inordinately benefited employers especially in new areas of investment and growth. In the formal sector, a large section of the workers receive wages that are a small fraction of the bargained wages of permanent workers whilst, in the majority of cases, perform tasks that are more arduous and less safe. In the informal sector, most workers today are struggling for recognition as ‘workers’. The largest number of new jobs created in the last five years is that of development workers on honorariums or as part-timers and are entirely denied employment rights. Women have been forced into insecure and unsafe jobs at lower wages than their male counterparts in order to make two ends meet. The triad of the agrarian crisis, the failure to create regular jobs in the urban sector and uncontrolled inflation have significantly eroded real wages and incomes. This sustained attack on wages and incomes has resulted in lowering rates of growth of domestic demand and the rate of savings which in turn have contributed to the further dependence on foreign investment and foreign flows.

Economic development remains the political rhetoric within the mainstream. Yet, over the last two decades, government supported and subsidised private sector expansion has resulted in a sharp widening of income inequality. In these 20 years, not just has income inequality worsened, it has come along with a culture of public display of consumption by a small minority while the misery and deprivation of the vast majority of working people has intensified. The profits of the present model of economic growth have been appropriated by capital while the costs have been borne by the working class. While direct taxes, such as taxes on companies, have remained unchanged and the income tax on the richest has been lowered year-on-year, subsidies meant to protect the working poor from the ravages of the market forces, are being cut drastically at each budget in the name of fiscal prudence with simultaneous increase in indirect taxes on all commodities that hit the working poor disproportionately. Government is additionally making every effort to substitute the existing subsidies with targeted cash transfers. While there is no doubt that markets contribute to inequality, government policy is meant to correct that through taxes and provision of social security and social protection. Government’s inability to move policy effectively on these counts has itself become a source of income and asset inequality.

 Economic crisis aggravating Social inequity

Low wages, the lack of employment opportunities and increasing income inequality have contributed to rising social marginalisation, of course of women, as also of dalits, adivasis, other oppressed castes and religious minorities, in particular muslims. As they have come to be pushed to the margins of the labour market, if not out of it, they are not just losing opportunities of employment but also the opportunity of social mobility from one generation to the next. Low incomes and irregular jobs have affected access to adequate healthcare and a quality education, both of which constitute the key recognised necessities for intergenerational social mobility. The lack of opportunity is leading not just to further marginalisation but also to rising discrimination. Social inequality is increasingly contributing to discrimination, differentiation, prejudice, violence and hate crimes in society on grounds of gender, caste, religion, race, region and language. The parliamentary political parties, with no exception, have actively employed the constitutional provisions for positive discrimination for advancing sectional interests to garner votes without really addressing the elemental objective of social justice embodied in the principle of positive discrimination leaving open a space for a politics of majoritarianism and regionalism. The persistence of majoritarian and regional sentiments has also curtailed the country’s capacity to advance a progressive foreign policy especially within the sub-continent. This has in turn undermined the capacity of the country to engage from a position of equality with imperialist and hegemonic forces.

 Concerted attack on the Right to Democratic Dissent

The inability to grow the home market has resulted in the failure to create jobs while destroying the livelihoods of those dependent on land. The inequality in growth outcomes which exacerbates inequalities in asset ownership, distorts the growth of the home market as well. India’s home market is today driven by elite consumption which not only has failed to create jobs for the vast majority but also destroyed the livelihoods of those dependent on land. This has caused the spread of movements against land acquisition in rural areas especially amongst small and marginal peasants. Correspondingly in urban and new industrial enclaves the increasing employment of contract and other forms of irregular labour has contributed to united trade unions of both regular and contract workers. Increasingly all efforts at collective action and the exercise of right to freedom of association, even in the private sector, are being seen as acts of violence and criminalisation against the state and have been met with the force of the police. Democratic dissent and the assertion by peoples of their fundamental rights, including the freedom of speech, have come to be seen as anti-state and anti-development and are being violently put down. This constitutes a serious attack on fundamental political rights of citizenship.

 Election without Ideology

At the general election in 2009, the Indian National Congress (INC) won an unusually large mandate, more than that won by any single party in over a decade-and-a-half. And yet, its United Progressive Alliance (UPA) government failed to deliver the mandate of the people as it sought to reconcile meeting the basic needs of both urban and rural working people with the objectives of neo-liberal economics. As the path of economic growth faltered the UPA government refused to recognise the structural limitations of the economy and take corrective measures and has come to be mired in charges of corruption and cronyism. While indeed these charges are not restricted to the UPA or the INC, the fact remains that they have been in government for a decade and must bear the responsibility for the state we are in.

The parliamentary left parties too have faced an erosion of their strength but more than that have lost credibility because of the inconsistencies of their policies when in government and their increasing electoral opportunism to retain their parliamentary strength and thereby failing to build a united front of progressive forces to defend and advance the challenges for building a society based on principles of equality and justice. The inability of centrist and left parties to reorient the economy and address social divisions has led to a crisis of the parliamentary system and a loss of credibility of the political class while opening the way for right wing offensive rooted in Hindu majoritarian politics.

In this environment the Bharatiya Janata Party (BJP) has been able to build considerable momentum against the UPA and the INC by building a case of corruption and economic mis- management while not just supporting the same neoliberal pro-imperialist policies but in fact seeking to shift the economy further to the right through wider opportunities for private sector expansion and fiscal tightening by reducing the funds for social security and social protection. The BJP promises “Minimum Government” that will “empower the weakest and the most neglected sections of Indian society, without any biases for caste, creed or religion”. In making this promise the BJP simultaneously does two things: first, it reaffirms its faith in the private sector; and second, it negates the social roots of inequality. It proposes, as an alternative, an undemocratic market-based meritocracy which in reality feeds on asset and income inequality and exacerbates social discrimination. Emboldened by the enormous and vocal support that the BJP have received from private capital, it now seeks to achieve a mandate for itself through an appeal to its core belief in Hindu majoritarianism.

Regional parties, many of which emerged in response to the aspirations of oppressed castes and deprived groups and communities and enjoy the support of working people in the state and 5 regions, have failed to take their mandates forward and have come to be bogged down by neo- liberal policies and competitive regionalism. In the efforts to obtain or retain electoral office the regional parties, again without exception, have been opportunist in their engagement with the UPA or the NDA, at one time or another.

With parliamentary politics in crisis the Aam Aadmi Party (AAP) has emerged through a campaign against the broken political system dominated by avaricious politicians and bureaucracy complicit with big business. This has in some measure and in some parts of the country captured the imagination of the middle class and a section of the working class. While it has also been able to win over sections of the social and peoples’ movements, it has consciously remained ideologically non-committal. By refusing to align with various electoral and non- electoral progressive forces, the AAP has allowed itself the freedom to steer clear of ideological clarity. This is no different from the opportunism resorted to by regional parties who are less than transparent about the possibilities of their post-election alliances and reflects the lack of accountability of the parliamentary system to the electorate.

Draft for comments

2 April 2014

Next: go to Indian Elections: Workers Charter for the 16^th Lok Sabha Election – II – Demands and Call