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India in a Scissors Crisis

India, a modern-day bourgeois democracy with socialism sitting uncomfortably in the Preamble, neither faces a civil war nor an invasion of states. Its problems are self-generated. The twin blades of economic and political crisis have been self sharpened by the government on the whetstones of indifferent governance, communalism, and neo-liberal capitalism.


India is in a ‘scissors crisis’. The phrase was employed first, and duly plotted on a graph by a member of the Left opposition, to depict the widening gap between industrial and agricultural prices in the early years of Soviet Russia which was beleaguered by a raging civil war involving the invasion of armies of 21 nation-states. They were driven not by a geo-political calculation i.e. to safeguard borders from an expansionist Russia, but to smother the flickering flame of socialist democracy which had exposed the dark underbellies of all major bourgeois democracies of that time which had hitherto prided themselves in the ownership of colonies, subjugation of universal adult franchise (including those of women and coloured people) and an expansionist bellicosity, ruthlessly displayed during World War I.

India, a modern-day bourgeois democracy with socialism sitting uncomfortably in the Preamble, neither faces a civil war nor an invasion of states. Its problems are self-generated. The twin blades of economic and political crisis have been self sharpened by the government on the whetstones of indifferent governance, communalism, and neo-liberal capitalism.

Covid-19 and the subsequent ill planned lockdown forced the GDP into a tailspin. The hammer fell on the working classes and marginalised sections, especially the Dalits, among whom one in three lost their jobs and means of livelihood. Three-fourth of migrant labourers stranded across the country were not paid their wages and half had less than just a day of ration, reported Stranded Worker’s Action Network (SWAN).

In such a state of collective misery, the government announced a fiscal stimulus (as percentage of GDP) of just 1.5 per cent, miserly when compared to 9.5 per cent of Vietnam, a much smaller country which successfully contained the spread of the virus via contact tracing, isolating and treating the infected.

As per the findings of Rohit Azad and Sourindra Mohan Ghosh published in the recent edition of the journal Social Scientist, the cumulative testing rate of Vietnam was a whopping 718 compared to India’s 12. Low spending by the government has led to a contraction of cumulative demand which has resulted in low investment. The greatest impediment to government spending is the centrepiece legislation of neo-liberal India, the Fiscal Responsibility and Budget Management Act (FRBM Act), piloted by Yashwant Sinha in 2000, the then Finance Minister of the BJP-led NDA government.

Although the Act contains the provision for exceeding set targets of fiscal deficit on grounds of national security and calamity, the government seems to be in no mood to spend money on its citizens. The much touted Atmanirbhar package with spending claims up to Rs 20 lakh crore i.e. 10 per cent of GDP, was nothing but an eyewash. Closer scrutiny reveals that of the Rs 20 lakh crore, only Rs 3 lakh crore i.e. 1.5 per cent of the GDP is a fiscal measure of which around Rs 90,000 crore was already accounted for in the budget of 2020.

The government has instead taken this opportunity to target labour, workers and small farmers. It has decided to pass the three labour codes which give greater flexibility to capital and abridge rights of workers. It increases the threshold relating to layoffs and retrenchment in industrial establishments from 300 to 100 workers. This implies that industrial establishments with less than 300 workers would no more be required to furnish a standing order regulating the terms and working conditions of labour.

The right to strike, the only weapon in the hands of the workers, has also been considerably weakened. The legislation says that a strike can be resorted to only after 60 days’ prior notice and 60 days after the conclusion of proceedings before the National Industrial Tribunal or any other tribunal.

The government has also failed to provide a single floor wage, not to speak of any increase from the bare minimum of Rs.178. Worst of all, the government has shelved the recommendations of a panel to increase the national floor wage to Rs. 375 on the egregious reasoning that it was ‘too steep’ a rise from the existing floor wage. This would further aggravate the demand crisis by suppressing mass consumption. The nakedness of bourgeois democracies is best exposed when a capping of wages is seen as normal and subject to bureaucratic bungling whereas a similar restraint on profit by capital is seen as blasphemous, even during a calamitous pandemic.

The farm bills, again numbering three, have rattled the farmers in north India. The bills (now acts of Parliament) seek to remove the purchase mandis which had hitherto given the farmers, both big and small, the opportunity to sell their produce securely and at decent rates, unlike in places where deregulation kicked in. And it is the latter states which suffer low productivity in the farm sector with people being forced to migrate to prosperous states. Bihar is a case in point. Protesting farmers are afraid of this fate which afflicted their counterparts elsewhere.

Economists of the neo-liberal vein invoke Schumpeter to say that these farm laws are akin to ‘creative destruction’ which would replace the existing state of affairs with something qualitatively better. Surprisingly, they offer no road map for industrialization which is indeed a qualitative leap. On the contrary, their arguments proffer succour to rampant contract farming by big corporations. Amenable to this are not the eighty per cent of small and medium farmers who own less than five acres of land since they do not have the required wherewithal to produce bespoke quantities of a specific variety of crop demanded by food corporates, but the large farmers who can undertake/risk such ventures. Nor can small and medium farmers avail justice in case of cheating or refusal of purchase by corporates.

The claim that the middlemen would be eliminated by these laws turns out to be hollow because a new type of middlemen would take the vacated place – lawyers, expensive lawyers. Going by their logic, there is also no guarantee that the APMCs would give way to large corporations ready to buy produce from the farmers. Bihar has had deregulation since 2006 and has seen no such arrival of food corporations with bags of cash. Kerala has no APMC’s and has yet not seen thriving private markets. In Maharashtra, a state with around forty-two dams for irrigation, deregulation did not see the coming of big private players. The Vashi APMC is a case in point.

The farmers of Punjab and Haryana have rescued the country from recurrent food crisis. No doubt scientific innovation and state subsidies played an indispensable role. There is also considerable truth in the fact, as pointed out by the State of Rural and Agrarian India Report 2020 that accelerated production of monocultures have meant a loss to the agro-ecological diversity with nutritious crops such as millets and lentils being less favoured, but it is not the fault of the farmers. The policy of Green Revolution was taken in lieu of a red revolution i.e. radical land reforms and the concomitant depletion of water and soil are nothing but the unavoidable side-effects of such policy.

The protesting farmers were first subjected to communal divisiveness. They were branded Khalistanis masquerading as protestors. They defeated this ignominious attempt. And currently they are fighting against their impending mass proletarianization — the inherent tendency of capitalism.

The writer is a student at the Department of History, University of Cambridge.