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India’s Weaknesses in the Global Spotlight

Farmers’ protests around New Delhi have been going on for four months now. A controversial intervention by the Supreme Court has suspended the implementation of the new agticultural laws, but has raised questions about the dynamics between the judiciary and the executive, and has failed to unblock the negotiations between government and peasant organisations. The assault by Sikh farmers on the Red Fort during the Republic Day parade as India was displaying its military might to the outside world — the Chinese Global Times maliciously noted — paradoxically widened the protest in the huge state of Uttar Pradesh.

The Modi government has been trying to revive India’s image with the 2021 Union Budget: it announced one hundred privatisations and approved the increase to 75% of the limit on direct foreign investment in insurance companies. For The Indian Express (IEX) this is a sign of the commitment to push ahead with reforms despite the backlash from rural India. Also for The Economist the direction is the right one, but at the same time the journal recalls the 161st anniversary of the first Indian Budget, written by its founder, the Scotsman James Wilson. He died only eight months later from the combined effects of climate, anxiety and work, not before having criticised the administrative ineptitude and the faltering uncertainty of the British regime. The current Indian government does not look very different.

Farmers are now engaging in the electoral arena against the BJP, and the upcoming elections in the large states will be an opportunity to measure the depth of the processes of social transformation taking place on the subcontinent.

Separation of powers in the federal dynamics of centripetal and centrifugal forces

The Indian Supreme Court is described as one of the most influential in the world: since the 1990s it has intervened, directly or through its emanations at state level, in civil rights and administrative matters, and acts as a clearing house for the different social stratifications, the legislative, the executive and even the monetary power.

Its authority has been undermined by the passivity shown on issues such as the amendment excluding Muslims from the citizenship law and the archaic sedition law, laws that reek of executive excesses according to The Times of India (TOI). And now, there is the ruling which suspended the implementation of the new agricultural laws and set up a commission to resolve the dispute between the executive and the farmers, For TOI, this is an unnecessary risk, and for IEX, it exceeds the limits of the scope of the Supreme Court and will lead to a dead end, given the rejection of its ruling by the peasants’ organisations.

The Hindu points out that the dispute concerns only a group among farmers and already six large states have passed agricultural laws that over-ride the federal ones: the soluton should not progress through the judiciary, but it would rather be a political one that progresses through the regional parties.

BJP centralist attempt and development

On January 26th, the Sikh flag was flying over the Red Fort: this was the epilogue of the tractor march organised by farmers in opposition to the official Republic Day event. The Red Fort is a symbol of the nation, and from its platform, every August 15th, the prime minister gives a public speech on Independence Day. For Abhinav Prakash Singh, professor of Economics at the Delhi University, displaying the Sikh flag signals a battle over the nature of the state.

According to Singh, India, unlike China, has seen only 100 to 150 years of a strong centre to address centures of fragmentation. India’s traditon of reintegrating defeated rulers to the realm, and the strong influence of religious organisations, merchant corporations, and Brahmin sacerdotal classes are a reflection of a weak state. The British Empire itself was a kind of ghost empire in its systematic co-opting of local elements and minimalist bureaucracy.

With independence, the process of centralisation accelerated. but it also met resistance and backlash in the form of secessionist movements, religious extremism and a type of federalism held hostage by regional elites. An attempt was made to overcome this problem by co-opting local elites: first in the Congress Party, as an alliance between urban elites and landowners of the dominant local castes, then through a coalition policy. The rise of Hindutva, Hindu religious nationalism, has subverted the status quo: this centralising, although not homogenising, force that has found an effective vehicle in the BJP led by Narendra Modi. Its advance, even in non-traditional regions, is challenging the domination of regional elites and clashes with centres of power in the countryside.

In the 1990s, a new stratification emerged from the smaller municipalities and villages, which was not part of the old land-based agrarian elites or of the bureaucratic and political clientele system. It is one of the results, in the ascending sense of social flow, of the migration of hundreds of millions of people, who fed from the villages to the flourishing urban centres: this new urban class is nationalist and brings with it an affirmation of the pride of religious identity that comes with economic and material progress.

According to Singh, economic transition, urbanisation, social change, the rise of Hindutva and the growing support for a strong centre are all interconnected processes: Modi is a product of this socio- economic transformation.

Electoral front of the peasant struggles

India Today speaks of the Jat blowback. Peasants’ protests have spread among the strata of average farmers and also to the capitalist farmers in much of north-western India. These farmers belong to Jat castes, have prospered since the 1970s, often expanding their activities to include money-lending and trade, and have suffered since liberalisations progressed as a consequence of the gradual shifting of rural economy toward one based on non-agricultural occupations. Villagers are increasingly living on non-agricultural incomes and remittances: not only do they no longer depend on the Jats, but they also have conflicting interests with them. The BJP has addressed political and economic aspirations of these villagers.

The leaders of the peasant organisations are therefore looking for new political alliances and are intervening on the electoral front against the BJP in states, such as West Bengal, which are close to holding elections. However, the big battle will be next year in Uttar Pradesh, India’s most populous state. The BKU, the region’s largest branch of the Farmers’ Union, is looking for allies against the BJP. Its leader has already tried his luck in elections, with little success. He is carrying on the legacy of his father who in 1988 and 1993 blocked the Indian capital for several days: farmers were then asking to be allowed to sell their products on the free market, the opposite of what they are demanding today.

China and India in comparison

Shenggen Fan and Ashok Gulati, in their essay The Dragon and the Elephant: learning from agricultural and rural reforms in China and India, compare the different paths of the two countries. China began with reforms in the agricultural sector in the late 1970s, while India began with reforms in the manufacturing sector in the early 1990s.

According to the authors, China ensured both a wide distribution of earnings and a political consensus for the continuation of reforms by starting with agriculture: this fostered the development of a non-agricultural rural sector, and triggered in turn a process of reforms in urban state-owned enterprises, which had become less competitive than those in rural areas.

In India, conversely, the growth of agriculture has been mainly driven by external interventions, such as the devaluation of the currency and the reduction of protection in the industry. Economic growth in the 1990s remained confined to non-agricultural sectors and did not have such a significant impact on poverty as in the case of China.

For Fan and Gulati, the rapid growth of non-agricultural rural enterprises in China is one of the most obvious differentiating factors between the two countries. India’s delay is also linked to lower education rates in rural areas and lower investment in infrastructure. The different initial conditions have also had an impact: in 1970, life expectancy in India was 49 years, compared to 62 years in China, and 70% of India’s rural population was illiterate, compared to 49% in China. According to T.N. Ninan, former chairman of Business Standard, China is now I0 to 15 years ahead of India as it reached India’s current per capita income 15 years ago. But what worries Ninan is the loss of momentum and the fact that India is not outperforming countries like Bangladesh, Nepal and Cambodia, which instead benefit from the relocation of supply chains in higher labour-intensive sectors.

Relaunching the manufacturing industry?

The Modi government is trying to reverse this trend and has announced production-related incentive programs (PLI) and privatisations. The goal of the first is to develop a manufacturing sector orented to the local market and exports, modelled on the Made in China 2025. This programme launched by Beijing in 2015 and aims to improve the competitive strength of selected sectors by reducing dependence on foreign countries. Manufacturers like Ap ple seem to believe in it: about 10% of its production capacity is likely to move to India through partners such as EMS, Pegatron, Foxconn and Wistron. Others are skeptical and see the incentives as a kind of legacy of the Merchandise Export from India Scheme. This programme was closed last December due to its violations of WTO rules.

The government has also announced its intention to sell 100 stateowned enterprises, but it will not be easy to convince buyers: of its 274 companies, only 32 have a significant net profit, while all 12 public banks are burdened by bad loans. How the government manages the sale of BPCL (the second group in the ranking of Indian Energy producers and distributors) and that of LIC (India’s largest insurance group) and how much it earns will be an indication of the strength of the privatisation drive and the amount of ‘fuel’ available to facilitate the path of reform.

Lotta Comunista, March 2021

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