5 years ago, the Modi Government came to power on the promise of delivering “Achhe Din” to the people of India. The promise, however, was simultaneously made to two sets of people.
On the one side were the rich minority, the Ambanis and the Adanis, small in numbers but concentrating in their hands much of the wealth and resources of the country. They were guaranteed better prospects for making more money and to accumulate even greater wealth. In return for this promise made to the rich and wealthy and then delivering on them, the BJP was rewarded with crores and crores of rupees – it became by a long distance thus the richest and wealthiest among Indian political parties. A rich party representing the interests of the rich and wealthy – that the BJP under Modi has definitely been!
On the other was the vast millions of India’s working people, peasants and workers, large in numbers and therefore important from the point of view of winning elections, to whom was also made a promise. This was to address their fundamental problem, an end to their increasingly desperate search for secure livelihood opportunities that would offer at least a decent standard of living for them and their families and improve their life prospects. In meeting the promises to the rich and wealthy, however, the Modi government had to renege on this promise. Forget about “Achhe din”, the political gimmickry indulged in by the BJP and Modi to cover up for this treachery has only made an already grim situation of widespread economic distress far worse. What the Modi-led BJP hopes is that this political gimmickry and money power will see it through the elections, and it will not be made to pay a political price for what is its handiwork.
While “Sabka Saath and Sabka Vikas” was the BJP’s slogan through which it sought to project, this was only to paper over the fact that the only Vikas it was truly interested in was of the rich and wealthy and it was impossible to deliver on both sets of promises.
The Vicious Cycle of the Livelihood Crisis
Traditionally, a large number of Indians have depended for their livelihood on the agricultural sector. This sector has, however, been in distress for the last two decades and it has become increasingly difficult for most agricultural households to sustain themselves on the income generated from farming. In relation to the increasing cost of producing anything from the land they can command, the revenues earned from the sale of the produce are inadequate to provide an adequate income for either the peasants or agricultural labourers. As a result, more and more people are being forced to seek employment opportunities outside agriculture. Such employment can only be of two kinds – self-employment created by the people themselves or in the form of their labour services being hired by others either in some productive non-agricultural activity or for providing personal and other services.
The range of self-employment opportunities they can create is constrained by the lack of resources at their command. The hiring of their labour-services, on the other hand, depends on those with resources and high incomes – because they alone have the means to invest in productive activities like industrial factories and large construction projects, or to purchase personal services like that of maids and drivers. The sum total of non-agricultural employment opportunities that can be thus created depends on the level of demand for goods and services that would be created through such employment. Those in search of employment opportunities cannot create this demand themselves unless they can get employment and also earn a reasonable remuneration for it. The demand created by the spending activities of the rich, on the other hand, is limited by their own small numbers as well as the nature of their spending. The net result of this economic situation, therefore, is that the available jobs are extremely limited relative to the numbers seeking work. The consequences of this are that many cannot find work or cannot find work for several days in a year. If they try to overcome this situation through some form of self-employment or creating their own jobs, their income earning prospects are severely constrained both by the extremely limited resources at their command which means they can only produce for those like them who have little means to pay and not the products and services demanded by the rich. The consequence of such a dearth of livelihood opportunities and the persistent presence of a large reservoir of surplus labour is that even those who do manage to get hired in highly productive activities get paid very little and most of the benefits of their high productivity are cornered by those who hire their labour services. In this way, those with wealth accumulate more and more even as the rest struggle to survive.
One might of course ask - why don’t those who do and can command large resources, and thereby garner huge profits by investing these in highly productive activities, not expand such activities and hire more people if the wage that must be paid is so low? Why don’t companies set up more factories? Why don’t builders build more houses and malls? Why don’t more shops and restaurants get opened? Why aren’t more drivers hired to drive transport vehicles? The problem there is that the profit can only be made by selling the good or the service that is produced. With so many people stuck in a low-income trap and therefore unable to buy much, the market is not large and wide enough to sustain the scale of economic activity needed to generate significant job opportunities. The consumption spending of the rich is often concentrated on products and services that are either imported or require very few people to produce. The number of personal servants they can have is limited by their own small numbers. As a result of the narrowness of the market, even their expenditure that is for the sole purpose of making more money cannot take productive forms generating large employment - because the extreme concentration of income and wealth means there isn’t enough demand for the products that will flow from such investments. As a result, even the spending in the form of investment to make profits is curbed which in turn further limits the demand for products and therefore for the labour services that would be needed for such production. India has also not able to overcome the limits of her domestic market by exporting abroad.
Thus, employment opportunities in India are limited not because the country doesn’t have the resources to expand productive activities and absorb more labour in that process. Instead, the problem is that these resources and buying power are so concentrated in the hands of some that there is not enough demand for such expansion of production. And there isn’t enough demand in turn because of the shortage of employment and livelihood opportunities. This is the vicious cycle in which our economy has been trapped.
The Solution and Why the Modi Government Sabotaged it
The solution to the vicious cycle clearly lies in redistribution of resources and the creation of demand – both of which a government can achieve by taxing the rich and the corporate sector more heavily and by stepping up its own spending. Such increased spending can be used to provide relief to agriculture – through better support prices, more subsidies and cheaper inputs, public investment in irrigation and other agricultural infrastructure - and to improve agricultural incomes. It can be used to provide better health and education services to the people. It can be used to improve the country’s infrastructure which makes it easier for common people to travel and engage in productive activities. It can be used to provide resources to people which would strengthen their ability to create productive employment for themselves. It can be used to build better housing for all. All of these which would not only also create jobs directly but also give rise to multiplier effects by raising the level of demand. The Modi Government may say it has done all these things through a plethora of schemes – but having several schemes on each of which you spend a pittance does not achieve the solution to the crisis. The real solution it couldn’t provide because it was committed to serving the interests of the rich and wealthy who do not want such a solution but a different one – they also want a redistribution but one which would go in their favour.
Those in whose hands is concentrated most of India’s wealth don’t want to pay more taxes – they rather want these to be reduced so that they can accumulate even more wealth. Indeed, rather than financing public expenditure through taxes, they want public sector banks to finance their own money-making activities. They also don’t want to pay higher wages for those who they hire – they would rather pay even less as that would, in their eyes, increase their profits. They don’t want the government to spend in a lot in providing services and benefits to the people as they look at these as encroachment upon their profit-making opportunities. Indeed, if at all there is to be any such expenditure, they would rather that it be spent in a way that benefits them and their profit-making activities. Thus, they prefer if government pays the fees or the insurance premiums for private provision of education and health services, so that they can pocket the money government spends, rather than government providing these services directly. They want infrastructure to be built for them or through public-private partnerships which would bring them profits. What the Modi government did over 5 years was to strive as far as possible to decisively deliver this programme of action – that is the true meaning of ‘Majboot Sarkar’, which has created a “Majboor Janta”.