The contrast could not have been sharper. When the Union government unleashed a double assault on the people, through a diesel and cooking gas price hike and by allowing FDI in multi-brand retail, as every housewife, every man on the street, complained, the stock market boomed and the rupee climbed up. Capital is delighted when the people are hit. Finance cheers as the working people are squeezed. India’s “credit rating”, as officials were quick to point out, would now improve!
The usual official arguments were all trotted out. Cooking gas and diesel price hikes would affect only the middle class, not the really poor; “we” cannot afford such a heavy subsidy bill, and so on. Every one of these arguments was disingenuous. The fisherman of Kerala who has to pay the higher diesel price and would now sink even deeper into debt and distress, is not middle class. The lakhs of the poor who live on the outskirts of metropolises and have to commute daily to their jobs, and who would now have to pay more for their transport, are not middle class. Those who would be hit by the high prices of virtually everything, on account of the higher transport costs that the diesel price hike would cause, are not all middle class. In addition to the middle class, millions of the poor in the country will be hit by the government’s “thrust to reforms”.
And for the very government that has handed over lakhs of crores of rupees to favoured capitalists through the 2G and “Coalgate” scams, not to mention the Rs.5 lakh crores doled out as cumulative annual tax concessions to big business over the last few budgets, to say that the public exchequer would collapse unless the people are hit through price hikes, is brazen dishonesty of the higher degree. Moreover, this very government is planning at this very moment to abandon the capital gains tax altogether!
This assault on the people is sought to be justified in the name of growth. Capital has to be appeased by squeezing the people, for only then will it invest: only then will its “animal spirits” revive, only then will global finance flow into the country, only then will the Sensex start climbing up, all of which will boost growth. Even if this were true, which it is not, what good is this growth for the people? The years of high growth were accompanied by declining per capita food absorption and increasing absolute poverty. The assault on the people in other words is not just something that is “necessary” for kick-starting growth. A permanent and increasing assault on the people is a “necessary” condition for sustaining such growth. Any flagging in this assault, or even a non-intensification of it, dampens the capitalists’ “animal spirits” and brings down growth. Like a drug-addict who must have higher and higher doses, capitalists cannot do without a steady increase in the assault on the people, which alone can keep up their “animal spirits”.
But even this is not enough to revive growth in the present conjuncture of world capitalist crisis. The advance of “reforms” is not going to make financiers flock to the rupee as they did before the crisis, since every currency, from the Euro even to the dollar, is under strain today and gold has become a favourite option for wealth-holders. Oil may join gold in this role in the coming days, in which case the government will impose even heavier burdens on the people. They are, and will further be, victims of the government’s bankrupt strategy of servility to international finance.