Political Economy

As the Rich Receive State Patronage, Modi Has Left the Poor to Be 'Atmanirbhar'

Under Modi, the state bears the losses of the rich, with tax concessions and state subsidies. But, working classes have to live through complete doing away of fertiliser subsidies, and petrol and diesel subsidies.

Last year on May 12, in the peak of COVID -19-induced lockdown, when the poorest of the poor migrant workers were walking thousands of kilometres to their homes, Prime Minister Narendra Modi, with the insight of an oracle declared that “the state of the world today teaches us that Atmanirbhar Bharat (self-reliant India) is the only path. It is said in our scriptures – Eshah Panthah. That is self-sufficiency”.

Some economists were quick to point out that there is confusion in the statement, for ‘self-reliance’ and ‘self-sufficiency’ are not the same and have different connotations. Self-reliance basically meant that we have enough foreign reserves to pay for what we import, while self-sufficiency meant that the country produces all the goods and services it wants and does not need to depend on any other country.

Also read: Only 33% Foodgrain Allocated for Migrants Under Atmanirbhar Bharat Was Distributed

Some thought that this would lead to an economic autarchy or isolation, but it was soon clarified by the patriarch of Rashtriya Swayamsevak Sangh, Mohan Bhagawat, that we would continue to import what we want from whomsoever we want but “on our terms”. On whose terms we imported earlier was not clear. The opposition members remarked quite cynically that this meant “fend for yourself” as the government seemed to be uncaring of the migrant workers’ plight, having imposed the harshest ever lock-down on the country due to the pandemic.

It was also pointed out that there was nothing new in this concept, as almost all our Five-Year Plans starting from 1951 have been focusing both on self-reliance and self-sufficiency. Due to this, we had achieved self-sufficiency in food, milk and dairy products, cement and steel to a large extent, power generation and supply, production of skills in engineering (IITs and hundreds of engineering colleges) and medicine (AIIMS and other medical colleges), DRDO for defence research, HAL for Aviation, ISRO for space, BARC for nuclear energy, CCL, NTPL and GAIL for energy resources, etc. And the list goes on.

Nirmala Sitharaman Narendra Modi

Prime Minister Narendra Modi and finance minister Nirmala Sitharaman. Photo: PTI/Files.

A total of three Atmanirbhar Bharat packages worth Rs 29.87 lakh crore ($420 billion) were also announced by the Modi government. The focus here is not so much on the economic package and its benefit to the poor but on the socio-philosophical underpinnings of this concept and how it is different from the earlier Nehruvian model of self-reliance.

In the earlier notion, ‘self-reliance’ applied to the government as an aspirational objective to be achieved and not a cross to be borne by the individual. The ‘Mai-Baap Sarkar’ continued to be the source of succour for jobs and livelihood. Nehruvian socialism was based on the idea that the state was the provider of food, shelter, jobs, livelihood, education and health. Private business was largely ignored, if not openly scoffed at, and the unstated belief was that business was inherently unethical and profits were sin. Equality of opportunity was mistaken for equality of outcome and distributing the cake equitably became the main task of the government, however small the cake was. And the cake got smaller and smaller as the population swelled.

Economic reforms

All this changed in 1991 when the Congress party jettisoned the ideal of socialism, based on the License-permit Raj system of a regulated economy, and embraced neoliberal economic reforms. Suddenly the virtue of the free-market was discovered and private businesses not only became legal but also ethical and profits were no longer sinful. ‘Free enterprise’ and ‘animal spirits’ were unleashed and the economy took off to dizzying heights.

In less than three decades since 1991, the Indian economy had grown nearly nine times with the GDP racing up from $266 billion to $2.3 trillion, the budget size had grown 19 times and average incomes had gone up by five times. Our Forex reserves had reached $432 billion at the end of 2017, in comparison to 1.1 billion when finance minister Manmohan Singh presented his budget in July 1991. Over 200 million people were lifted out of poverty. Neoliberal economics seemed to have worked well for a large section of the population and there was no going back on it.

Also read: The Atmanirbhar Bharat Spirit Should Extend to the Way We Look at the Big 4 Auditors

“The market had become the determinant for our success rather than patronage from Delhi,” wrote N.R. Narayan Murthy on ‘The Impact of the 1991 Economic Reforms on Indian Businesses’. Many would argue that patronage from Delhi has returned to become the determinant of success today, at least for some businessmen. Nevertheless, the markets are largely free and remain a vibrant force for most businesses.

Reforms 2.0

If the 1991 economic reforms were heralded as the first phase of neoliberal reforms for the industrial sector, the recently passed farm laws were claimed to be reforms 2.0 for the agricultural sector. There is, however, much more to it than what meets the eye. There is a new socio-political underpinning in the notion ‘Atmanirbharata’ or self-reliance that is largely thrust upon the individual and not the state. But before we come to that it is important to get a clear understanding of what neoliberalism is all about.

Farmers protesting at Ghazipur border. Photo: PTI.

Professor David Harvey in his book A Brief History of Neoliberalism states that it is a doctrine that regards market exchange as an ethic in itself, capable of acting as a guide for all human action. He adds that its spread has depended upon a reconstitution of state powers such that privatisation, finance and market processes are emphasised. State interventions are minimised, while the obligations of the state to provide for the welfare of its citizens are diminished.

“With the reorientation of the state and the curtailment of its welfare and social sector function, the enterprising neoliberal citizen is supposed to be self-reliant, self-governed and self-disciplined, prepared to take responsibility for his own well-being, for managing risks and vulnerability…the state is being re-engineered from an interventionist institution to a regulatory one, primarily as the enabler of the market and of business, with a secondary role in the provision of public goods and services, which is to be increasingly shared with private businesses,” says Nandini Gooptu, a professor at Oxford University.

Also read: No Atma, Lots of Nirbharta: The Socio-Ecological Bankruptcy of Modi’s Self-Reliance Stimulus

Both the farm laws and the Workers Code enacted by this government are in line with this thinking. Further, Prime Minister Modi has openly aligned the state with the big industrialists by calling for support to businesses while the working class and the farmers are called upon to be Atmanirbhar. The reduction or stopping of subsidies for fertilisers, or for petrol and diesel prices, is a step in this direction. As for workers, the recently passed Workers Code has enabled businesses to hire and fire without government permission, make them work longer hours without overtime, and restricted their right to go on strike.

In the new Atmanirbhar Bharat, it will be socialism for the rich, as the state socialises the losses of the rich, asking banks to take a haircut and ‘free enterprise for the poor’. The worst of all possible outcomes.

Ravi Joshi was formerly in the Cabinet Secretariat.