Terry Eagleton is a British academician of repute with a leftist orientation in his economic thinking. His book on '' Why Marx was right" is thought provoking in the context of the current economic turmoil. The neo-liberal principles of de-regulation, free market and capital de-control were the fundamentals of the new economic order being practiced in many nations. This economic order along with the impact of modern information technology created globalization, and was breaking down barriers between geographically dispersed markets. Globalization resulted in internationalization of trade, production, investment and capital movements. The purpose of this article is not to have a discourse on globalization (as I am neither a critic nor a votary of it) but to focus on the Post COVID-19 turbulence that we are experiencing from the world markets and their consequent impact on the Indian economy.
In the twentieth century we saw the great divide between the Socialists who believed that through the dictatorship of the Proletariat, wealth can be redistributed, while the Capitalists believed the same can be achieved through free markets and enterprise. Social and Political developments in the later part of the twentieth century resulted in the triumph of the capitalist leading to the establishment of the so called new economic world order. Markets, production, demand and consumption shifted to Asia resulting in the emergence of India and China as consumption and production centers respectively. By the twenty first century, technology started transforming economic life and ensured free flow of capital across markets breaking geographical time lags. India became the service corridor of the world market especially in the area of IT enabled services and China, a manufacturing backyard and both economies started growing significantly. Buoyant by their huge foreign exchange surpluses, government stimulus and domestic demand, India and China were able to keep up its growth momentum and survive the financial meltdown which had engulfed world economies in 2009.
The conventional economic model of the free capital had its own irrationality was seen during the Asian Crisis of 1998, the Mexican Pizza crisis called Tequila crisis in 1994 which were all the consequences arising from flight of capital. The recession of 2009 had its origin in the subprime crisis in the US when the capitalist financiers used debts and mortgage tools to invest their capital and failed attempts for refinancing the debts are other examples. In all these cases, the respective governments had to pump in tax payers' money to re-establish the economic order.
You may ask what all of this has to do with India. Though still an import driven economy with a minuscule share in the world mercantile trade, foreign Institutional investors hold above 30 % of our Stock market which resulted in wealth creation for large stock holders albeit at the risk of wealth erosion. The recent COVID related stock tumbling and the short closure of debt schemes by Franklin Templeton are few of the examples that stock related shocks faced by stock investors.
How many of the 125 crore people in this country hold stocks and trade in them and make money? Only a few, and our country's population depends on Jobs and social security. The economic scenario today have already resulted in flight of capital affecting the Indian Industries' capability for capital investment and creation of jobs, in addition to the COVID related lockdown woos. Unemployment as per CMIE is above 27 % and there is hundreds of jobs gone daily due to layoffs. We did see this trend last year but COVID -19 has made it more cruelly conspicuous. We also came to know about the role the migrant workers play in our economy, their sheer numbers and their vulnerability to a capitalist oriented Central and State governments with sheer disregard for their social security.
In this regard our response of Atmanirbhar scheme should not be a glorious version of the swadeshi scheme propounded by the right wing long time before which does not address the issue of competition, cost effectiveness, technology development and egalitarianism. How the Atmanirbhar scheme will take off is not clear due to a lack of structured road map. This poses many questions. Is this going to create some form of crony capitalism with few Indian industries benefiting? How is a level playing field made . What will be the enhanced role of MSME/SMEs in this? How far quality, technology and cost, integrated to the business models for us to be globally competitive. How will a stimulus of 20 Lakh crore provided mainly through the banking system percolate down to demand and when will it happen? How are issues related to states, centre and banking system be regulated and coordinated in ensuring the needy gets the benefits.
The point made here is that the global capitalist order nicely christened as the new world order has crumbled but in the Post Covid period in a country like India, the million dollar question is , whether the growth is going to be egalitarian in nature. To quote Eagleton "It is a crazed notion that a single global system known as the free market can impose itself on the most diverse cultures and economies and cure all their ills". The great economist of the twentieth century John Maynard Keynes in the aftermath of the great depression of the 1930 had also warned that global capitalism can result in a spurt of unemployment, affecting demand in the economic system creating a recessionary trend. We should study these pitfalls and incorporate systems into the atmanirbhar scheme that it does not result in a desi form of capitalism.
The larger objective of this essay is not for a doomsday prediction but to understand India and its need for an egalitarian growth model, and ensure that Atmanirbhar scheme shall ensure equitable participation of all stake holders in the economy. The India's renewed growth story as desired by the honorable prime minister, should not create disparity and gap between the rich and the poor . The migrant story have taught us a lot of lessons. Globalization made India the 11th largest in terms of number of millionaires. In contract to this picture, what is the percentage of reduction in poverty in the same period? It is your guess because today we have reached a mind-set that we can't trust the government numbers if at all it is made visible...
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In a paper abstract named Converging Crises: Reality, Fear and Hope by Prof Susan George of the Transnational Institute in Amsterdam, the concept of re-localization or de- globalization is discussed where she talks about regulation and re distribution of wealth by a welfare state. The terminology of re localization echoes the Atmanirbhar scheme
Do we need more millionaires at the cost of the starving lot, what is the mechanism which will ensure that the wealth created percolates down? Eventually how do we address the issues of collective and egalitarian growth rather than being proud of our burgeoning millionaires and middle classes? Will we be able to make the MARKET the MAKER of our Destiny or the MASTER of our destiny?
Addressing these issues is more important and being detailed in policy making and implementation is what we require. Hope the vision of the honourable prime minister to the citizens is translated by his mandarins into a time bound actionable document for public review.
