[This is the concluding instalment of this series.]
India’s economy was in a depression well before Covid-19. In sections II to VII, we described how the period of bubble growth which began around 2003 ended around 2008 or 2010. It was followed by a long downturn. Since then, anxious to please foreign investors (including potential foreign investors in government bonds), the rulers have kept government spending to the minimum, even in the wake of Covid. This refusal to spend is both increasing the immediate suffering of the people and deepening the depression of demand. In fact, it is not merely that government spending has failed to increase; it appears that, since tax revenues of the Centre and the states will collapse this year, their total spending might even shrink.
Having forsworn revival through stepping up government spending, the rulers are instead attempting to revive the economy by promising various incentives to private investors, to arouse their ‘animal spirits’ via the scrapping of labour laws, provision of cheap/free land, cheap credit, deregulation, privatisations, and so on. However, such measures will not on their own revive private investment, since private investors want to see signs of a demand revival before they invest. On the other hand, these measures may further depress workers’ incomes, further destroy peasant livelihoods, and further reduce the meagre social claims of the working people, thereby aggravating the inadequacy of demand.
The Prime Minister is also pushing the idea that India can revive growth by integrating further with global supply chains, and getting multinationals to leave China and come to India. He terms this a policy of ‘self-reliance’.
However, even if some more foreign investment does come to India as a result of such efforts, it will not lead to growth in employment in India and revival of India’s economy, for two reasons. (more…)