Michael Roberts: Modi and the rise of the billionaire Raj

[hexatlas tags: india, china]

Another great piece by Roberts, this time on India, given the ongoing elections. He goes over the BJP's likely strong upcoming victory, and then:

How is it possible for the BJP and Modi to be so popular? First, because of the bulk of the BJP’s political support comes from the rural and more backward areas of this huge country who have not benefited from the strident rise of Indian capitalism in the cities. These areas are bulwarks of Hindu nationalism, incentivised by fear of muslims.

The second reason is the total failure over the decades of the main capitalist party and standard bearer of Indian independence, the Congress party, to deliver better living standards and conditions for the hundreds of millions, not only in the country but in the city slums. Congress appears to millions as the party of the establishment controlled by a family dynasty (the Gandhis), while the BJP appears to many as the populist party of the forgotten people.

The Modi government makes much of its handouts to the poorest. Welfare schemes have been expanded such as providing free grain to 800 million of India’s poorest, and a monthly stipend of 1,250 rupees ($16; £12) to women from low-income families paid into half a billion new bank accounts, along with free gas connection in millions of houses for the poor and over 40 million toilets constructed.

But in reality, the BJP and the Modi government is fully integrated and supportive of Indian capital, especially big capital. PM Modi has made the economy a major part of his election pitch, pledging at a rally last year to lift the country’s economy “to the top position in the world” should he win a third term. The Modi’s government’s key policy is Viksit Bharat 2047—a plan to make India a developed nation by 2047, 100 years after independence, something China is targeting for 2030.

Roberts spends the rest of the article describing how the idea that India will ever catch up to, let alone exceed China is comical and deeply unserious:

• India's GDP growth figures are greatly exaggerated. Additionally, China and India had about the same GDP per capita in 1990, but now China's is six times higher. The gap between China and India is not narrowing, it's widening.
• China's Human Development Index has improved from 0.48 in 1990 to 0.77 in 2021 (for context, the US's is 0.92). India's has gone from 0.43 to 0.63.
• India's income inequality - in some measures greater than when under the British Empire - dampen economic growth for the whole society, as wealth concentrates and stagnates in the bank accounts of oligarchs rather than being dispersed throughout society. Labor creates value, not entrepeneurs.
• Healthcare is not available for many and impoverishes people due to how expensive it is. Infant mortality in the poorest Indian states is worse than in sub-Saharan Africa. Government spending on health is only 1-2% of GDP.
• India has a third of the world's malnourished children. 74% of the population cannot afford healthy food.
• The average income in India is being dramatically outclassed by China. Income growth is well below claimed GDP growth.
• Where income growth is taking place at high speeds tends to be in the financial and real estate sectors, but these don't employ that many people relatively speaking. Labour force participation has fallen under Modi and less than half of the adult working population is employed.
• Most Indians are employed in small businesses where labour rights are ignored.
• India's manufacturing sector post-pandemic has been weak. Dreams that India might become the next world-factory like China now that there is political pressure (as well as capitalists seeking to minimize labor costs) and that China's manufacturing will plummet are almost certainly not going to happen so long as the Chinese state wills it and increases planning and state control over corporations.
• Infrastructure is not nearly as good as in China. China invested 6.5% of its GDP in infrastructure development (pre-COVID at least), whereas India invests just 4.5%.
• 78% of Indians are literate (and only 62% of Indian women), while 97% of Chinese people are literate. China has many more people in vocational education despite having similar population sizes.
• Productivity growth has been falling under Modi. Overall, labor productivity is an average of 4% in India while in China, it's 6.3%. This is because in China, underemployed peasants can move to the cities to get manufacturing jobs due to state planning of labor and infrastructure building. India's urbanisation rate is much behind and employment growth is very slow.
• Groundwater provides 85% of India's drinking water, and groundwater is thus declining at one of the fastest rates in the world. Predictions are that the situation will be critical within 20 years.

Overall, India will probably fall into a middle income trap, with mass exploitation of a billion or more people by the top 10%, while China continues its meteoric rise under intelligent state planning even despite Western sanctions pressure. India's BJP has no real solutions for the fundamental problems facing them. They are doing the classic neoliberal/fascist things - privatisation, cuts in subsidies, more regressive taxes, blaming powerless minorities for the country's problems, etc - and these make the situation worse, not better.