 Since the election outcomes which were influenced very significantly by the events of Fulwara and Balakor, seem to suggest that the economic crisis did not weigh very heavily on people's minds in exercising their electoral choices and once again the media have generally not been highlighting these issues of the crisis of livelihoods of the peasants and workers of India. However, suddenly now we have a lot of noise in the mainstream media on the economic slowdown right now and of course the highlight of course has been the crisis in the automobile sector, fast-moving consumer goods sector, some other sectors including textile sector which has been less highlighted but the real estate sector has found a lot of mention and in the light of critical comments and concerns expressed by leading lights of Indian industry people like the TVS or Rahul Bajaj or Godridge or leader of the Parleys and Britannia biscuit companies while the government continues to be in denial it has nonetheless been forced to appear to act quickly on these issues. Now that's very instructive because what it suggests is that the problems of millions of Indians are not a much concerned to the state but the problems of a very small elite or immediately seen as critical and addressed or at least ought to be addressed in some public and visible manner and this is something not entirely new to us. It happened with the former suicide in the 80s and 90s as well. The narrative from the side of the captains of industry is all about how government policies are not helping revive the economy including to the point where they would like government to be more active spend more money create demand and all that but more importantly they would like to see government address their concerns over taxation. In all this narrative one thing is happening which is that after a long period of denial both captains of industry and even government spokespersons like some people in the Ministry of Finance the vice chairperson of the Nithya Yoga and so on have finally started admitting that the demonetization and the hasty and remarkably confused implementation of the GST have hurt the economy quite badly but what is interesting is that when the captains of industry say there is trouble the government listens when lakhs of farmers commit suicide the government cannot be overly bothered likewise with the massive unemployment on which the government in fact refused to divulge data for a long time so today we have a situation which is somewhat peculiar government data on GDP or no longer trusted even by government spokespersons. What concerns me in this discussion is not so much the specific number on the rate of growth per se but the character of that growth process which as I mentioned earlier has been highly exclusive in its implications. We had two statements in recent times one from the Finance Ministry in her budget and one by the Prime Minister's Independence Day address which are nearly identical. In both statements what is the key point corporate India is the wealth creator in this country. For me there was an extraordinary statement I had always imagined that working people peasants workers office people people who work in management levels in various institutions people who work by hand also with their intellect all these working people right up to the highest managerial levels or producing wealth in this country stock market allows transfer of wealth from one party to another but not the production of it and yet we are now told not the private sector mind you not the public sector mind you but the corporate sector is the creator of wealth and therefore we are supposed to be nice to them this is the narrative that is being unfolded by the ruling regime I think it's important for us first of all to challenge this and to make the point that whether you take wealth creation or you take payment of taxes the major contribution comes from working people they pay the bulk of indirect taxes they produce a country's wealth through the hard work whereas our system rewards property ownership and not labor not work intellectual physical manual whatever so I'm not making a distinction between different kinds of work all kinds of work are relevant to the creation of wealth in the country what you must notice is that while the minister has been very careful in not making big financial commitments to Indian corporate sector and Indian industry including the auto sector she has been quite willing to meet the demands of the foreign portfolio investors their demands have been met in total they have removed the search are the taxes that were there in the budget on the FBI's and this is very symptomatic of the nature of the crisis that the government perceives India to be in and this is the following since 1991 practically in every single quarter every three month period you were the value of exports of India's physical goods has been far less than the value of imports of physical goods in other words you've run a very large merchandise trade deficit for a very long time this would be a very unsustainable situation except for the fact that we were able to get some foreign exchange through two sources one our net exports of services IT IT enabled services tourism and so on and we got some foreign exchange through repatriation of their incomes remittances by working people of India living abroad not by the art of living people not by the big captains of industry but by ordinary working people going from different parts of India and working under difficult conditions and sending home money unskilled semi-skilled skilled workers who sent home their money after you take into account remittances plus net service sector exports earnings you still have a large current account deficit now this is what compels the government of India to desperately seek foreign exchange without regard to the use to which such influence be put so for example you are desperate to get foreign portfolio investment even though you know this only comes in the stock market or commodity market comes in for purely speculative reasons does not add to output or wealth creation or employment or technology in any way but you're desperate because you have a you have liberalized trade so much you fall in line with the impositions on you by the advanced countries that your large trade deficit which is also a reflection of your failure to improve your exports has compelled you to desperately seek foreign exchange influence regardless of what use they put to so you know it's an extraordinary situation where the FBI demands are wholly addressed but the demands of even the Indian big bush was he or only partially addressed I think it gives you an indication of the nature of the regime at the moment not withstanding its protestations of being Swadeshi and all that is to exactly where their you know inclinations lie basic point is without substantial investment in India's infrastructure which is going to primarily have to come not from a reluctant private sector but a public sector large scale public investment in large number of sectors which will help industry raises productivity help India's exports compete better investments in the public sector in health education infrastructure and a whole lot of other areas without all that India is not going to be able to improve its export competitiveness address the trade deficit and without revisiting the issue of trade regulation and tightening it we will find it very difficult to sustain the kind of development that we are currently having we will have a recurrent and permanent forex crisis induces to submit ourselves to the dictates of speculative foreign capital as it is happening at the moment so we are currently surrendering to the dictates of speculative foreign finance capital and that regulates your entire policy framework for example you will not spend more on health education because you're afraid that your budget deficits will go up which will be frowned upon by the foreign finance capitalists and you will not raise resources from the rich in order to spend even while meeting the budget deficit targets because you will be concerned about the tax incentive effects on the rich so we have created an atmosphere in which any rate of taxation is seen as punitive any any increase there on is considered unthinkable and we have this constant practical about 30 percent and 20 percent tax rates after all exemptions are taken into account the effective corporate tax rate is much less than 23 percent it's not 30 percent currently phone companies earning 400 crore rupees more or less as turnover each year or enjoying after the last year's budget or enjoying 25 percent tax rates nominally and much lower once exemptions taken we have not removed any exemptions now the idea is to extend this to all corporate sector entities which would then mean even lower tax revenue for government of India the GST is in crisis so the GST revenues are not going to you know come up in a big way which is why Sita Raman has not yielded on the GST rate there is a government has this budget deficit to to manage so essentially you are caught in a bind of both a fiscal crisis and the balance payments crisis ironically these were the two that were put forward as a reasons for moving to neoliberal policies in 1991 30 years later we are back to square one where the same fiscal deficit crisis and the balance payments crisis are staring you in the face and the way out of this is not through more consistency of the corporate sector but through a different path of development in fact the the slowdown that we are talking about is only one facet of the Indian economy the narrowness of the Indian market resides first of all in the failure to carry out comprehensive land reforms if you take any successful Asian country Japan South Korea Taiwan and people's republic China all these have carried out comprehensive land reforms so for the lesson for India therefore would be that we should now not look at short-term solutions of just trying to sustain this very exclusivist economy by providing more consensus with corporates without reference to employment but rather our priority issue should be agrarian crisis and unemployment which in turn would require comprehensive land reforms as well as massive programs of employment in fact at the moment obviously land reform is a longer-term question but immediately if you look at the budget for example there's been a reduction in the outlay for rural employment guarantee program what we need is a far more massive urban and rural employment program which will build productive assets for the Indian economy in the public sector what we need is much greater public investment all of this requires a reversal of neoliberal policies and a much more proactive state policy because the without investment economy is not going to grow and without such public investment you will not be able to improve productivity for agriculture ultimately the crisis in agriculture has to be solved by improving productivity in agriculture for the mass of the cultivators and that cannot be done without for example a much stronger self-system in agriculture a much stronger extension system much stronger levels of investment for helping farmers to store their produce carry it to the market and irrigation and a whole lot of other things one can talk about so basically massive public investment is required whereas we are currently traveling in the reverse direction in the last three years alone the Modi regime has disinvested or has planned to disinvest around three lakh crore rupees of public sector enterprises assets this is committing suicide when today when private sector investment has basically collapsed the only kind of investment that can lift the economy would be massive public investment but that does require both more effective taxation and the willingness to run larger deficits sometime which both require much greater relative independence from the demands of international finance capital and from the pressures of big bourgeoisie inside the country big capital inside the country I think we need to follow those kinds of policies but those are easier said than done I don't see any other way out of this in the long-term more sustainable way out of this crisis