Just four weeks ago in the first week of September, there was great jubilation in the government, in the corporate world and the media that India had overtaken the UK to become the 5th largest economy in the world. This news gave rise to a lot of discussion on how the Indian economy has been growing over the years.
Rising profits of private corporations, high tax collections, booming exports and more money being spent on cars, real estate and overseas vacations are cited as measures of this growth of the economy.
However, this image of an economy of rapid growth, ranking fifth in the world in terms of its size, does not reflect the reality for hundreds of millions of Indians. The conditions of the majority of people is characterised by a continuous downward slide in living standards.
There is growing unemployment and insecurity of jobs and livelihood. Working people are being forced to cut back on food, health care and other essentials for the family. Increasing number of people are suffering from hunger and malnutrition. Rising rural indebtedness is leading to increasing number of peasant suicide. These conditions of the vast majority of the population reveal the bitter reality behind this growth story about the economy.
There is a total disconnect between the growth of the economy and the conditions of the vast majority of people across the country. How is it possible that the Indian economy is growing and yet there is so much economic distress being experienced by a large section of working people? The answer to this is that the economy is oriented to enabling rapid growth in the size and profits of the biggest monopoly capitalists. It is not oriented towards fulfilling the most basic needs of the majority of working people or improving their living conditions.
The biggest monopolies have been expanding and growing even bigger as they buy up other corporations and expand their operations abroad. Many Indian monopoly corporate houses are today counted among the richest in the world.
On the other hand, wages of workers have remained stagnant or gone down, with millions having lost their jobs or forced to work at lower wages. With rising costs of food, fuel and other essential goods and services, the net incomes and purchasing power of the vast majority of working people are rapidly going down.
A recent study of the Indian economy confirms that whatever growth is being talked about has been very lopsided. 4-wheeler vehicle sales are high, but two-wheeler sales have dropped, per capita consumption of food has decreased and unemployment is continuously on the rise.
Notwithstanding this reality, the government has been boasting about the growth rate reported for the previous year 2021-22. It was reported that the economy had expanded 8.7 percent in 2021-22 over the previous year. But we need to remember this growth was on a very low base, in the previous year due to the Covid-19 pandemic. In GDP terms, the economy is just 3.8 per cent larger than it was three years ago.
The government has also been projecting high growth rates for the current year but has had to revise it downwards every 2-3 months since the budget at the beginning of the year. In June 2022, the government had whittled down the rate to just over 7 per cent from a very exaggerated high of over 9 per cent in January 2022.The latest estimates have once again lowered the growth prospects. The Reserve Bank of India has cut its growth forecast to 7% from an earlier estimate of 7.2%, while the United Nations Conference on Trade and Development has projected that India’s economic growth will decline to 5.7%
Just a week ago, on 1st October 2022, the finance minister claimed that the Indian economy is seen as a “sweet spot” the world over! The propaganda about growth of the Indian economy and the massive size of the Indian market for all kinds of goods and services is used to promote India as a “good investment destination” for the capitalists of the world.
Despite the propaganda about growth, the truth is that the Indian economy is heading into another crisis. There is stagnation in demand for goods for mass consumption because masses of working people are too impoverished. Neither Indian nor foreign capitalists are increasing their investments. The economy cannot be sustained on exports alone, and even less so in the face of an impending recession in many countries across the world.
Capitalism is in acute crisis the world over, and India is no exception.