The ballooning wealth of Indian billionaires and their growing numbers are presented in the bourgeois media as a matter of pride for the people of our country. The bourgeois media is itself increasingly controlled by a few big monopoly companies. The increasing distress of workers and peasants is presented as a ‘necessary sacrifice’ for achieving faster economic growth.
The faster growth of the Indian economy has meant faster accumulation of wealth of the biggest monopolies of the country. It has been achieved by a fall in real wages and greater insecurity of livelihood of workers and peasants. It has been achieved by the destruction of a large number of small and tiny enterprises and lakhs of self-employed manufacturers and retailers.
Today, the top 20 companies in India account for 75% of the profits of the entire corporate sector of the country, as compared to around 45% a decade ago. This ratio keeps on increasing year after year. The top two companies in most sectors corner 85% of the sectors’ profits today. The speed of concentration and monopolization in the country becomes evident when we note that in 1992-93, the top 20 companies accounted for only 15% of the total profits.
The data of the Centre for Monitoring Indian Economy, CMIE covering the last 20 years, corroborates the above trend. In 2000-01, companies included in the Sensex 30 of Bombay Stock exchange accounted for 35 per cent of the profit after tax (PAT) of all the listed companies. In 2019-20, it rose sharply to 75 per cent (left axis in Exhibit 1).
Today, very high levels of profit share and concentration of capital are observed in many key sectors. One or two companies account for 80 per cent of the profits generated in each sector.
Concentration of Profit Share of Monopolies in some Industries |
|
Infant Milk Powder | Nestle |
Cigarettes | ITC |
Water proofing | Pidilite |
Hair Oil | Marico, Bajaj |
Paints | Asian Paints, Berger Paints |
Premier Cooking Oil | Marico, Adani |
Biscuits | Britannia, Parle |
Mobile data and telephony | Jio, Airtel |
Trucks | Tata Motors, Ashok Leyland |
Small cars | Maruti, Hyundai |
Petrochemicals | Reliance |
Airports | Adani |
Cement | Birla, Adani |
Power sector | Tata, Jindal, Adani, Torrent |
Nestle has an 85 per cent share in the baby foods market. ITC has a 77 per cent share in cigarettes, Pidilite has 70 per cent in the adhesive segment, Bajaj Corp has 60 per cent in hair oil, and Asian Paints around 40 per cent in the paints market.
The harmful effects of the monopoly of Jio and Airtel in mobile data and telephony is already being experienced by people in the country. A similar monopoly is emerging in retail and non-banking financial sectors.
A quarter of the commercial air traffic is handled by the airports run by the Adani group. The group owns the some of the biggest sea and air ports of the country. Nearly 30% of the food grain stock of the country is stored in its warehouses.
Now this trend of monopolisation is spreading to more fragmented sectors where hitherto the small and medium units had greater market and profit share. The Note Ban of 2016 and the introduction of GST in 2017 led to closure of a large number of small and tiny units, thereby accelerating the above trend. Both these measures led to monopolies increasing their market share and profit by taking advantage of their vast all-India distribution network.
With the growth of capitalism, financial lending, which was once dominated by regional players, is now seeing the emergence of a few big national monopolies like HDFC and HDFC Bank, with both lenders entering the list of top 20 profit makers over the last 10 years.
Access to cheaper loans helps monopoly companies to crush the competition and further concentrate capital in their hands. The bigger the monopoly the lower is the cost of capital for them. Globalization has enabled them to source capital from countries with the lowest borrowing rates. In the case of the Adani group, nearly three fourth of its total debt of more than Rs 2 lakh crores is sourced from outside the country.
India’s top 20 profit (Profit after tax, PAT) earners fall into two broad categories, private sector monopolies which are able to access capital from the lowest cost sources from around the world, e. g. Reliance (of Mukesh Ambani), Tata, Adani, HDFC groups, etc and big public sector units (PSUs) which get access to capital at a low cost because of their implicit sovereign guarantee.
Smaller companies have access to neither source of capital. This in turn practically eliminates their chances of being able to compete with these big monopolies which are now dominating a large number of sectors.
The access to cheap capital allows the big monopolies to grow at a much higher rate than other big and medium size capitalists. They corner most of the growth opportunities in both private and public sectors. Their stranglehold over the economy only gets tighter.
The Tata group recently announced investment plans totalling over Rs 7 lakh crore for the next five years.
The investment plans of the Reliance group of Mukesh Ambani total to Rs 10 lakh crore. The group plans to produce a fifth of the country’s renewable energy and has sought 45,000 acres of land from the Gujarat state government for this purpose.
The most ambitious growth plans have been announced by the Adani group, based on the dominance it has already acquired in many segments of the economy. Prior to its recent financial problems, the group had announced investment plans of Rs 9.5 -Rs11 lakh crore in the near future, that would have allowed it to dominate the fields of thermal power generation, renewable power, green hydrogen energy, highways, copper, coal mines, data centre, cloud services, etc.
The investments by the above three monopoly groups totalling to Rs 30 lakh crore amount to a tenth of the country’s GDP. It is clear that the biggest monopolies are preparing to further consolidate their monopoly and dominant positions in the coming years through investments.
The concentration of capital and monopolization of markets have also been aided by the privatisation program. Vedanta group of Anil Agarwal became the monopoly producer of zinc when Hindustan Zinc was privatised in 2001-02. That group also acquired a dominant position in aluminium production when the government sold public sector Bharat Aluminium (BALCO) to it. The sale of Indian Petrochemical Corporation Ltd to Reliance further strengthened its monopoly in petrochemicals. The most recent example of the creation of a monopoly through privatisation is the sale of Air India to the Tata group.
The monopoly of Adani, Tata, Jindal and Torrent in the power sector and of Ambani, Bharti Mittal and Birla in telecom sector are the result of opening up of these sectors to private companies. Opening up of the airport sector has led to the monopoly of Adani group.
The Insolvency & Bankruptcy Code (IBC) was supposed to help banks to recover their bad debts from big capitalists. The IBC has instead helped to consolidate the dominance of some of the biggest monopolies enabling them to buy assets at throw away prices and forcing banks to accept large ‘hair cuts’. (‘Hair Cut’ refers to the amount of unrecovered debt of the bank.) The Tata group strengthened its position in the steel sector by acquiring Bhushan Steel through the IBC auction. One of the world’s biggest steel monopolies, Arcelor Mittal took over Essar Steel through the IBC process.
More and more concentration of capital leads to increasing control over the means of production and exchange by a few multi-billionaires. It leads to intensified exploitation of the majority of the working people of the country, whose toil is the creator of all wealth. It is reported that the bottom half of the population together now owns just 3% of wealth. The fate of 135 crore people is being decided by a small number of profit hungry capitalists who are engaged in a race to be among the wealthiest persons in the world.
Growing concentration of capital and monopolisation of markets and sources of raw materials are the natural outcomes of capitalism. As discovered by Marx and Lenin, capitalism inevitably leads to concentration and monopoly. Capitalism developed from its early competitive stage to its highest stage of monopoly capitalism in the early 20th century. By now the degree of concentration and monopoly has reached a highly parasitic and destructive level.
Giant monopolies now control all aspects of society. They control the state, which acts strictly in their interest. The bourgeois propaganda that the economy can be regulated to promote “free competition” is an illusion. So is the promise of capitalism without corruption and cronyism. Monopoly capitalism is parasitic capitalism and an impediment to the progress of society. It is anti-social.
The claim that high growth rate will lead to well-being of all is false. It is put forward only to seek support for capitalism. Irrespective of the rate of growth of the economy, capitalist growth inevitably leads to increasing wealth for a few at one pole and poverty for the majority at the other pole.
Only the elimination of capitalism and the transition to socialism will bring an end to the misery of the majority of people. No changes in government, i.e., in the management of the capitalist system, can improve the conditions of the vast majority of working people, or reduce their oppression and exploitation.
Social ownership of the means of production is the necessary condition for social production to lead to the fulfilment of human needs rather than the fulfilment of monopoly capitalist greed.