The decade during which Narendra Modi has been the prime minister of India has witnessed a sharp increase in income and wealth inequality. According to the World Inequality Database, the share of the top 1% in national income, at 22.7% in 2023, is higher than at any time over the last century.
This increase in inequality has been accompanied by a rise in the ratio of the population facing absolute nutritional deprivation. India’s quinquennial surveys on consumer expenditure show a significant rise between 2011–12 and 2017–18 in the percentage of the population unable to access a minimum daily calorie norm per capita, which is 2,100 for urban and 2,200 for rural areas.
India is believed to be one of the fastest-growing economies in the world, although growth rate figures are known to be highly exaggerated. However, it currently ranks 111 out of the 125 countries in the Global Hunger Index — a rank that has worsened over the last decade.
Also read: ‘Hunger, Undernutrition Stalking India; Placed Worse Than Least Developed Nations’: Prabhat Patnaik
Neoliberal Continuity
Liberal opinion tends to put the entire blame for this extraordinary increase in inequality on the Modi government. It is certainly true that the government has pursued policies that palpably favour monopoly capitalists — especially some relatively new business houses that constitute Modi’s “cronies” — while unleashing a crisis for petty production, above all small-scale agriculture.
However, these policies are not the government’s innovations. It has only carried forward the established neoliberal agenda faithfully and blindly. Blaming the Modi government alone, therefore, wrongly exonerates neoliberalism from the charge of impoverishing the working people.
The trends toward increasing levels of inequality and nutritional deprivation have been evident ever since the introduction of neoliberal policies in 1991. The share of the top 1% in national income, for instance, is estimated to have risen from 6% in 1982 to over 21% in 2014. Nutritional deprivation had increased quite substantially between the 1993–94 and the 2011–12 Consumer Expenditure Surveys.
Some measures are considered to be the specific follies of the Modi government, such as the sudden demonetisation of nearly 87% (in terms of value) of the country’s currency notes in 2016 in the name of fighting “black money,” or the introduction of a Goods and Services Tax in 2017, in place of the earlier sales tax, which was supposed to facilitate “unifying the national market.”
Yet while the government has implemented these measures mindlessly, they are generally drawn from the toolkit of the international financial institutions. Moreover, Modi’s government has had the support of those institutions for such moves.
Neoliberal Crisis
The Modi government can be faulted for adhering doggedly to the neoliberal agenda even at a time when neoliberalism had run into a crisis and was generating massive unemployment. Nowhere was this more evident than in its enactment of three farm laws that would have eliminated the regime of support prices provided by the government for food grains.
Support for cash crops had been removed earlier, exposing farmers to wide fluctuations in world market prices, and thereby increasing their debt burden, which in turn has resulted in mass suicides among them.
A remarkable year-long struggle by farmers forced Modi to backtrack on these laws, which if implemented would have destroyed the country’s self-sufficiency in food grain production (admittedly at low levels of consumption) and exposed it to even greater food insecurity.
An increase in economic inequality, both within countries and for the world as a whole, is an immanent tendency under neoliberalism. This is because the mobility across countries of capital-in-production that neoliberalism entails exposes real wages in all countries, including those in the Global North, to the downward drag exercised by the vast labour reserves of the Global South.
These reserves do not dwindle, despite the relocation of activities from the Global North to the Global South, because the introduction of freer trade among countries — another feature of neoliberalism — intensifies competition among them. It also accelerates technological-cum-structural change that increases the rate of growth for labour productivity in each country.
This, in turn, keeps down the rate of employment growth, often even to a level below the natural rate of growth of the labour force, thereby increasing the relative size of the labour reserves. Thus, the level of real wages is suppressed under neoliberalism while labour productivity increases rapidly everywhere, raising the share of surplus in total output within countries and also globally.
The crisis of neoliberalism is directly linked to this growth in inequality. Since working people consume a much larger share of their incomes than those to whom the surplus accrues, the rise in the surplus share creates a tendency toward overproduction. This has revealed itself internationally after the collapse of the housing bubble in the United States.
Slowdown
In India, the effects of this collapse were temporarily kept in abeyance through an aggressive fiscal policy that violated the limitations on the fiscal deficit-to-GDP ratio. With the reimposition of this limit, which came roughly around the time that the Modi government took over, the slowing down has affected India as well.
The clearest manifestation of the crisis in India today is the extremely high rate of unemployment. Unemployment, as we noted earlier, was growing under neoliberalism even before the crisis, because the rate of employment growth was below the natural rate of growth of the labour force. In the Indian case, one must also mention the distressed farmers flocking to cities in search of jobs. With the onset of the crisis, we see the further addition of unemployment due to inadequate demand.
Unemployment is the single most acute problem facing India today. Because of the large-scale casualization of the workforce, it takes the form of a reduction in the hours of employment for most people, rather than a complete lack of work for some. As a result, it is difficult to capture through conventional measures.
However, the results of surveys asking people about their employment status show a significant jump in the unemployment rate during the post-pandemic years. There has also been a significant increase in the demand for jobs under the government-run rural relief program, known as the Mahatma Gandhi National Rural Employment Guarantee Scheme, which also confirms the phenomenon of rising unemployment.
Unemployment is particularly severe among young people — 44% in the 20 to 24 age group, according to an International Labour Organization report — and in rural India. Real wages of rural workers have remained at best stagnant since 2014–15, and perhaps even declined (depending on the deflator used).
In the case of construction workers, a numerically large segment of the labour force, wages certainly have declined, which further confirms the phenomenon of growing unemployment.
Indeed, the two phenomena — greater unemployment and stagnant or reduced real wages — together explain the increase in absolute nutritional deprivation mentioned earlier. This increase is only partially alleviated, but not negated, by the government’s scheme to provide five kilos of free food grains per month to about eight hundred million beneficiaries.
This scheme has been continued from the pandemic years, against the professed convictions of those in power.
Corporate-Hindutva Alliance
The Modi government’s wholehearted embrace of neoliberalism, even when the crisis of that economic model is causing mass distress, is precisely what constitutes its attraction for Indian monopoly capital.
Earlier support for neoliberalism in the belief that it would bring about rapid growth that would ultimately benefit everyone disappears when there is mass unemployment and acute distress. That is when neoliberalism requires a new prop to sustain itself, for which it allies with neo fascist elements.
In India, this neoliberal/neofascist alliance has taken the specific form of a corporate Hindutva alliance. The Modi government is an expression of this alliance.
Its purpose is to bring about a change in discourse so that issues of unemployment, inflation, and economic distress are pushed to the background. Meanwhile, Hindu supremacism comes to the forefront, even as the government continues to pursue an aggressive neoliberal strategy to the benefit of globalised capital and the domestic monopoly capital integrated with it.
Neofascism displays all the features of classical fascism: state repression subverting democratic institutions and abrogating democratic rights; an attack on the hard-won rights of workers and peasants; the combination of state repression with street violence by fascist thugs; and the “othering” of a hapless minority group and the fomenting of hatred toward it.
We can also observe a close nexus with monopoly capital — especially with a new stratum of monopoly capital constituted by the cronies of the government — as well as the apotheosis of a supreme leader and an immense centralization of powers and resources. This enables the carrying forward of an agenda of social counterrevolution, which in India means reversing the progress made toward overcoming caste and gender oppression.
In the current international context, one must add to this list of features adherence to neoliberalism and the accommodation of globalised capital, of which domestic monopoly capital constitutes an integral part.
Discourse of Division
However, in contrast with classical fascism, neofascism cannot overcome the problems of economic crisis and mass unemployment. This is because increased state expenditure for raising aggregate demand can work only if it is financed either by a fiscal deficit or by taxing the rich.
State expenditure financed by taxing working people, who consume most of their incomes anyway, does not add to aggregate demand. In today’s context, globalised finance frowns upon the idea of a larger fiscal deficit or higher taxes on the rich.
If the state does not accede fully to the caprices of globalised capital, it exposes the economy to the danger of capital flight, which it can ill afford. The Modi government can thus do little to overcome unemployment, which makes it all the more dependent on a divisive and diversionary discourse.
This approach is clearly evident during the present Indian elections. While observers confirm that there is great public concern about unemployment, and the main opposition parties have been addressing it in their campaigns, one can find no mention of unemployment in the speeches of Modi and other Bharatiya Janata Party (BJP) leaders.
Instead, they harp on the Ram temple that has been built at Ayodhya and foment animosity against Muslims (calling them “infiltrators”). They have been systematically propagating the myth that Congress, if elected to power, will take wealth from the Hindus for distribution among Muslims!
It is hard to imagine a more divisive, dangerous, and false discourse that diverts attention from pressing issues of material life and livelihoods. But that is what the BJP offers, while a pusillanimous Election Commission merely looks the other way.
The current parliamentary elections are of extraordinary importance for the future of the country. For the BJP, they are a means of legitimising, consolidating, and perpetuating its neo fascist rule.
The party has immense financial resources at its command, donated by its monopoly capitalist backers. It controls India’s central investigative agencies, which it uses to imprison opponents on false cases that do not even come to trial for years and to terrorise them with the threat of incarceration. It has also infiltrated the Indian judiciary or intimidated its officials.
With such resources at its disposal and its religious appeal, the BJP hopes to tighten further its grip on power. Will India’s working people allow it to do so?
This article was originally published on Jacobin.
