Economists Radhika Desai and Prabhat Patnaik analyze India’s 2024 general election and why Prime Minister Narendra Modi’s far-right Hindu-nationalist party BJP lost its majority. They discuss the state of the economy, rising unemployment and inequality, and Modi’s neoliberal model.
Video
Podcast
Transcript
Radhika Desai: Hello and welcome to the 29th Geopolitical Economy Hour, the show that examines the fast-changing political and geopolitical economy of our time. I’m Radhika Desai and working behind the scenes to bring you our show every fortnight are our host Ben Norton, our videographer Paul Graham, and our transcriber Zach Weisser.
The election results from India made the whole world sit up and take notice. Headlines used words like “stunning” and “shocked” to describe the result. No Indian election has elicited such worldwide attention. Modi and his BJP have thundered into the electoral arena with the slogan “Ab Ki Baar, Char So Paar”, which means “this time will go over 400”.
The National Democratic Alliance, the coalition that the BJP leads, was to win more than 400 seats in a Lok Sabha that has 545 seats. And the BJP itself was supposed to win 370 seats, which would have itself constituted the super majority of over two-thirds. The idea was to win a third term, and this would have bested or this would have equaled Nehru’s, the record of India’s first Prime Minister Jawaharlal Nehru. And by achieving a super majority, it would have bested even his performance.
India’s mainstream media, which is in India called the “godi media”, which means the “lapdog media”, published opinion polls showing that the BJP would easily surpass even these hubristic goals.
However, some of us who knew, who had our ear to the electoral ground rather than our ear to the echo chamber in which the Modi cult seems to live, knew that the electorate could have delivered a very substantially different verdict. And on the last day of polling, a very well-known pollster and an activist, Yogendra Yadav, basically proposed that for Modi, anything below 300 seats would be a moral defeat. A tally below 272, which is the halfway mark in the Lok Sabha, would have been a political defeat. And anything below 250 seats would have been a personal defeat for Modi.
And by winning 240 seats, Modi suffered all three defeats. 240 seats were 63 fewer than its score of 303 seats in 2019, and below even its 2014 tally of 282.
To top it all, these reverses were suffered in an election that was fought on Modi’s persona alone. He was the sole face of the BJP on posters, in advertisements, in the media, as if only he was running for the party in all the seats, not the hundreds of BJP candidates.
Indian voters have cut Modi down to size. They have humbled him. They have stripped him of the aura of invincibility. And they have made him reliant on two allies who are known to be capricious, and also known to have opposed some of the most extreme elements of his agenda.
The principal reason for this humbling is the manner in which Modi has managed the economy in the last 10 years. We knew the economy would be decisive and devoted our last Geopolitical Economy Hour to it as well. And today, with the new government installed, with Modi trying to proceed as though nothing has happened, and a re-energized opposition doing everything possible to underline the reasons for this humbling, what we are going to do today is we are going to review how the economy determined the result, and then reflect on what the result means going forward for India, its economy, its politics, its foreign policy, and much else besides.
And with us to do this is a guest who could not be more qualified to do all of this with us. Professor Prabhat Patnaik is India’s leading critical and Marxist economist and commentator on all aspects of its politics as well. Welcome, Prabhat. It’s so wonderful to have you.
Prabhat Patnaik: Thank you, thank you.
Radhika Desai: So Prabhat, why don’t we start off by you just giving us a kind of synoptic view of how you assess the results overall and what it means for India in the near term future?
Prabhat Patnaik: Well, you are absolutely right that this time the elections were fought on economic questions that the BJP tried to project, Hindu supremacism as its main plank. And Modi’s election speeches were abysmal. They were really terrible. I mean, simply the low level at which he pitched these speeches, the anti-Muslim rhetoric was unbelievable.
But at the same time, the rebuff that Modi got is indicative of the economic questions which are currently agitating people.
The two main issues in terms of the economic questions are, of course, unemployment, which is now massive, particularly youth unemployment; and the rise in prices, particularly the rise in food prices.
Now, both of these, in a sense, are global phenomena. Their current state in India is reflective of a global crisis. I don’t think, you know, there’s a tendency in liberal circles to blame Modi for this. As a matter of fact, these are global phenomena. They have to do with the current state of neoliberal capitalism. And Modi is a very staunch votary of neoliberal capitalism.
So in that sense, really, it is a much more structural problem that is confronting the Indian economy, but a problem that particularly confronts the Indian economy because of the fact that Modi has no ideas other than simply pursuing neoliberalism as faithfully as he can.
But at the same time, I think one has to be clear that neoliberalism in India itself, or if you like the capitalist agenda in India itself, is fraught with a problem. You see, unlike in advanced countries, in India, you actually have almost half the population consisting of peasants and petty producers, by which I mean craftsmen, fishermen, you know, artisans, and so on.
Now, if you have half the population consisting of this, and any capitalist development is one that actually displaces this, actually brings hardships to this section of the population, then naturally they would revolt against it.
So, if you wish to combine capitalism with democracy in a state like India, in that case, you need something extra so that you can sell the capitalist development on some other criteria.
Now, Modi is useful for Indian big capital for this reason, because he brought in Hindu supremacism. You see, in India, you don’t have a Christian democratic party. You don’t have a Tory party. The only completely unambiguously pro-capitalist party is at the same time a Hindu supremacist party. Now, that is really indicative of the fact that promoting capitalism in a country like India is something that does not sell, I mean, within a democratic framework, unless it is the case that you actually camouflage it by something else like Hindu supremacism.
As a matter of fact, you know, in the past, there have been pro-capitalist parties like the Satantra party and so on, which really came across because, you know, they hardly got much votes. Now, that being the case, particularly the peasants and the petty producers have been very badly hit by neoliberal capitalism, particularly in the last 10 years, because of the Modi administration pursuing such a strategy unambiguously, unashamedly.
A couple of things he did. One was the demonetization of the currency. Again, it was a crazy idea. But on the other hand, demonetization of the currency is something which was not opposed to, on the contrary, is generally approved of by agencies like the World Bank and the IMF. So, demonetization of currency notes brought enormous hardships to particularly this segment of the population. They had to queue up for hours all through the nights in order to get their cash changed. Sometimes they just didn’t have enough cash to buy their inputs, they got indebted. And because they got indebted, they actually, you know, got into that cycle of debt, which made them more unviable. So, this segment.
Now, similarly, he introduced a goods and services tax. Now, the goods and services tax is again something which is part of the neoliberal agenda. But on the other hand, it is something that actually brings great hardships to the small producers. They don’t have these meticulous accountings and so on, because of which their costs go up. And they are not in a position to kind of meet deadlines in terms of filling in forms and so on. And as a result, they get squeezed by it.
Also, it means that a whole lot of sectors that earlier were not taxed at all, now had to be brought into the tax net. And these sectors were really sectors of artisan production and so on.
So, the Bodhi policy of blindly pursuing neoliberalism was hurting the peasantry and the petty producers very badly. In a sense, the unemployment crisis is particularly acute because theirs is the sector that generates maximum employment. And therefore, you find that, to me, the election results represent a revolt of the peasantry, a revolt of the peasants and petty producer class.
You look at the states where Modi has lost the maximum number of seats. One is Uttar Pradesh and the other is Maharashtra. In Maharashtra, everybody is agreed that actually the crash in onion prices was a very important factor behind Modi’s defeat or BJP’s defeat. And likewise, in Uttar Pradesh, there has been, you know, that Eastern Uttar Pradesh has suffered because the artisans of Eastern Uttar Pradesh have been very badly hurt by Modi’s economic policies, which are really neoliberal policies without an apology.
Now, likewise, Western Uttar Pradesh has been hurt because that is the area which was in the thick of the peasant agitation against these three infamous farm laws that tried to withdraw minimum support prices from a whole range of commodities where currently such prices are offered.
So, I would say that really the most significant aspect of it is that it’s a revolt of the peasantry and petty producers. And in that sense, Modi’s defeat also, in a sense, constitutes a defeat for the capitalist project in India.
I mean, obviously, it’s not as if the left has done well, the left has not. But the point is that, you know, it constitutes a setback for the capitalist project. In fact, you look at all the kind of, you know, the elite, the capitalists, you know, they are all great supporters of Modi, because they are the beneficiaries of neoliberal capitalism. But it’s the small producers, the peasants, the farmers, and so on, who really have put a spanner in the works. And so I think Modi’s defeat is really a setback for the capitalist project in India.
Radhika Desai: I think this is absolutely a critical point, the one that you’re making, because, if you think about it, the capitalist class are the ones that brought Modi to power. They essentially insisted back in 2012, 2013, that Modi should be the BJP’s prime ministerial candidate, and he should do at the all India level what he had done in Gujarat, etc.
And you’re also absolutely right that Modi is pursuing a neoliberal policy, because contrary to what most people think, neoliberalism has never been about creating free markets or free competition; it has always been about giving more and more freedoms to the big capitalist classes, legislating entirely in their favor. And so, you know, what you’re saying is that, okay, the left has not done very well, but this election has shown the fundamental non-viability of capitalism. And Modi has really done that, because in a certain sense, we’ve had neoliberal government since the 1980s or 1990s, but this government has been so single-mindedly and relentlessly in favor of neoliberal legislating in favor of the capitalist class and doing them all sorts of favors.
Now that Modi is forced to rely on a coalition government, how much do you think this will matter? How much do you think that the coalition, his coalition partners will restrain him? And what do you think will be the capitalist class’s reaction? How will they react to this? How have they reacted to this election result? And what will now happen?
Prabhat Patnaik: You know, I do not see Modi doing, let us say, an Indira Gandhi in terms of pursuing policies which would bring some relief to the people. I don’t see him doing that, because I think he has no economic imagination. And he is really a corporate product.
I mean, you’re absolutely right that Modi’s rise to a dominant position in national politics was really, in a sense, a maneuver by the big capitalists. In fact, he was mooted as a prime ministerial candidate at a business summit that was held in Gujarat.
And what is more, he, if you like, constituted the bridge between big capital on the one hand and Hindu supremacism on the other.
Mind you, it was not an easy thing. In fact, even now, within the Hindutva fold, there are very many forces which were lying dormant, which are now speaking up, which really are not very much in favor of big capital. I mean, they represent, in a sense, rather similar to the tendencies in Nazi Germany that really took the Nazi rhetoric against big capital seriously.
But Modi is the person who really has brought about, he is the bridge between Hindutva on the one hand, the corporate-Hindutva alliance, which has been ruling India, the architect of that alliance is Modi.
Now, I don’t think the corporates themselves are going to do anything in order to bring about even some kind of a capitalism with a human face. On the contrary, whatever statements you come across, I mean, for instance, Arvind Panageria, who is a very senior economist of the government, says, “What’s wrong with inequality?” Because inequality, if you remember, was one of the issues which was being discussed by the opposition, throwing up the fact that in India, there has been an enormous increase in income and wealth inequality in the last few years.
Similarly, the other day, I saw that a person who belongs to the Prime Minister’s Advisory Council saying that, look, we have to rethink our positions, that inequality should be shunned.
So the point is, I do not see ideologically or in terms of Modi’s economic imagination the government pursuing an economic policy different from what they are doing now.
In fact, Modi himself, even though one of the measures, which actually accounts for a degree of support that he obtains from the poor, is giving five kilograms of food grains every month per head to about 800 million people. Now, that actually began during the pandemic. But that, instead of finishing at the time of the pandemic, was continued. Modi thought that he would actually, after the election, he is going to withdraw it.
But the point is that generally he has been criticizing any such transfers to the poor on the grounds that these are freebies that they take away from the money that could be given to the capitalists to incentivize them in order to undertake investments and so on.
So in a sense, his whole thinking is one that actually does not believe in providing relief to the people, certainly does not believe in sustaining or supporting or protecting the peasant agriculture or the petty production sector, as was the case in India for decades after independence.
The peasantry, as you know, was supported through a set of procurement prices, support prices, procurement operations and so on. Now that support is withdrawn for cash drops, Modi wanted to withdraw it from food crops. But on the other hand, he was not allowed to because of the agitation. So I don’t see any serious changes in the economic policies.
But then that raises the question, how is he going to manage to cope with this? I think, in fact, if anything, it might actually mean greater recourse to Hindu supremacism. Because, I’m not saying consciously, I’m not saying in terms of rhetoric, but if you have a communal riot somewhere, which is engineered locally, let us say, in that case, that would have a certain diversionary role.
So I see Modi pursuing with the old agenda that he was pursuing, by diverting people’s attention by all kinds of such kind of incidents and so on and so forth.
I mean, obviously, he would not explicitly say such a thing, because then he would lose the support of his allies, because the allies are on the whole secular people. And likewise, I think the attack on intellectuals is not going to be withdrawn or reduced in any way, as is clear, because Arundhati Roy has been targeted.
So I don’t see Modi actually withdrawing in any way. But he would, first of all, do it in a more quiet way. But secondly, he would actually continue with the whole Hindu supremacist agenda, because he can’t do anything about the capitalist agenda.
Radhika Desai: So do you think that there is any prospect that this government might fall? For example, if he pursues the policy that you are saying he is pursuing, then surely it is, I mean, can it be sustained? Will there not be, you know, the opposition is re-energized, as you rightly pointed out, his allies are secular. I mean, do you think there is any prospect of the government not finishing its term? And if so, what form do you think that might take?
Prabhat Patnaik: You know, there are two kinds of possibilities within this. One is the allies breaking away from the BJP. The other is rifts within the BJP. Now, I think the allies breaking away is likely to be less, perhaps, prominent than rifts within the BJP. Because, you know, within the BJP, Modi has been having a kind of power which no BJP leader earlier had ever enjoyed. Because, and already now you can see their criticisms by the RSS of the BJP, and so on. Because Modi also tried to lord over the RSS.
In other words, even while pursuing a Hindu supremacist agenda, he tried to do it on his own without necessarily consulting with the RSS or listening to them and so on. So I suspect if there is a threat to him, that threat is likely to come through an inner party revolt within the BJP, at least in the foreseeable future. Because, you see, even whether it’s Modi or Amit Shah and so on, who’s the Home Minister, they are not very senior people within the BJP. They were not senior people within the BJP. Amit Shah was handpicked by Modi, brought from Gujarat and made Home Minister of India.
So the point is that within the BJP, there would also be a certain amount of resentment against this Modi’s arrogance and so on. And I think there may be divisions. I don’t think these divisions would come out into the open in the form of splits and so on. But a quiet removal of Modi on the ground that he’s old, he’s past 75 and so on, is something which is not impossible.
Radhika Desai: So maybe, in a certain sense, let’s shift focus a little bit to the opposition. You know, this time, part of the reason why Modi suffered such a loss of majority and other forms of humiliation, I suppose, that he has suffered in terms of the electoral verdict is because of the way in which the INDIA coalition came together. The (Indian National Developmental Inclusive Alliance) INDIA coalition consisted of the Congress party, various regional parties, and of course, the left parties.
And so, and it seems as though, from my point of view, it seems as though the INDIA coalition did two or three things that were very, very good and important. Number one, Congress did not play the sort of big brother role and try to hog most of the seats. In fact, Congress contested the fewest seats ever in its history, allowing its allies to contest more seats.
Secondly, it seemed to have really taken on a fairly radical agenda, you know, putting issues of unemployment, inflation, caste census, all these things at the center of its agenda.
So can you sort of comment on these? I mean, how secure and permanent are these changes? Can we expect any, you know, what can we expect from the INDIA alliance going forward?
Unemployment in India: Reflective of Demand-Constraint System
Prabhat Patnaik: You know, you’re absolutely right that the Congress really, or the INDIA coalition generally, has really placed a lot of emphasis on the economic agenda. And that being the case, the INDIA coalition, of course, now they’re not in power. But when they do come to power, the INDIA coalition would have to make up its mind again on this whole neoliberal capital agenda.
I mean, let’s be very clear that within the Congress, there is a very clear division between those who are committed to the neoliberal capitalist agenda, and those who would like at least to provide some relief to the people. They may not be people who are ideologically anti-neoliberal or something, they may not operate at the level of ideology, but they are people who would like, let us say, some wealth taxation to be imposed. And they would like some transfers to the people. They would like some support to the peasantry. They would like some law on minimum support prices. They would like that, you know, some protection as far as the petty production artisan sector is concerned and so on. So they are people who would like to, if you like, withdraw a little from the aggressive neoliberal agenda.
So I think within the Congress, there is a left and a right division. And let’s be very frank, I think the Gandhis within the Congress, they distinctly belong to the left. I mean, whatever, left or center, I don’t mean left. But they are people who are somewhat more sensitive to the mood of the ordinary citizen. And they would like, in Indira Gandhi fashion, to reach out some kind of transfers and benefits and so on to the people.
Now, I think this is a division. As you know, when the left withdrew support from the UPA (the United Progressive Alliance, which governed India from 2004 to 2014), the then prime minister actually said that he was relieved. That, you know, that he had been kept in check because of the support of the left. But now he can actually go ahead and do things as he liked.
And what is more, much of the crucial legislation, the most important being the Mahatma Gandhi National Rural Employment Scheme, was introduced under UPA 1 through the pressure of the left. And that is something which really has played an extraordinary role in providing whatever little support and succor that the people get. And this was clear during the pandemic, because when thousands of people migrated back to their villages, they immediately enrolled themselves in the MGNREGS and got something by which to kind of, you know, get an income and live.
So the point is that, at the moment, fortunately, all these are under wraps. But of course, if the INDIA coalition, when it comes to power, not immediately, but over a period of time, would have to make up its mind where exactly it wishes to stand.
If it pursues neoliberal capitalism, in that case, it would simply be a precursor to Modi coming back, or precursor to some Modi-like figure coming back.
On the other hand, if it actually does a few things like imposing a wealth tax, having some kind of an agenda of providing relief to the people and so on, in that case, it would necessarily have to retreat somewhat from neoliberal regime, from the neoliberal policies. And in such a case, it would actually have a much longer duration.
Radhika Desai: So what would you say, I mean, realistically, a kind of a viable program that the Congress might pursue? You already mentioned that it should consist of some welfare measures, but what else might it have as a sort of, you know, not supremely ambitious, but a sort of minimum viable program that would take India forward in some way, particularly on the productive side of the economy? What can the Congress-led INDIA coalition do?
Prabhat Patnaik: You know, the main constraint, even on corporate investment now, is a shortage of demand. Therefore, it is extremely important to enlarge purchasing power in the economy in the hands of the people.
Now, the Modi government’s economic program, if anything, is to pursue neoliberal capitalism and whatever resources the government has to use those resources for infrastructure investment and infrastructure expenditures.
Now, infrastructure investment and expenditures have largely multiplied effects that leak out abroad, because a lot of these, you buy equipment from outside and so on, and therefore, its impact on the domestic level of demand is not very high. If the same amount of money could be spent, let us say, in handing over purchasing power to the people, in that case, it would create demands for commodities, and that demand for commodities would be not only for one or two crony capitalists, but would be for a large number of people who produce locally in the villages and so on in a dispersed manner. And that is, of course, much more employment generating.
So I would say that the multiplier effects of government expenditure that is in the form of welfare expenditures are likely to be much greater even in terms of employment generation than the kind of expenditures that Modi is doing at the moment, which is creating capital, which, if anything, is really state capital expenditures.
But in addition, if you enlarge government expenditures by raising wealth taxation and so on, wealth and inheritance taxation, in that case, you would be able to really bring about a substantial increase in employment.
I’ll give you one example. In every government department, there are huge numbers of jobs which are unfilled. You know, part of the reason you hear of these railway accidents taking place and so on is because people are just not employed to the extent that is required.
Likewise, I know that in terms of government teaching establishments, colleges and universities, innumerable vacancies exist.
Now, the point is, if these vacancies could be filled up, that would not only be a direct generation of employment, particularly education, educated employment, but particularly youth employment. But what is more, it will also have great multiplier effects.
So these are things that the government should actually be thinking in terms of doing. But I don’t think Modi is capable of doing it. But if INDIA comes to power, it should be doing it.
Radhika Desai: I always like to say that Modi has had throughout his 10 years what I call a one-point economic program, which is to essentially do whatever the corporate capitalist classes want.
And you emphasize that Modi has put a lot of emphasis in terms of government expenditure on infrastructure spending. And infrastructure spending is nothing but a big bonanza for big capitalists, because they, first of all, they get these big lucrative contracts, they can be cost overruns for which there is no accountability. As you say, they’re allowed to import whatever they want.
And of course, the effect of all this activity may be to create fantastic infrastructure for rich people, you know, with flyovers and bridges and roads and what have you. And very little really that comes out for ordinary people. So that’s absolutely right.
But so you, and I also agree with you that, of course, given that the demand constraint is there, you know, relieving that, putting more money in the pockets of ordinary people will have a very stimulative effect on the Indian economy.
But do you not feel that there are any other elements, for example, some measure of planning, some measure of, for example, Modi had his so-called Make in India program, which was supposed to make manufacturing 25% of the economy. In fact, manufacturing shrank as a proportion of GDP under Modi. So don’t you think some kind of a project of manufacturing and, of course, also agricultural revival will be necessary?
Prabhat Patnaik: All of that I agree. I mean, of course, that is over a medium term, that’s over a longer term. In India at the moment, it’s not as if we have a shortage of food grains, food prices are rising, not because of a shortage of food grains. It’s true that you know, I mean, at this very moment, there may be a shortage of wheat and so on. But that’s because the harvest has not come in. And it’s true that suppose you have a poor harvest, then you may meet it.
But it’s not as if in India there is, as it were in secular sense, we are a food grain constraint economy. Now, we are not a food grain constraint economy, not because of the fact that people are eating well, but precisely because of the fact that the limitations of the purchasing power.
So if you like, the proximate constraint on the people, I mean, on the economy is really from the demand side. Of course, the moment demand-side constraints are looked after, then they’re going to hit against supply bottlenecks, the inflation will rise. And that’s when you actually have to prepare for overcoming the supply bottlenecks. And that’s when you’d also have to have a larger amount of food grains output and so on.
The government itself has to resume its role of carrying out research and development, which it was doing in agriculture earlier. Now, virtually, the only agencies which are entrusted with this are the international agribusiness.
Now, the substitution of the state, of the Indian state by international agribusiness is something which is absurd because of the fact that it also, quite apart from anything else, hurts the farmers, because they have to pay much more.
So the point is, you’re absolutely right that all these have to be done. They have to be done sequentially. So what I was really talking about is what is the immediate thing that you can do?
Radhika Desai: Yeah, very important. And I think you put it really well. The whole issue of sequencing is, I think, very well put there.
I want to shift slightly again the focus. You know, one of the things that happened during the election campaign is that Rahul Gandhi particularly, but other leaders as well, took to waving copies of the constitution around, saying the constitution is in danger and so on.
So would you comment on that? I mean, what has happened in the 10 years of Modi? What can we expect in the future, you know, to the constitution?
And particularly the issue of federalism is very important, not only because, you know, India is such a big and diverse country and so on, but I would say it’s also because the opposition to Modi, you know, of course, there is the Congress, there are left parties, but the third big component of the opposition to Modi has come from the regional parties, what are called the regional parties, but they’re really parties that were originally devised to take control of state power, exercise power in various states. So if you can comment on all those aspects a little bit, please.
Prabhat Patnaik: Yes, I think there are certainly, I mean, there are at least two major areas in which the constitution is being violated.
One, as you say, quite rightly, is, of course, in the center-state relation, the whole question of federalism, where the violation to start with, took a bizarre form when a goods and services tax was introduced in lieu of the sales tax.
Now, the sales tax is something which was written into the constitution. Most state governments obtain at least 80% of their revenue from sales tax. It was the tax in the hands of the state government and they had freedom about where to tax, how much to tax, what kind of rates to impose and so on.
Now, the point is that the substitution of sales tax by a GST, basically, and a GST in which no individual state has the freedom to levy a tax that it likes, because the GST has to be agreed to by the GST council, the whole idea is to have a uniform tax across the country.
Now, that’s absurd. You look at the United States, from one shop to another, the price of a commodity differs. So, it’s a bogus idea that the national market would be better served if you had only one kind of common tax rate and so on. But again, it’s a demand of neoliberalism. The World Bank and so on insist upon it.
So, the point is that that, however, really crippled the state finances. And today, state after state is suffering from it, because of the fact that they just do not have the freedom to levy whatever taxes that they were doing before.
Now, of course, it is true that in India, structurally, the states never have had enough resources to look after their expenditure needs. But what is more, even the resources they had are now being denied to them. And what is more, they also do not have the freedom to raise resources. That is completely out.
The other area, in fact, I have been thinking, I mean, I don’t know, I’d like to talk to some lawyers and so on, whether individual states should not even consider opting out of this GST arrangement. You know, I think that is something which at least can be thought about, can be considered.
Radhika Desai: Well, and I think just on that point, I think that is a very important point to pursue because, of course, one of the things we will see in the coming years is that now that the INDIA Alliance has done as well as it has, we will see perhaps more state governments being elected, which will not be BJP governments, which will be of one or the other type of INDIA Alliance government, and they may very well want to pursue this option.
Prabhat Patnaik: Absolutely. You know, even when the GST was introduced, there was one suggestion made by many people that have an agreed base GST and leave it to the states to top it up by having different rates of taxes, you know. So you could move to such an arrangement, some such arrangement you’d have to move to in order to, I mean, quite apart from the Finance Commission and so on, you know, the division of resources within central states. Quite some such arrangement would have to be resorted to in order to give states some kind of leeway so that they can, if some states want to raise more taxes to kind of finance health care, fine, it should be allowed to do that.
Now, the other area where the constitution has been totally trampled upon is, in fact, in the realm of personal individual freedom, political freedom, and so on, journalistic freedom, etc.
Now, the amendment which Modi brought in to, I mean, to start with the Unlawful Activities Prevention Act was a terrible act to start with. The left had opposed it when it was introduced. But on the other hand, Modi’s amendment to it, which came during his tenure, where any individual, whether or not that individual is linked to any terrorist organization, can be declared a terrorist, is just shocking.
Because under the UAPA, you are really speaking not even allowed to get bail. So, literally, the government can pick up anybody, call him a terrorist, put him in jail without trial. Even charges don’t have to be kind of brought to the accused. Even if some charges are brought because there’s some time limit, in that case, those charges can be subsequently added to and so on and so forth. So, final charges are not even brought to the accused. And what is more, the accused is not even tried.
There are people who have been jailed for years and years without trial. And I think that is just shocking. That is just shocking. And that’s a complete violation of the constitutional rights of the individual. And I think something has to be done about that. Today, I find in the papers that someone has suggested that they free all political prisoners. Anyway, but I think such demands have to be raised.
Radhika Desai: Well, you know, the BJP is trying to make a great deal of the fact that this is, I mean, they have somehow brought the 50th anniversary of the emergency forward by a year and they’ve been talking about it. And I think the opposition has quite rightly said that, you know, you may use the ‘75 to ‘77 emergency as a stick with which to beat Congress, but you have had an undeclared emergency for the last 10 years. And I think they are absolutely right, because it’s like this. I mean, how would you compare the two, do you think?
Prabhat Patnaik: In fact, at the moment, what Modi has added is much worse than the emergency, because on the one hand, in terms of attack on personal freedoms and so on, it is like the emergency. But the emergency was not something which meant a class attack on workers and peasants. It is not something which actually violated secular foundation of the Indian constitution and so on. So this is much more a kind of fascistic attack on the constitution rather than simply an authoritarian attack. I mean, I’d like to distinguish between the two.
Radhika Desai: Yeah, I mean, that’s that’s quite interesting. And in fact, that was another question I really wanted to ask you. I mean, both you and I have used the term fascism to describe Modi’s government. So, you know, can you elaborate a little bit more on that? I mean, in what way do you consider this government a fascist government?
And also, how do you see this evolving? Because I know you’ve written somewhere that in the classical instances of fascism in the interwar period in Europe, of course, fascism ended in war. And so, well, will Modi lead us to a war? If not, how would you expect fascism to unfold from here on?
Prabhat Patnaik: You know, that is why, I mean, I don’t see Modi leading us to a war or anything. I’d like to draw a distinction between the interwar period fascism, which I’ve called classical fascism, and the current fascism, which is neofascism, because the current fascism is not confined to India. There are large numbers of countries all over the world, Argentina being the latest addition to it, where you actually have neofascist governments. I’ll come to exactly where the distinction between the two is in a moment.
But the point is that, you know, that in terms of all the features that classical fascism had, you actually find it in neofascism.
Firstly, very close relationship between a few monopoly groups on the one hand and between monopoly capital and the fascist elements in what (Michał) Kalecki had called classical fascism a partnership between big business and the fascist upstarts. Now, that’s exactly what you have here.
Corporate Hindutva alliance, within the corporate sector, within monopoly capital, a particularly small group of favored monopoly capitalists. You know, in Japan, you had the Shinko Zaibatsu, not just Zaibatsu. Similarly, as you know, Daniel Jarre has written about fascism and big business in his book. He talks about behind Hitler being a whole range of new monopoly houses, not the old ones with, I mean, the old ones supported him, but not the old ones in textiles and so on, but the new ones in producer goods, armaments and so on. So there is always a new group of fascism, a new group of monopoly houses that actually support the fascist particularly strongly.
Generally, the location of the other, which is, of course, a minority group, linguistic or religious and so on, against which a hatred is generated that we know is common to both. You, of course, have a suppression by an authoritarian state, but the suppression of the authoritarian state is supplemented by vigilantism by street thugs that you find in India. I mean, the ABVP is going around terrorizing everybody, terrorizing in university, terrorizing students and so on. So an acute personality cult, I mean, really an obnoxious personality cult.
So all these are really common between classical fascism and neo-fascism. What is different is the fact that the same reason for which liberal bourgeois governments cannot overcome the current neoliberal crisis, the same constraints also apply to fascist governments. That’s because of the fact that to overcome the crisis, if you need to have larger government expenditure, which is what Keynes had suggested, which is what the New Deal had introduced, though pretty soon it was withdrawn, then this additional government expenditure has to be taxed either by taxing the capitalists or it has not to be taxed at all. It is simply to be financed by a fiscal deficit.
But if you spend a hundred dollars and you raise the hundred dollars by taxing working people, then there’s hardly any net addition to demand because they use the bulk of the hundred dollars for their own consumption anyway. So you may have a reduction in their consumption and rise in government expenditure, but no net increase in demand.
But both these ways of financing government expenditures, namely either through a fiscal deficit or taxing the rich, are ways that finance capital does not like. And at the moment, since finance capital is international, globalized, while the state remains a nation-state, which was not the case in the 1930s, you have the incapacity of the nation-state to go against the wishes of finance capital.
You remember, even when Biden talked about a corporate minimum, a minimum corporate tax, they couldn’t agree. I mean, he wanted 25 percent, but ultimately they settled on 15 percent, which is lower than the prevailing corporate tax rates in most countries. So the idea of, you know, taxing the corporates or the rich generally, or fiscal deficit, most countries now have fiscal responsibility legislation, this idea is out. Therefore, the government can do very little, even the fascist government can do, neo-fascist government can do very little in terms of overcoming the crisis.
Now, that’s a big difference between classical fascism and now. Classical fascism overcame the Great Depression through military expenditure, and of course, military expenditure led on to the war. But now you have the continuation of the crisis. But of course, that would not lead us to war. On the contrary, that would basically mean that in this continuation of crisis, as I said, unless the anti-fascist element, the India bloc, for instance, actually pursues some economic agenda that withdraws somewhat from neoliberalism, Modi will make a comeback, or a Modi-like figure will make a comeback.
Radhika Desai: I mean, in a certain sense, Prabhat, what you’re saying is that unless, at least, I mean, supposing the India bloc were to defeat Modi in the next election, unless the India bloc at least begins to set India on a path that goes away from capitalism, we may have this sort of scenario once again. And I presume that that means ultimately that you have to be very clear that the big corporate capitalist class do not get to determine the agenda of the state. Rather, the state requires, the state regulates, and in a certain sense, regulates taxes and in various other ways, determines, assigns a role to big capital if it is allowed to continue to exist, which I think it probably would be for at least some time. So that’s really fascinating.
And maybe we should probably also wind down our conversation as we are coming close to an hour. But maybe my last question to you would be, you know, you mentioned that, you know, today, today, capital is global and so on. Speaking of sort of foreign capital and so on, can you say a little bit about the role of foreign capital in India under Modi, and then also about Modi’s foreign policy in relation to this, particularly given that, you know, we know that Western countries, in particular, the United States, have been very eager that India should play a role as a sort of Western allied counterweight to China, etc. And, and of course, we also know that Modi would dearly love to fulfill this, this wish of the West. So yeah, I mean, what have we seen in terms of foreign policy and foreign capital under Modi? And what do you expect going forward?
Prabhat Patnaik: No, I think Modi has certainly taken India closer to the West than it had ever been in the past. But I don’t think Modi has been able to shake off completely India’s links with the old non-aligned movement and so on.
On every issue, for instance, you look at, you look at Palestine, you know, India talks about, not only talks about two state solution, but India actually voted for Palestine becoming a member of the United Nations, which was vetoed by the US. Mind you, so did France vote for it. But on the other hand, the other Western, major Western countries abstained, but India actually voted for it.
Similarly, on Ukraine, I think the kind of close relations that India has traditionally had with earlier the Soviet Union, and now Russia, has meant that it has not been a part of the Western bloc or the Western alliance. So in that sense, Modi is playing a certain role.
But on the other hand, this also implies that India’s stock in the non-aligned movement has gone down greatly, that India is no longer as respected as a leader of the G77 and so on, as it earlier was. So it’s falling peculiarly between two stools. I mean, on the one hand, the G77 is something which is no longer looking at India with the same kind of respect as before. On the other hand, the G7 doesn’t really think of India very much as a part of their bloc, so that, you know, India is falling between the stools.
I think Modi left to himself would probably like to join the Western alliance. But obviously, I think the objective situations, compulsions, the economic compulsions and historical compulsions, including, of course, the defense arrangements we have had with the Soviet Union earlier and Russia now, all compel him to take a certain position, quite apart from the fact that India is benefiting greatly from the sanctions against Russia, because we import Russian kind of oil and gas and we export it to Europe. So in that sense, and India is doing very well, in fact, some of the favored monopoly houses have been really profiting greatly from this.
Radhika Desai: Yeah, no.
Prabhat Patnaik: So I do not see an immediate change as far as that is concerned.
Radhika Desai: Yeah, I mean, there’s been a lot more continuity, I suppose, in foreign policy, as you say, because of the constraints and also precisely the constraints that in a sense have been further intensified by Modi, given his the way in which he has essentially crashed the economy, really, if you think about it. So yeah. So Prabhat, that was really a fantastic conversation. Thank you so much. I think I’m sure that everybody will really appreciate the deep understanding that you’ve brought into this conversation. And we hope that you’ll come back and discuss some other issues with us as well sometime in the future. Thanks very much.
Prabhat Patnaik: Certainly, Radhika. It’s a pleasure talking to you. Thank you very much. Thanks. Goodbye. Yeah.
Radhika Desai: Bye-bye.
(Geopolitical Economy) by Radhika Desai
