A Mass Movement Against Democracy: The Threat of the Sangh Parivar by Shankar Gopalakrishnan

Author:Shankar Gopalakrishnan [Gopalakrishnan, Shankar]
Language: eng
Format: epub
ISBN: 9788189833909
Publisher: Aakar Books
Published: 2009-11-30T18:30:00+00:00

The Response of Capital

At the same time, the large capitalists in India were also changing their positions and politics. Until the 1970's, India's big bourgeoisie had built monopolistic large corporations through a close cooperation with the state bureaucracy, relying on state regulation to provide them with guaranteed markets for their products. But by the 1970's these companies also began to chafe at the state system, with the continued small size of their markets becoming an obstacle to their growth. State regulation also blocked them from easily absorbing smaller capitals and small commodity producers. The post-1980 Congress regime gradually began to change regulations in order to address these “problems”. In 1985, for instance, the government promulgated a “New Economic Policy”, with tax cuts, lower import duties, export tax breaks and relaxed licensing requirements.

Thus, at the same time as it came under intense pressure to grant increased subsidies and investment in favour of people mobilised in the various 1980's movements, the state also began to withdraw from regulation and taxation of big capital. The combined result was a sharp rise in state investment together with a 'boom' of consumer consumption (driven by the new availability of goods for the rich) and economic growth. Rural employment grew, agricultural real wages rose, and income poverty decreased at a more rapid rate than either before or since; it was an unusual period of “prosperity.”

Yet this prosperity was built on a contradiction, for the interests of capital and the interests of the mass mobilisations were fundamentally opposed (though few of the 1980's movements were explicitly anti-capitalist). The demand for greater state support and assistance required state involvement and regulation, as well as allocation of economic resources through political decisions based on favouring “communities.” But this was precisely what Indian capitalists, along with the now rapidly rising foreign capitalist presence, were opposed to. Capital was demanding freedom from all political constraints on their investment, withdrawal of the state from procurement and distribution, and the conversion of India into a unified market. State control over investment and state support for petty producers was exactly the opposite of what they wanted.

Throughout the 1980's the Indian state attempted to square this circle, with the result that the state descended deeper and deeper into debt as it both reduced corporate taxes and increased public investment. In 1991, NRI's and foreign financial institutions – the two main sources of finance for covering the increasing negative balance of state funds – pulled the plug by suddenly and rapidly withdrawing their funds. The resulting financial crash became the excuse used by Manmohan Singh and the then Congress government to begin the process of liberalisation, with the consequences that we know today.

Even as the pressure from foreign and domestic capital intensified in the run to 1991, Indian capital also needed a political project that could effectively oppose and contain the “divisive” and collective politics promoted by the 1980's movements. It found that project in Hindutva, which, as we saw in Chapter 1, was ideologically and

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