In the space of a few days, there have been two developments concerning the pandemic and the economy which are alarming. India became the country with the second largest number of Covid-19 cases in the world, overtaking Brazil. Preceding this came the news that in the first quarter (April-June) GDP had contracted by 24 per cent. This is the worst fall among 25 major economies of the world.
The pandemic is surging and it has spread to small towns and villages. India has outstripped all countries in the daily increase in number of infections. It is also recording the highest daily cases of death. At this rate, according to the health experts, India would top the chart and overtake the United States by the second week of October.
But both these disasters do not seem to have alarmed the Prime Minister and the government. The Modi government seems to have decided that the only way out is to let the pandemic run its course. The brazening out of this health care crisis involves claims that the lockdown saved many lives and the mortality rate in India is among the lowest in the world. The other track is to claim that the government could speedily gear-up to meet the challenge. Modi in a recent speech claimed that India has become the second largest manufacturer of PPEs in the world.
Throughout the last six months, there has been no substantial increase in government expenditure on public health, except for the provision of Rs. 15,000 crore for the health sector announced in the fiscal package. Even here, only a small portion was allocated to the states who are dealing with the health crisis. Actually, the Central government is starving the states of funds and thereby hampering the efforts of the state governments to upgrade and expand the public health system.
The consequences in terms of human costs are appalling. Many are going to die because of the lack of adequate medical facilities. Tens of thousands of middle class households are going to be in debt due to the rapacious cost of treatment in private hospitals and nursing homes. The health crisis is going to affect economic activities and retard the chances of revival of growth.
The severe contraction of the economy is primarily due to the total lockdown imposed for two months in April and May. The impact of the crisis could have been muted if timely steps had been taken to increase public expenditure; transfer cash to the poor; distribute the huge stock of foodgrains free to all needy families; and provide financial support to the MSMEs. But the government refused to do all these. In the fiscal stimulus package, additional public expenditure amounted to only 1 per cent of GDP.
The Chief Economic Advisor to the government, Krishnamurthy Subramanian, has argued that the GDP decline is purely due to the Covid-19 and claimed that the economy is recovering strongly in the unlock phase. He expects a V-shape recovery. The 24 per cent negative growth of GDP means that there is a massive fall in employment, incomes and consumption. According to CMIE, 21 million (2.1 crore) salaried jobs were lost from April to August. Many more millions engaged in the informal sector have lost their livelihoods. As economic activities revive, the restoration of all these jobs is not going to take place. The economy had already slowed down considerably in the pre-Covid period. It will be difficult to even get back to the pre-Covid level. To talk of `green shoots' in the economy and a V-shape recovery is only obfuscation by the government of the hard realities.
There are no signs that the government is considering a big step-up in public expenditure and public investment which alone will increase demand, boost consumption and create the grounds for increased private investment and revival of production. But the course adopted by the Modi government is different: woo FDI, free license to corporates to exploit mineral resources, large-scale privatization of PSUs, promote privatization in all spheres, and discipline workers by scrapping labour laws. This is the neo-liberal path which facilitates the intensification of the exploitation of the people and the country's resources by Indian big business and foreign capital.
It is this anti-people approach which finds reflection in the third crisis facing the country – the crisis of democracy. In the six and a half months since the lockdown began on March 24, there has been a calculated assault on democracy and a whole range of democratic rights – use of UAPA and sedition clauses against anti-CAA protestors, intellectuals and activists falsely implicated in the Bhima-Koregaon case; the use of the Epidemic Act and the Disaster Management Act to suppress all democratic activities; the pushing through of the domicile law in Jammu & Kashmir; and finally the truncation of Parliament.
The functioning of the Parliamentary Standing Committees was curbed and online meetings were not allowed. For the forthcoming session, question hour has been scrapped depriving members of their elementary right to ask questions to the government. States' rights are being trampled upon. The list is endless.
At a time when the government is pleading that it has no money for payment of GST compensation due to the states, the Home Ministry has asked the Finance Commission to set-up a National Internal Security Fund (NISF) with a corpus of Rs. 50,000 crore. This is to meet capital expenditure, a good part of which will be for real-time surveillance and intelligence gathering technology. The significance is that funding of internal security has been added to the terms of reference of the Finance Commission. The Home Minister has justified a separate fund being set-up saying it is a shared responsibility of Centre and states. So, probably some of the resources accruing to the states will be diverted for internal security purposes and the surveillance State.
With, by and large, a pliant judiciary going along with the executive's assault on democratic rights and civil liberties, the architecture of authoritarianism has been reinforced during the pandemic. People's health and economic well-being are the victims. This is the real face of the Modi regime in Covid times.
Prakash Karat is Member, Polit Bureau of CPI (M).