By Krishna Jha
The Reserve Bank of India came out in the open when it pointed at the fractured status of economy. Shaktikanta Das, the governor, announced that demand has collapsed, growth in 2020-21 is sliding down to a negative territory. He also added that GDP could contract further. In the face of the soaring disaster, the ‘celebrated package’ of twenty lakh crore contains a fiscal stimulus of Rs 1,86,650 crore amounting to barely 0.91 per cent of GDP.
The amount mentioned in the package is claimed to be that of 10 percent of India’s GDP and will lay emphasis on land, labour, liquidity and law, PM Modi had said in his fourth TV address to the nation since the start of the lockdown nearly two months ago. The boisterous confidence rang hollow amidst pangs of hunger, pervasive absence of resources, pandemic, lockdown and finally lakhs of labour, women and children along, walking away from any economic activity that would be resumed at the end.
As early as in 2015 itself, claims were made on land, first of the four. The land was meant for those who would put it into use to serve the interest of corporates alone, and to meet this need, there were amendments in the existing Land Acquisition Act. In 2015, a Land Bill was passed with clauses like Government is to acquire land for government bodies, corporations. It also replaced the term ‘private entity’ with ‘private enterprise’. Obviously the purpose of the initiative was blatantly clear. It was to acquire the agrarian land for commercial purposes and that too exclusively for the NRIs. In its six year rule, there has not been a single measure taken to provide succour to the farmers, who toiled on the agrarian land.
Then comes labour and the labour laws. The Constitution itself ensures the basic rights of the entire masses in the country, and any attempt to distort them is obviously aimed at serving the vested interests of the corporate rule.
The labour issue is in the concurrent list, but states have already started acting in violation of basic rights. They have tried to stretch the working hours from eight to twelve, take away the right to get organised and then reduce the salary too. These rights were fruits of prolonged struggles, unleashed by the toiling masses all over the world. Within the country too working class raised its voice against the injustice, and came out with flying colours, creating history. Now, each one is taken away from all of us.
In this grimness, one fact stands out clearly and that is the amendments are not meant to have industrial growth, they are aimed at creating an atmosphere of discontent. The workers are at their peril, industrialists, the micro, small, medium enterprises (MSME) are pushed to the wall. Production rate is feeble, all round deprivation has taken away purchasing power.
So far cash flow is concerned, the liquidity is all almost in the hands of Finance capital. Industrial capital, or in other words, MSME, with few monopolies ruling the roost, stand Capital starved. With slide in demand and deepening recession, the basic structure of production faces damage. According to a survey conducted by RBI in December, 2019, 44 percent of MSME engaged in basic production, that was manufacturing metal and metal products, engineering, construction, and infrastructure building activities, suffered massive non-payment. The trouble had been deep and massive and to resolve it, RBI announced restructuring scheme without an asset classification downgrade, earlier allowed in 2019 for GST affiliated MSMEs, and extended to all standard accounts, but in default, and restructuring to be implemented by December 31, 2020. Six lakh accounts were restructured by March, with Rs 22,650 crore and MSME ministry expects 25 lakh MSME loan accounts to be restructured, that is 300 percent more by March.
About liquidity as one of the focus points, the RBI had initiated ‘targeted’ long term repo operations (TLTROs), allowing banks to access liquidity at the repo rate to lend to a number of exclusive clients. The operation in one of its rounds, considered to be as more successful, called for investment of the cheaper capital in higher quality investment grade corporate bonds, commercial paper, and non-convertible debentures. The funding was made available to big business houses like Reliance and L&T, and also financial units like HDFC. They could access cheap capital instead of the earlier high-cost debt or finance ongoing projects. Thus goes barren any attempt to boost investment. The liquid assets help provide cash in times of crisis, such as now, but transferring directly to low paid or not paid workers, or support the micro and small businesses, and also to medium and big businesses, would not yield the same results as those in the earlier initiative of the RBI. Thus the connotation of the real purpose of liquid assets in a democracy stands bereft of its real significance.
Thus the last L, standing for Law, goes out of hands. And that happened in the beginning itself. (IPA Service)