The Significance of the US Recession for India

N. Bhattacharyya

14th March 2007 is remembered as a day of national shame in the history of the peasant movement in independent India. One that day the poor peasants and landless labourers of Nandigram in the East Midnapore district of West Bengal (India), the supporters of the communist movement from the days when Bengal had not been divided, refused to hand over their fertile cultivable land to the Saleem Group of Indonesia (associated intimately with the murderous Suharto military regime) for construction of a chemical hub. To teach them a lesson armed CPI(M) ruling party cadres wearing police uniforms but in civilian sandals and the state armed police force in a cold-blooded and well-planned joint operation killed at least 14 people, raped and wounded thousands of hapless villagers on this historic day. One feels sorrow for such a shameful and barbaric incident in an independent country and that too in a state ruled by a party which claims to be communist.

Comrade Jyoti Basu, the former chief minister and Comrade Buddhadev Bhattacharyya, the present one are convinced that in India there is no space left for communism and they support wholeheartedly the ‘capitalist development processes’. Their so-called Communist Party steadfastly follows the path of ‘capitalist development’ even if it demands the destruction of millions of poor peasants and landless workers. A government formed under ‘oath’ to the Indian Constitution refuses to listen to any protest from the affected people and under the banner of ‘law and order’ tries to teach lessons by killing innocent protesters. For them like the other mainstream political parties the ‘capitalist path’ is the only path of GDP growth and there is no other alternative in the 21st Century! They are ostriches hiding their head under the sand, as if no one can see the reality. They refuse to recognise the millions of people who refuse to subscribe to this opinion on the future of imperialism. Have we not seen these protesters in their lakhs only recently at Singur, Nandigram and Dinahata and in other parts of West Bengal, Kalinganagar and Jagatsinghpur in Orissa and in many other places of the country wherever the so-called elected governments wanted to forcefully take away the land and property of the poorest of the poor. The reactionary political and bureaucratic establishment of the country term these people as either opposition opportunists or Maoist terrorists. They refuse to understand that in a democratic set up every Indian has a fundamental right to protest, criticise and do whatever is possible under the sun to protect one’s property from robbers and plunderers. State terrorism has no sanction in the Indian Constitution and the judiciary of the country has to safeguard the individual’s fundamental rights. The impatience of the Indian ruling class shows all the symptoms of an attempt to turn India into a fascist banana republic. The anti-people policies of the government must be arrested immediately. The public fund is there to run the government machinery according to the laws of the land but it can never be used to mercilessly suppress protestors against capitalism and imperialism. There is hardly any space left for public debate and argument in the present political atmosphere of the country. Protesters are detained, tortured and many of them are untraceable after police arrest and no government is held accountable. Various draconian laws are there in the statute book which have been passed by the authorities only to safeguard the interests of the rich and mighty who are ceaselessly working since the British Raj to loot and rob. Independent India proposes that elected governments will function in a democratic, socialistic and judicious manner, but since 1947 they have worked against the interests of the millions of destitute people of the subcontinent.


The Sarbahars (the people with nothing to depend upon, the destitutes) of the world are convinced that in the beginning of the 21st Century international finance capital, and the global profit-sucking institutions have all proved hollow and bankrupt. Though it is late the strategists of international corporatisation have realised that the days of anti-people policies are over.

As a last resort the leaders of the erstwhile developed world who regularly organise meetings of G-7, World Economic Forum etc. and publish list of world’s billionaires every year in their home journal, Fortune, are desperately stretching out their hands with begging bowls seeking help to survive specially from the poor of Asia, Africa and Latin America. They want the poor countries to purchase more and more goods and services from the rich countries; the value of dollar is reduced every day to make it attractive to the poor consumers of the world. It is a sad dream to think that that the billions of poor of these countries suffering from the oil and commodity price hikes will be able to save themselves from the collapse of the world’s artificial economy. During the last 300 years the then advanced economies had a simple formula to develop their own economies and that was by invasion, occupation by force and the wanton exploitation of natural resources endowed countries of the world. That chapter of history is over and now these rich countries have to beg for ‘help’ from the world’s poor so that they can survive. After the Iraq war the USA economy is shattered. India since independence is helping the rich nations by importing everything from the west starting from wheat in sixties while today the USA wants us to purchase junk nuclear reactors under the 123 agreement. Our so-called development budget is spent to import second or third hand technologies from the west. What happened to the 1970s junk ship imported by India for its defence needs and questioned by CAG? Lateral and multilateral aid and loan agreements do not mean that the US dollar or other foreign currencies are given as loans, against which one can purchase items at the cheapest price from the international market, but all loans or aid are tied and India has to purchase from specific countries at the dictated price. This is called fair trade and the promotion of the industries of the developed world! Many developing countries like the OPEC group, China and even India with less than $2 per day per capita income were investing their sovereign fund with the US treasury. The US economy is dependent on help from the poor people of the world not now but since we started development in the fifties!

History’s worst international capitalist plunderer, the US, amassed 70 per cent of the world’s gold during the second world war selling war machines to both the warring groups in Europe and Asia. Now it is left with around 20 per cent of that metal and finds itself entangled tightly in its own created ‘capitalist free trade market theory’ net spread around the length and breadth of the world. In a planned manner it destroyed the socialist governments in Russia and in China but miserably failed in Cuba. Imperialism’s catchy slogan that ‘market and market alone will decide what is correct or wrong for the economic destiny of the nations without any state regulation and intervention’ sounds hollow, disastrous and hypocritical. Human experience does not support such an approach. The USA’s current account balance was not only negative for a long time, it ballooned to a unreasonably high level, the cost of production sky rocketed and to save rising labour costs factories were shifted outside the USA’s borders, the country became dependent perennially on imports from foreign countries. In the meantime to meet the hunger of the USA’s MNCs, Afghanistan and then Iraq were attacked at the beginning of this century, and to-day the USA is in utter crisis. When the Iraq war started in March 2003 it was proposed to spend around 6 million US dollars, now it is thought that the cost may accrue to around 6 billion US dollars while independent economists calculate that the Iraq war expenditure will reach around 6 trillion US dollars. Neither the Republicans nor the Democrats can do anything in this suicidal game. The per capita GDP growth is declining, unemployment is rising, the dollar is no longer treated as international currency, every second day the Federal Reserve, the central bank of the US, is doling out billions of dollars to financial institutions and individual corporate houses against all norms of banking to save the sinking ship of imperialism. In this economic drama the US resembles a socialist economy trying desperately to bail out nationalised units! ‘Socialism’ a dirty word in the imperialist book is practiced by the US at the beginning of the 21st Century to save itself from sinking into a depthless recession!

Recession and depression are normal in the capitalist world. Japan is in recession ever since when everyone has forgotten. Today the US, a proud capitalist leader, has gone into a severe recession which may be worse than the ‘Great Depression’ of the 1930s, and when that reaches the shores of the European Union is any one’s guess! With the declining value of the US dollar, the international price of oil and gold which was expressed till now in US dollars is surging high. The OPEC countries and countries like China and other current account surplus exporting countries who conventionally used to park their sovereign funds in ‘safe destinations’ in the US investment banks, are finding it difficult to believe in the last year that their entire investments in the US’s financial institutions are just so many scraps of papers. One of the richest investment banks in the USA, Bear Stearns, became bankrupt within a short time and another bank, J P Morgan bought Bear’s share for just $2 per share, about 90 per cent less than its value last week (ending 15.3.08), and the deal was funded by Federal Reserve forgetting that US under capitalist doctrine it should allow market forces to determine who will survive and who will die. Keeping the US dollar as foreign exchange reserve in the treasury of any Central Bank of the world is no longer safe and sound economic policy and that is why institutions are busy in converting US dollars into gold and its price is soaring everyday in the international market. There is panic among the imperialist mafia! Triple A rating, investment banking, insurance, industrialisation, free trade, globalisation, the human face, inclusive growth have all proved useless and obsolete gimmicks coined by international robbers, manipulators and mafias. The concept of globalisation and world trade which was pushed by the World Bank, IMF and WTO is no longer uttered.

Is it the opportune time to ask the communist revolutionaries of the world to get reunited and frame policies to put an end permanently to imperialism? Those who have faith in the values of communism have to sit down and frame new policies to give to the majority population of the world firm assurances of a dignified human life in this world. They have to guarantee every individual not only safe drinking water and two square meals a day but a better and dignified human life in this planet. In the bigger court of world public opinion imperialists should be prosecuted and punished for their anti-mankind activities for such a long a period. The US has followed its notorious policy of destroying one country after another and at the same time shamelessly claiming that its capitalist dogma is for the benefit of billions of the poor living both in the north and southern hemisphere. Yesterday they destroyed Vietnam, today they are in Iraq and tomorrow they may be in another country viz. North Korea, Iran or Venezuela.


Let us see where we stand at this moment in India with more than 900 million people without any assurance of gainful employment and security for food for to-morrow! I presume the other 100 million people of India have seen some form of bubbles of ‘growth’ and they constitute hardly 10 per cent of the total population. As per the programme prepared in USA in the mid-sixties, the Indian ruling clique depended on the ‘green revolution package’ to produce more and more crops at higher and higher input costs and lower output prices. After exactly four decades most of the land under cultivation has lost its productivity and in many cases the soil is saline and unfit for cultivation. The underground water is being used recklessly, it is uneconomical in many areas of the country. Farmers in their thousands throughout this vast country are forced to commit suicide because the business of agricultural production and sale of produce is simply a loss-making venture. Despite the so-called industrialisation and the growth in the service sector (51 % of GDP), about two-thirds of our total workforce are still in the rural areas and there is no alternative job opportunity in the villages other than in unproductive agriculture and that too for hardly 100 to 150 days out of 365 days in a year.

Government after government in the last 60 years spent billions of rupees to develop major, medium and minor irrigation projects, but in real life the cultivators get canal water only when there is flood due to excessive rain in the catchments of the rivers. In many states irrigation dams due to non-maintenance are in a dilapidated condition, their holding capacity is virtually nil due to the accumulation of silt and the canals also are silting. The dams only cause a flood when water is discharged from them not for cultivation but to save an unsafe dam structure! Politicians, babus and contractors have made a rich harvest from the public fund and then disappeared. The concept of accountability demands that the criminals who defrauded the country after independence should be brought to book and their properties auctioned and distributed among those whom they cheated. A democratic and civilised government should behave as such and should end protection to the robbers and fraud masters. If governments have to punish terrorists, these are the people who hold honourable positions in public life but work against public interests.

To take full advantage of the economic miseries of the millions of our cultivators, a new vulture (though natural vultures are no longer seen in the blue sky due to the excessive use of pesticides) under the brand name of Monsanto, Cargill and so on who are seen roaming in the lanes and by-lanes of villages as the age-old kabuliwalas (village moneylenders). They are selling genetically modified (GM) seeds along with kits of fertilisers and pesticide. This kit is very dangerous and scientifically not yet cleared. It may cause cancer after consumption of crops. The rich countries refuse to use them. Moreover, the complete kit of seed, fertiliser and pesticide is very costly and every year our farmers have to purchase fresh kits from them and cannot save seeds from past crops as was the normal practice. In some places the farmers used last year’s seeds taken from harvested crops, grew crops and these villains of the west had the courage to burn the entire standing crop without any punishment being given by the government. What type of terrorism is this by the MNCs in Indian villages? Why are our law enforcing authorities silent on such acts of terrorism? When President Bush visited India he had with him the representatives of these MNCs and they are treated here as our special guests.

With all fanfare the Centre claims in the current election budget that they will write off the farmers’ loans taken from banks. But the rich farmers, who are the only ones to have access to banks, took loans to pay back these foreign vultures for their recommended agricultural practices. Why should India subsidise the agricultural business of the MNCs in this country and under what international agreement? The farmers should get back their money from the dealers who sold the spurious kits as a consequence which production failed. The banks should secure guarantees signed by the suppliers of these kits. The small and marginal farmers and especially the bargadars (non-owner cultivators) have no access to banks because the local moneylenders have all the papers with them for the past unpaid loans. They are the friends and relations of the politicians and bureaucrats who are working as agents of the MNCs which are selling the kits. Will these moneylenders allow the peasants to survive in the villages? The governments pay subsidies to the fertiliser companies for their uneconomic production technology. By abolishing the extension service system we have left the field wide open for these vultures from the developed world. Farmers will not be able to increase productivity from existing fields without assured inputs like power and water? Our agricultural universities are made non-functional, they have budgets adequate to pay salaries only but nothing else. These MNCs bribe our agricultural scientists not to work and allow these foreign vultures to reap as much profit as possible within the shortest period of time by sucking blood of millions of illiterate farmers of the country. The farmers are committing suicide, selling their limbs, selling their fertile land to the corporates for SEZs and so on. In some parts of the country an entire village is ‘on sale’. What is happening in the rural areas is well known to each politician of the mainstream political parties of both left and right and to all the bureaucrats. These people are kept happy by accepting bribes from these MNCs. The Manmohan Singh government is an helpless spectator because it is duty bound to help the US economy to survive, our farmers’ interest is only to be remembered in election manifestos!

The Indian farmers are unorganised and poor. They don’t know how to challenge the government’s disastrous agricultural policies. The MNCs will be giving more emphasis to those crops with bio-fuel potentiality because that will have demand in their own countries for substitutes to petrol. It will give them more profit. They have nothing to do about the growing shortages of cereals in the world market. There is no food in India and the world prices of agricultural commodities are manipulated by these MNCs. Despite the fact that governments in India are least interested in the production and trade of agricultural commodities as they have handed this over to the MNCs even then our farmers from Kashmir to Tamilnadu and from Gujarat to Nagaland are trying their level best to maximise production to help the country to survive.

Middlemen are given bank loans to corner agricultural produce and to create artificial shortages. In West Bengal which is ruled by the CPI M, and is one of the supporters of the UPA government in the centre, recently there were riots over the distribution of food through the Public Distribution System (PDS). Outside the PDS stores notice boards showed nil stock, but the village people with Below Poverty Line cards looted warehouse after warehouse of these fraudulent shopkeepers! Most of the shopkeepers are selected for their allegiance to the ruling clique. The government of India has to ban MNCs in agricultural occupation and take over complete responsibility to revive once again the agricultural economy of the country from scratch. The developed countries will never reduce subsidies to the farm sector and the WTO is irrelevant to the rich countries. The Indian rulers should ensure that our farming is not further damaged; rather it is given all the incentives that it deserves. When the destructive WTO rules are not applied to the developed countries, why does our government open the import door for agricultural commodities? Indian farmers should be given huge compensation as in developed countries; they should have enough money in their pocket to purchase goods and services produced in India. The days of keeping them starving should be over!


Due to the declining value of the dollar our exports to USA may suffer, but we need not worry about any loss in exports to the USA and other countries, so long as we create a vibrant market for our one billion consumers inside our own country! Some NRIs have arrived back in India due to the recession; we must gear up our own production system for our internal market. Our banks should stop playing gimmicks in collaboration with western banks. Their normal banking role is to accept deposits, return them when demanded and to advance loans and nothing else and for that the Reserve Bank of India as the regulator has to discharge its statutory duties and refuse to listen to the political masters. The financial crisis in US today is a result of the negligence of the Federal Reserve in the discharge of its duties. Goods from the US are cheaper today due to the rapid devaluation of the dollar, but why should India import from the US when we can produce the same in our own country! India should look after interests of its own people and not that of US.

Every year the industrialists refuse to repay billions of rupees of bank loans and our banks write them off mechanically as bad debt. The non-performing assets of banks (NPA) are running into lakhs of crores of rupees. There is an understanding at the political level not to accumulate this but to write it off as a bad debt. It is well known that these written off bad debts are again purchased by the business community in different names from banks at throw away prices and they thereby earn huge profits. This has become a routine matter for our nationalised banks! Why not advertise simultaneously this type of permanent loan waver scheme to the industrialists when the government advertises the one time loan waver of Rs. 60000 crores to the millions of farmers for votes.

Mr. Kamal Nath’s SEZ has made this country poorer by more than one lakh crores of rupees as units in SEZ will not pay any taxes. What about the millions of farmers who work in the scorching heat of summer, torrential rains and in the odd hours because electricity sometimes may come for some hours only in the dead of night? What compensation do we pay to these farmers? We have made public procurement by the Food Corporation of India non-functional by making it a den of fraudulent commission agents. There is no cold storage facility in the villages and the producers are forced to sell off their harvest at throw away prices. For the development of SEZs lakhs of hectares of fertile agricultural land are acquired by the state governments. Originally the idea of SEZs was exclusively of production for export, but after ‘international humpty- dumpty’s great fall’ to which country/s Mr. Kamal Nath wants to export? His ministry claims to have sanctioned more than 450 SEZ areas but our exports are declining and to develop SEZs, imports from the west are increasing! What does Kamal Nath and Co. have to say to the farmers whose land the government had taken over virtually free of cost? Defence purchases by India in 2008-9 will go up to save the recession-hit US economy. Nuclear reactors are to be imported otherwise the US will be very angry! Our External Affairs minister is in the US to negotiate how to save it in its hour of crisis. It is these people who want imperialism to survive even when it stands on one leg! Due to the policy of export-led growth policy how many workers have lost their jobs in the export-oriented industries in textiles, handicrafts and so on and how many more will join that queue? Why are more and more SEZ units sanctioned and for whose benefit? Will Dr. Manmohan Singh tell his country people where his ‘economic reform’ package has landed the country? He claims to be an expert in foreign trade!

The net result after 18 years of so-called ‘economic reform’ package dictated by the W.B., IMF and WTO is that India has become sick and handicapped excepting some selected families whose name you see in Fortune’s annual list of billionaires. The all-important head of this unipolar world, the US, the well-known international plunderer is also sick and lying in the intensive care unit suffering from great depression. All the financial institutions are paralysed except the Central Bank, the Federal Reserve. It is injecting ceaselessly billions of dollars every third day to keep the patient alive artificially in intensive care. There is no prayer left for the US and we should do what is required to safeguard the interests of our teeming millions.

23 03.08

Click here to return to the April 2008 index.