The budget presented by the Modi government envisages huge investments in basic infrastructure, most of it from public funds. A good chunk of this comes from cutting down expenditure in health, education and similar sectors. The Centre claims that actual expenditure won’t really be reduced since the States can make up with the extra funds transferred to them. But this ‘extra’ actually comes to only 3 to 4 per cent more than what they were already getting. After setting off for inflation, this leaves hardly anything to add to existing outlays and effectively means a fall in real expenditure. Another source of funds targeted by the government comes from a widening of service taxes. While Modi and Co. choke off funds to the social sector and squeeze people through increased indirect taxes, they lavish favours on the comprador monopolies. Most of this is repeats UPA policies. However, this budget does stand out — in its sanctioning of a new phase of public investment led economic activity.
Though reviled in recent decades as a detestable dead weight on the economy, the public sector and government in infrastructure had their origins in the needs of the big private sector monopolies. It was first proposed in the Bombay Plan of 1948 authored by a committee that included Jamshedji Tata. The private compradors simply didn’t have the capital necessary for building up infrastructure. While successive governments built up the public sector and infrastructure, based on and sustained by imperialist capital and technology, the private sector thrived on cheap facilities and raw materials. Within two decades the limits of this model that failed to address the people’s needs became apparent. This set the context for a major rejigging of the economy and heightened contention among its different factions. The faction tilted to the erstwhile Soviet social imperialist bloc gained headway. In keeping with international trends and following the direction given by Moscow, it nationalised many imperialist and Indian monopoly concerns, including the banking sector.
This was vehemently opposed by the US bloc but nationalisation was not completely against its interests. For example, government control over banks was used to push credit in the rural sector on a massive scale in order to service the needs of the fertiliser pesticide hybrid seed package promoted by the US imperialists through the so called Green Revolution. This round of dependent growth soon enough turned stagnant, necessitating another heavy dose of imperialist capital. This came in the form of the ‘globalisation, privatisation, liberalisation’ (GPL) package. Passing through a transitional stage in the mid 1980s it was formally launched in the early 1990s. The ‘public’ was damned and the ‘private’ was acclaimed.
In the realm of ruling class politics, the parliamentary Left more or less made the public defence of the public sector its sole ‘socialist’ credential, while slyly carrying out GPL, while in Central government by proxy and in States it ruled. All the others made the blatant sale to imperialists and local comprador monopolies of public assets and the country’s natural resources — factories, telecommunication networks, energy sources, even rivers — their main task. When its impulse started weakening, they came up with ‘Public Private Partnership’.This too has run its course. The ruling classes, advised by imperialist agencies, are now back to singing the virtues of public investment.
That doesn’t mean that privatisation has been abandoned. It is still pursued, as seen in disinvestment of public sector shares and the move to cut down government owned coal mining concerns. But, expectations of the private sector driving the economy have been shelved for the present. There will be those, especially the parliamentary Left, who will be acclaiming this as proof of the public sector’s inherent strength. The fact of the matter is that, public or private, big capital in India is bureaucrat capital – a capital nurtured by imperialism and serving the interests of imperialism and feudalism. The class representing this capital, the bureaucratic comprador bourgeoisie, is incapable of building a sustainable economy. The promotion of public investment has nothing to do with the real interests of the public, the people. Just as it did in the early decades, this investment will be ultimately guided by imperialist interests, and will only serve to ease its penetration and the fattening of the compradors.