An Attack on India's Sovereignty


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Impact on the Various Classes

               (i) Workers

               (ii) Peasants

               (iii) Urban Middle-classes

               (iv) National Bourgeoisie


Except for the small elite class in the country that has gained enormously from the present trend of globalisation, all others have been adversely affected. Those that have gained the most are the big business houses and TNCs and those linked to them. Next to gain are the big bureaucrats, politicians and their hangers on, who lap up the crumbs from the imperialist/comprador table. Thirdly, those to gain are that small class of landlords, a section of rich peasants and some big traders that have jumped on to the bandwagon of the new agri-business policies and are closely tied-up with the benefits derived from their connections with the state-apparatus. Finally, it is the upper crust of the middle-classes and professionals, who have seen quantum leaps in their earnings during this period of globalisation. Particularly a section of those linked to the ICE (Infotech, Communicatins, & Entertainment) sector have gained windfall benefits from globalisation.

Except for these, who comprise less than 5% of India’s population, all others have been badly hit. They comprise the workers, peasants, middle-classes and even a section of the small-bourgeoisie and traders. Let us then take a look on the impact of globalisation on these classes.

i) Workers

For the maximization of profits by the TNCs and their comprador accomplices, an attack on the working class is a must. In fact liberalization of the labour laws and the introduction of an EXIT policy with the right to hire and fire at will, has been one of the important conditions for the entry of TNCs into the country. In fact, this was spelt out in the early 1990s itself by the two World Bank documents "India: Poverty, Employment and Social Services" and "India: An Industrialising Economy in Transition".

To quote, "Giving companies greater freedom to make investments, enter new lines of production, and expand, may be of only modest effect, if firms are not concurrently given greater freedom to adapt to market forces by retrenchment, merger and/or closure and sale of assets". It adds "in the field of labour the Industrial Disputes Act could be modified to provide employees with firm guidelines for working conditions, remuneration and retrenchment compensation".

The Goswami Committee, set up by the government in 1993, also clearly recommended that it was the inability of industrialists to reduce the number of workers, shift production facilities, modernize, etc. that was responsible for sickness, and that all the above could be cured if industrialists were given freedom to "hire and fire" labour as the need arose. For this the Committee said, Sec.25(N) and 25(O) of the ID Act would have to go, or be suitably modified so that industrialists would not have to seek government permission for retrenchments or closures.

Though the government has not yet been able to bring in its EXIT policy (it plans to do so in the next session of parliament) due to resistance from the labour movement, there has been a wholesale attack on the conditions of the working-class in the reform period. Through the path of the Voluntary Retirement Scheme, lakhs of workers have been thrown out from both private and public sector. The details of unemployment have already been covered in an earlier section of this booklet. Here we will look at the attacks of capital on labour in other spheres.

There has been a particularly strong attack on the wage rates of workers/employees. We find that the share of wages in the total value added in industry has fallen drastically from roughly 30% in 1988/89 to 20% in 1997/98, while surplus value of the capitalist has risen from 54.5% to 67% of value added in the same period. Table XIII.1 1 brings this out clearly:

Table XIII.1

Share of Factor Incomes in Industrial Value Added (%)


Share of



Rent, interest & Profits

















The above Table also shows that the share of total emoluments (wages plus salaries) has also dropped drastically in the same period by over 12%. That means the middle-class staff as well have been hit by the wage cuts.

Looked at from another angle we see the percentage of wages to sales fell from 7.3% in 1994/95 to 6.6% in 1997/98.

All the above shows that the period of globalisation has resulted in a shift in income distribution towards the high income earning categories and the owners of capital. The spread of consumerism and the mania for consumer durables is fed on the basis of this shift. While the workers and the vast sections of the middle-classes will earn less and less a class will grow with enormous wealth that acts as the market for the ‘new economy’.

In the public sector too we have seen the governments at both the State and Central level arbitrarily stopping payment of bonus, freezing DA, refusing payment of wages due for months on end, and harassing employees to leave. So, for example, in 2001 the Prime Minister had assured the Rajya Sabha that the statutory dues of 1.5 lakh central public sector employees, amounting to Rs 1,899 crore, would be cleared soon. A year later, only Rs 88 crore had been paid out.

At the State government level and lower down, employees, teachers, staff often do not get paid for months with the governments and local bodies claiming lack of funds. So, for example the 20 lakh employees in the Maharashtra state government found their DA installments for 2000 and 2001 arbitrarily freezed.

In addition to all this the central government has reduced the interest on the Provident Fund from 12% to 9.5% and has said that in future it will be determined by market rates — which are today at about 7.5 to 8%. This has seriously affected the retired workers/employees who suddenly find their savings disappear.

If we turn to the bulk of the working class who are in the unorganized sector life is a hell. Conditions of work are so terrible that it is estimated that roughly one lakh people die each year at work due to accidents. Besides this, it is estimated that 22 lakh die each year due to occupational-related diseases. 2 The Voluntary Health Association of India estimated another 20,000 die each year from pesticide poisoning. It has been estimated that India accounted for 37% of the global burden of occupational injuries and contributed to 32% of the deaths due to them.

During the period of globalisation wage rates in the unorganized sector have been virtually static in real terms. For example, in West Bengal, the daily wage rate of male field labourers (at constant prices) actually dropped from Rs 16.6 in 1992/93 to Rs 15.2 in 1994/95. 3 Overall, the wage rate growth for unskilled agricultural labour declined from 3.3% in the pre-reform period (1986/87 to 1990/91) to 0.1% in the post reform period (1990/91 to 1992/93). 4 This is inevitable as globlisation displaces lakhs from the organized sector swelling the ranks of the unorganized, leading to increased competition for limited jobs.

In addition the hi-tech industrialization linked with globalisation on the one hand, and rural retrogression, on the other, has vastly enhanced the pool of the unemployed. Besides, food prices increased at a much faster pace in the post-reform period, than prices in general. The combined affect of low increase in wages together with a jump in prices of food items has sharply hit the living standards of agricultural labourers. The defacto dismantling of the PDS has made conditions even more unbearable.

It is for all these reasons that the working-class becomes a foremost force in the fight against globalisation and the new offensive of foreign capital in our country.

ii) Peasants

Never before have such large numbers of peasants resorted to suicides, since the latter part of the 1990s, by when the full impact of the new ‘economic policies’ had devastated the countryside. Till today reports keep coming in of farmers committing suicide from all over the country. And these are not the poorest of the poor, they are those that went for ‘green revolution’ type production. First it was the cotton growers of AP, then the sugar-cane growers from many states, then chilli, onion, tea, coconut, etc. growers from all over the country. Now reports have come in, that last year over 600 farmers committed suicide from the very heart of India’s food bowl — Punjab.

Also we find that for the first time since 1947, during this period of globalisation large tribal tracts have been regularly reporting starvation deaths. This is not confined to the traditional dry areas of Orissa, but large number of deaths has been reported from such areas as Melghat and Thane in Mahrashtra, many districts of Jarkhand, etc. In addition, since the last few years, regular droughts have been hitting a number of States, and this year nearly the entire country, resulting in thousands of deaths and lakhs living on the brink of death.

In addition there are the crores of artisans, particularly the weavers, which have been devastated by government neglect and the stampede of the modern textile industry. Only the handful that promote exports are pampered while the rest are allowed to languish. They are a mass of living-dead in India’s countryside, discarded by the glamour and pomp of the globalised fashion industry.

With the ‘green revolution’ coming to the end of its tether, with the land and forests ravaged, and with yields dropping — on top of all this, came the onslaught of global pricing, cheap imports, de-regularisation of agricultural markets and huge drops in rural investments and institutional credits. To the vagaries of the monsoon was added the instability of commodity prices, particularly affected by the crash in world prices of agricultural commodities. The new WTO regime called upon the Indian farmer to compete on equal terms with the giant agri-businesses of the world in a ‘free world market’, in a situation where the Indian farmer is not allowed even the smallest subsidy while their counterparts in the developed world are subsidized to the tune of 70%.

This ‘freedom’ has already wreaked havoc on agricultural commodity prices in India. It has seriously affected not only the poor peasant and agricultural labourer, not only devastated the middle-peasant but also badly hit a big section of the rich peasantry.

Also, the poor and landless peasants have been marginalized even further by globalisation, with the crisis resulting in less work opportunities. With this situation, we witness today crores of people migrating for work in order to survive. Increasing indebtedness, low yields and returns on investments, lack of capital and rising cost of inputs has crushed the middle peasantry. Already in a state of near-collapse, the policies of globalisation have now pushed them to the brink. And as for the rich peasantry they have been squeezed by falling returns and rising costs on the one hand, and on the other have been hit by the systematic dismantling of the public distribution system and the takeover of distribution by the rapacious traders (cum moneylenders) of the "free market".

It is this huge mass of peasantry that can act as a bulwark against globalisation and the imperialist offensive in our country. If mobilized politically into a united force they can shake the very foundations of the present imperialist offensive in this country.

iii) Urban Middle-classes

The urban middle-class in India is sizable. Except for the upper crust that lives off crumbs from the imperialist/comprador table, the bulk are also victims of the globalisation offensive. Of late, it is they who have been particularly targeted in the budgets, as the ruling-classes have left little to squeeze from the oppressed sections. Due to their class-character they aspire to climb up the ladder and so are most prone to ruling-class propaganda — whether it is the imperialist/consumerist culture of the media or the Hindutva chauvinist culture of the saffron brigade. While the upper castes amongst them are the most prone to the retrograde values promoted by the fascist gangsters, the lower castes and dalits fall prey to petti-bourgeois fads that come up due to lack of a powerful communist alternative. Yet, the bulk of this class has been badly hit by the new offensive of imperialism, whether they realize it or not. In a country like India, winning over this class is an important factor in any movement for change, not only because of their size, but also because of the influence they wield on society at large, as opinion makers.

Globalisation has attacked the middle-classes from all sides. Even the cozy secure existence of the lakhs of employees employed in government, quasi-government and PSUs has been crudely smashed. Retrenchments, lay-offs, wage cuts, DA freeze, scrapping of bonus payments, etc. have become the order of the day. What is worse, the spiraling unemployment is hitting the next generation of the middle-class the worst. Every middle-class house has youth with no hope for a secure job. Running from pillar to post, the best that they manage is some low-paid temporary job. Many try their hand at petty businesses, to lose even that money due to increased competition. A large section of the middle-class is being pushed into the ranks of the proletariat. And the sheen and glamour of the TV-promoted consumerism is fast coming in conflict with the raw reality. The high profile ICE sector (Info-tech, Communications and Entertainment) only provides jobs for the handful of English-speaking, westernized, and upper crust of society. The future for most is bleak.

Let alone the future, even in the present the middle-classes find their existing standard of living being badly hit. They are being attacked from all directions — the rise in prices of essentials, like food, transport, LPG, diesel & petrol, electricity, water and other charges, health and medicine, education, and now even TV cable charges, etc., is making life increasingly difficult for the majority. Given the fact that salaries have been virtually frozen and vast numbers have lost their jobs (or been forced to accept pay-cuts) the situation has become even more fragile. The double attack of rising costs and stagnant (or falling) income has hit them hard.

Over and above this, even their dwindling income has come under attack by the government in the form of a series of extra taxes on this section. Particularly the government has sought to bring as many as possible into the tax net — even those that merely own a phone (available now for a deposit of a mere Rs 1,000). While it has drastically reduced the tax on the very rich and big business, given huge tax holidays to foreign investors, exporters and others, etc. it is now seeking to extract the extra rupee from the middle classes, hounding and harassing them for their ‘tax’. In just the two years from 1998 to 2000 the number of assesses doubled bringing in an additional 13 million people into the tax net (1.3 crore). They plan to increase the number each year. While letting off the big fish, they catch the small fry.

In addition, the government has increased tax on small-savings, drastically reduced interest rates on PF and other saving schemes, and virtually robbed the middle-class of its savings through huge scams, frauds, and stock-market manipulations. Worst affected have been the old-aged pensioners, who live off their savings, who found their income reduced by nearly one-third overnight, due to these measures.

What has particularly hit the security-conscious middle-class is the fact that they have found their life-earned savings suddenly disappear. In a country with no social security net-work it was these savings, carefully put aside throughout their working life that acted as the only source of sustenance in case of emergency (like illness) and old-age.

The liberalised financial markets demanded by the sponsors of globalisation have unleashed ruthless mafias linked to big business, the FIIs and the top politicians/bureaucrats, that have swallowed crores of funds from the small-investor. First it was the fly-by-night NBFC operators, promising huge interest on savings that disappeared overnight, swallowing up funds of lakhs of people. Then came the mega-scandals linked to the stock-market the most prominent being those of Harshad Mehta and Ketan Parekh (KP), and numerous smaller ones like that of the Nagpur District Central Cooperative Bank (NDCCB). In these lakhs more lost their savings, both in the stock exchanges and also in the banks that were pushed to bankruptcy. So, for example in the KP scam the collapse of the Madhavpura Mercantile Cooperative Bank, severely hit 160 urban Cooperative Banks affecting bank deposits of roughly Rs 600 crores. The bulk of these were of small investors. The NDCCB fraud hit numerous small district cooperative banks affecting deposits of Rs 241 crores. These comprised mostly small investors from semi-urban areas. In the current year, in Gujarat alone six banks have collapsed swallowing up crores of small depositor’s monies. The latest to shut down has been a Surat bank, which has refused to pay back Rs 65 crore of depositor’s funds.

And now comes the scam of all scams — that of the giant UTI with savings of over 2 crore people. Considered the safest investment this mutual fund alone cornered about 43% of all mutual fund business in the country. With liberalisation of the financial markets in the 1990s the UTI shifted its investments to equity manipulations (from debt bonds) on the stock market. The equity component of its flagship fund, the US-64 increased from 28% in 1991/92 to 70% in 1997/98. With the vast funds available to it, it became the tool of big business and politicians to manipulate the stock-market, invest huge sums in fake companies, etc. giving windfall profits to the thugs involved, including the top bosses of the UTI, REDUCING IT TO THE PRESENT STATE OF BANKRUPTCY. Just two examples of this are: First, the stock market manipulations by Reliance, using UTI funds, resulting in a Rs 1,520 crore loss to the latter and an equivalent gain to the former.5 The other example is the purchase of 15 lakh shares of the Lucknow based Cyberspace Infosys Ltd. by UTI for Rs 33 crores, at the rate of Rs 960 per share. This fake company’s shares soon fell to Rs 1.15. The owner of this company, Johari, has top RSS connections, and none other than the Prime Minister of the country did the very inauguration of the company. Today 2 crore of its members, who put their life-savings with the UTI, face total loss of their savings, unless bailed out by the government. The bail amounts are staggering — Rs 5,522 crore in the current year to meet immediate payments to schemes that expire; and a total bail-out of a gigantic Rs 14,561 crores 6 Now the government says it will spend this huge amount. Either way the people suffer, as the government will raise taxes to make up this loss. Instead of asking the culprits to pay up, it will again add to the burden on the poor and middle classes by increasing the tax burden further.

After UTI now the next to be caught in similar frauds is that supposedly most reputed company of the Tata House — Tata Finance. Not only that, the government plans a massive infusion of Rs 21,000 crores into the two major Indian Financial Institutions (FIs) — IFCI and IDBI. These too have been devastated through frauds and manipulations.

Where then can the middle-class turn for its savings? But what has emerged from all this is that the middle-classes have now no safe place to keep their savings, and that an Albania, Argentina, Uruguay, etc. is being effected in India — there, ALL savings were lost overnight, here it is being lost in small doses.

So, the middle-classes are being hit badly by the policies of globalisation. Never, since 1947, have they faced such an insecure future as they do today. It is important that they see through the glamour of consumerism and the fog of Hindutva to understand that their present frustrations are caused, not by some Muslims, Christians, dalits, or by Pakistan, but by the policies followed by the present rulers. They will, no doubt, soon come out of the make-believe world of TV and Film, as living reality is far more potent than the continuous brainwashing by the media. Once they realize the truth, they can become an explosive force in the struggle against globalisation and the new imperialist offensive.

iv) National Bourgeoisie

As already outlined, in an earlier section, large sections of the small-scale sector have been pushed to bankruptcy due to the onslaught of foreign capital and foreign goods. Government policy is out to crush them so that their markets can be taken over by big business. Even that section that functions as ancillaries to big business and the TNCs, though they are dependent on the latter, are also badly squeezed by them, being forced to produce goods at cheaper and cheaper rates. As the small-scale sector is huge in numbers, though vacillating in nature, a section from amongst them can become an ally in the anti-imperialist struggle. Though many may not come to the forefront of the battle they could provide much assistance. Of course, this will occur only when the anti-imperialist movement grows in strength and gains in popularity. Till then they will seek accommodation with the compradors and the imperialists, trying to get the best bargain.

In addition to the small-scale sector there is the vast section of petty traders, shopkeepers, etc. Though the smaller amongst these would come under the category of middle-class, they have always been the main social base of the Sangh Parivar. But today globalisation is threatening them as well. Traders have been hit with big business and the TNCs entering the fray in a big way and now even the shopkeepers are threatened with the government considering allowing FDI into the huge retail sector. Though they deny it today, it is only a matter of time before upper end of this massive market is opened out to TNCs.



1. Alternative Economic Survey 1998-2000

2. Frontline; June 22, 2001

3. Economic Times; April 26, 1997

4. Paper on New Economic Reforms: Its Effect on Dalits by G.Nancharaiah presented in Pune university,   Dec. 1996

5. Mohan Gurumurthy; July 22, 2001

6. Business World; Sept. 2, 2002; & The Hindu; Sept. 1, 2002



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