Dr John Mohan Razu
Coronavirus has radically altered political economy of the world. Political economy in simple term means activities that deal with production, distribution, consumption, buying and selling and its relations with laws and mechanisms that regulates in conformity to the government. Political economy is “political” and involves the use of state power that decides who gets what, when, how and why in the distribution of public goods and social values.
Political economy theoretically emphasizes pursuing “public good”. Political economy is all about economy or economics, which means it also deals with how scarce resources are allocated to different uses and to who goods are distributed. It deals with questions such as: what is to be produced; to whom to be produced, and how to be produced? Further, the volume (quantity) is produced for whom and at what price is it to be sold?
What is important is the allocation of funds in the overall budgetary provision reflecting the percentage of GDP and the ways allocations are worked out. As we are in the midst of coronavirus, the political economy needs careful scrutiny because this is time for the State and the state actors to carry on particularly the twists and turns of the political economy to their advantage. Narratives, gestures and actions of them underpin political economy.
Budgetary provisions, political packages, and policy enunciations should have direct bearing on the lives of people at large. Majority of the labor force in India is employed in the informal sectors and so the Government of India has announced plans to spur small and medium businesses as part of economic package to the tune of $266 bn. These include an emergency credit line of collateral-free loans worth $40bn to “resume business activity and safeguard jobs” to curb coronavirus.
India now has come to the third place for having largest infected cases next USA and Brazil. In such a scenario the economic package is equivalent to 10 percent of India’s GDP. The Finance Minister of India initiated a series of measure to infuse momentum to stimulate the ailing Indian economy particularly that accommodates major of the workforce such as small and medium businesses, power distribution companies, non-banking financial institutions and micro-finance firms among others.
Bailing out 200,000-plus small and medium businesses has been the core objective. In one of the clauses the government wanted to protect against the global tenders for government procurements worth up to $26.5m to help local businesses to sell to government. Some of these measures are taken primarily to building India a vibrant, self-reliant and self-sufficient economy. The aim is to enable innovation and ‘Made in India’ and be part of global competitive market. Accordingly the Central Government transferred 1.7 trillion rupees in direct cash remittances.
Upon the request of the GOI World Bank approved $ 750 million emergency response program for MSME enterprises in India. Its purpose is to support increased flow of finance into the hands of micro, small, and medium enterprises (MSMEs) severely impact by the COVID-19 crisis. MSME’s contribution to Indian’s enormous is huge to the tune of 30 percent of India’s GDP and 40 percent of exports and therefore considered as backbone of economy. This sector employs about 200 million people.
During these months COVID-19 has sent the wage laborers especially the migrants to a state of shock, fear, and misery. COVID-19 has displaced them from their jobs which in turn hit their livelihood leading to other problems putting their future in jeopardy. Billions of dollars and crores of rupees GOI has at its disposal to address to COVID-19 and its victims. In such catastrophic situation the Government at the Centre and the state governments assume greater power to spend the money in whatever way they want.
The fluidity of the current scenario and nature of the pandemic are such that the lack of accountability has given a free rein to the complex web of those who are close to the political class—national and international monopolies and conglomerates, capitalists, contractors and sub-contractors. Political economy revolves around organization of production, consumption and distribution and in that particularly to whom should these be given, at what cost?
For instance, the Solicitor General of India representing the Union of India denied the charges that those who died on the trains and in others due to the illness they have had earlier. In tune to this Union Minister of Railways Piyush Goyal stated defended in such ways that “We have gone through the entire three months without a single person starving”, but the ground reality shows contradictory data. RPF data show that there were about 80 deaths in Sharmik trains between 9th and 27th of May, 2020, and most of these were due to starvation and financial distress.
All kinds of reasons are given for their actions. The duty of the citizens is to fall in line. The State via the government has amassed absolute power to take unilateral decision because they have the reign and to back them the state machinery is armed with brute force. For example, the maze of travel announcement for the migrants and those stranded due to change of bus and train schedules is like playing a cruel game of snakes and ladders. Thousands and lakhs of migrant workers travelled hundreds and thousands of kilometers paying excess fares and facing police brutality Those who could not go had to stay back, some evicted from rented spaces.
GOI has promised and introduced many schemes like piece meals. For example, the Central Government’s stimulus package of Rs. 20 lakh crore to tackle the economic disruption caused by the spread of coronavirus point out that the money should have gone directly to the people who suffer without jobs affecting their livelihood. The budgetary impact of the measures announced by the Finance Minister in five press conferences is only about Rs. 2 lakh crores, or about 1 per cent of the GDP. The remaining 90 per cent of the package is directed largely towards making it easier for industry, MSMEs and even street vendors to borrow from banks.
For instance, the world’s largest social media company announced it has invested $5.7 billion for a 9.99 per cent stake in India’s Reliance Jio Platforms, a three-and-a-half-year-old subsidiary of the nation’s most valued firm Reliance Industries and the biggest telecom operator in the country with more than 370 subscribers. The deal valued Jio at a pre-money valuation of $65.95 billion. This is a major breakthrough where giant oligopolistic corporations in telecommunication and digital technology coming together to dominate the Indian platform in the coming years.
It is the consolidation of products, power and profits. Discussions of the CEOs of these corporations at the tops levels including with the Prime Minister have been going on for months. Now they may come out with all sorts of narratives such as “commitment to India” and to create “new ways for people and businesses to operate more effectively in the growing digital economy”. It is said that this is the largest investment by a technology company in the world.
Google’s investment is about Rs. 33,000 crores. Likewise, Facebook has entered into a contract in April 2020 worth several billions promising that it would provide smart phones with affordable data in the 5G network. In this arrangement Indian counterpart the owner of Jeo, Mukesh Ambani is close to the government at the Centre. Everyone knows in this deal who are those going to plough the most—dialects of political economy.
