We witnessed an infantile jubilance on the part of the government since last year about a “record recovery” from the pandemic. Finance Ministry’s report claimed that armed with necessary macro and micro growth drivers, India is on its way to becoming the fastest growing major economy in the world.

The Prime Minister claimed that “COVID-19 affected the economies of the entire world, including that of India. But our economy has recovered more strongly than it was halted by the pandemic.”

The Reserve Bank of India (RBI) has recently said that the country would overcome the losses made during the Covid-19 pandemic only by 2034-35. The RBI acknowledges the role of deep-rooted structural bottlenecks and says the virus has “scarred minds, production capacities and confidence with far-reaching economic and social costs.’’ The report also acknowledges that in addition to the ruin of the informal sector even the smaller ones among the formal sector have suffered. As expected, the central bank does not critically assess the possible role of the government in exacerbating the crisis, as the government kept insisting on supply side solutions to demand side problems.

While manipulative use of data, using low base effect, and withholding of data has been deployed to cover up the odds and project a rosier picture, there are other data sets that run contrary to the government’s claims, ones they don’t talk about.

Poverty: Surjit Bhalla in his IMF paper claims that Extreme poverty in India is less than one per cent in 2019 and it remained at that level even during the pandemic year 2020.” This of course has been widely discredited as an assumption based on methodological madness. While he himself has been an outspoken advocate of giving up food subsidies, in fact praises the PM’s food distribution for this ludicrous claim. More sound estimates by Azim Premji University finds that while crores already lived on the edge, the shock of the lockdowns meant that 23 crores more individuals went below the national minimum wage threshold during the pandemic. For daily wage workers, there has not been a survey especially after the 2nd wave. But after the first wave, field surveys showed that ⅔ rd of the respondents said after pandemic food intake quantity has decreased in their families. People either stopped eating or reduced quantity of pulses, oil, eggs, vegetables, etc.

Joblessness: Frustrated at not being able to find the right kind of job, millions of Indians, particularly women, are exiting the labor force entirely, according to new data from the Centre for Monitoring Indian Economy. With India betting on young workers to drive growth in one of the world’s fastest-expanding economies, the latest numbers are an ominous harbinger. Between 2017 and 2022, the overall labor participation rate dropped from 46% to 40%. Among women, the data is even starker. About 21 million disappeared from the workforce, leaving only 9% of the eligible population employed or looking for positions. Now, more than half of the 900 million Indians of legal working age — roughly the population of the U.S. and Russia combined — don’t want a job, according to the CMIE.

Inflation: Inflation is alarmingly cutting into the meagre savings of the poor who are struggling to recover from the impact of the lockdowns during pandemic waves. Some have even called the effect akin to an “inflation tax”. The WPI has been hovering alarmingly high since last year and has touched 14.55% in March 2022. In concrete terms, for instance, food price inflation is rural areas has more than doubled from 3.94% to 8.04% in the same month. While it has been an easy way out for the government to blame the rising prices on external factors like the Russo-Ukraine war, but much of the factors pushing the gears of inflation are actually home grown. The fact that the MSMEs have been systematically decimated over the last eight years with the successive poor policy decisions like demonetisation, GST and the lockdown has a role to play. This has meant today the remaining big players have an unduly higher leverage in determining prices and pushing them up even as supply volume dwindles. The oligopolistic core, has not only survived the viral waves but have also thrived under favourable policies, like the tax exemptions, waivers and lower interests. And the time has come for it to exercise its pricing powers which would further drive inflation thereby hurting the poor. Since October 2019, barring one month, inflation has always been more than 4% and at times even crossing 6% and yet the RBI has refused to take steps. This is despite the fact that the RBI was well aware of the surge in crude oil prices as early as February. Finally on the 4th of May the RBI has announced in an unscheduled meeting on the Monetary Policy Committee that the repo rate or the rate at which the central bank lends to the commercial banks is to be pushed up. A lower repo rate, while advantageous to big business allowing them to take cheaper loans, has come at a cost as it has ignored the mounting pressure of inflation on the poor who are anyways struggling to recover. The Governor’s “whatever it takes” stance to boost growth, therefore has come at the cost of great suffering, and experts think that it may be too little too late at this stage.

 Alarming concentration of wealth in recent years

Belying such claims that the pandemic has been an “equalizer” affecting one and all, studies have shown regressive impact of the pandemic – i.e., the rich were less affected than the poor. Mrinalini Jha from APU says that if we look at the drop in incomes between Feb 2020 and April 2020, this drop is much sharper for the poorer 25% than the richer 25%. We have witnessed that while the earnings of the poor have been severely depleted, the super-rich has only gotten richer. Several recent reports like the World Inequality Report and the Oxfam Inequality Report has pointed towards alarming levels of inequality. The average wealth of the Indian billionaires grew by 35% during the lockdown period. In this period, the wealth of Mr. Mukesh Ambani was growing at Rs. 90 crores per hour while 24% of the population was struggling to make Rs. 3,000 per month. The wealth of Mr. Gautam Adani grew 12 times over in the last 2 years to Rs. 9.5 lakh-crores in 2022, while the resilience of the poor have been severely depleted as their meagre saving have been cut short by the months of indebtedness when they were without work. While in 2021, Indian dollar billionaire families grew from 102 to 142 as per the Oxfam Inequality Report released in January 2022, it is the most marginalized that bore the brunt of the successive waves.

In a society that has practiced the inhuman norm of caste based social distancing for centuries, the impact of the pandemic cannot be oblivious of its caste bias. For instance, even if we look at the basic prescriptions of home quarantine, hygiene and social distancing prescriptions, we must realise that they don’t apply similarly to all as is evident in the study by Sandip Mondal and Ranjan Karmakar. Illustratively, 71.85% SC households cannot afford soap for washing hands after defecation, 33.94% cannot afford the same before meals. Ashwini Deshpande and Rajesh Ramachandran in their study found the same pattern in terms of job and income loss. Although all caste groups faced job losses due to lockdown, the rate of job losses among SCs was three times higher than the upper castes.

Similarly, a study by Amitav Kundu indicated that the hateful targeting (as “super-spreader”) and social vulnerabilities of the Muslims made them stand out as one of the worst sufferers of the pandemic. In rural areas, for instance, the percentage of persons with no work among the self-employed for the SC/ST population, Muslims and others (non-SC/ST and non-Muslim) shot up from 6.9%, 8.6% and 5.5%, respectively, to 15.1%, 27.5% and 13.7%, respectively. It is evident that the impact was sharpest for Muslims, followed by the SC/STs.

The impact of the first wave was rather gendered and in this respect too the pandemic was anything but an equaliser. The analysis in the State of Work in India Report shows that conditional to being in the labour force in pre-pandemic times, women were 7 times more likely to lose their job during the pandemic and were 11 times more likely to not return to work. And even when they return to work, they do so with lesser earnings.

The pandemic in fact has been a rude reminder of the fact that the three decades of liberalization and pro-market policies has not only allowed for grotesque levels of inequality, it has pushed crores into extremely precarious living, to an edge. The viral waves just pushed them over into an abyss. The economic policies over the last three decades actively facilitated the concentration of immense wealth at the top peddling the theory of “trickle down” saying this would eventually generate jobs, investments, growth and upliftment of those at the bottom. Instead, what we have witnessed is alarming levels of inequality as well as an increase in absolute deprivation. It is important to note that the rich have not amassed this wealth on their merit alone, this process has been duly supported by subsidies, tax holidays, large loans from public sector banks, massive loan waivers and indiscriminate environmental clearances all in the name of “ease of business” irrespective of the unease it has caused to the common people.

For decades, unions, vilified activists and the much derided civil society have been speaking up against a model of “development” that allows for a fragile/unaffordable health system, an insecure labour force, shrinking avenue of livelihoods, and eroding social security. It was an opportunity to actually reimagine the future as a more equitable one by fundamentally rethinking our economic trajectory. The PM in fact referred to turning the “Aapda” into an “Avsar” (turning a calamity into an opportunity). But instead of changing course, the government relied on the same prescriptions that caused the ailment in the first place. It has continued, albeit more aggressively, on the path towards further concentration of wealth in fewer hands, towards creating oligopolies while striking down all redistributive mechanisms that were aimed at protecting the poor in terms of their affordability and accessibility to basic services. This is evident in their desperate drive towards privatization and monetization of public sector and public services.

The wheels of privatization and monetization are designed towards enriching the ones at top at the cost of the poor

Public sector units were a product of a constitutional principle of state policy that is intended to ensure that the ownership and control of material resources of the community are so distributed so as so to subserve the common good and that the operation of the economic system does not result in the concentration of wealth and means of production to the detriment of the public at large. The crucial role that the PSUs played in nation building have been erased, downplayed or even tarnished over the years. What has also been sidelined is the question of affordability of services and their accessibility in remotest areas which has only been possible because PSUs have operated beyond the pale of profit motive alone. By its very presence in each sphere – from steel to higher education, from health to airways – it has had the effect of setting the benchmark for even the private sector to operate. It has been able to counterbalance (through regulations) the exigencies of an unbridled market and risks of monopolies. Instead what has been the trend is the handing over of public sector units to private hands and a withdrawal of the state.


In her 2021 budget speech the Finance Minister announced the government’s intent of privatiszing two Public Sector Banks apart from IDBI. Faced with massive strikes from the bank unions and given the upcoming elections, Nirmala Sitharaman avoided any mention of it in her budget speech this year. But with the election season coming to an end the moves towards privatiszation have gathered steam again. The two banks being targeted seem to be Indian Overseas Bank and the Central Bank of India while the government is also assessing investor interest for the privatiszation of IDBI. The Finance Ministry is reported to seek cabinet approval to amend the Banking Regulation Act, 1949 soon. One of the changes being considered is the removal of the 20% cap on foreign investment in PSBs in these two cases. And the other could be a more lucrative voluntary retirement scheme to facilitate the lay offs that such a move would bring. The bank unions struck work against these moves that are against the interest of the ordinary people, their savings and are aimed at fundamentally overhauling the character of public sector banks. The social obligations of PSBs would now be replaced with a singular motive of profit.

With the Life Insurance Corporation of India’s IPO, India’s biggest-ever privatisation exercise, there are fears that the institution may be valued significantly lower than its true worth. And with that we will lose another pillar of social security in the country. So far it has been obligated to serve the interests of the ordinary people – the small policy holders. But once in the hands of the investors, it will only serve the purpose of profit, changing its basic character altogether. It will be directed more towards big policy holders and in urban areas.

The other scandalous sale is the story of privatisation of Central Electronics Limited (CEL), a profit-making PSU developing critical frontier technologies for defence and space, to a minor finance firm Nandal Finance and Leasing Company owned by furniture and interior decorator company in November 2021. It was sold at ₹210 crore. It is only when the employees went to court that the deal was put on hold.


While an over-complacent government was largely missing in action when the tragic second wave swept through the country, in fact has used the pandemic as its pretext to justify raising necessary resources through monetization of brown field assets made by public money. In August 2021 the NDA government unveiled its grand design to put chunks of the nation’s public assets on lease for private profits. The plan has been named the National Monetization Pipeline, the idea being, to lease or monetise infrastructural assets ranging from roads, railways, ports, telecom, gas, power and so on, to raise 6 lakh crore over the course of four years. The fate of the national assets built over seventy years with people’s money was decided with no participation of the people or even their representatives in the parliament.

If one calculates the capital cost of the assets at today’s price and compares with the price that has been targeted for realisation by the government in this pipeline, one can get a sense of the undervaluation and this is a worry that has been echoed even from sections who are not necessarily against the idea of monetization in principle. For instance, 22% of the National Highways aggregating 26,700 km is going to be monetised. The government announced that it would realize a sum of Rs 1.6 lakh crore from the said asset as upfront price. But, we must ask what exactly was the capital cost involved for such a huge infrastructure. If we draw from the estimate made by the ministry of road transport and highways in 2019 as the capital cost even today, the construction cost of 26,700 km of four-lane national highways comes to not less than Rs 8 lakh crore!

At a time when the macro-economy is weak, when globally economic climate is straining under the pandemic, to speak of monetization of assets is akin to distress sale as it would have the effect of beating down prices. Such a fire sale is not when one can expect “fair value” for public assets. One may wonder, what is the idea of putting big capital assets such as roads, railways, and pipelines on the bloc at a time when private investment is extremely constrained? Some have accused this as nothing but a backdoor entry for friends of the government in the facade of a monetization process!

The government claims to raise 6 lakh crores from the monetization of the assets on the bloc. To understand the implication of this in the easiest terms, it can be said that the private companies would at the least like to raise this amount that they have already paid to the government as soon as possible and then they would also account for profits and interests. To maximize their profit over a limited time frame, investors would predictably raise prices, limit competition or cut back on upkeep. What this would necessarily translate into is the shifting of the burden on the people, the consumers, in the form of higher and exorbitant user charges and also deterioration of the maintenance of the assets.

Much of the public sector in fact serves as a livelihood option for India’s poorest and marginalised sections. Be it the railways, or road construction and so on provide employment to millions. And more importantly the entire affirmative action, the reservation policy is pegged on the public sector. What would be the fate of reservation for the historically oppressed castes is hanging by the thread today. The biggest bloc (52%) earmarked for monetization are railways (25%) and roads (27%). While it is riddled with discrimination , the railways nonetheless is the largest public sector where Dalits, Muslims and adivasis have over the decades gotten significant representation as stakeholders, writes Tamoghna Halder. 2020 data suggest that about 25% of the employees in railways come from SC/ST background. This is a clear outcome of its adherence to its obligations as an equal opportunity employer that had to follow the reservation policy in the hiring process. The fact that the private sector does not have to adhere to any such principles is bound to have detrimental impact on the representation of marginalized sections post monetization or lease.

Need to tax the super-rich to ensure universal social and economic rights

It is evident that each of the above measures would only hurt the interests of the poor and further the trend of concentration of wealth in fewer hands giving further fillip to the gaping inequalities that plague the country today. Such were the diktats of neoliberal capital. As Prabhat Patnaik says, after the decades of Keynesian consensus, capital in the neoliberal phase was spontaneous again which is bound to generate wealth on one end and poverty on another. It detested limits on competition considering them as fetters on “liberty”. It detested state regulations, taxes and any such attempts at redistribution of wealth. It considered trade unions to be inimical to the natural flow of the market and hence as “distortions”. It demanded a complete submission to the “invisible hand” of the market which they said would be the “greatest equaliser”.

Compared to the period from 1950-80, this latter phase witnessed a marked shrinkage in global tax revenue and social spending. Progressive income tax rates have come down sharply since the 1980s under the neoliberal consensus that taxation is inimical to growth as it is thought to distort economic incentives. And with that has stagnated social spending that were characteristic of the erstwhile welfare model. A simultaneous and striking trend in the global tax policy is the drastic and continual fall in the corporate income tax rates since the 1980s. Between 1985 and 2018, the global average statutory corporate tax rate fell by more than half, from 49% to 24% further aggravating the concerns around concentration of wealth.

Simultaneously, in pursuance of the above we have witnessed a crippling of the trade unions, the dilution of the labor laws, the weakening of the safeguards against displacement or dispossession, the casualization of the workforce, cuts in social security and the withdrawal of the state from providing crucial services and such other steps which have seen to it that all redistributive mechanisms are beaten down.

Economists have been advocating for a progressive wealth tax model as the tax generated may be invested by the government to ensure a set of universal rights – health, employment, food, etc so as to ensure a framework of social protection that is uplifting in general. Prof. Prabhat Patnaik and Prof. Jayati Ghosh for instance have argued that far from discouraging investment, the increased public spending can in fact boost the economy from below. Prof. Thomas Pickety demonstrates that the US and Europe saw the highest growth when the taxes were at their peak (i.e., between 1940 and 1980). Tax cuts in fact have been accompanied by a reduced growth rate as compared to the earlier phase and have only fostered concentration of wealth.

Even a 2% wealth tax on the top 1% can yield enough public revenue for the government to increase on health, education, public transport, social security, basic income, etc thereby increasing the wealth-generation potential of crores of citizens in a bubble up model of growth. In the context of the health crisis and the disruption caused to the livelihoods of crores, we need more government spending and enhance the state’s capacity to spend.

Similarly there is no place even in a bourgeois order, of an archaic idea of inheritance. Even in the self-prescribed version of capitalism (which is far from reality) it argues for merit and innovation of an individual, and there ought not to be any place in it of wealth passed on through lineage. In which case, in fact, there is ample ground to imagine an inheritance tax of 50% on the top 1% wealthy that can once again generate substantial resources and augment the redistribution process to some extent.

We have to remember that these taxes would be applied on less than 1% of Indians, so effort of tax officials does not have to be spread thin over our vast population. And ultimately, it is like we said above, a matter of political will, a matter of whether we adopt an alternative pro-people vision for our future, one that ensures the well being of the 99%, or do we continue on the same path that left millions of us in despair while allowing for super profits for the top 1%.

This article was first published in ‘Promises & Reality 2021-22: Citizens’ Report on the Year Three of the NDA II Government’ coordinated by Wada Na Todo Abhiyan. Read the full report here.

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