From forest rights to GST and note ban: How Modi has favoured fat cats and harmed the marginalised
The prime minister has come to view large corporations as the main architects of the country’s future power and prosperity.
On February 13, the Supreme Court passed an order evicting over a million impoverished Indians from their homes. Last week, it stayed that order, while admonishing the central government for its lack of interest in the matter. Narendra Modi’s administration washed its hands of the case as early as 2016, and didn’t bother to send lawyers to important hearings thereafter, leading the court to accuse it of “sleeping for several years”.
The only favourable explanation for the apathy towards potential evictees is that, like the petitioners, the government is committed to preserving the nation’s forest cover, no matter the cost. That explanation becomes untenable when we consider its facilitation of infrastructural and industrial projects which threaten protected reserves. The Modi administration has expedited wildlife clearances granted to such projects, rejecting only 1.1% of the proposals considered, down from 11.9% during the Manmohan Singh government’s time in power.
The administration’s alacrity in handing out wildlife clearances contrasts sharply with its indifference to forest dwellers, exposing its belief that economic development is best secured by providing benefits to large-scale industries, even when these hurt citizens lower down the economic ladder.
It’s a form of trickle-down economics that characterises a wide range of government actions over the past half decade. Early on in Modi’s term, he pushed to reform the Land Acquisition Act of 2013. The 2013 legislation made buying land more difficult for private and public undertakings, and could legitimately be viewed as a brake on economic growth. Modi’s desire to make land acquisition easier was not controversial in itself, but the route he chose revealed his priorities.
Where a believer in free markets would have enhanced property rights of individual farmers, permitting them to sell their land as they pleased, Modi sought to dilute the right of landowners to decide whether or not to sell their land, while boosting the state’s power to take over farmland for public and private industrial and infrastructural projects.
A backlash from farmers and landless agricultural labourers scuppered these reforms, but the Modi government kept making surreptitious moves to give industry a leg up in its perpetual tussle with small landholders. In 2018, the government passed, without parliamentary debate, the Specific Relief Amendment Act, which made strict enforcement of contracts easier. This was a good move, since India is ranked near the bottom of the world’s nations when it comes to enforcing contracts.
Sadly, the administration overstepped through clause 20A (1) of the Act, which states, “No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project.”
In other words, should public or private firms working on specified projects encroach on property, or breach any agreement, property owners can no longer gain remedy through injunctive relief. Clause 20A (2) gives the government great latitude in determining which projects will qualify for protection from court injunctions. Taken as a whole, section 20A tilts the balance heavily in favour of large firms against small farmers for whom injunctions were a crucial weapon in defending their property rights.
Bias towards big business
The government’s two signature initiatives betray the same bias towards big business in the name of formalisation of the economy. Among the central justifications of demonetisation was the idea that a cashless economy was by definition advanced and therefore desirable. This revealed an ignorance about affluent cash-loving nations like Japan and Germany as well as a misunderstanding of the vital and irreplaceable role cash plays in the lives of Indians at large.
No e-wallet or digital transfer system offers a substitute for the nearly frictionless and cost-free transactions enabled by currency coins and notes. The withdrawal of cash was presented as a blow struck against fat cats hoarding illegal wealth but ended up damaging supply chains through the entire informal and agricultural economy, and hurting the underprivileged the most.
Unlike the note swap, which was an idiosyncratic idea with no benefits, the Goods and Services Tax was a profound reform and a significant achievement. While it brought India together as one market and removed a bunch of complicated local and state taxes, thus easing movement and sale of goods, it did so at the cost of breaking the backs of tens of thousands of small traders faced for the first time with a complex and expensive compliance burden.
It didn’t help that the roll-out of the GST portal was as wretched as the handling of currency supply after demonetisation. The wounds of demonetisation and GST have not healed, although the government has been forced into a series of rollbacks and adjustments after protests by organisations representing small traders.
Opaque election funding
A natural corollary of Modi’s love of corporatisation and formalisation is the alteration he has brought about in the funding of political parties. In keeping with the digitalisation philosophy, the reforms cut the amount of cash that can be donated by an individual from Rs 20,000 to Rs 2,000. On the surface, this reduces the flow of black money into politics. However, there is nothing stopping parties from dividing large cash donations into smaller ones under faked identities.
As part of its reform agenda, the government introduced an innovation in political financing, the “electoral bonds”. These can be purchased in unlimited quantities by individuals and corporations that are under no obligation to reveal their identity. The Bharatiya Janata Party has cornered around 95% of donations made by this means till date.
Corporations are now forbidden from giving political contributions in cash. On the other hand, the previous cap on donations, 7.5% of a corporation’s average net profits over the previous three years, has been removed. Not only can firms give as much as they like to a party, these donations no longer have to be declared in their financial statements.
The most shocking addition to the law is the legitimisation of foreign funding, that too with retrospective effect from 1976. The Congress quietly accepted this amendment because, like the BJP, it had been found guilty of flouting the Foreign Contribution Regulation Actby the Delhi High Court. Both parties had accepted contributions from subsidiaries of Vedanta Resources Limited, a firm headquartered in London.
The Modi administration took up the worthy cause of cleaning up election funding, but has only made it worse, leaving parties vulnerable to corporate and foreign control to a greater degree than ever. The shift in the medium of contributions from cash to cheques, digital transfers and bonds offers a veneer of modernisation while keeping the process as opaque as ever. Above all, the change in funding modes aligns with Modi’s overall philosophy of encouraging formalisation by favouring large corporations.
When Rahul Gandhi coined the term “suit boot ki sarkar” back in 2015, it seemed like a line of attack that would never fly. Gandhi, after all, was the scion of a wealthy and powerful dynasty, while Modi had experienced hardscrabble existence first-hand, working his way from the bottom of the ladder to the top.
Comparing the Congress-led government’s time in power with the five years of the BJP-led government, however, it becomes apparent that the Congress leader was correct. The aristocratic Gandhis prioritised the common citizen far more than the self-made Modi, who has grown to love fat cats and views them as the prime architects of the nation’s future power and prosperityk
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