International Committee of the Fourth International
Fourth International 1991: Oppose imperialist war and colonialism!

The Crisis of Capitalism in India

By Nessan R.

This article originally appeared in the June 7, 1991 issue of the “Bulletin.” Nessan R. is a special correspondent for the “Neue Arbeiterpresse.”

When Chandra Shekhar was installed in November 1990 as the eighth prime minister of the “independent” India, the capitalist media suddenly introduced him as “socialist Chandra Shekhar” and reported at length about his anti-imperialist policies.

This malicious propaganda of the capitalist media around the world was a desperate attempt to present a fig leaf for the real intentions of the Indian bourgeoisie.

Chandra Shekhar leads a tiny faction called Janata Dal (S), which holds only 54 out of the 513 seats in parliament. Nevertheless he was called on by President Venkataraman—who functions as a rubber stamp for the system—to form a government. This farce was a clear signal from the beginning of the Indian bourgeoisie’s departure from parliamentary democracy and its turn towards a dictatorship.

During his brief stay in power, Chandra Shekhar did his best to serve the interests of world imperialism and of the Indian bourgeoisie. His government dealt aggressively with “sensitive” issues such as strengthening the relationship with world imperialism, suppressing the Tamil national struggle and brutally suppressing uprisings in Kashmir, Punjab and Assam.

During the gulf war, the Chandra Shekhar regime supported the barbaric imperialist war and gave permission for the US Air Force to land and refuel during bombing missions against Iraq. This was the first time imperialist war planes had been allowed to land at an Indian airport. He accepted various conditions of the IMF to obtain loans which the other representatives of the Indian bourgeoisie had avoided for the last 10 years. In order to speed up the investments of multinational conglomerates, he made various changes in Lidia’s foreign investment policies.

In order to suppress the Tamil national struggle which continuously sends shockwaves through the Indian bourgeoisie, he acted more ruthlessly than his predecessors, granting special powers to the police and the paramilitary forces to crush the activities of the Tamil liberation fighters in Tamil Nadu, the southernmost state of India.

All the camps of the liberation fighters were forced to close and most of the liberation fighters were arrested. Communications equipment was confiscated and contact with the north and east of Sri Lanka was completely cut. Indian navy patrol boats were ordered to control the Indian waters of the Palk Strait and the movements of the freedom fighters, thus cutting their supply line to the northern and eastern parts of Sri Lanka. As the high point of these measures, the Tamil Nadu state government was dismissed and the state brought under direct presidential control.

This action was taken out of fear of the mobilization of workers and poor peasants in Tamil Nadu in support of the Tamil national struggle. The pretext put forward by Chandra Shekhar was that the Tamil Nadu Chief Minister Karunanidhi had been supporting the LTTE, the principal Tamil liberation organization. In reality, Karunanidhi has been shamelessly making use of the Tamil national struggle and the feelings of the oppressed Tamil masses in the south of India to preserve his own bourgeois regime.

Under Chandra Shekhar’s rule, military and police brutality in Kashmir, Punjab and Assam have reached a high point. In Assam as well as in Tamil Nadu the state government has been dismissed and brought under the direct control of the central government. The United Liberation Front of Assam (ULFA), a petty-bourgeois national movement, was banned and its leaders arrested. The paramilitary troops were given special powers to carry out search-and-destroy operations against the ULFA members and sympathizers.

The Stalinist party leaderships of the Communist Party of India, CPI and the Marxist Communist Party, CP(M) provided their full support to the Chandra Shekhar regime by declaring their neutrality. These traitors have chained themselves to the “progressive” V.P. Singh faction of the Indian bourgeoisie and are continuously committing crimes against the working class.

The Stalinist trade union bureaucracy functions as the chief agent of the bourgeoisie within the working class to carry out strikebreaking and divide the working class on religious and regional grounds.

At the end of November 1990, this treacherous bureaucracy sold out the sit-in strike of 450,000 telecommunication workers in Bombay, Delhi and other parts of India by accepting an interim allowance of 100 rupees (around $5). This two-month-long nationwide sit-in strike of Indian workers of Hindu, Moslem and other religious groups was a powerful demonstration of the working class and meant a direct challenge to the chauvinist Baratiya Janata Dal Party (BJP), which was undertaking its Hindu pilgrimage to Ayodhya at the same time.

The end of Chandra Shekhar’s term of office in parliament came, as expected, through the withdrawal of support by the Congress Party of India. Chandra Shekhar continued to be the caretaker prime minister until the general elections. It was reported that in the midst of the crisis he sent two policemen to spy on Rajiv Gandhi’s house to look for possible defectors from his faction of the Congress Party. These kinds of methods—spying, horsetrading, maneuvers, treachery—form an integral part of the Indian bourgeoisie’s parliamentary politics.

The actual cause of the collapse of the Chandra Shekhar regime, however, lies in the deepening crisis of the Indian bourgeoisie, which was only heightened by the world crisis expressed in the gulf war.

The US-led imperialist intervention in the Persian Gulf and the barbaric war on Iraq have dealt a severe blow to the economy of India. The economic sanctions imposed by the United Nations on Iraq and Kuwait have slashed export income; foreign exchange income has gone down due to the mass layoff of Indian workers in Iraq and Kuwait who had been contributing a large amount to the hard currency; higher oil prices on the world market have resulted in both higher import costs and increased domestic oil prices, which in turn have resulted in higher inflation rates.

The Reserve Bank of India stated in its report of March 1991 on currency and finance 1989-90 that the overall performance of the economy would be uncertain. It reads: “Looking ahead it is clear that the pressures on the balance of payments will continue to persist. The oil situation is still uncertain. Even if the gulf crisis is resolved, oil prices may not reach the low levels of the previous years. The pressures on account of petroleum imports would be substantial in the next year even if we succeed in containing the growth in the physical volume of imports. At best, there could be only a marginal decline in the value of oil imports. Non-oil imports have been showing rising trends in the recent period. Maintaining the export volume growth in the order of 10 percent appears to be difficult. The world trade environment is distinctly unfavorable with the recession in leading Western countries.”

This report also warned about persisting inflationary pressures, exorbitant budget deficits, the decline in raising the funds for the capital market, the decline of exports, increase of imports, etc.

Since independence in 1947 the Indian bourgeoisie’s bankrupt politics of attempting to build up a national economy with a protectionist trade policy could not win an ounce of freedom from imperialism. On the contrary, the Indian economy, which is directly bound up with the imperialist-dominated world market, is rapidly disintegrating as the world capitalist crisis intensifies. As a result, the Indian bourgeoisie had to give up all its pretense of “Be Indian and Buy Indian” and was forced to open up the doors wide for the imperialist exploiters.

This process was accelerated by the Rajiv Gandhi regime, in power from 1984 to 1989. Major policy changes were made then in foreign trade, import control and other factors which had been blocking the imperialist investors’ free access to the Indian economy. Mass unemployment, the closure of hundreds of small- and medium-size industries and a skyrocketing cost of living were the immediate results of this pro-imperialist policy.

V.P. Singh and Chandra Shekhar, who succeeded Rajiv Gandhi after 1989, followed in his pro-imperialist footsteps. In December 1990 while Chandra Shekhar was in office, the foreign exchange reserves of India ran out and the country had to practically declare its bankruptcy. In order to reestablish India’s credit worthiness an immediate loan of the International Monetary Fund totaling US $1.8 billion was pumped into the foreign exchange reserves.

The present deal between the IMF and the Indian bourgeoisie indicates the approval of the International Monetary Fund for India’s new foreign policy and its total subordination to the interests of world imperialism.

The Indian economy needs an immediate $4 billion to cover the losses from the imperialist war in the gulf. So far $1.8 billion has been secured by India from the IMF “without many conditions.” The IMF is offering India 75 percent of the remaining $2.2 billion in Special Drawing Rights. For this, however, the IMF demands drastic changes in India’s economic policies.

This measure was an unprecedented move for both the IMF and the Indian bourgeoisie. India’s last major borrowing from the IMF was in 1980 and 1981 when India drew a credit of $3.9 billion which is still being repaid. The Indian bourgeois parliamentarians have always been reluctant to accept the conditions of the IMF out of the fear of uprisings of the working class and the oppressed masses when implementing the austerity measures demanded by the IMF. The IMF on its part has been reluctant in the past to offer loans to India since Indian foreign policy was not completely aligned with US imperialism.

The IMF now demands a commitment to contain the fiscal deficit to around 6.5 percent of the gross domestic product. It has advanced a series of measures to curb this deficit, primarily by the elimination of budget subsidies. According to the Hindu International Weekly, a leading bourgeois newspaper, dated February 23, 1991, “it was agreed to cut the food and fertilizer subsidies and to reduce the budgetary support to some of the loss-making public sectors.”

No further details were published. The Chandra Shekhar regime which made this arrangement expected to present the details of these measures in the budget which it had planned for February 28, 1991. At this point, however, the divisions and conflicts among the various sections of the bourgeoisie had mounted and the Chandra Shekhar regime could not even find the minimum majority to hold a parliamentary session. Chandra Shekhar declared his resignation on March 5, 1991. An interim budget was put forward to parliament by his cabinet, but the budget debate and details on the overall budget were put off until after the elections.

The fact that all the opposition parties which had their part in Chandra Shekhar’s overthrow—including the CPI and the CP(M)—have passed this interim budget without any debate shows the depth of the crisis of the Indian bourgeoisie.

As part of the postwar settlement, the imperialists entered an agreement with the national bourgeoisie of India which provided the basis for the imperialist exploitation of the Indian subcontinent during the past decades. With the collapse of these postwar agreements, the imperialists need to work out and establish a new settlement and new methods of rule. One manifestation of how such a settlement would be achieved was the imperialist war on Iraq.

This war in fact signifies a direct threat to the Indian subcontinent: the imperialist war machines are in a constant state of readiness to dismantle and colonize India at any time. The attempts made by American, German and British imperialism, during and after the gulf war, to strengthen or build up a relationship with India and the readiness of the Indian bourgeoisie, on the other hand, to serve the imperialist interests unconditionally are a serious threat for the millions and millions of workers, peasants and oppressed masses in this region.

The Cold War and the support of the Stalinist bureaucracy in the Kremlin (for its own purposes) for the national bourgeois regimes provided an opportunity for the Indian bourgeoisie to cheat and exploit millions of workers under the slogans of anti-imperialism, freedom, nonviolence, non-alignment, etc. But Gorbachev’s policies in the Kremlin have put an end to this period of “antiimperialist” politics. The complete subordination of the Gorbachev bureaucracy to US imperialism left nothing for the national bourgeoisie except to unconditionally surrender to world imperialism. The Indian bourgeoisie for its part quietly dropped its slogans of an “Indian Ocean Peace Zone” and for the closure of the US air and naval base on Diego Garcia.

The Indo-Sri Lankan pact of 1987 marked the beginning of a clear shift in the policies of imperialism towards India. The withdrawal of the Soviet troops from Afghanistan and the nonexistence of a “communist threat” in the region made it no longer necessary to maintain Pakistan as an imperialist military base for counterrevolutionary activities in the subcontinent. At the same time the Indian bourgeoisie was more than ready to fulfill the imperialists’ need for a strong partner in the region to control future social conflicts like in Sri Lanka.

The gulf war has stripped naked all the pretenses of the national bourgeoisies of following “anti-imperialist policies” in Asia. The Indian bourgeoisie gave its full political backing to US imperialism by supporting all the UN resolutions against Iraq.

The Indian bourgeoisie’s decision to completely subordinate itself to the foreign policy of US imperialism was rewarded by US imperialism through a certain relaxation on its financial policies towards India. The IMF was ordered to grant an immediate loan, while the sale of modem technology to India, which had been prohibited for a long period to avoid possible transfers to the Soviet Union, was revived.

These policy changes of US imperialism brought the interimperialist conflicts and the trade war over India to a new dimension. The reaction of German imperialism was to dispatch President Richard von Weizsacker to reaffirm Germany’s “traditional partnership” with India. During his visit, he repeatedly emphasized closer cooperation with India in the international arena. The Indian bourgeoisie and the German imperialists agreed to form a “consultative group” of experts covering the fields of politics, industry, trade, banking, academics and culture, in order to improve bilateral relations.

During his visit an inter-government agreement was reached for a credit of 174 million deutsche marks which was signed on February 20, 1991. It was agreed that for this loan India should import fertilizer from Germany before the end of 1991—at the value of 100 million deutsche marks—and that the balance of 74 million deutsche marks was granted as “mixed credit,” that is, 50 percent export credits and 50 percent soft loans. The term “export credit” means that India should deliver its export items at a price which is determined by the German government. The term “soft loan” means that the loans plus interest have to be repaid by a stipulated date and at interest rates agreed upon by both parties.

The intervention of the American and German imperialists prompted British imperialism to take its own measures to consolidate its very old traditional relationship with the subcontinent. India and Pakistan are still major trading partners of their old colonial masters. In order to maintain its authority over India as against its trade rivals, Britain supported the Indian position on Kashmir for the first time, i.e., the Simla Agreement of 1972 which reaffirms the forcible annexation of Kashmir by India in 1947.

The growing rivalry among the imperialists aimed at the exploitation of India shows very clearly that the imperialists will not be reluctant to start a new colonial war in the Indian subcontinent.

The present elections are another attempt by the bourgeoisie to secure the uninterrupted exploitation of the millions of workers and poor peasants in India. Despite their tactical differences, the three major bourgeois parties agree on one point: that the Indian economy should be open to multinational capital.

The Janata Dal Party, led by V.P. Singh, is shedding crocodile tears for the so-called low caste and the oppressed masses and is promising that the majority of its parliamentary candidates will be selected from among the Harijans (the untouchables, or lowest caste) and the oppressed masses. The Stalinists, who are rallying behind V.P. Singh, claim that the “progressive role” of Singh was the only way for India to solve its immediate problems.

The Congress Party, formerly led by Rajiv Gandhi, criticizes his successors, V.P. Singh and Chandra Shekhar, and blames them for loading an unbearable burden on the shoulders of the ordinary masses. It demands that “the rich should be taxed in a way that these taxes should not affect the poor masses.” The same Rajiv Gandhi who had been speeding up the multinational investments in India also claimed that it was time to maintain India’s traditional policy of “nonalignment.” He also preached that “we should go back to our tradition of secularism,” while his party continued to support the massacres in Kashmir, Punjab and Assam.

The Congress Party, which was appointed with the approval of imperialism to rule India, continued its services almost unquestioned until 1985. Today this former leading party of the national bourgeoisie is very seriously disorganized. The party leaders act like Mafia bosses, organizing all sorts of criminal activities from thuggery to murder. The party has not been in a position to conduct a party congress for the last 10 years.

This decay of the Congress Party and its inability to rule and exploit the working class and the oppressed masses in India drove the bourgeoisie to look for an alternative. The Baratiya Janata Party, which bases itself on Hindu chauvinism to mobilize the very backward layers of the petty bourgeoisie, was carefully prepared by the bourgeoisie as a substitute for the Congress Party.

The nationwide uprisings of the working class and the oppressed masses against capitalist rule in recent times were always diverted by the BJP towards racism. Their slogan of “Ram and Roti” (Ram is the mythical figure of a Hindu God, Roti means bread), their demand to destroy the centuries-old Moslem mosque in Ayodhya to build a Rama temple and their pilgrimages to Ayodhya were carefully calculated measures of the bourgeoisie to divert the anger and hatred of the working class and the poor peasants against capitalist rule.

The new BJP leader Dr. Joshi, who has recently replaced the ailing old man L.K. Advani, said that the constitution of India should be changed in a way that the government’s rule would not be interfered with by decisions of the elected members of parliament. He said a presidential system was necessary to secure a prolonged rule of a government independent of decisions of the parliament. He also said the present rules should be amended so that the minorities and the separatist tendencies could not become a threat to the government.

V.P. Singh’s “rule of untouchables,” Rajiv Gandhi’s “back to secularism” and the BJP’s slogan of “Ram and Roti” all have the same purpose: to create an even more barbaric bloodbath than in 1947 in the multiracial society of India, in order to maintain capitalist rule.

The role played by Stalinism and petty-bourgeois nationalism during and after the imperialist war in the Middle East has completely destroyed the faith of the working class and the millions of oppressed masses in this region in these political forces. It is the immediate task of the working class to build up a new revolutionary leadership in these oppressed countries which is based on the program of permanent revolution. Only the working class, taking the leadership of the peasants and the oppressed masses, can overthrow imperialist domination and set up the dictatorship of the proletariat. Only the dictatorship of the proletariat can solve the numerous unfinished democratic tasks.

In Sri Lanka the Revolutionary Communist League, the Sri Lankan section of the International Committee of the Fourth International, is fighting for the mobilization of the peasants and oppressed masses in the island under the leadership of the Sinhala and Tamil working class to set up a Soviet Socialist Republic of Sri Lanka and Tamil Eelam.

In India the Socialist Labour League, which is in political solidarity with the International Committee, fights to mobilize the millions of peasants and oppressed masses under the leadership of one of the most powerful battalions of the world proletariat, the Indian working class.

The International Committee of the Fourth International is the only party which bases itself on Trotsky’s perspective of the world socialist revolution. Building new sections of the International Committee is decisive for the future of the working class and the oppressed masses in these countries.