The Government is Lying about Oil Prices

At close to (in certain cities more than) Rs 80 and 70 per litre respectively, prices of petrol and diesel have hit the highest levels ever in India. Adding insult to injury was the recent cut of 1 paisa on both by the Indian Oil Corporation (ostensibly by mistake), which was later corrected to a cut of 7 and 5 paisa respectively. An international comparison with neighbouring countries shows that the petrol and diesel prices in India are the highest in the region. 

Table 1: Retail Selling Price in Neighbouring Countries

Country Petrol Diesel
(INR / Litre)
India (Delhi) 74.63 65.93
Pakistan 50.67 57.06
Bangladesh 68.47 51.75
Sri Lanka 49.67 40.33
Nepal (Kathmandu) 66.69 54.73
Source: Petroleum Planning & Analysis Cell

Price rise in general and of oil in particular was one of the reasons for the anger against the UPA government. While the crude oil prices were quite high during UPA-2 (USD 106.85 per barrel in May 2014 before the UPA demitted office), they have fallen dramatically during the better part of the Modi government (in the range of USD 30s) and yet we find the trend of retail prices to be exactly the opposite. One could legitimately ask what matters for the Indian public is crude oil’s price in INR and not in dollars, so, if dollar itself has become more expensive, which it indeed has during the current government, then the decline of dollar prices of oil will not get fully passed on to the Indian consumers.

To combine the effect of these two opposite forces and to measure the burden on the people, it’s easier to ask what portion of the Rs 80 we pay goes in purchase of crude oil. The difference between the retail price and the crude oil price comprises of the taxes levied by the government, refining charges and the profit margins of the oil retailers in India. I call this difference a burden on ordinary citizens of this country since it measures what part of the fall in the international prices is pocketed either by the government or the oil oligarchs of the country instead of being passed on to the consumers. It can be seen from the figure below that this burden is currently about 50 percent higher than it was in May 2014 (Rs. 46.6/ltr now as opposed to Rs. 31.6/ltr earlier). It is easy to understand that this is because on an inbuilt asymmetry in retail pricing, so, while a rise in crude oil prices is passed on to the consumers, a fall is either not or only marginally passed on to the consumers. Between May 2014 and Dec 2015, the crude oil cost fell by Rs 25 per litre whereas the retail prices fell only by Rs 11 per litre. On the other hand, an increase in crude oil prices has been matched by an equivalent rise in retail prices. As a result we get a paradoxical situation, where instead of reducing the role of the government in meddling with the prices of petrol and diesel, deregulation of oil prices in India has done the exact opposite.  


But who’s inflicting this burden, in other words, who’s pocketing this gap? Indian Oil Corporation provides latest data on the breakup of retail prices, which states the share of the government in the overall price we pay (table 2). Close to half of what we pay goes as taxes to the government (central and state combined).

Table 2: Price Buildup of Petrol at Delhi on 31-May-18

Crude Oil 29.26
Price charged to Dealers by Oil Companies 38.57
Dealer Commission 3.64
Taxes (Excise Duty + VAT) 36.14
Retail Selling Price 78.35
Source: Indian Oil Corporation Ltd.

There are broadly two arguments being made by the government about high oil prices. First, this is on account of the state governments being greedy, so, once they can be persuaded to bring the taxes down, the prices of oil can be brought under control. A look at the division of oil tax revenues between central and state exchequer, however, presents a different picture. Data from Petroleum Planning & Analysis Cell shows that in the first year of Modi government, the petroleum sector was contributing equally to the state and the central kitty but over the next 3 years, it has contributed one and a half times more to the central than the state exchequer. Moreover, even if the claim of the government were true, which it’s not, a party which boasts of running a large majority of the state governments in the country, can’t pass the blame on to its own state governments without any accountability of its central government.

Second, we are told that since these tax revenues are quite critical for the social sector spending by the government, any cut in taxes ipso facto means a cut in such spending which will hurt the poor the most. There are a few problems with this argument too. One, there is fallacy in this argument. A cut in spending as a result of a fall in the revenue is only necessitated by the self-inflicted limit set to deficit spending, which this government is so assiduously following even at the cost of causing hardships to its people. Other than being fiscally hawkish and a religious belief in orthodoxy prevalent in most of the economics profession today, why should a government do so in conditions of slow growth and an economy running below capacity is difficult to understand.

Two, and more importantly, indirect taxes, unlike the direct taxes, are not redistributive. The incidence of indirect taxes falls equally on the consumer whether she is rich or poor. In other words, poor people shell out more as a proportion of their income than the rich to pay for these taxes. So, the government might be extracting more from the poor in the form of indirect taxes than it’s contributing for their wellbeing. Also a government whose priority is to give relief to the corporates and the middle classes, there is a continuous pressure to decrease direct taxes. The ensuing gap in resource mobilisation targets is increasingly being filled by indirect taxes, a regressive trend when it comes to redistribution.

Three, higher indirect taxes of a necessary good such as oil, which goes into production of almost every other commodity, means stoking inflation in the economy from the cost side. While it’s true that the Modi government hasn’t yet seen levels of inflation of the UPA-2 years, an upswing in crude oil prices, as is being witnessed recently, can reverse the fortunes of this government too if it insists on milking the oil-cow in the days to come.

(This article was originally published here)

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Breathing Green

Rohit Azad and Shouvik Chakraborty*

It won’t be an exaggeration to say that air pollution is one of the biggest public concerns in India today. Its implications are many but just two will suffice here. A report of the Lancet Commission on Health and Pollution states that around 19 lakh people die prematurely every year due to outdoor and indoor air pollution. A study by the Indian Journal of Pediatrics shows that the lungs of children in India are 10% smaller as a result of rising pollution levels. It’s nothing short of a public health emergency! What’s needed, therefore, is a comprehensive policy to curb pollution. We need to act now.

CO2 emissions are at the heart of the problem of pollution. About 75% of all GHG emissions are CO2 emissions produced through burning fossil fuels – oil, coal and natural gas – to produce energy. Since the early 2000s, carbon emissions have increased because of the high growth phase in the Indian economy. In 2014, India’s total carbon emissions were more than three times the levels in 1990 (see figure below). This is so because of India’s heavy dependence on fossil fuels and a dramatically low level of energy efficiency.


Emissions can be curbed only if people are persuaded to move away from fossil fuels and adopt greener forms of energy. But how do we achieve that? Tax carbon, period.

A part of the carbon revenue thus generated can be used for a systemic overhaul of the energy mix, which to a large extent addresses the pressing problem of environmental degradation. Indian economy’s energy mix needs to be remodelled through (a) investments in clean renewables like solar, wind, hydro, geothermal and low-emissions bioenergy and (b) raising the level of energy efficiency through investments in building retrofits, grid upgrades and industrial efficiency.. Our estimates tell that this energy mix overhaul requires an additional 1.5% of GDP (over and above the current annual level of 0.6% being spent) annually over the next two decades. Assuming that the Indian economy grows at 6.0% per annum and population rises from 1.2 to 1.5 billion over the next two decades, the per-capita emissions will still fall, as a result of this policy, from IEA’s 2035 Current Policy Scenario of 3.1 metric tonnes to 1.5 metric tonnes, a 52% decline. Since this expenditure is financed by the carbon tax revenue, it will be a revenue neutral policy with no implications on the fiscal deficit.

There is, however, a problem with carbon tax. It’s regressive in nature, i.e. it affects the poor more than the rich. Fortunately, there’s a way out. Economists in the West have argued for a ‘tax and dividend’ policy according to which the revenue thus generated is distributed equally across its citizens and as a result, the poor are more than compensated for the loss since in absolute amounts the rich pay more carbon tax than the poor. Such a policy of cash transfer, which might work in the West, however, has a problem in the Indian context, which has been discussed in the context of the Right to Food debate; so, we need not go there.

We propose that, instead of a cash transfer, the other part of the carbon revenue can be used for an in-kind transfer of free electricity to the population who contribute less carbon than the economy average and universal travel passes to compensate for the rise in transport costs and to encourage the use of green public transport. Such a policy justly addresses the widening schism between two countries co-existing side by side i.e. Bharat, which bears the climate impact burden, and India, which is imposing that burden because of their lifestyle choices.

As of 2014, more than 20 per cent of India’s population did not have access to electricity. In July 2012, India experienced a blackout affecting roughly 700 million people. Through this Right to Energy programme, every household in India will have access to electricity, a feat that almost all the governments since independence have dreamt of but failed to deliver. The free entitlement of fuel and electricity for a household comes out to be 189 kWh per month based on our calculations from the National Sample Survey (NSS) data. Anything above this limit will be charged in full to control misuse of this policy. Travel passes with pre-loaded balance amount of around Rs. 4600 per household per annum, which can be used in any mode of public transport, private and government alike, will be available for every household to avail.

The level of carbon tax required for this policy to come into effect is Rs. 2,818 per metric ton of carbon dioxide. It will be levied upstream i.e. at the ports, mineheads etc. While almost all the commodities’ prices will rise, the highest rise will be in fuel and energy since the carbon content is the highest in this category. To give an idea about the pinch that will be felt, the average price of electricity will rise from its current value of Rs. 3.73 to Rs. 4.67 per kWh.

This policy not only curbs emissions but also delivers on providing more employment since the employment elasticity in greener forms of energy is higher than those in fossil fuel based energy. Higher prices of commodities according to their carbon content will induce households, including the rich, to look for greener substitutes. It has the effect of enticing even the poor to move away from traditional forms of energy consumption because the price of energy will be zero for them (provided they consume less than the cut off limit) as compared to a shadow positive price in terms of time used for collection of wood/cow dung cakes etc. Availability of free energy also addresses the issue of stealing of electricity since there will be no incentive left for those stealing right now . In India, even in 2014, about 0.8% worth of GDP is estimated to stolen electricity through corrupt means. It’s difficult to put a figure on health benefits such a policy will entail, but as a rough measure, a significant part of more than 3 per cent of India’s GDP currently spent on pollution-induced diseases will surely come down.

If we want to breathe to live, India needs to make such a policy leap.

* Rohit Azad teaches economics at JNU, India and Shouvik Chakraborty is a research fellow at Political Economy Research Institute (PERI), Amherst, USA. This has been published in The Hindu as an oped on Dec. 12, 2017.

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Rising Inequality and the Global Resurgence of the Ultra-Right

[This is the text of a talk I gave at the New York University on May 8, 2017]

What follows is a take on the rise of Hindutva in India from the lens of an economist. At the outset, let me state the basic argument I am going to present to you. The global rise of the Right is a response to the crisis of Neoliberalism both in the First and the Third Worlds. In the absence of a response from the Left (defined in a broad and inclusive sense) to these challenging times, these trends are going to continue.


India is as much a part of the global shift to the Right as the First World, so, let me begin with the circumstances under which this resurgence has taken shape. Before I do that, the term ‘Right’ needs to be defined carefully. One can be on the Right in two different, but not necessarily independent, senses.

Right in the first sense is its position in favour of Capital against Labour. Capitalism as a system is premised on the contradictions and struggles between Capital and Labour. But this same struggle also generates the possibility of pitting one section of labour against another on the lines of identity, gender, region or religion. Being on the Right in this second sense means those who attack and undermine the rights of the religious/racial minorities, women, immigrants. So, for eg., Obama/Chirac/Manmohan Singh/Cameron can be considered to be Right-wing in the first sense but not necessarily in the second. We tend to use the term ‘Centrists’ for such a political position. I think, however, that it hides their Right-wing politics in the first sense. To distinguish them from those who are on the Right in both senses of the term, for eg. a Trump/Le Pen/Modi/Farage, I use the term Ultra-Right. This leaves the political spectrum with a third pole of the Left, which is on the Left in both senses of the term. A Sanders in the US, a Melenchon in France or a Corbyn in the UK can be considered as broadly representing such a position. In the Indian case, we don’t currently have such a significant third pole.

Another reason why I don’t believe in the term Centrists is because being on the Right in the first sense, by creating misery for Labour through its pro-Capital policies, creates fertile political grounds for a rise of the Ultra-Right while the term Centrist gives the impression as if they are neutral to this political process. Ultra-Right uses this opportunity by posturing to be pro-labour, for eg. by slogans of anti-globalisation, anti-corporatism, anti-corruption to gain political currency. Once in power, however, it unleashes its Ultra-Right agenda.

Most of these Ultra-Right candidates have gained popularity by their slogan of going local instead of global by cutting away from globalisation, which on the face of it looks similar to the demands of the Left but from the perspective of the Right, it is an empty rhetoric. Any such process of delinking would require fundamentally challenging the hegemony of global Capital, something that the ultra-right is neither capable of nor does its class interest allow. Without that challenge, there is no possibility of a reversal of the process set in motion by global Capital because it stands to lose in this process of delinking. What we might see in the immediate future are trade barriers/anti-immigration laws, which are mutually devastating for the world economy in general as was seen during the Great Depression of the 1930s. This struggle to win away global markets against each other resulted in the Second World War, which ultimately pulled the world economy out of the Great Depression. But is that the only direction in which the world can move today? I am by no means suggesting here that there is another global war waiting to happen simply because Capital is too tied globally today than it has ever been but growing militarism, which is fuelled by jingoism, as a politico-economic means out of this misery, is not altogether an unlikely possibility.

How did the current rise of the Right take place across the world?

Neoliberal Crisis and the Global Rise of the Right

At the cost of sounding too general, let me state that what we are seeing the world over is a crisis of Neoliberalism. Neoliberalism as a political ideology came into being in the late 1970s as a result of a dual crisis: crisis of the welfare state and crisis of an alternative to capitalism.

Hard won battles across the First world by organised movements in the 1950s and 1960s, of labour, which demanded better wages and other social security measures; of gender equality, which demanded equal pay as men, freedom to plan families or not to have any, equal legal rights for women; of civil rights, which demanded equality in opportunities and access to resources to people of colour as well as the thriving possibilities of an alternative world with the newly independent countries in Asia and Africa choosing to chalk out an alternative roadmap for post-independence development, which came to be known as the Third World, had frightened Capital. As a result of this growing insurgency by the people, it had to acquiesce to a welfarist State that had the responsibility of providing welfare to the working people in terms of better pay, legal rights to women, civil rights, affordable health care, access to public education, social security for the elderly.

However, this process was laden with contradictions. The political unrest was frightening for capital. An ever expanding State, which can be forced by different pressure groups into titlting the political rights and economic entitlements in their favour against the interests of capital also creates a political possibility of overthrowing Capital itself. So, disciplining the labour force becomes paramount. And this is exactly what the neoliberal order, which came into existence in the mid-1970s, attempted to do by going global and the resultant threatening possibility of losing jobs through outsourcing brought the marching forces of the Labour in the first world to a grinding halt. Popular movements, labour unions were thrashed in the wake of the new world order. The political and social instability that these movements had created in the First World could now be controlled simply by a threat of job-flight. It is in this process that the essence of inequality, which became so pervasive globally, lies.

This is because while Capital became global but Labour simply cannot. So, even as productive capital moved out of the First World, profits accruing to the capitalists didn’t since the ownership of this globalising capital was still concentrated in the hands of a few in the First World. An Apple manufacturing unit can move to China, thereby, uprooting its erstwhile US workers but the profits flowing out of these units accrue to the stockholders of this company. For eg., out of a dollar value in an iPhone, approximately 60 cents accrue as profits to Apple while only 2 cents go to the Chinese workers! What can be a better way of disciplining the working people domestically. It is a win-win situation for capital. It exports the political and social instabilities to the outlying regions and at the same time increases its profits since the wages in these regions are lower than what they would have to pay to the highly mobilised and politicised working class in their own backyard. This lies at the heart of inequality within the First World countries. Thomas Piketty has worked extensively on this rise in inequality in the First World countries, so, let me show you evidence from the US, the UK and Australia of how pervasive this inequality is (Data used below is from The World Wealth and Income Database prepared by F. Alvaredo, T. Atkinson, T. Piketty and E. Saez).

World Inequality

The same process, however, creates inequality on the other side of the world with China and India as prime examples. This job flight to the periphery is premised on low wages and high productivity of labour, which displaces labour with machines, thereby creating inequality. Here are the charts for the some of the so-called emerging economies (from Piketty compiled by John Cassidy in a New Yorker article).


The resulting popular unrest among the dispossessed, both in the First and the Third world, in the absence of a credible progressive alternative is channelised by the Ultra Right.

What are the solutions to this rising inequality? Noam Chomsky says that, historically, two possible solutions have been provided. One was from James Madison, the father of the US Constitution, who said “to protect the minority of the opulent against the majority”, there is a need to reduce democracy. The other solution provided by Aristotle was to reduce inequality through welfare measures. These can be seen as the two poles of the Right and the Left respectively today as well. Let me locate where the Indian politics lies today within this spectrum.

The Current Rise of the BJP

While the problems that India faces are seemingly different from the ones faced here, they are not altogether different. The central difference lies in the fact that the Great Recession did not affect India as much as the countries in the First world. In fact, India had an impressive economic growth from 2003 through 2011. After that there has been a decline in its growth but it still cannot be described as an economy under any severe economic crisis. What is however remarkable about its growth, and which I believe lies at the heart of the rise of the Bharatiya Janata Party, the current party in power under the leadership of Mr. Narendra Modi, is that this growth was premised on exclusivity. A popular term used in India for this phase is `jobless growth’. You can imagine that a jobless growth is by its very definition inequality enhancing. A large part of the growing population is either over-exploited by encroachment of their resources by global Capital or completely excluded from this growth. And indeed, as a result of this process, wealth inequality has risen drastically in India over this period (Compiled by Manas Chakravarty, The Mint in an article. The data is based on Credit Suisse Global Wealth Databooks).


Initially the way this inequality was responded to, because of the political pressures from social groups and the Left, was through some attempts towards redistribution by the State, the most popular, and perhaps the only of its kind in the world, was a guarantee of jobs for 100 days in rural India, which came to be known as Mahatma Gandhi National Rural Employment Guarantee Act. But gradually the political pressures from the Left declined drastically, primarily because of its own compromise with neoliberalism. While protesting nationally against the increasing land grab by the big corporates resulting from this growth, they were advocating doing the same in a state in which they were in power! Things came to such a pass that the Left used police firing which killed farmers protesting against Left’s attempt to grab their land for a big corporate house. This to my mind marks distinctively the shift in the politics of India to the Right, which essentially meant that even the Left was moving to the Right in the first sense of the term. To be sure the Left as a parliamentary force was never significant so as to stake claim over forming the national government. The sense in which I am using their strength is as a political force which formed an alternative political voice. But seduced by the glamour of neoliberalism, it vacated that space, which has not since been occupied, at least not in a definitive sense, by any political force in India so far.

With the political spectrum moving to the Right across established political parties, it had already created the basis for the rise of the ultra-right, the final process of which was concluded by an all India political movement by the civil society against rampant corruption by the Congress Party in its second term in office. If you were to ever do a poll on which are the most important agenda on which people vote in India, corruption and price rise will surely be at the top of that list. While price rise is easily understandable as a concern for a vast majority of the population since their incomes are not indexed to inflation, it’s difficult to locate the importance of large scale corruption as a game changer in the same way. The reason why corruption matters for the people is because it exposes inequality in its most naked form. So, while the poor are trying to make their ends meet, the ruling elite is seen snatching away their potential resources to favour those who already have plenty of it. The unfairness of the system stares you right in the face in moments such as these. This popular anti-corruption movement led to the decline of the Congress, which was replaced by the current regime led by Mr. Modi. It is yet another classic case where, implementing the agenda of the Right in the first sense of the term creates political space for the ultra-right.

For the first time in the history of India, the BJP has surpassed the grand old party of India, the Congress in terms of their all India representation in legislative houses across India (see the chart below from on an article by Roshan Kishore, The Mint)


While corruption played a critical role at the macro level, at the grass root level, the party was busy setting a communal discourse, the most important of which was the issue of `love jihad’, i.e. Hindu girls being lured into marriage by Muslim boys, especially in the state of Uttar Pradesh. Nakul Sawhney’s documentary titled `Muzzafarnagar Baqi Hai’ shows quite persuasively how the BJP succeeded in polarising the electorate in the last general elections.

Mr. Modi is, however, no ordinary ultra-right wing politician and this is not the first ultra-right government in India. His party has been in power earlier under the leadership of Mr. Atal Bihari Vajpayee, who was known to be a person choosing the middle path within his party. Like Mr. Modi, Mr. Vajpayee too was a great orator and they were both products of the ultra-right organisation called the Rashtriya Swayamsevak Sangh (RSS) or Sangh as it is popularly known. But the basic sense in which their personalities differ, and I think personalities play a critical role in politics, is the authoritarian streak in Mr. Modi. He is a man who detests dissent within his party, his mode of functioning is extremely centralising. In other words, he has all that it takes to be a fascist leader. He personifies the ultra-right agenda.

The political organisation that he owes his allegiance to has a central agenda of replacing India’s secular republic by a theocratic Hindu state. But Hindutva, as opposed to the Hindu religion, is to be seen as a political agenda and not religious. Again since individuals matter, let me give you an example of Savarkar, one of the founders of the RSS, who was himself an atheist even as he promoted the cause of hindutva for all the wrongs done in the past by the Islamic rulers. The core of the political agenda of the BJP draws quite critically from these so-called wrongs which it seeks to set right. To give you a few examples of those wrongs, which have driven the political agenda of the BJP to this day, were demolition of temples by Islamic rulers, their oppressive rule targeting the hindus and forced conversions of an otherwise peaceful original Hindu inhabitants. To suit the political agenda of the present, a narrative is therefore created about the past which endorses this distorted view of the past. In Romila Thapar’s words “false history becomes instrumental in the promotion of political mythology.”

Unfortunately, the foundations of this ideology have been sown quite deep in the psyche of much of India’s Hindu population, which makes them susceptible to accepting this ideology at a much larger scale than what we have at the moment. And it is this looking at the past with a lense of the present to influence the course of events now, which is, I think, at the core of the ultra-right agenda in India.

But what is this past that the Sangh harps upon? The starkest form in which it comes out is their interpretation of the periodisation of India’s history. So, the usual division of Ancient, Medieval and Modern History, for the Sangh, is translated into the Hindu, the Islamic and the English period with the Islamic period interpreted as representing the dark age in the history of India while glorifying the Hindu past.

A past is reconstructed, which is factually incorrect, for eg. the Budhhist period is assimilated into the Hindu period. It is also ideologically motivated, for eg., as Romila Thapar shows, that the culture of this ancient past, which is hardly recognisable to current forms of hinduism practised in India, are suppressed whereas the one which comes closest to today’s forms of hindu worship, the bhakti sect, which developed during the medieval period, is undermined.

Let’s take the specific wrongs of temple demolition or forced conversions. Historians, such as Harbans Mukhia, have argued that for political stability of a foreign rule, help from the existing power structures were required. They needed the local elite, who were Hindus, to act as their eyes and ears while not antagonising the local population. A religious assault, through demolitions of temples would have meant a loss of support among the general population and hatred for Islam, quite counterproductive to establishing the rule. Instead such demolitions, which usually took place in the territory of the enemy and not within one’s region unless they became sights of a local rebellion, were symbolic of a conquest. That such acts were not religious but political comes out quite clearly in the case of a Hindu king of Kashmir, Harsha, who had an officer appointed especially to plunder the Hindu temples for the amount of wealth they amassed. But this is hidden in popular discourses to make the past look like a past of contesting religions and not one of contesting political forces.

Religious conversion was limited to those who were punished for their disloyalty to the emperor and giving up one’s religion, which was considered the highest value in life, was a way to show genuine loyalty to the king. There is no evidence of forceful mass scale conversions, in fact if such a thing had happened, it would have found mention with much fanfare in the Mughal courtier’s accounts.

Let us look at how these myths about the past have influenced the present.

Late 1980s and early 1990s were times of political upheaval in India. The structural break in Indian politics came in August 1990 with the then Prime Minister V P Singh announcing in the Parliament that his government was going to implement 27\% reservation for other backward classes at all levels of government services, a policy which would have inverted the entire power structure dominated by the upper caste elite of the Indian society. The convulsions of this moment became a defining feature in Indian politics.

It created for the Sangh both a fear of loss of control on the homogenised Hindu identity it had been striving to create and at the same time an opportunity to reorient the anger it generated among the Upper caste elite towards changing the political discourse, in the absence of which the entire agenda of Hindutva would have got derailed. It led them to launch an all-India Rath Yatra (Chariot March) within a month of this move demanding a Ram temple to be constructed where Babri Masjid stood in Ayodhya. This movement symbolised their pledge to correct one of the wrongs committed during the dark ages of Islamic rule in India. It culminated in a manual demolition of the masjid on Dec. 6, 1992, which marked the beginning of the march to power of the ultra-right in India. It was projected as a moment of bringing the Hindu honour back from the clutches of Islam. This demolition was also a violent reminder of the underlying subconscious hindu identity that the Sangh had been assiduously trying to create over the years. The Sangh had succeded in setting the agenda for the future in Indian politics. Electoral process, campaigns, rallies haven’t been the same ever since. Hindutva had become centrestage of Indian politics and the other political formations had to react to that. BJP has gained steadily in strength after that turning point in Indian politics.

But this process of diverting the political discourse from social reform of the Mandal commission towards a communal agenda also had its contradictions. By taking a position against the Mandal Commission, the BJP further exposed its upper caste basis and its own allegiance to the hegemonic power structure within Hinduism. How did they manage to contain this contradiction? The only way it could do it is by asserting their common Hindu identity where myths of the past were utilised to create a narrative of an aggrieved Hindu identity. Its success lies in a careful mobilisation of the other backward castes. That they have managed to do so was clear in the recently concluded elections in one of the fiercest political battles in India, Uttar Pradesh, where the electoral polarisation of the Hindus cuts across caste lines as shown here (see the chart below from on an article by Roshan Kishore, The Mint).


Resistance to the Ultra Right

But is there an opposition in sight to this reactionary and divisive ideology? The political opposition to this march toward a Hindu rashtra is quite meek to say the least. One of the central reasons for that is the fact that all mainstream political parties, including the leadership of the mainstream Left, in India today, are on the Right, albeit in varying degrees, in the first sense of the term. To win this political battle, therefore, the response has to be carved out against the Right in both senses of the term. What is required is an ideological alliance of the politics of redistribution and the politics of honour.

Politics of redistribution

I will classify the politics based on class as the politics of redistribution because that is the primary objective of this formation. Given the political discourse on inequality across the globe, it might be tempting to argue that the time for politics of class has come back and it could be used as a unifying principle for those who are at the receiving end of the crisis of Neoliberalism. But I would like to argue against such a position. While class can be a unifying force, it is at the same time a homogenising force, which can be oppressive for the heterogenous minorities with the oppressed classes. One of the central problems with the Indian Left has been the forceful conflation of the identity question with the question of class. While nobody would deny a caste-class overlap in the Indian case, but a fight for economic entitlements alone i.e. a pure class politics, which leaves the social order intact, is not genuinely egalitarian. No wonder there is such a disdain for the Left within the Dalit movements because such an understanding questions their very existence and presents a logic of assimilation of these movements within the broad left movements. Moreover, the old Left has itself compromised on its agenda of redistribution. But this point of the failure of just class politics to meet up to the current challenge holds true for a new political formation based on these lines as well.

Politics of Honour

The BJP has learnt the political game of winning votes based on identities. As shown earlier, it has already beaten identity-based parties in their own political game, so, the limitations of exclusively identity based politics is quite clear. But it has managed to do so by camouflaging their upper-caste ideology as a pan-Hindu ideology. Moreover, the current identity based political parties have a limited reach not because of the incorrectness of identity based politics per se but because, instead of raising issues of identity and launching transformative social reform movements, they have positioned with the Right in the first sense by compromising with big business while giving patronage to a small section, often a sub-caste of the political leader, of those they seek to represent. So, while the majority of the Dalits are surviving as scavengers, having a Dalit Chief Minister, which in itself is quite important because such an inversion of caste hegemony is symbolic of a change, or a Dalit CEO is neither revolutionary nor can form a basis for a transformative mobilisation against caste oppression.

Despite the failure of the current identity based parties, I will stick my neck out to say that identity has to be one of the key mobilisers against the force of hindutva today. If there were one category on which oppression has been propagated on the Indian people, caste will come way ahead of any other form of oppression. So, identity based movements have to be the centrepiece of any revolutionary movement in India. More importantly, they are the only credible voice which can break the backbone of Hindutva by effectively challenging the very narrative of homogenised Hindu identity on which the entire ultra-right movement is based. But in order for it to be a formidable challenge, it needs to expose the upper caste-big business alliance at the top, for which it will need on its side masses oppressed by this regime independent of their identity. In the absence of such an alliance, it will always be seen as representative of this or that particular caste to which the leader belongs as most of the identity based political parties are in India today.

To conclude, new political formations will have to evolve an agenda which builds on intersecting unities of identity and class, which brings what is more in common than what is not between them.

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The Ponzi is On!

A more detailed analysis of the House of Debt as an article in the Hindu today.

The Indian corporate sector is grappling with a severe bad debt crisis, and as a result, the banks (public sector banks) are increasingly getting saddled with non-performing assets. Calling it India’s sub-prime crisis might be an exaggeration but I would just like to add ‘not yet’! Moreover in conditions such as these, with the global economic crisis in the background, it’s better to be cautious rather than looking back at the data when it’s all over. This might also help policymakers to take regulatory steps in time to control the contagion before it spreads in the banking system in a big way.

Read on …


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Plurality in Teaching Macroeconomics

In the aftermath of the Great Depression, there was turmoil in the field of Macroeconomics, which resulted in the Keynesian ‘revolution’. However, the current Great Recession, the worst crisis that capitalism has faced since then, has failed, at least so far, to generate a change in the teaching and practice of Macroeconomics. This seems bizarre as if nothing has happened and the economists are just going about doing business as usual. Without going into the politics of why this is so, I focus in this paper on how Macroeconomics ought to be taught to students at the intermediate level, which gives them an overall perspective on the subject.

Unlike my other posts, this is slightly formal and academic in nature so I would like to apologise to the readers in advance.

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More from the House of Debt

This gallery contains 5 photos.

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Adani Power

The story of bad financial health continues for Adanis. Loans don’t fall despite deteriorating health.


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