On 5 November, in the midst of a bruising election campaign in Bihar, a raging pandemic and a crushing recession, Prime Minister Narendra Modi took time out to address an exclusive meeting. Going by the participants and what was said by the PM, it was a high stakes marketing pitch. Called the Virtual Global Investors Roundtable (VGIR) 2020, it had 20 of the world’s wealthiest investors, tuned in to listen in on what the Indian prime minister had to offer. These investors are pension and sovereign wealth funds that manage assets worth over $6 trillion between them. Included among them were: GIC, Temasek, US International Development Finance Corporation, Pension Denmark, Qatar Investment Authority, Japan Post Bank, Korea Investment Corporation and others like them.
From the Indian side, six leading industrialists were there too: Deepak Parekh, Ratan Tata, Nandan Nilekani, Mukesh Ambani, Dilip Shanghvi and Uday Kotak. Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das were in attendance as were various top officials of financial regulators.
What Modi said in this meeting may be called the flip side of the coin. He and his government have been telling the people in India that they are reforming the economy to make everybody prosperous. That is why, the government says, they have changed labour laws, brought in new agriculture related laws, changed tax laws (especially corporate tax), and so on. It is all to do with making India strong and prosperous.
In the meeting with global investors the tone was subtly different. Modi reportedly pointed out the corporate tax regime has been eased in India, new labour codes have been brought in and production linked incentives are being given to different sectors. What he was really saying to the mandarins of High Finance was: you will not have to pay much tax, the labour force you will employ will not create much trouble by asking for more wages or benefits because our laws are now very employer friendly, even our agrarian system has been opened up for corporate investment, right from cultivation to marketing – so then, how about it?
Modi reportedly said he is conscious of the requirement of the funds to provide the best and safest long term returns. “Therefore, our approach is of finding long term and sustainable solutions for issues. Such an approach mixes very well with your requirement.”
Modi hit the nail on the head – indeed the Modi government’s approach “mixes very well” with the demands of pension and wealth funds. For, what do these funds want? In one word, they want profit. They will invest anywhere and everywhere there is the slightest chance of making more money. Their commitment is neither to the people of the country where their funds flow, nor to the workers they employ. Their sole and single-minded purpose is to get better ‘returns’ for their clients. If needed, they will withdraw their investments in double quick time, or shift it to some other industry. If needed they will sell the industrial assets they invested in to get a better return.
Repeated Appeals to Foreign Investors
In recent months, as the Indian economy has gone into a tailspin, the Modi-led government has been incessantly begging foreign investors to put their money in India. In July this year he addressed the US India Business Council (USIBC) India Ideas Summit, attended by US businesses where he listed out all the ways in which his government had eased their path. Among the sectors in which foreign companies can invest, he listed:
- Insurance sector, where Foreign Direct Investment (FDI) limit has been raised to 49%, and in insurance intermediaries, to 100%.
- Tech sector, where opportunities await in “5G, big data analytics, quantum computing, blockchain and Internet of things,”
- Agriculture where food processing sector is expected to be worth over half a trillion dollars by 2025.
- Health sector, where India is growing at 22% every year
- Infrastructure, where American companies can gain from building housing for millions, roads, highways and ports
- Civil aviation where passengers are expected to double in the next decade and companies need a thousand aircraft
- Defence, where FDI limit has been raised to 74%.
In September, Modi addressed the US India Strategic Partnership Forum via video link and listed out the benefits of investing in India, which included: labour reforms that were reducing compliance costs for employers and providing social security for workers, a better tax regime, and the Insolvency and Bankruptcy Code for reducing risk, among other advantages.
“Friends, the road further ahead is full of opportunities,” Mr. Modi reportedly said. “These opportunities are in the public and private sector. They cover core economic sectors as well as the social sectors.”
He again reiterated that his government had opened up the coal, mining, railway, defence, space and atomic energy sectors for foreign investors. He also talked about agricultural manufacturing reforms, and a $14 billion agricultural financing facility, launched in August.
Actual Reason for ‘Reforms’ Revealed
So, there you have it. The real reason why the Modi government has been in such a hurry to ‘reform’ the economy is that they want to make it more accessible for foreign investments. All the changes in laws, tax cuts, ease of doing business, scrapping this or that body, appointing this or that Authority – all has been geared towards this end. This is not speculation or surmise, PM Modi himself is admitting this repeatedly to foreign audiences.
Modi and his supporters of course couch this strategy in the very opposite terms. They say it is to make India ‘Atma Nirbhar’ or self-reliant! And that, through such self-reliance, peace and prosperity will come to Indians. How selling off your public sector which is owned by the people to foreign companies can be called self-reliance only Modi can explain. These companies are not coming to India with their deep pockets only to distribute alms. They are predatory corporations that are investing in order to maximise their profits. True, they will invest in setting up some productive capacities or expanding others, or bringing in new technologies. But the same could have been done by the Indian government also. As the trade unions working in coal mines pointed out last year after they observed a successful strike against commercial mining and opening up of coal-mines to foreign companies, the public sector Coal India Ltd was giving thousands of crores of rupees to the government, both as taxes as well as dividends. If foreign investors take over, not only will tax accruals go down but dividends will go into their pockets. In addition, they will cut down the workforce, and further casualise it.
Although Modi must surely be aware, but he did not reveal one thing to all these investors he was so assiduously wooing. This was the fact that on 26-27 November this year, workers across India are going on strike precisely against these policies that he listed out to lure foreign investments. And, they will be joined by crores of farmers opposed to the new farm laws, who will march to Delhi to gherao the government, as per their reported plans.
Little do the foreign investors realise – and perhaps neither does Modi himself – that what he is tomtomming as attractive offers of sale are life and death questions for most Indians, and they are ready to fight for their future.