In this pair of articles, Dr. Manuj Mukherjee looks at how the new bills play into a dynamic between the global North and the global South that continues the legacies of colonial extraction. References backing up the assertions to this piece can be found in its companion notes, which you can access here. You can also read part 1 here.
The previous part illustrated how B. R. Ambedkar and Raul Prebisch, coming from completely different vantages, converged on the same solution, i.e., industrialization in order to increase the standard of living of the populace. This is not to be confused with industrialization as a fetish that is a culture among the corporates and think tanks. This vision of industrialization as a fetish is a cultural construct utilized by the global north in order to push its vision on how the global south should industrialize, in order to maintain the global north’s parasitic accumulation and the global south’s continued subjugation. The previous part detailed the designs of this notorious agenda. This part will elucidate how the new farm bills and other bills directly fit into the global north’s designs.
Recall the three postulates of W. W. Rostow on what the global south should do, i.e., commercialize agriculture, spend in developing infrastructure, and leave industrialization to private players. The agrarian bills take up the first of these, i.e., commercializing agriculture. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act (APMC Act) ensures any trader can trade directly with the farmers in the Mandi (section 4), no state taxes shall be applicable to them (section 6), and price discovery can be done by central government-promoted companies (section 7). The Essential Commodities (EC) Act enables hoarding of food grains without any limits, except under some emergency.
Together, these two acts ensure that big corporations like the Ambanis and Adanis can hoard agricultural produce to the hilt (EC Act); at the same time, they can enter the mandi and destroy any competition there (Section 4, APMC Act). Furthermore, without import barriers they can import produce from countries producing them at cheaper rates and hoard them, too. In other words, they would have absolute monopoly in commanding the purchase price from the farmers. Indeed, they can become the government-promoted companies doing price discovery (Section 7, APMC Act). No state legislation can be used to thwart them (Section 6, APMC Act). This will ensure farmers’ income plummets faster than present. The larger and middle farmers will then go toward commercial agriculture with companies (coming under the rubric of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act (FAPAFS Act)), while smaller farmers and agricultural laborers will need to migrate to cities and industries creating surplus industrial labor. This additional aspect of creation of surplus industrial labor will also play its part in the greater scheme of things, as explained later.
Second comes the increase of freight movement infrastructure. Aided by the advice of “independent experts” such as the Boston Consulting Group (BCG), the government has started expanding waterways and freight railways. BCG reported that freight movement along inland waterways cost 1.1 INR/tonne-km, and railways cost 1.4 INR/tonne-km, as opposed to 2.6 INR/tonne-km along roadways which carries over 60 percent (as per 2011 data) of the entire freight movement.
Accordingly, the government enacted the National Waterways Act, 2016, despite strong opposition from certain states. Madhya Pradesh, for example, was strongly opposed as the identified waterways do not have enough water for freight transport outside of the monsoon, and hence pumping in excess water could lead to irrigation shortage. River linking has been questioned on ecological grounds, as well as creation of massive embankments, barrages, etc., needed to facilitate river linking in already drying rivers. Despite opposition, the National Waterways Act, 2016, was passed, clearing the way for “cheaper” freight. Indeed, one should really look into the fact that the passing of National Waterways Act was accompanied by godman Sadhguru’s corporate-backed call to “Rally for Rivers,” which attempted to shift the focus of the problem of Indian rivers to a simple lack of trees. On the railways side, the World Bank, the global north’s giver of “aid,” has already stepped in to fund the Eastern Dedicated Freight Corridor (EDFC). Although it might be worth mentioning that unlike the Marshall Plan, this aid is still a loan that India needs to repay.
The government is thus steadily marching toward creating the ideal “competition state” envisaged by the IMF, by checking all the three broad criteria generally demanded by the IMF. The first criterion, that is devaluation of currency for easy export of raw materials, was already met long back in 1999. The remaining criteria of making investment cheaper and loosening regulations are primarily addressed by the industrial codes, in conjunction with other regulations, as described next.
The easiest method of drastically reducing investment costs is decreasing wages, which the Code on Wages, 2019, sets out to do. The minimum wage is fixed on the basis of food consumption units, reflecting the kilocalories of nutrition needed by the workers and their family (assumed to consist of two children). The Code of Wages 2019 uses gender discrimination to assume a total of 3 units by assuming 1+0.8+0.6+0.6 = 3, where the male (1) is assumed to consume more than the female (0.8). Furthermore, it is assumed children only require 0.6 units, whereas experts maintain that ideally it should be 0.75. In total, we should therefore have 1 + 1 + 0.75 + 0.75 = 3.5 units as a bare minimum in order to fix the minimum wage.
One should further note that this somehow assumes the parents of the workers are self-sufficient and do not depend on their income for consumption needs. Moreover, the Code of Wages is the modification of the dated Minimum Wages Act, 1948, and other acts dating to no later than the 1970s, which determined nonfood expenditure as 25 percent of total food expenditure by the worker. Times have changed, and a greater amount of nonfood expenditure is now required by the workers, for example, cellphones. However, the nonfood expenditure is still pegged at 25 percent of the food expenditure, which itself is reduced from 3.5 to 3, thus further lowering the minimum wage.
Further avenues of investment cost reduction have been envisaged. The Code on Wages calculates minimum wages based on a normal workday of nine hours, instead of the standard eight, thereby giving the industrialist one hour of work per worker, per day, for free. The second innovation is the institutionalizing of contract labor. The Occupational Safety, Health, and Working Conditions (OSH) Code, 2020, does not contain any provisions for equal treatment for contract labor, who perform work of a similar nature as that of permanent workers in the same establishment. In other words, the corporations pay less as the proportion of contract workers increase. Furthermore, the responsibility for a violation of the OSH code with respect to inter-state migrant workers lies with the immediate contractor, thereby further shielding the principal employer, the large enterprise.
Such provisions are bound to be met with workers’ unrest, and an ideal competition state should be able to blunt them out. The key concept deployed to take the steam out of workers’ unrest is the reserve army of labor. Michał Kalecki writes in his seminal essay “Politics Aspects of Full Employment”:
Indeed, under a regime of permanent full employment, the “sack” would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension.
Indeed, to ensure higher bargaining power of the employer, surplus labor is needed. The major source of this surplus labor will be created by the agrarian bills as discussed before. Without sustainable incomes, agrarian labor will be forced to migrate to the city and join the industrial labor force for sustenance. The New Education Policy (NEP) 2020 seeks to add to the pool of surplus labor by introducing internship-embedded degree programs, as well as extend apprenticeships to schools in the guise of “vocational education.”
However, following the successful creation of a competition state, more and more global north firms as well as their subsidiaries, or supply chain partners, are likely to set up shop in India, and the surplus labor created through the farm bills might not be enough to give the industrialists bargaining power over the workers. The power of the “sack” thus needs to be strengthened, a task taken up by the Industrial Relations (IR) Code, 2020. The IR Code, 2020, institutionalizes fixed-term contracts, fixing tenures of employment. Workers can be fired at will after that tenure expires, even if their labor is still needed. The government regulations on retrenchment have also been loosened. Earlier, establishments employing at least 100 workers needed government permission for retrenchment. The number has been increased to 300. Furthermore, apprentices, to be sourced using the NEP 2020, will be unable to avail of even the bare minimal protection the IR Code, 2020, affords.
Finally, the IR Codes comes down heavily on the right to strike itself. The definition of strike has been broadened to include “the concerted casual leave on a given day by fifty percent or more workers employed in an industry.” A 14-day prior notice is now needed to strike. Furthermore, the Bill also prohibits strikes and lock-outs during and up to seven days after a conciliation proceeding, and during and up to sixty days after proceedings before a tribunal. A final nail in the coffin is delivered by this IR Code, where it provides the government with the power to exempt any new industrial establishment or class of establishment from any or all of its provisions if it is in “public interest.”
Supply chains and manufacturing units of industries owned by the global north have already started arriving in India. Wistron, a company appearing in Apple’s supply chain, has already set up shop in Karnataka, and is planning a plant in Maharashtra. Pegatron, Apple’s second-largest manufacturer, is also looking to set up shop in India. In fact, Tesla, which in 2018 blamed “government regulations” in India for not setting up a manufacturing unit in India, is now ready to set up shop in India. In other words, India has successfully rebranded itself as a competition state.
Within months of starting its India operations, Wistron violated basic human dignity by simply refusing to pay laborers, resulting in massive unrest in its manufacturing plant. Apple’s PR team immediately stepped in to perform yet another PR exercise in sacking the vice president of Wistron, and putting it on “probation.” This course of action exactly adheres to the established pattern of Apple’s PR antics in China and Taiwan since the 2010s. Apple’s supply chains are managed primarily by the four contractors Foxconn, Pegatron, Wistron, and Luxshare. As soon as the news of a labor-rights violations by one of its suppliers makes sufficient buzz, Apple steps in by putting it on probation, while switching its production to the others. This is exactly what will happen in India, as an “on probation” Wistron and “on probation in China” Pegatron are both scheduled to open new plants in India. In other words, if morning shows the day, the future looks bleak.
How does one then dream of a better future for our people? Many years later, Prebisch realized the big folly inherent in his import-substitution scheme, that of the elite bureaucracy draining out all the wealth generated through it. He didn’t have a very clean path laid out for us to follow, but he did give us a short answer: “a complete social transformation.”
A more detailed rough note on both parts, including references, is available here.