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Current crisis regime and impact on class struggle in India

by Gurgaon Workers News | 15 February 2009 | No Comment | Last modified: 15 Aug 12:17 am

Working paper from Gurgaon Workers News, February 2009

The following is an invitation for further debate. We hope that this overview of the development of crisis in India will be refined, sharpened and widened by your response. So far it has been based on literary research and some recent experiences of living in Gurgaon and working with political groups around Delhi/ Gurgaon/ Faridabad.

We start with having a short look at the ‘Shining India’ [1] boom after the crash in 1991, whose inflated character is finally revealed by the current crisis. We then give an overview of the landmarks of the current crash and how it played out in the time between October and December 2008: Which sectors are affected and what is the state’s immediate reaction to it? The main question will then be about the material potentials of state and capital in India to counteract the crisis, to restructure exploitation in the main sectors, to secure the material and political reproduction of the working class. In the last part we risk an outlook: What kind of potentials for a wider proletarian movement - a new class composition [2] - might emerge as a result of the crisis induced social unrest? Here the limitations of this paper become most blatant, primarily because of the lack of first-hand reports about the impact of the crisis on the local working class reality in India, be it in the rural or urban areas. We therefore attach a short questionnaire [3] addressing groups and individuals interested in reporting about the local situation. We hope to be able to publish some reports in the coming issues of Faridabad Majdoor Samaachaar [4] and GurgaonWorkersNews and look forward to further exchange.

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1. The character of the Shining India after the crash 1991

2. Landmarks of the current crisis in India
a) The Crisis Blow
b) The state’s reaction

3. Margins of the crisis regime in India
a) The Social Unrest of the Rural World
b) The Energy Crunch
c) The Industrial Impasse
d) The political consequences for the crisis regime

4. New frame-work and potentials for proletarian unrest

1. The character of the Shining India after the crash 1991

India is the sub-continental test case for global capitalism, the country underwent all its development models: colonial rule followed by democratic catch-up nationalism and mixed socialist/market planning economy, which was able to transform into a centralised draconic state of emergency and to become a neo-liberal regime subsequent to a severe crisis. Each phase was a test case in the sense that ‘development’ had to secure both the reproduction of the class relations; and a promise for the masses of the impoverished rural population and the growing urban proletariat, a way out for the India of malnourished peasants and labouring children of the city slums.

After the non-payment crisis in 1991 India became a role model of neo-liberalism which managed to keep up its official shine much longer than for example its counterparts in South America. Official shine not only in the sense of a rapid growth of the gross domestic product (GDP) or of foreign direct investment (FDI) or stock-market indicators; official shine also in the material form of IT hubs, growing automobile and shopping mall culture. Already during the period of this boom a closer look at both the economic figures behind the GDP and the social reality behind the glossy facades would have been sufficient to discover the ‘non-integrative’ character of the ‘Shining India’ [5].

The boom was not based on the growth of official permanent employment and working class consumption, in fact it was based on the reverse trend and therefore not even able to seriously promise anything else. On a general level it was based on a massive influx of foreign capital, most of it short-term investment on the stock-market or investment in IT and real estate sector [6]. The IT sector accounts for a huge share of the Indian export but is minute in terms of employment [7]. The real estate sector saw a massive boom, but materialising in the form of now derelict shopping malls and gated upper-class apartment blocks, rather than industrial infrastructure, not at all in form of working class housing schemes. The state fuelled the general boom by reducing cooperate tax and excise duty [8], it financed this ‘passive credit’ by growing state debt [9], sales of government assets and shrinking state investment in infrastructure [10].

The hailed new consuming middle-class was neither a developmental middle-class of the public sector, e.g. scientists or other social managers, nor a business middle-class with an economic drive. It is mainly comprised of a relatively better waged, partly supervising workforce attached to the outsourced IT and call centre businesses, closely linked to the US financial sector. In that sense the rapidly growing sales numbers of e.g. the automobile or real estate sector, being the industrial back-bone of the ‘Shining India’, were based on a double credit bubble: first of all because the actual cars and apartments were bought on credit [11] and secondly they were paid off with wages linked to the outsourced US sectors. This would not be historically exceptional, as the industrial working class was never the first to consume their own products and regional development was often kick-start by global capital flow.

The ‘non-integrative’ character of the boom is primarily expressed in the regressive tendency of the industrial working class since 1990 [12]. Here the lock-out at Suzuki Maruti [13], India’s biggest automobile manufacturer symbolises a wider tendency: end of 2000 after a rather insignificant strike the workers were locked out and afterwards forced to sign a voluntary retirement scheme which resulted in the replacement of 2,000 permanent workers - probably the best paid industrial workers at the time - by temp workers earning about a fourth of their salary. Similar processes took place in all industries so that today the permanents account for only a small faction of the total workforce [14]. In terms of their wages these temporary workers are even further away from participating in the world of modern consumption. The textile industries are a sector of major importance in terms of employment. Here the Bombay strikes in the mid-1980s triggered a mass relocation of industry within India accompanied by deteriorating working conditions. Since then the enormous volatility of the currency values and textile markets in recent years resulted in frequent mass lay-offs and further casualisation of the workforce.

The disintegration of the urban workforce in India can only be explained by the even more intensive process of disintegration of the rural class relations. Throughout the 1990s the process of proletarianisation on the countryside accelerated, meaning that more and more people were not able to sustain themselves by agricultural activity [15]. The average land-holding per household decreased further; more and more people moved away from a traditional village economy towards other sources of wage income [16]. In certain regions these displacements were accelerated by the regressive drive of the boom for intensified resource looting e.g. in forms of mining. The boom regions of the Green Revolution, the grain basket of Punjab or the cotton bag of Maharashtra plunged into an economic and social crisis. Increased output was counteracted by rapidly declining cash-crop prices, the dependency on (micro) credits mainly for chemical input aggravated, the numbers of mass suicides of bankrupt farmers increased throughout the 1990s up to today [17]. The market forces ripped apart the populist cohesion of the New Farmers Movements of the 1980s, which were held together by the alleged common market interest of small peasantry and large-scale farmers. With the intensified dependency of the agricultural sector on credits and global trade, a business strata and whole semi-urban trading towns emerged whose dynamic growth was mainly due to their function as financial interface between cash crops and debt misery.

The social disintegration and widening gaps between losing and winning sections of society was mirrored by increasing ‘communalism’ [18], caste-based identity politics [19] and rivalries between single states and the national centre. The ‘Hindu/Muslim’ Bombay riots took place in the aftermath of the 1991 crash, marking an increase in religious and ‘communal’ tension, climaxing in the 2002 massacres of Gujarat. These primarily took place in areas where internal competition between the new sections of semi-urban traders, money-lenders etc. was the most severe. Regions which were starved of development or only used for cheap supply of resources were plunged into low-intensity warfare; with Maoists increasingly becoming an army of a parallel state of rural backwardness, rather than an armed class movement.

The classic organisations of the labour movement turned into agents of ‘development’, thereby becoming an active force that deepened the divisions within the proletarian movement. For example the West Bengal ruling CPI(M) when it attacks rural movements against industrial projects and ‘jobless destructive growth’ or the established unions when they turn against struggles of temp workers in the name of defending the interest of their permanent members [20].

Throughout the 1990s and 2000s both Congress and Hindu-nationalist BJP had a chance to de-legitimise themselves in government, trying to mediate the various contradicting dynamics of the boom. What is left at the end of the boom? A new generation of neither socially nor politically ‘integrated’ proletarians with little option to fall back on subsistence farming. Some of them have produced the goods and promises of the ‘Shining India’, most of them are on the move away from the misery of the soil, now finding themselves in a situation where the export and FDI fuelled boom cannot continue to offer the prospect of better jobs, but nor is the state able to guarantee mass welfare. In this situation the current crisis not only takes away the last veil of the ‘Shining India’, it might also act as a spark between the unsatisfied desires of the migrant rural and urban poor - for more hopeful thinking see the last part of this text.

The inflated character of the boom can be seen more clearly when we examine the impact of the current crisis in the next part. Once we look beneath the mere level of markets and have a closer look at conditions in the respective sectors in part three, it will also become clear that the phase of neo-liberalism was not an errant move away from ‘proper growth’, but a desperate attempt to re-structure class relations and to deal with the rapidly growing rural and mobile proletariat.

2. Landmarks of the current crisis in India

In the following we have a look at the main landmarks of crisis between October and December 2008. This is necessarily limited to economical figures and numbers - which absurdly enough became the main expression of our social relationships. They can only give us vague indications about the main dynamics and the depth of the crisis in India. In the footnotes [21] you can find a blunt over-view of the Indian GDP 2007/08, the composition of state revenue and expenditure. Here just the three main figures:

Total GDP: 1076 billion US Dollars at current prices
Total State Income (tax, customs etc.): 158 billion US Dollars
Total State Expenditure:174 billion US Dollars

This can give us a rough context for the currently announced figures of export slump, declining manufacturing output or government spending. For example we can see that a major slump in global trade would impact hard on a state which sources more than a quarter of its total receipts from export and excise duties. Major financial bailouts such as the announced 15 billion US Dollars loan waiver (non-repayment of farmers’ loans to major banks) for small farmers have a different dimension once we see that this sum accounts for nearly a tenth of the total state income 2007/08. If we can assume that the sectors most severely affected by the current crisis are finance, real estate, business and personal services, trade, tourism and transport then we have to bear in mind that these sectors account for more than a half of the total Indian GDP. State (external) debts and deficits did not increase much in recent years [22], but they remained significant if we see that out of the total expenditure of 174 billion US Dollars, about 45 billion is spent on interests and loans. In the whole debate about state debts politicians frequently remark that the external state debts are on a much lower level than before for example 1991. What they don’t mention is the major shift in sources of credits and debts from state borrowing to commercial borrowing, mirroring the privatisation of some of the former public sector companies: between 1990 and 2007 the external debts of Indian companies increased many fold [23].

a) The Crisis Blow

“Thus, the combination of low domestic absorption and high capital inflows have posed new challenges for monetary and exchange rate management in India”.
- Report of the Reserve Bank of India (RBI), December 2008

There are more blunt ways to declare the over-heating of an economy based on labour-intensive exploitation of a cheap workforce. During the last years of the boom the dependency on massive capital inflow [24] and on software-related exports led to an over-valuation of the Indian Rupee, to rising inflation and a constant increase of prime interest rates [25]. Under the burden of the unfavourable exchange rate and the high interest rates the traditional and labour intensive export sectors, e.g. textiles, tea or other agricultural products, got stifled. The onset of the global crisis in autumn 2008 showed that it was not a mere stock-market, currency or real estate bubble, but with the trickling down of the credit crunch it became clear that each sector of Indian economy was affected. We can see how violently the Indian economy swings within the wider crisis development, e.g. in terms of inflation rate, capital input and outflows, share prices, export figures or sales numbers of manufactured goods, finally resulting in mass redundancies of workers.

The Stock-Market Slump
The main stock-market index (Sensex) has fallen by more than 50 percent during the year 2008, from 20,800 in January 2008 to under 10,000 in mid-October. The first companies who had to digest major losses were exactly those companies who were presented as the shining symbols of the 1990s boom, for example the real estate giant DLF, the multi-sector group Reliance or bio-tech firms like Ranbaxy. In October 2008 the stock-market lost one trillion US Dollars, which is about the GDP of the year 2007/08. One of the reasons for the massive losses was the sale spree of Foreign Institutional Investors (FIIs), who basically invest short-term. FIIs held about a quarter of the floating stock of the Indian stock market. After a record influx from foreign investors in 2007, the second half of the year 2008 saw the opposite trend 24].

The Shrinking Foreign Currency Reserves and Credit Crunch
The sales of the FII shares and the subsequent massive US Dollars outflow resulted in the largest fall of the foreign exchange reserves in eight years. While in July 2008 the reserves stood still at 300 billion US Dollars, by November 2008 they had plunged down to 258 billion, showing that a big portion of the reserves do not stem from export gains, but are only stored as a result of the stock-market speculation. After a panic reaction of Indian companies to borrow from banks in order to convert into Dollar funds the market experienced a massive credit squeeze. In an economy like India this credit squeeze translated immediately down to the various micro-credit systems of the rural sector. By the end of October various micro-credit institutions were lamenting about a lack of liquidity 25].

The Currency Devaluation and Deflation
The withdrawal of capital from the Rupee caused a massive devaluation of the currency. Early 2008 the Rupee stood at 39.25 US Dollars, by end of November 2008 it had depreciated to 50.5 US Dollars. As we can see below this devaluation was accompanied by massive cancellation of orders from the US and therefore did not alleviated the problems for sectors such as textile export, but rather aggravated the situation for the main import product of the Indian economy: oil and related products like fertilizers. The depreciation was further fuelled by a surge of speculation on the future development of currency prices in October 2008. The inflation rate mirrored this development of the exchange rate. With the rising oil prices India’s inflation rate reached a peak of 12.9 percent in August 2008 and dropped to 6.8 percent at the beginning of December 2008. At the end of December the economists warned of deflation in the second quarter of financial year 2009/2010 [26].

The Trade Balance Shift and Export Decline
Mainly due to the increase in value of oil imports the Indian trade deficit stood at 14 billion US Dollars in August 2008 alone, compared to 7 billion US Dollars in August 2007 [27]. If we bear in mind that the major crash of 1991 manifested itself as a payment crisis of external debts and of depleted foreign currency reserves, this trend of increasing trade deficit in addition to the FII capital outflow the foreign currency reserves mentioned above no longer seem so ‘bullish’. The trade deficit will not easily be re-balanced by the current drop of global oil prices given the significant drop in exports since the second half of 2008. If petroleum is excluded from the bill, the merchandise exports dipped by 20 percent during October 2008, shipping rates for bulk cargo dropped by nearly 50 percent in August 2008, tonnes of iron ore for the Chinese market are reported to be stuck in Indian ports. The bitter irony of the crisis of the Indian export regime: while there was much blood shed over the opening of Special Export Zones all over the country, including the several protesting peasants who got shot dead in NOIDA in August 2008, many of these SEZ are now up for sale or the developers try to get denotified in order to be out of the deal [28]. As we can see in the next part, the trade war with China has intensified since October 2008, closing further margins.

The Decline of Real Estate Prices
Real estate was one of the driving sectors of the 1990s [29], companies like DLF, Reliance and many developers from the United Arabic Emirates fed on the spree. The first difficulties surfaced earlier in 2008 when many property owners announced problems in paying back their mortgages [30] due to rising interest rates, which in turn were a result of the state’s attempt to curb inflation and over-heating. Many voices warned of a massive over-production of IT offices, hotels and shopping malls. Private equity investors withdrew from the market [31]. The credit squeeze was the final straw: in November 2008 DLF requested the Haryana government to refund license fees worth 47 million US Dollars, basically as a bail out. The construction of India’s biggest shopping mall in Gurgaon was put on hold, many other companies and projects followed. DLF, Unitech, Omax and other real estate developers announced job cuts after Diwali 2008. In November 2008 Goldman Sachs announced in a report that a price decline of at least 30 percent would be required to rekindle the real estate business in India.

The Decline in Manufacturing
In October 2008 for the first time in more than a decade the manufacturing output of the Indian industry declined [32]. Already during the first half of 2008 investment projects worth 17.5 billion US Dollars were put on hold. Between April and August 2008 energy generation growth declined from 8.3 percent to 2.3 percent compared to the previous year. Given the unofficial nature of a huge chunk of the Indian industry and energy generation these numbers are rather blunt indicators.

The First Wave of Redundancies
The government tries to down play the actual numbers of lay-offs, e.g. in December the Labour Minister Oscar Fernandes declared that between August and October 2008 around 65,500 workers lost their jobs due to the global recession. The actual numbers will be much higher, particularly if we add all the lay offs of unofficial temporary or contract workers, the ‘unpaid holidays’, the lock-outs etc. - In part ‘3c) The Industrial Impasse’ we summarise the main announcements of crisis related redundancies.

Shrinking Remittance
Another big chunk contributing indirectly to the Indian economy are wages of workers sent from abroad. India received 27 billion US Dollars remittance in 2007, globally the highest sum for a national economy. A lot of these jobs - be it construction work in the United Arabic Emirates, service jobs in the financial districts of the North or skilled IT work - are also put at stake.

These are only first very short-term and superficial impressions on the impact of the current crisis, now followed by a short summary of the state’s reaction to it.

b) The State’s Reaction

We can summarise the first reaction of the Indian state in few words: unlike in the US or Europe there hasn’t been a major bail-out package and unlike in China the Indian state did not mobilise or promise a major financial package to boost the economy. The first steps undertaken by the state between October and December 2008 were steps of panicky first aid, each in itself further increased the potentials for financial instability. The state:

* mobilised liquidity by cutting the cash reserve ratio [33]
* cut interest rates of state banks [34]
* further liberalised credit flow, e.g. for Indian companies to borrow on international market or for the federal states to borrow on commercial markets [35]
* further opened Indian market for international speculation, e.g. by allowing more foreign investment in retail and insurance sector [36]
* cut export duties and tax for certain goods and sectors [37]
* changed legal system to make mergers and acquisitions easier [38]
* increased state debts by further borrowing both from the World Bank and the open market [39]

All these measures induced liquidity by either reducing financial safety buffers, by opening new markets for global speculation, by postponing costs or by minimising state income (custom duties, interests) in the future – i.e. deepening the path which has lead to crisis in the first place and reversing some of the stability measures taken by the state after the crash of 1991. We can say that this was just a first quick fix and that the main question will be whether money will be spent for productive investments. In December the state announced that it will spend 8.5 billion US Dollars (42,480 crore Rs) as an extra stimulus package in 2009. In the media this 8.5 billion was compared to the 580 billion US Dollars extra spending plan of the Chinese state. There has been criticism of such large chunks of the state’s deficit spending going not into investment, but actually being used in a ‘populist’ way to finance loan waivers for farmers or in order to guarantee prices of agricultural products like cotton. In the following part we examine the reasons for why a huge chunk of the state expenditure flows into the rural sector.

3. Margins of the crisis regime in India

On the background of these dubious macro government statistics we can now have a look at how the limitations of the crisis regime are set in the main economic sectors: agriculture, energy, manufacturing, where general economic figures have to confront lively class reality. We can summarise some main political thoughts:

a) The massive spending for the agricultural sector is neither populist nor an economically promising investment, but a desperate attempt to curb an explosion of proletarianisation, in turn preventing huge future welfare spending, mass starvation and/or social unrest. Here the state has to constantly juggle with the economic costs and political dimension of agricultural prices, being both guaranteed income for millions of small farmers and reproduction limit of the growing proletarian masses. While small farmers tend to individualise and localise their misery, the rural landless proletariat tends to move and behave less predictably. Only covering a few million rural proletarians the National Rural Employment Guarantee Scheme (NREGS) can be seen as such a labour-intensive work-scheme to govern their movements und reproduction.

b) Due to the dependency on oil and gas imports the Indian state has a major energy sourcing problem which, apart from enormous costs, causes political conflicts. On the supply end we see geo-political conflicts such as the quarrel about the nuclear deal with the US or the gas supply from Iran or Oil from Assam, and on the other end we see increasing pressure from various social groups agitating about oil and fertilizer prices, for example the mass strike of trucker associations in January 2009.

c) The most profitable manufacturing sectors are directly or indirectly (e.g. via middle-class consumption) linked to the export and outsourcing market or, like real estate and construction, to the massive capital inflow. In the last decade the global relocation of the textile industry and call centre services from North to South has been completed. The labour-intensive manufacturing sectors, ranging from the metal industry, to textile production and construction, have squeezed the wage costs to a minimum and pushed working times to the maximum. Now - having fed off the casualisation of workforce, the tax and customs reductions of the neo-liberal regime and eased commercial global borrowing – they are starved of capital liquidity for a technological jump. The second half of 2008 witnessed a heat-up in the trade war with China and other Asian national economies, trying to compensate for the slump in internal demand by further cutting prices for manufactured goods.

a) The Social Unrest of the Rural World

In many senses the Indian agrarian sector underwent a successful capitalist transformation. The enclosures, the tax rule and plantation regime of the colonial times resulted, in addition to mass starvation, in tying the rural world closer to the money economy and the global market. The colonial rule was followed by mild land reforms of the 1950s and 1960s [40], which were primarily aimed at mobilising some of the unproductive big land-holdings, but were accompanied with state repression against serious land occupations. In this process the ‘peasant movements’ under the banner of the CPI were a medium to forge a class unity of medium peasants and the rural proletariat against the old zamindars - land owners - ‘for rural development’. The state intervened in price developments and took hold of the centres of agrarian processing industries, such as sugar or cotton mills and thereby linked wider areas to the state controlled market. The panchayat, the village council, turned from a body of upper caste personal rule into an extended arm of state and party management. There was a growth of infrastructure (transport in particular), a further integration into the money economy, and the struggle against personal forms of oppression and exploitation. These developments undermined not only the village caste system and generational bonded-labour, but also the long-term patriarchal village cohesion, which ideally would secure the survival of the landless labourers in times of unemployment.

The labour debt contracts became shorter and more impersonal, mediated by professional contractors. The mechanisation and chemical input of the Green Revolution led to: further concentration of certain cash crops in certain states; the emergence of a new section of market farmers (e.g. in Punjab, Gujarat, Haryana, Maharashtra); an increase in the share of the total harvest which is sold on the markets [41] and further monetarisation of agricultural production enforcing economies of scale and thereby creating waves of mass social death of the small peasantry. The development of the agriculture sector solved the food question materially, providing at least potential food security for a growing population. But at the same time it has subjected agricultural production to capitalist terms: the social misery continued, not because of lack of output, but because of the lack of the growing output to convert itself into growing profits [42].
In capitalist terms the importance of the agricultural sector is shrinking and representing a smaller share of the total GDP [43]. The debts of the sector reached a level where payments of interests are higher than the actual investments [44]. At the same time the absolute number of people who earn parts of their income off the land is growing [45] while average size of land per household is shrinking drastically [46]. Both of the landless and small peasantry make up an increasing proportion of the population [47] and most of the rural households cover only a fraction of their income from agricultural activity [48]. There is no smooth transition from peasant to agricultural wage labour. On the contrary: overall the share of waged labour on the soil decreases, because the shrinking profit margins forced many small farmers to replace formerly paid alien labour with unwaged family labour [49]. Therefore the rural proletariat and the majority of small peasant households rely increasingly on non-agricultural wage labour, small business and on debts [50]. For a huge share of the rural population migration to urban areas is a difficult step, given that it requires resources, e.g. in form of small land-holding that can provide a small amount of money to get started, or at least a fall-back option. The fact that agricultural development has increasingly detached itself from the peasantry left roughly three different situations of rural class relations:

Market family farming
Highly dependent on cash-crop prices, agro-business, the credit / subsidy system and rural labour migration to top up family labour in peak seasons [51]. Operational costs per hectare increased dramatically during the 1990s [52]. Hundreds of thousands of family farmers exist on the brink of the social abyss; falling cash crop prices result in a steady process of land concentration [53] and of individual bankruptcy. In some areas the dependency on migrant labour during harvest period leads to the paradox of frequent labour shortages. This has various causes: many industries and large farmers shy away from employing the local population, knowing that it will be much more difficult to subject them to similarly harsh exploitation and to kick them out after the peak season. In India the poverty-stricken areas like Bihar, Orissa, parts of UP and West Bengal provide a constant stream of labour migrants. In wide areas of Punjab we can see a double dependency on migration. While most of the farming families rely on wages from family members working abroad for farm investment [54], they depend on cheap migrant labour for the seasons. Due to the increase in agricultural productivity the necessary labour time per hectare gets shorter [55], which means that for a lot of migrants the long journey is not worth the short-term employment. If we read that rural monthly wages increase [56] we have to bear in mind to relate them to an annual household wages, which might actually drop due to less paid working-days. On this background the development of rural industries and urban jobs, for example construction, have up to now offered better conditions than actual agricultural labour.

Plantation economy
Apart from commercial family farming there is the traditional plantation economy employing a mass workforce, including about a million workers directly employed in the tea districts of Assam and West Bengal, producing 85 percent of India’s tea output, India being the biggest tea producer globally. The intensified global competition with China, Kenya and Sri Lanka; the increased dependency on few major buyers like Hindustan Lever, Tata Tea etc; and the falling tea prices have sped-up the re-structuring in this sector. This involves dismantling the old patriarchal ’set-gardens’, which often included processing units, workers housing etc. and enforcing a ‘bought-leaf’-system which is mainly based on temporary labour. With the swings of the market the bigger tea plantations close down temporarily, leaving thousands of workers without income and living facilities like potable water etc.. Tragedies like the mass child starvations of tea workers families in Ramjhora in 2004 or Jalpaiguri become bitter part of the economic cycle. There have been union-organised strikes, like in 2004 in Assam when 800 plantations were shut down or like the last general tea workers strike in West Bengal in 2005, followed by officially 500,000 workers on 300 plantations. But these strikes seem to have targeted the power-relations between political class and sector representatives, rather than the improvement of actual conditions. In December 2008 the newspapers published reports about the situation in the tea belt of Northern Bengal, where due to the 5 to 10 percent dip in exports over a dozen of large plantations have shut-down after October 2008, leaving “hundreds of tea labourers” unemployed.

Patriarchal regime of underdevelopment
In areas which are less integrated in the national or global market - often due to being either remote or less fertile - traditional agricultural structures persist, either in forms of caste hierarchy [57] and/or tribal structures [58]. The neglect in terms of infrastructure (irrigation, transport, etc) and employment opportunities and/or the outside pressure due to state projects like mining enforces either migration, a return to patriarchal village structures or affiliation to clans or the various kinds of political castes and their patronage. Affiliation to political parties guarantees access to credits or might help to benefit from minor land redistribution schemes. In some of these areas Maoist armed struggle often means putting pressure on local administrations to implement the planned employment or development schemes [59]. In general there is increasing danger that the local proletarian population gets caught in the shadow-boxing of different political parties and NGO interests or worse, in the cross-fire of low-intensity war-fare [60].

This rough overview helps to understand the three main aspects of the character of the agricultural sector and their relevance for capitalism in India. Firstly, the Indian state has to foster the competitiveness and profitability of agro-business [61], cash-crop production and export. Secondly, it has to guarantee a certain food price level for the rural and urban proletariat and, thirdly it has to control the reproduction of the semi-proletarianised small peasantry and landless, a mass of 100s of millions of people. The masses of rural semi-proletarianised households are the foundation of the high exploitation level of urban and rural industry, supplying it with seasonal migrant labour and a fall back option for times of unemployment - the only real-existing welfare system in India. The increasing pressure on the reproduction of the semi-proletarianised households - by increasingly global market forces and the increasingly global desires of the rural proletariat itself - endangers the rural stability and the controlled supply of a mobile workforce. With the demise of small-scale subsistence the state has to intervene more intensively, in both its functions: to guarantee reproduction and stability. In that way the large-scale rural employment schemes like NREGS [62] are just a drop in a troubled ocean, and they are backed up with the counter-insurgency of anti-Naxalite war fare.

Under the double pressure of social unrest and crisis these three different social aspects of agriculture drift apart. They were held together by an elastic band of state subsidies, credit and labour income from non-agricultural jobs. The current crisis stretches the social cohesion to the max, e.g. by further collapse of agricultural prices, by drying up of state finance for subsidies etc., by extending the credit crunch to the local rural economy and by creating a wave of laid-off workers without reproduction guarantee in the urban setting. In the following we have a short look at announced state interventions in the agricultural sector since the onset of the current global crisis.

At the end of July 2008 we saw a symbolic confirmation of the enormous social pressure emanating from the rural south acted out on the political stage of institutionalised globalisation: the WTO talks in Geneva failed because China and India kept up the tariff barriers and thereby did not allow the over-production of agricultural products of the global north to shake up the precarious balance of agriculture product and food prices in their respective countries. The fact that the global food riots some months previous didn’t find much echo in India [63] had confirmed the protectionist attitude, including enforcing a export ban on rice and by hiking the internal minimum support price [64] by 20 percent. But protectionism is not declared or legally enacted; it needs a material and financial buffer. In order to protect local farmers against the much higher productivity of the global north, while at the same time the sector depends on enormous fertilizer import and is meant to secure low prices for the local proletarian masses, the state has to pay heavily to keep the balance. The onset of global recession shakes up this balance.

We can see how much the major slump of the exchange rate - from 40 Rs / 1 US Dollars in Spring 2008 to 50 Rs in autumn 2008 - will affect the main input price for the agriculture sector in India: in the period April to July 2008 India imported fertilizer worth 4.1 billion US Dollars from the international market, in contrast to the total export of agricultural products from India at 7.3 billion US Dollars. In 2008 the bill for fertilizer state subsidies exploded to around 24 billion US Dollars. To this we can add around 17 billion US Dollars for farm loan waivers in 2008/09. The debt waivers have been topped-up after the onset of the credit crunch in October 2008, which left a lot of (micro-credit) banks dry [65]. And we can add 10 billion US Dollars for the rural employment scheme NREGS if we assume that it was actually implemented in all Indian districts in summer 2008 [66]. Just for these three schemes alone the state would have to pay around 48 billion US Dollars in 2008/09. This is compared to 158 billion US Dollars total state receipts in 2007/08! To this bill we would have to add the costs of the state’s minimum price policies for farmers.

In October 2008 traders expected the global cotton price to fall by 40 percent over the period of the year 2008. Indian cotton traders complained about cancelled orders and assume that export numbers will halve in 2008/09 [67], due to both China and India expecting an over-production of a fifth of the current harvest [68]. In September 2008 the central state hiked the minimum support price (MSP) for cotton by about 40 percent, paying tribute to about 10 million cotton farmers. The representatives of the Indian textile industry in turn announced they would import cheaper cotton from Pakistan. In Punjab the state agency Cotton Cooperation of India (CCI) was said to be the only buyer on the cotton market after commercial traders refused to pay the minimum support price. A similar picture can be drawn from the sugar cane and rice production [69]. After the crash of 1991 the Indian state and the IMF used the economic emergency to restructure the agricultural price system. Today the general price pressure, the decline of internal and global demand and dwindling financial clout of the state to mediate prices might result in downward spiral [70].

b) The Energy Crunch

Another main variable in the Indian crisis regime is the dependency on energy imports. Around 70 percent of oil used in India is imported; oil and lubricants accounting for 40 percent of the total imports in the first half of 2008. In April - July 2008 India imported oil worth 40 billion US Dollars, compared to India’s total exports in the whole year 2007/08 of 72 billion US Dollars. In most industrial areas oil-fuelled energy-generators have to back-up the public grid. The Indian state sets the national fuel price. The government’s price dictation – basically a state subsidy - to the three major distributors resulted in an estimate loss of 106,000 crore RS, around 21 billion US Dollars. After the general fall of global oil prices in the second half of 2008 the state did not pass on the lower prices immediately, which immediately led to protests of the opposition parties and shortly after to a mass general strike of the truckers association for lower prices and oil company employees for higher wages. The attempt to exploit oil fields in Assam – where a fifth of Indian’s total oil production takes place – are frequently endangered by separatism and local low intensity warfare; the gas supply from Burma by the demise of the dictatorship. The turn to other sources of energy seem similarly political precarious, e.g. the 7.6 billion US Dollar pipeline project which is supposed to supply India with gas from Iran via Pakistan or the nuclear deal with the US, which lead to the split up of the Indian central government in 2008.

c) The Industrial Impasse

Of course it is impossible to say how the situation of the general working class in the Indian industry will be affected. We can state that for the main export industries - IT/call centre services and textiles - the general global outsourcing of employment and industrial capacity to India reached it’s peak at around 2005.

IT / Call Centres
On a global level the outsourcing of call centre and IT services to India meant a drop in wages of about 60 to 80 percent. In India itself these wages were still relatively high, an 18 year old woman employed in a call centre could earn more hen her father working as a professor - which disrupted gender and generational relationships considerably. Until around the peak-time of outsourcing we saw an average annual wage increase in the call centre sector of about 20 percent. Young workers took advantage of the general demand for their work by changing jobs frequently [71]. Since then we saw a first ripple of relocation from the former call centre hubs of Gurgaon, Bangalore etc., to smaller Indian cities where rents and wages are lower. Rationalisation, such as cutting costs for provided transport, became more intense and reports about smaller call centre companies closing more frequent. With the industry depending on US companies for 70 percent of its business, particularly of the financial sector, the impact of the crisis will be severe [72]. There are various reports of wage and job cuts affecting call centres or office workers of outsourced American banks or software companies in India. The Union of Information Technology Enabled Services (UNITES) estimates in January 2009 that between September and December 2008 10,000 jobs were lost in the IT industry and anticipates a further 50,000 cuts in the first half of 2009. As if to mimic the US Enron scandal that buried the new-economy bubble in the US, the Satyam scandal came at the right time to finish off the last doubts about the state of the sector in India.

Textile Industry
The textile sector has a long tradition of restructuring in India, starting from the destruction of the industry by Colonial custom policies and brute force, to the mass-closures of the huge mill industry in the 1980s, to the creation of textile parks after 1991. The industry is still major in terms of jobs, officially (!) employing around 35 million people in India, even more if cotton production is taken into account. About 55 percent of the total textile production is exported. Since the reform of the global quota system in 2005 the competition between India, China, Vietnam and Bangladesh increased and the global prices for apparel dropped drastically. The Indian textile industry was able to compensate for the stagnating internal demand and dropping profits by higher export outputs – benefiting from the higher production costs in countries like Greece, Spain, Egypt and Dominican Republic (and therefore the severe effect the end of the quota system had on those countries). In competition with other major Asian producers the industry in India is squeezed between the much higher degrees of mechanisation (e.g. in China) and lower wages (e.g. in Bangladesh) [73].
In autumn 2007 the industry was hit by the Dutch Disease; meaning that the over-valuation of the Rupee stifled exports and dried up credit sources. Export hubs like Gurgaon/Okhla witnessed a wave of mass dismissals. Only a year later, despite the slump of the Rupee, a massive slump in orders led to the next wave of lay-offs. From many workers’ reports [74] we can see that in terms of working-hours and wages the reproduction limit has more or less been reached and in most cases of the Northern Indian industry the number of permanent employees reduced to lowest levels - although further casualisation seems the main short-term focus of the manufacturers. The competition with other national economies will increase, not only on the global market, but also within India itself. For example at the end of December reports about the major influx of embroidery machinery, silk and artificial silk products from China warned of the severe impact on local employment. In towns like Varanasi, where around 700,000 people depend on the weaving industry, incomes are dwindling. A closer look at the CAD embroidery machinery in the bigger Indian (export) factories would be sufficient to grasp that the main threat to the remaining artisan labour is not as far away as Shenzhen. In October and November 2008 news from Bangalore said that only three quarters of the total workforce - around 600,000 workers - are currently “utilised”. Workers report wage cuts, unpaid enforced holidays or delayed wages. In the knitting hub of Tirupur (Tamil Nadu) reports say that orders dropped by 30 percent and that 20,000 workers are at risk of losing employment; most of them now work only five instead of six or seven days per week. In Gurgaon bigger exporters like Modelama sacked hundreds of workers in October. The Confederation of Indian Textile Industry warns in November 2008 that 700,000 jobs could be lost Indian-wide within the next months. In January 2009 the Apparel Export Promotion Council (AEPC) estimates that around 500,000 jobs have been lost in the last six months of 2008.

The construction sector and the attached rural industry like quarries or brick kilns have been the productive release valve for rural unemployment. In recent years the construction sector was pumped up by international real estate business. With the slump in the real estate sector many building projects were put on hold and building workers families left without income. In October 2008 the IT park developer Quark City in Chandigarh (Haryana/Punjab) sacked 400 daily workers after the impact of the credit squeeze. The crunch in the construction sector trickled down to cement and other manufacturers. At the end of October 2008 the sandstone industry in Rajasthan announced lay offs. About a million people are employed in this sector, either in quarries or transport and many export orders were recently cancelled.

Steel / Raw Material
The Indian steel industry still mainly produces for the internal market; with exceptions such as iron ore export through steel internationals like Posco or the merger of Arcelor and Mittal. Indian is the fifth biggest steel manufacturer in the world, but its output is only about a tenth of the Chinese one [75]. The massive slump in global steel prices of about 40 to 50 percent, the decreasing demand from the local manufacturing industries and the announcement that China plans on lifting its export tax on steel created an enormous pressure on the industry.
In November 2008 JSW Steel, India’s third biggest steel manufacturer, announced a 20 percent cut in production. ArcelorMittal said it would delay the two major green-field projects in Orissa and Jharkhand worth 20 billion US Dollars and shut down production in its European plants [76]. Other steel manufacturers followed, for example Welspun in Gujarat. By the end of November 2008 iron ore mining companies in Orissa, Jharkhand and Karnataka closed down 20 mines and down-scaled production in 50 others, leaving thousands of temp workers unemployed. The mines are hit by the current fall in demand for iron ore in China and falling prices, e.g. the price for a tonne in 2007 was around 120 US Dollars, now it came down to 45 US Dollars. Other newspaper articles report about 5,000 unemployed truck drivers and cleaners in the Chitradurga district (Karnataka), who used to work for the mines. The mass unemployment of casual workers in these mining areas have a particular political significance given that it was in areas like Kashipur in Orissa where the strongest movements of small peasant and tribal communities waged a long battle against the mining industry. With the chemical industry, another up-stream industry noticed the crisis crunch. Due to the recession in the manufacturing sector, many chemical plants scaled down production, most of them major players like Reliance (petro-chemicals, polyester), Birla (viscose fibre) or Asian Paints, see [77] for summary. None of the news items stated how many workers were effected by these shut-downs.

Automobile Industry
In the 1990s a lot of the existing automobile companies (Maruti, Escorts etc.) got dismantled and its workforce casualised. Escorts in Faridabad used to employ more than 20,000 permanent workers in the 1980s, this came down to less than 6,000, due to out-sourcing of departments and increasing employment of temp workers [78]. Along with the workforce the structure of the car part supplying industry got reshuffled, combining industrial parks with first-tier suppliers like Delphi or Bosch [79] with workshop production in the surrounding slum areas. In the last years this establishment of modern supplying industry and its higher utilisation of machinery reshaped the distinct feature of the car industry in India. Maruti reduced the number of official suppliers from 800 to 400, companies like Delphi replaced the prevailing two 12-hour shifts by three 8-hour shifts. The second and third-tier suppliers still rely on 70 to 80 hours working weeks of a migrant temporary workforce, now having to compete with (or counter-balance) the most advanced technological standards. Further relocations are made difficult by the insufficient transport infrastructure, e.g. Maruti Suzuki spending double the amount on truck transport than on workers’ wages.
After liberalisation in 1991 nearly all major global automobile manufacturer opened plants in India during the 1990s and early 2000s, attracted by the promising growth rate 80]. By 2007 the official direct and indirect employment in the Indian automobile industry stood at 13.1 million employees manufacturing around 8 million two-wheelers, 2 million cars, 300,000 tractors and 480,000 commercial vehicles and trucks. Attached to the dozen new passenger car assembly plants - employing between 4,000 to 5,000 workers - most global car part manufacturers opened factories. The ratio between output and workforce in the main assembly plants doesn’t vary much from the plants in the global North, indicating a similar degree of mechanisation, e.g. in the body-works, welding departments or paint-shops. This also means that most plants will run profitably only under full utilization of around 300,000 passenger cars per year. Consequently passenger car sales in India would have to go up to at least 3.5 million. Less than ten percent of the total production is for export. This means that most of the output depends on industrial investment in India (tractors, trucks) or increasing middle-class income, given that the gap between workers’ monthly wage - around 5,000 to 10,000 Rs for a temp worker in the assembly plant - and product price - around 400,000 to 600,000 Rs for a passenger car - remain considerable.
With the onset of the crisis the car sales fell drastically. Basically all automobile manufacturers reported a 20 percent sales decline (passenger cars) in the last quarter of 2008, the biggest decline for eight years, and subsequent production cuts, dismissals of hundreds of temp workers - 2,000 at Hyundai alone and cancellation of investment plans (see [81] for a more detailed summary). The production of trucks saw an even steeper slump of 25 - 40 percent indicating the worsening wider investment climate. The supplying industry followed; all major tyre manufacturers scaled down production. There has been a first surge of lock-outs, for example at Dunlop and Bosch. Here, as well, the industry starts to suffer from Chinese cheap car parts and tyres start flooding the Indian market. For us, the main political question will concern the impact of the crisis and lay offs on a new generation of workers who displayed their confidence in form of various strikes and material victories; at Honda HMSI, Hero Honda, Toyota, Skoda, Bosch, Delphi and many other suppliers.

d) The political consequences for the crisis regime

On this background of a likely recession in agriculture and industry resulting in a tighter state budget we can make some broad assumptions about the consequences for the crisis regime in India. Stating the obvious: compensating for falling state income through tax and customs the state will have to continue selling state property or outsourcing costs. The privatisation of the last decades, for example of public transport (such as the Delhi buses) or sub-contracts (for example public road works, hospital or university maintenance) will accelerate and with it the worsening of conditions of the affected the workers [82]. Similarly the liberalisation will continue, for example opening the insurance and retail sector for FDI, thereby putting extra-pressure on the masses of small traders.
In this sense the crisis will deepen certain tendencies of segregation and division. The state will have fewer resources to appease various conflicting interests. One recent example is the attempt of the state to secure the collaboration of the rural elite after the cotton minimum price hike, by using the falling oil prices to regain some income through not adjusting prices immediately. This resulted in the day long Indian-wide strike of the All India Motor Transport Congress (AIMTC) demanding lower fuel prices and fees, allegedly stopping 600,000 trucks.

The question of distribution of state money and jobs will also strain the relation between central governments and states. Shortly after the major slump in October 2008 we saw Maharashtra Navnirman Sena (MNS) nationalist activists attacking Bihari job seekers who applied for national railway jobs in Mumbai. The attacks triggered further riots and inter-state tensions and finally a Supreme Court notice issued to Maharashtra government. In November 2008 the governments of West Bengal and Kerala complained about the crisis effect on the relation between central government and the states, demanding higher shares of central tax for the states and debt relief [83]. Finally the rekindled threat of a Pakistan-Indian war after the Mumbai terror [84] displayed the various separatist or nationalist channels which the ruling class might drag the proletariat into.

The main enemy to confront will be the working class itself. We can also see that both state and companies are trying to reassure a certain section of the working class - the small backbone of the existing regime - that they won’t face the full brunt of future restructuring. To this section of the working class belong the middle-management of state administration who benefit from the recommendation of the Sixth Pay Commission which was brought into effect in various states in November 2008 [85]. Another significant group are the permanent workers with mainly supervisory tasks: Tata Steel and Tata Workers Union announced a wage deal for the permanent staff in Jamshedpur in October 2008 while at the same time Tata sacked hundreds of temps in its car plants. The official established unions and employers also start to form ‘interest alliances’ for certain industries, asking the state for debt relief, for example in the textile or diamond industry. The main unions want to demonstrate their ability for more responsible co-management [86], which will inevitably involve meeting the employers’ demand for further casualisation of the workforce. The first public announcements of crisis related lay-offs were immediately converted into play-fights on the political stage, for example the case of the dismissals at Jet Airlines in October 2008 [87].

4. New framework and potentials for proletarian unrest

In the following section we have a short look at struggles that took place since the onset of the crisis [88]. We then highlight the struggles of diamond workers in Surat, asking how the crisis – instead of eradicating the recently gained confidence – might rather change the course of unrest. We finally focus on some of the arenas of workers’ struggle that seem politically crucial to us.

This short summary is limited in two ways, first of all because it relies on information of the public media, which in most cases only covers official labour disputes. Secondly, because it covers the limited time-frame of October 2008 to December 2008. Out of the total 50 to 60 strikes and protests that were mentioned by the wider media during this period by far the most disputes were taking place in the public sector, mainly over the question of wage increases [89]. A similarly high portion, and this seems more relevant for the future, are struggles of casualised workers, like those who do daily wage work sub-contracted from the public sector, demanding higher minimum pay and/or regularisation [90], or in some cases, battle for the payment of delayed wages [91]. There have been struggles in the traditional agriculture-related sectors [92] and in strikes in the sectors of the new economy [93]. There have been spontaneous walk-outs after accidents, and riots on prestigious construction sites of the crisis regime [94]. There are much fewer reports of struggles in the private manufacturing industry, and those mentioned are divided between struggles for higher pay and those against job cuts [95]. There are some struggles that directly relate to the impact of the crisis or resist further re-structuring [96]. Something that has posed and will increasingly pose a problem for workers in industry are lock-outs. In winter 2008/09 the lock-outs increased, e.g. at tyre makers MRF Ltd. and Apollo Ltd. (Kerala) [97] and at Bosch in Jaipur. In the past there have been frequent incidents where small strikes were provoked - with the complacency of the official unions or not - in order to legitimise a lock-out, in order to facilitate restructuring and cost cutting. Workers will have to find new ways of avoiding this trap.

The impact of the crisis hits hard on a generation of workers who regained their confidence in various struggles over the last few years, particularly those in the booming industries and new industrial clusters. In October 2008 casual workers at Hero Honda went on wildcat strike for better conditions and pay [98]; only a few days later all major two-wheeler manufacturers announced that sales will probably drop by 10 percent in 2009. We find a similar situation in a very different sector, the diamond industry in Surat and Saurashtra regions in Gujarat, where the industry depends on the work of roughly 700,000 workers and their families. The region witnessed a major strike wave in July 2008 with workers demanding a 20 percent wage increase. Diamond factories were pelted with street stones; security guards shot at protesting workers. This movement was then hit by the crisis. Undertaken after the onset of the recession in November 2008 a study comprising 1,000 diamond units in Surat revealed that over 600 have been shut down. In Amreli 60 percent of the total 1,500 units were said to be closed. On 20th of December workers gave an ultimatum of 10 days to the government to support laid off workers and their families and give a 20 percent electricity subsidy to the crisis stricken units - otherwise they would resort to strike action. The actions of diamond workers continued despite the looming threat of work-time or even job cuts [99].

The tragic element of this crisis is that it has enforced in some parts what the workers’ struggles haven’t been able to - but on terms of capital: in the textile industries in Bangalore or the diamond polishing factories in Surat the working-week was reduced to five days and many units operate on eight-hours shifts. But this will be only a temporary situation before actual further job cuts take place. Currently workers’ wages are being cut and they are forced to sign that they will make up for the lost working-time in the future. In that sense two major questions arise: what happens to the sacked migrant workers, i.e. will they be able to stay in the industrial areas, will they have to go back to their respective villages and how will this affect the economically drained rural areas, of Orissa, UP, Bihar etc.? And will the crisis wash away the little gains of the boom - in terms of minor wage increases, but more importantly, in collective experience of struggle?

In the following we want to dare an optimistic outlook on the possibly unifying or at least reshaping impact of the crisis. We will focus on three terrains of the proletarian unrest which have been politically decisive over the past few years: the new industrial and urban clusters, the movements against destructive industrial projects and the battlefields of the rural proletariat.

The new urban and industrial clusters
During the 1990s various new industrial clusters developed - or older industrial areas were restructured by FDI inflow and new industries such as call centres. The industrial belt around Delhi (NOIDA, Faridabad, Gurgaon), Bangalore, Chennai, Pune became mass concentrations of a very mixed new generation of industrial workers in the wider sense. They became a magnet for a migrant workforce; they became signs of future promises. In the industrial areas of Gurgaon textile export factories run next to car suppliers, next to mass call centres and IT office blocks, surrounded by slum settlements, serviced by masses of drivers, security guards, rickshaw wallahs. So far these different sections of the working-class - from proletarianised middle-class kids in the call centres to rural peasant-workers in the metal workshops - existed next to each other. The hundreds of employees of the call centre opposite the Hero Honda plant watched the factory occupation of temp workers, the arrival of the police, the mass gatherings on the premises in April 2006 - but their situation seemed too different to allow for more practical relations. The crisis hits all these sectors more or less at the same time; closures of call centres become more frequent, cutting of wages and certain services are common now. During the last few years the workers in these areas have seen the possible - the automatic embroidery machines, the data-highways, the world’s leading architecture, the tourism - and they have felt the real - the 12 hour shifts in the export units, the burn-out after night-shift, the contract work and slum evictions, the kidney trade [100]. They have learnt how to survive collectively, sharing sleeping rooms and resources, changing jobs, migrating back to the village for a while, returning and reconnecting with city-life. They have made experiences in struggle; they have made experience with the official politics and hierarchies [101]. If under the impact of the crisis the betrayed hopes of a lost academic call centre generation, the productive mass experience of temp workers, and the vast informal networks of the service proletariat find points of fusion or repercussion the possible might become real.

The movements against destructive capitalist development
In recent years there have been various local rural movements against industrial or infrastructure projects including those against: the Narmada dam; the Posco steel plant and mining in Sundergarh district in Orissa; aluminium processing plants in Kashipur; a chemical industrial complex in Nandigram; the Tata car plant in Singur West Bengal and various SEZs in the country [102]. The backbone of these movements were local small peasant families whose land and livelihood was put at stake, either by land acquisition and displacement, or by the industries’ destructive effect on the environment. The movement also criticised ‘the jobless growth’, saying that the number of jobs created by the industrial projects were far less than the number of displaced and destroyed livelihoods of peasant households [103]. The representatives of corporations and state played the job card, promising immediate jobs on construction sites and future investments of the supplying industries. They were able to tap into actual local divisions of land ownership; for example the landless Dalit labourers in the tribal areas of Kashipur had no land to defend and the wages paid on the industrial construction sites were said to be two to three times higher than those paid by local farmers. In Singur and Nandigram the ruling CP was also able to mobilise a Stalinist ideology of ‘progressive industrial development’ against the ‘rural backward petty peasantry’, partly on the bases that right-wing opposition parties voiced their support for the displaced people. When ideology wasn’t enough they mobilised their Stalinist para-police to quell the movement. In reaction to this state propaganda of ‘development for the people’, some of the lefty supporters retreated into a false rural romanticism and tribal identity politics. In that way - on the basis of actual divisions between land-holding peasantry / landless and urban / rural proletariat - these movements got caught in the crossfire of various political parties and local interests of different factions of the ruling class. The current crisis hits hard, particularly in these very same mining and steel processing areas; thousands of temp workers, drivers and cleaners were laid off in the second half of 2008. The higher prices for land compensation gained by the local movements and the additional costs caused by it are now intensified by the current slump in steel and car sales and the further development of several SEZ are put on hold. We will have to see whether the local struggles against destructive development, the uprisings of large communities of impoverished semi-proletarianised peasants like the one in Lalgarh in November 2008 [104], and the struggles of laid off workers in these semi-rural areas will be able to find moments of practical solidarity on the bases of their common proletarian existence [105]. The coming together of knowledge of rural movement organising – such as the mass decision-making assemblies during the Lalgarh uprising - and the workers’ experience of cooperating and struggling within the destructive mining and manufacturing machine could be a blow for capitalist industrialisation - and its flip-side, for rural backwardness. A blow even more severe than the current crisis.

The battlefields of the rural poor
After the food riots in spring 2008 the think tanks of the ruling class - including the Food and Agriculture Organization of the UN - talked about the need to strengthen small peasantry and subsistence farming. We think that this new emphasis is not a humanitarian move towards food security and democratic small-scale development, but a strategic move to contain and individualise mass misery. Those who drop out the rat-race of the cash crop sector are supposed to survive on their own plot of land, backed up and controlled by micro-credit schemes and NGO management. Those who cannot be tied to their own soil are supposed to enrol in the labour intensive rural labour schemes, becoming dependent on political leaders of the village council or the ration shop regime [106]. The question is how to break out of either the misery of individual subsistence or the subjection to state welfare schemes. Struggles over land-ownership or distribution used to be bloody and those land-occupations we read about are often long drawn out and tend to get stuck in the division between ‘landless ex-farmers’ and ‘rural labourers’ [107]. More frequently we can read about struggles within the NREGS [108], which demonstrate that the rural poor do not see themselves as individual claimants, but as waged workers. The NREGS might turn into the opposite of what the state had intended. I.e. into an Indian wide generalisation of struggles along two main proletarian questions: how much do we earn, not based on an individual harvest or individual relation with the local land-holders, but in a power-relation with the state as the general manager of social surplus; and what kind of work do we have to do, why should it be labour-intensive and what kind of ‘infrastructure’ are we supposed to construct with our work. Their struggles will turn dry as long as the state manages to isolate them from those struggles in the material profit production of rural industry and agro-business, e.g. the struggles of plantation workers. In many cases the struggle of plantation workers has gone in a similar direction, cutting out the middle-men of individual plantation proprietors and addressing the state with their demands. We can only hope that these ‘proletarian’ struggles - through the massive waves of rural migration - will mix with or at least influence the experience of small farmers’ struggle and their attempts of, e.g. cooperative farming and permaculture.

We hope that the daily organisational forms of the people in struggle - their cooperation at work, their exchange as neighbours, their experience and mobility as migrants - will become the foundation of a wider movement. In order to understand and support this process we have to see beyond the existing representative forms of political or union organisations. We also hope that the miserable boom of the recent years and the current crisis will show up in new desires within the coming struggles: the boom has shown us the enormous social productivity and wealth; the crisis is just the boom’s other face, showing us that as long as this productivity and wealth has to express itself in money terms; in GDP growth, in share prices or plan targets, it will consequently be based on mass misery. The automated welding departments will automatically produce the 14-hours shifts in the slum workshops or rising numbers of unemployed workers and sick units [109]; the rise in cash-crop in some areas will be based on the general social demise of the rural poor.

If we want to be of help for these struggles and understand their full potentials we need a wider debate about actual changes in the daily conditions of the rural and urban proletariat. As a small step we attach a questionnaire for local use, as a platform for a wider exchange of experience.



[1] ‘Shining India’ was the slogan of the Hindu-nationalist BJP during the elections in 2004.

[2] We use this term in order to emphasise the non-monolithic character of the working class. We put together some material about the theoretical and historical debate on the notion of class composition:

[3] Crisis and workers’ response in India - Questionnaire
Did the financial crisis and credit squeeze affect the situation of indebted farmers or workers in your region, e.g. due to lack of funds or as small share holders? Did the state loan waivers (non-payment to official banks of farmers loans) etc. come into effect?
Has there been a considerable change in prices for main proletarian goods (food, fuel, rent) during the last six months?
Have market developments (price, import, export) recently influenced the income of small farmers or artisans in your region?
Have there been any wage cuts, job cuts, factory closures, evictions etc.? In which sectors? How many people were affected?
What was the reaction of the workers?
How do people compensate for the fall in income? Are there new individual and collective forms of survival?
Have migrant workers been affected by the job cuts etc., do they return to their respective homes?
Has there been a change in state policy towards workers’ living standards, e.g. social security, work schemes, ration shops, minimum price policies?
Has there been a change in the repressive policies of the state, e.g. raids on ‘illegal settlements’, police or goondas against workers’ resistance?
Have there been changes in the official union policy, have there been mobilisations around the question of crisis?
Has there been a change in tensions or divisions within the proletarian population, e.g. between local population and migrants?
Have there been any other collective struggles, which might not be directly related to the crisis?

[4] Faridabad Majdoor Samaachaar is an independent workers’ newspaper which is distributed freely and on a monthly bases in the industrial area of Faridabad since the 1980s and more recently in Gurgaon. If you want to write to FMS:

Majdoor Library
Autopin Jhuggi
Haryana 121001

[5] Probably the most thorough analysis of the state of Indian economy was provided by the group Rupe, ‘Aspects of India’s Economy’

[6] After the 1991 crash, and a part of the IMF credit program, various legal reforms opened the Indian economy for foreign direct investment. The size of net capital flows to India increased from 7.1 billion US Dollars in 1990-91 to 108 billion during 2007/08. Gross capital inflows to India, as a percent of GDP, have increased five-fold from 7 percent in 1990-01 to 36.6 percent in 2007/08, in absolute numbers the foreign direct investment increased from 107 million US Dollars in 1990-01 to 35,000 million US Dollars in 2007/08.

[7] The IT and call centre sector accounts for about 30 percent of the total export, roughly 35 percent of the total FDI flow and 5.4 percent of the GDP in 2006, while directly employing only about 1.5 million people, which is less than 0.3 percent of the total working population. The sector’s exports depend to 70 percent on US companies.

[8] Between 1993 and 2005 cooperate taxes were cut by 10 percent to then 30 percent, custom duties as part of the GDP have fallen from 3.6 percent in 1990-01 to 1.8 percent in 2002-03. The gross tax - GDP ratio fell from 10.3 percent in 1991-92 to 8.2 percent in 2001-02. The state revenue from custom duties as a ratio of imports witnessed a decline from 47.8 percent in 1990-91 to 10 percent in 2006/07. For a more detailed view on tax cuts see:

[9] The revenue deficit (state borrowing for mere expenditure, not investment) has risen from 4.2 percent in 1990-01 to 6.7 percent in 2002-03 .

[10] Between 1980 and 2001 the public development expenditures as a percentage of the GDP fell from 16 percent to 6 percent. The share of state’s capital expenditure (infrastructure, military etc.) declined from 25.7 percent in 1990-08 to 17.0 percent in 2004-07 and under 10 percent in 2007/08.

[11] About 90 percent of all private property is bought with loans, the same is true for purchases like cars.

[12] According to official statistics the industrial growth was much smaller than during previous decades of mainly ‘domestic industrialisation’ (agricultural machinery, chemical, textile and steel industry). This might also be due to the tendency towards casualisation: a lot of industrial employment today is ‘off the records’ while during the 1970s and 1980s many workers stood on official wage lists who actually were not employed (or paid).

[13] For a detailed summary of the lock-out and further development at Maruti Suzuki see GurgaonWorkersNews no.8

[14] In the industrial belt around Delhi permanent workers account for 10 to 30 percent of the total workforce, often assigned with supervising tasks.

[15] About 40 percent of the rural population is landless. The proportion of marginal peasants (defined as those owning less than 0.4 hectares) increased, in 1992 these marginal farmers accounted for 71 percent of the peasantry, owning 17 percent of the land. These households are only statistically ‘peasant families’; they actually depend on other sources of income. Only 35 percent of the average rural household’s income stems from agricultural activity, the rest on other kinds of waged work, small business or debts.

[16] A good account on how this process of proletarianisation takes place in the rural region of Gujarat is given by Jan Breman.
Jan Breman, “Industrial Labour in Post-Colonial India”
Jan Breman, “Footloose Labour - Working in India’s informal economy”

[17] Even government statistics portray the increase in suicides, officially 182,936 farmers killed themselves between 1997- 2007.

[18] In India ‘communalism’ mainly refers to tension between religious groups.

[19] Partly reinforced by the ‘positive discrimination’ policies since 1990, a kind of liberal flip-side of neo-liberalism, increasing the competition within certain ‘under-privileged’ communities by giving career chances to the best, betting on the productivity boost of upward-mobility.

[20] The Faridabad and Gurgaon industrial zones have seen many cases where the official unions turn against strikes of temp workers, e.g. during the wildcat strike at automobile supplier Delphi at the beginning of 2007.

[21] GDP and State Expenditure

The following figures are taken from the Reserve Bank of India Report December 2008. We use the exchange rate of 30th of September 2007 (1 USD = 40Rs).

*** The Gross Domestic Product 2007 - 2008 in Crore (10,000,000) Indian Rupees

Gross Domestic Product at Factor Cost (at 1999-00 Prices): 31,22,862 (780 billion US Dollars)
GDP (at current prices): 43,03,654 (1076 billion US Dollars)


*** Sector contribution to GDP

Agriculture: 7,64,083 (191 billion US Dollars)
Mining: 1,18,711 (29.7 billion US Dollars)
Manufacturing: 7,05,103 (176 billion US Dollars)
Construction: 3,66,945 (91 billion US Dollars)
Finance, Real Estate, Business service: 6,14,067 (153.5 billion US Dollars)
Social and Personal Services 5,73,949 (143.5 billion US Dollars)
Trade, Hotels, Transport, Communication 10,85,467 (271.3 billion US Dollars)


*** State income April - September 2007
We doubled the amount for the US Dollars figures in order to get a rough notion of the annual figures.

Total Receipts: 317,892 (158 billion US Dollars)

Revenue Receipts: 197,956 (99 billion US Dollars)
Capital Receipts: 119,936 (60 billion US Dollars)

Fiscal Deficit 81,200 (40.6 billion US Dollars)

Gross Tax Revenue 223,491 (112 billion US Dollars)
Cooperate Tax 70,176 (35 billion US Dollars)
Income Tax 41,057 (20.5 billion US Dollars)
Custom Duties 48,098 (24 billion US Dollars)
Excise Duties 44,889 (22 billion US Dollars)
Tax Revenue (Net): 160,500 (80 billion US Dollars)


*** State Expenditure April - September 2007

Total Expenditure: 349,081 (174 billion US Dollars)

1. Revenue Expenditure:

a) Non-Plan Revenue Expenditure: 229,484 (115 billion US Dollars)
Interest Payments: 86,061 (43 billion US Dollars)
Major Subsidies: 54,916 (27.5 billion US Dollars)
Defence Revenue: 27,393 (14 billion US Dollars)
Pension: 12,247 (6 billion US Dollars)

b) Plan Revenue Expenditure: 93,727 (47 billion US Dollars)
Social Services: 19,077 (9.5 billion US Dollars)
Grants to states: 33,671 (17 billion US Dollars)
Other Economic Services: 40,916 (20.5 billion US Dollars)
(as part of plan expenditure/economic services)
Dept of Rural Development 24,577 (12 billion US Dollars)

2. Capital Expenditure: 25,870 (13 billion US Dollars)

Loans: 5,167 (2.6 billion US Dollars)
Non-Defence Capital Outlay: 12,316 (6.2 billion US Dollars)
Defence Capital Outlay: 8,387 (4.2 billion US Dollars)


*** State Income and Expenditure as percent of GDP


Gross tax revenue as percent of GDP: 12.5
Indirect tax as percent of GDP: 6
of which Customs 2.1
of which Excise 2.7


1. Non-plan: 10.7
of which
Interest Payment: 3.7
Defence: 2.0
Total subsidy: 1.5
Food subsidy: 0.7

2. Plan expenditure: 4.0
3. Revenue Expenditure: 12.5
4. Capital expenditure: 2.6


[22] Ratio of India’s external debts to GDP declined from 38 percent in 1991-92 to 18.8 percent in 2007/08.

[23] After further liberalisation and legal reforms the share of external commercial borrowing (external credits of Indian companies) increased rapidly: from 2.5 billion US Dollars in 2005-06 to 22 billion US Dollars in 2007/08, meaning that external commercial borrowing accounted for 20.5 percent of the net capital flow to India.

[24] In 2007 there was a record influx of 17.4 billion US Dollars; during the second half of 2008 foreign investors sold 13 billion US Dollars worth of Indian shares. But it’s not only about the big investors. Similar to Pakistan, where after a slump angry small share holders rioted in front of the Karachi stock-market in summer 2008, there are many small share holders in India, many of them worked abroad, e.g. in Dubai, and will now have lost their savings.

[25] At the same time many farmers, who on average have to pay interests ranging between 15 and 24 percent to these institutions and who have to borrow from unofficial money-lenders to be able to pay them, announced their bankruptcy. Shortly after the government had to announce another massive loan waiver.

[26] The drop in prices of, e.g. oil and steel explain the deflationary tendencies, which does not mean that the main area of proletarian consumption - food - became cheaper. While wholesale price inflation dropped from 12.9 to 8.4 percent between September and December, food inflation went up from 8.8 to 10.4 percent.

[27] The trade deficit of August 2008 is confirmed by the general trend: between April and October 2007 it was 45 billion, during the same period in 2008 it was 72 billion US Dollars.

[28] For example in November 2007 newspapers reported that DLF wants to get out of a contract to develop a 10-hectare IT SEZ in Noida.

[29] The real estate sector contributed 7.3 percent to the 2006/07 GDP directly, indirectly (used steel, cement etc.) 14 percent.

[03] The interest on home loans went up drastically from around 7.7 percent in 2004 to 12.7 percent end of November 2008. From 2005 till October 2008 the prime lending rate, e.g. for business investments, increased from 10.25 to 14 percent.

[31] In August 2008 private equity funds invested only 12 million US Dollars in the Indian real estate sector, compared to an average of 400 million in the preceding months.

[32] In October 2007 manufacturing output grew by 12.2 percent, on an annual level the average growth was around 10 percent, in October 2008 it declined by 0.4 percent.

[33] Following the first massive slump after the 10th of October the Reserve bank cut the cash reserve ratio several times. The cash reserve ratio is the ratio of the amount of money banks have to keep as a reserve with the central bank. The cut of this reserve resulted in a first liquidity wave of 13 billion US Dollars, a rather small amount compared to the liquidity input of other national economies. In addition the state released 5 billion US Dollars to banks who had to battle with non-payment of farming debts.

[34] In November the Reserve Bank of India cut the interest rate (repo rate) at which it lends short-term money to the commercial banks by 0.5 percent to then 7.5 percent; a further 1 percent cut followed in December. In October the biggest national money lender, the State Bank of India, cut the prime lending rate by 0.75 percent to then 13 percent. At that time commercial loans of private banks stood at around 16 percent. The state hoped that these rate cuts would trickle down to the commercial banks, resulting in fresh and cheaper credits for industries, the rural sector, the home owners. Actually most private banks announced that they are not able to pass on the cheaper credits due to current lack of funds.

[35] In mid October the Reserve Bank of India further liberalised the rules for external commercial borrowing (ECB) for Indian companies. So far Indian companies were allowed to take credits overseas, but there were quite strict rules, e.g. fixing a maturity period of seven years and prescribing that the credit money had to be parked overseas until actual investment takes place. This was an attempt to regulate money flow, in the current situation the state is forced to accept money inflow at any risk. At the end of November the central state announced that it would raise the open market borrowing cap for the federal state governments, meaning actually that it would outsource the risk to the states: get your money from the open market, the central government will not be able to bail you out. In November the government also eased the restrictions on interest rates paid by Indian banks to non-resident Indians. The state hopes that by increasing these rates the money outflow can be stopped.

[36] In mid October the finance ministry first doubled the limit for investment of Foreign Institutional Investors to 6 billion US Dollars and then announced plans to liberalise Foreign Direct Investments in retail and insurance sector. These sectors are known to attract quick capital flow. Foreign investment in retail is highly disputed, given the millions of small traders whose lively-hood would put at risk. Increased foreign investment in the local insurance sector is criticised as a further opening to global speculation.

[37] In November the government announced various cuts in export duty, e.g. a 15 percent cut for long steel products and iron ore and duty refunds for the cement industry. At the same time export bans for various products were lifted. In December the Board of Excise and Customs (CBEC) announced that the state will lose 8.1 billion US Dollars (40,475 crore Rs) of indirect taxes due to duty cuts announced after the budget. Previous to the announced cuts excise collections fell by 8.7 percent in October 2008 compared to October 2007.

[38] In late October 2008 the state pushed a legal reform that simplifies mergers and acquisitions. The changes in the Companies Bill pay tribute to the future prospects of bankruptcies and resulting capital mergers.

[39] In December 2008 the World Bank announced a lending plan for India of about 14 Billion US Dollars. In January 2009 the Indian government announced to extend the additional state borrowing from the market to a total of 10 billion US Dollars (50,000 crore Rs).

[40] These land reforms officially curbed the maximum size of land-holdings at a time when the zamindars increasingly turned towards other sources of accumulation anyway, e.g. trading or transport. Some insightful information can also be found in “Political Economy of Contemporary India: Some Comments on Partha Chatterjee’s theoretical framework”, by Dipankar Basu and Debarshi Das, Sanhati http://sanhati.com/front-page/1045/

[41] Indian-wide the share of a households’ harvest that is commodified is around 57 percent. In the states of the Green Revolution this share is much higher, up to 80 percent.

[42] Therefore food security is increasingly put at stake again. In the attempt to produce for the market the actual products move away from grain towards more markable products: which then appears as if there was hunger in India because the soil would not nourish the ‘masses of people’. It should be noted that the total area under foodgrains has been steadily declining in India: it was 116 million hectare in 1961 before the Green Revolution and it went up to 128 million hectares in 1990-91 but declined to 113 million hectares in 2002-03.
In the Hunger Report 2008 it says: “India has more people suffering hunger - a figure above 200 million - than any other country in the world. India scored worse than nearly 25 sub-Saharan African countries and all of South Asia, except Bangladesh”. Studies which did not take the price development as an indicator for poverty, but the calorie intake, report that in rural India 75 percent of the rural population consumed less than 2,400 calories in 1999-2000, as against 56 percent in 1973-74.

[43] In 1983 the share of the agricultural sector as part of the GDP was 37 percent, in 2004-05 only 21 percent and in 2007/08 around 18 percent. In Punjab, the wheat and rice basket of India and one of the centres of the Green Revolution, the agriculture share of the state’s GDP shrank from 54 percent in 1970 to 34 percent in 2005.

[44] “Indebtedness per farmer household comes to around Rs 22,000, and total farmer debt rises to around Rs 1.95 trillion. Interest payments on this figure (at an average interest rate of 21 percent) would be around Rs 410 billion. This comes to nearly 10 percent of agricultural GDP for 2002-03. Let us compare this figure of interest payments to investment in agriculture. Gross investment in agriculture in 2002-03 was Rs 33,5.08 billion, and net investment (i.e., net of depreciation of assets) was Rs 78.74 billion. Thus the figure of interest payments was larger than gross investment in agriculture, and more than five times net investment”. - Rupe (http://www.rupe-india.org/44/impasse.html).

[45] The share of agriculture as part of total official (!) employment decreased to 56.5 percent in 2004-05, which was then 257 million people out of a total rural population of about 800 million. In Punjab in 1983 about 82 percent of the total rural workforce worked in agriculture, this share came down to 67 percent in 2005. The Indian-wide population growth during that period was relatively higher, meaning that in absolute numbers more people depend on agriculture income.

[46] In 1961 the average size of land per household was 2.6 hectares in 1992 it was 1.3.

[47] The share of marginal peasants (owning less than 2 hectares) increased from 62 percent of rural landowners in 1971 to 71 percent in 1992. These 71 percent owned 17 percent of the land. The medium and big farmers account for 5 to 6 percent and own around 45 percent of the land. Around 40 percent of the rural population don’t own land at all.

[48] The average rural household covers less than half of its income, some sources say a mere 35 percent, through agricultural activity.

[49] There are certain areas where rural agricultural labour increases rapidly, such as the sugar region of Gujarat. Here the full dependency on wages forced the Gujarat government in July 2008 to double the rates of minimum wages for the agricultural labourers from Rs 50 to 100 per day. The number of agriculture labourers that stood at a little over 180,000 in Gujarat in 1971 has shot up to a 510,000 as per the census conducted in 2001.

[50] The degree of household debt varies between different states, e.g. in Punjab 73 percent of all households are said to be in debt, which is average for the states with a high share of marketable crop. In Punjab in 2003 the average farmers debts were around 100,000 Rs, the average total income 280,000 Rs.

[51] The local agricultural sector in Punjab depends on an influx of about 300,000 to 600,000 workers each year. Migrants constitute 60 percent of the rural workforce. On average these migrants find 50 days of paid work per year in the Punjabi agriculture. In June 2008 local farmers complained about an acute labour shortage, pushing wage levels up by up to 100 percent. At the same time there are about 2.4 million ‘local’ people reported unemployed in rural Punjab.

[52] M.Raghavan, “Changing Pattern of Input Use and Cost of Cultivation”, EPW 28 June, 2008

[53] With falling prices the cash-crop farming requires more land in order to be profitable. Different sources state that, e.g. for cotton farming, around 6 to 8 hectares are a necessary minimum for profitable production - around 80 percent of rural households own less than 2 hectares. In Punjab the numbers of marginal and small farmers is decreasing drastically, e.g. there were 300,000 marginal and 200,000 small farmers in Punjab in 1990-91. Ten years later these numbers decreased to 173,000 and 175,000 respectively. (EPW)

[54] There are about 8 million Punjabis working and living abroad, most of them sending money home.

[55] In Punjab in 1985-88 the average needed (wo)man/day input per hectare of rice was about 103 days. This has come down to 56 days in 1998-2000. (http://mpra.ub.uni-muenchen.de/6420/1/MPRA_paper_6420.pdf). Labour input for wheat per hectare declined from 55 days in 1970 to 20 days in 2004-05. (M.Raghavan, EPW June 200 8)

[56] As already mentioned in Gujarat in July 2008 the state government doubled the minimum wage. Apart from the fact that minimum wages are rarely paid it shows that even the state has to acknowledge that due to the shrinking numbers of annual work the wage decreased below subsistence level.

[57] The extend of caste violence in these areas is still considerable, e.g. in Bihar in the time between 1982 and 1986 there were 16,000 registered cases of murder of landless people by gangs of the land-holding class/caste, which also explains the rise in gang or guerrilla formation within these areas.

[58] Even in the tribal belt and local resisting tribal communities like in Kashipur the tribal agricultural production is largely based on individual family farming and rural labour of the landless Dalit population, less on commons and communal production.
This might still be different in other tribal areas like for example around Niyamgiri Hill in Orissa, where the struggle against Posco and other bauxite mining continues and where communities are less farming based and more dependent on what the forest provides.

[59] For an interesting report from Andhra Pradesh about the influence of the Maoist Peoples’ War Group and its links with local separatists see Singha Roy, “Peasant Movements in Post-Colonial India”

[60] In January 2009 the Chief Ministers of Andhra Pradesh, Orissa, Maharashtra, Jharkhand, Chhattisgarh, Bihar and West Bengal announced a new joint offensive against Naxalism. The degree of this low-intensity war-fare is described in a report on anti-Maoist violence in Chhattisgarh (http://www.pudr.org/index.php?option=com_docman&task=doc_details&Itemid=63&gid=1)

[61] Two examples of agro-businesses becoming more and more intertwined with global (financial) capital and equity firms are Blackstone who in 2008 invested 50 million US Dollars in Hyderabad-based Nuziveedu seeds, which is one of the largest hybrid seeds companies in India, and Morgan Stanley’s investment in 2008 in castor oil maker Biotor Industries.

[62] According to official data, the NREGS was employing nearly 3 million workers on an average day in 2006/07 (when the act was in force in 200 districts). As the act is extended to the whole of rural India, this could rise to 10 million or so - the largest public works programme ever. The act guarantees a 100 days of paid work for one person per household. The official wages vary from state to state, ranging from 60 Rs per day to 130 Rs. The act prohibits the use of machinery. It is a labour intensive work-scheme to build infrastructure: roads, wells, canals etc.. The local village council functions as supervisor and receives the funds. The scheme is a battlefield: local activists, NGOs, Maoists fight for the proper implementations of the scheme, against the corruption of the (upper class and caste) village councils, for the full payment of wages, for providing the full amount of working-days. NREGS activists have been shot dead in this battle. There have been strikes. And NREGA is the state’s foot in the door of rural village class relations. Focusing on support structures at the panchayat (village council) and block level can actually help a working system that can allow panchayats to become an effective tier of local self-governance. The NREGS has been one of the biggest programmes to combat rural poverty. Its legal guarantees have radically altered the relationship of the poor with the state. quote from: Indian Express, 2 February 2008

[63] There have been cases of rioting, but more related to the political fight over the ration shops (state minimum price shops)

[64] For main agricultural products the state sets certain minimum prices and, at least officially, guarantees that the state will pay this price in case the traders would not. Actually a lot of peasants are forced to sell below this guaranteed price - also due to the unofficial credit system - or certain groups, like the sugar lobby, enforce legal decisions to lower the official minimum price.

[65] The total debt waiver bill is actually higher given that some single states announced additional schemes, e.g. the state of Maharashtra considered a 5,000 crore (100 million US Dollars) top-up in November 2008, in order to cover more than central debt waiver campaign, which claimed to have covered 3.7 million farmers in Maharashtra. The additional spending of the Maharashtra government is ambitious given the official total state debt of 1,35 lakh crore RS (27 billion US Dollars). The loan waivers only refer to the official debts. Most of the debts of small farmers are unofficial, they cannot get bank loans, so they have to turn to money-lenders.

[66] There are no official figures yet, but some people did the following accounting work:
There are around 64.2 million rural labour households who have the legal right to apply for NREGA. If 80 percent actually apply this would mean 50 million people on the scheme. If we apply a minimum wage of 70 Rs per day the costs would amount to 35,000 crore Rs plus 15,000 crore RS for non-wage costs. Currently, in January 2009, there are strike going on, e.g. in Karnataka, to increase the minimum pay to 150 Rs, which is still less than the minimum reproduction level of a household. Actually newspapers reported at the end of December 2008 that 52.7 million NREGA accounts have been opened so far.

[67] From 100 lakh bales in 2007/08 to 50 lakh in 2008/09.

[68] India harvested about 5.3 million tonnes of cotton in 2008/09, the internal market is saturated at 4 million tonnes. China, which used to be the main cotton importer for India, reports an over-production of 1 million tonnes now entering the global market.

[69] In Uttar Pradesh the sugar mill associations announced in November 2008 that they will not be able to pay the minimum support price of 125 Rs per quintal, the harvest is delayed, the sugar mill owners hope to force either the state to jump in or the farmers to accept lower interim cane prices. Since September the price of global Thai Rice plunged from 700 US Dollars/tonne to around 450 US Dollars in December 2008. Between April and December 2008 the basmati price fell by 50 percent.

[70] The pressure to sell surplus product abroad and to allow cheaper agricultural products to enter will increase. In mid-October the Indian state lifted the Maize export ban and considered lifting the rice and wheat export ban in early 2009. This will have different impacts on different agricultural product prices. Internal wheat prices might drop further. In the case of thai rice the internal Indian price was about 300 US Dollars compared to 400 US Dollars on the international market in December 2008. An opening of the market would therefore result in an immediate export wave due to the price difference, which would slightly lower global prices and increase the internal consumer prices considerably.

[71] We put together some reports and interviews with call centre workers in Gurgaon and write short up-dates about the sector regularly: http://gurgaonworkersnews.wordpress.com/gurgaonworkersnews-no1/

[72] Apart from call centre services the organised retail sector also had to face a massive slump, despite the hope of the Indian ruling class that it could attract major global players like Walmart etc.. For example in December 2008 Reliance Retail cut 600 support jobs. The sector itself is accused of leaving thousands of small traders redundant.

[73] A study on textile companies in Gurgaon reveal some of the major problems in terms of client orders etc. and gives an impression of the technological level in the advanced sections of the industry

[74] A longer report about working conditions in the export industry given by a young worker http://gurgaonworkersnews.wordpress.com/gurgaonworkersnews-no4/

[75] World crude steel production for the 66 countries reporting to the International Iron and Steel Institute (IISI) was 696 million tonnes in the first half of 2008. The Indian production stood at 27 million tonnes, while China produced 263.2 million tonnes.

[76] Apart from shares in European steel companies the major steel manufacturers of Indian origin have bought shares in various mining projects around the globe, which have obviously turned into risk capital, too. Tata Steel acquired stakes in Riversdale Mining, Mozambique, JSW Steel acquired mining assets in North Chile. Tata Power also acquired 30 percent in coal mining unit in Indonesia worth 1.3 billion US Dollars. Coal prices have fallen from their peak of 300 US Dollars per tonne in mid-2008 to about 200 US Dollars per tonne. Iron ore prices have also seen a sharp decrease from 130 US Dollars per tonne to about 65 US Dollars per tonne. Under the current scenario, these investments turn out to be bets that have gone wrong.

[77] In October 2008 Grasim Industries cut production of viscose staple fibre by 30 percent, due to slow-down in the textile industry and financial difficulties. At the same time Reliance shut down half of the polypropylene plant in Gujarat, due to decreasing demand in the packing industry. Reliance has a 70 percent share in this market. In India the plastic industry employs around 3.3 million people. Reliance also shut down five of its seven polyester and petrochemical units near Mumbai. Asian Paints temporarily shut down its plant in Gujarat in November 2008, mainly manufacturing paint for the car industry.

[78] A longer summary about the re-structuring at Escorts in Faridabad:

[79] Reports from young workers at first tier car plant manufacturers (Delphi, Anu Industries) in Gurgaon:

[80] http://en.wikipedia.org/wiki/Automobile_industry_in_India

[81] List of automobile companies and the respective crisis impact:
GM: Deferd capacity expansion at new Talegoan unit in Maharashtra. The plant would have a daily capacity of 300 passenger cars on two shifts, but the introduction of the second shift has been postponed. At the end of December GM announced extending the shutdown of both plants by two weeks. The two plants employ around 17,000 people.
TVS: Third largest two-wheeler manufacturer scales down investment plans. The sector expects a 10 percent dip in sales 2009.
Suzuki: Maruti Suzuki, the biggest passenger car manufacturer, witnessed a net profit slump of 37 percent in the second quarter of the 2008/09 fiscal year. Production cut in the Gurgaon plant by 5 percent, meaning 35,000 to 50,000 cars less per month. Maruti was the first company to announce price cuts after the government cut excise duties and central value-added tax in November. A passenger car (300,000 to 400,000 Rs) would now cost around 12,000 Rs less.
Tata Motors: Reduces production of truck chassis from 8,000 to 5,000 per month and sacks 700 temporary workers and shut the Jamshedpur plant for several days in November. Contracts of 1,600 workers were not renewed at Pune plant. In the last quarter of 2008 sales of commercial vehicles were down 30 percent compared to previous years, passenger cars sales down by 6 percent. At the end of January 2009 the Jamshedpur car plant was closed again for five days.
Mahindra&Mahindra: Reports 17.8 percent sales decline in October 2008 compared to the previous year.
Hyundai: Second largest car manufacturer in India scales down sales target for 2008 from 600,000 to 515,000.
Ashok Leyland: Commercial vehicle manufacturer introduces three-day working week after sales have halved at the end of 2008.
LG Balakrishanan: Auto parts maker stops production in Bangalore unit and lays off workforce in November 2008.
Dunlop: Tyre maker shuts down plant in Sahagunj, near Kolkata and sacks all 1,100 workers.
Renault-Nissan: Scales down production in Chennai plant, now using one common instead of two separate assembly lines. Renault will run only one instead of two shifts. The sales of the ‘world car’ Logan was down by 80 percent in 2008, selling only 300 units. The start of production of Nissan trucks in a joint venture with Ahok Leyland will be postponed by half a year to mid-2011.
Toyota: Reports a 30 percent production cut due to sales declining by 40 percent at the end of 2008.
Honda: Defers expansion of plant in Rajasthan and cuts production in second plant in NOIDA, Delhi, in December 2008.
Hyundai: End of december Hyundai announces to lay off 2,000 temp workers. The total workforce is 8,400 out of which 3,300 have temp contracts.

[82] There are various reports on the working-conditions in these formerly public sectors. See for example

[83] Shortly after these increasingly desperate criticisms of the central governments’s budget policy, in January 2009 after some post-election quarrels, the state of Jharkhand was put under central ‘president rule’ - which might well be understood as a general hint to other states. The competition between states increases, another sign of it being the tax regime, for example states like Uttarakhand offering tax exemption for companies trying to attract or divert investment.

[84] Texts on the Mumbai attack: http://www.anhadin.net/article71.html

[85] For example both Haryana and Bihar state governments assured a 7 percent Dearness Allowance to the state employees in January 2009 - which is just enough to cover the current inflation, but seems looks better in the light of the tendency of job and wage cuts in the wider class reality.

[86] For example on 1st of December 2008, Sanjeeva Reddy (INTUC president) said in an interview with the Business Standard: “In the past few weeks we have met top leaders of the United Progressive Alliance (UPA) government in New Delhi on behalf of the employers. The employers wanted us to appeal to the government on their behalf for financial assistance and easy loans to bail them out of this current crisis”.

[87] In October Jet Airlines announced the dismissal of 1,900 workers. We then were shown some symbolic protests by the unions, fiery speeches by various political representatives, a state intervention, a repenting general manager and the public reinstatement of the workers. At the end of October a planned strike by Air India employees was consequently called off. After this populist demonstration of the various leaders the actual restructuring continued behind the scene, e.g. shortly after the Jet Airline case, the biggest airline Air India announced that it would ask 15,000 employees to take unpaid leave for up to five years. In December 2008 media reported that Jet had sacked 1,000 people in September, which has never been disputed on the political arena. At the same time the government put the new ground handling policy for Indian airports back on the agenda, which would, once implemented, result in around 67,000 airline and airport workers losing their job.

[88] Here we rely heavily on the official media. We used labourstart as a fairly comprehensive source for getting a first picture.

[89] For example: 400,000 government employees, including teachers and health workers, went on a day-long strike in Kashmir in November 2008; in West Bengal over 250,000 teachers, paramedical staff, contract workers, health workers, anganwadi sevikas, state secretariat employees and non-gazetted state government employees, have begun preparations for an indefinite strike in January 2009; 80 percent of the 50,000-strong village civil servants went on an indefinite strike demanding wage increase in Andhra Pradesh; more strikes or dharnas (manifestations) have been carried out by State Road Transport Corporation Employees Association (Karnataka), State Government employees (Gujarat), All-India State Bank Officers’ Federation (AISBOF), Reserve Bank of India officers and employees, All India Federation of University and College Teachers’ Organisations (AIFUCTO), Federation of Central Universities Teachers’ Associations, Southern Railway Mazdoor Union (SRMU), All India Postal Employees Union.

[90] For example: City Municipal Daily-wage Employees’ Association (Kanataka), contract security guards of a Medical College Hospital (UP), Telecom Contract Workers’ Union (Tamil Nadu), State Anganwadi Employees’ Association (Karnataka), State Marketing Corporation Employees Union (Tamil Nadu)

[91] For example: “The social forestry department (SFD) employees were taken aback when a group of 43 ‘van majoors’ (daily wage forest workers) confined them inside the office for around four hours to protest against non-payment of wages for the past four months. The workers are affiliated to the Maharashtra State Forest and Social Forestry Department Daily Wagers Sanghatana”. In Gujarat in November 2008 over 1,000 employees of the Gujarat State Road Transport Corporation (GSRTC), staged a dharna at GSRTC head office after its authorities failed to pay for working employees’ leave since 2005.

[92] For example: Beedi workers laid siege to the office of the Assistant Commissioner of Labour demanding the reopening of branches of Bashai Beedi Company at Chinnapur, Khanapur, Kanteswar, Goopanpally and at a couple of other places in the town and payment of salary arrears (Andhra Pradesh); there have been strikes by cashew workers in Kerala for wage increases.

[93] For example: In October 2008 the Bollywood industry was crippled by a strike of casual technicians and a short while later an indefinite strike by thousands of workers in India’s thriving TV entertainment industry disrupted the broadcast of popular soaps in Winter 2008. The striking workers, who include technicians and assistants on set, are demanding a pay rise. They want a raise of up to 20 percent in their daily wages. At the moment some earn as little as 12 US Dollars a day. In winter 2008, drivers for call centres and information technology industries went on strike for better conditions in Karnataka.

[94] For example: Thousands of building workers destroyed company property after a fatal accident on Commonwealth Games construction site in Delhi. In Jamshedpur in December 2008 contract labourers of Adhunik Alloys & Power Limited closed the company gate and staged a dharna demanding compensation for the family of a worker who was killed on the premises.

[95] For example: In October 2008 temp workers at Hero Honda (Haryana) went on strike for higher pay, so did temp workers at Rashtriya Ispat Nigam Ltd in Andhra Pradesh in protest against the steel plant management’s refusal to hike the salary by Rs 1,000 a month as promised by the Union Steel Minister. Workers at car part supplier Bosch Ltd went on strike - and were locked out - in November in Rajasthan. KEC power equipment workers walked out in Nagpur. In Bangalore a section of garment workers planned a strike in November 2008, urging the State Government to fulfil their demands, including increase in minimum wages. A union rep stated We demand minimum wages to be fixed at Rs. 6,000 a month and there should be 10 percent increase annually in the wages. In West Bengal Dunlop workers blocked road and rail traffic in winter 2008, after the closure of the plant.

[96] For example: In October 2008, 400 building workers at IT park Quark City in Haryana protested against their sudden dismissals; the developer had been hit by the credit crunch. We have already mentioned the symbolic protests of the Jet Airline workers in October 2008. In October over 350 Bata employees across 70 outlets in Mumbai and Thane stopped work. The decision came a day after the management decided to put permanent employees on temporary contracts, due to the prospect of a slump in sales. In December around 150,000 public sector insurance employees struck in protest against the government’s move to amend the Insurance Act and the General Insurance Business (Nationalisation) Act, which would allow FDI in the sector. In December 2008 ground-handling staff of Air India staged a demonstration at Bengaluru International Airport (BIA) in Devanahalli in protest against the Civil Aviation Ministry’s new policy on outsourcing ground-handling work, which is likely to come into force in January 2009.

[97] At the end of January 2009 after more than seven weeks the lock out at Apollo was still dragging on.

[98] For a short summary on the strike at Honda:

[99] For example news from 30th of December 2008: “Bhawani Gems, a diamond polishing unit at Ashwani Kumar Road in Varachha, was the scene of commotion when hundreds of jobless diamond workers assembled outside the unit and demanded jobs. The unit owner, Manji Patel, told the assembled crowd of 400 workers to come in January as he did not have a stock of rough diamonds. He, nevertheless, announced a relief kit comprising Rs 1,500 in cash and other household items for each diamond polisher who was working in his factory and at present jobless. But anger was writ large on the faces of the workers as they turned down the offer and said they will be content only with a job and not money. The news soon spread like wildfire”.

[100] Gurgaon became one of the international hubs for kidney trade; mainly migrant workers selling their kidneys to the rich. http://gurgaonworkersnews.wordpress.com/gurgaonworkersnews-no9/

[101] The strike and/or lock-out at Maruti in 2001, the police attack on the Honda HMSI workers in Gurgaon in 2005 and the workers’ unrest and consequent death of the factory manager of the Italian automobile parts manufacturer Graziano in NOIDA in 2008 were not only the most publicised clashes, but also bitter lessons for the local working class. For a short summary of the protest and the solidarity forum see:

[102] A very good account on the mode of agricultural production, land-distribution and the movement against the mining project in Kashipur:
People’s Union for Democratic Rights - Halting the mining juggernaut (July 2005)

[103] For example supporters of the struggle against the Singur plant reckon that the lively-hood of 15,000 people would have been destroyed by the car plant, which will create only 1,000 new jobs.

[104] In November and December 2008, after a brutal police raid tens of thousands of impoverished ‘tribals’ set up road blockades and encircled police stations in the West Bengal district of Lalgarh. After a month of partly violent confrontations with CPI(M) cadres and state forces, the rank-and-file dominated movement won their demands for compensation and withdrawal of the police presence in the area. Interestingly enough at the same time when roads where blocked in Lalgarh, railroads were blocked in Kolkata. At the Dunlop plant management had issued an order of temporary closure at the Sahaganj factory. A large number of Dunlop workers and supporters attacked the management, forcing the officials to leave the factory premises. The irate workers organised blockades on the railway tracks and access roads. Workers were told to collect an ad hoc amount of Rs 2,000 every month till the company’s present financial crisis was over and the normal work at the factory began. But, the workers refused to accept that and instead they approached the state government to intervene. A detailed account on the Lalgarh uprising can be found at:

[105] That there are potentials for this kind of class movements is confirmed by a day-long strike called for by Maoists in eastern India in January 2009. The strike shut down factories in the three states of Jharkhand, Bihar and Orissa, and saw work at mines affected and highways blocked. The strike was called to protest against rising prices and what the rebels said were police atrocities against villagers.

[106] Officially the so called ‘governmental fair price shops’ are shops where ‘officially poor’ people can buy basic items (wheat, rice, kerosene etc.) for fixed and allegedly lower prices. In order to be able to buy in the shops you need a ration card. The ration card is also necessary as a proof of residency, but in order to obtain the ration card you have to prove your residency. Catch 22 for many poor. Local politics use the ration depots and cards as a power tool that reaches far into the working class communities. Depot holders are answerable to the local political leaders and in return they receive this privileged position, which often enables them to make money on the side.

[107] For example a news item from the Times of India, December 2008: “The struggle of close to 5,000 landless tribals continues and reaches the 500 day mark at a rubber estate in Chengara (Kerala). The tribals formed a Sadhu Jana Vimocha Samyukta Vedi (SJVSV) and have been demanding land from the government. But 170 families of plantation workers who have lost their livelihood due to the occupation of the estate are opposing them and staging another protest.

[108] For example: In Karnataka in January 2009 the Pranta Krishi Coolikarara Sangha (KPKCS) threatened the government with a strike, demanding a wages rise for workers engaged in works taken up under the National Rural Employment Guarantee Scheme (NREGS) from 83 Rs a day to 150 Rs. Some general sources about the struggle around the implementation of the NREGA

[109] According to government figures of December 2008 there are currently 85,000 ’sick units’ in India, meaning factories that are not fully utilised due to financial difficulties.

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