This approach to the problem explains the government's attempt at fighting poverty through supply-side policies and structural reforms. While the two economic support plans announced in the spring only earmarked half a percentage point of GNP for the poor, two to three times as much money was earmarked for business. While such measures were fully justified in the case of Small and Medium Enterprises (SMEs), others reflected an ideological bias that was all the more obvious since they could not respond to the urgency of the moment.
Three sets of reforms are worth mentioning here: a vast privatization plan for public enterprises (mainly intended to bail out the state coffers) which should help already dominant industrial houses to become robust oligopolies, a challenge to labor laws that deprived workers of many protections (including legal working hours), and a liberalization of agricultural markets that provoked huge protests from peasant farmers. The farmers fear in particular that they will be subjected to the diktat of the large agribusiness corporations.
This supply-side policy contradicts the views of most Indian economists, who recommend a demand stimulus through direct cash transfers, a more important condition for restarting investment than subsidized loans to businesses. The same economists, following the IMF’s recommendations, suggest introducing a wealth tax to finance this stimulus package - to no avail.
Thus, the Covid-19 crisis reveals the ideological preconceptions and strategies of the Indian government regarding the economy. In India, where since 2014 the government has been promoting crony capitalism aimed at structuring the economy around a few oligarchs, his supply-side policy and the reform of agriculture aims to open up new horizons for them. The poor will have to wait, as is often the case.
Copyright : NARINDER NANU / AFP