[Marxism] "India Shining" exposed as fraud

["Jacob Levich" <jlevich@xxxxxxxxxxxxx>]

Aspects of India's Economy Nos. 36 & 37 (March 2003)

The Real State of India's Economy
Growth Suppressed, Parasitism to the Fore

At the start of 2004, the Government is making a desperate effort to whip up
a sense of euphoria about the state of India's economy. The mass media have
been making out that there is a basis for the euphoria. Stock prices have
risen at breakneck speed - the Bombay Stock Exchange's Sensitive Index (the
Sensex) has doubled between late April 2003 and January 2004, and foreign
institutional investors are bringing in large funds. Corporate profits
appear to have picked up in the first three quarters of the financial year.
The foreign exchange reserves have risen by an unprecedented $30 billion
over the last year, and have recently crossed $100 billion amid much
celebration. The Central Statistical Organisation projects that GDP (Gross
Domestic Product) growth in the whole year might touch eight per cent. Amid
such seeming achievements, the finance ministry has coined the slogan "India
Shining" for its media campaign; the Government is rushing to spend Rs 500
crore (Rs five billion) of public funds on this campaign; and elections will
be held in April. The press and electronic media too have been retailing the
Government's slogan relentlessly in their reportage.

The sudden growth of the foreign exchange reserves is not an achievement to
boast about. It is largely due to the huge influx, through a variety of
channels, of foreign speculative capital, which sees the opportunity to make
huge gains in India's financial markets. On the other hand, when these funds
are added to the country's foreign exchange reserves, they have to be
invested abroad by the Reserve Bank at a rate of return of just one or two
per cent a year. Further, foreign investors can draw these funds out as fast
as they have brought them in, with devastating effect.

The stock market boom is driven by such foreign speculators, who, with the
$30 billion (net) they have brought in since 1992, dictate the movements of
share prices. They reportedly hold 45 per cent (by market price) of the
'free float' shares (ie those shares that are ordinarily available to
investors) of the Bombay Stock Exchange.1 It is estimated that they hold 30
per cent of the shares of the top 10 Indian companies, and 20 per cent of
the top 50 Indian companies.2 However, such foreign investment in India's
stock markets has not given any boost to productive investment by the Indian
corporate sector in the 1990s.3

In fact the entire "India Shining" campaign is a cheap statistical fraud.
There is no significant turnaround in the economy as a whole. The actual
condition of the people and their productive future - the only real measure
of economic performance - is appalling.

In the following piece we take apart the claims of the Government. We
apologise to our readers for the large number of figures and calculations
below. As the propaganda of the Government and the ruling elite comes in the
form of a shower of figures, it is necessary for us to expose these figures
as bogus or misleading.

Moreover, we have not separated the period of BJP rule from the periods of
Congress or United Front rule. For there has been no break in policy in any
respect.

More at http://www.rupe-india.org/36/intro.html




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