March 29, 2021

Blog | March 2021, Scroll.in

Is Indian capitalism really designed to enhance public welfare?

The difference in the way the farmers protest and bank bailouts are treated is instructive.

by Ajay Gandhi

This blog  was originally published on 22 March 2021 in Scroll.in.


India is the place where western theory goes to die, someone once joked at a PhD seminar I attended. For an anthropologist, India is too particular, too unruly to categorise. It does not adhere to Euro-American ideas of culture or development.

Yet in one realm, western theory, far from expiring, actually thrives. This relates to markets in general and finance in particular. Indian capitalism continues to be both understood and performed through orthodox economics.

This is somewhat ironic. The 2008 economic crisis at least tempered western deference to the rationales that were followed since the 1980s when western countries submitted to business school urgings to privatise, deregulate and financialise. This was fronted by a technocratic confidence: algorithmic projections, econometric models.

Economies of scale could be achieved via large conglomerates, the argument went. Stagnant stores of value would be unlocked with private investment. Speculative activity and consumer debt should replace state-led provision.

Since the crisis, however, public discourse is less innocent on whose interests are served and what the costs are. Yes, the incentives and infrastructures of speculative capitalism remain. Debt, liquidity and low-interest rates are political dogma. Economists of this consensus still staff treasury departments and sovereign funds.

But the western public has seen the fruits of laissez-faire victories since the 1980s: degraded pensions, stingier healthcare and ambient anxiety at being disposable at work. The boast of an economy that becomes self-regulating and stable – at a time of incessant shocks and tenuous gig-work – is quaint.

In India, however, major ventures are argued using impartial economistic language. Take two current examples which have wide-ranging socio-economic consequences: agricultural reform and bank bailouts. In both cases, public debate has been engineered around intellectual claims that seem disinterested – when in fact, both processes are embedded in and advance particular interests.

Farmers’ protests

For months, farmers across India have protested three agricultural laws passed in Parliament last year. Supporters of the laws claim that they will introduce much-needed reforms: they will reduce waste, unshackle farmers from intermediaries and enhance productivity.

As the protests gained traction, the government’s planning body, the NITI Aayog, went on a public relations offensive. Its line: these laws will improve export competition, farmers’ risk appetite and capital formation.

Yet Indian farmers understand that the laws will likely concentrate profits in vertically integrated companies. The law’s advocates coopt the universalising promise of markets and finance. Backers of the governing party correspondingly see the subversion in the protestors.

The protesting farmers are not confined to any one state, ethnic or religious group. Yet pro-government analysts accuse them of a discrete agenda. The farmers can only be “vested interests” undermining the general good. The government’s chief economic advisor Krishnamurthy Subramanian dismissed them as “a vocal minority” drowning out “a silent majority”.

Wilful defaulters

Bank bailouts are another instructive example. India’s banks have among the highest ratios of unserviced debt in the world. Since 2018, several have been generously rescued by the government. But how did these banks accumulate such vast portfolios of bad loans? Many public banks were directed by political functionaries to disburse funds to favoured companies.

In other words, far from using impartial technical criteria to circulate capital, state banks were nudged to lend to dubious companies – their main virtue being executives with one or two degrees of separation from influential politicians. The finance ministry has been notably sluggish in divulging the names of and pursuing justice from “wilful defaulters”.

Now, NITI Aayog promotes bank privatisation and the Reserve Bank of India is mulling the accelerated input of non-financial companies in banking. A plausible outcome is a further concentration of capital and de facto monopolies in key sectors, abetted by cosy complicity with political parties.

It would be one thing if proponents of agricultural and banking reform legitimised their claims by being upfront about whose interests are being served. Instead, just as political manoeuvres are staked through reference to general categories – the “people” or the “public” – economic policies disavow and disguise who really benefits.

Vested interests

NITI Aayog speaks of an “improved risk-assessment framework” to prevent toxic debt. The Reserve Bank approves of “management expertise” in corporate houses wanting to bank. The studied neutrality of the jargon obscures who risks and profits.

A recent book that I co-edited, Rethinking Markets in Modern India (Cambridge 2020), investigates these issues. The book argues that Indian market activity is embedded within social relations where conflicting jurisdictions proliferate. Economic life has become conceptually demarcated from society and politics. It is now the privy of technical specialists who reassure us of capitalism’s inherent productivity, rationality, and efficiency.

This reductive argument is a fairy tale, albeit one that does pernicious work. The political debate around the appropriation of value and redistribution of risk is neutralised through economistic language.

As Indian scandals show – from foreign arms deals to state collusion with minerals and sand mining – commercial and financial activity is lubricated through networks: familial relations, industry friends and party allies. In its most humble iteration and in its most high-altitude guise, modern capitalism never transcends the social, despite claims to the contrary.

In other words, markets are always about jockeying for power, striving for status, desiring betterment and serving the community. To acknowledge this is to qualify the impartial authority economic reform gathers to itself. The flat language of quantitative growth and market share distracts from the dignity, autonomy and fairness that every human in an exchange needs.

The farmers’ protest and bank bailouts show us that far from being unbiased, Indian capitalism is replete with its own vested interests. Claims to agricultural and banking reform in this sense evade which players are positioned to coopt profits and socialise debt.

Markets are always tethered to social practices and moral aspirations. They are inherently subject to claims and counter-claims. In contemporary Indian capitalism, this is something to overcome. The formula: consolidate power in conglomerates that promise simplicity and scale.

The usurping of commercial and financial debate through abstract, detached prescriptions is fatal to a humane economy. Conventional economics and management devotees produce apolitical ideas that do transformative political work. Avowedly evenhanded regulation, such as the agricultural reforms being protested, or bank bailouts that absolve nepotism, are advanced in the name of – but mock – public welfare and collective prosperity.

Perhaps we can revise the idea of India as where western theory goes to die. At least in markets and finance, western economic rationales – discredited for enabling the 2008 recession – are very much alive.


Ajay Gandhi is an anthropologist and assistant professor at Leiden University.

Go to Editor View