The Social Tsunami Impact / Snap-Shots against Capital-Class-Crisis

Debating the dimension of the micro-credit crisis in India we have to go beyond the old formula of ‘parasitic moneylenders in new disguise’. The growth of micro-credits is essentially part of the wider global development: credit money has to fill the gap between global over-capacities and subsequent under-consumption.

In this sense the growth of micro-credits can not be explained by general ‘greed of loan sharks’, but by, on one hand the global ‘hot money’ leaving the low interest regimes of the ‘over-accumulated’ developed states in order to invest in the interest-yielding industrial periphery, e.g. in growing sectors like micro-credits (2009 growth rate in India: 58 per cent); this ‘hot money’ then meets the ‘credit needs’ and ‘reproduction crisis’ of a large segment of semi-proletarianised population, which cannot survive as farmers, nor as small entrepreneurs, nor as fully proletarianised wage workers. Micro-credits are rarely ‘invested’ productively, they mainly serve as household income.

The current conflict about whether the wages for the rural employment scheme NREGS should be tied to the general minimum wage level, is part of the picture. Currently in most states the wages for NREGS are below the minimum wage. The central state fears that the fiscal deficit would expand even more once NREGS would be linked to minimum wage levels. It would be easy to counteract this argument by pointing at the planned four-year budget of 45 – 50 billion USD for acquisition of military hardware, but this would ignore the necessities of a ‘capitalist state’.

Fact is that despite the ‘hot money inflow’ the state deficit is increasing, that the current boom does not generate enough ‘employment’ and that the wage level of most of the new jobs can hardly be called a ‘family living wage’. The changes in the international migration regime will change the flow of remittance – last year India was the record receiver of remittance amounting to 55 billion USD – and will aggravate the social crisis in ‘emigrant-states’ like Punjab, already ridden by mass debts. The ‘micro-credit’ – as much as ‘subsidies’ or ‘farmers’ debt waivers’ – has therefore to be seen as the ‘grease’ in a troubled process of proletarianisation The Nobel Prize idyll of ‘small entrepreneur’-ship has capsized in the rough sea of global crisis.

In the following we summarise in a rather random fashion some general news relating to the development of social crisis.

a) inflation continues to stifle ‘industrial growth’
b) central state has subsequently increased its expenses beyond plan
c) nregs wages are supposed to remain below minimum wage levels
d) micro credit system threatens to default
e) tighter control of rural poor through electronic ID system
f) remittance on record high but threatened by changes in global migration regime
g) expansion of defence budget and US reiteration that China uses Pakistan to stifle India
h) increased investment of ‘Indian’ companies in Africa
i) towards a global class: recent workers’ strikes at Foxconn, BYD and General Motors India

a) inflation continues to stifle ‘industrial growth’

Garment industry suffers from Rupee appreciation. From April to August, exports were down 6.4 percent from a year earlier in the $10 billion Indian clothing industry. Although it represents only about 1 percent of the nation’s economy, the garment industry is India’s largest employer after agriculture. “Soaring inflation, rising input cost and slow growth in capacity addition are some of the reasons that are inhibiting growth in specific sectors,” Food inflation in mid-October stood at 13.75 per cent. Industrial output growth in August slowed to a 15-month low of 5.6 per cent from 15.2 per cent in July. While flows into the stock market have more than doubled, foreign direct investment into India fell more than 24 percent in the first seven months of the year, to $12.5 billion, compared with the comparable period a year earlier.
(1st of November 2010)

b) central state has subsequently increased its expenses beyond plan

The government is looking for approval to spend about $9.8 billion more than what was passed in its February budget, towards interest and subsidy payments.
(26th of November 2010)

c) nregs wages are supposed to remain below minimum wage levels

Fiscal experts are worried the government could be staring at a financial black hole if it agrees to the demands to provide minimum wages under the employment guarantee law. The spending on scheme is already one of the biggest item of expenditure for the government, budgeted at Rs 40,100 crore for the current fiscal. [But] “As per the latest figures, only about Rs. 17,000 crores has been spent – roughly 42% of the allocated budget. Immediately notifying the prevailing state minimum wage will have no impact on the Center’s fiscal budget,” said Roy, one of the founders of Mazdoor Kisan Shakti Sangathan.
(24th of November 2010)

d) micro credit system threatens to default

India’s rapidly growing private microcredit industry faces imminent collapse as almost all borrowers in one of India’s largest states have stopped repaying their loans. Sector’s leading company SKS Microfinance shares have lost 41 percent since Oct. 15. Lenders say that less than 10 percent of borrowers have made payments in the past couple of weeks. Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry, banking officials say. Now some Indian officials fear that microfinance could become India’s version of the United States’ subprime mortgage debacle. Micro-finance company association demands a 200 million USD ‘state rescue package’ in case the crisis aggravates.

e) tighter control of rural poor through electronic ID system

The purpose of this exercise [current census] is to build the National Population Register (NPR). In due course, your UID (Unique Identity Number, or “Aadhaar”) will be added to it. This will make it possible to link the NPR with other Aadhaar-enabled databases, from tax returns to bank records and SIM (subscriber identity module) registers. Benefits and services that are linked to the UID will ensure demand for the number.” That UID is, in effect, going to be compulsory is clear from many other documents. For instance, the Planning Commission’s proposal for the National Food Security Act argues for “mandatory use of UID numbers which are expected to become operational by the end of 2010″ (note the optimistic time-frame). No UID, no food. Similarly, UIDAI’s concept note on the National Rural Employment Guarantee Act (NREGA) assumes that “each citizen needs to provide his UID before claiming employment.” [...] Take for instance Captain Raghu Raman (of the Mahindra Special Services Group), who is quietly building NATGRID on behalf of the Home Ministry. His columns in the business media make for chilling reading. Captain Raman believes that growing inequality is a “powder keg waiting for a spark,” and advocates corporate takeover of internal security (including a “private territorial army”), to enable the “commercial czars” to “protect their empires.”
(24th of November 2010)

f) remittance on record high but threatened by changes in global migration regime

Indian expatriates are expected to remit about $55 billion into the country this year as the number of emigrants from the nation is likely to clock 11.4 million, a new World Bank report said.
(24th of November 2010)

Offshore IT staff face new pay thresholds
UK migration officials said that non-EU entrants using intra-company transfers would need to earn at least £40,000 to work in the UK for more than 12 months.
(1st of November 2010)

India IT firms say US rejecting business visas
US is rejecting a growing number of visa applications and visa interviews are bordering on interrogations, Indian information technology companies say.
Also recently, the US Border Security Bill hiked the fees for H1B and L1 business visas, leading to protests from Indian IT firms.
(4th of November 2010)

With 5 mn pounds to invest, make UK your permanent residence
If you’re rich and ready to invest more than £5 million in Britain, you could now get permanent residence in two years and full citizenship in five. The UK government is easing immigration rules to woo millionaires to make England their home.
(6th of November 2010)

36 Indian illegal immigrants arrested in Britain
LONDON: Thirty-six Indian nationals have been arrested in Britain for working illegally in the country, while six other Indians were found hiding in a lorry in France, trying to enter Britain illegally, officials said on Wednesday. Since July, over 400 operations have taken place across Britain which resulted in arrests of more than 800 people from various countries.
(1st of December 2010)

India imports 15,000 Chinese laborers to build, teach infrastructure projects
“India may be an IT superpower and producing thousands of doctors, lawyers and MBAs every year. But the biggest gap is in the availability of skilled electricians, carpenters, welders, mechanics and masons who can build mega infrastructure projects,” said Raghav Gupta, president at Technopak. India’s demand for steel is growing exponentially, and steel production, now at 70 million tons a year, will need to grow 12 percent every year to keep up. “China is the only country in the world that has built so many new steel plants in the past decade, almost like assembly-line products, adding about 80 million tons of steel capacity each year. So we decided to get their technology and manpower,” said R.S. Singh, director of Electrosteel Steel Ltd., the company building a factory in Chandankyari. “This factory is a classroom for Indian workers and we will create a benchmark for speed, quality and cost,” Singh said. The Indian workers are learning a new work ethic from the Chinese and are now more punctual, not stopping work to take frequent tea-breaks or gossip, managers said.
(23rd of October 2010)

g) expansion of defense budget and US reiteration that China uses Pakistan to stifle India

During US-president Obama’s visit to India this autumn some 250 businessmen were traveling with him. American exports to India have doubled between 2005 and 2009. India plans to spend 45 yo 50 billion USD on military hardware during the next four years. The Indian state hopes that intensified economic relations will translate into formal political recognition: “Will he make a major push to support India’s hopes of becoming a permanent member of the UN Security Council? Unlikely, say most analysts. Though the Indo-US nuclear agreement sounded the death knell of the era of defence technology apartheid practised against India, it will still be a decade or more before the ghosts of technology denial regimes are finally buried. The deeply entrenched bureaucracies in the departments of state, defence and commerce around the Washington beltway will take quite some time to finally accept India as a co-equal partner with whom dual-use technologies can be shared to mutual advantage.”

In the meantime the US diplomacy prepares the atmosphere for future arms deals.
“Relations between India and China have deteriorated in last 18 months and is unlikely to get better”, Blackwill, a former US Ambassador to India. “The Indians have a long list of Chinese transgressions, which in my judgment are accurate, having to do with Chinese policy on Kashmir and on the border dispute between the two countries and the so-called ‘ring of pearls’ of Chinese quasi-military installations in Bangladesh and in Sri Lanka and in Pakistan and so forth,” he said. “In other words, China using Pakistan to slow India’s rise,” Blackwill said.
(4th of November 2010)

h) increased investment of ‘Indian’ companies in Africa

In the past 18 months India-based Essar group bought coal mines in Mozambique, half an oil refinery in Kenya and a call center in South Africa. Essar Energy Plc. plans to invest heavily in Nigeria’s power grid. “Africa looks remarkably similar to what India was 15 years ago,” said Firdhose Coovadia, director of Essar’s African operations. “We can’t lose this opportunity to replicate the low-cost, high-volume model we’ve perfected in India.” India-based Karuturi Global Ltd. leases 311,000 hectares of land — larger than the U.S. state of Rhode Island — in Ethiopia and Kenya, and sells more than half-a-billion roses a year.

i) recent workers’ strikes at Foxconn, BYD and General Motors India

* Government seeks to crush strike of Foxconn workers in India

Defying police repression, thousands of workers have been on strike since September 21 in the industrial city of Sriperumbudur. The more than 7,000 workers at the plant are demanding an increase in wages, increased health benefits, as well as recognition for the trade union Thozilalar Sangam (FITS), which is affiliated with the Stalinist Communist Party of India (Marxist). On October 9 police arrested several hundred Foxconn workers who, in defiance of repeated police attacks, have continued the strike. A total of 319 workers, identified as leading activists, were remanded into judicial custody and transferred to Vellore central jail. The remaining few hundred workers not arrested were laid off. After being held for four days in jail, 307 workers were released on bail on October 13. On October 10, the day after the mass arrests, over 3,000 workers staged protest demonstrations on the streets of Sriperumpudur. They have been staging ‘Dharna’ (sit in protests) near the District Collectors Office. Police are preventing workers from staging any protests in and around the Foxconn plant. Foxconn workers are paid 4,800 rupees ($US106) per month. The workers are demanding a basic pay of 10,000 rupees ($US221) and other additional bonuses, along with health checks and medical insurance. Foxconn management has contacted some workers from distant villages who live in the Sriperumbudur area and forced them to report back to work. However, most of them defied that order. Now the factory is staffed partly by workers brought from villages through labor contractors, along with some workers who have given into management threats. However, only a few hundred are working in the factory now. Even the vast majority of the 6,000 contract and trainee workers have joined the strike. On October 19, CITU General Secretary Tapan Sen sent a letter to Tamil Nadu Chief Minister Karunanidhi urging his “effective intervention to resolve the crisis” at Foxconn “in the best interest of the company and its 7,400 workers”. That is, the union leader is appealing to the chief minister of a government that has framed up striking Foxconn workers to intervene in the interest of the company.
(World Socialist Web-Site, 25th of October 2010)

* BYD Electronics fires most of its workforce, after police break up sit-in

The Indian subsidiary of the giant Chinese-based BYD Electronics has fired most of the workforce at its plant in Oragadom in the south Indian state of Tamil Nadu, after the workers staged a sit-in to press their demands for increased wages, an 8-hour work day, the regularization of contract employees, and recognition of their newly-formed union. BYD has now locked out the entire workforce at its Tamil Nadu plant and announced the dismissal of all 2500 contract workers. More than 3,000 of BYD’s 3,350 production workers participated in the plant occupation, which began on the night of October 28 and lasted for almost two days. The workers chose to end their sit-in on the evening of Saturday, October 30, after baton-wielding state police surrounded the plant and vowed to storm it if workers didn’t vacate the premises in 30 minutes. When the BYD workers returned to the plant on Monday, November 1, they found the gates shut, a heavy police presence, and a letter on the company notice board. The letter said BYD is dismissing all its “contract” workers-that is, 2,500 workers the company has hired through recruitment agencies so that it can pay them even less than its 850 “regular” workers.

The BYD notice also announced the firing of 60 regular workers and said 437 others will be required to sign a letter of apology for “misconduct,” i.e., for their participation in the occupation. The three-and-a-half-year-old plant is now closed, ostensibly for a snap week-long “holiday.” Management is using this time to plot with the state government to resume operations using other poor villagers, recruited through various labor contractors, as scabs. Workers at the plant, which produces parts for Nokia cell phones, are forced to work 12-hour shifts. A majority of them are young women. Those with four years’ experience earn just 5,400 rupees (about US $120) per month. Workers approached the Center of Indian Trade Unions (CITU), the union federation led by the Stalinist Communist Party of India (Marxist) or CPM, to form a union on October 9, after BYD announced the layoff of a hundred workers. The vast majority of the workers-regular and contract-soon joined. With the company refusing to negotiate, the workers staged an initial sit-in on October 21. Faced with this militant action, one moreover that united contract and regular workers, the company agreed to hold negotiations with 68 of the workers. But within a week the negotiations broke down because the company insisted that it would not discuss the grievances of the contract workers. Suriyadevi, a young woman worker, told the WSWS, “We don’t get proper food in the company canteen. That’s also run by contractors. During our occupation the management cut off the water supply so that we couldn’t even use the bathroom. There was no canteen facility. All of them were deliberately stopped to exert pressure on the workers to return to work. Now we have been locked out and are standing under the burning sun.”
(World Socialist Web-Site, 4th of November 2010)

* GM workers call off strike, work resumes at Halol plant

Around 450 [other sources say 900 worker] workers went on strike on 29th of October 2010, demanding hike in wages. The plant, which produces 150 vehicles per day, has 900 permanent workers distributed equally between two shifts. The Halol facility has an installed capacity to produce 85,000 units every year in three shifts. The strike was ended after three days. Management claims that the strike was called off unconditionally, while union leaders say that they have a written agreement to negotiate a wage deal.