Dated 20 July 2016

Greek Tragedy knocking at India’s door

Chanchal Chauhan 

Most of our people including even the economists and academics would laugh at the warning I am blowing here that India is heading towards a Greek type economic collapse by the year 2018. Even Raghu Ram Rajan, the RBI governor once had expressed his view without mincing words that the crisis was worse than it was in the 1930s and cautioned about the impending negative economic pace in India notwithstanding the rosy picture drawn every day by our PM and FM who never shirk in their duty of inventing new ‘Jumla’ every now and then. Some body (perhaps Nitish Babu) had rechristened the BJP as ‘Bhartiya Jumla Party’ commenting on what the BJP president termed the promise of crediting Rs.15 lakh by Narendra Modi to the account of every Indian as a ‘jumla’. After coming to power on the basis of ‘jumlas’ the BJP leadership did not stop with that practice and every day their government feeds people with one ‘jumla’ after another, ‘Swachh Bharat’ (without water!!!), ‘Start-up India’(impacted by slowdown now), ‘Digital India’(see the condition of Infosys) and so many similar ‘jumlas’ attached to ‘India’ including ‘Bharat Mata ki Jai’ and ‘Deshbhakti’ debate full of ‘jumlas’. The condition of India has become a tale told by an idiot full of sounds and furies signifying nothing but ‘jumlas’.

                The promise of ‘achchhe din’ (good days) proved to be a ‘jumla’. The rulers flaunt data of GDP growth while, in reality, majority of sectors reportedly have shown decline in production. Industrial production is declining, agricultural production destroyed by the nature’s wrath, majority of states and regions are still in distress because of drought, unseasonal rains and hailstorms and now floods in many areas hit farmers badly. Even drinking water was not available to people in as many as 11 states and railway wagons with water were arranged to a place like Latur that came to lime light after the IPL match controversy. So where was the growth? The ground reality is totally different. Even the best of economists world over do not find the GDP data to be credible. There was a similar credibility crisis in Greece also. So it is here in India now.

                 No body can contradict the fact that Indian ruling classes adopted the economic policies carved out by IMF and World Bank and only those policies are being followed since 1991. No change of political leadership at the centre or states could reverse those policies, These policies are known as neo-liberal economic policies of globalised capitalist world under the hegemony of international finance capital.

                Under the neo-liberal economic regime the whole poor world is in the grip of debt. Right from developing nations to the poor farmer in a remote village is in the debt net. The human labour that produces wealth is robbed of its real income and by this robbery enormous capital is created. This capital is turned into commodities, goods and services, and a moment arrives in history when vast majority of people become so poor that they can buy nothing. Modern technology is capable of huge mass production of commodities that are dumped in the stores on the whole globe. The collapse of demand leads to recession and the flow of capital is thus hampered by capitalism itself. This had happened in the ‘thirties’ to which Raghu Ram Rajan referred recently. This happened in USA in 2008  and now the whole developed world is facing the situation of great recession. Academic economists call it slowdown. This process is taking place in almost all the sectors of Indian economy too with a few exceptions.

                India is a part of global economy now and cannot remain unaffected by the economic crisis that is engulfing the economies of all big capitalist countries and even China that is guided by a different philosophy of political economy. Our exports have tragically declined during these two years of Modi government. This decline is to continue with the slowdown of demand in the developed countries. As of now the decline in export earnings is more than 15% as per media reports. India’s foreign debt burden has increased in the same manner as Greek people witnessed in their own country. As per the data provided by the Finance Ministry, the total external debt on India at the end of March 2014 was at US$ 4,46,178 million, this has increased to the level of US$4,80,180 million by the end of December 2015. The Reserve Bank of India (RBI) said recently that India's external debt stood at $485.6 billion at the end of March 2016, a rise of $10.6 billion year-on-year (YoY). This is our indebtedness that has been gifted to ‘Bharat Mata’ by Modi government during these two years. This is going to increase further, as the data for the June 2016 quarter ending are not available.

                Greek government-debt crisis started in late 2009. It was the first of five sovereign debt crises in the eurozone – later referred to collectively as the European debt crisis. In Greece, triggers included the turmoil of the Great Recession, structural weaknesses in the Greek economy, and a sudden crisis in confidence among lenders. In 2012, Greece's government had the largest sovereign debt default in history. On June 30, 2015, Greece became the first developed country to fail to make an IMF loan repayment. At that time, Greece's government had debts of €323bn i.e. US$ 367.31 bn. Now India has debts amounting to US$ 485.6  billion, much higher than what Greece owed to her lenders last year. Greece has accepted the pressure from IMF and World Bank to burden people with more and more taxes, curtail all expenditure on social welfare and adopt strict austerity measures and thus repay the heavy debt. Modi government too is under the same pressure and it is faithfully obliging the IMF and World Bank by implementing their policies of austerity measures such as cutting heavily the budget allocation on education, social welfare, MNREGA and other poverty alleviation programmes and passing the burden on the common people. These steps will lead to a disastrous situation by 2018 when Indian economy will be in shambles under the Modi administration. But who will believe me in the era of media hype what I say? Greek tragedy is knocking at India’s door. Any one who does not foresee it, can look at the following data as upated the RBI in July 2016.


India Trade






Balance of Trade





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USD Million






USD Million

Current Account





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Current Account to GDP






External Debt





USD Million

Capital Flows





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Foreign Direct Investment





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USD Million


Will the situation improve? The incumbent RBI governor will face it. The blame game will start by the next year. The present World Bank economist, Raghuram Rajan will be replaced by any other World Bank economist (Arvind Pangariya or Arvind Subramanian or any one imposed by the World Bank) as has been happening in the past since the adoption of neo-liberal economic regime in 1991. The World Bank imposed on India Manmohan Singh, Montek Singh Ahluwalia, Raghuram Rajan, Arvind Pangaria and Arvind Subramanian to hold the reigns of Indian economy. This time too, after the departure of Raghuram Rajan in September 2016, the international finance capital will impose its own faithful economist as RBI governor who will obediently pursue the same neo-liberal economic agenda of international finance capital that serves the interests of developed capitalist world led by US administration and the corporate houses that have put heavy load of NPAs on Indian economy. The combination of various negative factors, such as mounting foreign debt, the burden of rising NPAs. and lack of demand and many more factors will ultimately lead to the unbearable misery of ‘Greek tragedy’ that will knock at India’s door by 2018. So let us stand and stare!