Labour Monthly, September 1944

Danger Signals in Indian Economy
by S.A Dange

Source: Labour Monthly, September 1944, p. 269 272, by S.A. Dange;
Transcribed: by Ted Crawford

Five years of a modern total war, requiring the complete mobilisation of a country’s economic and moral forces, have produced in the leading capitalist countries of the democratic bloc, a centralised control of production and distribution, a growth in the productive forces, a system of rationing and price control, which affords the people some protection from the rapacity of the profiteers and harmonises the demands of the front and the rear. In England the people, could be saved from famine, demoralisation and defeat because the anarchy in the sphere of production and distribution was to a great extent overcome in the first two years of the war.

It was the existing democratic institutions and the National Government established on their basis which carried through this change. The first step in that direction was political – clean-up of the Munichites from the Government. The second was economic – rigid control over production and distribution, though the latter was slow to come. The people could be mobilised morally and physically only on the basis of these vital political and economic changes in the life of the country.

In India no such changes took place. The country, politically and economically, was prey to imperialist politics and economics. The Government of the country reflected the monopoly interests of British capital and not the democratic interests of the Indian people. It tried to mobilise the resources of the country for the War in Europe before Japan attacked and then for the war in Asia. But being a bureaucracy divorced from the people it failed to harmonise the demands of the front with the needs of the people. For the same reason, it failed to plan production and distribution. The result was inevitable breakdown in the economy of the country which already was too poor to meet the needs of “a modern war of motors.” Threatened with this collapse the bureaucracy relied on the mere force of the all-powerful State, on repression of the people on the one hand, and partial concessions to profiteering interests on the other.

The result was that the threat of economic collapse became a fact. It was brought to the attention of the world by crowded prisons and by the three million corpses of the Indian famine.

There were no plans of production to utilise existing resources in an efficient manner and to augment them wherever possible. India has no heavy industry to produce the means of production. The military crisis on the Continent and England cut off supplies even of spare parts for replacements. Instead of augmenting the productive capacity by basic extensions, higher production was secured for time by increased shift working and by the incentive of high boom prices and profits. The picture will be clearly seen if we take five strategic items of industrial production which have developed to some extent in India – such as (1) iron, (2) steel, (3) cotton textiles, (4) jute textiles, and (5) coa1. Production in 1941-42 over that of 1938-39 was as follows:

Pig iron increased by 14 Per cent., steel by 23 per cent., cotton cloth by 10 per cent., jute by 10 per cent. But the danger spot of the whole position was already visible in coal, which did not increase and later, in 1943, showed a serious decline.

In all these increases there was no co-ordination of plant capacity, allocation of materials, markets or labour. It was anarchy of production intensified by the war boom and utilised by the profiteers.

The increase in production was achieved not only without any increase in basic capacity, but also at the cost of the progressive impoverishment of the people and the country. The working class cost of living increased, as there was no price control. But the increased cost of living was not covered by a proportional or even substantial rise in wages. No section of the working class, whether highly organised in Trade Unions or not, could got a wage increase without a strike, i:e.; a threat to production. The best organised workers (in Bombay), in spite of the increases secured from time to time, could not keep up with the rising cost of living and suffered a fall in wages to the extent of 30 per cent. In Calcutta, the fall was 60 per cent. This resulted in a lowering of efficiency and an increase in sickness and absenteeism. The attempt to transfer war burdens to the shoulders of the working class, by impoverishing the working class, was bound to result in a severe crisis of production – as came in at a later stage in 1943. The Government of India, while refusing to freeze prices, directly supported and inspired the employers in freezing wages. But the threat to the economy of the country developed mainly on the food front. Agricultural economy in India as a result of imperialist policy, had failed to develop even to the point of supporting the needs of the country’s population on the lowest standard of living. The towns and the non-agricultural population, drawing supplies from the market had to depend upon the vast, uncoordinated movements of small scale farmers, 75 per. cent. of whose products were expropriated in rent by a rapacious landed gentry, in interest by usurers and in prices by the capitalist market. In the absence of a central food plan, price-control and rationing, the food market strained by the extra demands of the army and by exports, was the first to collapse. Rice, the staple food, which was Rs. 4-14-0 per maund of 82 pounds in Calcutta in 1939, had risen to Rs 14/- in February, 1943. The wholesale price index of rice rose to 218 in December, 1942, over August, 1939, as 100. But by December, 1943, according to the Economic Adviser of the Government of India, it had jumped to 951.

The Government of India failed to procure stocks enough to supply the big industrial centres where production of vital goods was going on. Working hours were lost in a hunt for food. Coal mining areas in the two large coal producing provinces were denuded of food and other supplies. Coal production fell from 28 million tons in 1942 to 22 millions in 1943. Workers deprived of food and plants deprived of fuel – production was in serious danger.

The production indices show the picture as follows:

Base 1935-36 = 100.

The crisis in food was not so much of production as of distribution. The crisis in coal was both of production and distribution.

The reactions the Government to the crisis were not marked by any set policy in the economic field. Politically they had the set policy of refusing to let the major political parties of the country handle the affairs of the country. Economically, they played with the price market, inflated currency to an unheard-of extent. Currency note circulation which was 1,723 million rupees in August 1939, rose to 3,084 million Rs. on an average in 1941-42. And as the collapse became more visible and goods refused to flow in, it was further inflated to Rs.8,408 million in December 1941.This inflation made the collapse worse.

When people began to fall dead in the streets and workers were forced to leave factories or go on strike for want of food and the essential consumer goods, the Government was moved to think seriously of price-controls, rationing, allocation of transport and productive capacity, and procurement of food stocks and distribution from a central plan. Rationing was for the first time introduced in May 1943 in Bombay. But Calcutta, the largest city in India, with four and a half million population, did not get it till 1944. According to the Government, 234 cities with a population of 35 millions, are today under rationing: This is a false, or exaggerated claim. While the Secretary of State on July 28 was making this claim which included the large cities of famine-stricken Bengal, the Governor of Bengal was saying almost the same day that the famous town of Dacca was not yet on rationing. Frantic efforts to release transport and rush supplies to certain, key industries checked for a time the disastrous curve of falling production. Currency inflation was reduced to January 1944, and several controls were announced.

But all these were bureaucratic measures relying on the administrative machinery alone for their success. The industrialists, for so long suppressed in their growth by the denial of industrialisation of the country, are not prepared to submit to controls, especially when four-fifths of their profits are going to the State, which, as they see it, does not serve them, but foreign interests. The working class and the people are not allowed to organise and not asked to co-operate in the administration of controls “for fear of the growing people’s power.” For the same reason, the great patriotic parties like the National Congress and Muslim League are denied any effective share in the political-economic management of the country’s affairs. The inevitable result is continuance of famine, production not restored to the level of its highest, capacity, stocks of food not coming in (see the Government Food Member’s admission), and rationing, except in a few cases, merely a mockery.

A recent meeting of the Textile Control Board and the Administrative heads of the Provinces came to the conclusion that control in the matter of textile production and distribution had failed and was on the point of breakdown. A big Bristol Combine (no wonder!) reported, in July 1944, “largest profits ever made, despite control.” The bright hopes of the Secretary of State (Mr. Amery) that the food situation is in hand, are belied by the price market and stocks. Wheat in Hapur Market, which was Rs.8/- per maund of 82 lbs. in January 1943 (pre-war rate Rs.3/-) had risen to 11/8 in January 1944. Rice had jumped from Rs.13/- to 20/-. The statement made by the Government that this year prices are tending to fall, is not borne out by the facts.

Thus the attempt of the British Government to run Indian economy without the co-operation of the people has failed. It has failed to safeguard war production and keep the front free from a shaky rear. It has only brought famine, collapse, and bitterness. Instead of the unity of the people with the United Nations, the vast colonial masses of India stand isolated from the greatest struggle in history, in bitterness.

Who then can deny that the only solution is to change this Government and hand over to the political parties of the people for which a way has been opened by Mahatma Gandhi’s new approach?

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