Facts are showing that the world capitalist economy has entered a period of a deep recession. Declining sales are forcing capitalist corporations around the world to scale back production and throw workers out of jobs. Global recession is affecting capitalist countries all over the world. India is no exception.

In India the process of scaling down and retrenching workers has begun in various sectors including garments, jewellery and other export oriented manufacturing, as well as real estate, retail trade, BPOs, entertainment and other services. Indian arms of global multinational companies are also cutting jobs. As there is no reliable data on total number of jobs destroyed every month, a lot of lies and confusion is being spread by spokesmen of the big capitalists and the government (for more on this, see Lies and Drama over Job Cuts).

China, India and a few other countries experienced faster growth in new jobs in recent years, as compared to the advanced capitalist countries. Capital from all over the world flowed into these economies because the low wages of skilled labour made possible a higher degree of exploitation and higher rates of profit. More and more workers in China and India began to produce goods and services for the western capitalist markets. Now the global recession has thrown into reverse gear the export driven growth of various sectors in China and India. Factories and offices are closing down and thousands of workers are being thrown out of jobs. 

More rapid capitalist growth has meant more acute inequality in our country. Workers of all kinds in India have seen prices rise much faster than their wages. Workers have become poorer as a result. Their monthly consumption needs are growing, but their purchasing power is not keeping pace.

Peasants and farmers in India have been suffering for several years as a result of rising input costs and lagging prices received for their crops. The recent surge in food prices raised incomes of those selling food – but only a fraction of this gain has reached those who till the land.

Impoverishment of the majority is limiting the rate of growth in the market for consumer goods in the country. Thus, the most important factor underlying the economic crisis – both in the west and in the east, including India – is the impoverishment of the majority. In the name of solving the problem, capitalist governments want to preserve this trend of ever widening gap between the monopoly capitalists and the toiling masses.

To address the problem of recession, it is necessary to take measures that enhance the purchasing power of the toiling majority. Enforcing a significantly higher minimum wage is one such measure. Guaranteeing regular cost of living adjustments for all wage and salaried employees is another such measure. Guaranteeing remunerative prices for all peasants is yet another. Enhancing the purchasing power of the working people means to restrict the rate of profit pocketed by the capitalist monopolies. This will be the approach of a workers’ and peasants’ government.

Capitalist governments have no solution to recession, as they have neither the interest nor the capacity to restrict corporate profits. They will at best take measures to increase public spending so as to increase demand for cement, steel and other manufactured goods. This can at best provide a temporary respite and postpone the hour of reckoning.

The lasting solution is to reorient the economy towards constantly improving the living standards of the working people, rather than the profits of the capitalists. If providing prosperity and protection for all becomes the main aim and driving force of the economy, then the problem of recession would disappear altogether.