Labour Laws Scrapped, Key Industries Sold Off: How Coronavirus is Being Exploited by the Indian State to Further Crony Capitalism


Naomi Klein’s anti-capitalist manifesto, the Shock Doctrine (2007), observes through decades of coups d’état, hurricanes, massacres and tsunamis, that industrial capital has used these moments of shock and awe to pull the rug from underneath the public’s feet. Neoconservative economist Milton Friedman- may he turn in his grave- used the shock of the coup that installed Augusto Pinochet in Chile in 1973 to cut social spending and renegade Chile to hyperinflation. The shock of the United States backed coup in a country that had seen a century and a half of peaceful democracy and economic stability paved the way for an economic shock with ‘the free market trinity’: privatizing industries long held by the state, deregulating finance, and cutting welfare schemes. Chile’s economy spiraled, with unemployment rising from 3% to 20% in a year and inflation hitting the roof at 375%. 45% of the country soon fell below the poverty line, although 10% of the richest Chileans became much richer. Those who opposed the junta’s brutal ‘reforms’ were hunted down with yet another kind of shock: arrest, torture, and disappearance.

Chile’s blueprint for corporatism, a ‘mutually supportive alliance between a police state and large corporations’, which followed a similar imperialist coup in Sukarno’s Indonesia, in turn became the model for neoliberal ‘reform’ in Brazil, Argentina, and Uruguay, too, which saw the pattern of shock and impoverish replicated, removing successful democratic socialist governments from power.

Thirty-two years later in 2005, when Hurricane Katrina ravaged New Orleans, the then ninety-three-year-old Friedman still wouldn’t rest. Friedman used this “opportunity’’ to push George W. Bush’s administration to abandon the city’s public schooling system in favor of publicly funded, private ‘charter’ schools. Through an elegantly spun web of political maneuvers, Naomi Klein demonstrates that the history of capital is rife with predatory opportunism. She calls the treatment of catastrophes as market opportunities, coupled with raids on the public sphere, ‘disaster capitalism’. The effects of disaster capitalist policies far outlive the moments they had used to seed. New Orleans saw most of the teachers in the public school system fired and, for African American parents, reversed the gains of the Civil Rights Movements towards equal education. The project snowballed to become a ‘laboratory for charter schools’ across the United States.

Klein likens this corporate strategy to ‘shock therapy’, a now-debunked method of ‘treating’ patients for mental illnesses, wherein electric shock and heady cocktails of psychiatric medicine are administered to wipe their mental slate clean. All this, so they may have a ‘fresh start.’ Of course, this was no less than torture for patients, whose consent was invariably manufactured or discarded, and who’d suffer from crippling amnesia and regress for the rest of their lives. Friedman perfected the political version of shock therapy over several parts of the world in the four decades between Pinochet’s rule in 1973 and Friedman’s own death, propagating it at the University of Chicago. 

This league of Friedman and his students would come to be called the ‘Chicago Boys’ and be funded by the Central Intelligence Agency (CIA) to play pivotal pawns in destabilizing socialist and democratic governments in Latin America. Disaster capitalists like the Chicago Boys have learned to spend years in the shadows, waiting for public attention to be too engrossed in the business of survival to resist, to strike. Once begun, disaster marauding is insatiable- the growth of the disaster capitalist sector was at par with the Information Technology boom of the 1990s.

Covid-19, the dizzying, all-consuming refrain of our times, has been the moment of shock the Indian Central government needed to deliver at least three more shocks: selling key parts of the economy to private companies, sabotaging decades of vibrant labor struggles and jurisprudence, and getting rid of environmental regulations. The Bharatiya Janata Party’s ‘Minimum government, maximum governance’ rhetoric, touted 2014 onwards (this magical contradiction is lost on me) has found its season to sow in the pandemic.

The country’s migrant labor was still reeling from walking thousands of kilometers back home after lockdown when Finance Minister Nirmala Sitharaman declared on July 1 that the Indian Railways, coal, defense production, atomic energy, space, oil, steel, shipping, and banks would be privatized. This happened without consultation with the states or parliamentary debate. Prime Minister Narendra Modi has already begun the auction of 41 coal blocks held by Coal India Limited, a public company. The only bar on private entities from taking over sectors will be their ability to pay, Sitharaman announced. [India has also been steadily moving to privatize healthcare, and now education through the New Education Policy 2020, though these require separate articles for analyses.]

But what do these companies mean for an economy? What are they motivated by? If they do wrong- how can the public reproach them?

Whereas the state is accountable to people to stay affordable, be open to Right to Information petitions and enforce fundamental rights of employees including non-discrimination, private players can be held to none of these standards; nor do they have a mandate to serve the people. They don’t need to enact affirmative action in employment as the state must. This shrinks the space within which vulnerable groups like Scheduled Castes, Scheduled Tribes, Other Backward Castes, transgender people and people with disabilities could call for reservations. Article 12 of the Indian Constitution protects fundamental rights against the state, but not private entities. There are exceptions to the rule, such as when they are funded and administered by the state or have received land grants, etc.- but even these narrow carvings require going to the courts for each case (likely, the Supreme Court, given the nascency of this question): a barrier that works as a bar for overworked employees, especially during lockdown. The sell-out thus shrinks the public sphere, where workers could have participated in terms of business. Klein in her earlier book, No Logo: No Space, No Choice, No Jobs (1999), avers that such shrinking robs democratic norms of the spaces they need to flourish- the sites of the vulnerable and the masses.

Though privatization has been pushed with the rhetoric of ‘Aatmanirbhan Bhaarat’ (self-reliant India), the sectors are open to foreign players who have no stake in serving Indian labor, customers, or ecology. Multinational corporations, notoriously, operate from a distance and face virtually no public censure for their failures in the countries of operation. The production caters not to the country where the factory is located, but where wealthy consumers are, meaning that the things produced have nothing to do with what the former needs. Instead, neoliberal trade creates relationships of perpetual extraction across rich and poor countries. This is evident from the experience of most post-colonies. Anthropologist Paul Farmer writes, for instance, that Haiti under French rule produced tobacco, coffee, and sugar for French trade, but had to continue to rely on France and other European nations after independence to buy them. These were not products Haitians ever demanded, but they were all Haiti had the capacity of producing in the colonial homestead farming system. 

Read in tow with the suspension and dilution of labor laws in many states, and with the amendment to the Environmental Impact Assessment which seeks to do away with public consultation before grabbing land for corporates, these moves towards corporatization portend a freefall of social and environmental justice.moderne quote-8

The executive onslaught on labor protections in 2020 alone reverses decades of Indian labor struggles and a hard-won jurisprudence. Rajasthan, Haryana, Punjab, Madhya Pradesh (MP), Uttar Pradesh (UP), Himachal Pradesh, and Gujarat have prolonged the work-day from 8 to 12 hours, with Gujarat and UP not even requiring that overtime be paid (the rule under the Factories Act). The 8-hour work-day victory has been a cornerstone of minimum labor rights since the 19th century and is celebrated internationally on May Day. It was the first issue the International Labour Organisation (ILO) discussed. Section 65(2) of the Factories Act, under which these notifications were passed, places limits on their suspension. Even under extreme circumstances, the Factories Act only allows working over 9 hours if the wage-rate for the extra hours is double the usual rate. The 29th Convention of the ILO also noted that though calamities could warrant working overtime, there must be fair remuneration of the extra hours at market rates. The UP and Gujrat ordinances are thus illegal. The Factories Act outrightly bars making workers work for 12 hours a day more than thrice a week, making the other states’ ordinances illegal, too.

If corporates are getting a freeway overworking their labor- why would they be interested in hiring more people? The Rajasthan ordinance, in fact, explicitly states it is to reduce manpower to 60-65%. How then, can it be maintained that the shift to private hands creates jobs? Rather, multinational companies, with the globe’s labor to pick from, can drive down the wages of Indian workers to the global bottom.

The UP government in May passed ordinances that exempted businesses from nearly all labor laws for three years. The legislation on minimum wages, the mechanisms for dispute resolution and negotiation (Trade Unions Act and Industrial Disputes Act), the rights of contract workers,, the rights of migrant workers to be remunerated at the same rate as home-state workers, and basic health and safety rules like the provision of toilets and non-toxic work conditions (the Factories Act) are now gone. The MP government also suspended the Factories Act. With these crucial acts out of the way, we also abandon the jurisprudence on when workers can unionize and strike, the norms of negotiation, and representation of employees’ interests. 

Reportage like Klein’s on ‘export processing zones’ in the 1980s in many Latin American and Asian countries – analogous to India’s ‘special economic zones’, where wage and labor laws cease to apply- confirms, through narrative, the grim conditions we know exist in factories and sweatshops.moderne quote-9

Indian employees validly fear being laid off en masse from the newly privatized sectors to cut costs. The Railways are India’s biggest employer and have not historically been run for profit, but as a public service holding up the economy. It is not surprising that workers have strongly resisted its privatization whenever it has been proposed.

If the privatization of the British Railways can serve as a warning, we find that it was accompanied by a hike in fares which excluded a significant portion of passengers. The loss from this offset a downsizing of the rails by a third of their capacity, shutting down 2363 stations and laying off workers. Old workers were replaced with inexperienced ones to cut costs, resulting in the service operating poorly and with frequent delays. The high fares are impediments to economic growth as workers cannot afford the commute to work, limiting their options. In a poll in May this year, 76% of British citizens called for re-nationalizing the rail.

The Finance Minister expects the private sector to invest Rs. 3000 crores – stoking the likelihood that the investors will be eager to cut industrial costs to break even. Indeed, the Central Government has not set any limits to the fares that can be charged by the Railways. Even as this investment comes in, it is one-time and robs the state of a historic source of revenue that it could have used to better public health and infrastructure. If neither employees nor consumers are going to benefit- whom is this privatization for? 

At a time when unemployment is soaring from lockdown, the state-engineered loss of public jobs rubs salt on the wounds of a country that belongs less and less to its people. The Centre for Trade Unions estimated that 14 crore people have lost their jobs since lockdown, and the numbers could go up to 24 crores if the unorganized sector and contractual workers are counted. The ensuing unemployment is particularly cruel during a pandemic, when malnutrition and starvation hike the chances of contracting Covid-19, and diseases like tuberculosis and malaria. 

Indian workers have been valiantly resisting this carnage despite the frequency and the volume of shocks. Their response to them has been comprehensive and sees the common thread cutting against their interests. On the three days between July 2 to 4, ten out of the twelve workers’ unions in India, including Indian National Trade Union Congress (INTUC) and Centre of Indian Trade Unions (CITU), held decentralized strikes across the country against the sell-out of key sectors, especially Coal and Railways. The privatization of coal is likely to affect 4.5 million workers. The unions’ joint statement said:

“We cannot accept lying down the designs for the imposition of slavery on workers through total nullification of all labor laws; nor can we remain an onlooker to the government project of wholesale privatization of our public sector undertakings (PSUs) through multi-pronged routes.”

The statement also congratulated coal workers for successfully halting the production of an estimated 9 million tonnes of coal over the 3 days of the strike. The CITU expressed rage over the rising prices of fuel which was hurting ordinary people most. The unions challenged the moral right of the Central government to change the character of institutions that have served the people since Independence. 

On 7, 8 and 9 August, trade unions once again held nationwide strikes, where scheme workers – aanganwadi, ASHA, mid-day meal, national health mission, Samagra Siksha workers, et al. – were at the front of the resistance. They protested the privatization of health, nutrition, and education. They demanded that scheme workers be regularized, as recommended by the Indian Labour Conference. These are frontline covid-19 workers who have been deprived of protective gear and not been paid in months. Several have died in the line of service. They also demanded minimum wages, pensions, and compensation for contracting the virus while on duty. Their comprehensive list of demands can be accessed here.

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Photo credits: Comrade Sureet Singh of Democratic Youth Federation of India


aidwa ggn
Photo credits: Comrade Sureet Singh of Democratic Youth Federation of India


Jharkhand Chief Minister Hemant Soren of the Jharkhand Mukti Morcha has called the auction of 41 coal mines cleared by New Delhi ‘extractive’ of the state’s natural resources and likely to return its people to slavery. Speaking to a journalist from Article 14, he lamented that the Narendra Modi government had made the decision to auction coal blocks without consulting the states where they are located. Even under Coal India Limited, a government operation, the people of Jharkhand have lost their land, pushing them into the hazardous and exploitative mining work. Moreover, he asks, why big corporations see Jharkhand only as a site for cheap labor and minerals, while running hospitality or health services out of richer states and metropolitan areas. He emphasizes:

Over the India and China border, you can understand that territory has to be protected. Then why can you not understand when Adivasi communities want to protect their land? Without forests, Adivasi communities cannot live. The land and forests are their bank account, their ATM, their primary asset…”

The defense sector, lastly, is perhaps the most dangerous to outsource. It creates an incentive for arms producers and contractors to push for war, using their financial clout to lobby members of Parliament. This has happened infamously in the United States’ invasions of Afghanistan and Iraq, wherein the contractors for arms outnumbered the soldiers, and companies like Boeing, Textron, and BAE made billions profiteering from war and influencing its course. With the first batch of Dassault Aviation’s Rafale jets being sent to India on 27 July, the register for those who will be invested in war has already been opened.

It’s going to take enormous public engagement, resistance, and solidarity with workers’ groups to reclaim India from greed and steer it back to a country that works for its people.






Featured Image: (no copyright infringement is intended)
Rhea Malik

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Rhea Malik

Rhea Malik is a law graduate and aspires to be a human rights advocate, journalist, and writer. She sees whooping potential in science fiction to describe reality, and maybe even tweak it a little. Her work has previously appeared in The Leaflet, Disrupted Journal for feminist foreign policy, Tint Journal, Mad in Asia-Pacific, and the Booker World Podcast.

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