India — gripped by the second wave of the COVID-19 pandemic — has been endlessly witnessing desperate scrambles for hospital beds, the dire need for oxygen and mass cremation. Amid all this, the stock market is booming. In fact, Mumbai Sensex has signaled that bullish trends have been on the rise. Over the year ending April 1, 2021, while benchmark composite indices rose by 19% in the Philippines, 35% in Indonesia and 48% in Thailand, the rise was a staggering 77% in India, which experienced one of the sharpest real economy contractions in economic activity over that period. Moreover, India — unlike other Southeast Asian countries — has witnessed increased speculative investments at the expense of portfolio investments in bonds.

RBI’s Support for the Super-rich

Thriving stock market amid a general slowdown is a direct result of the Reserve Bank of India’s (RBI) over-friendly attitude. During the years, investors have been assured that if any kind of instability visits upon them, the authorities will immediately arrive to offer moratoriums, state-guaranteed loans and other liquidity-enhancing measures to make up for disappearing cash flows. Their expectations are entirely accurate. On May 5, 2021, RBI announced repayment relief, as well as $6.8 billion in three-year funding at its policy rate of 4% for banks. These liquidity infusion measures gave Indian equities a booster shot, lifting the benchmark indices 0.88% higher on the same day.

RBI’s supportive stance toward the stock market has proven to be extremely beneficial for the ruling class. When the stock market was entering a bear phase in 2020 — with crony capitalists like Mukesh Ambani and Gautam Adani suffering losses — the central bank instantaneously began its policy of regular credit injections and quantitative easing. Refilled coffers directly aided the concentration and centralization of capital, allowing businesses to begin a new round of speculation with less competition and higher profit margins.

When stock prices were falling in February-March 2020, powerful investors — rather than offloading their stocks — used the state’s money to buy up stocks from smaller owners who were busy panic-selling. Therefore, when stock prices increased after April, they got enormous capital gains. In spite of occasional ups-and-downs, the stock market scaled new heights in 2020, leading to an astronomic increase in wealth appropriation by the speculative super-rich class. The ranks of Indian dollar billionaires swelled from 102 to 140 in 12 months, their combined wealth doubling to $596 billion in 2020, when the oppressed masses of India were bearing the entire burden of the first wave of the pandemic. These 140 billionaires now eat up 22.7% of India’s GDP of $2.62 trillion.

Global Conditions

The situation of India’s financial sector is a part of the wider global conditions which have evolved since the 1990s. With low profit rates in the productive sectors of the economy, endemic overproduction and weak demand, investments decreased. Corporations turned to the financial sector and the stock exchange. The vast sums of capital that could not be profitably invested in the real economy produced a growing market for high-risk, high-reward investments. In other words, the expansion of the financial system, of the whole debt and credit apparatus, has been a way of utilizing the economic surplus which is not utilized in productive investment. It is instead poured into speculation, and that creates a wealth effect that has a secondary stimulus to the underlying economy, because as people who benefit from asset price increases get wealthier, they spend more on consumption, and that stimulates the economy. Finance also provides some jobs, although not as much as other sectors of the economy.

While stock values represent future expected streams of earnings arising primarily from production, finance has become increasingly autonomous from production or the real economy, relying on financial bubbles and unsustainable explosions of credit/debt. This means that the speculative process depends for its very continuation on the piling up of greater and greater amounts of debt, and in order to do this, it needs to have constant cash infusions from the real economy to provide additional capital that can be leveraged. But as the underlying system remains stagnant, the bubble eventually bursts — typically after a speculative mania in which the rapid rise in quantity of debt leads to a marked decline in its quality.

At this point of time — when the liquidity has dried up — the monetary authorities intervene to keep the whole house of cards from collapsing. This serves to reduce the risk to speculators, thereby keeping the value of stocks and other financial assets rising on a long-term basis, along with the overall wealth/income ratio. In these circumstances, asset accumulation by speculative means has replaced actual accumulation or productive investment as a route to the increase of wealth, generating a condition which Costas Lapavistas calls “profits without production.” The recent actions of India’s central bank are structurally situated in this new global regime of profiteering which is geared toward irrational profit-making for the few.

This article was posted on Friday, May 7th, 2021 at 10:39pm and is filed under Capitalism, Classism, Finance, India.

As India is being devastated by COVID-19 cases that have now passed a daily rate of 400,000, affluent and callous Australia has taken the decision to suspend all flights coming into the country till mid-month. The decision was reached by the Morrison government with the blessing of the State Premiers and the Labor opposition.

Not happy with banning flights from India, the Morrison government promises to be savage in punishing returnees who find ways to circumvent the ban (for instance, by travelling via a third country). Citizens who breach the travel ban can face up to five years’ imprisonment and fines up to AU$66,000. “We have taken drastic action to keep Australians safe,” explained the Treasurer Josh Frydenberg. The situation in India was “serious”; the decision had only been reached after considering the medical advice.

According to a statement from Health Minister Greg Hunt, it was “critical the integrity of the Australian public health and quarantine systems is protected and the number of COVID-19 cases in quarantine is reduced to a manageable level.”

The decision fails to carry any weight. It did not take long for more alert medical practitioners to wonder why the approach to India was being so selectively severe. Health commentator and GP Vyom Sharma thought the decision “incredibly disproportionate to the threat that it posed”. Sharma is certainly correct on this score in terms of international law, which requires the least restrictive or least intrusive way of protecting citizens.

Then there was the issue about the previous policies Canberra had adopted to countries suffering from galloping COVID-19 figures. A baffled Sharma wondered, “Why is it that India has copped this ban and no people who have come from America?” Former race discrimination commissioner Tim Soutphommasane seconds the suspicions. “We didn’t see differential treatment being extended to countries such as the United States, the UK, and any other European country even though the rates of infection were very high and the danger of its arrivals from those countries was very high.”

The Australian Human Rights Commission has also asked the federal government to justify its actions. “The government must show that these measures are not discriminatory and the only suitable way of dealing with the threat to public health.”

In the face of such behaviour, aggrieved citizens are left with few legal measures. Australia, among liberal democratic states, is idiosyncratic in refusing to adopt a charter of rights. Down Under, parliamentarians are supposedly wise and keen to uphold human rights till they think otherwise. (Human rights, the argument goes, would become the fodder of lawyers and judges, interfering with the absolute will of Parliament and the electors.) The Australian Constitution is hopelessly silent on the issue of citizenship. Left at the mercy of legislative regulation, Parliament and the executive can be disdainful towards their citizens without consequences.

One avenue remains the Geneva-based UN Human Rights Committee. On April 15, the UNHRC ruled on the case of two petitioners of FreeAndOpenAustralia.org (formerly StrandedAussies.org) that the Morrison government had to “facilitate and ensure their prompt return to Australia.”

Represented by the notable sage of international law Geoffrey Robertson QC, the petitioners argued that Australia was in breach of Articles 12(4) and 2(3) of the International Covenant on Civil and Political Rights. The first article provides that no one shall be arbitrarily deprived of the right to enter his own country; the second provides for “effective” remedies to be granted to those whose rights and freedoms have been breached under the ICCPR. The petitioners also freely admitted that they had no issue with quarantining for 14 days on returning to Australia.

In the words of Free and Open Australia spokesperson Deb Tellis, the Commonwealth should “use its power to expand quarantine facilities, and end travel caps that are being dictated by the states. There are thousands of our fellow citizens suffering loss of their relatives and loss of their jobs.”

The government has preferred a meaner, penny pinching approach in coping with quarantine, reducing flights when needed rather than expanding facilities to accommodate a greater number of infected arrivals. The hotel quarantine system continues to receive effusive praise from the Australian Prime Minister Scott Morrison as being 99.99 percent effective. But it is impossible for him, and his ministers, to conceal the fact that they do not trust, and are unwilling, to use other facilities and expand existing ones.

Since last November, there have been 16 COVID-19 leaks across the cities of Melbourne, Sydney, Brisbane, Adelaide and Perth from quarantine hotels. At this writing, another quarantine leak is being reported in Western Australia, involving the now customarily infected hotel security guard and the inevitable seepage into the community. The problem of airborne transmission continues to plague, as does the uneven provision of Personal Protective Equipment. No national standard of quarantine has been formulated through the country, with each state adopting its own approach. Audits of the ventilation systems in many such hotels remain sketchy.

Western Australian Premier Mark McGowan, who recently imposed a lockdown of the Perth and Peel areas and may well do the same thing over the next few days, suggested that the Commonwealth be generous with some of its facilities. Why not use the RAAF Curtin Air Base, or the immigration detention centres of Yongah Hill and Christmas Island? “It’s kind of staring us in the face and there are things that could assist, it’s just that the Commonwealth doesn’t want to do it.”

The evidence so far is that facilities such as Howard Springs in the Northern Territory tend to work. It features single-storey cabins, segregated air conditioning systems, outdoor veranda space and, in the vicinity, a fully functioning hospital. No leaks have been recorded. And location is everything: distant from densely populated areas. This government, however, is miserly on the issue of quarantine, an obligation it has transferred without constitutional justification to State premiers who fear both the virus and its electoral consequences.

This article was posted on Saturday, May 1st, 2021 at 7:31pm and is filed under Air Travel, Australia, Citizenship, COVID-19, Human Rights, India.