Social Scientist

Imperialism in India
Author(s): C. P. Bhambhri
Source: Social Scientist, Vol. 13, No. 2 (Feb., 1985), pp. 38-45
Published by: Social Scientist
Stable URL: http://www.jstor.org/stable/3520189
Accessed: 01-02-2017 06:00 UTC

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted
digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about
JSTOR, please contact support@jstor.org.

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms

Social Scientist is collaborating with JSTOR to digitize, preserve and extend access to Social Scientist

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 C.P. BHAMBHRI*

Imberialism in India

rHE newlv liberated countries of Asia, Africa and Latin America are
involved in a struggle to break their links with the 'collective neo-
colonialism' of the capitalist countries. The international class struggle of
newly liberated countries against the capitalist world is based on a solid his-
torical experience that imperialist exploitation of colonies and semi-colonies
distorted their development. The lesson of history that imperialism imposes
a division of labour and mechanisms of exploitation over the colonised
world is necessary but not a sufficient condition to create genuine anti-
imperialist movements in the post-liberation phase of the erstwhile
colonised world. Imperialism is operating in the newly liberated countries in
a very sophisticated maniier by identifying social classes and groups which
legitimise foreign aid, foreign trade, import of foreign capital and technology
in the name of national interest and goals of national economic develop-
ment. Imperialisnm has identified mnany social constijmencies which support
imperialist penetration in the newiv liberated countries, and contemporary
neo-colonial exploitation is successful because it is based oni the support of
indigenous social groups which are sophisjicated legitinmisers, rationalisers
and collaborators of imperialism. Everv new social situation demands new
strategies. Instead of direct physical and militarv domination, neo-colonia-
lism has tried to gain acceptability in the newlv liberated countries by creating
a social base in indigenously powerful classes and groups and by sharpening
^onflicts and divisions among the dominant and powerful social classes in
the newly liberated countries. In the light of this framework that neo-colonial
strategies are miiore sophisticated than the old military type imperialistn, it is
worthwhile to examine the social constituencies of inmperialism in the con-
crete context of India. ' The British colonial rule over India created mnanv new
things in our societv, but two facts are relevant for the present discussion.
First, India as a colony was structurally linked with the world capitalist system
for imperialist exploitation. Second, colonial capitalism created an,
indigenous capitalist class which experienced new opportunities especially
(luring the initer-war period and which experienced many objective obstruc-
tions in development because the Indian market was controlled bv the
British colonisers for the British capitalist class. This struggle for control over
the Indian miarket created a contradiction between the Britishi colonial power
and the Indian capitalist class and the struggle brought about a negotiated

Centre for Political Studies, Jawaharlal Nehru University, New lDelhi.

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 IMPERIALISM IN INDIA 39

transfer of power on 15 August 1947.

India adopted the path of capitalist development after achieving
independence but this path of development could not have been smooth
because India was entering quite late in capitalist development and also in a
phase when world capitalist system was itself facing a serious crisis. In spite of
this objective hostile situation, the leading classes of India embarked on
building capitalism in the country. The strategy of capitalist development of
India was based on an active role by the Indian state in creating essential con-
ditions for capitalist development and thus the Indian state and the Indian
capitalist dasses had to come to terms with imperialism by evolving policies
on the role of foreign capital, foreign aid, trade and technology.
The public policy makers in India have always argued that we are operat-
ing in a framework of an inter-dependent world and we have diversified our
sources of aid, trade and import of technology and by following this policy of
diversification we have maintained a relative autonomy in world affairs. It
would be worthwhile to examine the argument of diversification of the
Indian public policy makers to understand the Indian reality.
The World Bank and its affiliates have been the most important source
of funding for the Indian economic development India has received US
$ 7.3 billion as IBRD loans during the last thirty-five years. Since 1960, India
has received soft credit from the IDA amounting to US $ 12.5 billion. Of this,
the share of the agriculture and rural development sector was 13.6 per cent
and that of the energy sector 30.2 per cent.
It may be clearly stated here that India's linkage with the World Bank has
many ramifications and they cannot be just ignored by destribing it as mul-
tilateral aid. The World Bank links India with the world capitalist system and
sells its policies to tht Indian public policv makers through its own opinion
makers. Many of the erstwhile employees of the World Bank hold important
positions in the Reserve Bank of India, in the Prime Minister's Secretariat, in
the economic ministries of the Government of India and in the Planning
Commission of India. By giving a large quantum of aid to India, the World
Bank has created an important base in the decision-making mechanisms ol
the Government of India and this social constituency of the Bank in India
sells thte Bank's recipe of development to the Government. The World Bank
operations in India are smooth because it has a base among economic plan-
iers and politico-bureaucratic decision makers in the country. The World
Bank is an institution of the imperialist countries and it is a mechanism of
'collective neo-colonial' policies and its functioning is facilitated because its
voices are heard favourably in the corridors of power in India. Such smooth
sailing for the World Bank in India would not have been possible if it did not
have a social base in the important ministries and autonomous organisations
of the Government of India.

The I.M. F. and the World Bank are twin brothers and when the Govern-
ment of India went in for a large loati from the I.M.F., erstwhile employees of
the Fund and the Bank were alreadv occupving crucial positions in the

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 40 SOCIAL SCIENTIST

Government of India. When the humiliating conditionality clauses of the

I.M.F. loan were criticised in India, the World Bank. I.M.F. lobby in the
corridors of power was very active in its defence. The patriotic protest against
the I.M.F; loan was rejected by the powerful lobby of Indians which always
extends its support to the Bank and I.M.F. operations in India.
The World Bank also adopts methods of misinformation to induce the
Government of India and the private corporate sector to enter thie western
markets for commercial loans at exorbitant interest rates.
The World Bank Report observed:

India, due to the inward orientation of its economy and inflow of exter-
nal resources, including from I. B. R. D and I. D.A., escaped the full brunt
of adverse ipternational factors.... No doubt, India's total debt amoun-
ted to $ 20 billion. This is about 7.3 per cent of the GNP. And service
obgligation has been around 7.2 per cent of export earnings. This ratio is,
relatively low as compared to other upper middle-income developing
countries, such as Mexico, Argentina and South Korea. On the whole
India's credit-worthiness is rated high.2

The above comment of the World Bank on India has a trap. It praises
India for low level of dependence on foreign aid and it suggests that India can
go further in borrowing from the capitalist countries. The result of this World
Bank thinking and advice is that beginning with 1980, India has tapped corn-
mercial loans amounting to US $ 6 billion mainly to finance NALCO; the
National Thermal Power Corporation, O.N.G.C., and Air India. In spite of
the World Bank's testimonial on the credit-worthiness of India in the inter-
national market, apprehensions have been expressed in India on commer-
cial borrowing of US $ one billion per year. In an editorial entitled "Undue
optimism", the Economic Times observed:

Commercial borrowing, unless backed by structural adjustment, will

not provide us an escape route for long. It needs to be pointed out that
debt servicing will have to be financed in convertible currencies, that is,
out or trade outsidetastern Europe."
With a trade deficit of Rs. 5,800 crores in 1983-84. which is unlikely to
come down much in 1984-85, the credit-worthiness of India would be eroded
if our reliance on external aid and borrowings iicreases. It may be stated here
that debt service payments of India are on the increase, i.e., from Rs. 796
crores in 1978-79 to Rs, 1,025 crores in 1983-84.
Of late, collective neo-colonialism is in activeoperation in India which is
reflected in our growing economic relations with the United States and
Japan. The foundations for such a linkage were laid in the, 50s, 60s and,70s,
but in the 80s the trend is clear. While the two-way trade between India and
the U.S. is more than U.S. $ 3 billion, India is trying to expand its linkages
with Japan. Both the Indo-U.S. Joint Commission and the Indo-Japanese
Joint Commission are pressurising India to liberalise its trade, fiscal, inlvest-
ment, import and technological policies. The FICCI journal Economic Trends
in an editorial on "India-Japan Trade and Economic Cooperation", observes

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 IMPERIALISM IN INDIA 41

that an assurance was given to the Japanese businessmen by their Indian

counterparts that a "qualitative and lasting change for the better" is taking
place in-the Government's economic policies and the journal says that
this assurance was reinforced by three Government of India Secretaries,
those in charge of Industrial Development, Commerce and Energy.;
During the 80s, under international pressure applied by the I.M. F., the
World Bank and other capitalist countries, India is opening its econorny and
liberalising the rules of foreign investnment and import of technology. The
recent trend of opening the Indian market to the world capitalist countries
has local support. Many businessmen, politicians, bureaucrats, and leading
members of mass media are demanding that the Indian industry should
become more competitive internationally anid obsolete technology should
be replaced by importing new technology. This is the political economy of
thie. 80s and its significance needs probing. It is maintained in India that the
high cost economy is the major factor responsible for the current economi(
crisis and for India's failure to raise its exports in the world market. A very
important lobby has emerged in India which believes in export-led growth
and Free Trade Zones where multinational corporations should be provided
with facilities to earn foreign exchange for India through exports. The export-
kld growth is ultimately linked with an invitation to imperialism in India
because multinationals have excellent marketing network and they have to
be invited to give a push to foreign trade. The advocates of Free Trade Zones
in India are in effect acting as lobbyists for imperialism in India because the
Free Trade Zones need modern technology, investment and sensitivity to
nmarket requirements of the capitalist countries, which, only the mul-
tinational corporations possess. Thus the advocacy of the new economic
strategy for India becomes synonymouswith the advocacy of invitation to
foreign capital and technology in India; and the distinction between Indian
requirements and foreign intervention gets blurred.
The social constituencies of imnperialism in India should be located in
the politico-bureaucratic power structure and in the changing composition
of the Indian capitalist classes.
During the last thirty-seven years, the Congress party has followed the
capitalist path of development and it has promoted and defended i'n varying
degrees the interests of the Indian Big Business, medium capitalists, land-
lords and the emerging capitalist farmers. The Congress party has con-
trolled and guided the planning process of the country to expand and deepen
the national market for exploitation by the capitalist classes. The Indian state,
which is the most important instrument of the capitalist classes, has
esblished many linkages with imperialism; while making many com-
promises with imperialism, it has many a time used its political power to
resist imperialist pressures over India. The Congress party and leaders of the
Indian capitalist classes were never committed to the idea of wholesale
imperialist penetration into the Indian market. Many illustrations are avai-
lable to prove that while the Government of India controlled by the Congress
party and the Indian capitalist classes succumbed to imperialist pressures,

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
42 SOCIAL SCIENTIST

and provided opportunities to the imperialists to invest and operate in India,

they also resisted imperialist pressures on many key issues. The devaluation
of the Indian rupee irn 1966 was done under imperialist pressure but the
Government of India resisted the pressure of the late President LyndonJohnson
of the Untited States on our Viet Nam policy. India condemned and criticised
the U.S. military intervention in Viet Nam and did not succumb to the U.S.
pressure to change this policy in spite of our need for U.S. aid for food in
1966 and 1967.5
The Congress party and the Indian capitalist classes had opposed British
imperialism and they had also made many compromises with British
imperialism to achieve a negotiated transfer of power. This approach of the
Congress partyand the leading groups of the capitalist classes continued dur-
ing the post-independence phase of Indian development. The Indian
capitalist classes needed the support of the imperialist countries to bu
capitalism in India but at the same time they were not prepared to surrender
the vast Indian market to tlhe imperialists. The Big Business in India had a
clear consciousness that imperialism cannot be givenra carte blanche to operate
in the Indian market. The Indian Big Business needed imperialist aid and
help but was unwilling to reduce itself to the position of a junior partner t
the world capitalist system. The Government of India controlled by the Con-
gress partyfollowed policies which were in hIarmony with the interests of the
Indian Big Business and this policy was concretised during the last thirty-
seven years. Thus we can discern two key ideas which informed the Congress
partv's perspective on India's linkage with imperialism; these were: (a) lin-
kages of India with imperialism for capitalist development were essential and
(b) such linkages should be selective so that India does not become an appen-
dage of imnperialism and the Indian capitalist class does not become a junior
partner of world capitalist system. The Indian market was meant for the
Indian capitalist classes but many concessions were given to the imperialists
to operate in India.
It may also be pointed out that the Congress partycould not altogether
ignore the pressure exerted on kev issues by the redicalised masses, par-
ticularly those under the influence of the Communist movement. During the
last thirty-seven years, the Communist movement in India and its trade
unions have been consistentlv anti-imperialist in their outlook, policies and
prictice, and the Congress partv was many times checked in following its pro-
imperialist policies for fear of the Communist challenge. When India
borrowed more than U.S. $ 5 billions from the I.M.F. under the attendant
conditionality clausei, the Communist parties launched an offensive against
it and the Congress partv and the Grovernment of India were hard pressed to
defend the I.M.F. loan.

Continuitv in the attitudes of the Congress party and the Indian

capitalist classes towards imperialism, however, cannot be taken for granted
because manv changes are taking place in the Congress and the capitalist
classes of India. A new leadership is emerging in the Congress partv which is
not a product of the phase of freedom struggle. The new leadership of the

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 IMPERIALISM IN INDIA 43

Congress party is committed to capitalist development but it has no

experience of the processes of development of the last thirty-seven years and
this leadership is unaware of the Congress party's position on imperialism
i.e., the position of compromise and resistance. Such a new leadership of the
Congress party which lacks in historical consciousness of India's dealings
with imperialism can create disastrous situations for the country. Apart from
the change in the nature of leadership of the Congress party, many changes
arn also taking place in the social composition of the capitalist classes. Many
capitalists have emerged at the second layer of the capitalist pyramid who
were never involved in the national struggle for control over the Indian
market; and these newly-sprung capitalists are very enthusiastic about foreign
collaboration in India. The Modi'Tyres, the Modi Xerox are prospering in
India because of foreign collab9ration and such capitalists are in important
new social constituency for imperialism in India. The new leadership of the
Congress party which is not a product of the anti-imperialist phase of Indian
national struggle and the new second-layer capitalists who have emerged
during the last thirty-seven years mav provide new opportunities to the
imperialists in India. It should be clearly understood that Indian politicseas
represented by the new leadership of the Congress party and the emerging
capitalist groups may bring about a drastic change in India's relatonship with the
wor-ld capitalist countries in the name of moderriisation of industry,
accelerating the rate of growth etc. and they may push India towards
imperialism for the import of sophisticated technology and foreign
investments.

Moreover, during the last thirty-seven years a very important social base
for impenralism in India is provided by the emerging middle classes which
occupy an important place in bureaucratic decision-making structures of
India. The higher echelons of bureaucracy are not capitalists but they are lin-
ked with capitalist development as its regulators and beneficiaries. Many
important bureaucrats have direct interests in capitalist enterprises because
their sons are employed in the private corporate sector and also because
retired bureaucrats are employed by many Indian and foreign capitalists.
K. B. Lal, a former Indian ambassador to the E. E. C., and S. Boothalingan, afor-
mier Finance Secretarv of the Governrnent of India, are Chairmen of Guest
Keen Williams and Glaxo Ltd., respectively. Many bureaucrats are linked with
multinational corporations and they become their. defenders. A very impor-.
tant social constituency of imperialism in India is the Indian bureaucracy
because it sees many job prospects in the World Bank, I.M.F. and multinational
corporations. Since the bureaucracy plays a crucial role in the management of
the production system of India, imperialism has consciously attempted to win
over sections of the bureaucracy, and these sections are willing to extend their
support to imperialism. The Indian bureaucrats negotiate with imperialism for
the transfer of technology and they play acrucial role in approving agreements for
foreign investment and collaboration. The imperialist countries employ many
techniques for winning the support of bureaucrats: those willing to extend

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 44 SOCIAL SCIENTIST

their support, for example,

incidential benefits. Using such techniques, imperialism has penetrated the,
decision-making structures of the Indian Government and the bureaucracy pro-
vides a very hospitable atmosphere to imperialism.6 Further, the
Government of India's policy of diversification of the sources of aid, trade,
import of technology and of foreign investment has provided an opportunity
to all the capitalist countries to establish their lobbies in India. Such a pro-
liferation of lobbie: of the various capitalist countries has brought many
groups of the Indian middle classes under the influence of imperialism. The
Indian lobbyists of foreign capital are linked with the politico-bureaucratic
decision-making apparatus and they operate as defenders and promoters of
the interests of imperialism in the country.
Thus. the social base of imperialism in India is in the new leadership of
the Congress party, in the rising bourgeoisie which has become prosperous
during the last thirty-seven years with the assistance of foreign collaboration,
the commercial bourgeoisie which is primarily involved in foreign trade, the
buraucracy which is attracted towards imperialism and multinational cor-
porations for jobs and re-employment after retirement and the middle
classes which are finding the job of lobbying for imperialism a lucrative busi-
ness. The attitudes of all these segments of society towards imperialism
should be distinquished from that of the typical old Big Business houses,
which invite imperialism but also resist its penetration so that the Indian
market is not conquered by the imperialists. It is these segments which con-
stitute the comprader element in Indian society.
An important pillar of post-independence capitalist development and
the struggle against imperialism was the relation between India and the
Soviet Union. Trade with the Soviet Union, for instance, starting from a mere
Rs. 30 crores, has crossed the Rs. 3,800 crore mark in the course of the last
thirty years. The Indo-Soviet economic relations provide an important base
for the Indian ruling classes to bargain with imperialism and fight against
imperialist penetration in India. The western capitalist countries have
developed powerful lobbies irn the politico-bureaucratic structure in India
which resist the growth of Indo-Soviet cooperation. This is clearly observable
in the field of import of technology. During the last thirty seven years, India
has entered into 8,000 technological agreements with the capitalist countries,
and the lobbyists for imperialism in the bureaucracy always show preference
for technology from the imperialist countries as against the socialist coun-
tries. This is the success of imperialism, which is forever making an open or
concealed onslaught on technological cooperation between India and the
Soviet Union.7
To sum up, during the last thirty seven years new groups and social for-
ces have emerged which provide important social constituencies for
imperialism in India. Among these can be listed the rising second-layer
bourgeoisie, segments of the Indian bureaucracy, sections of the Indian mid-
dle classes and the new leadership of the Congress Party. India is very impor-
taint for imperialism because it is a huge market but the Indian capitalist

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms
 IMPFRIALISM IN INDIA 45

classes will not easily surrend

capitalist countries; If imperialism has to succeed in India, it has to identify
social groups which would legitimise and welcome imperialism. It is in this
context that the emergence of this constituency mentioned above acquires
c,rucial importance.

I For a good discussion see Yuri Popov: Essays in Polical &onomy: Imperialism and the Develop
ing Countrsis Moscow, Progress publishers, 1984.
Also seel Ye. M. Primkov The East after the CoUapse of the Colonial System Moscow, Naulha
Publishing House, f983.
2 World Bank Report, Economic Trends, Delhi, FICCI, Vol.XIII, No.19, 1, October 1984,
P.S.
3 Economi Times Bombay, 2 October 1984.
4 "India-Japan Trade and Economic Cooperation" in Econmic 7Tends Vol. XIII, No.24,
December 16, 1984, New Delhi, p.S.
5 See: Uloyd I. Rudolp et al: The Renal Imperative: U.S. Foreign Policy Towards South Asian States
New Delhi, Concept Pubiishing Company, 1980,
6 See: C.P. Bhaznbhri: Bureaucracy and Poltics in India,Vikas, Delhi, 1970.
7 See: Bald'-v Raj Nayar, India's Qest for Technological Independence, Vol.1, Polcy Foundation and
Policy Change: The Results of Policy, Vol.II: New Delhi. Lancers Publishers, 1983.

This content downloaded from 14.141.49.238 on Wed, 01 Feb 2017 06:00:32 UTC
All use subject to http://about.jstor.org/terms