K. Murali (Ajith): The Working of the Neo-Colonial Mind

That the 1991 reforms marked a major watershed in India’s economic history is surely beyond argument. No waiting list for cars and scooters, no special license for securing foreign exchange for studying abroad, no gold smuggling and no more the dread of customs officers at the airports.
The world has changed substantially since the 1990s and so has India. The country is now carving a niche in the global markets which has so far been dominated by developed countries.

These quotes were taken from issues of the Economic and Political Weekly (EPW).¹ The consumerist glee seen in the first is of someone wholly supportive of the neoliberal turn taken by the Indian State in 1991. Rajeev Kumar (presently the vice-chair of the NITI)² had some concerns about the inequality that accompanied it. Still, he believed that this could be handled and resolved, continuing with a neoliberal agenda adjusted to India. Greater integration with the world economy was declared as a “major achievement.” Above all, he was quite certain that the reforms had a very large dose of indigenous inputs. He claims that they were based on domestic research and advocacy.
The second quote is from someone addressing a very different concern. Ramdas Rupvath was writing about the discrimination and humiliation suffered by Dalit and Adivasi students in institutes of higher education. Well aware of the social, economic roots of the prejudices they are victims of, he squarely targeted the varna/caste system as anti-social and anti-national. He also pointed out that opportunities became even more unequal and uncertain post-liberalization. The fruits of its growth went to a tiny rich class.
Coming from distinctly different spaces, Kumar and Rupavath articulate sharply different concerns. Yet, as seen in these quotes, both are convinced about one thing—India has “arrived” on the world stage. Indeed, this is a dominant theme among a great majority of the middle class. And that includes many otherwise critical of the state of affairs in the country. It is almost an article of faith, an unquestionable frame of reference. It was also the overriding theme of most of the articles published in newspapers and magazines marking the 25th anniversary of the 1991 reforms. Many of them made it a point to deny any foreign compulsion and insisted on their indigenous origins.
Montek Singh Ahluwalia’s article is symptomatic of this viewpoint. Refuting allegations that these reforms were imposed by the IMF, he writes:

This completely ignores the fact that there was a home-grown process of rethinking on economic policy that had been underway and pointed towards many changes. These changes certainly formed part of the conditionality of the IMF’s assistance, because the IMF’s supposed to lend only in situations where the government has a credible adjustment programme. The IMF obviously approved the reforms in that sense, but that is not the same thing as saying it dictated the contents.³

He then goes on to enumerate various proposals and initiatives, beginning from the late 1970s onwards, aimed at changing economic policy. They culminated in a paper he authored in 1990. Its contents mostly anticipated the reforms of 1991. Ahluwalia cites the discussion of this paper in a Government of India (GOI) Committee of Secretaries as proof of these proposals “. . .being considered internally, well before any IMF arrangements was contemplated.”
We need not dispute this account given by a leading architect of the 1990 reforms. But does it really settle the matter? Can the mere fact of a policy paper being discussed by some GOI Secretaries, or the policy shift carried out since the 1990s, determine that the reforms were of internal origin? Ahluwalia supplies the answer in his unwitting admission: the policy changes proposed by the Narasimha Rao Government were precisely those that formed the conditionalities of the IMF loan. They were directed towards ensuring structural adjustments suited to the neo-liberal agenda. They were not advisory in nature. A country seeking IMF assistance could not amend or reject them. They were inviolable—an imposition. That is the crux of the matter. It stands confirmed by the fact that almost all Third World countries had to adopt similar policy shifts during that period.⁴
An imposition need not take the form of an explicit diktat. It could well be achieved through the loan seeking government pre-indicating willingness to fulfil IMF conditions. Considering that the prior acceptance of a structural adjustment program was a must, it would make eminent sense for a desperate government to declare its compliance well in advance. Keep in mind that while the “balance of payment” crisis was brought to quick maturation by the first Gulf War, the motion towards it was already evident by the late 1980s. Therefore, the fact that the policy shift was proposed and debated upon even before approaching the IMF really doesn’t prove Ahluwalia’s claim.
The collapse of the Soviet Union had a direct impact on the Indian economy. It severely weakened the Indian ruling class. They had to fall in line with the “Washington Consensus” and accept the neoliberal “globalization, privatization and liberalization” (GPL) agenda promoted by the US, now the sole superpower. Whether as an IMF conditionality or not, structural adjustments to give free play to neoliberal policies were inevitable. Later, structural adjustments incorporating the GPL agenda, became a permanent, inviolable condition, an inseparable part of the Indian economy (and of other Third World economies) through the 1993 GATT Agreement and the World Trade Organization’s (WTO) directives.
All of this is long since public knowledge. Why do Ahluwalia and Kumar then persist in insisting on the “domestic pedigree” of the 1991 reforms? Theirs is not an attempt at covering up. No, they wholeheartedly believe it, in full view of the facts. And that makes it worth probing further.
What immediately strikes one is the blurring of the distinction between the internal and external. There has been a continuous exchange of technocrats and academicians between the GOI (and various Indian institutions) and imperialist agencies like the World Bank, IMF, and Asian Development Bank (ADB). This became particularly noticeable from the 1980s onwards. Manmohan Singh, Ahluwalia himself, Raghuram Rajan, Arvind Subramanian and Arvind Panagariya and Urjit Patel—these are some of the recent examples.
Those who serve at the IMF and similar agencies are inevitably conditioned by the current set of ideas or policy framework being prescribed by them. When these technocrats come back to occupy key positions in GOI and articulate policy, they are invariably guided, inspired by the thinking they had imbibed and argued for while working in those imperialist agencies. Kumar’s claim about the “Indian origin” of the reforms brings this out very well. His justification is that researchers “well versed in the Indian ground realities”⁵ had presented reform measures in a “readily comprehensible form” to the political leadership and other policy makers well before the formal acceptance of IMF conditionalities. Kumar added a note to his article to prove this. It informs us about a study prepared by a team, including himself, for the ADB in 1989. In his words, “It is noteworthy that many of these measures [i.e., those proposed in the study] were replicated in the structural reforms matrix presented by the IMF. . .” as conditionality for its loan.
There is nothing surprising about this “replication.” After all the ADB is a key player among imperialist agencies. Going by the information Kumar provides, there is also nothing surprising about his considering an external, foreign, set of ideas as “internally” generated. For people like him and Ahluwalia this only appears as a seamless flow of ideas, which they share and willingly act upon. For them there is nothing separating the indigenous from the foreign in this matter.
This approach is by no means restricted to IMF-WB returnees. A great many academicians and all top-level administrators are tutored or directly trained in imperialist thinking. Quite naturally enough, the contribution they make to governance and economic policies remains within the framework of imperialist thought. Nothing is imposed. The external is internalized. Its articulation becomes country specific without even a trace of its foreign origins.
Whether they be foreign returnees or home-based ones, consideration of the Indian economy as one enmeshed (not integrated) in the global imperialist system is simply missing. This stands in sharp contrast to the thinking of the local elites during the colonial period. They could not but be acutely aware of British India’s dependent status and its debilitating consequences. The British origins and biases of policies executed by the colonial administration were all too plain. Hence, even while remaining loyal subjects of the British empire, some among them produced weighty studies exposing the plunder of the imperial metropolis and expressing local interests in opposition to metropolitan capital.
The transfer of power in 1947 promoted a transition from this mindset to a new one. To get an idea of this transformation and the characteristics of the new consciousness, we must first get acquainted with the colonial mind, the mind of the elite colonial subject. Awestruck by the political and economic might of the colonial power and grieving one’s own backwardness—such was its main character. The local elites were eager to imitate the colonial masters in all public spheres of their lives. The metropolis was acclaimed as the model to aspire to. Yet, the colonial mind was also quite disgruntled. Even the richest, even those with royal lineage or those who had demonstrated academic acumen were still treated as inferior “locals” by colonial masters. They remained lesser subjects compared to those in colonies populated by “whites.” They were denied dominion status. Dissatisfaction engendered by such discrimination, coupled with the drain of wealth, crystalized over time into political opposition expressed as anti-colonialism. The Indian National Congress was its main articulator and vehicle.
For the new rulers who came to power in 1947 and their ideologues, independence was nothing more than the ending of colonial rule. Hence they sincerely believed that they were engaged in building an independent country. This was not simply a false image meant to deceive the people. They were quite convinced about its feasibility. By 1947 an elite intellectual stratum had taken form. It was composed of elements from the comprador, feudal, and upper middle classes. They became the formulators and executors of economic measures adopted by the new state. A good many were driven by a zeal to build an India capable of taking a prominent role in the world arena. Brahmanist claims about a glorious past and a desire to “retake” it were intertwined with their ambitions. Getting rid of economic backwardness was their priority. But their very class nature ruled out radical reforms in agriculture and other spheres. Considering the building of an industrial base as a necessary condition and constrained by paucity of capital and technology, they eagerly sought “foreign aid.”
Initially, some imperialist powers like the US were opposed to their plans. The new rulers succeeded in crossing this obstacle by relying on other powers. The whole experience and similar instances in other fields went to further strengthen the illusion of independence. Sharp contradictions between the capitalist bloc and the erstwhile socialist camp and later between the two superpower blocs (led by US and the erstwhile Soviet Social Imperialism) allowed room for their maneuvering and bargaining.
The uppermost strata were well aware of India’s actual dependent position in the world order. Their immediate dealings with the world powers repeatedly underlined this real status, especially during recurring crisis. But it was realized as limits on their independence, not as limitations inherent to it. The middle class, distant from such experiences, was however firmly convinced of India’s “importance” in world affairs as an independent country. It was quite taken in by ruling class hype. Such are the main characteristics of the neo-colonial mind in India. It mainly manifests as a sense of independence, even while the country remains dependent.
Formal independence of erstwhile colonies is an essential feature, a vital requirement of neo-colonialism. That distinguishes it from colonialism. Instead of direct control exercised in the political sphere under colonialism, indirect control becomes the norm. This emerges from the very trajectory, the origins and evolution of neo-colonialism. Principally, it did not come from the internal economic dynamism of imperialism. Rather, it was a political response, something forced on it by the tide of anti-colonial and national liberation struggles. In countries like China this high tide was expressed as a revolution challenging the imperialist order. For imperialism, the success of the new global architecture hinged on the degree to which the tide of revolt could be turned back. The semblance of independence in former colonies thus became crucial for the emerging neo-colonial world order. The imperialist powers had to concede this, even if grudgingly.
Even then they tried to retain their direct control in the economic sphere. This was true of the US too, which was promoting “decolonization” as a stratagem to weaken major colonial powers like Britain and France. Wherever possible, imperialism tried to prevent any development that would weaken its direct economic grip. It sought to retain existing forms of exploitation and plunder of oppressed nations. This impacted the interests of the new rulers in the neo-colonies. They were keen on building and strengthening their own base, in order to be in a better position to bargain. This tug of interests inevitably became a prominent aspect of the relations between imperialist powers and Third World ruling classes. The shift to indirect control of the economies of semi-feudal, semi-colonial countries under neo-colonialism took place over time. Primarily, it was enabled by the perfection of new means for imperialist penetration, such as tied aid, transfer of obsolete technology, and conditional loans from imperialist agencies during periods of crisis.
The new ruling classes remained subservient to imperialism as a whole. Yet, the legitimacy of their rule, their ideological hegemony, ultimately rested on the claim of heading an independent country. Wherever the communists or other revolutionary forces succeeded in gaining leadership of the struggle against the colonial power, they took it forward as a broad anti-imperialist, anti-feudal struggle. This forced the compradors and feudal classes in those countries to increasingly reveal their true nature as servitors of imperialism. In situations where revolutionary forces failed to gain leadership and power was transferred to the exploiting classes, they presented themselves as champions of independence. Having cornered the leadership of the struggle during the colonial period, they could conceal their nature and appear as genuine leaders of a quest to consolidate independence and achieve development. This appeared as a continuation of their leading role in the anti-colonial struggle.
The bolstering and perfecting of the semblance of independence in both the political and economic realms was vital for the new ruling classes. The backing away of imperialism from retaining direct control over neo-colonial economies and the fleshing out of neo-colonialism, was however mainly realized as responses to struggles of the masses—that is, through the working out of the contradiction between imperialism and oppressed nations and people. Though the contradictions between Third World ruling classes and imperialist powers also had a role in this, it was secondary. These remained essentially non-antagonistic within the imperialist system. The opposition expressed by any Third World state was always with one or the other imperialist power or bloc. It was never against the imperialist system as such. The limits of anti-colonial struggle, a struggle that had equated independence to the ending of colonial rule, was thus revealed. For the comprador and feudal classes, that limit was inherent in their class character. But for the classes that rallied under their leadership and thus failed to go beyond anti-colonialism, it was an unconscious internalization of comprador thought. It was also a process through which they were co-opted into the hegemonic consensus being forged by the rulers-to-be. They remained trapped in a false consciousness that presented dependence as independence.
Those lacking in a consistent anti-imperialist stand inevitably failed to break away from imperialist thinking. That frame of thought and the policies it generated appeared to them as value-free universal principles. Imperialism’s active role in shaping and influencing the academic world of neo-colonies complemented and strengthened the disguised subservience it spawned. Hence, for the neo-colonial mind, measures of imperialist control and exploitation are never seen as external impositions. They are considered as arising from the internal dynamics of the country, necessitated by its development quest. The neo-colonial mind is blind to the imperialist system in which the country is enmeshed. With their vision blocked from seeing the real world by the false consciousness of independence and its articulation as narrow nationalism, the neo-colonial intellectual/technocrat proposes and pursues policies that heighten imperialism’s grip ever more; all the while believing that they will strengthen the country. Participation in neo-colonial bodies like the IMF, WB, G-20 and so on is seen as a matter of self-willed choice and recognition of one’s country’s standing.
It is not the case that the neo-colonial subjects have no contradiction with imperialism. We earlier saw the differentiation within this. There is the antagonistic contradiction the oppressed people have with the imperialist system. And there are also the non-antagonistic contradictions Third World ruling classes have with this or that imperialist power. Consequently, the manner in which these contradictions are grasped varies. For the ruling classes, bred and shaped by imperialism, this is a matter of bargaining. That is not how it is experienced by other classes such as the national bourgeoisie, middle class, peasantry, and workers. Yet, to the extent they are under the sway of ruling-class hegemonic consensus, the neo-colonial mind dominates. Apparent similarity is seen between their understanding of the country’s position in the world, world events, and that of the ruling classes. The difference lies in their patriotism, as opposed to the compradorism of the rulers. However, that patriotism fails in its subjective desire to be independent when it remains trapped in the neo-colonial frame of thought. In the final analysis it ends up strengthening the ruling class’s hegemonic consensus and dependence on the imperialist system. This is true even when it is expressed in the form of militant nationalism.
An instance of this dynamism that readily comes to mind is the Indira Gandhi government’s stand-off with the US in 1971 on the Bangladesh issue. Despite facing threatening moves by the US, the Indian government stuck to its plan to intervene in the Bangladesh liberation war and ensure the break-up of Pakistan. The ruling classes celebrated it as proof of India’s independent foreign policy and standing in the world. This stance and India’s victory in the 1971 war were hailed by the broad masses with great fervor. In the midst of this what went unnoticed was the backing given by the erstwhile Soviet social imperialism and its tightening grip through the Indo-Soviet Treaty. Thus the patriotism of the masses became a means of legitimizing greater subservience to social imperialism and, through it, to the imperialist system as a whole.
Having noted some of the salient features of the neo-colonial mind, we shall now return to the matter of the 1991 policy shift. The occasion of the 25th anniversary has been used by some intellectuals to grieve the years “lost” preceding that shift. A rather simplistic lesson is drawn by comparing the rapid growth of South East Asian countries in that period with the slow pace seen in India. It is argued that these countries “succeeded” because they had opened up to foreign capital quite early and boosted exports. India, on the contrary, remained a closed economy insisting on “import substitution.” Note that the position of these countries in the post-World War 2 political and economic architecture of the imperialist system simply does not figure in this argument. When that is taken into consideration, the key role played by the strategic moves of the US in their growth would stand out.
The importance given by the US to these countries was closely related to its strategy of containing the impact of Socialist China and growing national liberation struggles. The Vietnam War, pitting a communist-led people’s war against the US and allies, soon turned into a focal point. Countries like Thailand, Singapore, Malaysia, Taiwan, and South Korea became even more important for the US. This was the global context enabling and shaping the economies of these countries through “export-led growth.” Yet, for all that, they remained links in the imperialist value-commodity chain, as component suppliers to transnational corporates. In recent decades, a few monopolies from these countries have emerged as significant players in consumer goods production. But then, so too have Indian corporates. Besides, import substitution was by no means unique to India. In its heyday, it was standard policy in a number of Third World countries, particularly the bigger ones. Their common inspiration was a neo-colonial development model then favored by some imperialist circles. It was seen as a means to deepen imperialist penetration through project-tied loans and limited export of obsolete technology. Whether “export-led” or “import-substituted” they ultimately contributed to a strengthening of dependence. The Indian neo-colonial mind is bitter about having been denied the opportunity to indulge in consumerist orgies along with its fellows in South East Asian countries. In doing so it blinds itself to the hollowness of those economies, sharply exposed in the crisis that hit them in the late 1990s. Big corporates like Daewoo simply collapsed. A huge chunk of locally owned industrial assets was snatched up for a trifle by imperialist corporates. Their dependence on imperialism stood out in all its ugliness.
Incidentally, the Indian economy escaped the worst of the 2007 global financial crisis precisely because it had not yet opened up to full capital convertibility. This was something the IMF and local technocrats had insistently demanded. But, just around the time the clamor to fully open up capital markets reached a high pitch, the South East Asian “Tigers” started collapsing. Given their “openness” they were unable to control capital flight. It was this turn, rather than the prudence of this or that RBI Governor, that delayed full capital convertibility. And that turned out to be quite beneficial when the 2007 crisis hit the world.
The neo-colonial mind is still stuck in a time warp lamenting the slow pace of “opening up.” Meanwhile, an influential and growing section in imperialist ruling circles and its agencies have moved on. Full capital convertibility is seen by them as a major risk. It is no longer advised. The sharp rise in inequality following implementation of GPL policies is recognized as a serious destabilizing factor. The neo-liberal policy set is being amended. A trend arguing for this had emerged by the late 1990s and early 2000 with calls for “globalization with a human face” and “inclusive government.” What is significant is the broader respectability this has gained over the years in the IMF-WB officialdom and its promotion through their official journals.⁶ Even then, the main thrust of the neo-liberal agenda still retains its venomous bite. Conditions imposed on Greece for a bailout loan are a sharp reminder.
The slowdown of reforms during the UPA rule and attempts to “revive” it under the NDA-2 has been a prominent theme in neo-colonial academic political circles.⁷ There certainly was a “slowdown.” Objective factors underlay it. By the late 1990s and early years of 2000s, broad mass struggle broke out in many parts of the country. They were mainly focused on the forced displacement of peasants and Adivasis from their lands for the sake of multinational-Indian corporate projects and Special Economic Zones. The ruling classes had to take this into account, particularly because they aided the growth and spread of the Maoist movement in some regions. Taking a cue from imperialist circles, and lessons from the miserable defeat of NDA-I in 2004, the UPA started parroting “globalization with a human face.” It initiated reformist programs like MNREGA and adopted new acts meant to blunt struggles from below.⁸ The aggressive promotion of GPL was held back to some extent.
As usual, the neo-colonial mind grasps this as its own product. The conclusion that “India is not suited to the application of the Washington Consensus” is presented as original thought “emerging from Indian reality.”⁹ Imperialist finance capital is renamed by some as “global capital.” Defying all indicators of deepening dependency, it is even claimed that global capitalism “has been created” within India!¹⁰
It is not that those who state such views are unaware of policy rethinking taking place in imperialist circles. They consider this merely an enabling factor. The real impetus, in their view, comes from internal developments. Imperialist agencies certainly do not produce policies purely from their own thought or conditions. Political, social and economic developments in Third World countries are under their constant observation. Sensing the mood of the broad masses is an important part of this. Comprador rulers and intellectuals are vital sources in this process; there is continuous interaction with them. But, ultimately, policy is set at the global level by imperialist thinktanks and agencies serving finance capital. The comprador, the neo-colonial mind, won’t experience this as an external input. After all, they too have been part of its evolution. Yet they still are not the deciding factor for the formulation of policy. This is the crux, however incomprehensible it is to the neo-colonial mind.
Let us go back to the “slowdown-revival” theme posed and debated in neo-colonial circles. One notes a near total absence of any reference to the 2007 global crisis and the long drawn out global recession it caused. If we are to really understand what happened and is happening in our economy, this must be factored in. In the initial years of the crisis China and India (and a few other Third World countries) were able to maintain their growth and remained stable. Restrictions on capital convertibility played a major role in this. The relative stability of these economies was an important factor aiding the imperialist powers to ride out the worst years of the crisis. However, given the enmeshing of these economies in the imperialist system this could not be sustained for long. By 2010/11 the continuing recession in imperialist countries started impacting them. Furthermore, the UPA-2 got caught up in the uncertainties of its coalition politics.
A stable government that could vigorously push the GPL agenda became a pressing necessity. This underlay the all-out backing given to Modi and the BJP led NDA by the ruling classes and imperialists. The payback is now appearing as a stepped-up effort to carry out GPL. It is not just a matter of economic policies. Concerted efforts to stifle democratic protest through deploying the fascist hordes of the Sangh Parivar, the attempt to disarm the masses by fanning up narrow nationalism and a massive increase in para-military deployment in areas of struggle are all part of this step-up.
Despite all this and the haste to attract foreign capital, growth rates have kept on falling. Banking is in a mess. Fresh local investment is stagnant. Demonetization and GST have further worsened things. The biggest chunk of India’s industry is in the unorganized medium, small, and tiny sectors. They are suffering the most, along with the rural economy. The Modi government seeks the answer in a more desperate effort to attract foreign capital. Every instance of foreign capital coming in, even if it is mainly portfolio investment in the share, debt markets, is hailed as proof of the Indian economy’s strength and confidence in the present ruling dispensation.
Finance capital is flowing in, no doubt. It seeks profits from differences in interest rates by borrowing at low or zero rates in imperialist countries and investing it here to take advantage of the higher rates existing in India. The recession in imperialist countries also leads finance capital to seize profitable investment opportunities in countries like India that still retain some buoyancy. Thus, a few sectors like urban transportation have seen fresh foreign investment. We can see this in the race for metro networks, even in cities that still don’t have proper roads. Huge amounts of finance capital, in the form of loans, are flowing in to fund these projects. They give recession-stricken rail industries in imperialist countries some reprieve. The “smart cities” project is another example of opening up new avenues for profit-seeking finance capital. It is predicated on a wholesale privatization of municipal services.
Control over finance capital is the key lever in the global imperialist system. According to a study by a research group in Switzerland, just 20 imperialist transnational financial corporates control almost all the big corporates in the world. No matter how many companies the Tatas or Ambanis buy up in imperialist countries, even if more than half of their income originates in global operations, they remain comprador midgets before these giants. The composition of India’s relatively higher growth rate is itself reflective of the country’s true status. It is mainly consumption driven. Industrial production does not contribute even one third.
Ramadas Rupavath has plainly gotten his facts wrong. Let alone “carving niches,” India’s performance in the “global marketplace” is still quite negligible. But, more than the factual error, what is most worrying is the shocking knowledge that even someone like Rupavath, who stands with the oppressed, is trapped in the discourse of the neo-colonial mind. We are forcefully reminded that an unapologetic, aggressive, anti-imperialism is by no means outdated. We need more of it, in higher doses.

(Written in October 2016 and updated in January 2018)

The following essay was written in 2024 for this issue of Material and can be taken as a postscript to the above text, last printed in 2020 by Foreign Languages Press as part of a larger compilation (Of Concepts and Methods). It further analyzes the neo-colonial characteristics of India through the concrete example of the telecom industry, among others, juxtaposed to China.—Eds.

Evading the Neo-Colonial Trap

In an earlier essay I pointed out an important characteristic of neo-colonialism:

For the neo-colonial mind, measures of imperialist control and exploitation are never seen as external impositions. They are considered as arising from the internal dynamics of the country, necessitated by its development quest. The neo-colonial mind is blind to the imperialist system in which the country is enmeshed. (Its) . . . vision (is) blocked from seeing the real world by the false consciousness of independence and its articulation as narrow nationalism. . . .¹¹

The material grounds for this is given by the very nature of neo-colonialism. Formal independence of erstwhile colonies is an essential feature for it, a vital requirement. That distinguishes it from colonialism. Instead of direct control exercised in the political sphere under colonialism, indirect control becomes the norm. Exploitation too is carried out, to the extent possible, indirectly.
Let us try to understand this by looking at the telecom sector in India. Up until the 1990s this sector was reserved for State players. A major expansion of services took place in 1980s. It was enabled and accompanied by some development in local technical capacities. That was to end after the 1990s implementation of the imperialist globalization, privatization, liberalization agenda, and telecoms were opened up to the private sector. Simultaneously, public sector entities were either sold off or weakened in a drastic manner. This initial period was also witness to massive speculation. Some of the major players at that stage had nothing to do with telecom or even manufacture! They were real estate giants.

Unitech, one of the largest real estate companies in the country at that time, bought 22 licenses for a sum of Rs 1,651 crore in 2008. And within months it offloaded 60 per cent of its purported telecom arm’s stake to Telenor (of Norway) for Rs 6,200 crore,¹² an appreciation of more than six times! Swan Telecom, promoted by another real estate company, DB Realty, obtained its license for Rs 1,537 crore; it immediately sold 45 per cent of its shares to Etisalat (of the UAE) for around Rs 4,200 crore. Likewise, Shyam Telecom sold shares to the Russian firm Sistema at a massive profit.”¹³

Quite possibly those companies were fronting for foreign companies.
This dependence was not a matter of a fledgling industry trying to get established. The comprador big bourgeoisie has always relied on imperialist capital and technology for its growth. Neo-colonialism hasn’t brought about any change in this. The above-cited essay in RUPE exposes how this has operated in a modern sector like telecom.¹⁴ Three decades after opening up the sector to private capital, there is nothing worth showing in terms of indigenous technology or manufacturing. The only difference in recent years is the growth of a local mobile phone assembly sector. Most of it is operated for the benefit of foreign companies like Apple, Samsung, and Xiaomi. Very little apart from assembly is done in India. India still imports much of what goes into the mobile phone. When the value of these imports are corrected for, there is a net outflow of foreign exchange.¹⁵ From phones to towers and switching gear, each and everything is dependent on foreign technology. It continues to be dependent on foreign capital as well, even for the leading players in the telecom sector.
Take the case of the largest private operator in India, Reliance Jio, part of the larger Reliance conglomerate owned by one of India’s wealthiest compradors. The parent company of Jio, Reliance Industries, floated a holding company in 2019, Jio Platforms Ltd. (JPL). Its stated purpose was control of Jio Telecom and other digital initiatives of the group. But in the very next year, a series of investments were made in JPL by big international finance and tech companies, such as Meta, Google, Qualcomm, and others. JPL raised around Rs 1.1 lakh crore¹⁶ by selling 30–32 percent of its ownership stake.¹⁷ The money raised was used to clear its debts, at the cost of massively strengthening foreign dependence. This is not an isolated example. ICICI is the leading private sector bank in India. More than 40 percent of its paid up capital is foreign. Axis Bank, another leading private sector bank, is 53 percent foreign owned.
This continued dependence seen in the Indian economy is often compared to that of China. Huawei, a Chinese company, is one of the world leaders in the telecom industry today. Despite severe sanctions imposed by the US , it has managed to sustain itself and advance. Massive State support is often cited to explain this. But that was possible to a great extent in India too. Its technical capacities are well demonstrated in the space industry and software. But why didn’t the Indian big bourgeoisie leverage all these factors to build up an indigenous telecom industry? The answer lies in the difference in the trajectories and nature of the big bourgeoisie of both the countries.
In the case of India, we see an unbroken chain of dependence on imperialist capital and technology. CPM and CPI revisionists and their theoreticians dispute this, pointing to the years following the transfer of power by the British in 1947. This was the period during which most of the public sector factories were established. Several factories came up in both heavy and light industrial units sectors during the early decades after the transfer of power, covering most industrial sectors. According to these revisionists, the turn to foreign dependence emerged from the 1980s onwards and became dominant in the next decade with globalization. But the industrialization seen in the early decades was not unique to India. One sees a similar phase in many other Third world countries, broadly known as “import substitution.” Industries were built up with the professed aim of replacing import of capital and consumer goods with locally manufactured ones. Actually, what was seen as local development was nothing other than neocolonialism in operation. Under “import substitution,” imperialist capital came in as “aid,” both as loans and grants, usually tied to import of machinery and technology from the imperialist country granting them. Again, most were obsolete. This pattern of industrialization did allow the building up of a modern industrial sector in oppressed countries like India as it simultaneously opened up new markets for imperialist capital and technology and deepened dependence on them.
The case of China was entirely different. It was a socialist country for nearly three decades, following the success of the new democratic revolution in 1949. This ended with the restoration of capitalism when the capitalist roaders, led by Hua Guofeng and Deng Xiaoping, captured power through a coup in 1976 and began the process that opened up the country to imperialism. Chinese working masses were forced to labor for them at pitiable wages and in horrible working conditions similar to the sweatshops of early capitalism. This led to a huge inflow of imperialist capital and technology. China became a cog in the imperialist chain of value production, a crucial one at that. By and large, almost all the initial processing, manufacturing, and assembly of transnational monopolies took place in China. Exports, mostly by imperialist transnationals, brought in huge foreign currency earnings. The country’s foreign exchange reserves swelled to trillions.
However, these factors alone are not sufficient to explain or understand the matter. Though not exactly in the same situation, South Korea too had similar enabling factors. What really mattered was its socialist past. Unlike other Third world countries, China was completely cut off from the imperialist system during the decades of socialist rule. This allowed it to develop an indigenous scientific and technical base. Above all, it broke the slavish mentality imposed and nurtured during its semi-colonial past by imperialism. Along with these internal factors, a fortuitous world situation also helped. US imperialism was tied down by its wars in Afghanistan and Iraq. That gave the Chinese ruling class a window of opportunity. Perhaps one can see something similar here to the world context that allowed the Japanese ruling class to evade colonial domination and instead become an imperialist power. Total domination over all aspects of society and the economy by the new Chinese bourgeoisie, as well as the ability to marshal resources in a focused manner, and a highly educated and disciplined workforce were other factors. The transformation of proletarian dictatorship led by a vanguard communist party into social fascist rule of a single, capitalist, party allowed this.
If we leave out fortuitous factors, what we see from this comparison is the vital importance of severing ties from imperialism. That is the only way an oppressed country can avoid getting caught in neocolonial ties of dependence. We know of a number of countries that gained independence from colonial powers through arduous, protracted, armed struggle. Yet none succeeded in advancing to socialism and sustaining it.¹⁸ True, in both these countries, socialism lasted only for some decades. Even then, their experiences remain qualitatively different, as the others failed to translate national liberation into social emancipation. Moreover, within a relatively short period, the political formations/parties that led the national liberation war themselves became instrumental in allowing imperialist penetration through neocolonialism. Ultimately, what is called for is a thorough rupture from imperialism in all realms—in the economy, in social relations, in education, culture—in everything. This rupture depends on the class character of the vanguard leading the struggle. In oppressed countries, most having a large peasant population vastly outweighing the proletariat, the ideology guiding the national liberation struggle is even more decisive. While the proletarian component of the vanguard is important, it is ideology, firm adherence to Marxism-Leninism-Maoism, that ensures its class character and revolutionary orientation. Facing the vastly superior forces of imperialism demands nothing less than continuing the revolution all the way to the end, until the worldwide victory of communism. National liberation is only a first step.

1. Rajiv Kumar, “Making Reform Work for the People,” Economic and Political Weekly, vol. 51, no. 19 and Ramdas Rupavath, “Confronting Everyday Humiliation: Response from an Adivasi,” Economic and Political Weekly, vol. 51, no. 31.
2. The NITI (National Institution for Transforming India) is a policy think tank of the Government of India.
3. Montek S. Ahluwalia, “The 1990s Reforms: How Home Grown Were They?” Economic and Political Weekly, vol. 51, no. 29, 39.
4. Between 1982 and 1990 the number of “upper tranche” loans with at least 11 conditionalities grew from 5 to 60%. WB structural adjustment loans went up from 3 to 25% in 1981–1996. (Economic and Political Weekly, vol. 52, no. 33, note 6, 92.)
5. Kumar, 35.
6. Pritam Singh, “IMF’s Auto critique of neo-liberalism?” Economic and Political Weekly, vol. 51, no. 32. An article in the IMF’s official magazine has admitted that “the claim that neo-liberalism always contributed to economic growth is difficult to sustain,” 39.
7. United Progressive Alliance (UPA) is a coalition of political parties led by the Indian National Congress. National Democratic Alliance (NDA) is the one led by the Bharathiya Janata Party (BJP). The NDA is ruling since 2014.
8. MNREGA—Mahatma Gandhi National Rural Employment Guarantee Act—a scheme for rural employment meant to alleviate poverty.
9. Kumar, 55.
10. Anjan Chakrabarti, “Indian Economy in Transition,” Economic and Political Weekly, vol. 51, no. 29, 64.
11. K. Murali (Ajith), “The Working of the Neo-colonial Mind,” Of Concepts and Methods, (Paris: Foreign Languages Press, 2020), 108.
12. 1 crore is equal to 10 million.
13. Rahul Varman, “Indian Telecom’s Spectacular Rise and the Nature of Monopoly Capital in India,” RUPE, no. 80, www.rupe-india.org, 2023, 16.
14. Varman, 16.
15. The Wire, “India’s Mobile Phone Exports Driven by Assembly Rather Than Domestic Manufacturing: Raghuram Rajan,” May 30, 2023, https://thewire.in/government/indias-mobile-phone-exports-driven-by-assembly-rather-than-domestic-manufacturing-raghuram-rajan.
16. 1 lakh crore is equal to 1 trillion.
17. Varman, 16.
18. In terms of countries who came out of colonial domination.