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Fourth International, October 1944

The Famine in India

II

J.K.L.

War And The Food Crisis

From Fourth International, vol.5 No.10, October 1944, pp.315-316.
Transcribed, marked up & formatted by Ted Crawford & David Walters in 2008 for ETOL.

There are various convenient “explanations” of the Bengal famine which have come from official sources. The first theory of Mr. Amery pointed to the blocking of food imports from Burma. But food imports were never relatively large in India, and there was ample time to make good the local deficits due to this cause during the eighteen months which separated the loss of Burma from the famine crisis in Bengal. The Secretary of State’s evasive attempt to shift the responsibilities on to the Provincial Governments is also thoroughly exposed by the fact that these Provincial Governments are purely the creatures of British imperialism and represent the fruition of the “bloc” made by the Raj with the landlords of the Punjab, Bengal, Assam, N.W.F. Orissa, etc., in the face of the Oppositional movement of the Congress. That these governments concealed nests of profiteers appears quite inevitable when we remember that the landlords represent the chief profiteering interest in agriculture. The corruption and “bungling,” as well as the wild oscillation of policy of the bureaucracy in this period are not “accidental” but based on the impossibility of reconciling the necessities of the imperialist war with the welfare of the Indian people. The political bloc with the landlord profiteers, the export of grain from starving India to the Middle East, the blocking of internal transport for military purposes, etc., all flow inevitably from this “impossibility.” All these seriously worsened the food crisis.
 

Effects of Inflation

In the inflation policy of the Government of India, pursued for war reasons, lies the real explanation of the food crisis, since this policy served the government in directing production and capital away from agriculture to meet the needs of the British war effort.

A little pamphlet called Starving India by Satyasandhu provides a trenchant analysis of the causes of the famine. Though politically nebulous the writer makes an excellent concrete analysis of governmental inflation and its effect on the food situation. Here is a summary of his argument.

The problem of the food crisis is, for the masses, one of soaring prices first and foremost. Men die because they cannot buy food to eat. What is the cause of the soaring prices? To speak of the shortage of production is not enough. How is there a shortage of production? “In a country engaged in war, while production is increased to meet essential war demands, the volume of consumption goods often diminishes” – thus, a distinguished economist. War materials and not consumption goods are produced. The scarcity of the latter (including food) is one result of the war; and far from being the causa incausata of rise in prices is one of the effects of a war economy which redirects production to war aims among other means by a currency policy and the manipulation of prices.

To explain soaring prices by the large Allied purchases in India, that is, by the huge preponderance of exports over imports is a fallacy. How are the Allies able to buy goods without giving an equivalent in exchange? Precisely because the Indian government as the agent of British imperialism in making purchases, expands its currency, to buy goods in exchange for paper money.

To explain the “soaring prices” by the blocking of food imports is ridiculous, since food imports were in any case minimal: the loss of these should in any case be balanced by the fall in price of articles formerly exported to areas with which commerce has ceased. In any case, this cause would only lead to the rise of a few annas in the rupee. Besides there has been ample time to adjust production to the new situation.

It is equally ridiculous to try to explain a general and not local rise in food prices by difficulties of internal transport. The control of transport would undoubtedly have helped to relieve the starvation of Bengal, but it could not cause a general lowering of prices throughout India.

To explain the rise in prices by “hoarding,” is a cheap evasion of which only the government and the Stalinists are capable. Why do people hoard, if not to profit by the continual and progressive rise in prices?

It should be better recognized that there is no special rise in food prices, relative to those of consumption goods in general, so far as the masses are concerned. There is a general rise in prices.
 

Official Figures

According to the Economic Adviser to the government, the All-Commodities Index of prices for January 1943 was 190; and for June 1943 – 246. When the Index for All-Commodities was 246, that of food grains was 306, of primary commodities 240, of cloth 506, and of manufactures 266. The disparity between food and All-Commodities would have been much lowered if the figures had been weighted.

The fact is that there has been a general upswing of prices in a curve which is becoming steeper. This is due mainly to the Government of India’s currency inflation.

The note issue has risen from Rs. 218 crores (218,00,00,000) [1] in September 1939 to Rs. 734 crores in June 1943, and rising daily by 1 crore. The percentage graph of the increasing note issue “strangely” coincides with that of the food prices and general price index.

The government not only denies any connection between its currency policy and the phenomenal rise in prices. It denies that inflation exists! The “explanation” is that “the expansion of Indian currency is backed by gold and sterling in excess of the requirements of the Act.” This is in fact true. Reactionary economic authorities like The Economist and Mr. Sarkar, however, interpret this to mean that the expansion of Indian money is backed by “real assets,” as opposed to “government security,” and is therefore not inflation. But the “real assets” are only sterling, that is to say the British government war bonds, and represent only British government security. What the sterling assets of India are really worth is very, very doubtful, but in any case not relevant to the issue, since there is no free exchange permitted between the rupee and sterling, and the sterling exchange standard is not operative. Hence the paper rupee is full-fledged inconvertible “fiat” money, entirely independent of the contents of the Reserve, whatever the latter are worth. This remains within the “requirements of the Act.” That is to say, for the government of India, inflation is strictly legal.

Currency manipulations always hide real trends of government policy regarding the production and exchange of material goods. What is the policy underlying this gross inflation? The government creates purchasing power at the expense of the whole country in order to help finance the British war effort directly, by enabling the British government to make free “purchases” in this country. But this is not the whole story. The Indian government uses this extra purchasing power to direct production along certain channels, by sharing some of the proceeds of the robbery of the masses with those who are ready to produce war goods. Capital and labor are attracted accordingly, and production is directed away from food to war material. Hence it follows that the consumption of food has to be curtailed by the masses.

That people go hungry cannot create food, unless they have the effective purchasing power to buy it, if and when produced. When the people’s purchasing power is reduced by inflation, there can be no wonder that food production dwindles. Food production would indeed be still lower than it is if it were not for the purchasing power of the troops (including Indian troops) in the country. Capital does not flow to finance agricultural production. It may be said in this connection that agriculture was a deficit economy for the cultivator, even before the war. The present higher prices of food-stuffs profits the landlord-profiteer, and only to an extent the small upper layer of the peasantry.

It must simply be said that there is no solution of the food problem consistent with the effective prosecution of the war.

It is useful to review some of the “solutions” suggested by politicians. The government and the Stalinists are “on the hunt” for the hoarders. These latter only profit by the continual rise in prices. They do not create the rise, which is due to an excess of “purchasing power” over the supply of commodities. The real shortage of consumption goods is due to the diversion of production to serve the war.

The “grow-more” food campaign of the government and the Stalinists can have small success, except as diversion of public interest, unless it is backed by a heavy subsidy. That is, unless the proceeds of inflation are withdrawn from the war effort to agriculture. Even so, we must note the permanent obstacles to the expansion of agriculture in this country, which have long ago brought it to an impasse, namely, the load of parasitism (landlord and money lender) on the cultivator, his miserable technical equipment, the exhaustion of the soil, the microscopic holdings, and finally the heavy taxation.

The control and rationing schemes can only secure some measure of fairness in the distribution of the restricted supply. But the supply will not increase unless inflation ceases, and the country resources are not drained away for war purposes. More food means: Down With the War!

The talk about cooperative food stores, about improving the internal export and import system, etc., is only a business of scratching the surface of things.

Finally, Satyasandhu proposes the following immediate “solutions,” not as practicable under imperialism, but as fixing attention on the real starvers of the people: STOP FURTHER INFLATION; RETURN THE 1,000 CRORES OF STERLING BALANCES IN THE FORM OF GOODS; REMIT ALL EXCISE IMPORT AND SALES TAXES ON THE PEASANTRY TO COMPENSATE IT; REMIT ALL LAND REVENUE.

It is necessary to strip the government of all its disguises, and reveal its stark oppression and exploitation to the people.

Footnote

1. Crore is a money of account equal to 10 million rupees, and written Rs. 1,00,00,000. – Ed.

 
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