Losing the middle

Modi’s BJP may be alienating the vyapari as it courts Big Capital and the underclass

Written by Harish Damodaran | Published: July 22, 2017 12:10 am
goods and services tax (GST), Prime Minister Narendra Modi traders, Modi BJP Traders Vyapari, Bhagidari section of traders, GST Traders, GST Demonetisation Small Business Houses, Indian Express Opinion Columns, Indian Express News But under Narendra Modi, the BJP has probably metamorphosed into a party more favourably disposed towards Big Capital in general. While many have sought to project Modi’s proximity to particular business houses, there is no evidence so far, of his government bestowing special favours to the suspected groups.

I recently got a Whatsapp forward from a pulses trader in Gulbarga titled Hamari Bhool, Kamal Ka Phool. Circulating within a large group of which he was part, it alluded to the mistake (bhool) they committed voting for the kamal (lotus, the Bharatiya Janata Party’s election symbol) and making Narendra Modi the Prime Minister. “Socha tha baniyan ke upar shirt aa jaayegi, kya pata tha baad mein patloon bhi utar jayegi (We thought we might get a shirt over our vest, only to realise later that our pants, too, would be taken off)”, read the message. The same Whatsapp group — of people also from Latur, Akola, Indore, Bundi, Ajmer and other mandi centres — had another revealing post. This one was addressed to the Dukhi Vyapari (sad trader): “The hammal (mandi labourer) scares you. The farmer scares you. The sales tax, income tax and mandi tax officials scare you. And now GST will not just scare, but finish you. Where will you go from here, oh vyapari?”

The above trader-as-victim narrative is currently being played out not just within my Gulbarga friend’s active Whatsapp circles. We are seeing it in Surat, where textile merchants and powerloom owners — those weaving synthetic fabric that go for making saris and dress material as cheap as Rs 200 — have been opposing the implementation of the goods and services tax (GST). It is visible in other textile hubs, too, be it Ludhiana, Bhiwandi, Ichalkaranji, Erode or Karur. There are two strands to these protests.

The first, of course, has to do with the GST. In textiles, only yarn or fibre was being taxed until now. With the GST, the entire chain at every stage of manufacture/job work and sale — from yarn to grey/dyed/printed fabric and finished dress material/saris — would be liable for taxation. True, the GST allows manufacturers/traders to set off the tax on their product/services against the tax paid on purchased inputs. Thus, a powerloom owner can claim credit for the tax paid on yarn/fibre. The effective tax on his product (fabric) post set-off could actually be lower than what he is already suffering.

But then, it’s not the extent of tax as the very prospect of coming into the tax net that is driving the current trader discontent. The opposition to the GST is about losing the freedom to do business without leaving a paper trail, thereby risking retribution from the authorities.

The second aspect to the unrest concerns the relationship of the trading community with the BJP, which right from the time of its progenitor, Jana Sangh, was derisively referred to as a Bania Jain Party. The trading class — the so-called bhagidari sector comprising proprietary and partnership firms, as opposed to large corporates — was to it what the trade unions were to the Communists. The party, on the other hand, had few backers among big industrialists — barring the odd Viren J. Shah of Mukand Steel.

That changed somewhat when the first BJP-led government of Atal Bihari Vajpayee came to power in the late 1990s. Some of its ministers, particularly Pramod Mahajan, were known to have close connections with select corporate groups.

But under Narendra Modi, the BJP has probably metamorphosed into a party more favourably disposed towards Big Capital in general. While many have sought to project Modi’s proximity to particular business houses, there is no evidence so far, of his government bestowing special favours to the suspected groups. One industry that may have received special treatment from this government — through minimum import price and anti-dumping duty protection measures — is steel. But the beneficiaries here aren’t really the names usually thrown around.

A more accurate description of the BJP under Modi — he is, indeed, both the party and the government today — would be that it has grown beyond being merely a representative of the bhagidari class. The GST and demonetisation together have dealt a body blow to businesses whose operations were mostly cash-based and non-tax paying. The Sensex’s rise in recent months, even in a not-so-booming economy, could plausibly be linked to the perception of big listed companies gaining in the long run from the marginalisation of micro, small and medium-sized enterprises.

In an insightful piece (‘Business Line’, July 6), Aarati Krishnan has shown how in a host of industries — soaps, detergents, toothpastes, cars, two-wheelers, cement, steel, telecom, airlines, etc — the top 2-3 players already command over 50 per cent domestic market share. This trend towards consolidation and increased pricing power of large listed firms will only intensify post-demonetisation and the GST.

It raises the question: What will happen to the vyapari who constituted the BJP’s original support base? This is where one must factor in an additional transformation that Modi has seemingly brought about in a traditionally right-of-Centre and Hindu upper caste-dominated party. By portraying demonetisation and the GST as measures for unearthing black money and checking tax evasion — besides implementing schemes to provide universal banking access (Jan Dhan), LPG connections (Ujjwala) and housing (Pradhan Mantri Awas Yojana) — Modi has sought to convert the BJP into much more than just a Bania Jain Party.

In this process of simultaneous courting of Big Capital and the underclass, the one section that might well end up being alienated is the vyapari: A common refrain amongst the members of our Whatsapp group was how “every shopkeeper is a thief in the eyes of this government” and “they only want the votes of the poor”.

One can draw parallels here with the Congress. In 1931, Mahatma Gandhi described the Congress as “essentially a peasant organisation”. Truth be told, the Congress, till at least the first decade after Independence, was a party with the widest cross-sectional and class appeal. The urban trader, middle peasantry and the rising provincial elite were the first to desert it. As these sections found refuge in the Jana Sangh and the various socialist and regional formations, the Congress found itself reduced to a party that only big industry and the poor could identify with.

The BJP, by contrast, started off as party of the bhagidari class. As the party is now working towards expanding its base to both above and below — Modi has definitely succeeding in doing that — it faces a similar possibility of desertion from the “middle”. But given the scale of past emotional attachment, the question can be thrown back to the vyapari: Is there any other party you can go to?


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More From Harish Damodaran
  1. R
    R K
    Jul 24, 2017 at 1:02 pm
    GST is a masterstroke from modi....what these people are afraid of is that the paper trail is definitely one day going them to pay taxes....which they are not in the habit of paying...the country cannot prosper unless people from all walks of life contribute to taxes...therefore the government has to make these people to pay taxes...and sooner than later they will realize that it is good for them as well...
    1. R
      Jul 24, 2017 at 12:01 am
      The vyapari selling Chinese goods at the expense of Indian ones doesn't deserve sympathy any more.
      1. P
        Paresh V
        Jul 23, 2017 at 3:01 pm
        The author makes fanciful projections. The vyapari class is purposeful and will certainly try to prevent taxation where it can. When it realizes that government is serious, it will adapt. The textile traders in many cities have already ended their protests and are registering for GST. Once the concept of streamlined input system gets clear to them, they will like GST far better than previous system. Shri Damodaran also makes another funny claim that vyaparis are threatened by farmers also. This is as ridiculous as it get can get just to write something to oppose the government, for a left leaning author.
        1. S
          Jul 23, 2017 at 2:54 pm
          After trying to turn Dalits and Mulsims against Modi, now people are looking at middle classes.
          1. M
            Jul 23, 2017 at 12:56 pm
            Majority of the Keralites are anti BJP including the author. They are either congress or communist stooges. No honesty in business and they do not want it either. They know only to show the wrong side of everything the government does, so no point adressing an y griecence or opinion as such. In fact if IT department goes through the entire household right from a labourer to an officer all could be liable to pay income tax, but they never do. Thery want to highlight all wrong things but fail in their duty. The author does not cover these except euliogize all unwanted things.
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